/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090304.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, March 4, 2009, Vol. 13, No. 62 Headlines ACCO BRANDS: Moody's Downgrades Corporate Family Rating to 'B3' ACUMENT GLOBAL: Moody's Reviews 'B2' Corporate Family Rating AGRIPROCESSORS INC: To Auction Off Business March 23 AHERN RENTALS: Declining Markets Prompt Moody's 'Caa2' Rating ALLENTOWN AREA: Bond Covenant Violation Cue S&P Outlook to Neg. ALLIED CAPITAL: New CEO Appointed; W. Walton to Remain as Chairman ALLIED CAPITAL: Posts $1.0 Billion Net Loss for Full Year 2008 ALLIED CAPITAL: KPMG Raises 'Going Concern' Doubt AMERICAN CAPITAL: Fitch Downgrades Issuer Default Rating to 'BB-' AMERICAN INT'L: Key Employees' Exodus May Hurt Restructuring AMERICAN INT'L: Unit to Be Placed in Special Purpose Vehicle AMERICAN INT'L: Fitch Affirms Outlook on Firm Govt. Support AMERICAN INT'L: Moody's Confirms Senior Unsecured Ratings AMERICAN INT'L: Says Former CEO Created of Financial Products AMERICAN INT'L: Scraps Sale of Philamlife After Add'l Govt. Aid AMERICAN MEDIA: S&P Ups Rating to 'CCC+' on Debt Swap's Success AMERICAN STERLING: Weiss Ratings Assigns "Very Weak" E- Rating AMR CORP: Posts $2.1-Bil. Loss for 2008, $2.9-Bil. Deficit ANDERSON NEWS: Creditors Send Firm to Bankruptcy ANITXTER INC: Fitch Assigns 'BB+' Rating on $200 Mil. Offering ARLINGTON RIDGE: May Obtain $30,000 to Fund Completion of Home ARMADA SINGAPORE: Offers 32.5% Recovery for Some Creditors ASHTON WOODS: Moody's Withdraws 'Ca' Corporate Family Rating AVALON RE: S&P Says Maturity Extension Won't Affect 'CCC' Rating BANK OF AMERICA: Merrill Purchases $1.59 Billion in 2032 Notes BEARINGPOINT INC: Disclosure Statement Hearing Slated for March 30 BELDEN INC: S&P Downgrades Corporate Credit Rating to 'BB' BLOCKBUSTER INC: to Announce 2008 Q4 & Annual Results on March 19 BLOCKBUSTER INC: Not Seeking Bankruptcy; Clarifies Kirkland's Role CANWEST GLOBAL: Agrees to Sell Holdings in Score Media Inc. CANWEST GLOBAL: Ten Holdings Won't Proceed With Proposed Offering CAPMARK FINANCIAL: S&P Downgrades Corporate Credit Rating to 'B+' CAPMARK INVESTMENTS: Fitch Downgrades Rating on Real Estate CDO CC MEDIA: Posts $4.99 Billion Fourth Quarter 2008 Loss CENTERBANK OF JACKSONVILLE: Gets Weiss' "Very Weak" E- Rating CHESAPEAKE CORP: Unsec. Creditors Want Probe on Firm's Sale CHRYSLER LLC: Talks Stall as Banks Object to Debt-Equity Swap CITIGROUP INC: S&P Keeps A Rating on Salt Verde's $1.13BB Bonds COMMSCOPE INC: Moody's Affirms 'Ba3' Rating; Gives Neg. Outlook CONGOLEUM CORP: Court Denies Confirmation of Amended Joint Plan CONSECO INC.: Auditor to Raise Going Concern Doubt, Shares Drop CONSECO INC: S&P Puts 'CCC' Counterparty Rating on Negative Watch CONSTAR INT'L: Panel Taps CRT Investment as Financial Advisor CREEKSIDE VISTA: S&P Removes 'CCC' Rating on De Kalb's 2005 Bonds CRHMFA HOMEBUYERS: Moody's Cuts Ratings on 2006-FH-1 Bonds to Ba3 DELPHI CORP: GM Adds $150-Mil. in Advances; to Buy Steering Biz DOLLAR THRIFTY: Inks Loan Amendment with Lenders, Chrysler Fin'l DOUGLAS JOHNSON: Wants to Sell Vehicle and Boat for $15,000 ERIE PROPERTY: Case Summary & 20 Largest Unsecured Creditors FIRST DATA: Moody's Reviews 'B2' Rating for Possible Downgrade FORD MOTOR: U.S. Sales Dropped 48% to 96,044 in February FRESH DEL MONTE: S&P Affirms Rating at 'BB-'; Outlook 'Developing' FULTON HOMES: Files List of 18 Largest Unsecured Creditors FULTON HOMES: U.S. Trustee Unable to Form Creditors Committee GANNETT CO: S&P Cuts Rating to 'BB' on Expected Ad Revenues Drop GENCORP INC: Compensation Panel & Board Adopt Incentive Plans GENERAL MOTORS: Treasury Grants Waiver on VEBA, Bond Swap GENERAL MOTORS: Bondholders Will Meet With Task Force on Thursday GENERAL MOTORS: U.S. Vehicle Deliveries Dropped 52.9% in February GENERAL MOTORS: To Advance $450MM to Delphi, to Buy Steering Biz GENERAL MOTORS: Needs Govt. Aid Worldwide to Survive Market Slump GOODY'S LLC: Has Deal on Prior Ch. 11 Case; U.S. Trustee Objects GOODY'S LLC: Begins Rejection of Non-Sellable Store Leases GOTTSCHALKS INC: Court Extends Auction of All Assets to March 30 GREATER ATLANTIC: Weiss Ratings Assigns "Very Weak" E- Rating HALLWOOD ENERGY: Hallwood Group Not Included in Bankruptcy HEXCEL CORP: S&P Changes Outlook to Stable; Affirms 'BB' Rating HSBC HOLDINGS: Seen to Support Finance Unit's Closing, Says Fitch INDEPENDENCIA SA: Files for Chapter 15 to Shield US Bank Accounts INDEPENDENCIA SA: Voluntary Chapter 15 Case Summary INDEPENDENCIA SA: Bankruptcy Filing Cues Moody's Junk Rating INVISTA BV: S&P Downgrades Corporate Credit Rating to 'B+' ISTAR FINANCIAL: S&P Downgrades Counterparty Credit Rating to BB J.A. BRUNTON: Voluntary Chapter 11 Case Summary JOURNAL REGISTER: Court Sets April 13 as Claims Bar Date KIRK PIGFORD: Asks Court to Dismiss its Chapter 11 Case LENNAR CORP: Unit Enters Into Amended Aircraft Dry Lease Pact LOUISIANA-PACIFIC CORP: Moody's Assigns 'Ba3' Notes Rating MAGNA ENTERTAINMENT: To Be Delisted From TSX Effective April 1 MASONITE INTERNATIONAL: To File For Ch. 11 with Pre-Arranged Plan MCCLATCHY CO: Posts $4.0 Million Net Loss in Year 2008 MCCLATCHY CO: Receives NYSE Non-Compliance Notice; Faces Delisting MEDIACOM COMM: Reports Results for 4th Quarter & Full Year 2008 MEDIACOM COMMUNICATIONS: Compensation Panel OKs Executive Pay MICHAEL VICK: Court Sends Plan to Confirmation Stage MICHAEL STERN: Files for Chapter 11 Bankruptcy Protection NATIONAL CENTURY: Ex-Vice President Sentenced to 2 Years Prison NATIONAL HERITAGE: Transferred $1MM to Unit Before Bankruptcy NEWARK GROUP: Has No Forbearance for $84-Million Loan NRG ENERGY: To Acquire Reliant's Texas Retail Unit for $287.5MM NRG ENERGY: Moody's Reviews 'Ba3' Rating for Possible Upgrade NWL HOLDINGS: Court Converts Case to Chapter 7 Liquidation OCEAN WOOD: Voluntary Chapter 11 Case Summary ONESTAR LONG DISTANCE: Trustee Can Assert Claims vs. WorldCom PARMALAT SPA: To Award Investors 10.5 Million Shares in Settlement PARMALAT SPA: District Court Rejects Deloitte's Bid to Appeal PATRIOT HOMES: U.S. Trustee Appoints 11-Member Creditors Committee PATRIOT HOMES: May Sell Personal Property at Alabama Facility PETROHAWK ENERGY: Share Issuance Won't Affect Moody's 'B2' Rating PHILADELPHIA NEWSPAPERS: Wants Dilworth Paxson as Co-Counsel PHILADELPHIA NEWSPAPERS: U.S. Trustee Forms Three-Member Committee PHOENIX COS: S&P Downgrades Counterparty Credit Rating to 'BB' PILGRIM'S PRIDE: Seeks 1st Exclusivity Extension to Sept. 30 PILGRIM'S PRIDE: Names Jerry Wilson as Sales & Marketing VP PLIANT CORP: Wants to Hire McMillan LLP as Canadian Counsel PLIANT CORP: Wants to Hire Sidley Austin as Bankruptcy Counsel PLIANT CORP: Taps Sonnenschein Nath & Rosenthal as Special Counsel QIMONDA N.A.: Sets Machinery for Auction of Virginia Plant QUICKSILVER RESOURCES: S&P Cuts Corporate Credit Rating to 'B' REGENCY ENERGY: Alinda Joint Venture Won't Affect Moody's Ratings RELIANT ENERGY: To Sell Texas Retail Unit to NRG for $287.5MM RITZ CAMERA: Accepts GOB, Going Concern Offers for Boating Stores SANTA ROSA BAY BRIDGE: Moody's Cuts Rating on Bonds to 'B3' SELECT COMFORT: Bankruptcy Possible, Says Analyst SLM CORPORATION: Fitch Puts 'BB+' Rating on Negative Watch SMURFIT-STONE: To Take $2.76 Billion Impairment Charge SPANSION LLC: Chapter 11 Filing Cues S&P's Rating Cut to 'D' STANDARD PACIFIC: Two Execs Resign; Babel & Stephens Named SVPs STANFORD INT'L BANK: U.S. Judge Extends Freeze Order to March 12 STANFORD INT'L BANK: U.S. Investigators Locate $250-Mil. in Assets STATION CASINOS: Pens Forbearance Pacts; Plan Votes Due April 10 STERLING MINING: Case Summary & 20 Largest Unsecured Creditors SUMMITT LOGISTICS: Case Summary & 20 Largest Unsecured Creditors SUNWEST MANAGEMENT: Charged by SEC for $300-Mil. Securities Fraud TARRAGON CORP: DSC Advisors Disclose Zero Equity Stake TEXAS PETROCHEMICALS: S&P Downgrades Corp. Credit Rating to 'B-' TRIAXX FUNDING: Moody's Junks Ratings on Four Classes of Notes TROPICANA OPCO: Lenders Say Atty. Fees Should Also be Controlled US CENTURY: Fitch Affirms Issuer Default Rating at 'BB' W.R. GRACE: Files Amended Plan Documents With SEC W.R. GRACE: Dec. 31 Balance Sheet Upside-Down By $426.9 Million WENDY'S/ARBY'S: S&P Cuts Arby's Corporate Credit Rating to 'B-' WINDSOR AT GRAND: Case Summary & Six Largest Unsecured Creditors WOODSIDE GROUP: Ceramista Debtors & Alabama Investments Bar Dates WOLVERINE TUBE: S&P Puts 'CC' Corporate Rating on Negative Watch WORLDCOM INC: Judge Rules OneStar Trustee Can Assert Claims YOUNG BROADCASTING: U.S. Trustee Forms 7-Member Committee * Factory Index Falls in February for 13th Month * Upcoming Meetings, Conferences and Seminars ********* ACCO BRANDS: Moody's Downgrades Corporate Family Rating to 'B3' --------------------------------------------------------------- Moody's Investors Service lowered ACCO Brands Corporation's corporate family and probability of default ratings to B3 from B1; its senior secured bank credit facilities to B1 from Ba2 and its senior subordinated notes to Caa2 from B3 following the company's sizable revenue and profit deterioration during the fourth quarter of 2008 and reduced expectations for performance during 2009. Moreover, financial flexibility will diminish under its recently negotiated financial maintenance covenants, particularly by the fourth quarter of 2009. Moody's negative outlook reflects the prospect of lower volumes going forward and the consequent pressure on operating leverage. ACCO's speculative grade liquidity rating is affirmed at SGL-3. Ratings lowered: -- Corporate Family rating to B3 from B1; -- Probability of Default rating to B3 from B1; -- Senior secured credit facilities to B1 (LGD2, 25%) from Ba2; and -- Senior subordinated notes to Caa2 from B3 (LGD5, 86%) The rating outlook is negative. Ratings affirmed: -- Speculative grade liquidity rating at SGL-3. ACCO's B3 rating is principally driven by the company's negative revenue trends in the Americas and overseas as well as its diminishing profitability and free cash flow. Declines in operating margin driven by the company's fixed cost base and its impact on financial flexibility also influence Moody 's negative rating action. Operating expenses (raw material, freight, and distribution) may benefit somewhat from lower input costs but over the short term declines in volume demand and a stronger dollar are offsetting the benefits. As a result of the difficult operating climate, ACCO has increased its restructuring efforts (layoffs, salary reductions, etc.) and while potentially short term in nature they should moderate negative margin pressure. Finally, the rating also reflects Moody's concerns regarding the negative secular trend in office supplies, competition from private label and ACCO's vulnerability to its customer base. The benefits of ACCO's value based and private label business should benefit volume trends but is less likely to offset margin pressure. Moody's last rating action was on December 19, 2008 when Moody's concluded ACCO's review for possible downgrade, confirmed existing ratings and changed the outlook to negative. ACCO Brands Corporation is a leading supplier of branded office products, which are marketed in over 100 countries to retailers, wholesalers, and commercial end-users. The company reported net sales of approximately $1.7 billion for the year ended December 31, 2009. ACUMENT GLOBAL: Moody's Reviews 'B2' Corporate Family Rating ------------------------------------------------------------ Moody's Investors Service has placed the B2 corporate family and probability of default ratings of Acument Global Technologies, Inc. on review for possible downgrade. At the same time, the B2 rating on senior secured term loan was also placed on review for possible downgrade. The review reflects Moody's belief that Acument's financial performance is under substantial stress given its reliance on the weakened automotive sector (approximately 60% of worldwide sales). Moody's expects that Acument is experiencing a meaningful decline in its credit metrics as demand from key auto OEM and Tier 1 auto suppliers falls in response to declining global consumer demand for automobiles. The review will focus on Acument's ability to stabilize its earnings and cash flows despite challenging end-market conditions across its businesses over the intermediate term. Specifically, Moody's will consider whether the expected decline in product demand and earnings will weaken leverage and interest coverage metrics to the point where they are no longer consistent with the B2 rating. Moody's will continue to evaluate the effectiveness of cost cutting initiatives implemented by the company to arrest margin declines and reorganize its manufacturing footprint and distribution channels. While Moody's believes that Acument's elevated cash balances and adequate liquidity profile currently cushion the B2 rating, the review will assess the sustainability of Acument's liquidity profile while end-markets remain depressed. Ratings under review for possible downgrade: -- B2 corporate family rating; -- B2 probability of default rating; and -- B2 (LGD4 55%) senior secured term loan. The last rating action was on July 23, 2007 when the B2 corporate family rating was assigned. Acument Global Technologies, Inc., headquartered in Troy, Michigan, is a global provider of mechanical fastening systems and value-based fastening solutions, including engineered fastening systems, fastening installation technology, and inventory management and application engineering services. The Company manufacturers and sells over 270,000 products globally. Acument's sales were $1.7 billion for the twelve months ending September 30, 2008. AGRIPROCESSORS INC: To Auction Off Business March 23 ---------------------------------------------------- The Chapter 11 trustee for Agriprocessors Inc. will conduct an auction for the business on March 23, Bloomberg's Bill Rochelle said. Under procedures approved Feb. 27 by the U.S. Bankruptcy Court for the Northern District of Iowa, initial bids are due March 18. The Court will convene a sale hearing on March 24, a day following the auction. According to Mr. Rochelle, in January the trustee said he already had a $40 million cash offer from Israeli food company Soglowek Nahariya Ltd. Headquartered in Postville, Iowa, Agriprocessors Inc. -- http://www.agriprocessor.com/-- operates a kosher meat and poultry packing processors located at 220 North West Street. The company maintains an executive office with 50 employees at 5600 First Avenue in Brooklyn, New York. The company filed for Chapter 11 protection on Nov. 4, 2008 (Bankr. E. D. N.Y. Case No. 08- 47472). The case, according to McClatchy-Tribune, has been transferred to Iowa. Kevin J. Nash, Esq., at Finkel Goldstein Rosenbloom & Nash represents the company in its restructuring effort. The company listed assets of $100 million to $500 million and debts of $50 million to $100 million. AHERN RENTALS: Declining Markets Prompt Moody's 'Caa2' Rating ------------------------------------------------------------- Moody's Investors Service has downgraded the corporate family and probability of default ratings of Ahern Rentals, Inc., to Caa2 from B3, downgraded the speculative grade liquidity ratings to SGL-4 from SGL-3 and changed the outlook to negative from stable. The downgrades reflect heightened concern that impact of declining construction end markets will pressure Ahern's credit metrics over the ratings horizon and significantly raise the potential for a covenant breach under the company's first lien, asset-based revolving credit facility. As of September 2008, the eligible collateral supporting the revolver's borrowing base was high relative to the commitment size, however equipment prices have since substantially declined, and Moody's anticipates further price declines in 2009. The Caa2 corporate family rating reflects an expected decline in U.S. non-residential construction activity through 2010 and a weak liquidity profile, against moderately high leverage, and the company's established market position, including within its core Las Vegas market. The SGL-4 reflects a weak liquidity profile driven largely by a view that used equipment prices will decline substantially in 2009, activating covenant tests that will be difficult to comply with. Ahern's asset-based $350 million revolving credit facility has minimum fixed charge coverage, maximum leverage and minimum utilization rate covenant tests that spring if availability declines below set thresholds. The company is required to test covenants when availability declines below $25 million as it did during the third quarter of 2008. The maximum leverage ratio test steps down to 4.5 times by March 31, 2009; although at September 2008 levels, the company would possess a 15% cushion, at the stepped-down test, headroom under this covenant should become tight with further utilization rate declines. The negative outlook reflects concern that, although Ahern plans to curtail capital spending significantly and generate free cash flow in 2009 for revolver repayment, the amount of free cash flow generated from rental activity will likely be less than had been expected due to weak demand. Additionally, depreciation and lower used equipment prices should considerably diminish the revolver's eligible collateral value to levels that activate challenging covenant tests. Additional downgrades: * $290 million 9.25% second priority global notes due August 2013 -- to Caa3 LGD5, 76% from Caa1 LGD5, 77%. Moody's last rating action on Ahern occurred November 19, 2008 when the corporate family rating was downgraded to B3 from B2 and the outlook was changed to stable from negative. Ahern Rentals, Inc., headquartered in Las Vegas, Nevada, is a regional equipment supplier with 48 branches predominately in the Southwest region of the United States. As of September 2008 Ahern had in excess of 35,000 pieces of rental equipment having an original cost of approximately $824 million. The company specializes in high reach equipment. ALLENTOWN AREA: Bond Covenant Violation Cue S&P Outlook to Neg. --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on the 'BB' rating and underlying rating on Allentown Area Hospital Authority, Pennsylvania's series 2005 and 1998A hospital revenue bonds, issued for Sacred Heart Hospital of Allentown, to negative from stable based on Sacred Heart's poor financial performance as of June 30, 2008, which triggered a violation of its technical bond covenants for the fiscal year. Standard & Poor's also affirmed its 'BB-' rating on the hospital's debt. The sole factor precluding a lower rating is the turnaround initiative Sacred Heart's consulting team is currently implementing, which includes an interim chief financial officer and CEO/chief operating officer. The negative outlook reflects Standard & Poor's concern that Sacred Heart's financial profile has deteriorated through its fiscal 2008 results with the trigger of a technical bond covenant violation. "If the hospital is able to meet its budgeted expectations for the fiscal year, including operating profitability, preserving its liquidity, and more stable volumes, there is a possibility S&P might return the outlook to stable," said Standard & Poor's credit analyst Jennifer Soule. "If, however, actual fiscal 2009 results are significantly below management projections, coupled with poor usage and further liquidity deterioration, S&P might lower the rating to the 'B' category." Interim management indicates it has identified close to $11 million of annual savings with approximately $4 million to be realized in fiscal 2009. Turnaround opportunities include the layoff of 128 full-time equivalents, implemented in September 2008; the hospital's conversion to a flexible staffing model throughout the entire organization; physician realignment with the hospital; and various other cost-savings measures. The hospital is also searching for a new chief financial officer and CEO, and it hopes to fill the positions this calendar year. Sacred Heart's liquidity through fiscal 2008 declined slightly to $23.2 million, or 64 days' cash on hand, from the $26.7 million reported for fiscal 2007, or 73 days. Through the interim period, a balance sheet for just the hospital was available; and it reported unrestricted cash of approximately $12.6 million, or 43 days' cash on hand. Historically, hospital liquidity accounted for about 96% of the system's unrestricted cash. Management attributes the liquidity decline solely to a decline in the value of Sacred Heart's investment portfolio, which is now invested in 45% equities and 55% fixed income. The cash-to-debt ratio through the interim period was light compared to S&P's medians at 37%, and the debt-to-capitalization ratio was an elevated 70%. The rating action affects roughly $28.1 million of debt outstanding. ALLIED CAPITAL: New CEO Appointed; W. Walton to Remain as Chairman ------------------------------------------------------------------ Allied Capital Corp. reports that the roles of Chairman of the Board and CEO are being separated effective March 3, 2009. William L. Walton, who has been Chairman of the Board, President and Chief Executive Officer since 1997 and a director since 1986, will continue to serve full time as the Company's Chairman of the Board. In that capacity, he will be an executive officer and be responsible for the overall strategic direction of the Company. John M. Scheurer, Managing Director of the Company who has held key leadership positions during his 18-year tenure, has been appointed Chief Executive Officer and President. Mr. Scheurer will assume responsibility for the executive management of the Company. "During this critical time for the financial services industry, with the increasingly challenging environment, we believe that separating the Executive Chairman and CEO roles to expand our executive leadership team will enable me to focus on my responsibilities as Chairman and John to devote his full attention to the management of our business. John brings decades of experience, demonstrated leadership and investment credentials and a long list of achievements at Allied Capital to this role as the Company's Chief Executive Officer. His deep knowledge of our business and his commitment to building value for our shareholders makes him the right choice for this role," said Mr. Walton. About Allied Capital Allied Capital (NYSE:ALD) -- http://www.alliedcapital.com-- is a business development company in the U.S. that is regulated under the Investment Company Act of 1940. Allied Capital invests long- term debt and equity capital in middle market businesses nationwide. Founded in 1958 and operating as a public company since 1960, Allied Capital has been investing in the U.S. entrepreneurial economy for 50 years. At September 30, 2008, Allied Capital had $4.6 billion in total assets, $2.1 billion in total borrowings, $2.4 billion in total equity and a net asset value per share of $13.51. Allied Capital has a diverse portfolio of investments in 117 companies across a variety of industries. * * * Moody's Investors Service on Jan. 28 lowered Allied's corporate grade by two levels to junk at Ba2. As reported by the Troubled Company Reporter on February 24, 2009, Allied Capital Corp. is in default on a revolving credit and $1.015 billion in notes. Allied Capital said in a February 19 regulatory filing that it remains in discussions with lenders under its revolving credit facility and the holders of its outstanding private notes to seek relief under certain terms of both the revolving credit facility and the private notes due to an expected covenant default. ALLIED CAPITAL: Posts $1.0 Billion Net Loss for Full Year 2008 -------------------------------------------------------------- Allied Capital Corporation has released its 2008 financial results. For the year ended December 31, 2008, net investment income was $213.2 million or $1.23 per share compared to net investment income of $141.0 million or $0.91 per share for the year ended December 31, 2007. For the year ended December 31, 2008, the company had net realized losses of $129.4 million or $0.75 per share. For the year ended December 31, 2007, the company had net realized gains of $268.5 million or $1.74 per share. For the year ended December 31, 2008, the sum of net investment income and net realized losses was $83.8 million or $0.48 per share, as compared to $409.5 million or $2.65 per share for the year ended December 31, 2007. Net investment income was reduced in 2008 by employee stock option expense of $11.8 million or $0.07 per share. Net investment income was reduced in 2007 by employee stock option expense of $35.2 million or $0.23 per share. For the year ended December 31, 2008, net change in unrealized appreciation or depreciation was a decrease of $1.1 billion or $6.49 per share. Net unrealized depreciation for the year was increased by additional net depreciation of $1.2 billion or $7.18 per share due to changes in portfolio value and the reversal of previously recorded unrealized appreciation associated with realized gains and dividend income of $131.1 million or $0.76 per share. Net unrealized depreciation for the year was reduced by $249.9 million or $1.44 per share due to the reversal of previously recorded unrealized depreciation associated with realized losses. Net loss for the year ended December 31, 2008, was $1.0 billion or $6.01 per share, as compared to net income of $153.3 million or $0.99 per share for the year ended December 31, 2007. For the quarter ended December 31, 2008, net investment income was $34.2 million or $0.19 per share compared to net investment income of $58.0 million or $0.37 per share for the quarter ended December 31, 2007. For the quarter ended December 31, 2008, the company had net realized losses of $176.7 million or $0.99 per share compared to net realized losses of $46.4 million or $0.30 per share for the quarter ended December 31, 2007. For the quarter ended December 31, 2008, the sum of net investment income and net realized losses resulted in a loss of $142.6 million or $0.80 per share, as compared to income of $11.6 million or $0.07 per share for the quarter ended December 31, 2007. For the quarter ended December 31, 2008, net change in unrealized appreciation or depreciation was a decrease of $436.3 million or $2.44 per share. Net unrealized depreciation for the quarter was increased by additional net depreciation of $605.1 million or $3.39 per share due to changes in portfolio value and the reversal of previously recorded unrealized appreciation associated with realized gains of $0.9 million or $0.01 per share. Net unrealized depreciation for the quarter was reduced by $169.7 million or $0.95 per share due to the reversal of previously recorded unrealized depreciation associated with realized losses. Net loss for the quarter ended December 31, 2008, was $578.8 million or $3.24 per share, as compared to net income of $27.5 million or $0.18 per share for the quarter ended December 31, 2007. Net income can vary substantially from period to period due to the recognition of realized gains and losses and unrealized appreciation and depreciation, among other factors. As a result, quarterly or annual comparisons of net income may not be meaningful. For 2008, the company paid $456.5 million or $2.60 per share in dividends to shareholders. Dividends for 2008 were paid primarily from taxable income carried forward from 2007 for distribution in 2008. The company estimates that it has met its dividend distribution requirements for 2008. The company currently does not expect to declare dividends in 2009 and would be able to carry forward any 2009 taxable income for distribution in 2010. The company had approximately $217.4 million in deferred taxable income resulting from installment sale gains as of December 31, 2008. These gains have been deferred for tax purposes until the notes or other amounts received from the sale of the related investments are collected in cash. Events of Default, Liquidity and Operations Events of default related to certain covenants have occurred under the company's revolving line of credit and private notes. The company's asset coverage ratio, which these debt agreements require to be no less than 200%, was 188% as of December 31, 2008. During the continuance of an event of default, the company is prohibited from issuing indebtedness and from paying any dividends to its shareholders. Neither the lenders nor the private noteholders have accelerated repayment of the company's obligations; however, the occurrence of an event of default permits the lenders and private noteholders to accelerate repayment. Acceleration of the debt obligations would have a material adverse effect on the company's operations. The company's auditors have included an explanatory paragraph in their 2008 audit opinion that expresses substantial doubt about the company's ability to continue as a going concern. The company is in discussion with these lenders and private noteholders regarding a comprehensive restructuring of these debt agreements to provide long-term operational flexibility. There can be no assurance that the company will achieve a comprehensive restructuring. At December 31, 2008, the company had cash and money market and other securities totaling $50.7 million. The company repaid $186.0 million of its debt in the fourth quarter of 2008. At December 31, 2008, the company had borrowings on its revolving line of credit of $50.0 million, outstanding private notes of $1.0 billion and outstanding public debt of $880.0 million. In addition as of December 31, 2008, $122.3 million in standby letters of credit have been issued under the revolving line of credit. Portfolio and Investment Activity The company has reduced new investment activity as part of its efforts to conserve capital and repay debt. In addition, the company is pursuing certain asset sales in order to generate capital to further reduce debt outstanding and de-lever its balance sheet. New investments for the quarter ended December 31, 2008 totaled $50.3 million. During the quarter principal collections related to investment repayments or sales totaled $159.1 million. At December 31, 2008, the total portfolio at value was $3.5 billion, including interest-bearing investments of $2.9 billion with a weighted average yield of 12.1%. Portfolio Quality Loans and debt securities over 90 days delinquent at December 31, 2008, were $108.0 million or 3.1% of the portfolio at value. At September 30, 2008, loans and debt securities over 90 days delinquent were $21.4 million or 0.5% of the portfolio at value. Excluding the Company's senior loan to Ciena Capital LLC, loans and debt securities over 90 days delinquent were $3.1 million or 0.1% of the portfolio at value at December 31, 2008, as compared to $21.4 million or 0.5% of the portfolio at value at September 30, 2008. Loans and debt securities not accruing interest at December 31, 2008 were $335.6 million or 9.6% of the portfolio at value, as compared to $383.1 million or 9.1% at September 30, 2008. Excluding the company's senior loan to Ciena Capital LLC, loans on non-accrual were $230.7 million or 6.6% of the portfolio at value at December 31, 2008 as compared to $202.9 million or 4.8% of the portfolio at value at September 30, 2008. Loans and debt securities on non-accrual and over 90 days delinquent totaled $108.0 million at December 31, 2008, and $21.4 million at September 30, 2008. About Allied Capital Allied Capital (NYSE:ALD) -- http://www.alliedcapital.com-- is a business development company in the U.S. that is regulated under the Investment Company Act of 1940. Allied Capital invests long- term debt and equity capital in middle market businesses nationwide. Founded in 1958 and operating as a public company since 1960, Allied Capital has been investing in the U.S. entrepreneurial economy for 50 years. At September 30, 2008, Allied Capital had $4.6 billion in total assets, $2.1 billion in total borrowings, $2.4 billion in total equity and a net asset value per share of $13.51. Allied Capital has a diverse portfolio of investments in 117 companies across a variety of industries. * * * Moody's Investors Service on Jan. 28 lowered Allied's corporate grade by two levels to junk at Ba2. As reported by the Troubled Company Reporter on February 24, 2009, Allied Capital Corp. is in default on a revolving credit and $1.015 billion in notes. Allied Capital said in a February 19 regulatory filing that it remains in discussions with lenders under its revolving credit facility and the holders of its outstanding private notes to seek relief under certain terms of both the revolving credit facility and the private notes due to an expected covenant default. ALLIED CAPITAL: KPMG Raises 'Going Concern' Doubt ------------------------------------------------- Allied Capital Corp.'s annual report on Form 10-K filed on March 2 contains an explanatory paragraph by auditor KPMG LLP that states that the Company is in default on provisions of certain credit agreements. "The credit agreement defaults provide the respective lenders the right to declare immediately due and payable unpaid amounts approximating $1.1 billion at December 31, 2008. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements and financial statement schedules do not include any adjustments that might result from the outcome of that uncertainty." The Company acknowledged that events of default related to certain covenants have occurred under its revolving line of credit and private notes. The Company's asset coverage ratio, which these debt agreements require to be no less than 200%, was 188% as of December 31, 2008. During the continuance of an event of default, the company is prohibited from issuing indebtedness and from paying any dividends to its shareholders. Neither the lenders nor the private noteholders have accelerated repayment of the company's obligations; however, the occurrence of an event of default permits the lenders and private noteholders to accelerate repayment. Acceleration of the debt obligations would have a material adverse effect on the company's operations. The Company said that it is in discussion with these lenders and private noteholders regarding a comprehensive restructuring of these debt agreements to provide long-term operational flexibility. "There can be no assurance that the company will achieve a comprehensive restructuring," Allied said. At December 31, 2008, the Company had cash and money market and other securities totaling $50.7 million. The Company repaid $186.0 million of its debt in the fourth quarter of 2008. At December 31, 2008, the Company had borrowings on its revolving line of credit of $50.0 million, outstanding private notes of $1.0 billion and outstanding public debt of $880.0 million. In addition as of December 31, 2008, $122.3 million in standby letters of credit have been issued under the revolving line of credit. Bloomberg reported on March 2 that Allied fell the most in more than a week in U.S. trading after auditors expressed "substantial doubt about the company's ability to continue as a going concern." Allied Capital's credit line requires the Company's assets to be triple the amount of debt. Mr. Greg Mason, a senior equity analyst at Stifel Nicolaus & Co. in St. Louis, said that the company needs to get that ratio lowered and adds, "If Allied Capital cannot rework the covenants, or it does and then violates them again, "that could lead to their failure". He rates the company "hold" and says that the key will be for the company to pledge its assets as collateral, Bloomberg said. Mr. Mason further adds that Allied Capital should be able to renegotiate the agreements although "the devil will be in the details." About Allied Capital Allied Capital (NYSE:ALD) -- http://www.alliedcapital.com-- is a business development company in the U.S. that is regulated under the Investment Company Act of 1940. Allied Capital invests long- term debt and equity capital in middle market businesses nationwide. Founded in 1958 and operating as a public company since 1960, Allied Capital has been investing in the U.S. entrepreneurial economy for 50 years. At September 30, 2008, Allied Capital had $4.6 billion in total assets, $2.1 billion in total borrowings, $2.4 billion in total equity and a net asset value per share of $13.51. Allied Capital has a diverse portfolio of investments in 117 companies across a variety of industries. * * * Moody's Investors Service on Jan. 28 lowered Allied's corporate grade by two levels to junk at Ba2. As reported by the Troubled Company Reporter on February 24, 2009, Allied Capital Corp. is in default on a revolving credit and $1.015 billion in notes. Allied Capital said in a February 19 regulatory filing that it remains in discussions with lenders under its revolving credit facility and the holders of its outstanding private notes to seek relief under certain terms of both the revolving credit facility and the private notes due to an expected covenant default. AMERICAN CAPITAL: Fitch Downgrades Issuer Default Rating to 'BB-' ----------------------------------------------------------------- Fitch Ratings has downgraded and maintained the Rating Watch Negative on American Capital Strategies LLC's ratings: -- Issuer Default Rating to 'BB-' from 'BBB-'; -- Senior unsecured debt to 'BB-' from 'BBB-'. The above ratings remain on Rating Watch Negative. Approximately $2.3 billion of unsecured debt is affected by this action. The downgrades reflect the recognition of a $1.6 billion net unrealized loss in the fourth quarter of 2008 and substantial weakening of the company's capitalization. As a result of this loss, ACAS will breach various loan covenants under its $1.4 billion revolving bank facility and $0.9 billion of unsecured term debt. The company is also unable to meet the Investment Company Act requirement to maintain minimum asset coverage of 200%, which restricts the company from issuing any debt, except to refinance existing debt. Additionally, ACAS' auditors have provided an unqualified opinion on the company's financial statements for the year ended Dec. 31, 2008; however, they have included a 'going concern' explanatory paragraph in their opinion as a result of the covenant breaches under the company's unsecured debt agreements. The Rating Watch Negative remains in place because of the above noted covenant breaches and subsequent default on $2.3 billion of unsecured debt. Resolution of the Rating Watch will be primarily driven by ACAS' ability to reach an agreement with its unsecured creditors in a timely fashion and reflective of any structural or pricing changes. Absent a timely agreement, which Fitch would expect to occur within the next 60 to 90 days, or acceleration of the debt, a rating downgrade of more than one notch is highly likely. Moreover, even if a timely agreement is achieved, based on the significant potential for further deterioration in underlying financial performance and the need to sell assets to reduce leverage, Fitch is likely to maintain a Negative Rating Outlook upon resolution of the Rating Watch. ACAS is actively negotiating with its banks and unsecured lenders. Fitch believes restructure terms will likely include higher pricing and additional principal amortization, in part, necessary to meet the 200% asset coverage requirement under the Investment Company Act of 1940. Fitch also recognizes that unsecured lenders may also require a collateral interest in all existing unencumbered portfolio assets The magnitude of further unrealized losses and ability to remain in compliance with revised debt covenants remains a critical near- term rating factor. Due to recessionary economic conditions, Fitch anticipates that capitalization will weaken further due to deterioration in both underlying investment portfolio performance and further declines in market spreads or valuation multiples. The ability to achieve asset sales to meet ongoing funding and debt repayment requirements also represents a critical rating factor. Fitch believes the sale of investment assets will be necessary to satisfy asset coverage and potential near-term principal amortization requests from its lenders. This belief reflects the fact that ACAS will be unable to raise equity capital and that cashflow generated via operations and from contractual repayments from investments is insufficient to achieve the required reduction in leverage over the near-term. Given expected near-term sector and overall economic conditions, proceeds from potential asset sales may be less than management's intrinsic values for these assets and likely below current fair value estimates. Fitch also recognizes that the sales process will take some time to complete and that asset sales will be generated through the next year. AMERICAN INT'L: Key Employees' Exodus May Hurt Restructuring ------------------------------------------------------------ American International Group Inc. warned that resignations by key employees could hamper its restructuring plans, Lavonne Kuykendall and Bhattiprolu Murti at Dow Jones Newswires report. Dow Jones relates that AIG said in its annual report that a loss of key employees could "impair its ability to effect a successful asset disposition plan." According to Dow Jones, AIG has seen an exodus of key employees in recent months to take positions at better-capitalized companies. Dow Jones relates that Charles H. Dangelo left AIG to head some of Starr International Co.'s major insurance subsidiaries, including Starr Indemnity & Liability Co. (SILC), and Starr Excess Lines Insurance Co. Mr. Dangelo was formerly chief reinsurance officer and president of AIG Global Risk Management. AIG said in a filing with the U.S. Securities and Exchange Commission that uncertainty in AIG's financial condition, asset dispositions, and decline in the firm's stock price "have adversely affected AIG's ability to retain key employees and to attract new employees." According to Dow Jones, AIG's latest government bailout puts new limits on top-executive compensation. Citing an insurance industry consultant, the report says that government restrictions on pay and bonuses could urge workers to look elsewhere, and could give rivals an inexpensive way of taking over major parts of AIG's business. Dow Jones quoted Rancho Santa Fe-based consultant Andrew Barile as saying, "I can give AIG a check for $1 billion [to buy a business unit] or I can put the $1 billion in the bank and steal AIG's people instead," is the thinking among insurance company rivals. AIG, Dow Jones relates, said that it has granted retention awards and has taken other steps to keep its key employees, but it can't give any assurance that these actions will be successful. Gov't Aims to Sell Firm in Pieces Sudeep Reddy and Liam Pleven at WSJ report that government officials said on Monday that they are aiming to shrink AIG by selling off assets once the market improves, scaling the firm back to a domestic insurance business and reducing the risks AIG poses to the financial system. Citing government officials, WSJ states that major restructuring measures must wait until the economy improves. According to WSJ, the government has already risked more than $170 billion to keep AIG alive, and government officials said that if the economy worsens, the firm may need more money. WSJ states that the bailout of AIG has increased, and taxpayers have taken on more risk: * On September 16, 2008, the government extended AIG a two- year loan of up to $85 billion, and gets a 79.9% stake in return. * On October 8, 2008, bailout loans increase to almost $123 billion due to problems in AIG's securities-lending program. * On November 9, 2008, the rescue package increases to $150 billion, including a new $40 billion federal investment. * On March 1, 2009, the government makes $30 billion in TARP money available and cuts the loans to up to $25 billion. About American International Based in New York, American International Group, Inc. (AIG) was 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: Unit to Be Placed in Special Purpose Vehicle ------------------------------------------------------------ American International Group, Inc., and American Life Insurance Company (ALICO) disclosed a set of actions, taken in cooperation with the U.S. Department of the Treasury (U.S. Treasury) and the Federal Reserve, to improve AIG's capital structure, protect and enhance the value of its key businesses, and position these franchises for the future as more independently run, transparent companies. AIG is working closely with the management of each of its major operating businesses to establish the appropriate governance and capital structures for those businesses. Certain businesses that are already positioned for sale will continue on this track; some will be held for later divestiture; and some businesses, such as ALICO and American International Assurance Company, Ltd (AIA), will continue to review their divestiture options, which ultimately may include a public offering of shares, depending on market conditions. AIG intends to contribute the equity of ALICO and AIA into special purpose vehicles (SPVs) in exchange for preferred and common interests in the SPVs. This will enable the Federal Reserve Bank of New York (FRBNY) (or a trust for the benefit of the FRBNY) to receive preferred interests in repayment of a portion of the FRBNY facility. The amount of the preferred interests will be a percentage of the fair market value of ALICO and AIA based on valuations acceptable to the FRBNY. AIG will continue to hold the common interests in the SPVs. These transactions will reduce AIG's debt and interest carrying costs, while allowing AIG to continue to benefit from its ongoing common interests in the SPVs. Until subsequent divestment, ALICO will remain a wholly owned subsidiary of AIG, consolidated in AIG's reported financial statements. "Given the importance of ALICO and AIA to repaying our obligation to the U.S. government, we think this structure is the optimal solution to maintain the value of these businesses and best position them to enhance their franchises," said Edward M. Liddy, Chairman and Chief Executive Officer of AIG. "The ultimate success of our restructuring plan centers on ensuring that the unique businesses that make up AIG can thrive on their own. While this process may take up to several years to complete, we will ultimately create stronger, sounder businesses worthy of investor, customer, and regulatory confidence. We greatly appreciate the continued cooperation and support of our customers, business partners, the U.S. government and regulators around the world," Mr. Liddy said. "We are delighted by the changes announced by AIG today," said Rodney O. Martin Jr., ALICO Chairman and Chief Executive Officer. "This sends a clear message to our stakeholders that ALICO continues to be a trustworthy, reliable and qualified partner. It will position us well in continuing to focus on our core life insurance and retirement services business. We can continue to execute ALICO's successful business model to enhance the value of our franchise and to provide maximum value to the U.S. taxpayers. We continue to have very strong insurance operations and our ability to pay claims will be unaffected by this change." AIG also confirmed today that it had received proposals to acquire all or part of the share capital of ALICO. These proposals are preliminary and are being reviewed along with AIG's consideration of a full or partial IPO of ALICO. "We will continue to consider all strategic alternatives for ALICO and evaluate expressions of interest from qualified parties with access to capital," Mr. Martin said. AIG to Form AIU Holdings for General Insurance Businesses AIG will form a General Insurance holding company, including its Commercial Insurance Group, Foreign General unit, and other property and casualty operations, to be called AIU Holdings, Inc., with a board of directors, management team and brand distinct from AIG. The establishment of AIU Holdings, Inc., will assist AIG in preparing for the potential sale of a minority stake in the business, which ultimately may include a public offering of shares, depending on market conditions. Kristian P. Moor, currently President and CEO, AIG Property Casualty Group, will be President of AIU Holdings, Inc. Nicholas C. Walsh, currently President and CEO, AIU, will be Vice Chairman of AIU Holdings, Inc. A chairperson will be named at a later date. John Q. Doyle, currently President and CEO, AIG Commercial Insurance, will assist in the formation of AIU Holdings, Inc., by assuming additional responsibility for the Domestic Personal Lines Division. "AIG is executing one of the most extensive corporate restructuring programs in history," said Mr. Liddy. "The formation of AIU Holdings, Inc., will help protect and enhance the value of these key businesses, and position them for the future as more independently run, transparent companies." When formed, AIU Holdings will be a unique leading franchise with more than 44,000 employees and 500 products and services serving 40 million commercial and individual customers in 130 countries and jurisdictions. 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: Fitch Affirms Outlook on Firm Govt. Support ----------------------------------------------------------- U.S. Government support remains firmly in place for American International Group Inc. (AIG) despite a $61.7 billion fourth quarter-2008 (4Q'08) net loss as actions taken in cooperation with the U.S. Treasury and the Federal Reserve are intended to promote AIG's return to financial stability, according to Fitch Ratings. However, the possibility of increased future political or other incentives to defer payments on hybrid instruments in order to preserve cash to support repayment of taxpayer funded capital is a concern for AIG's deferrable hybrid securities. Ratings that Fitch has affirmed with a Stable Outlook include AIG's: -- Long-term IDR of 'A'; -- Senior unsecured securities of 'A'; -- Insurer Financial Strength (IFS) ratings of subsidiary insurers that AIG intends to retain as part of its previously announced restructuring of 'AA-'. Ratings that Fitch has downgraded include AIG's: -- Junior subordinated securities to 'BB' from 'A-'; -- Trust preferred securities to 'BB' from 'A-'. Ratings that remain on Rating Watch Evolving include: -- IFS ratings of 'AA-' of subsidiary insurance companies that AIG does not intend to retain as part of its previously announced restructuring plan -- International Lease Finance, Inc.'s and American General Finance Corp's. various ratings. AIG announced these actions to be taken in cooperation with the U.S. Treasury and Federal Reserve Board. Fitch views these actions positively since they enhance the company's liquidity and reduce the company's annual preferred dividend requirements and financial leverage. Favorably this added level of support highlights the commitment by the U.S. Government to assure that AIG remains financially healthy and meets its future obligations. Negatively, additional support was required due to AIG's very weak performance, as well as AIG's inability to date to move forward in selling assets at reasonable terms consistent with its restructuring plan. -- The U.S. Treasury will commit to purchase $30 billion of new 10% perpetual non-cumulative preferred shares in AIG. The capital commitment will remain in place for five years and be made available to AIG to draw upon at the company's option as long as the U.S. Treasury's ownership interest in AIG remains greater than 50% and AIG has not entered into bankruptcy. -- The dividend on AIG's existing $40 billion of outstanding Series D cumulative preferred shares will be revised to a non-cumulative dividend from a cumulative dividend. -- AIG will enter into two separate transactions under which a portion of the company's economic interests in two of its flagship life insurance companies, American Life Insurance Company and American International Assurance will ultimately be exchanged with the Federal Reserve Bank of New York. Consideration received by AIG in this exchange will be satisfaction of a portion of the debt due to the FRBNY under the existing $60 billion senior secured credit facility between AIG and the FRBNY. Fitch's expectation is that the value of this exchange will be $20-25 billion. -- AIG and the FRBNY will enter into transactions in which certain of AIG's domestic life insurance companies will issue securitization notes to the FRBNY backed by expected future profits on designated blocks of life insurance policies. Consideration received by AIG in this exchange will be satisfaction of a portion of the debt due to the FRBNY under the existing $60 billion credit facility between AIG and the FRBNY. Fitch's expectation is that the value of this exchange will be up to $6 billion. Fitch continues to believe that the U.S. government has significant incentives to assure AIG is successful in implementing its restructuring plan to manage systemic risks primarily emanating from AIG's role as a counterparty within its Financial Products CDS business. AIG's ratings are accordingly based heavily on an assumed 'government support floor'. Absent this assumption of ongoing government support, AIG's IDR and senior debt ratings would not be investment grade. The downgrade of AIG's hybrid securities ratings reflects Fitch's broader concerns for financial institutions receiving significant government support that that there may be increased future political or other incentives to defer payments on these instruments in order to preserve cash to support repayment of taxpayer funded capital. These downgrades are consistent with actions Fitch has recently taken on deferrable hybrid securities issued by several other large financial institutions globally that have received significant financial support from various governments. Fitch notes, however, AIG has indicated it has no plans to defer. The Stable Outlook on AIG's IDR and retained insurance company subsidiaries reflects Fitch's rating expectations for the next 12- to-18 months. Beyond that time horizon, AIG's ratings are exposed to above average ratings migration risk due to uncertainty as to AIG's financial profile after it emerges from being government supported. Due to the significant volatility experienced by AIG over the past year, Fitch can not reasonably predict at this time what AIG's ratings levels may be post-government support. Fitch views these factors as generating the most uncertainty surrounding AIG's future ratings levels: -- Potential erosion in the competitive position and franchise value of AIG's commercial insurance and foreign general insurance subsidiaries resulting from AIG's well-publicized financial difficulties. Fitch would view the emergence, over the next six to twelve months, as evidence of such erosion: -- Market share and gross premium volume declines that are inconsistent with the companies' historical trends and inconsistent with peer company experience; -- Declines in client retention levels that are inconsistent with the companies' historical trends and inconsistent with peer company experience; -- On-going defections of key staff members; -- Underwriting profitability on an accident year and calendar year basis that is inconsistent with the companies' historical trends or peer company results; -- Overall profitability and capital formation rates that are inconsistent with the companies' historical trends or peer company results. -- AIG's commercial and foreign general insurance units' 4Q'08 results generally lagged those of peers as net written premiums declined materially and combined ratios were materially higher than those of peers. Fitch believes that some of this underperformance can be explained by items that are related to the organization's restructuring, such as the large adverse effect a goodwill write-off had on the units' combined ratios. However, Fitch believes that other portions, such as the larger than peers' decline in net premiums written are tied to market concerns with respect AIG's financial stability where insureds with significant insurance exposure to AIG have diversified their insurance coverage. -- AIG Financial Products Corp.'s portfolio of credit default swap and various derivative contracts could generate material cash and or capital needs under various scenarios. At Sept. 30, 2008, the notional value of the portfolio, excluding the multi-sector CDO portfolio, was $306 billion. Fitch believes that the liquidity and capital strain associated with the multi-sector CDO portfolio, which had been the most troublesome portion of the overall portfolio, have been alleviated by steps AIG and the FRBNY announced in November 2008. While AIGFP's plans to wind-down AIGFP's portfolio appear to be well-designed and implementation appears to be progressing according to plan, Fitch views the portfolio's sheer size as representing a material source of risk. -- AIGFP had $43 billion of outstanding debt at Sept.30, 2008. Fitch continues to view the majority of this debt as 'matched funded debt' in the sense that there are assets with comparable durations supporting the debt obligations. However, given the potential for continuing financial market volatility that could adversely affect AIGFP, Fitch believes that ability of the companies' matched assets to fully fund these obligations is under heightened stress. -- AIG's American General Finance Corp. subsidiary will also need to rely on support from AIG to fulfill any debt obligations to the extent there is a cash flow shortfall. Importantly, AIG is required to maintain AGF's net worth under the company's fully drawn bank facility, affording additional comfort that AIG is incented to maintain AGF over the near-term. There is a high potential for future losses from various exposures. AIG's $61.7 billion net loss for the fourth quarter of 2008 was materially outside of expectations. The results include $51 billion of after-tax non-cash charges including $21 billion of tax-related items, a $13 billion charge for mark- to-market losses on investments that are classified as other than temporarily impaired, a $5 billion mark-to-market charge on AIGFP's portfolio of CDS contracts, and a $4 billion goodwill impairment charge. Fitch has taken these rating actions: American International Group, Inc. -- Long-term IDR affirmed at 'A'; -- Senior debt affirmed at 'A'; -- 6.25% series A-1 junior subordinated debentures due March 15, 2087 downgraded to 'BB' from 'A-'; -- 5.75% series A-2 junior subordinated debentures due March 15, 2067 downgraded to 'BB' from 'A-'; -- 4.875% series A-3 junior subordinated debentures due March 15, 2067 downgraded to 'BB' from 'A-'; -- 6.45% series A-4 junior subordinated debentures due June 15, 2077 downgraded to 'BB' from 'A-'; -- 7.7% series A-5 junior subordinated debentures due Dec. 18, 2062 downgraded to 'BB' from 'A-'; -- 8.175% series A-6 junior subordinated debentures due May 15, 2058 downgraded to 'BB' from 'A-'; -- 8% series A-7 junior subordinated debentures due May 22, 2038 downgraded to 'BB' from 'A-'; -- 8.625% series A-8 junior subordinated debentures due May 22, 2068 downgraded to 'BB' from 'A-' -- 5.670% series B-1 debentures due Feb. 15, 2041 downgraded to 'BB' from 'A-'; -- 5.820% series B-2 debentures due May 1, 2041 downgraded to 'BB' from 'A-'; -- 5.89% series B-3 debentures due Aug. 1, 2041 downgraded to 'BB' from 'A-'; -- Short-term IDR affirmed at 'F1'. AIG Funding, Inc. -- Commercial paper affirmed at 'F1'. AIG International, Inc. -- Long-term IDR affirmed at 'A'; -- Senior debt affirmed at 'A'; AIG Life Holdings (US), Inc. (formerly American General Corp.) -- Long-term IDR affirmed at 'A'; -- Senior debt affirmed at 'A''. 21st Century Insurance Group -- Long-term IDR affirmed at 'A'; -- Senior debt affirmed at 'A' ASIF Program ASIF II Program ASIF III Program ASIF Global Financial Program -- Program ratings affirmed at 'AA-'. American General Capital II -- 8.5% preferred securities due July 1, 2030 downgraded to 'BB' from 'A-'; American General Institutional Capital A and B -- 7.57% capital securities due Dec. 1, 2045 downgraded to 'BB' from 'A-'; American General Institutional Capital B -- 8.125% capital securities due March 15, 2046 downgraded to 'BB' from 'A-'; HSB Capital Trust I -- 5.06% Preferred securities due July 15, 2027 downgraded to 'BB' from 'A-'; Fitch has affirmed these 'AA-' IFS ratings with a Stable Outlook: National Union Inter-company Pool Members: -- AIG Casualty Company (formerly Birmingham Fire Ins. Co. of PA); -- American Home Assurance Company; -- American International South Insurance Company; -- Commerce and Industry Insurance Company; -- Granite State Insurance Company; -- Illinois National Insurance Co. ; -- National Union Fire Insurance Company of Pittsburgh, PA; -- New Hampshire Insurance Company; -- The Insurance Company of the State of Pennsylvania. Lexington Inter-company Pool Members: -- AIG Excess Liability Insurance Company, Ltd. (formerly Starr Excess Liability Ins. Co., Ltd.); -- Landmark Insurance Company; -- Lexington Insurance Company. Foreign-Domiciled General Insurance Companies -- AIG MEMSA Insurance Company Ltd. (UAE); -- AIG (UK) Ltd. (formerly The Landmark Insurance Co. Ltd. (UK); -- American International Underwriters Overseas, Ltd. (Bermuda). Fitch has also affirmed these National Scale IFS ratings with a Stable Rating Outlook: -- La Interamericana Compania de Seguros Generales S.A.: 'AA+'(chl); -- AIG Union Y Desarrolo, S.A.: 'AA'(slv); -- AIG South Africa Limited 'AAA' (zaf) -- AIG Life South Africa Limited 'AAA' (zaf) Additionally, Fitch has affirmed these 'AA-' IFS ratings with a Negative Rating Outlook: -- United Guaranty Residential Insurance Company These 'AA-' Insurer Financial Strength ratings remain on Rating Watch Evolving: -- AGC Life Insurance Company; -- AIG Annuity Insurance Company; -- AIG Life Insurance Company; -- AIG SunAmerica Life Assurance Company; -- American General Life and Accident Insurance Company; -- American General Life Insurance Company; -- American International Assurance Company (Bermuda) Limited; -- American International Life Assurance Company of New York; -- American Life Insurance Company; -- First SunAmerica Life Insurance Company; -- SunAmerica Life Insurance Company; -- The United States Life Insurance Company in the City of New York; -- The Variable Annuity Life Insurance Company. AIG Personal Lines Inter-company Pool Members: -- 21st Century Casualty Company; -- 21st Century Insurance Company; -- 21st Century Insurance Company of the Southwest; -- AIG Advantage Insurance Company (formerly Minnesota Ins. Co.); -- AIG Auto Insurance Company of New Jersey; -- AIG Centennial Insurance Company; -- AIG Hawaii Insurance Company; -- AIG Indemnity Insurance Company; -- AIG National Insurance Company, Inc.; -- AIG Preferred Insurance Company; -- AIG Premier Insurance Company; -- American International Insurance Company; -- American International Insurance Company of California; -- American International Insurance Company of New Jersey; -- American International Pacific Insurance Company; -- American Pacific Insurance Company; -- New Hampshire Indemnity Company, Inc.. Non-Pooled Companies -- AIU Insurance Company; -- American International Specialty Lines Insurance Company; -- Hartford Steam Boiler Inspection & Insurance Company; This National Scale IFS rating remains on Rating Watch Evolving: -- La Interamericana Compania de Seguros de Vida S.A. 'AA+' (chl) These ratings remain on Rating Watch Evolving: International Lease Finance, Corp. -- Long-term IDR 'A'; -- Senior unsecured debt 'A'; -- Preferred stock 'A-'; -- Short-term IDR 'F1': -- Commercial paper 'F1'. American General Finance, Inc. -- Long-term IDR 'BBB'; -- Short-term IDR 'F1'; -- Commercial paper 'F1'; American General Finance, Corp. -- Long-term IDR 'BBB'; -- Senior debt 'BBB'; -- Short-term IDR F1'; -- Commercial paper 'F1'; AGFC Capital Trust I -- Preferred stock 'BB'; CommoLoCo Inc. -- Short term IDR at 'F1'; -- Commercial paper 'F1'; AMERICAN INT'L: Moody's Confirms Senior Unsecured Ratings --------------------------------------------------------- Moody's Investors Service has confirmed the A3 senior unsecured debt and Prime-1 short-term debt ratings of American International Group, Inc. AIG's subordinated debt rating has been downgraded to Ba2 from Baa1. The rating outlook for AIG is negative. This rating action follows AIG's announcement of net losses of $62 billion for the fourth quarter and $99 billion for the full year of 2008, along with a revised restructuring plan supported by the US Treasury and the Federal Reserve. This concludes a review for possible downgrade that was initiated on September 15, 2008. In addition, Moody's has confirmed the insurance financial strength ratings of AIG's core property & casualty operations, including AIG Commercial Insurance (AIGCI -- Aa3, negative), AIG UK Limited (AIG UK -- A1, negative) and AIG General Insurance (Taiwan) Co., Ltd. (AIGGI Taiwan -- A3, negative). Also confirmed were the IFS ratings of American International Assurance Company (Bermuda) Limited (AIAB -- Aa3, negative), Transatlantic Reinsurance Company (Transatlantic -- Aa3, developing), and United Guaranty Residential Insurance Company (UGRIC -- A3, negative). The rating agency downgraded the IFS ratings of AIG's Domestic Life Insurance & Retirement Services companies, American Life Insurance Company (ALICO) and AIG Edison Life Insurance Company to A1 (developing) from Aa3. "The rating confirmation for AIG and its core P&C operations reflects the benefits to policyholders and senior creditors from the restructuring steps announced today," said Bruce Ballentine, Moody's lead analyst for AIG, "as well as Moody 's expectation that the government will provide incremental support as needed to ensure that AIG can meet its obligations through this period of severe economic recession and market turmoil." The expectation of systemic support is based on the substantial size and global scope of AIG's insurance and financial operations, and is consistent with actions taken to date by the US government and related statements made by the US Treasury and Federal Reserve. The IFS ratings of the core P&C subsidiaries and the senior debt rating of AIG incorporate Moody's view that AIG will emerge from the government intervention as a leading global P&C insurer with a sound credit profile. "The negative rating outlook on AIG and its core P&C operations signals the potential loss of customers, distributors and employees during the period of government intervention," added Mr. Ballentine, "along with the uncertainty regarding the ownership and capital structure following the intervention." Other areas of risk and uncertainty include: (i) potential erosion of values in operations to be divested; (ii) potential further declines in investment portfolio values, particularly in life insurance subsidiaries, which may require further capital infusions; (iii) the timing of divestitures and resulting proceeds, given the limited funding available to potential buyers; and (iv) the timing and costs associated with unwinding AIG Financial Products Corp. (AIGFP). AIG's fourth-quarter loss was driven mainly by realized capital losses on investments (including other-than-temporary impairments), write-downs of intangible assets, unrealized market valuation losses on derivatives, and other charges related to the ongoing restructuring efforts. Major aspects of the revised restructuring plan include: (i) conversion of the existing $40 billion preferred stock provided by the US Treasury to a non- cumulative issue; (ii) commitment from the US Treasury for an additional $30 billion of preferred equity capital; (iii) debt- for-equity swaps whereby the Federal Reserve Bank of New York (the NY Fed) will exchange a portion of the senior secured loan under its $60 billion facility for preferred interests in certain operating units; and (iv) exchanges by the NY Fed of a portion of the senior secured loan for embedded value securitization notes from certain DLIRS companies. These actions were prompted by AIG's fourth-quarter loss and the deteriorating market conditions, and will give the company greater flexibility to pursue its restructuring and divestiture plans. Subordinated Debt Ratings Moody's lowered AIG's subordinated debt ratings to Ba2 from Baa1. The rating agency noted that the cumulative nature of the interest on such instruments reduces the incentive to defer interest payments, especially in light of the enhancements to AIG's capital position. Nevertheless, in the event of further liquidity strains and/or a need for additional government support, the risk of deferred payment on these instruments, as well as the risk of a potential restructuring, warrants additional notching on these ratings down from AIG's senior unsecured debt rating. Rating Actions On Core Operations The confirmations of the IFS ratings of AIGCI, AIG UK and AIGGI Taiwan were based on Moody's expectation of a sound business and financial profile for the global P&C operations following the government intervention. "AIG holds one of the world's largest and most diversified P&C operations, with a leading market presence in global accounts along with solid positions in several local markets," commented Mr. Ballentine. These operations have suffered some loss of business, especially in the most credit sensitive lines, as a result of parent company turmoil and the weak economy, according to the rating agency. The negative outlook reflects the potential for further business erosion during the period of government intervention, whether through loss of customers, distributors and employees or through aggressive pricing which could hurt underwriting results over time. Rating Actions on Operations To Be Divested The downgrades of the IFS ratings of the DLIRS companies and of ALICO and AIG Edison reflect business disruptions related to turmoil at AIG as well as general deterioration in economic conditions and investment portfolio values. Moody's noted that business disruptions were most pronounced during the fall of 2008, when several business units experienced spikes in customer surrenders and steep declines in new business. Since that time, the business flows have recovered to varying degrees, with recent growth in some markets and a slower pace of decline in others. AIG has contributed large amounts of capital to its life insurance subsidiaries, particularly the DLIRS companies, to offset the effects of investment losses and equity market declines over the past year. "The current ratings incorporate Moody's expectation that the government will support these operations and maintain their capital levels throughout the divestiture process," said Laura Bazer, lead analyst for the DLIRS companies and ALICO. "The developing outlook reflects the possibility of business sales over time to buyers of higher, equal or lower credit quality, and the potential for further business erosion, in the event that divestitures are delayed." The confirmation of the IFS rating of AIAB reflects its strong market presence and that of the broader American International Assurance across Asia and Australia, along with an expectation that the group will eventually attract one or more buyers who will maintain capitalization at a level consistent with the current rating. AIA has suffered some of the same disruptions as AIG's other life operations, but the rating agency still sees the business and financial profile as consistent with a rating in the Aa range. The negative outlook reflects uncertainty about the future ownership structure as well as the challenging market conditions. The confirmation of the IFS rating of Transatlantic reflects Moody's view that this unit maintains a strong presence in the broker reinsurance market and an appropriate capital structure to support the rating. Transatlantic, which is publicly traded with an approximate 59% stake held by AIG, generates about 13% of its business through AIG affiliates and the remainder through globally diversified sources. The developing outlook signals uncertainty regarding Transatlantic's future ownership structure. Unwinding Aigfp Moody's said that AIGFP has developed a comprehensive plan to unwind its business, attempting to strike a balance between reducing exposures rapidly and limiting cash outflows. AIGFP has already eliminated some of its more challenging exposures, including substantially all of its credit default swaps covering multi-sector credit default obligations. "Still, the ultimate costs and duration of the unwinding process are difficult to estimate and could be substantial," said Mr. Ballentine. For instance, remaining exposures include CDS written for regulatory capital or corporate arbitrage purposes, where further market deterioration and/or changes in valuation methods could lead to sizable losses and collateral requirements. Other Operations In confirming UGRIC's IFS rating with a negative outlook, Moody's noted that the rating is based mainly on the benefits of a net worth maintenance agreement provided by AIG and a fixed-dollar- limit reinsurance agreement provided by an AIGCI member. The long-term ratings of International Lease Finance Corporation and American General Finance Corporation remain under review for possible downgrade and will be addressed in separate rating announcements over the next week or two. AIG, based in New York City, is an international insurance and financial services organization, with operations in more than 130 countries and jurisdictions. The company is engaged through subsidiaries in General Insurance, Life Insurance & Retirement Services, Financial Services and Asset Management. AIG reported a net loss of $61.7 billion for the fourth quarter of 2008. Shareholders' equity was approximately $52.7 billion as of December 31, 2008. The last rating action took place on December 18, 2008, when Moody's commented on AIG's restructuring efforts, while continuing the review for possible downgrade. Moody's has announced these rating actions: Ratings Confirmed With A Negative Outlook * American International Group, Inc. -- long-term issuer rating at A3, senior unsecured debt at A3, short-term issuer rating at Prime-1; * AIG Funding, Inc. -- backed short-term debt at Prime-1; * AIG General Insurance (Taiwan) Co., Ltd. -- insurance financial strength at A3; * AIG Life Holdings (US), Inc. -- backed senior unsecured debt at A3; * AIG Liquidity Corp. -- backed short-term debt at Prime-1; * AIG Retirement Services, Inc. -- backed senior unsecured debt at A3; * AIG UK Limited -- insurance financial strength at A1; * American International Assurance Company (Bermuda) Limited -- insurance financial strength at Aa3; * Capital Markets subsidiaries -- AIG Financial Products Corp., AIG Matched Funding Corp., AIG-FP Capital Funding Corp., AIG-FP Matched Funding Corp., AIG-FP Matched Funding (Ireland) P.L.C., Banque AIG -- backed senior unsecured debt at A3; * Capital Markets subsidiaries -- AIG Financial Products Corp., AIG Matched Funding Corp. -- backed short-term debt at Prime-1; * Commercial Insurance subsidiaries -- AIG Casualty Company; AIU Insurance Company; American Home Assurance Company; American International Specialty Lines Insurance Company; Commerce and Industry Insurance Company; National Union Fire Insurance Company of Pittsburgh, Pennsylvania; New Hampshire Insurance Company; The Insurance Company of the State of Pennsylvania -- insurance financial strength at Aa3; * Mortgage Guaranty subsidiaries -- United Guaranty Mortgage * Indemnity Company, United Guaranty Residential Insurance Company -- backed insurance financial strength at A3. Ratings Confirmed With A Developing Outlook * AIG SunAmerica subsidiaries -- AIG SunAmerica Life Assurance Company, First SunAmerica Life Insurance Company, SunAmerica Life Insurance Company -- short-term insurance financial strength at Prime-1; * Transatlantic Holdings, Inc. -- senior unsecured debt at A3; * Transatlantic Reinsurance Company -- insurance financial strength at Aa3. Ratings Assigned To Replacement Shelf With A Developing Outlook * Transatlantic Holdings, Inc. -- senior unsecured debt shelf at (P)A3, subordinated debt shelf at (P)Baa1. Ratings Downgraded With A Developing Outlook * AIG Edison Life Insurance Company -- insurance financial strength to A1 from Aa3; * AIG SunAmerica funding agreement-backed note programs -- AIG SunAmerica Global Financing Trusts, ASIF I & II, ASIF III (Jersey) Limited, ASIF Global Financing Trusts -- senior secured debt to A1 from at Aa3; * AIG SunAmerica subsidiaries -- AIG SunAmerica Life Assurance Company, First SunAmerica Life Insurance Company, SunAmerica Life Insurance Company -- insurance financial strength to A1 from Aa3; * American Life Insurance Company -- insurance financial strength to A1 from Aa3; * Domestic Life Insurance & Retirement Services subsidiaries -- AIG Annuity Insurance Company, AIG Life Insurance Company, American General Life and Accident Insurance Company, American General Life Insurance Company, American International Life Assurance Company of New York, The United States Life Insurance Company in the City of New York, The Variable Annuity Life Insurance Company -- insurance financial strength to A1 from Aa3. Ratings Downgraded With A Negative Outlook * American International Group, Inc. -- subordinated debt at to Ba2 from Baa1; * American General Capital II -- backed trust preferred stock to Ba2 from Baa1; * American General Institutional Capital A & B -- backed trust preferred stock to Ba2 from Baa1. Moody's insurance financial strength ratings are opinions of the ability of insurance companies to punctually pay senior policyholder claims and obligations. AMERICAN INT'L: Says Former CEO Created of Financial Products ------------------------------------------------------------- Kathy Shwiff at The Wall Street Journal reports that American International Group Inc. said that former CEO Maurice Greenberg was "directly responsible" for the creation of financial products, the Company's compensation structure and its businesses, including the book of CDSs. WSJ relates that the financial products caused AIG's near collapse. As reported by the Troubled Company Reporter on March 3, 2009, Mr. Greenberg 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. 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, WSJ relates, said that he is suing AIG because the Company's managers failed to disclose in 2007 that outside auditors had uncovered "material problems" in the Company's accounting. Mr. Greenberg said that he exercised options to purchase AIG stock, unaware of the problems, WSJ states. According to WSJ, AIG said that Mr. Greenberg's lawsuit was "utterly without merit" and that "it strains common sense to accept Greenberg's allegations that he was misled or did not appreciate the risks from the multisector CDS book written by AIG." WSJ quoted Liz Bowyer, a spokesperson for Mr. Greenberg, as saying, "These attacks on Mr. Greenberg are apparently designed to deflect attention from AIG's disastrous performance since Mr. Greenberg retired four years ago, and to distract attention from its wasteful use of shareholder and taxpayer funds since that time." Citing Ms. Bowyer, WSJ relates that AIG's massive losses in 2007 and 2008 resulted from a shift in the way the financial products unit did business, reportedly writing as many CDSs on collateralized debt obligations in the nine months after Mr. Greenberg's departure as it had written in the previous seven years. Majority of those were exposed to subprime mortgages, says WSJ. Mr. Greenberg, according to the report, said, that "the risk controls that Mr. Greenberg and his team put in place reportedly were weakened or removed after his retirement, and the massive additional exposure in AIGFP was apparently not hedged." Mr. Greenberg claimed that under his leadership, AIG carefully limited its exposure in credit default swaps, Fox Business states. WSJ quoted AIG as saying, "When he [Mr. Greenberg] left AIG after saying he could not rule out invoking his Fifth Amendment rights against self-incrimination before a regulatory inquiry," the CDS book was about $40 billion "and he knew that these swaps were not hedged." 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: Scraps Sale of Philamlife After Add'l Govt. Aid --------------------------------------------------------------- Doris Dumlao at the Philippine Daily Inquirer reports that AIG won't sell Philippine American Life and General Insurance (Philamlife) after the U.S. government AGREED to provide AIG about $30 billion in fresh funds. Citing people familiar with the mater, Philippine Daily Inquirer states that AIG said in an internal advisory it will fold Philamlife under American International Assurance (AIA) Co. Ltd., the holding company for Asian units. According to the report, bidders for the unit have been notified of AIG's change of plan. Analysts, Philippine Daily Inquirer relates, said that AIG must have decided it wasn't in its best interest to rush the sale of its profitable units as the tough financial environment has depressed the valuation of the assets. Philippine Daily Inquirer, citing market sources, reports that AIG may not have been happy with the bids submitted for Philamlife. The report states that the bidders include the Bank of the Philippine Islands and Banco de Oro Unibank, which was in partnership with foreign institutions. The fresh funds from the U.S. government also removed the urgency of closing a deal, says the report. According to Philippine Daily Inquirer, analysts said that AIG might still consider selling Philamlife in case it gets a very good offer in the future. Philippine Daily Inquirer quoted an analysts at a foreign stock brokerage house as saying, "If the price is too low, it may be better to operate the companies themselves. Whether it's a good decision or not, it remains to be seen." AIG reportedly wanted to raise at least P36 billion from the sale of Philamlife and its affiliates, says Philippine Daily Inquirer. The report states that a deal to sell AIG's Philippine consumer finance units bundled into AIG Philam Savings was earlier sealed in favor of East West Bank for about $48.5 million, a premium over their combined book value of P1.6 billion. 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 MEDIA: S&P Ups Rating to 'CCC+' on Debt Swap's Success --------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on New York City-based consumer and tabloid magazine publisher American Media Operations Inc. to 'CCC+' from 'SD' (selective default). This follows the company's completion of an exchange offer for its subordinated notes due in 2009 and 2011. The rating outlook is negative. At the same time, S&P raised the issue level rating on the company's senior secured facility to 'B-' from 'CC' and removed it from CreditWatch, where it was placed with developing implications on Nov. 7, 2008. The recovery rating on this debt remains at '2', indicating S&P's expectation of substantial (70% to 90%) recovery for lenders in the event of a payment default. S&P also assigned a 'CCC-' rating to American Media's $21.2 million senior notes and $300 million subordinated notes. The recovery rating for these notes is '6', indicating S&P's expectation of negligible (0% to 10%) recovery in the event of a payment default. American Media exchanged both its 10.25% and its 8.875% subordinated notes for new notes at more than a 40% discount to par value. The transaction pushed out the maturities of subordinated indebtedness to 2013. It also lowered leverage from 9.8x to roughly 7.5x for the 12 months ended Dec. 31, 2008 (according to S&P's calculations, which is different from the methodology used for covenant purposes), and reduced interest expense. "We estimate that coverage of cash interest improved to approximately 1.4x from 1.2x because of lower debt levels and because some of the interest of the new notes can be paid in kind," noted Standard & Poor's credit analyst Tulip Lim. For the nine months ended Dec. 31, 2008, revenue and EBITDA declined 5% and roughly 14%, respectively, due to soft advertising demand and newsstand sales. The company initiated a cost-savings plan, including headcount reduction. S&P is concerned that operating performance may deteriorate further over the near term and that cost reductions may not be sufficient to offset top-line pressure from the recession. Longer term, S&P is concerned that magazines face secular pressure from advertising spending migrating online. Several of the company's publications face intense competition from traditional lower-priced competitors and from Web sites with celebrity news content. Moreover, revenue in the company's tabloid segment has continued to decline, as cover price increases have been insufficient to offset the secular decline in newsstand circulation. AMERICAN STERLING: Weiss Ratings Assigns "Very Weak" E- Rating -------------------------------------------------------------- Weiss Ratings has assigned its E- rating to Sugar Creek, Missouri- based American Sterling Bank. Weiss says that the institution currently demonstrates what it considers to be significant weaknesses and has also failed some of the basic tests Weiss uses to identify fiscal stability. "Even in a favorable economic environment," Weiss says, "it is our opinion that depositors or creditors could incur significant risks." American Sterling Bank is chartered as a savings association and is primarily regulated by the Office of Thrift Supervision. Deposits have been insured by the Federal Deposit Insurance Corporation since January 1, 1934. American Sterling Bank maintains a Web site at http://www.americansterling.com/and has five branches, three in Missouri, one in Arizona and one in California. At Dec. 31, 2008, American Sterling Bank reported $181 million in assets and $169 million in liabilities in its regulatory filings. AMR CORP: Posts $2.1-Bil. Loss for 2008, $2.9-Bil. Deficit ---------------------------------------------------------- As of December 31, 2008, AMR Corporation's balance sheet showed total assets of $25,175,000,000 and total liabilities of $28,110,000,000, resulting in total stockholders' deficit of $2,935,000,000. Gerard J. Arpey, chairman, president and chief executive officer, disclosed that the Company recorded a net loss of $2.1 billion in 2008 compared to net earnings of $504 million in 2007. These results reflect a dramatic year-over-year increase in fuel prices from an average of $2.13 per gallon in 2007 to an average of $3.03 per gallon in 2008. Fuel expense was the Company's largest single expense category and the fuel price increase resulted in $2.7 billion in incremental year-over-year fuel expense in 2008 -- based on the year-over-year increase in the average price per gallon multiplied by gallons consumed. In addition, the Company paid 11.7 cents more per gallon in 2007 than in 2006, which drove a $268 million negative impact to fuel expense in 2007. Although fuel prices have abated considerably from the record prices recorded in July 2008, fuel prices remain volatile. Fuel price volatility, additional increases in the price of fuel, and disruptions in the supply of fuel would further adversely affect the Company's financial condition and its results of operations. The significant rise in fuel price was partially offset by higher unit revenues -- passenger revenue per available seat mile. Mainline passenger unit revenues increased 7.3 percent in 2008 due to an 8.6 percent increase in passenger yield -- passenger revenue per passenger mile -- partially offset by a 0.9 point load factor decrease compared to 2007. Although passenger yield showed year- over-year improvement, passenger yield remains essentially flat with 2000 levels, despite cumulative inflation of approximately 25 percent over the same time frame. In addition, the Company's 2008 operating results were impacted by three special items: (1) In the second quarter, the Company announced capacity reductions due to unprecedented high fuel costs and the other challenges facing the industry. In connection with these capacity reductions, the Company concluded that a triggering event had occurred, requiring that fixed assets be tested for impairment. As a result of this test, the Company concluded the carrying values of its McDonnell Douglas MD-80 and the Embraer RJ-135 aircraft fleets were no longer recoverable. Consequently, the 2008 results include an impairment charge of $1.1 billion to write these and certain related long-lived assets down to their estimated fair values. Also in connection with these capacity reductions, the Company recorded $71 million in expense for employee severance costs and a $33 million expense related to the grounding of leased Airbus A300 aircraft prior to lease expiration. (2) The Company completed the sale of American Beacon Advisors receiving total proceeds of $442 million and realizing a net gain of $432 million. (3) AMR recorded a settlement charge totaling $103 million related to lump sum distributions from the Company's defined benefit pension plans to pilots who retired. Pilot retirements resulted in $917 million in total lump sum payments to pilot retirees. A full-text copy of the Company's annual report is available for free at: http://researcharchives.com/t/s?39fe Results of Put Option for 4.5% Sr. Convertible Notes Due 2024 AMR Corporation disclosed on February 18 that holders of $282,911,000 in aggregate principal amount of its 4.5% Senior Convertible Notes due 2024 validly surrendered for purchase their Notes prior to the expiration of their right, pursuant to the terms of the Notes, to require AMR to purchase their Notes for cash. The Put Option expired at 5:00 p.m., New York City time, on Feb. 13, 2009. AMR has accepted for purchase all of the Notes validly surrendered for purchase and not withdrawn. The purchase price for the Notes pursuant to the Put Option was $1,000 in cash per $1,000 principal amount of the Notes, and the aggregate purchase price for all the Notes validly surrendered for purchase and not withdrawn was $282,911,000. The Company has forwarded cash in payment of the aggregate purchase price to Wilmington Trust Company, as paying agent, for distribution to holders of the Notes in accordance with the procedures of The Depository Trust Company. Following AMR's purchase of the Notes pursuant to the Put Option, $198,000 in aggregate principal amount of the Notes remains outstanding. Questions regarding the Put Option should be directed to Wilmington Trust Company, Rodney Square North, 1100 North Market Street, 9th Floor, Wilmington, DE, 19890, Attention: Alisha Clendaniel (302) 636-6470. About AMR Corp. Headquartered in Forth Worth, Texas, AMR Corporation (NYSE: AMR) operates with its principal subsidiary, American Airlines Inc. -- http://www.aa.com/-- a worldwide scheduled passenger airline. American provides scheduled jet service to about 150 destinations throughout North America, the Caribbean, Latin America, including Brazil, Europe and Asia. American is also a scheduled airfreight carrier, providing freight and mail services to shippers throughout its system. Its wholly owned subsidiary, AMR Eagle Holding Corp., owns two regional airlines, American Eagle Airlines Inc. and Executive Airlines Inc., and does business as "American Eagle." American Beacon Advisors Inc., a wholly owned subsidiary of AMR, is responsible for the investment and oversight of assets of AMR's U.S. employee benefit plans, as well as AMR's short-term investments. * * * As reported in the Troubled Company Reporter on Aug. 5, 2008, the TCR said that Moody's Investors Service downgraded the Corporate Family and Probability of Default Ratings of AMR Corp. and its subsidiaries to Caa1 from B2, and lowered the ratings of its outstanding corporate debt instruments and certain equipment trust certificates and Enhanced Equipment Trust Certificates of American Airlines Inc. The company still carries Moody's Negative Outlook. ANDERSON NEWS: Creditors Send Firm to Bankruptcy ------------------------------------------------ Anderson News LLC's creditors have filed petitions for the Company's bankruptcy in the U.S. Bankruptcy Court for the District of Delaware, Reuters reports. Court documents say that these publishing companies claimed that Anderson News owes them a combined $37.5 million: -- Hachette Book Group, -- HarperCollins Publishers, -- Random House Inc., and -- Simon & Schuster Inc. Anderson News has 20 days to object to the bankruptcy filing, Reuters states. Anderson News LLC is a sales and marketing company for books and magazines. ANITXTER INC: Fitch Assigns 'BB+' Rating on $200 Mil. Offering -------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' rating to the proposed $200 million senior unsecured note offering by Anixter Inc. Uses of proceeds from the offering are for short-term debt reduction and general corporate purposes. Fitch continues to rate Anixter International Inc. and its wholly owned operating subsidiary, Anixter Inc.: Anixter -- Issuer Default Rating 'BB+'; -- Senior unsecured debt 'BB-'. Anixter Inc. -- IDR 'BB+'; -- Senior unsecured notes 'BB+'; -- Senior unsecured bank credit facility 'BB+'. The Rating Outlook is Negative which reflects Fitch's outlook on the overall IT Distributor industry based on expectations that a reduction in global IT spending will weaken operating profiles and could potentially lead to weakened credit profiles, particularly if combined with the realization of event or execution risk. The Negative Outlook for Anixter also reflects these considerations: -- Anixter has significant and unhedged exposure to copper prices as well as the value of the Canadian Dollar and Euro relative to the U.S. dollar, all of which boosted profitability and revenue growth (upwards of several hundred basis points) in recent years as values increased. This trend reversed dramatically in the last quarter of 2008 and should have an adverse effect on revenue growth and profitability for the next several quarters. -- Liquidity, which was always lower than industry peers, remains adequate but has been reduced by short-term borrowings for acquisitions in recent months. The proposed note offering and use of proceeds to reduce debt outstanding under Anixter's accounts receivable securitization facility should improve overall liquidity. Anixter ended calendar 2008 with approximately $315 million in total liquidity (cash plus available revolving credit facilities, excluding ARS availability). Fitch believes significant uncertainty remains as to the ability of companies in general to renew short-term credit facilities such as Anixter's ARS which expires in September 2009. Fitch does expect further improvement in liquidity to occur through reduced working capital requirements as revenue declines in 2009. -- Anixter has $370 million (face value) of convertible notes outstanding which are putable to the company in July 2009 at roughly 46% of par which will likely offset some of the aforementioned expected improvements in liquidity. Potential event risk heightened by depressed asset prices as Anixter has a long history of acquisitions and shareholder friendly actions. A downgrade could occur if the economic decline is more significant and prolonged than currently anticipated leading to expectations for reduced profitability over an extended period. Additionally, negative rating actions will likely occur if Anixter aggressively pursues acquisitions or shareholder friendly actions financed by existing cash, debt issuance or free cash flow generated from reduced working capital requirements. Fitch expects that Anixter will forego acquisitions and shareholder friendly actions for the foreseeable future as it focuses on improving liquidity and maintaining margins in uncertain economic times. Anixter's ratings are supported by: -- Strong diversification of products, suppliers, customers and geographic penetration, which adds stability to the financial profile by reducing operating volatility; -- Market leadership in niche distribution markets, which has resulted in above industry average margins. As of year end 2008 and proforma for the notes offering, Fitch estimates Anixter's liquidity to be approximately $320 million consisting of: i) $70 million of cash and cash equivalents; ii) $230 million available under a $450 million five-year revolving credit facility maturing April 2012; and iii) various other committed and uncommitted credit facilities totaling approximately $85 million with $20 million available. Anixter's $255 million on-balance-sheet ARS program, which expires September 2009, would have no borrowings against it and would further add to liquidity but has moderately limited availability due to borrowing base restrictions. Total debt at year end 2008 and proforma for the note offering would be $1.2 billion and consist primarily of these: i) $218 million outstanding under the $450 million revolving credit facility; ii) $200 million in 5.95% senior unsecured notes due February 2015; iii) $168 million ($370 million face value) in 3.25% zero-coupon unsecured notes due July 2033 but which are putable in July 2009; iv) $300 million in 1% convertible unsecured notes due February 2013; and v) $200 million of the proposed senior unsecured notes due 2014. Fitch estimates Anixter's leverage (total debt / total operating EBITDA) at 2.9 times (x) as of December 2008 (3.7x when adjusted for operating leases), which Fitch expects to increase moderately due to declining EBITDA in 2009 (in excess of 4x on an adjusted basis). The 3.25% zero coupon notes and the 1% convertible notes are issued by Anixter International and are structurally subordinated to the remaining debt which is issued by Anixter Inc. Anixter Inc. is the operating company under the parent company of Anixter International. ARLINGTON RIDGE: May Obtain $30,000 to Fund Completion of Home -------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida granted Arlington Ridge LLC, and its debtor-affiliates, permission to obtain postpetition financing of $30,000 from Wachovia Bank to fund the cost of finishing the "Hampton" modeL single family home located on Lot 164. The amount will be sourced from the funds that remain unused of the initial $900,000 Wachovia DIP Loan that was granted on Dec. 30, 2008. As reported in the Troubled Company Reporter on Jan. 27, 2009, the Debtors filed with the Court on Jan. 14, 2009, an amended Joint Chapter 11 Plan of Reorganization and a disclosure statement explaining the Amended Plan. The Plan contemplates the wind-down of the Debtors' business operations and for the transition of those business operations and the transfer of most of the Debtors' real estate and any related permits and entitlements, to Wachovia, the principal secured creditors of the Debtors. The Plan, as amended, provides for the payment in full of the general unsecured claims of all non-insider creditors. It leaves unimpaired the claims of the Arlington Ridge Community Development District (CDD), a public entity created pursuant to the Florida Statutes, and the claims of the Lake County Tax Collector for ad valorem real property taxes. To permit the Plan to be confirmed, the Prepetition Claims of Insiders and Affiliates will be cancelled, and the Insider DIP Lender will waive its right to any distribution under the Plan. About Arlington Ridge Saint Petersburg, Florida-based Arlington Ridge LLC and its affiliates operate a retirement community. The companies filed for Chapter 11 protection on Oct. 8, 2008 (Bankr. M. D. Fla. Case No. 08-15678). Amy Denton Harris, Esq., Harley E. Riedel, Esq., and Susan H. Sharp, Esq., at Stichter, Riedel, Blain & Prosser, represent the Debtors as counsel. In its schedules, Arlington Ridge LLC listed total assets of $84,045 and total debts of $17,539,779. ARMADA SINGAPORE: Offers 32.5% Recovery for Some Creditors ---------------------------------------------------------- Armada (Singapore) Pte offered to pay some creditors 32.5 cents on the dollar over five years as it seeks to reorganize, Bloomberg reported. Chan Sue Ling of Bloomberg said the Company will also repay debt owed to some creditors completely as they become due, Armada said in a March 2 Singapore court filing. The debt reorganization plan, which still needs approval, didn't detail individual payments to the 66 creditors listed in the court document. The Troubled Company Reporter, citing Bloomberg News, reported on January 19 that Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York granted interim approval to Armada's petition for protection from creditors under Chapter 15. Approval of the Chapter 15 petition would allow Armada to reorganize in Singapore and protects it from U.S. lawsuits. Armada announced January 6 that it has been granted leave to convene a creditors' meeting to vote on a proposed Scheme of Arrangement pursuant to Section 210 of the Companies Act of the Republic of Singapore that will protect its assets and maximize funds available to creditors as it restructures its business operations. About Armada Singapore Armada (Singapore) Pte. Ltd. -- http://www.armadagroup.com/-- is a privately owned holding company incorporated and based in Singapore. It is one of the world's leading dry bulk shipping companies. It provides ocean transportation services to a variety of major raw material and commodity shippers and consumers located throughout the globe. Armada filed for bankruptcy protection under Chapter 15 of the U.S. Bankruptcy Code on January 7, 2009, to seek recognition of its bankruptcy proceedings in Singapore and imposition of the automatic stay to protect its assets while it restructures (Bankr. S.D. N.Y. Case No. 09-10105). The petitioner's counsel is Barbra R. Parlin, Esq., at Holland & Knight, LLP, in New York. In its bankruptcy petition, Armada estimated assets and debts of US$100 million to US$500 million. ASHTON WOODS: Moody's Withdraws 'Ca' Corporate Family Rating ------------------------------------------------------------ Moody's Investors Service withdrew all the ratings of Ashton Woods USA, LLC, including the Ca corporate family rating, D probability of default rating, C rating on the $125 million senior subordinated notes, Speculative Grade Liquidity Rating of SGL-4, and negative outlook. Moody's has withdrawn these ratings as the company as it believes it will be unable to attain sufficient information to assess effectively the creditworthiness of the issuer going forwards. Please refer to Moody's Withdrawal Policy on www.moodys.com. The last rating action was on November 4, 2008 when Ashton Woods' probability of default rating was downgraded to D and when Moody's affirmed the company's corporate family rating at Ca and $125 million subordinated notes rating at C. The rating outlook remained negative. The rating action reflected the company's previous failure to cure or waive the missed interest payment on its $125 million senior subordinated notes within the 30 day cure period. On February 23, 2009 Ashton Woods announced as part of an overall capital restructuring plan the successful completion of an exchange offer whereby $123.3 million of the senior subordinated notes were exchanged for $64.1 million of new 11% senior subordinated notes and a 19.728% equity interest in Ashton Woods. All prior defaults on the old senior subordinated notes where either waved or cured. Begun in 1989, headquartered in Roswell, Georgia, and privately- owned by six Canadian families, Ashton Woods builds single-family detached homes, townhomes, and stacked-flat condominiums, with operations in seven U.S. cities. Homebuilding revenues and net income for the TTM period ended August 31, 2008 were approximately $389 million and ($118) million, respectively. AVALON RE: S&P Says Maturity Extension Won't Affect 'CCC' Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services commented on Avalon Re Ltd. The maturity date of Avalon Re's Class B and Class C notes has been extended to June 9, 2009, from March 9, 2009. The original maturity date was June 6, 2008. Standard & Poor's ratings on the Class B and Class C notes remain unchanged at 'CCC' and 'CC', respectively. Under the terms of the reinsurance agreement between Avalon Re and Oil Casualty Insurance Ltd. (OCIL; BBB+/Stable/--), the ceding insurer, the notes can be extended for up to eight consecutive three-calendar-month periods. OCIL had submitted an extension verification report in May 2008 confirming the estimated net losses to Avalon Re were equal to or greater than 75% of the applicable trigger amount. This means that an Extension Event II (as defined in the transaction indenture) had occurred. OCIL has submitted another event extension notice, so the maturity date on the notes has been extended for an additional three calendar months, and investors in each class continue to receive interest at a rate equal to three-month US$ LIBOR plus 10 basis points. The expected losses to Avalon Re have not changed. However, certain claims continue to be monitored to determine whether they will become covered claims. To date, Avalon Re has experienced $347 million of covered losses, which are the sum of paid losses and reserves. Paid losses total $147 million due to Hurricane Katrina, and reserves total $200 million due to the December 2005 explosion at the Buncefield oil depot and the July 2007 steam pipe explosion in New York City. Avalon Re could incur an additional $153 million of additional paid losses prior to the Class C noteholders having to bear any losses. The covered loss report OCIL submitted indicated that losses because of the explosion at Buncefield will total $150 million and losses because of the steam pipe explosion on Lexington Avenue in New York City could be as high as $50 million, though there could be an additional $15 million of losses from this event. This higher amount is what Milliman Ltd., the transaction claim reviewer and loss verification agent, is reporting. The maturity date of the notes could be extended an additional four times, in three-month increments, to June 8, 2010. Standard & Poor's will continue to monitor developments related to OCIL and will take ratings actions as necessary. BANK OF AMERICA: Merrill Purchases $1.59 Billion in 2032 Notes -------------------------------------------------------------- Merrill Lynch & Co., Inc., (ML&Co.) a corporation existing under the laws of Delaware, released the results of its offer to purchase for cash any and all of its outstanding Exchange Liquid Yield Option Notes due 2032 (Zero Coupon - Floating Rate - Senior). ML&Co.'s offer to purchase the Securities was subject to the terms and conditions described in the Notice of Change in Control and Offer to Purchase, dated January 22, 2009, and related Change in Control Purchase Notice (which together, as amended and supplemented, constitute the "Change in Control Offer"). The Bank of New York Mellon, as trustee under the indenture and as Paying Agent for the Change in Control Offer, has advised ML&Co. that an aggregate of $1,594,386,000 Original Principal Amount (as defined in the Indenture) of the Securities were validly surrendered and not properly withdrawn in the Change in Control Offer prior to the expiration of the Change in Control Offer at 5:00 p.m., New York City time, on February 23, 2009. In accordance with the terms of the Change in Control Offer, ML&Co. accepted for payment $1,594,386,000 Original Principal Amount of the Securities at a purchase price equal to $1,095.98 (the "Change in Control Purchase Price") per $1,000 Original Principal Amount of Securities purchased. The Change in Control Purchase Price represents the Contingent Principal Amount (as defined in the Indenture) on February 23, 2009, which is the Original Principal Amount of such Securities increased daily by the applicable Yield (as defined in the Indenture). ML&Co. forwarded to the Paying Agent the appropriate amount of cash required to pay the Change in Control Purchase Price for accepted Securities. Pursuant to the terms of the Change in Control Offer, the Securities not tendered in the Change in Control Offer will remain outstanding, subject to the existing terms and conditions governing such Securities, including the Indenture dated as of December 14, 2004, between ML&Co. and the Trustee, as amended and supplemented by the First Supplemental Indenture, dated as of March 6, 2008, between ML&Co. and the Trustee, and the Second Supplemental Indenture, dated as of January 1, 2009, among ML&Co., the Trustee and Bank of America Corporation ("Bank of America") (as so amended and supplemented, the "Indenture"). 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. Merrill Lynch & Co. Inc. -- http://www.ml.com/-- is a wealth management, capital markets and advisory companies with offices in 40 countries and territories. As an investment bank, it is a leading global trader and underwriter of securities and derivatives across a broad range of asset classes and serves as a strategic advisor to corporations, governments, institutions and individuals worldwide. Merrill Lynch owns approximately half of BlackRock, one of the world's largest publicly traded investment management companies with more than $1 trillion in assets under management. Merrill Lynch's operations are organized into two business segments: Global Markets and Investment Banking (GMI) and Global Wealth Management (GWM). BEARINGPOINT INC: Disclosure Statement Hearing Slated for March 30 ------------------------------------------------------------------ BearingPoint, Inc. and its debtor affiliates have scheduled a March 30 hearing to consider approval of the disclosure statement for their proposed pre-arranged plan. If the Bankruptcy Court approves the adequacy of the Disclosure Statement, the Debtors will begin the solicitation and confirmation process for the Plan. The Debtors are proposing this schedule: Date ---- Objection Deadline to Disclosure Statement March 23, 2009 at 4:00 p.m. Disclosure Statement Hearing March 30, 2009 at 11:00 a.m. Record Date March 30, 2009 Solicitation Date April 3, 2009 Bar Date for Non-Governmental Units April 17, 2009 at 4:00 p.m. Voting Deadline April 30, 2009 at 5:00 p.m. Objection Deadline to Confirmation of the Proposed Pre-Arranged Plan April 30, 2009 at 5:00 p.m. Confirmation Hearing May 7, 2009 at 9:45 a.m. To determine which creditors and interest holders may vote, the Debtors will promptly file (a) their schedules of assets and liabilities as well as (b) a motion to set (1) April 17, 2009 at 4:00 p.m. (Eastern Time) as the proposed deadline for any parties in-interest other than governmental units to file proofs of claim. Parties that are listed in the Schedules as contingent, unliquidated or disputed must file a proof of claim. Holders of general unsecured claims, senior noteholder claims and credit facility claims are entitled to vote on the Plan. BearingPoint has revised the Plan and Disclosure Statement it filed on its petition date. The latest versions of those documents are available at: http://bankrupt.com/misc/BPoint_DS_01.pdf http://bankrupt.com/misc/BPoint_Plan_01.pdf About BearingPoint Inc. BearingPoint, Inc. -- http://www.BearingPoint.com-- is currently one of the world's largest providers of management and technology consulting services to Global 2000 companies and government organizations in more than 60 countries worldwide. Based in McLean, Va., BearingPoint -- a former consulting arm of KPMG LLP -- has approximately 15,000 employees focusing on the Public Services, Commercial Services and Financial Services industries. BearingPoint professionals have built a reputation for knowing what it takes to help clients achieve their goals, and working closely with them to get the job done. The Company's service offerings are designed to help clients generate revenue, increase cost-effectiveness, manage regulatory compliance, integrate information and transition to "next-generation" technology. BearingPoint, Inc. fka KPMG Consulting, Inc., together with its units, filed for Chapter 11 on February 18, 2009 (Bankr. S.D. N.Y., Case No. 09-10691). Alfredo R. Perez, Esq. at Weil Gotshal & Manges LLP, has been tapped as counsel. Greenhill & Co., LLC, and AP Services LLC, have also been tapped as advisors. Davis Polk & Wardell is special corporate counsel. BearingPoint disclosed total assets of $1,762,689,000, and debts of $2,231,839,000 as of Sept. 30, 2008. Contemporaneous with their bankruptcy petitions, the Debtors filed a pre-packaged Joint Plan of Reorganization under Chapter to implement the terms of their agreement with the secured lenders. Under the Plan, the Debtors propose to exchange general unsecured claims for equity in the reorganized company. Existing shareholders are out of the money. The Plan and the explanatory disclosure statement remain subject to approval by the Bankruptcy Court. BELDEN INC: S&P Downgrades Corporate Credit Rating to 'BB' ---------------------------------------------------------- Standard & Poor's Rating Services said it lowered its ratings on St. Louis-based Belden Inc., including its corporate credit rating, which S&P lowered to 'BB' from 'BB+'. Simultaneously, S&P placed the ratings on CreditWatch with negative implications. "These actions reflect the company's challenging operating environment," said Standard & Poor's credit analyst Susan Madison, "which has resulted in significant declines in fourth-quarter revenue and EBITDA." The resulting deterioration in credit metrics, and expectations for reduced profitability over the next year due to the weak economy, could make it difficult for the company to meet the minimum 3.5x debt to EBITDA covenant contained in its $350 million senior secured credit facility. At year-end 2008, Belden has $240 million outstanding under this agreement and debt to EBITDA, as calculated in the loan agreement, was 2.95x. "Although Belden has implemented an aggressive restructuring plan that S&P expects could yield $30 million in cost savings in 2009," added Ms. Madison, "meeting the covenant could be a challenge if operating performance remains weak." BLOCKBUSTER INC: to Announce 2008 Q4 & Annual Results on March 19 ----------------------------------------------------------------- Blockbuster Inc. will report its fourth quarter and fiscal year 2008 financial results for the period ending Jan. 4, 2009 on Thursday, March 19, 2009, after the close of the U.S. financial markets. The Company will also host a conference call for analysts and investors to provide business updates and discuss its financial results at 4:30 p.m. Eastern Time (ET). Additionally, the Company will discuss the status of its efforts to refinance the portions of its senior credit facility which are scheduled to mature on Aug. 20, 2009. In this regard, the Company has hired the law firm of Kirkland & Ellis LLP to advise it with respect to its ongoing financing and capital raising initiatives. A replay will be available beginning two hours after the conclusion of the call and will be available until midnight ET on Thursday, March 19, 2009. The replay number is 1-800-642-1687. International callers interested in listening to the replay should dial 706-645-9291. Additionally, a live web cast (voice only) of the conference call will be accessible from the Investor section of the Company's web site at http://investor.blockbuster.com.Following the live web cast, an archived version will be available on Blockbuster's web site. About Blockbuster Inc. Based in Dallas, Texas, Blockbuster Inc. is a leading global provider of in-home movie and game entertainment, with more than 7,500 stores throughout the Americas, Europe, Asia and Australia. The Company may be accessed worldwide at http://www.blockbuster.com/ BLOCKBUSTER INC: Not Seeking Bankruptcy; Clarifies Kirkland's Role ------------------------------------------------------------------ Blockbuster Inc. said Tuesday it has no intention of filing for bankruptcy, David B. Wilkerson of MarketWatch reports. Blockbuster made the clarification after seeing its shares plunged 77% after a published report said the company was looking into such a possibility, Mr. Wilkerson relates. The Company yesterday said it has hired the law firm of Kirkland & Ellis LLP to advise it with respect to its ongoing financing and capital raising initiatives. The Company is slated to announce its fourth quarter and fiscal year 2008 financial results for the period ending Jan. 4, 2009 on March 19, 2009, after the close of the U.S. financial markets. The Company will also host a conference call for analysts and investors to provide business updates and discuss its financial results at 4:30 p.m. Eastern Time (ET). The Company said it will discuss the status of its efforts to refinance the portions of its senior credit facility which are scheduled to mature on Aug. 20, 2009, at the conference. Mr. Wilkerson relates Blockbuster spokeswoman Karen Raskopf said the Company has the cash to fund debt through 2009 if necessary, but is trying to secure refinancing to make a debt payment due in August. Mr. Wilkerson says Blockbuster shares were down 74 cents at 22 cents before trading on the shares was halted. The stock already has fallen 93% in the past year, he reports. Blockbuster made a pitch to acquire Circuit City early last year, but withdrew the offer after completing due diligence. Circuit City has since filed for bankruptcy. About Blockbuster Inc. Based in Dallas, Texas, Blockbuster Inc. is a leading global provider of in-home movie and game entertainment, with more than 7,500 stores throughout the Americas, Europe, Asia and Australia. The Company may be accessed worldwide at http://www.blockbuster.com/ CANWEST GLOBAL: Agrees to Sell Holdings in Score Media Inc. ----------------------------------------------------------- On February 24, 2009, Canwest Global Communications Corp. disclosed that its subsidiary CW Media Inc. has agreed to participate in a Score Media Inc. issuer bid and signed a lock-up agreement with SMI to tender up to 16,560,902 Class A Shares at a purchase price of $0.40 per share. In addition, Canwest and CW Media have engaged Genuity Capital Markets as an agent to offer for sale, on a best efforts basis, up to 9,000,000 Class A Shares at $0.40 per share by way of private placement to accredited investors. The private placement could result in gross proceeds of approximately $3.6 million. There is no assurance that Canwest or CW Media will be able to sell the intended amount of Class A Shares. CW Media currently owns 21,460,902 Class A Shares, and Canwest owns 4,100,000 Class A Shares for a total of 25,560,902 Class A Shares in SMI. CW Media owns and operates a leading portfolio of 13 specialty television channels, including Showcase, Slice, History Television, HGTV Canada and Food Network Canada. The lock-up agreement is subject to a number of conditions and may be terminated by either CW Media or SMI in certain agreed circumstances. Accordingly there is no assurance that the shares tendered by CW Media under its lock-up agreement with SMI will be taken up by SMI. Following the successful completion of the Issuer Bid, CW Media has agreed to convert its outstanding 4,434 Special Voting Shares of SMI into Class A Shares and intends to subsequently sell them in the open market. Should the SMI Issuer Bid and the private placement be successful the gross proceeds are expected to be approximately $10 million with approximately 84% going to CW Media and 16% going to Canwest. About Canwest Global Communications Based in Winnipeg, Manitoba, in Canada, Canwest Global Communications Corp. (TSX: CGS and CGS.A,) -- http://www.canwest.com-- an international media company, is Canada's largest media company. In addition to owning the Global Television Network, Canwest is Canada's largest publisher of English language daily newspapers and owns, operates or holds substantial interests in conventional television, out-of-home advertising, specialty cable channels, web sites and radio stations and networks in Canada, New Zealand, Australia, Turkey, Indonesia, Singapore, the United Kingdom and the United States. Canwest Media Inc. is wholly-owned by Canwest Global Communications Corp. Substantially all of the publicly traded parent company's operations are held though Canwest. * * * As reported by the Troubled Company Reporter on February 25, 2009, Moody's Investors Service downgraded Canwest Media Inc.'s corporate family rating and probability of default rating to Caa3 from B3. The corporate family's consolidated speculative grade liquidity rating remains SGL-4 (indicating poor liquidity) and the company's ratings outlook remains negative. At the same time, instrument ratings for Canwest and its two rated affiliates, CW Media Holdings Inc. and Canwest Limited Partnership were also downgraded. The TCR said February 12 that Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Winnipeg, Man.- based Canwest Media Inc. to 'CCC' from 'CCC+'. The outlook is negative. At the same time, S&P lowered the senior secured debt rating on wholly owned subsidiary Canwest Limited Partnership to 'CCC+' from 'B-'. The recovery rating on Canwest LP's secured debt is unchanged at '2', indicating an expectation of substantial (70% - 90%) recovery in the event of a payment default. CANWEST GLOBAL: Ten Holdings Won't Proceed With Proposed Offering ----------------------------------------------------------------- On February 18, 2009, Canwest Global Communications Corp. disclosed that that Ten Network Holdings Limited has elected not to proceed with its proposed equity offering. In a market update issued February 16, Ten Holdings -- which owns and operates the TEN Television Network in Australia and EYE Corp.'s multi-national out-of-home advertising business -- announced a potential equity offering of up to approximately 13% of its current outstanding shares. Canwest owns 56.6% of Ten Holdings. While there was investor interest in Ten Holdings' proposal, the difficult financial market conditions in Australia led to terms that Ten Holdings did not find acceptable. "We made it clear from the outset that this equity offering was being undertaken proactively and that we would not proceed with it unless we could achieve an acceptable outcome," Ten Holdings' executive chairman Nick Falloon said. Mr. Falloon added, "Ten Holdings remains well capitalized and is comfortably within the requirements of its lending facilities." The trading halt in Ten Holdings shares was lifted February 18. About Canwest Global Communications Based in Winnipeg, Manitoba, in Canada, Canwest Global Communications Corp. (TSX: CGS and CGS.A,) -- http://www.canwest.com-- an international media company, is Canada's largest media company. In addition to owning the Global Television Network, Canwest is Canada's largest publisher of English language daily newspapers and owns, operates or holds substantial interests in conventional television, out-of-home advertising, specialty cable channels, web sites and radio stations and networks in Canada, New Zealand, Australia, Turkey, Indonesia, Singapore, the United Kingdom and the United States. Canwest Media Inc. is wholly-owned by Canwest Global Communications Corp. Substantially all of the publicly traded parent company's operations are held though Canwest. * * * As reported by the Troubled Company Reporter on February 25, 2009, Moody's Investors Service downgraded Canwest Media Inc.'s corporate family rating and probability of default rating to Caa3 from B3. The corporate family's consolidated speculative grade liquidity rating remains SGL-4 (indicating poor liquidity) and the company's ratings outlook remains negative. At the same time, instrument ratings for Canwest and its two rated affiliates, CW Media Holdings Inc. and Canwest Limited Partnership were also downgraded. The TCR said February 12 that Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Winnipeg, Man.- based Canwest Media Inc. to 'CCC' from 'CCC+'. The outlook is negative. At the same time, S&P lowered the senior secured debt rating on wholly owned subsidiary Canwest Limited Partnership to 'CCC+' from 'B-'. The recovery rating on Canwest LP's secured debt is unchanged at '2', indicating an expectation of substantial (70% - 90%) recovery in the event of a payment default. CAPMARK FINANCIAL: S&P Downgrades Corporate Credit Rating to 'B+' ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its ratings on Capmark Financial Group Inc., including lowering the corporate credit rating to 'B+' from 'BBB-'. At the same time, S&P placed the ratings on CreditWatch with negative implications. "The four-notch downgrade is driven by funding pressures that have been magnified by recent write-downs, asset quality deterioration, and very poor market conditions," said Standard & Poor's credit analyst Jeffrey Zaun. Poor reported earnings have, so far, been driven by noncash items. S&P believes the write-downs and provisioning that drove the $800 million loss for the quarter are precursors to losses and that the firm's capital is not strong enough to absorb significant losses. On Feb. 25, the firm announced that its preliminary pretax loss for fourth-quarter 2008 was $800 million. Management also reported that earnings could be lower still because the firm may record impairments related to its valuation of deferred tax assets, intangibles, and certain investment securities. Management also announced that it will withdraw its application to become a bank holding company. The CreditWatch with negative implications reflects uncertainty with respect to whether the firm will have to record additional losses for the fourth quarter and its ability to modify terms or obtain covenant waivers on its senior credit facility and term loan. CAPMARK INVESTMENTS: Fitch Downgrades Rating on Real Estate CDO --------------------------------------------------------------- Fitch Ratings has downgraded Capmark Investments LP's commercial real estate collateralized debt obligation asset manager rating to 'CAM2' from 'CAM1-'. Fitch has also placed the rating on Rating Watch Negative. The downgrade reflects the adverse impact of current market conditions on the financial condition of Capmark Investments' parent company, Capmark Financial Group. On Feb. 26, 2009 Fitch downgraded the long-term Issuer Default Rating of Capmark to 'B-' from 'BBB-' reflecting the significant valuation adjustments the company is expected to incur due to mark-to-market, provisions and impairments, and the impact these will have on specific leverage covenants tied to Capmark's credit facilities. Fitch will continue to monitor Capmark's financial condition as it relates to the operational capacity of the company's CDO management function. Resolution of the Rating Watch Negative status of Capmark Investments' 'CAM2' rating will be dependent upon resolution of the Rating Watch Negative Status of the IDR of Capmark. Capmark Investments' 'CAM2' rating is based on these category scores: -- Company and Management Experience '3+'; -- Staffing '1-'; -- Procedures and Controls '1-'; -- Portfolio Management '2+'; -- CDO Administration '1-'; -- Technology '1-'. Capmark Investments is a wholly owned indirect subsidiary of Capmark, a real estate finance company specializing in commercial mortgage loan servicing, lending and mortgage banking and investment management. Within Capmark Investments, the 26-member leveraged finance team specializes in real estate related debt investments and is responsible for managing 13 outstanding CDOs and resecuritizations. Fitch rates CDO asset managers, by asset type, on a scale of 1 to 5, with 1 being the highest rating. These ratings are based on a standardized scorecard methodology that includes factors in several rating categories. On Oct. 16, 2008, Fitch published updated CAM rating criteria, which was applied in the context of Fitch's analysis of Capmark Investments. CC MEDIA: Posts $4.99 Billion Fourth Quarter 2008 Loss ------------------------------------------------------ CC Media Holdings, Inc., reported results for its fourth quarter and year ended December 31, 2008. The Company's income (loss) before discontinued operations decreased to a loss of $4.99 billion, primarily attributable to a pre-tax impairment charge of approximately $5.3 billion, as compared to income of $228.3 million for the same period in 2007. The Company's fourth quarter 2008 net loss also included approximately $124.5 million of pre-tax aggregate gains on bond tenders. CC Media Holdings reported revenues of $1.6 billion in the fourth quarter of 2008, a decrease of 14% from the $1.9 billion reported for the fourth quarter of 2007. Included in the Company's revenue is a $55.2 million decrease due to movements in foreign exchange; strictly excluding the effects of these movements in foreign exchange, revenues would have declined 11%. The Company's operating expenses increased 3% to $1.2 billion during the fourth quarter of 2008 compared to 2007. Included in CC Media Holdings' fourth quarter 2008 expenses is a $47.6 million decrease due to movements in foreign exchange. Strictly excluding the effects of these movements in foreign exchange in the 2008 expenses, expense growth would have been 7%. Also included in CC Media Holdings' fourth quarter 2008 operating expenses are approximately $4.4 million of non-cash compensation expense. This compares to non-cash compensation expense of $8.5 million in the fourth quarter of 2007. CC Media Holdings' OIBDAN (defined as Operating Income before Depreciation & amortization, Non-cash compensation expense, Merger costs, Other operating income -- net and impairment charges) was $309 million in the fourth quarter of 2008, a 50% decrease from 2007. Restructuring Program On January 20, 2009, the Company announced that it had commenced a restructuring program targeting a reduction of fixed costs by approximately $350 million on an annualized basis. As part of the program, the Company eliminated approximately 1,850 full-time positions representing approximately 9% of total workforce. The restructuring program will also include other actions, including elimination of overlapping functions and other cost savings initiatives. The program is expected to result in restructuring and other non-recurring charges of approximately $200 million, although additional costs may be incurred as the program evolves. The cost savings initiatives are expected to be fully implemented by the end of the first quarter of 2010. No assurance can be given that the restructuring program will be successful or will achieve the anticipated cost savings in the timeframe expected or at all. In addition, the Company may modify or terminate the restructuring program in response to economic conditions or otherwise. As of December 31, 2008 the Company had recognized approximately $95.9 million of expenses related to the restructuring program. These expenses primarily related to severance of approximately $83.3 million and $12.6 million related to professional fees. Full Year 2008 Results For the full year, the Company reported revenues of $6.7 billion, a decrease of 3% when compared to revenues of $6.9 billion for the same period in 2007. Included in the Company's revenue is a $62.6 million increase due to movements in foreign exchange. The Company's expenses increased 5% to $4.7 billion during the year compared to 2007. Included in the Company's expenses is approximately $49.7 million of non-cash compensation expense and a $52.1 million increase due to movements in foreign exchange. Income before discontinued operations was a loss of $4.6 billion as compared to income before discontinued operations of $793 million in 2007. The Company's full year 2008 net loss included pre-tax impairment charges of $5.3 billion, approximately $94.7 million of pre-tax aggregate gains related to bond tenders, an $82.3 million pre-tax loss on marketable securities and a $75.8 million aggregate gain on the disposition of equity investments. CC Media Holdings' OIBDAN was $1.8 billion in 2008, a 21% decrease from 2007. Mark P. Mays, Chief Executive Officer of CC Media Holdings, commented, "Although CC Media Holdings revenues were down in 2008, our radio and outdoor businesses performed well compared to their sectors. These are challenging times which have taken their toll on many of our advertisers. However, macroeconomic conditions will continue to present a stark reality where disciplined focus on working with our advertising partners, cost containment and the flexibility to adjust to change are essential. Most importantly, we are so appreciative of the tremendous efforts expended by our employees to meet the demands of these difficult times." The Company's fourth quarter 2008 revenue decreased from foreign exchange movements of approximately $55.2 million as compared to the same period of 2007. The Company's full year 2008 revenue increased from foreign exchange movements of approximately $62.6 million as compared to the same period of 2007. The Company's fourth quarter 2008 direct operating and SG&A expenses decreased from foreign exchange movements of approximately $47.6 million as compared to the same period of 2007. The Company's full year 2008 direct operating and SG&A expenses increased from foreign exchange movements of approximately $52.1 million as compared to the same period of 2007. Radio Broadcasting For 2008, the Company's radio broadcasting revenue declined approximately $264.7 million compared to 2007, with approximately 43% of the decline occurring during the fourth quarter. Local revenues were down $205.6 million in 2008 compared to 2007. National revenues declined as well. Both local and national revenues were down as a result of overall weakness in advertising. The Company's radio revenue experienced declines across advertising categories including automotive, retail and entertainment advertising categories. For the year ended December 31, 2008, total minutes sold and average minute rate declined compared to 2007. Operating expenses declined approximately $11.1 million in 2008. The decline was attributable to a decrease in programming expenses in the Company's radio markets, a decrease in expenses from reduced marketing and promotional expenses and a decline in commission expenses associated with the revenue decline. Partially offsetting the decline was an increase in severance of approximately $32.6 million, an increase in bad debt expense of approximately $17.3 million and an increase in programming expenses associated with the Company's national syndication business. The increase in programming expenses in the Company's national syndication business was mostly related to contract talent payments. Outdoor Advertising The Company`s outdoor advertising revenue was relatively flat for the full year of 2008 when compared to 2007. Included in the 2008 results is an approximate $62.6 million increase related to foreign exchange when compared to 2007. Outdoor advertising expenses increased 9% when compared to the same period in 2007. Included in the 2008 results is an approximate $52.1 million increase related to foreign exchange when compared to 2007. Americas Outdoor Revenue decreased approximately $54.8 million during 2008 compared to 2007, with the entire decline occurring in the fourth quarter. Driving the decline was approximately $87.4 million attributable to poster and bulletin revenues associated with cancellations and non-renewals from major national advertisers, partially offset by an increase of $46.2 million in airport revenues, digital display revenues and street furniture revenues. Also impacting the decline in bulletin revenue was decreased occupancy while the decline in poster revenue was affected by a decrease in both occupancy and rate. The increase in airport and street furniture revenues was primarily driven by new contracts while digital display revenue growth was primarily the result of an increase in the number of digital displays. Other miscellaneous revenues also declined approximately $13.6 million. The Company's Americas operating expenses increased $83.4 million primarily from higher site lease expenses of $45.2 million primarily attributable to new taxi, airport and street furniture contracts and an increase of $6.9 million in severance associated with the Company's restructuring plan. In addition, expenses increased from increased bad debt expense of $15.5 million. International Outdoor For the full year, revenue increased approximately $62.3 million, with roughly $60.4 million from movements in foreign exchange. The revenue growth was primarily attributable to growth in China, Turkey and Romania, partially offset by revenue declines in France and the United Kingdom. China and Turkey benefited from strong advertising environments. The Company acquired operations in Romania at the end of the second quarter of 2007, which also contributed to revenue growth in 2008. The decline in France was primarily driven by the loss of a contract to advertise on railways and the decline in the United Kingdom was primarily driven by weak advertising demand. During 2008, operating expenses increased $132.3 million. Included in the increase is approximately $50.7 million related to movements in foreign exchange and $20.1 million related to severance associated with the restructuring plan. The remaining increase in was driven by an increase in site lease expenses. Impairment Charge The global economic slowdown has adversely affected advertising revenues across the Company's businesses in recent months. As a result, the Company performed an interim impairment test as of December 31, 2008 on its indefinite-lived FCC licenses, indefinite-lived permits and goodwill. The interim impairment test resulted in the Company recognizing a non-cash impairment charge of $1.7 billion on its FCC licenses and permits and $3.6 billion to reduce its goodwill. Share-Based Payment Approximately $39.2 million of the 2008 share-based compensation was recognized in the third quarter of 2008 as a result of the accelerated vesting of stock options and restricted stock awards at the closing of the merger. Current Information and Expectations The Company has previously provided information regarding its revenue pacings and certain expectations related to 2008 operating results. That information was last provided on May 9, 2008 and has not been updated. The Company is not providing such information in this release and does not anticipate providing this information in the future. The Company will not update or revise any previously disclosed information. Investors are cautioned to no longer rely on such prior information given the passage of time and other reasons discussed in the Company's reports filed with the SEC. Future results could differ materially than the forward- looking information previously disclosed. The Company periodically reviews its disclosure practices in the ordinary course of its business and management determined to cease providing this information after taking into consideration a number of factors. Other Income (Expense) Net of $126.4 million in 2008 relates to an aggregate gain of $124.5 million on the fourth quarter 2008 tender of certain of Clear Channel's outstanding notes, a $29.3 million foreign exchange gain on translating short-term intercompany notes, an $8.0 million dividend received, partially offset by a $29.8 million loss on the third quarter 2008 tender of certain of Clear Channel's outstanding notes and a $4.7 million impairment of its investment in a radio partnership and $0.9 million of various other items. Income Taxes Current tax expense for 2008 decreased $302.4 million compared to 2007 primarily due to a decrease in "income (loss) before income taxes, minority interest and discontinued operations" of $1.2 billion, which excludes the non-tax deductible impairment charge of $5.3 billion recorded in 2008. In addition, current tax benefits of approximately $74.6 million were recorded during 2008 related to the termination of Clear Channel's cross currency swap. Also, the Company recognized additional tax depreciation deductions as a result of the bonus depreciation provisions enacted as part of the Economic Stimulus Act of 2008. These current tax benefits were partially offset by additional current tax expense recorded in 2008 related to currently non deductible transaction costs as a result of the merger. The effective tax rate for the year ended December 31, 2008, decreased to 10.2% as compared to 34.4% for the year ended December 31, 2007, primarily due to the impairment charge that resulted in a $5.3 billion decrease in "income (loss) before income taxes, minority interest and discontinued operations" and tax benefits of approximately $648.2 million. Liquidity and Financial Position For the year ended December 31, 2008, cash flow from operating activities was $1,281.3 million, cash flow used by investing activities was $18,128.0 million, cash flow provided by financing activities was $15,907.8 million, and net cash provided by discontinued operations was $1,033.6 million for a net increase in cash of $94.7 million. As of December 31, 2008, 61% of the Company's debt bears interest at fixed rates while 39% of the Company's debt bears interest at floating rates based upon LIBOR. The current global economic slowdown has resulted in a decline in advertising and marketing services among the Company's customers, resulting in a decline in advertising revenues across its businesses. This reduction in advertising revenues has had an adverse effect on the Company's revenue, profit margins, cash flow and liquidity, particularly during the second half of 2008. Continuing adverse securities and credit market conditions could significantly affect the availability of equity or credit financing. While there is no assurance in the current economic environment, the Company believes the lenders participating in its credit agreements will be willing and able to provide financing in accordance with the terms of their agreements. In this regard, on February 6, 2009 the Company borrowed the approximately $1.6 billon of remaining availability under its $2.0 billion revolving credit facility to improve its liquidity position in light of continuing uncertainty in credit market and economic conditions. The Company expects to refinance its $500.0 million 4.25% notes due May 15, 2009 with a draw under the $500.0 million delayed draw term loan facility that is specifically designated for this purpose. The remaining $69.5 million of indebtedness maturing in 2009 will either be refinanced or repaid with cash flow from operations or on hand. As of February 27, 2009, the Company had approximately $18 million available on its bank revolving credit facility and had a balance of approximately $1.6 billion in short-term investments. The Company may utilize available funds for general working capital purposes including funding capital expenditures and acquisitions. The Company may also from time to time seek to retire or purchase its outstanding debt or equity securities or obligations through cash purchases, prepayments and/or exchanges for debt or equity securities or obligations, in open market purchases, privately negotiated transactions or otherwise. Such uses, repurchases, prepayments or exchanges, if any, will depend on prevailing market conditions, the Company's liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. The Company's senior secured credit facilities require the Company to comply with a maximum consolidated senior secured net debt to adjusted EBITDA (as calculated in accordance with the senior secured credit facilities) ratio. The covenant does not become effective until the quarter ending March 31, 2009. Secured Leverage, defined as secured debt, net of cash, divided by the trailing 12-month consolidated EBITDA, was 6.39x at December 31, 2008. About CC Media Clear Channel Communications is the operating subsidiary of San Antonio, Texas-based CC Media Holdings Inc. As reported by The Troubled Company Reporter on February 24, 2009, Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on San Antonio, Texas-based CC Media Holdings Inc. and its operating subsidiary, Clear Channel Communications Inc. (S&P rates both entities on a consolidated basis), by one notch. The corporate credit rating was lowered to 'B-' from 'B'. These ratings remain on CreditWatch with negative implications, where they were placed Feb. 13, 2009, reflecting S&P's concerns over financial covenant compliance. The TCR reported on January 7, 2009, that participations in a syndicated loan under which Clear Channel Communications is a borrower traded in the secondary market at 49.80 cents-on-the- dollar during the week ended January 2, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 1.87 percentage points from the previous week. Clear Channel Communications pays interest at 365 points above LIBOR. The bank loan matures on December 30, 2015. The bank loan carries Moody's B1 rating and Standard & Poor's B rating. CENTERBANK OF JACKSONVILLE: Gets Weiss' "Very Weak" E- Rating ------------------------------------------------------------- Weiss Ratings has assigned its E- rating to Jacksonville, Florida- based CenterBank of Jacksonville, N.A. Weiss says that the institution currently demonstrates what it considers to be significant weaknesses and has also failed some of the basic tests Weiss uses to identify fiscal stability. "Even in a favorable economic environment," Weiss says, "it is our opinion that depositors or creditors could incur significant risks." CenterBank is chartered as a national bank and is primarily regulated by the Office of the Comptroller of the Currency. Deposits have been insured by the Federal Deposit Insurance Corporation since August 9, 2001. CenterBank maintains a Web site at http://www.centerbankjax.com/and has one branch located in Florida. At Dec. 31, 2008, CenterBank disclosed $199 million in assets and $176 million in liabilities in its regulatory filings. CHESAPEAKE CORP: Unsec. Creditors Want Probe on Firm's Sale ----------------------------------------------------------- Court documents say that unsecured creditors of Chesapeake Corp. want an investigation on the proposed sale of the Company, saying they had reservations as to whether the sale negotiations were conducted in good faith. In documents submitted to the U.S. Bankruptcy Court for the Eastern District of Virginia, the official committee of unsecured creditors said Chesapeake's requests for court approval of its bankruptcy financing and sale procedures may have been commenced for the benefit of Chesapeake, the lead group bidding on its assets, and Wachovia, at the expense of the unsecured creditors. Court documents state that in light of the fact that the proposed sale offers virtually no distribution to unsecured creditors, the Committee has the obligation to conduct a thorough investigation of the negotiations that took place. Reuters reports that the committee said it wanted to make sure Chesapeake hadn't been improperly "coaxed" into selling all of its assets. Headquartered in Richmond, Virginia, Chesapeake Corporation (NYSE: CSK) -- http://www.cskcorp.com-- supplies specialty paperboard packaging products in Europe and an international supplier of plastic packaging products to niche end-use markets. The Debtors have 44 locations in Europe, North America, Africa and Asia and employs approximately 5,400 people worldwide. The company directly owns 100% of each of the other Debtors. The company owns, directly or indirectly, 100% of each of the non- debtor subsidiaries except: (i) Chesapeake Plastics Kft, a Hungarian joint venture which is 49% owned by Chemark Kft; and (ii) Rotam Boxmore Packaging Co. Ltd., a British Virgin Islands company which is 50% owned by Canada Rotam International Co. Ltd. The company's certificate of authorization authorizes the issuance of 60,000,000 shares of common stock. About 20,559,115 shares of common stock are issued and outstanding with par value of $1.00 per share as of Dec. 26, 2008. Moreover, the company's certificate allows the issuance of 500,000 shares of preferred stock, and no shares are outstanding. As of Dec. 31, 2007, Dimensional Fund Advisors LLP owns 7.98% of the company; T. Rowe Price Associates Inc., 8.4%; and Wells Fargo & Company, 14.71%. Edelmann GmbH & Co. KG and Joachim W. Dziallas owns 13.5% of the company as of Sept. 19, 2008. New York Stock Exchange suspended the listing of the company's common stock effective Oct. 8, 2008, due to its inability to meet the global market capitalization requirements for continued listing on the exchange. Subsequently, the company's stock began to be quoted on the over-the-counter bulletin board under the trading symbol "CSKE.PK." Chesapeake Corporation, and 18 affiliates filed Chapter 11 petitions (Bankr. E.D. Virginia, Lead Case No. 08-336642) on Dec. 29, 2008. Chesapeake has tapped Alvarez and Marsal North America LLC, and Goldman Sachs & Co. as financial advisors. It also brought along Tavenner & Beran PLC as conflicts counsel and Hammonds LLP as special counsel. Its claims agent is Kurtzman Carson Consultants LLC. The United States Trustee for Region 4 appointed seven creditors to serve on an Official Committee of Unsecured Creditors for the Debtors' Chapter 11 cases. As of September 30, 2008, Chesapeake's consolidated balance sheets showed $936.4 million in total assets, including $340.7 million in current assets; and $937.1 million in total liabilities, including $469.2 million in current liabilities, resulting in $500,000 in stockholders' deficit. CHRYSLER LLC: Talks Stall as Banks Object to Debt-Equity Swap ------------------------------------------------------------- Chrysler LLC has been unable to move forward with its plans to trade bank loans for uncertain equity, people familiar with the companies' actions say, Michael Ramsey of Bloomberg News reported. Chrysler needs to reduce its debt by $5 billion by getting creditors such as JPMorgan Chase & Co. to trade debt for an ownership stake or by changing loan terms in order to be viable. Bloomberg noted that unless Chrysler shows progress in revamping its operations, the government can call the loan March 31. According to Bloomberg, banks have little incentive to trade their loans, and the only other creditors Chrysler lists that could take more equity for debt are the U.S. government and the United Auto Workers union, which already has agreed in principle to reduce its obligation by 50 percent. "It's going to be a tough sell to get the banks to give up their position for worthless equity," said Don Workman, a bankruptcy attorney at Baker & Hostetler LLP in Washington, according to Bloomberg. "The best Chrysler can hope is that the government is going to force them to do it." The banks, which include Citigroup Inc., Goldman Sachs Group Inc., Morgan Stanley and JPMorgan, would be first in line for recovery in the case of a bankruptcy. However, if the debt is exchange for equity, these banks will lose priority. 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. Viability Plan Chrysler LLC submitted on Feb. 17 as scheduled its viability plan to the U.S. Treasury, which plan provides that an orderly wind down under Chapter 11 would be its last alternative. Chrysler also said that it will need an additional $5 billion in Federal aid to be able to survive. Chrysler said that if it does not receive the additional $5 billion in government funding, its only alternative is to file for Chapter 11 as a first step in an orderly wind down. Chrysler stated that in the event of a bankruptcy filing, it would seek debtor-in-possession financing from both private sector lenders and the U.S. Government. "We believe the estimated size of the financing need is $24 billion over a two year period." Chrysler added that without adequate DIP financing, it estimates that: -- First lien lenders will only realize a 25% recovery. -- The U.S. government will recover five cents on the dollar. -- All other creditors will receive nothing. Chrysler also warned, "An orderly wind down will result in significant social impact, with 300,000 jobs lost at Chrysler and its suppliers and over 3,300 dealers falling. 2-3 million jobs could be lost due to a follow-on collapse in the wider industry, resulting in a $150 billion reduction in U.S. government revenue over 3 years." Management's Recommendations: Stand-Alone Plan Chrysler's management recommends that the Company continue its "stand alone" plan while it pursues an alliance. According to the viability plan, a partnership with GM was the best option for the U.S. auto industry from financial and operational perspective "but they 'took it off the table'." Chrysler also investigated an alliance with Nissan but was only able to pursue and alliance with Fiat. However, the non-binding term sheet reached with Fiat is subject to conditions, including Chrysler being able to restructure its balance sheet. Status of Restructuring Chrysler said that it has made progress with respect to its plans to restructure its balance sheet and seek concessions from constituents: -- Chrysler has signed a tentative agreement with the United Auto Workers union with respect to competitive level compensation, among other things. -- Both shareholders (Cerberus and Daimler) have expressed willingness to (i) relinquish their equity, and (ii) convert 100% of their second lien debt for equity. -- Management has reduced filed cost by 27% or by $3.8 billion, reduced headcount by 35,000 (41%), and completed asset sales of $1 billion. -- Chrysler requested a 3% price reduction from suppliers effective April 1. Negotiations are in process. Chrysler's Debt Reductions Chrysler said that its debt composition and required debt reductions (in billions) are: Current Debt In Debt Tentative Add'l Loan Stand Alone Structure Concessions Needed Plan --------- ----------- ---------- ----------- 1st Lien - Lenders /Secured $6.9 -- -- $6.9 2nd Lien - Cerberus/Daimler/ Secured $2.0 $(2.0) -- -- 3rd Lien - Government/Secured $4.3 -- $5.3 $9.6 UAW - VEBA Loan/ Unsecured $10.6 $(5.3) -- $5.3 DOE/136 Loan - Government/Secured -- -- $6.0 $6.0 ----- ------ ------ ------ TOTALS $23.8 $(7.3) $11.3 $27.8 Required Debt & Debt Service Relief from Creditor Groups ($5.0) ------ Serviceable Debt TOTAL $22.8 Chrysler said that alternatives to achieving the $5 billion in debt and debt service reductions are (i) common stock conversion, (i) preferred stock conversion, (iii) modified debt conversion, and (iv) cash out. Chrysler said that if the additional $5 billion of government funding is received and creditors agree to liability restructuring, it will pursue the alliance with Fiat. It will also diligently work to finalized negotiations with all other constituents and pursue a simultaneous closing with Fiat, U.S. Treasury, Daimler, Cerberus, the UAW and its creditors by March 31, 2009. A full-text copy of the Chrysler viability plan is available for free at: http://researcharchives.com/t/s?39a3 A full-text copy of GM's viability plan is available for free at: http://researcharchives.com/t/s?39a4 The Treasury Secretary, upon receipt of Chryser's and GM's viability plans, said, "I have received restructuring reports from both General Motors and Chrysler, and they have been posted on the Treasury Web site. NEC Director Summers and I will be convening the President's Task Force on Autos later this week to analyze the companies' plans and to solicit the full range of input from across the Administration on the restructuring necessary for these companies to achieve viability." About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Dec. 3, 2008, Dominion Bond Rating Service downgraded the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. As reported in the Troubled Company Reporter on Aug. 11, 2008, Standard & Poor's Ratings Services lowered its ratings on Chrysler LLC, including the corporate credit rating, to 'CCC+' from 'B-'. On July 31, 2008, TCR said that Fitch Ratings downgraded the Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The Rating Outlook is Negative. The downgrade reflects Chrysler's restricted access to economic retail financing for its vehicles, which is expected to result in a further step-down in retail volumes. Lack of competitive financing is also expected to result in more costly subvention payments and other forms of sales incentives. Fitch is also concerned with the state of the securitization market and the ability of the automakers to access this market on an economic basis over the near term, given the steep drop in residual values, higher default rates, higher loss severity being experienced and jittery capital market. As reported in the TCR on Dec. 3, 2008, Dominion Bond Rating Service downgraded on Nov. 20, 2008, the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. CITIGROUP INC: S&P Keeps A Rating on Salt Verde's $1.13BB Bonds --------------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its 'A' senior secured debt rating on Salt Verde Financial Corp.'s $1.13 billion senior secured gas project revenue bonds and its $29 million subordinated gas project revenue bonds. At the same time, S&P revised the outlook on both the senior and subordinated bonds to negative. The outlook revision mirrors the Feb. 27, 2009, outlook revision of Citigroup Inc. (A/Negative/A-1) to negative. Citigroup guarantees the obligations of Salt Verde's gas supplier, Citigroup Energy Inc. (CEI; not rated). The negative outlook on Citigroup followed its announcement of an extensive recapitalization plan and reflects Standard & Poor's concern that if, contrary to S&P's current expectations, Citigroup's turnaround strategies (which entail significant execution risk) are unsuccessful, bondholders could eventually be required to participate in further government- led restructuring actions. The rating on Salt Verde's senior secured bonds is solely tied to Citigroup as the lowest-rated counterparty with obligations that are critical for the transaction to function as structured. In addition to Citigroup and CEI, the subordinated bonds also have credit exposure to these counterparties: -- Salt River Project Agricultural Improvement & Power District, Arizona (SRP; AA/Stable), the project participant. -- Royal Bank of Canada (RBC; AA-/Stable/A-1+), the fixed-price commodity swap counterparty. -- MBIA Insurance Corp. of Illinois (MBIA Ill; AA-/Watch Developing), the surety bond provider for the debt service reserve fund and working-capital fund. -- MBIA Inc. (BB+/Negative), the guaranteed investment contract provider for funds deposited in the debt service reserve account with a guarantee by MBIA Insurance Corp. (BBB+/Negative). -- AIG Matched Funding Corp. (A-/Negative/A-1), the GIC provider for the debt service account. The subordinated bonds are exposed to SRP's payment and performance risk, the commodity swap counterparty, and the GIC providers, in addition to the gas supplier, to redeem the outstanding subordinated bonds in the event of the prepaid contract's early termination. As a result, the rating on the subordinated bonds reflects Citigroup's credit risk as the lowest- rated counterparty in the transaction. Salt Verde acquires and finances natural gas transactions for SRP. Proceeds from the Salt Verde senior secured bonds were funded to the prepayment of about 295 billion cubic feet of natural gas. CEI will provide the gas for 30 years. The proceeds from the senior secured bonds also provide for capitalized interest and pay various transaction fees. The proceeds from the subordinated bonds fund a portion of the senior-lien debt service reserve fund, which supports the senior secured bonds. The gas requirements reflect about 20% of SRP's annual retail gas requirements. The negative outlook on Salt Verde's senior secured and subordinated gas supply revenue bonds reflects the current outlook on Citigroup as the guarantor of CEI's obligations under the gas purchase agreement. Standard & Poor's could revise the rating and outlook on the senior secured bonds to the extent that S&P revise the rating or outlook on Citigroup. S&P could revise the rating and outlook on the subordinated bonds to the extent that S&P revise the rating or outlook on Citigroup, or if S&P lower the rating on another counterparty and it becomes the transaction's primary ratings constraint. The negative outlook on Citigroup reflects the potential for earnings to be substantially worse than expected by Standard & Poor's and possibly require further government assistance. This raises the possibility that bondholders could then be required to participate in those further restructuring actions. COMMSCOPE INC: Moody's Affirms 'Ba3' Rating; Gives Neg. Outlook --------------------------------------------------------------- Moody's Investors Service affirmed CommScope's Ba3 rating and revised the company's ratings outlook from stable to negative. The change in outlook was driven by CommScope's rapidly declining performance and challenges the company will likely have in meeting financial covenants. While the Ba3 rating accommodates a cyclical downturn, the current economic environment could prove worse than that contemplated in the rating. Revenues for the December quarter were down 15% year over year (down 10% adjusted for divestitures on an organic, constant currency basis) and are expected to be considerably worse in the March 2009 quarter. The declines were driven by pull backs in most of CommScope's end markets, particularly the wire-line carrier market which saw declines of 50%. Results were somewhat exacerbated by cutbacks in their distribution channel as the channel aggressively attempted to reduce its inventory levels. Sales to the wireless carrier industry have held up relatively well so far though and should temper declines in the company's other markets. The company's interest coverage and leverage covenants step down in the second half and will be a challenge to meet if EBITDA continues to decline. The company is taking actions to address the tightening covenants, but uncertainty over the economic outlook will make it difficult to ensure compliance. The company is expected to continue to generate free cash flow as working capital declines similar to what it achieved in the 2001-2003 downturn. The Ba3 rating continues to reflect the company's market leading positions supplying cable and connectivity systems and specialized components to the cable television, wireline and wireless telecom carrier industries as well the enterprise market. The rating is tempered by the cyclicality of the company's end markets combined with moderate leverage. The ratings could face further downward pressure if the declines continue through the second half, or the company is unable to amend their financial covenants on reasonable terms if needed. These ratings were affirmed: * Corporate family rating - Ba3 * Probability of Default - Ba3 * $400 million Senior Secured Revolving Credit Facility due 2013 - Ba3, LGD3 44% (from 45%) * $1.2 billion (originally $1.35 billion) Senior Secured Term Loan due 2014 -- Ba3, LGD3 44% (from 45%) * $601 million (originally $750 million) Senior Secured Term Loan due 2013 -- Ba3, LGD3 44% (from 45%) * $176 million (originally $250 million) Convertible Senior Subordinated Debentures due 2024 -- to B2, LGD6 92 % (from 95%) The individual debt instrument ratings were determined using Moody's Loss Given Default Methodology and reflect the relative positions within the capital structure. Moody's will withdraw the rating on the convertible notes upon redemption. The redemption will result in a slight change in the secured debt assessment to LGD3 48%. Moody's most recent action was on October 12, 2007 when Moody's downgraded CommScope's ratings following the Andrew acquisition announcement. CommScope Inc., headquartered in Hickory, North Carolina, is a leading global provider of wired and wireless connectivity solutions targeted towards cable and telecom service providers as well as the enterprise market. The company had 2008 sales of $4.0 billion. CONGOLEUM CORP: Court Denies Confirmation of Amended Joint Plan --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey has granted the motion of First State Insurance Company and Twin City Fire Insurance Company for summary judgement denying the confirmation of the Amended Joint Plan of Reorganization of Congoleum Corp., et al., the Official Asbestos Claimants' Committee and the Official Committee of Bondholders, dated Nov. 14, 2008. In its decision, the Court found that there is no genuine issue as to any material fact and because of this, the insurers are entitled to summary judgement as a matter of law. On Feb. 26, 2009, the Court also ordered the dismissal of the Debtors' case, effective 20 days from the date of the order. At the close of the Disclosure Statement hearing on Dec. 18, 2008, the Court ruled that the plan that had been recently filed would be the final one it would consider. All parties were given the opportunity to submit their positions, either for dismissal or conversion, to the Court. In its opinion regarding the motion of the insurers for summary judgement denying confirmation of the Amended Joint Plan of Reorganization, the Court made these observations: -- In the Court's first summary judgement opinion addressing confirmation, the Court noted that the pre-petition Claimant Agreement with Joseph Rice and Perry Weitz ("Claimants' Counsel"), referring to the treatment of $2 million in payments to Mr. Rice and Mr. Weitz, "provided for an eneven treatment of asbestos creditors and creates many of the confirmation problems that have plagued this case." Claimants' Counsel was able to exact this tribute from the Debtors because Sec. 524(g)(2)(B)(ii)((IV)(bb) requires that a Sec. 524(g) plan be approved by at least 75% of the voting claimants. Thus, from the Debtors' perspective, it would be difficult, if not impossible, for the Debtors to confirm a plan unless Claimants' Counsel delivered the votes of their clients. -- The inequality of distribution among asbestos claimants makes the plan unconfirmable. The Plan proponents contend that the Amended Joint Plan provides for equality of treatment because all of the asbestos personal injury claims are placed in the same class. While this is true, not all the creditors in Class 7 can avail themselves of the option available to asbestos claimants Kenneth Cook, Richard Arsenault and Edward Comstock. For truly equal treatment the plan could have provided that claimants Cook, Arsenault and Comstock must relinquish any prepetition payments and apply to the Plan Trust on the same terms as all other asbestos creditors. -- Cause exists under Sec. 1112(b)(5) for the dismissal of the Debtors' case because the Court has denied confirmation of every proposed plan, and has made clear its intent to deny any request for additional time to file a further amended plan. Cause can also be found under Sec. 1112(b)(1) because there is continuing loss or diminution of the estate in the form of mounting professional fees. Beyond the examples of cause enumerated in Sec.1112(b), the Court also finds cause exists to convert or dismiss based on the failed mediation attempts. This case had the benefit of extensive mediation sessions with two extremely capable jurists, one of whom had previously presided over the coverage action. The Court finds it quite telling that despite those efforts the parties could not be moved toward proposing a confirmable plan. -- The Court believes that dismissal, as opposed to conversion, is the more prudent course of action. Debtors are able to pay their immediate expenses on a short term basis. Conversion would result in a convulsive disruption of both cash flow and employment. Conversion would also add a significant layer of expense, as a Chapter 7 Trustee would be forced to start from scratch evaluating all of the Debtors assets and liabilities, including some very complex litigation. Dismissal would leave the Debtors free to continue the ongoing coverage litigation in the state court and to negotiate in what the parties seem to agree is a tort litigation environment that has changed quite a bit since these Chapter 11s were filed. A full-text copy of the Court's opinion, dated Feb. 26, 2009, is available at: http://bankrupt.com/misc/Congoleum.OpinionSummaryJudgment.pdf As reported in the Troubled Company Reporter on Jan. 16, 2009, Bill Rochelle of Bloomberg News said the two insurers argue the Plan does not satisfy the statutory requirements under Section 1129 of the Bankruptcy Code and therefore cannon be confirmed. The company may only be able to emerge from bankruptcy after obtaining confirmation of its plan. Mr. Rochelle detailed that although the revised Plan was intended to remedy defects the Court identified when it rejected the 12th amended plan in June and the 10th amended plan in February, the two insurance companies contend that the Plan still violates bankruptcy law by not treating all creditors alike. The insurers, the report adds, characterize the Plan as giving Congoleum a release from liability "for a minimal contribution" while the insurance companies "would be saddled with a wildly inflated liability." As reported by the Troubled Company Reporter on Jan. 14, Owens- Illinois, Inc., filed with the Court a preliminary objection to the Plan filed by Congoleum, together with its official committee of bondholders, on Nov. 14, 2008. Owens-Illinois claimed that the plan trust, to be established on the effective date of the Plan, and which will assume liability for all Asbestos personal injury claims against Congoleum, fails to protect the interests of co- defendants in the Asbestos litigation. Congoleum to Appeal According to Reuters, the bankruptcy case dismissal is effective 20 days from the date of the ruling. Reuters relates that Congoleum will file an appeal on the ruling. Congoleum, if the ruling stands, will lose protection from creditors and be forced to deal with the asbestos claims in civil court, says Reuters. Reuters relates that Congoleum's unsecured creditors have also filed an emergency motion seeking to stay the court's decision, pending results of the appeal. About Congoleum Based in Mercerville, New Jersey, Congoleum Corporation (AMEX:CGM) -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The company filed for chapter 11 protection on Dec. 31, 2003 (Bankr. N.J. Case No. 03- 51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A. Brennan, Esq., at Pillsbury Winthrop Shaw Pittman LLP, and Paul S. Hollander, Esq., and James L. DeLuca, Esq., at Okin, Hollander & DeLuca, LLP, represent the Debtors. The Asbestos Claimants' Committee is represented by Peter Van N. Lockwood, Esq., and Ronald Reinsel, Esq., at Caplin & Drysdale, Chtd. The Bondholders' Committee is represented by Michael S. Stamer, Esq., and James R. Savin, Esq., at Akin Gump Strauss Hauer & Feld LLP. Nancy Isaacson, Esq., at Goldstein Isaacson, PC, represents the Official Committee of Unsecured Creditors. R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, the Court-appointed Futures Claimants Representative, is represented by Roger Frankel, Esq., Richard Wyron, Esq., and Jonathan P. Guy, Esq., at Orrick Herrington & Sutcliffe LLP, and Stephen B. Ravin, Esq., at Forman Holt Eliades & Ravin LLC. American Biltrite, Inc. (AMEX: ABL), which owns 55% of Congoleum, is represented by Matthew Ward, Esq., Mark S. Chehi, Esq., Christopher S. Chow, Esq., and Matthew P. Ward, Esq., at Skadden Arps Slate Meagher & Flom. Congoleum, together with its bondholders, filed a revised plan of reorganization on Nov. 20, 2008. CONSECO INC.: Auditor to Raise Going Concern Doubt, Shares Drop --------------------------------------------------------------- Conseco, Inc. said that its Annual Report on Form 10-K for the fiscal year ended December 31, 2008, cannot be completed within the prescribed time period. The Company needs additional time to finalize the analysis and disclosure related to its investment portfolio in light of unprecedented market conditions. The Company has been informed by its independent registered public accounting firm that without additional information and analysis to satisfy the auditors' concerns regarding the Company's liquidity and debt covenant margins (primarily those that could be impacted by a significant amount of additional realized losses in the Company's investment portfolio), their audit opinion will include an explanatory paragraph regarding the Company's ability to continue as a going concern. If, after considering the additional information to be provided by the Company, it is concluded that there is substantial doubt as to the Company's ability to continue as a going concern, the auditors' report on the consolidated financial statements for the year ended December 31, 2008 will include an explanatory paragraph to that effect. The inclusion of such a paragraph would constitute a default under the Company's Second Amended and Restated Credit Agreement dated as of October 10, 2006, as amended which would allow the lenders to accelerate payment of the principal amount of and accrued but unpaid interest on the debt borrowed thereunder if the Company cannot correct the default or obtain a waiver from the lenders within 30 days. As of December 31, 2008, the principal amount of the debt thereunder was $911.8 million. If the lenders accelerate the debt under the Credit Agreement, holders of the Company's 3.50% Convertible Debentures due September 30, 2035 issued under the August 15, 2005 indenture can also accelerate payment of the principal amount of the debentures plus accrued and unpaid interest thereon. As of December 31, 2008, the principal amount of the debt thereunder was $293.0 million. Similarly, if the lenders accelerate the debt under the Credit Agreement, the holder of the Company's 6% Senior Note due November 12, 2013, can accelerate payment of the principal amount outstanding plus accrued and unpaid interest thereon. As of December 31, 2008, the principal amount thereunder was $125.0 million. The Company intends to file its Form 10-K for the fiscal year ended December 31, 2008, as soon as practicable. Shares Plunge Conseco dropped as much as 60% percent after saying its auditors may raise doubt about the Company's ability to stay in business, Bloomberg said on March 2. Conseco declined by 54 percent to 56 cents at 12:41 p.m. in New York Stock Exchange composite trading March 2, the most since September 2003. The stock sold for more than $25 in 2006. Chief Executive Officer Jim Prieur, as cited by Bloomberg, said, "The two issues are liquidity at the holding company and the potential losses in the investment portfolio." He said that auditors were "somewhat reluctant" to include some dividends and payments the insurer is due into the company's liquidity as they are pending regulatory approval and adds, "We're very confident we'll be able to resolve the issue and provide more information to auditors". Mr. Prieur said he didn't think the firm, which emerged from bankruptcy in 2003, would apply for the government's Troubled Asset Relief Program, and that "generally" insurance companies were unlikely to receive funds from the bailout. About Conseco Inc. Headquartered in Carmel, Indiana, Conseco Inc. (NYSE: CNO) -- http://www.conseco.com/-- is the holding company for a group of insurance companies operating throughout the United States that develop, market and administer supplemental health insurance, annuity, individual life insurance and other insurance products. The company became the successor to Conseco Inc. (Old Conseco), in connection with its bankruptcy reorganization. CNO focuses on serving the senior and middle-income markets. The company sells its products through three distribution channels: career agents, professional independent producers and direct marketing. CNO operates through its segments, which includes Bankers Life, Conseco Insurance Group, Colonial Penn, other business in run-off and corporate operations. * * * As reported in the Troubled Company Reporter on Jan. 6, 2009, Fitch Ratings has downgraded the ratings assigned to Conseco Inc. The rating outlook on Conseco Inc. and its subsidiaries remains negative. Fitch downgraded these ratings: (i) issuer default rating to 'BB-' from 'BB'; (ii) senior secured bank credit facility to 'BB-' from 'BB+'; and (iii) senior unsecured debt to 'B' from 'BB-'. CONSECO INC: S&P Puts 'CCC' Counterparty Rating on Negative Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it placed its 'CCC' counterparty credit rating on Conseco Inc. and its 'BB-' counterparty credit and financial strength ratings on Conseco's core insurance subsidiaries on CreditWatch with negative implications. This rating action follows the announcement by Conseco that its auditors have a going-concern issue with the company. If management cannot satisfactorily address this issue and the auditors' report on Conseco's financial statements for the year ended Dec. 31, 2008, includes an explanatory paragraph to that effect, Conseco will be in violation of its senior credit facility covenants unless the lenders waive them. "The ratings are on CreditWatch negative to reflect the likelihood that S&P will lower them if Conseco is not able to rectify the going-concern issue and does not receive a covenant waiver from its lenders," said Standard & Poor's credit analyst Jon Reichert. "We expect to resolve the CreditWatch status of the ratings in four to six weeks as more information becomes available." CONSTAR INT'L: Panel Taps CRT Investment as Financial Advisor ------------------------------------------------------------- The Official Committee of Unsecurdd Creditors of Constar International, Inc., et al., asks the U.S. Bankruptcy Court for the District of Delaware for authority to retain and employ CRT Investment Banking LLC as its financial advisor, nunc pro tunc to Feb. 3, 2009. In accordance with the Engagement letter dated Feb. 13, 2009, CRT Investment will perform the following services: a) review and analyze the company's operations, financial condition, business plan, strategy, and operating forecasts. b) analyze any merger, divestiture, joint-venture or investment transaction; c) assist in the determination of an appropriate capital structure for the company; d) assist the Committee in developing, evaluating, structuring and negotiating the terms and conditions of a restructuring or Plan of Reoganization, including the value of the securities that may be issued to any unsecured creditor under any such restructuring or Plan; e) evaluate any debtor-in-possession financing and any exit financing in connection with any plan of reorganization and any budgets relating thereto; f) provide valuation analyses of the company if requested, and provide expert testimony relating to such valuation; and g) provide the Committee with other appropriate general restructuring advice and litigation support. As detailed in the Engagement Letter, CRT Investment will charge $75,000 per month. The principal CRT professionals who with represent the Committee are Randall Lambert, managing director, Mike Seery, senior vice president, and Nathan Laverriere, associate. Randall L. Lambert, a managing director and head of the Restructuring Advisory Group of CRT Investment, assures the Court that, to the best of his knowledge, the firm neither holds or represents any interest adverse to the Committee, the Debtors, their creditors or their resepctive attorneys in these Chapter 11 cases, and that the firm is a "disinterested person" as that term is defined in Sec. 101(14) of the Bankruptcy Code. Headquartered in Philadelphia, Pennsylvania, Constar International Inc. (NASDAQ: CNST) -- http://www.constar.net-- produces polyethylene terephthalate plastic containers for food, soft drinks and water. The company provides full-service packaging services. The company and five of its affiliates filed for Chapter 11 protection on Dec. 30, 2008 (Bankr. D. Del. Lead Case No. 08-13432). Bayard, P.A. represents the Debtors aa counsel. Wilmer Cutler Pickering Hale and Dorr LLP represents the Debtors as co-counsel. Goodwin Procter LLP, and Young, Conaway, Stargatt & Taylor, LLP, are the Official Committee of Unsecured Creditors' proposed counsel. CREEKSIDE VISTA: S&P Removes 'CCC' Rating on De Kalb's 2005 Bonds ----------------------------------------------------------------- Standard & Poor's Ratings Services removed its 'CCC' rating on De Kalb County Housing Authority, Georgia's multifamily housing revenue bonds series 2005, issued for the Creekside Vista Apartments Project, from CreditWatch with negative implications where it was placed on Feb. 9, 2009. At the same time, Standard & Poor's affirmed its 'CCC' rating on the bonds. "The rating action reflects Standard & Poor's opinion that there will be sufficient funds to meet the debt service payment on March 1, 2009," said Standard & Poor's credit analyst Renee Berson. As per the trustee, U.S. Bank, a deposit in an amount sufficient to make the March 1, 2009, debt service payment was made by the servicer. The trustee will be submitting updated trust balances subsequent to the debt service payments. Standard & Poor's will review these balances and make the appropriate rating action. CRHMFA HOMEBUYERS: Moody's Cuts Ratings on 2006-FH-1 Bonds to Ba3 ----------------------------------------------------------------- Moody's Investors Service has downgraded the ratings on these bonds: the rating on CRHMFA Homebuyers Fund Senior Single Family Mortgage Revenue Bonds Series 2006-FH-1(original principal amount $14,380,000) is downgraded from A2 to Ba3, and CRHMFA Homebuyers Fund Subordinate Single Family Mortgage Revenue Bonds Series 2006- FH-1 (original principal amount $920,000) from Baa3 to B3. This action follows the downgrade of Radian Guaranty, Inc., which provides primary and pool insurance for mortgage loans financed with the Bonds, from A2 to Ba3 (outlook developing) and a review of the very high level of delinquencies in this small pool of whole mortgage loans. The ratings remain on watch for downgrade following this action. The Single Family Mortgage Revenue Bonds Series 2006-FH-1 (the Bonds) were issued in May of 2006 by CRHMFA Homebuyers Fund (the Fund), a joint exercise of powers agency the members of which are local jurisdictions within the State of California. The Bonds are limited obligations of the Fund, payable solely from the mortgage loans, reserves, and revenues pledged under the Indenture. Although the Indenture permitted additional issuance, to date only this one series of bonds has been issued. The Bonds consisted of $14,380,000 original par amount of Senior Lien Bonds (the Senior Bonds) and $920,000 original par amount of Subordinate Bonds (the Subordinate Bonds). Proceeds of the Bonds, along with other funds available at closing (an issuer advance, a servicer advance, and bond issuance premium) were issued to fund up to $15.3 million of whole loans, as well as make deposits in reserve funds and pay costs of the program. The loans consist of first lien mortgage loans to first-time homebuyers solely for owner-occupied residences. Each loan is underwritten according to the issuer's standards and is either a fixed-rate loan with 40 year level amortization, or a fixed-rate loan with interest only for seven years and then 33 year level amortization. Credit strengths that contributed to the rating included asset to debt ratios of 1.06 for the Senior Bonds (provided in part by subordination of the Subordinate Bonds) and 1.00 for the Subordinate Bonds; A Liquidity Reserve equal to 2% of outstanding Mortgage Loans, and an additional Mortgage Reserve covering an additional 45 days of debt service on mortgages; primary mortgage insurance on each of the mortgage loans from Radian, a 5% pool insurance policy from Radian, and liquidity support from the Servicer, CitiMortgage, Inc. The issuer also provided a series of cash flows demonstrating the ability of the program to perform under a variety of stress scenarios. Because the loans are whole loans, the PMI coverage and pool coverage from Radian were key elements in protection against losses from delinquency and/or foreclosure for the program. In addition, because of the small size of the program and the potential for delays in obtaining recovery from PMI and/or foreclosure for non-performing loans, the liquidity provided by the servicer obligations from CitiMortgage, and the Advance Claim Rider to the Radian Policy were important elements in rating analysis. Although CitiMortgage is obligated as servicer to advance payment on each of the mortgages (regardless of whether it first receives payment from the borrower), CitiMortgage itself does not have an applicable rating, and its obligation may be limited to the extent it concludes amounts advanced are not reasonably recoverable. Therefore, Moody's considered the Advance Claim Rider from Radian to be key to liquidity support; under this Rider, the Trustee can make advance claims on the pool policy to the extent that it needs funds to pay bond debt service due to mortgage loans being at least 60 days delinquent and in foreclosure. On February 13, 2009 Moody's downgraded Radian's insurance finance strength rating from A2 to Ba3 (with a developing outlook). This affects Moody's assessment of the support provided by Radian, which is key to the rating and includes PMI on all of the loans, 5% pool coverage, and liquidity through the Advance Claim Rider. In addition, information obtained by Moody's indicated that of the 60 loans outstanding under the pool as of 1/31/08, 14 loans (comprising approximately 23.4% of loan principal outstanding) were two or more payments delinquent, and an additional three loans (comprising approximately 5.69% or loan principal outstanding) were in foreclosure. Although Moody's understands that debt service has been paid to date without using the reserves, Moody's will continue to review the program to assess the potential impact of delinquencies and foreclosures on the program. DELPHI CORP: GM Adds $150-Mil. in Advances; to Buy Steering Biz --------------------------------------------------------------- Delphi Corp. disclosed several agreements reached between Delphi and General Motors Corporation in order to supplement Delphi's liquidity position and to substantially complete Delphi's portfolio transformation through the sale of Delphi's global Steering business. The sale of the Steering business is a strategic component of Delphi's transformation strategy, which was announced in March 2006. Pursuant to two amendments to GM's liquidity advance agreement with Delphi, GM has agreed to increase from $300 million to $450 million the amount it is committed to advance to Delphi. The amendments are subject to several conditions, including U.S. Bankruptcy Court approval and review prior to March 24, 2009 by the President's Designee in accordance with the provisions of GM's federal loans. Delphi and GM have entered into an agreement under which GM will exercise its option to purchase Delphi's Steering business as contemplated under the Amended Master Restructuring Agreement between Delphi and GM dated Sept. 12, 2008. Delphi had earlier entered into a Purchase and Sale Agreement with an affiliate of Platinum Equity, LLC, which the parties have mutually terminated. GM has confirmed that it will exercise its option under the GM/Delphi Master Restructuring Agreement to acquire the Delphi global steering business. The option covers Delphi global Steering business including employees, facilities, products, technical capability and intellectual property. The business will still be operated as a stand-alone business and, at least in the near term, will be held in a wholly owned subsidiary of GM. A diverse customer base and the ability to self-fund the operations will be essential to the business' long-term future. To achieve these goals, new business opportunities and technologies will continue to be aggressively pursued. GM and Delphi are committed to work together to provide non-GM customers of the Steering business with the continued supply of high quality products and services following the sale. Additionally, Delphi is committed to provide general transition services to GM through mid-2011 and information technology transition services through December 2012. Delphi and GM have agreed to use their reasonable best efforts to close the Steering transaction on or before April 30, 2009, as well as to achieve certain other milestones, which are also subject to various conditions including U.S. Bankruptcy Court approval. Delphi believes that GM's commitment of additional liquidity coupled with the support it has received from its lenders under its debtor-in-possession (DIP) financing facility should allow Delphi to manage its liquidity into May 2009 as it continues emergence discussions with its stakeholders on proposed modifications to Delphi's First Amended Plan of Reorganization confirmed in January 2008. GM and Delphi are working together to negotiate an arrangement under which Delphi would transfer to GM certain of Delphi's U.S. manufacturing sites dedicated principally to supply product to GM in exchange for a payment which Delphi expects to facilitate the company's emergence from Chapter 11. These manufacturing sites represent less than 3 percent of Delphi's global manufacturing operations. As part of these negotiations, Delphi and GM are seeking to finalize modifications to their previous agreements as part of the April 2, 2009, milestone for Delphi's filing of reorganization plan modifications as contemplated by the recent Accommodation Agreement Amendment Supplement. "As stated in GM's Feb. 17 filing with the U.S. Dept. of the Treasury, Delphi represents an important source of supply for GM. This financial commitment by GM represents an important and necessary step for Delphi to be able to access additional liquidity to manage its U.S. operations while providing the company with the liquidity runway to complete discussions with stakeholders and obtain court approval of reorganization plan modifications," said John Sheehan, Delphi vice president and chief financial officer. In addition to the agreements reached with GM, Delphi's agreements with participating DIP Lenders approved by the Bankruptcy Court on Feb. 24, 2009 to amend and supplement the Accommodation Agreement relating to the DIP credit facility will also allow Delphi to access the restricted amounts of cash collateral of up to $117 million, provided: (i) Delphi remains in compliance with all mandatory prepayment provisions and other covenants in the accommodation agreement and the DIP borrowing base supports the Company's use of some or all of the cash collateral, (ii) Delphi has achieved the remaining specified milestones in its reorganization cases, including the filing of a plan of reorganization or modifications to Delphi's existing plan of reorganization meeting the conditions specified in the Accommodation Agreement by April 2, and (iii) GM has obtained all required approvals to increase the available amounts under the GM Advance Agreement to $450 million by March 24, 2009. GM's agreement to increase the amounts available under the GM Advance Agreement and to seek any required governmental approvals is a significant step in satisfying these conditions. Delphi will submit its Annual Report on Form 10-K to the Securities and Exchange Commission (SEC), which will include additional information concerning Delphi's current liquidity outlook, the terms, covenants and conditions of its DIP financing facility and its accommodation agreement, as recently amended and supplemented, and its 2008 results. Additional information regarding Delphi's DIP financing facility and the Accommodation Agreement (as amended and supplemented) can also be found on www.delphidocket.com and Delphi's previous filings on Form 8-K with the SEC. 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) DOLLAR THRIFTY: Inks Loan Amendment with Lenders, Chrysler Fin'l ---------------------------------------------------------------- On February 25, 2009, Dollar Thrifty Automotive Group, Inc. (NYSE: DTG), disclosed amendments of its senior secured credit facility and fleet financing agreements with Chrysler Financial and another bank group. Under the amended agreements, the Company will no longer be required to maintain a minimum leverage ratio, but must maintain a minimum adjusted tangible net worth of $150 million and a minimum of $100 million of unrestricted cash and cash equivalents. As of December 31, 2008, the Company had approximately $215 million of adjusted tangible net worth and approximately $230 million of unrestricted cash and cash equivalents. The amendments are intended to provide a long-term resolution of the financial covenant compliance issue that had been addressed with short-term amendments over the last five months. These amendments became effective February 25. "Dollar Thrifty is very pleased to announce the successful completion of these amendments in an incredibly difficult credit market. We greatly appreciate the ongoing support of our bank groups and Chrysler Financial during these challenging times. T he amendments provide us with the financial flexibility needed to continue to execute our plans, and they remove the uncertainty associated with short-term amendments, all at a reasonable cost and on terms we feel are equitable. With these amendments now completed, we can dedicate all of our efforts to our top priorities -- operational improvements, customer service, and maximizing cash flow and liquidity," said Scott L. Thompson, President and Chief Executive Officer. In connection with the amendment of the senior secured credit facility, the Company prepaid $20 million of its term loan and permanently reduced the total revolving credit facility commitments to $231.3 million, which is in line with the Company's financing needs under its operating plan. In addition, the amendment provides that revolving credit facility commitments will be restricted to issuances of letters of credit in future periods. The amendments provide for a 50 basis point increase in the interest rate borne by outstanding debt under all three financing agreements, including letters of credit. The Company also paid one-time amendment fees of 50 basis points, based on outstanding commitments and/or loans. The Company used approximately $24 million of unrestricted cash for the term loan payment, fees and expenses associated with the amendments. "The Company's aggressive actions over the past several months to reduce costs, improve revenue and right-size operations were fundamental to achieving the resolution reflected in these amendments. Those actions, taken together with the amendments to our financing arrangements and our recently announced $490 million prepayment of our liquidity and conduit facilities, position us to manage our liquidity to meet our operating objectives in today's challenging environment," said Mr. Thompson. About Dollar Thrifty Automotive Group Dollar Thrifty Automotive Group, Inc. -- http://www.dtag.com-- is a Fortune 1000 Company headquartered in Tulsa, Oklahoma. Driven by the mission "Value Every Time," the Company's brands, Dollar Rent A Car and Thrifty Car Rental, serve travelers in approximately 70 countries. Dollar and Thrifty have over 800 corporate and franchised locations in the United States and Canada, operating in virtually all of the top U.S. and Canadian airport markets. The Company's approximately 7,000 employees are located mainly in North America, but global service capabilities exist through an expanding international franchise network. * * * As reported by the Troubled Company Reporter on December 29, 2008, Moody's Investors Service lowered Dollar Thrifty Automotive Group, Inc.'s Corporate Family Rating to Caa3 from B3 and Probability of Default Rating to Caa2 from B3. The outlook is negative and the Speculative Grade Liquidity rating remains SGL-4. The downgrade, Moody's said, reflects the severe downturn in the on-airport car rental sector, and the very challenged financial and operating position of Dollar's principal vehicle supplier, Chrysler Automotive LLC. Dollar sources over 80% of its vehicles from Chrysler. The TCR reported on March 2, 2009, Standard & Poor's Ratings Services said its ratings on Dollar Thrifty Automotive Group Inc., including the 'CCC+' long-term corporate credit rating, remain on CreditWatch with negative implications. Ratings were originally placed on CreditWatch on Feb. 12, 2008, and lowered to current levels on Dec. 22, 2008. DOUGLAS JOHNSON: Wants to Sell Vehicle and Boat for $15,000 ----------------------------------------------------------- Douglas R. Johnson asks the U.S. Bankruptcy Court for the Southern District of Texas to approve the sale of his and his ex-spouse, Melanie Johnson's (1) 2004 SEADOO Jet Boat (19'9") and (2) 2004 Polaris 4x4 Ranger all-terrain vehicle which were acquired during their marriage. The items were to be sold pursuant to the divorce decree entered in their prepetition divorce proceeding. Both properties are to be sold to Donald Weber for pay $15,000 in cash. There is no other offer to date. Mr. Johnson proposes that the proceeds be disbursed for expenses related to their Michigan and Houston residences and possibly for adequate protection payments on their mortgage on the residences, which, according to the Debtor, has not been paid for several months. As reported in the Troubled Company Reporter on Jan. 19, 2009, the Court approved the emergency motion of Melanie Johnson for the fixed tag sale of several significant items of household goods and furnishings for $10,730 and distribution to her of the net sales proceeds of $6,692, after sales commission and expenses, provided that she pays the private school tuition of Nathan and Justice Johnson from that amount. About Douglas R. Johnson Based in Houston, Douglas R. Johnson owns 100% of Johnson Broadcasting, Inc. and roughly 85% of Johnson Broadcasting of Dallas, Inc. He is the sole director of JB and JBDallas. Mr. Johnson filed for Chapter 11 relief on Oct. 13, 2008 (Bankr. S.D. Tex. Case No. 08-36584). Craig Harwyn Cavalier, Esq., at the Law Offices of Craig Cavalier, represents the Debtor as counsel. The Debtor continues to manage and operate his affairs as a debtor-in- possession. No creditors' committee has yet been appointed in the case by the United States Trustee. In his schedules, the Debtor listed total assets of $62,134,923 and total debts of $32,392,497. Johnson Broadcasting Inc. and Johnson Broadcasting of Dallas Inc. own and operate television stations in Texas. Johnson Broadcasting Inc. and Johnson Broadcasting of Dallas Inc. filed separate petitions for Chapter 11 relief on Oct. 13, 2008 (Bankr. S.D. Texas Case No. 08-36583 and 08-36585, respectively). John James Sparacino, Esq., and Timothy Alvin Davidson, II, Esq., at Andrews and Kurth, represent the Debtors as counsel. When Johnson Broadcasting Inc. filed for protection from its creditors, it listed assets and debts of between $10 million and $50 million each. ERIE PROPERTY: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Erie Property LLC 363 W, Erue Street Suite 400 Chicago, Il 60654 Bankruptcy Case No.: 09-06968 Chapter 11 Petition Date: March 2, 2009 Court: Northern District of Illinois (Chicago) Judge: Susan Pierson Sonderby Debtor's Counsel: Paula K. Jacobi, Esq. pjacobi@btlaw.com Barnes & Thornburg LLP 1 North Wacker Drive, Suite 4400 Chicago, IL 60606 Tel: (312) 214-4866 Fax: (312) 759-5646 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 ------ --------------- ------------ First Midwest Bank non-recourse $2,500,000 One Pierce Place mortgage, value Suite 1500 likely equal or Itasa, IL 60143 less than 1st mortgage James Stefanski settlement $89,500 1178 Euclid Avenue Apt. 3 Berkeley, CA 94708 Blue Star Services Group security deposit $21,000 363 West Erie Street Suite 700W Chicago, IL 60654 Latimer LeVay Jurasek LLC legal services $20,000 Data Based Ads, Inc. security deposit $16,531 Peoples Gas utilities $9,000 North Town Mechanical Svcs. security $8,432 Bishop Taylor Group LLC security deposit $8,000 Central Print Services Inc. security deposit $7,427 Kathryn Quinn Architects Ltd. security deposit $7,200 Midwest Newclip Inc. security deposit $5,241 NRC Realty Advisors LLC security deposit $4,375 Chicago Elevator Company security deposit $4,174 Internal Revenue Services taxes $4,000 D.G.L. Distributors Inc. security deposit $3,825 Combi Wear Parts Inc. security deposit $3,800 City of Chicago utilities $2,500 Dept. Water Management Mark's services $2,500 ComEd utilities $2,000 State of Illinois taxes $2,500 The petition was signed by Gerald E. Tomaszewski, managing member. FIRST DATA: Moody's Reviews 'B2' Rating for Possible Downgrade -------------------------------------------------------------- Moody's Investors Service has placed First Data Corporation's (B2 corporate family rating) credit ratings under review for possible downgrade. The rating action reflects Moody's concern that the projected ramp in profits and free cash flow expected for 2009 and 2010 that had been factored into the B2 corporate family rating will not be achieved due to the global economic crisis and resulting slowdown in consumer spending levels. At the time of the leveraged buyout led by Kohlberg, Kravis, Roberts & Co in September 2007, Moody's noted that First Data was weakly positioned in the B2 CFR category because of its considerable financial leverage (pro forma debt to EBITDA of approximately 9x). Moody 's expected that the company's credit metrics, including free cash flow to debt, would remain weak for at least eighteen months following the transaction's close, but that leverage ratios would begin to improve significantly in 2010. Although the company faces no significant debt maturity until 2014 and has ample cushion with its financial covenants under the senior secured credit facility, Moody's believes the high debt burden will continue for the next several years, which may no longer be consistent with a B2 rating. "Given the current economic recession, Moody 's believe the company's ability to de-lever through EBITDA growth could be delayed for another couple of years despite the better-than- expected cost savings achieved to date," said Moody's Senior Analyst Stephen Sohn. Any downgrade of the CFR would likely be limited to one notch in view of Moody's expectation that First Data will be able to generate steady cash flows during the current economic downturn. The company's credit quality is supported by its large size and leading market positions in the electronic commerce and payment solutions for financial institutions, merchants, and other organizations worldwide, which benefits from the secular shift from cash/check payment to electronic payments. In addition, the company maintains a diversified business profile (e.g., breadth of service offerings and international expansion) and near-term liquidity, which is supported by around $1.7 billion of availability on its revolver. Moody's review will focus on the impact of the consumer spending downturn on revenues and margins of the Merchant Services business, the effect of bank consolidation on the performance of the Financial Services segment, the extent to which the company can realize additional cost synergies to counter the effect of the economic recession, and the implications of the recent termination of the Chase Paymentech alliance. Ratings affected by the review are: Issuer: First Data Corporation * Corporate Family Rating -- B2 * Probability of Default Rating -- B2 * $2 billion Senior Secured Revolving Facility due 2013 -- Ba3 (LGD 2, 27%) * $13 billion Senior Secured Term Loan B due 2014 -- Ba3 (LGD 2, 27%) * $3.75 billion Senior Unsecured Cash Pay Notes due 2015 -- B3 (LGD 5, 76%) * (Approximately $86 million) Pre-LBO Untendered Senior Unsecured Stub Notes -- Caa1 Outlook, changed to rating under review from stable. The last rating action was on January 11, 2008, when Moody's lowered FDC's untendered senior unsecured stub notes rating to Caa1 from A2. The company's corporate family rating of B2 and stable rating outlook were unchanged. Based in Greenwood Village, Colorado, First Data Corporation is a global leader in electronic commerce and payment solutions for financial institutions, merchants, and other organizations worldwide. FORD MOTOR: U.S. Sales Dropped 48% to 96,044 in February -------------------------------------------------------- Coming off a strong February performance in 2008, Ford, Lincoln and Mercury February U.S. sales totaled 96,044, down 48% compared with a year ago. "The economic and competitive environment remains challenging," said Ken Czubay, Ford Motor Co. vice president of sales and marketing. "Ironically, these times provide the best opportunity to distance Ford from the competition. We're determined to stay on course and stay focused -- building a foundation for future growth with distinctively styled products that offer consumers best-in-class quality, fuel economy, safety and value." Ford's next generation mid-size cars -- the 2010 Ford Fusion and Mercury Milan -- will arrive in dealer showrooms this spring. Recent independent studies rate Fusion and Milan as having the best predicted reliability among all mid-size sedans. The new Fusion Hybrid delivers 41 mpg in the city and 36 mpg on the highway, topping the Toyota Camry Hybrid by 8 mpg in the city and 2 mpg on the highway. The new four-cylinder Ford Fusion S achieves 34 mpg on the highway and 23 mpg in the city, beating both the gasoline-powered Camry and Honda Accord. U.S. Inventories At the end of February, Ford, Lincoln, and Mercury inventories totaled 405,000 units. Inventories are 32% lower than a year ago -- in line with the sales decline (26%) during this period. North American Production In the second quarter 2009, the company plans to produce 425,000 vehicles (135,000 cars and 290,000 trucks). In the second quarter 2008, the company produced 685,000 vehicles (237,000 cars and 448,000 trucks). "A key element of our strategy to build our reputation and improve resale values is to align our production with consumer demand," said Mr. Czubay. "Our disciplined approach to the market in these challenging times helps us to minimize costly incentives which erode brand value." FORD MOTOR COMPANY FEBRUARY 2009 U.S. SALES February Year-To-Date -------- % ------------ % 2009 2008 Change 2009 2008 Change ---- ---- ------ ---- ---- ------ Sales By Brand Ford 84,422 164,915 -48.8 63,744 295,989 -44.7 Lincoln 5,633 9,573 -41.2 11,724 17,558 -33.2 Mercury 5,989 10,806 -44.6 11,172 20,102 -44.4 ----- ------ ------ ------ ------- ----- Total Ford, Lincoln and Mercury 96,044 185,294 -48.2 186,640 333,649 -44.1 Volvo 3,356 7,505 -55.3 6,266 15,541 -59.7 ----- ----- ----- ------ ------- ----- Total Ford Motor Company 99,400 192,799 -48.4 192,906 349,190 -44.8 Ford, Lincoln and Mercury Sales By Type Cars 34,678 58,585 -40.8 63,385 102,844 -38.4 Crossover Utility Vehicles 21,993 33,846 -35.0 42,140 63,526 -33.7 Sport Utility Vehicles 5,439 19,033 -71.4 12,722 34,431 -63.1 Trucks and Vans 33,934 73,830 -54.0 68,393 132,848 -48.5 ------ ------ ----- ------ ------- ----- Total Trucks 61,366 126,709 -51.6 123,255 230,805 -46.6 ------ ------- ----- -------- ------- ----- Total Vehicles 96,044 185,294 -48.2 186,640 333,649 -44.1 FORD BRAND FEBRUARY 2009 U.S. SALES February Year-To-Date -------- % ------------ % 2009 2008 Change 2009 2008 Change ---- ---- ------ ---- ---- ------ Crown Victoria 3,272 3,894 -16.0 4,918 8,325 -40.9 Taurus 3,290 4,789 -31.3 4,995 8,969 -44.3 Fusion 7,603 14,980 -49.2 15,755 24,163 -34.8 Focus 9,904 16,302 -39.2 17,673 27,902 -36.7 Mustang 2,990 7,752 -61.4 5,934 14,297 -58.5 ----- ----- ----- ------ ------ ----- Ford Cars 27,059 47,717 -43.3 49,275 83,656 -41.1 Flex 2,352 0 NA 4,811 0 NA Edge 5,214 11,638 -55.2 10,187 22,526 -54.8 Escape 10,090 14,192 -28.9 18,450 25,383 -27.3 Taurus X 1,160 2,154 -46.1 2,039 4,388 -53.5 ----- ----- ----- ------- ------ ----- Ford Crossover Utility Vehicles 18,816 27,984 -32.8 35,487 52,297 -32.1 Expedition 1,564 6,296 -75.2 3,941 11,259 -65.0 Explorer 3,073 9,452 -67.5 6,760 16,669 -59.4 ----- ----- ----- ------ ------ ----- Ford Sport Utility Vehicles 4,637 15,748 -70.6 10,701 27,928 -61.7 F-Series 23,614 52,548 -55.1 48,851 93,673 -47.8 Ranger 3,597 7,431 -51.6 6,410 12,977 -50.6 Econoline/Club Wagon 6,349 12,866 -50.7 12,205 24,199 -49.6 Low Cab Forward 10 70 -85.7 29 149 -80.5 Heavy Trucks 340 551 -38.3 786 1,110 -29.2 ------ ------ ----- ------ ------ ----- Ford Trucks and Vans 33,910 73,466 -53.8 68,281 132,108 -48.3 ------ ------ ----- ------ ------- ----- Ford Brand 84,422 164,915 -48.8 163,744 295,989 -44.7 LINCOLN BRAND FEBRUARY 2009 U.S. SALES February Year-To-Date -------- % ------------ % 2009 2008 Change 2009 2008 Change ---- ---- ------ ---- ---- ------ MKS 1,346 0 NA 2,881 0 NA MKZ 1,145 3,531 -67.6 2,706 6,243 -56.7 Town Car 1,084 1,306 -17.0 1,594 1,512 5.4 MKX 1,669 2,819 -40.8 3,404 5,845 -41.8 Navigator 365 1,553 -76.5 1,027 3,218 -68.1 Mark LT 24 364 -93.4 112 740 -84.9 ----- ----- ----- ----- ----- ----- Lincoln Brand 5,633 9,573 -41.2 11,724 17,558 -33.2 MERCURY BRAND FEBRUARY 2009 U.S. SALES February Year-To-Date -------- % ------------ % 2009 2008 Change 2009 2008 Change ---- ---- ------ ---- ---- ------ Grand Marquis 1,433 2,549 -43.8 2,158 4,512 -52.2 Sable 1,271 938 35.5 1,753 1,924 -8.9 Milan 1,340 2,544 -47.3 3,018 4,997 -39.6 Mariner 1,508 3,043 -50.4 3,249 5,384 -39.7 Mountaineer 437 1,732 -74.8 994 3,285 -69.7 ----- ----- ----- ----- ----- ----- Mercury Brand 5,989 10,806 -44.6 11,172 20,102 -44.4 VOLVO BRAND FEBRUARY 2009 U.S. SALES February Year-To-Date -------- % ------------ % 2009 2008 Change 2009 2008 Change ---- ---- ------ ---- ---- ------ S40 491 930 -47.2 891 2,449 -63.6 V50 128 157 -18.5 264 320 -17.5 S60 273 1,310 -79.2 548 3,023 -81.9 S80 671 1,270 -47.2 1,144 2,135 -46.4 V70 71 214 -66.8 162 381 -57.5 XC60 235 0 NA 235 0 NA XC70 369 933 -60.5 839 1,898 -55.8 XC90 665 1,887 -64.8 1,238 3,805 -67.5 C70 253 471 -46.3 525 846 -37.9 C30 200 333 -39.9 420 684 -38.6 --- ----- ----- ----- ----- ----- Volvo Brand 3,356 7,505 -55.3 6,266 15,541 -59.7 About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin-American regions, including Argentina and Brazil. * * * Moody's Investors Service in December 2008 lowered the Corporate Family Rating and Probability of Default Rating of Ford Motor Company to Caa3 from Caa1 and lowered the company's Speculative Grade Liquidity rating to SGL-4 from SGL-3. The outlook is negative. The downgrade reflects the increased risk that Ford will have to undertake some form of balance sheet restructuring in order to achieve the same UAW concessions that General Motors and Chrysler are likely to achieve as a result of the recently- approved government bailout loans. Such a balance sheet restructuring would likely entail a loss for bond holders and would be viewed by Moody's as a distressed exchange and consequently treated as a default for analytic purposes. FRESH DEL MONTE: S&P Affirms Rating at 'BB-'; Outlook 'Developing' ------------------------------------------------------------------ Standard & Poor's Ratings Services said that it revised its outlook on Cayman Islands-based Fresh Del Monte Produce Inc. to developing from positive. S&P also affirmed the existing ratings on the company, including the 'BB-' corporate credit rating. As of Dec. 26, 2008, the company had about $513 million total debt. "The outlook revision reflects our concerns about the company's upcoming refinancing needs," said Standard & Poor's credit analyst Alison Sullivan. Fresh Del Monte's $600 million revolver matures in November 2009 (the company borrowed about $350 million as of Dec. 26, 2008), and it must repay $50 million of its term loan debt before the revolver maturity. "We would consider a lower rating if Fresh Del Monte cannot timely refinance this debt, while maintaining adequate liquidity," she continued. However, Fresh Del Monte has sustained solid credit measures that would support a potential upgrade. The ratings on Fresh Del Monte reflect its participation in the highly variable, commodity-oriented fresh fruit and vegetable industry. Uncontrollable factors such as global supply, world trade policies, political risk, currency swings, weather, and disease affect the industry. Fresh Del Monte benefits from its leading positions in the production, marketing, and distribution of fresh produce. The outlook is developing. The company's $600 million revolver matures in November 2009, and the company must repay $50 million of term loan debt before the revolver maturity. S&P could lower the ratings if Fresh Del Monte cannot refinance this facility and term debt in a timely manner. S&P assumes Fresh Del Monte will maintain credit measures that are stronger than its rating category to compensate for inherent volatility in the produce industry. Standard & Poor's could review the ratings for an upgrade if the company refinances its credit facility on reasonable terms, operating performance remains stable, financial policy remains prudent, and the company sustains a rolling two-year average leverage of about 2.5x, and rolling two-year average funds from operations to total debt of 30%-35%. FULTON HOMES: Files List of 18 Largest Unsecured Creditors ---------------------------------------------------------- Fulton Homes Corporation submitted to the U.S. Bankruptcy Court for the District of Arizona a list of 18 largest unsecured creditors. The Debtor's largest unsecured creditors are: Entity Nature of Claim Claim Amount ------ --------------- ------------ BOA; Chase; Compass; 163,488,655 Guaranty; Wachovia c/o Chris Bayley - Snell & Wilmer 400 East Van BureN Phoenix, AZ 85004-2202 Town of Queen Creek contract $500,000 22350 S. Ellsworth Road Queen Creek, AZ 85242-9311 GE Appliances GE Consumer and $81,176 Industrial 307 N. Hurstbourne Parkway Louisville, KY 40222 Mesa Lighting & Fan Inc. $17,178 Arizona Wholesale Supply $4,323 S.O.S. Exterminating $998 Perkinson Rreprographics $892 Scott Blue Reporgraphics $762 Qwest $171 Mobil Mini $158 L. P. Rent-a-fence $142 Precision Drafting and Design $140 Pre Paid Legal Services $51 Cavanagh Law Firm $50 First Class Delivery $44 Fennemore Craig, P.C. $20 Infrastructure Dynamics unknown Optimus Survey Services unknown About Fulton Homes Fulton Homes Corporation -- http://www.fultonhomes.com-- is a Tempe, Arizona-based homebuilder. The Company filed for Chapter 11 protection on January 27, 2009 (Bankr. D. Ariz. Case No.: 09- 01298). Mark W. Roth, Esq., at Shughart Thomson & Kilroy PC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed assets and debt between $100 million and $500 million each. FULTON HOMES: U.S. Trustee Unable to Form Creditors Committee ------------------------------------------------------------- Ilene J. Lashinsky, the United States Trustee for Region 14, was unable to appoint creditors to serve on an Official Committee of Unsecured Creditors for the Chapter 11 case of Fulton Homes Corporation. The U.S. Trustee said in papers filed with the Court that it contacted several unsecured creditors of the Debtor but few creditors expressed their interest to enable the Trustee to form a committee. Fulton Homes Corporation -- http://www.fultonhomes.com-- is a Tempe, Arizona-based homebuilder. The Company filed for Chapter 11 protection on January 27, 2009 (Bankr. D. Ariz. Case No.: 09- 01298). Mark W. Roth, Esq., at Shughart Thomson & Kilroy PC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed assets and debt between $100 million and $500 million each. GANNETT CO: S&P Cuts Rating to 'BB' on Expected Ad Revenues Drop ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating for Gannett Co. Inc. to 'BB' from 'BBB-'. The rating outlook is negative. At the same time, S&P lowered the company's issue-level ratings on its senior unsecured notes issues four notches to 'B+' (two notches lower than the 'BB' corporate credit rating) from 'BBB-', partly to reflect the two-notch downgrade of the corporate credit rating, and partly to reflect the assignment of S&P's '6' recovery rating to the notes. The '6' recovery rating reflects S&P's expectation of negligible (0% to 10%) recovery for lenders in the event of a payment default. In addition, S&P withdrew its 'A-3' commercial paper rating on the company. The corporate credit and issue-level ratings were removed from CreditWatch, where they were placed with negative implications Jan. 30, 2009. The downgrade of the corporate credit rating reflects a worsening pace of expected decline in advertising spending in both Gannett's newspaper publishing and broadcasting businesses due to deteriorating levels of economic activity in the U.S. and the U.K.," said Standard & Poor's credit analyst Emile Courtney. The previous 'BBB-' rating incorporated that revenue would decline about 10% and EBITDA would decline about 20% (on a pro forma basis after factoring in ShopLocal LLC and CareerBuilder investments in 2008). S&P now believe that pro forma revenue could decline about 15% and pro forma EBITDA could decline between 30% and 35% in 2009. S&P's measure of Gannett's unfunded pension and postretirement obligations increased by about $500 million in 2008 compared to 2007, due to a meaningful decline in the pension plan's assets. In addition, on Feb. 25, 2009, Gannett announced a cut in its common dividend by 90% annually (or approximately $330 million), starting in the second quarter of 2009. Because of a greater decline in 2009 EBITDA and the increase in the unfunded pension and postretirement obligations (partially offset by additional debt repayment resulting from the lower dividend), S&P expects its measure of lease- and pension-adjusted total debt to EBITDA to increase to 4x at the end of 2009, from 3.4x at the end of 2008. This expected measure is weak for the 'BB' rating and assumes no acquisitions or share repurchases in 2009. Even though Gannett's financial profile benefits from significant discretionary cash flow for debt repayment (S&P expects over $500 million in 2009 after factoring in the dividend cut), S&P expects the company to face an extended period of cyclical pressure that will continue to exacerbate the secular shift in revenue away from Gannett's newspaper business. S&P expects cyclical economic pressure throughout 2009 in both the U.S. and the U.K. that will negatively affect the company's newspaper and broadcasting businesses at the same time. In addition, Gannett generated $118 million in Olympic and political related advertising revenue in its broadcasting business last year that will not repeat in 2009. While acknowledging that it is difficult to estimate at this time what would likely represent a moderated pace of decline for newspaper ad revenue post-recession, S&P has incorporated into the current rating the expectation for a U.S. economic recovery beginning in 2010 and for newspaper ad revenue to decline in the high-single-digit percentage area in that year. S&P believes Gannett's broadcasting business will benefit when the economy recovers, as well as from mid-term political advertising in 2010. Revenue in Gannett's digital business grew 13% on a pro forma basis in 2008, and S&P believes this business is likely to have a long-term growth profile that compares favorably to the company's publishing and broadcasting businesses. GENCORP INC: Compensation Panel & Board Adopt Incentive Plans ------------------------------------------------------------- On February 11, 2009, the Organization & Compensation Committee and the Board of Directors of GenCorp Inc. met to discuss director and executive compensation issues and adopted: * 2008 Annual Cash Incentive Awards The Board, upon the recommendation and approval of the Compensation Committee, approved cash incentive awards to all executive officers and other key employees of the Company for fiscal year 2008. The awards were based on an assessment of actual performance against pre-established Company and business segment performance objectives specified in the Company's annual operating plan. Specifically, performance targets consisted of: (i) for the Aerospace and Defense business segment, revenue growth, segment performance and cash flow, (ii) for the Real Estate business segment, various real estate objectives tied to the entitlement of the Company's excess real estate and (iii) for the Corporate business segment, earnings per share, cash flow and various real estate objectives tied to the entitlement of the Company's excess real estate. Executive Officer Title 2008 ----------------- ----- ---- J. Scott Neish Interim President, $357,000 Interim Chief Executive Officer, Vice President and President, Aerojet-General Corp. Kathleen E. Redd Vice President, $133,000 Chief Financial Officer and Secretary Mark A. Whitney Former Senior Vice President, $259,000 General Counsel and Secretary Chris W. Conley Vice President, $106,000 Environmental Health & Safety William M. Lau Vice President and Treasurer $100,000 * 2009 Annual Cash Incentive Plan The Board, upon the recommendation and approval of the Compensation Committee, adopted an annual cash incentive plan for fiscal year 2009. The program provides Eligible Employees, including the Company's named executive officers, the opportunity to receive cash incentive awards if individual and/or business targets are met. For the Corporate business segment, performance objectives relate to net income (accorded a 50% weighting), cash flow (accorded a 30% weighting) and revenue growth (accorded a 20% weighting). For the Aerospace and Defense business segment, performance objectives relate to cash flow (accorded a 40% weighting), awards (accorded a 30% weighting), contract profit (accorded a 15% weighting), and contract margin (accorded a 15% weighting). Each named executive officer and eligible employees in the Corporate or Aerospace and Defense business segments has the opportunity to earn up to 200% of their base salaries if all of their performance measures are met at the maximum target levels. For the Real Estate business segment, the performance objectives relate to cash flow/budget, signage of water agreements with the Golden State Water Company and Sacramento County, signage of the Glenborough Development Agreement, sale of the Folsom schools and general discretionary objectives. Each named executive officer in the Real Estate business segment has the opportunity to earn up to 200% of their base salaries if all of their performance measures are met at the maximum target levels. The target bonus for each Eligible Employee is based on a percentage of the participant's annual salary as of November 30, 2009. The applicable percentage for each participant is determined by the Compensation Committee, in its sole discretion. The earned bonus may be greater than or less than the target bonus depending on the level at which the performance objectives are attained. * 2009 Long-Term Equity Incentive Awards The Board, upon the recommendation and approval of the Compensation Committee, adopted, subject to shareholder approval at the Company's 2009 Annual Meeting of Shareholders, the 2009 Equity and Performance Incentive Plan. The Long Term Incentive Plan provides eligible participants the opportunity to earn long- term incentive compensation based on the Company's attainment of certain financial goals determined by the Compensation Committee and set forth in the Long Term Incentive Plan. The Compensation Committee may revise the performance goals in the event of a change of control or other corporate reorganization, merger, similar transaction or other extraordinary event, or as the Compensation Committee determines is in the best interests of the Company. The Long Term Incentive Plan is intended as an incentive to attract, motivate, and retain employees, including the Company's named executive officers, and directors upon whose judgment, initiative, and efforts the financial success and growth of the business of the Company largely depend, and to provide an additional incentive for such individuals through stock ownership and other rights that promote and recognize the financial success and growth of the Company and create value for shareholders. The Long Term Incentive Plan permits the grant of cash-based awards, nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other stock-based awards, provided that the total number of shares of common stock of the Company which may be issued under the Long Term Incentive Plan may not exceed 500,000 shares. Under the Long Term Incentive Plan, 50% of the target award is to be paid in the form of performance awards of cash or equity, 40% of the target award is to be paid in the form of stock options, including nonqualified stock options, incentive stock options, stock appreciation rights or other stock-based awards, and 10% of the target award is to be paid in the form of full value awards, including restricted stock and restricted stock units. Annual Meeting of Shareholders on March 25 The 2009 annual meeting of shareholders of GenCorp Inc. will be held on March 25, 2009 at 9:00 a.m. local time at the offices of Olshan Grundman Frome Rosenzweig & Wolosky LLP, Park Avenue Tower, 65 East 55th Street in New York, for these purposes: 1. To elect seven directors to our Board of Directors to serve until the 2010 annual meeting of shareholders and until their respective successors have been duly elected and qualified; 2. To ratify the appointment of PricewaterhouseCoopers LLP as independent auditors of the Company for the fiscal year ending November 30, 2009; 3. To approve the 2009 Equity and Performance Incentive Plan; and 4. To consider and act on other business as may properly be brought before the Annual Meeting. A full-text copy of the Proxy Statement for the Annual Meeting is available for free at: http://researcharchives.com/t/s?3a03 Only shareholders of record at the close of business on January 29, 2009, are entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements of the Annual Meeting. About GenCorp Headquartered in Rancho Cordova, Calif., GenCorp Inc. (NYSE: GY) -- http://www.GenCorp.com/-- is a leading technology-based manufacturer of aerospace and defense products and systems with a real estate segment that includes activities related to the entitlement, sale and leasing of the company's excess real estate assets. As reported in the Troubled Company Reporter on Jan. 20, 2009, Moody's Investors Service downgraded the Corporate Family Rating of GenCorp, Inc. to B3 from B2 and the Probability of Default Rating to Caa1 from B2. In a related action, the company's senior secured bank credit facilities were downgraded to Ba3, convertible subordinated notes downgraded to Caa2, and senior subordinated notes affirmed at B1. The rating outlook remains negative. GENERAL MOTORS: Treasury Grants Waiver on VEBA, Bond Swap --------------------------------------------------------- On February 17, 2009, General Motors Corporation and the United States Department of the Treasury entered into a waiver pursuant to which section 7.21 of the Loan and Security Agreement by and between GM and the UST dated as of December 31, 2008, was deleted, which removed the requirement that GM submit certain signed term sheets relating to the Labor Modifications, the VEBA Modifications, and the Bond Exchange, as each term is defined in the Agreement, on or before February 17. GM and the UST subsequently entered into the Second Post-Closing Matters Letter dated February 19, 2009, which restated and consolidated the Waiver and certain non-material post-closing matters set forth in a Post-Closing Letter between the parties dated as of December 31, 2008. A full-text copy of the Second Post-Closing Matters Letter is available for free at: http://researcharchives.com/t/s?3a04 On February 17, 2009, GM borrowed an additional $4.0 billion under the Agreement. The Troubled Company Reporter reported on January 8, 2009, that General Motors Corporation and certain of its domestic subsidiaries entered into a loan and security agreement with the United States Department of the Treasury, pursuant to which the UST agreed to provide GM with a $13.4 billion secured term loan facility. GM borrowed $4.0 billion under the Facility on Dec. 31, 2008, and is eligible to borrow an additional $5.4 billion on Jan. 16, 2009, and $4.0 billion on Feb. 17, 2009. GM's ability to make the subsequent borrowings is subject to its satisfaction of the requisite borrowing conditions, and, in the case of the final $4.0 billion on February 17, to the UST having funds available for this purpose. A full-text copy of the LOAN AND SECURITY AGREEMENT is available for free at http://ResearchArchives.com/t/s?377e First Amendment to Credit Agreement In a separate regulatory filing, General Motors Corporation disclosed that on February 11, 2009, it entered into the First Amendment and Consent to the Amended and Restated Credit Agreement, dated as of June 20, 2006, among GM, General Motors of Canada Limited, Saturn Corporation, Citicorp USA, Inc., as administrative agent for the Lenders thereunder, JPMorgan Chase Bank, N.A., as syndication agent, and the several banks and other financial institutions from time to time parties thereto as lenders. GM entered into negotiations to amend certain covenants in the Credit Agreement relating to restrictions on liens to permit the grant of junior liens for the benefit of the U.S. Department of the Treasury to secure obligations under the Loan and Security Agreement dated as of December 31, 2008 between the U.S. Treasury and GM and certain of its U.S. subsidiaries and modify the requirement that GM deliver consolidated annual financial statements for 2008 accompanied by an opinion of its independent public accountants that does not include a "going concern" qualification. Under the Amendment and related agreements, the covenants relating to restrictions on liens on assets securing the obligations under the Credit Agreement that are owned by GM or Saturn were modified to permit the grant of junior liens for the benefit of the U.S. Treasury to secure obligations under the Treasury Loan or any agreement refinancing the Treasury Loan Agreement on market-based, arms-length terms and additional extensions of credit provided by a branch of the U.S. government. Any optional prepayment of any tranche of the U.S. Government Funding or of indebtedness of GM Canada secured by Revolver Collateral owned by GM Canada at the time that a majority of the principal under such tranche are held by Non-Government Lenders will require a pro rata prepayment and commitment reduction under the Credit Agreement. If the final maturity date of any tranche of the U.S. Government Funding will occur before July 20, 2011, and 30 days prior to such early maturity date the majority of the obligations under such tranche are held by Non-Government Lenders, then loans outstanding under the Credit Agreement in an amount equal to the principal amount under such tranche to be paid on such early maturity date must be repaid, and commitments under the Credit Agreement equal to the repaid loans will automatically be terminated. Other significant provisions of the Amendment related to collateral include: * The secured revolving Lenders were provided with a junior priority lien on the collateral pledged to secure GM's obligations under the Treasury Loan and agreed to subordinate such junior liens to liens on the same collateral securing creditors under prospective financings, including refinancing of currently unsecured debt. * Any Canadian governmental authority (including Export Development Corporation (Canada)) that provides secured financing to GM or any of its subsidiaries may be offered a junior lien on the Revolver Collateral owned by GM Canada. * The value of Revolver Collateral that is subject to junior liens securing obligations under any U.S. Government Funding or Additional Canadian Debt will not be excluded from the determination of the value of U.S. Collateral or Canadian Collateral, respectively, under the Credit Agreement. Under the Amendment the Lenders agreed to waive the requirement to secure the obligations under the Credit Agreement equally and ratably with liens on assets comprising Principal Domestic Manufacturing Property if such assets are to be subject to a lien securing any other obligations in either of these circumstances: * None of GM's other loan agreements or other credit documents provides a similar requirement, or * GM pledges such assets in connection with a balance sheet restructuring negotiated between GM and its creditors. The Amendment provided additional events of default under the Credit Agreement for: * An event of default under the documents relating to any U.S. Government Funding or Additional Canadian Debt that continue for 20 business days, or * GM's failure under its existing term loan agreement to deliver consolidated annual financial statements accompanied by an opinion of its independent public accountants that does not include a "going concern" qualification if such failure is not waived by the lenders under such agreement or remedied during an initial 15-day grace period and GM does not remedy such failure within 30 days after the Lenders have given notice of such failure. The requirement in the Credit Agreement to deliver consolidated annual financial statements without a "going concern" paragraph in the accompanying opinion has been modified by the Amendment to exclude the opinion to be provided with the consolidated annual financial statements for the fiscal year ended December 31, 2008. The Amendment also added a covenant providing that GM may pay cash dividends to its stockholders only if such payment is permitted or consented to under the documents relating to any U.S. Government Funding. Finally, under the Amendment the parties agreed to a minimum LIBOR rate and an increase in the interest and default rates, all consistent with the terms of the Treasury Loan, and GM agreed to pay certain fees to the administrative agent and to the Lenders that consented to the Amendment. A full-text copy of the First Amendment is available for free at: http://researcharchives.com/t/s?3a05 About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. General Motors Latin America, Africa and Middle East, with headquarters in Miramar, Florida, is one of GM's four regional business units. GM LAAM employs approximately 37,000 people in 18 countries and has manufacturing facilities in Argentina, Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and Venezuela. GM LAAM markets vehicles under the Buick, Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and Suzuki brands. GM's common stock was considered the stock market's bellwether for many years, hence the saying "What's good for GM is good for America." As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of US$110.425 billion, total liabilities of $170.3 billion, resulting in a stockholders' deficit of $59.9 billion. * * * As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. To 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the Company's rapidly diminishing liquidity position. Given the current liquidity level of US$16.2 billion and the pace of negative cash flows, Fitch expects that GM will require direct federal assistance over the next quarter and the forbearance of trade creditors in order to avoid default. With virtually no further access to external capital and little potential for material asset sales, cash holdings are expected to shortly reach minimum required operating levels. Fitch placed these on Rating Watch Negative: -- Senior secured at 'B/RR1'; -- Senior unsecured at 'CCC-/RR5'. As reported in the Troubled Company Reporter on June 24, 2008, DBRS has placed the ratings of General Motors Corp. And General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. Economy. GENERAL MOTORS: Bondholders Will Meet With Task Force on Thursday ----------------------------------------------------------------- General Motors Corp. bondholders' advisers will meet with the auto task force on Thursday to discuss whether the federal government would guarantee new bonds that GM would issue as part of its restructuring, John D. Stoll at The Wall Street Journal reports, citing a person familiar with the matter. WSJ states that the bondholders requested a meeting last week. The source said that the bondholders will try to work out a "constructive solution" for an out-of-court reorganization of GM, WSJ relates. The bondholders will lay out several potential avenues for GM's attempt to reduce two-thirds of $27 billion in unsecured debt that it currently holds, WSJ says, citing the source. WSJ states that the task force will be meeting with the National Auto Dealers Association on Friday. 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: U.S. Vehicle Deliveries Dropped 52.9% in February ----------------------------------------------------------------- General Motors dealers in the United States delivered 127,296 vehicles in February, down 52.9% compared with a year ago, driven by a 75% reduction in fleet sales. However, GM's car sales compared with January were up nearly 23%, and crossover sales increased 6%, as financing availability continued to improve and slightly more fleet orders were able to be filled. Retail sales for the month were off 43% compared with a year ago in a total industry vehicle market estimated to be the weakest February since 1967. "It remains a tough and challenging market, but seeing some upticks in volume and showroom traffic compared with last month is encouraging. Our new products continue to take hold in the market and we are estimating retail share increases with Malibu, Traverse, Enclave, HHR, Cobalt and G6. This is in line with our viability plan which is focused on passenger cars and crossovers in addition to our strong truck lineup," said Mark LaNeve, vice president, GM North America Vehicle Sales, Service and Marketing. "With the 2010 Camaro launching this month, closely followed by the Buick LaCrosse, Chevy Equinox and GMC Terrain, we are adding even more world-class, fuel-efficient cars and crossovers to our lineup." GM February total car sales of 53,813 were off 50% and total truck sales (including crossovers) of 73,483 were down 55% compared with a year ago. The newly-launched Chevrolet Traverse crossover continues to gain traction in the marketplace with total sales of more than 6,400 vehicles, up 23% from January. Chevrolet's crossover portfolio of HHR, Equinox, and Traverse combined for 11,796 retail sales in February, a 7% increase compared with last year. Malibu retail sales were up 33% compared with a year ago. "All of our new product launches in the 2009-2014 timeframe are cars or crossovers, and with outstanding products like Malibu and Traverse already in the market, we're building on a strong foundation," Mr. LaNeve said. "We saw customers respond to our 0% reduced rate APR and bonus cash offers last month, so we're doing what we can to keep sales rolling by extending most of those offers into March," he added. A total of 1,087 GM hybrid vehicles were delivered in the month, illustrating the wide range of hybrid product offerings available. GM offers the Chevrolet Malibu, Tahoe and Silverado, GMC Yukon and Sierra, Cadillac Escalade, Saturn Aura and Vue hybrids. So far, in 2009, GM has delivered 2,010 hybrid vehicles. GM inventories dropped compared with a year ago. At the end of February, only about 781,000 vehicles were in stock, down about 160,000 vehicles (or 17%) compared with last year. There were about 337,000 cars and 444,000 trucks (including crossovers) in inventory at the end of February. Inventories were reduced about 20,000 vehicles compared with January. Certified Used Vehicles GM certified total sales for February 2009 were down, impacted by the uncertain economic environment. GM Certified Used Vehicles, Saturn Certified Pre-Owned Vehicles, Cadillac Certified Pre-Owned Vehicles, Saab Certified Pre-Owned Vehicles, and HUMMER Certified Pre-Owned Vehicles, combined sold 33,014 vehicles. GM Certified Used Vehicles, the industry's top-selling certified brand, posted February sales of 28,204 vehicles, down 25% from February 2008. However, several brands saw an increase in sales from February 2008. Saturn Certified Pre-Owned Vehicles sold 828 vehicles, up 17%. Cadillac Certified Pre-Owned Vehicles sold 3,303 vehicles, up 1%. Saab Certified Pre-Owned Vehicles sold 476 vehicles, up 4%, and HUMMER Certified Pre-Owned Vehicles sold 203 vehicles, up 31%. "Despite slow sales in February, the Certified Pre-Owned Program continues to be a bright spot for GM, our dealers and the automotive industry as a whole," said Mr. LaNeve. "In particular, we are proud of the strong performance of our luxury CPO brands that continue to show good growth year-over-year. We are providing a tremendous value for customers and dealers in very challenging times for the industry and economy." GM North America Reports February 2009 Production; Q1 2009 Production Forecast remains at 380,000 Vehicles; Initial Q2 2009 Production Forecast at 550,000 Vehicles In February, GM North America produced 135,000 vehicles (37,000 cars and 98,000 trucks). This is down 215,000 vehicles or 61% compared with February 2008 when the region produced 350,000 vehicles (129,000 cars and 221,000 trucks). (Production totals include joint venture production of 7,000 vehicles in February 2009 and 22,000 vehicles in February 2008.) The region's 2009 first-quarter production forecast remains unchanged from last month's projection of 380,000 vehicles (118,000 cars and 262,000 trucks), which is down about 57% compared with a year ago. GM North America built 885,000 vehicles (360,000 cars and 525,000 trucks) in the first-quarter of 2008. The region's 2009 second-quarter production forecast is initially set at 550,000 vehicles (195,000 cars and 355,000 trucks), which is down about 34% compared with a year ago. GM North America built 834,000 vehicles (382,000 cars and 452,000 trucks) in the second-quarter of 2008. General Motors Corp. (NYSE: GM), one of the world's largest automakers, was founded in 1908, and today manufactures cars and trucks in 34 countries. With its global headquarters in Detroit, GM employs 244,500 people in every major region of the world, and sells and services vehicles in some 140 countries. In 2008, GM sold 8.35 million cars and trucks globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall, and Wuling. GM's largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. 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 Advance $450MM to Delphi, to Buy Steering Biz ---------------------------------------------------------------- Delphi Corp. disclosed several agreements reached between Delphi and General Motors Corporation in order to supplement Delphi's liquidity position and to substantially complete Delphi's portfolio transformation through the sale of Delphi's global Steering business. The sale of the Steering business is a strategic component of Delphi's transformation strategy, which was announced in March 2006. Pursuant to two amendments to GM's liquidity advance agreement with Delphi, GM has agreed to increase from $300 million to $450 million the amount it is committed to advance to Delphi. The amendments are subject to several conditions, including U.S. Bankruptcy Court approval and review prior to March 24, 2009 by the President's Designee in accordance with the provisions of GM's federal loans. Delphi and GM have entered into an agreement under which GM will exercise its option to purchase Delphi's Steering business as contemplated under the Amended Master Restructuring Agreement between Delphi and GM dated Sept. 12, 2008. Delphi had earlier entered into a Purchase and Sale Agreement with an affiliate of Platinum Equity, LLC, which the parties have mutually terminated. GM has confirmed that it will exercise its option under the GM/Delphi Master Restructuring Agreement to acquire the Delphi global steering business. The option covers Delphi global Steering business including employees, facilities, products, technical capability and intellectual property. The business will still be operated as a stand-alone business and, at least in the near term, will be held in a wholly owned subsidiary of GM. A diverse customer base and the ability to self-fund the operations will be essential to the business' long-term future. To achieve these goals, new business opportunities and technologies will continue to be aggressively pursued. GM and Delphi are committed to work together to provide non-GM customers of the Steering business with the continued supply of high quality products and services following the sale. Additionally, Delphi is committed to provide general transition services to GM through mid-2011 and information technology transition services through December 2012. Delphi and GM have agreed to use their reasonable best efforts to close the Steering transaction on or before April 30, 2009, as well as to achieve certain other milestones, which are also subject to various conditions including U.S. Bankruptcy Court approval. Delphi believes that GM's commitment of additional liquidity coupled with the support it has received from its lenders under its debtor-in-possession (DIP) financing facility should allow Delphi to manage its liquidity into May 2009 as it continues emergence discussions with its stakeholders on proposed modifications to Delphi's First Amended Plan of Reorganization confirmed in January 2008. GM and Delphi are working together to negotiate an arrangement under which Delphi would transfer to GM certain of Delphi's U.S. manufacturing sites dedicated principally to supply product to GM in exchange for a payment which Delphi expects to facilitate the company's emergence from Chapter 11. These manufacturing sites represent less than 3 percent of Delphi's global manufacturing operations. As part of these negotiations, Delphi and GM are seeking to finalize modifications to their previous agreements as part of the April 2, 2009, milestone for Delphi's filing of reorganization plan modifications as contemplated by the recent Accommodation Agreement Amendment Supplement. "As stated in GM's Feb. 17 filing with the U.S. Dept. of the Treasury, Delphi represents an important source of supply for GM. This financial commitment by GM represents an important and necessary step for Delphi to be able to access additional liquidity to manage its U.S. operations while providing the company with the liquidity runway to complete discussions with stakeholders and obtain court approval of reorganization plan modifications," said John Sheehan, Delphi vice president and chief financial officer. In addition to the agreements reached with GM, Delphi's agreements with participating DIP Lenders approved by the Bankruptcy Court on Feb. 24, 2009 to amend and supplement the Accommodation Agreement relating to the DIP credit facility will also allow Delphi to access the restricted amounts of cash collateral of up to $117 million, provided: (i) Delphi remains in compliance with all mandatory prepayment provisions and other covenants in the accommodation agreement and the DIP borrowing base supports the Company's use of some or all of the cash collateral, (ii) Delphi has achieved the remaining specified milestones in its reorganization cases, including the filing of a plan of reorganization or modifications to Delphi's existing plan of reorganization meeting the conditions specified in the Accommodation Agreement by April 2, and (iii) GM has obtained all required approvals to increase the available amounts under the GM Advance Agreement to $450 million by March 24, 2009. GM's agreement to increase the amounts available under the GM Advance Agreement and to seek any required governmental approvals is a significant step in satisfying these conditions. Delphi will submit its Annual Report on Form 10-K to the Securities and Exchange Commission (SEC), which will include additional information concerning Delphi's current liquidity outlook, the terms, covenants and conditions of its DIP financing facility and its accommodation agreement, as recently amended and supplemented, and its 2008 results. Additional information regarding Delphi's DIP financing facility and the Accommodation Agreement (as amended and supplemented) can also be found on www.delphidocket.com and Delphi's previous filings on Form 8-K with the SEC. 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: Needs Govt. Aid Worldwide to Survive Market Slump ----------------------------------------------------------------- General Motors Corp., needs government help worldwide to get through the worst automotive market since the end of World War II, Vice Chairman Robert Lutz said, Jeff Green and Rishaad Salamat of Bloomberg report. The automotive slump is forcing GM to undergo changes it has needed to make for years, such as reviewing the future of its Hummer, Saab and Saturn brands, Mr. Lutz said in a Bloomberg television interview. "We will go through a rough spot as will every other automobile company," said Mr. Lutz. "We will get through and come out the other end stronger and more competitive than ever before." According to Bloomberg, General Motors plans to tell Germany and other European governments it needs EUR3.3 billion ($4.2 billion) in aid within weeks or it may run out of cash to operate the Adam Opel GmbH unit. GM, as part of the restructuring plan it submitted to the U.S. government, will cut costs at its European operations by about $1.2 billion, causing panic among employees at Opel and Swedish GM unit Saab and local politicians who are now scrambling to find ways to prevent factory closures and major job losses at GM Europe, Wall Street Journal previously reported. WSJ says that GM has indicated that it may sell a stake in Opel. Another WSJ report said that the South Korean government turned down GM Daewoo Auto & Technology Co.'s plea for financial assistance. GM Daewoo's president and CEO Michael Grimaldi met South Korea's Knowledge Economy Minister Lee Youn-ho to ask for financial aid, however, the plea was deined. In its viability plan submitted to the U.S. Treasury on February 17, GM said that it will need an additional $16.6 billion in financial assistance from the U.S. government. The Treasury and the automotive task force formed in the U.S. have not yet released their decision on the proposal. To recall, on Dec. 31, 2008, the U.S. Treasury completed a transaction with General Motors, under which the Treasury will provide GM with up to a total of $13.4 billion in a three- year loan from the Troubled Assets Relief Program, secured by various collateral. General Motors has reported a $30.9 billion loss for 2008. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. General Motors Latin America, Africa and Middle East, with headquarters in Miramar, Florida, is one of GM's four regional business units. GM LAAM employs approximately 37,000 people in 18 countries and has manufacturing facilities in Argentina, Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and Venezuela. GM LAAM markets vehicles under the Buick, Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and Suzuki brands. 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. GOODY'S LLC: Has Deal on Prior Ch. 11 Case; U.S. Trustee Objects ---------------------------------------------------------------- On January 13, 2009, about three months after their predecessor Goody's Family Clothing emerged from bankruptcy, Goody's, LLC and its affiliated debtors filed voluntary petitions for Chapter 11 protection before the U.S. Bankruptcy Court for the District of Delaware. On January 14, 2009, an ad hoc committee of trade creditors -- consisting of 11 trade vendors -- filed a motion seeking an expedited hearing on their motion to dismiss the Goody's II cases. In the motion, the AHC claimed that the liquidation of the Debtors' assets should occur "outside of bankruptcy or under the jurisdiction of this Court in Goody's I. Thereafter, the proceeds of such disposition should appropriately be administered in furtherance of substantial consummation of the Goody's I plan including, inter alia, replenishment of the woefully deficient administrative claim reserves and otherwise to satisfy the remaining obligations of the Reorganized Debtors under the Goody's I plan." The Goody's I Plan of Reorganization -- which provided for the mechanism for paying allowed claims against Goody's Family -- was confirmed by the Court on October 7, 2008, and declared effective 13 days later. The Goody's I Plan provided for (i) a reserve of approximately $2 million for allowed administrative claims and provided that such claims would be paid in full or as agreed to by the claimant as the claims were allowed, (ii) general unsecured creditors (Class 8 of the Goody's I Plan) receiving (i) $2 million to fund a limited liability company's prosecution of certain avoidance actions and other claims on their behalf and (ii) a $15 million note. The Goody's I Plan provided for the continuation of the debtors' business under new corporate entities, Goody's LLC and its affiliates. Goody's LLC is now in bankruptcy with the intent of paying off claims from the proceeds of its liquidation. According to the U.S. Trustee, Goody's II debt structure, in order of priority, is as follows: * Revolver (approximately $550K plus $15MM in outstanding letters of credit) - GECC - paid, LOCs cash collateralized. * Term loan (approximately $11 million) - GB Merchant Partners - paid * Tranche C - at least $20 million - Prentice (PGDYS Lending) * $15 million note for benefit of Goody's I Class 8 (general unsecured) creditors * Tranche D - at least $15 million - Prentice (PGDYS Lending) In addition to the foregoing obligations, the Goody's II estates also are subject to claims for administrative claims arising in the Goody's II cases, unpaid administrative obligations from Goody's I in the range of $10 million, and general unsecured claims arising after the Effective Date. Terms of Settlement with Trade Creditors On January 21, 2009, the AHC announced that, subject to documentation, it had reached agreement with the Goody's II debtors, the Plan Administrator for Goody's I, Prentice Capital Management, LP, PGDYS LLC and PGDYS Lending LLC and the Official Committee of Unsecured Creditors in Goody's II. Goody's II has filed a motion seeking approval of the Settlement. According to the U.S. Trustee, the key terms of the Settlement are: a. Increase the Administrative Reserve Under Goody's I Plan: The Prentice Entities have agreed to allow the Goody's II Debtors to use their cash collateral to provide an Additional $5 million to the Plan Administrator to satisfy accrued and unpaid administrative obligations under the Goody's I Plan. In addition, the Goody's II Debtors and the Prentice Entities have agreed to transfer certain Litigation Rights and Permitted Preference Actions (as defined in the Goody's I Plan) to the Plan Administrator, the proceeds of which will also be available to satisfy accrued and unpaid administrative obligations under the Goody's I Plan. The cash portion of the Administrative Reserve Increase would be paid in full before the Prentice Entities receive payment in full on account of their Tranche C obligations. b. Satisfy Obligation to Allowed Class 8 Claims Under Goody's I Plan: The Goody's I Plan provided that a $15 million instrument payable to Allowed Class 8 Claims (general unsecured creditors) of the Goody's I case was entitled to receive payment senior in priority to any payment made to the secured Tranche D obligations to the PGDYS Lending, except in the event of a subsequent liquidation or sale of substantially all of the company's assets under Section 363 of the Bankruptcy Code. In this alternative liquidation scenario, the Goody's I Plan requires that 1/3rd of proceeds available after satisfaction of the Tranche C obligations be paid to the Plan Administrator on account of the Allowed Class 8 Claims under the Goody's I Plan and 2/3rds of the proceeds be paid to PGDYS Lending on account of the Tranche D obligations, until such time as the Tranche D obligations have been paid in full. The Settlement follows the dictates of the Goody's I Plan, as required by the Confirmation Order, and provides that after satisfaction in full of the Tranche C obligations, 1/3rd of the remaining proceeds available from the liquidation will be paid to the Plan Administrator in further satisfaction of Allowed Class 8 Claims and 2/3rd of the proceeds will be paid to PGDYS Lending on account of their Tranche D obligations. c. Avoidance Actions in the Goody's II Case Will be Transferred to the Goody's II Committee: During the tumultuous period between the two bankruptcy cases, the Reorganized Debtors quickly became unable to pay their unsecured debts as they matured. In light of the capital structure of the Goody's II Debtors, a meaningful distribution to general unsecured creditors is unlikely. The Parties have recognized that fact and agreed to transfer sole and exclusive authority to pursue (or not pursue) any and all causes of action pursuant to chapter 5 of the Bankruptcy Code to the Goody's II Committee, to ensure that unsecured creditors who were not paid for goods and services provided to the Reorganized Debtors - despite believing they were transacting with a company that had just emerged from bankruptcy - would not add insult to injury by being sued for a preference in order to fund administrative claims in the Goody's II cases. d. Payment of Goody's II Administrative Claims: The Prentice Entities shall permit the Goody's II estates to use the Prentice Entities' cash collateral to pay in full the Allowed administrative expense claims in the Goody's II case in accordance with, and subject to, the wind-down budget attached to the Settlement as "Annex 1." e. Provision of Funds to Enable Plan Administrator and Post Effective Date Committee in Goody's I to Perform Goody's I Plan Obligations: The Plan Administrator will be provided up to $250,000, inclusive of the $100,000 advance provided to the Plan Administrator on January 9, 2009, from the cash collateral of Goody's II, along with the right to use 1/3rd of the net proceeds from the Litigation Rights and Permitted Preference Actions, in furtherance of performing its fiduciary obligations under the Goody's I Plan. Further, the Post Effective Date Committee will be provided up to $15,000 to perform its oversight functions under the Goody's I Plan. f. Allowance of Prentice Claims in Goody's II Cases: All obligations under the Tranche C exit facility ($20 million) and Tranche D exit facility ($15 million) shall deemed to be allowed secured claims, plus all accrued interest, fees, costs, expenses, and all other Obligations as defined in the credit documents for all purposes in these Cases; provided, however, that all parties' rights have been reserved with respect to the determination, allowance, or payment of any early termination fee under the Tranche C and Tranche D exit facilities. Allowance of such claims enables the Parties to effectuate the above-summarized distribution of proceeds in a more equitable manner than would have otherwise occurred absent litigation or agreement between the Parties. g. Prentice's Waiver of Rights in Goody's II Chapter 5 Actions: The Prentice Entities agree to waive any right or claim to receive any proceeds from Avoidance Actions arising from the filing of the Goody's II bankruptcy cases. h. Establish Supplemental Administrative Claim Bar Date in Goody's I Cases: To ensure that the Administrative Reserve Increase will be equitably distributed amongst all creditors in the Goody's I cases who hold an accrued and unpaid administrative claim, the Plan Administrator will be permitted to set a new administrative claim bar date of ________________, 2009, applicable to those entities with claims for (i) goods and/or services provided after the Petition Date (as defined in the Plan) but before the Effective Date (as defined in the Plan) for which the entity supplying such goods and/or services has not received payment and (ii) unpaid cure costs associated with any and all contracts assumed and assigned under the Plan. i. Releases of the Prentice Entities and the Plan Administrator: The Settlement provides for the waiver and release of any and all claims against the Plan Administrator and the Prentice Entities, arising out of, in connection with, or related to the conduct of the business of the Goody's I Debtors, the Goody's I cases, Reorganized Debtors or the Goody's I Plan. To the extent permissible by law, such releases would be applicable to the Goody's I Debtors, Goody's II Debtors, Ad Hoc Committee, Committee and all parties in interest receiving notice of the Settlement and an opportunity to object. j. Reimbursement of Fees and Expenses of Ad Hoc Committee: The Goody's II Debtors and Prentice Entities have agreed to support the allowance of an administrative claim pursuant to Section 503(b) of the Bankruptcy Code for counsel and local counsel to the Ad Hoc Committee in an amount equal to the actual, reasonable fees and expenses incurred in connection with (i) their participation in pre-petition efforts to organize vendors of Goody's I and Goody's II in an effort to reach a consensual out-of-court solution, (ii) their participation in the pre-petition sale process, including the auction of substantially all of the Debtors' assets and (iii) filing, litigating, prosecuting, negotiating and settling the Motion to Dismiss. U.S. Trustee's Objection Roberta A. DeAngelis, Acting United States Trustee for Region 3, asserts that the Settlement should be denied for four reasons. (1) 11 U.S.C. Sec. 1127 prohibits modification of a confirmed plan after the plan has been "substantially consummated." The Motion seeks to modify the confirmed, substantially-consummated joint plan of reorganization in Goody's I. The U.S. Trustee asserts, among other things, the $5 million "plus" increase in the administrative claims reserve for the exclusive benefit of administrative claimants in Goody's I constitutes a material modification of the Plan. At the time of confirmation, the $5 million "plus" increase in the administrative claims reserve would have reduced the Debtors' available cash and/or required additional financing to subsidize the Debtors' continuing operations. The Plan, the U.S. Trustee asserts, cannot be modified because it has been consummated. (2) Through the Motion, the Debtors seek approval of a sub rosa plan of liquidation. According to the U.S. Trustee, there are two key elements of the Settlement that would not pass muster under 11 U.S.C. Section 1129: (i) certain claims of general unsecured creditors in Goody's II are unfairly discriminated against in favor of other general unsecured claims - specifically, those general unsecured creditors whose claims are based upon unpaid administrative obligations in Goody's I, and (ii) the "carve-out" issued by Prentice in favor of unpaid administrative claimants in Goody's I is a class-skipping gift prohibited under the Third Circuit's decision in Armstrong. The U.S. Trustee asserts that the Settlement unfairly discriminates by providing favorable treatment for certain general unsecured creditors in Goody's II -- namely, unpaid Goody's I administrative claims -- by providing such creditors with an additional $5 million "plus" of security. All other unsecured claims, including claims which arose after the Effective Date of the Goody's I plan, are not getting similar consideration under the Settlement. (3) The Settlement is not in the best interests of the Debtors' estates and should be denied. Citing the criteria set in In Myers v. Martin (In re Martin), 91 F.3d 389, 393 (3d Cir. 1996), the U.S. Trustee asserts that the Court is obligated to reject settlements which favor one creditor constituency at the expense of another creditor group. (4) The settlement parties seek approval of nonconsensual, third-party releases which do not comport with applicable law. The U.S. Trustee notes that the law does not permit for non- consensual, third-party releases absent (a) consent or (b) specific findings that the releases are (i) fair, (ii) supported by consideration and (iii) that the failure to grant the releases will unravel a complex reorganization (e.g., one with mass tort issues). About Goody's LLC Headquartered in Wilmington, Delaware, Goody's LLC, successor to Goody's Family Clothing Inc., operates a chain of clothing stores. Goody's LLC and 13 of its affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. D. Del. Lead Case No. 09- 10124). Young, Conaway, Stargatt & Taylor, LLP, and Bass Berry & Sims PLC represent the Debtors as counsel. Skadden, Arps, Slate Meagher & Flom, LLP is the Debtors' special counsel; FTI Consulting Inc. is the Debtors' financial advisor. Goody's Family Clothing Inc., as of May 31, 2008, operated 355 stores in several states with approximately 9,868 personnel of which 170 employees are covered under a collective bargaining agreement. Goody's Family and 19 of its affiliates filed for Chapter 11 protection on June 9, 2008 (Bankr. D. Del. Lead Case No. 08-11133). Gregg M. Galardi, Esq., and Marion M. Quirk, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, represented the Debtors. The Company emerged from bankruptcy Oct. 20, 2008, after closing more than 70 stores. The reorganized entity was named Goody's LLC. GOODY'S LLC: Begins Rejection of Non-Sellable Store Leases ---------------------------------------------------------- Goody's LLC intends to reject certain leases relating to its closed store locations after it failed to find buyers for rights to those leases. Goody's has filed wit the U.S. Bankruptcy Court for the District of Delaware four motions seeking authority to reject leases to its closed stores. The first motion identified leases to stores in Tennessee, Georgia, South Carolina, Florida, Ohio, North Carolina, Alabama, Kentucky and Virginia. A list of these initial group of leases is available at: http://bankrupt.com/misc/Goody's_1st_Reject_Leases.pdf The Debtors want to rejection of the Leases effective February 28. The hearings on the proposed rejection is on March 30. Objections are due March 17. Goody's and its affiliates are currently a party to approximately 282 nonresidential real property leases for their retail store locations. Goody's has closed 74 underperforming stores as part of its previous bankruptcy case. Hilco Merchant Resources, LLC and Gordon Brothers Retail Partners, LLC as the liquidators, have concluded store liquidation sales at the closed locations . The Debtors employed DJM Asset Management, LLC, as a special real estate consultant to assist and advise in the disposition of its Leases. DJM distributed thousands of brochures to retailers, brokers, and attorneys, as well as posted a marketing brochure on the DJM Web site. DJM also conducted multiple calls with landlords informing them of the process for marketing the Leases and informing them of their ability to submit an offer to terminate their Lease(s). To date, the Debtors' efforts to sell the Leases have been unsuccessful. According to Jaime N. Luton, Esq., at Young Conaway Stargatt & Taylor, LLP, the rejection of the Leases will eliminate the Debtors' obligation to perform under them and the accrual of any further obligations thereunder, such as administrative rent. About Goody's LLC Headquartered in Wilmington, Delaware, Goody's LLC, successor to Goody's Family Clothing Inc., operates a chain of clothing stores. Goody's LLC and 13 of its affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. D. Del. Lead Case No. 09- 10124). Young, Conaway, Stargatt & Taylor, LLP, and Bass Berry & Sims PLC represent the Debtors as counsel. Skadden, Arps, Slate Meagher & Flom, LLP is the Debtors' special counsel; FTI Consulting Inc. is the Debtors' financial advisor. Goody's Family Clothing Inc., as of May 31, 2008, operated 355 stores in several states with approximately 9,868 personnel of which 170 employees are covered under a collective bargaining agreement. Goody's Family and 19 of its affiliates filed for Chapter 11 protection on June 9, 2008 (Bankr. D. Del. Lead Case No. 08-11133). Gregg M. Galardi, Esq., and Marion M. Quirk, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, represented the Debtors. The Company emerged from bankruptcy Oct. 20, 2008, after closing more than 70 stores. The reorganized entity was named Goody's LLC. GOTTSCHALKS INC: Court Extends Auction of All Assets to March 30 ---------------------------------------------------------------- Gottschalks Inc. received approval from the United States Bankruptcy Court for the District of Delaware to extend its auction date until March 30, 2009, to allow for further negotiations related to potential going concern offers. The Company remains in active discussions with multiple potential buyers and continues normal business operations in its stores. Additionally, the court approved the Employee Retention Plan and the Executive Incentive Plan, finding that they were appropriate in assisting the Company to achieve its goals. Jim Famalette, Chairman and Chief Executive Officer of Gottschalks, said, "We are pleased the court has extended the auction date, and we continue to negotiate in good faith with potential buyers to keep Gottschalks as a going concern." As reported by the Troubled Company Reporter on February 18, 2009, Gottschalks initially proposed to conduct an auction for the sale of substantially of its assets on March 17, 2009. The Debtor proposed March 12, 2009, as deadline for interested buyers to submit their offers. The Debtor intends to hold the auction at the offices of Richards, Layton & Finger, P.A., at One Rodney Square, 920 North King Street in Wilmington, Delaware. The Debtor also proposed a hearing to take place on March 19, 2009, at 2:00 p.m., to consider approval of the sale. The Debtor also expected to close the sale by March 27, 2009. Bloomberg's Bill Rochelle noted that the financing for the Debtor's reorganization requires selling the assets within 65 days of the Chapter 11 filing. A full-text copy of the Debtor's sale bidding procedures is available for free at http://ResearchArchives.com/t/s?398e A full-text copy of the Debtor's executory contracts is available for free at http://ResearchArchives.com/t/s?398f A full-text copy of the Debtor's sale guidelines is available for free at http://ResearchArchives.com/t/s?3990 About Gottschalks Inc. Headquartered in Fresno, California, Gottschalks Inc. (Pink Sheets: GOTTQ.PK) -- http://www.gottschalks.com-- is a regional department store chain, currently operating 58 department stores and three specialty apparel stores in six western states. Gottschalks offers better to moderate brand-name fashion apparel, cosmetics, shoes, accessories and home merchandise. The Company filed for Chapter 11 protection on January 14, 2009 (Bankr. D. Del. Case No. 09-10157). O'Melveny & Myers LLP represents the Debtor in its Chapter 11 case. Lee E. Kaufman, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., will serve as the Debtors' co-counsel. The Debtors selected Kurtzman Carson Consultants LLC as its claims agent. The U.S. Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $288,438,000 in total assets and $197,072,000 in total debts as of Jan. 3, 2009. GREATER ATLANTIC: Weiss Ratings Assigns "Very Weak" E- Rating ------------------------------------------------------------- Weiss Ratings has assigned its E- rating to Reston, Virginia-based Greater Atlantic Bank. Weiss says that the institution currently demonstrates what it considers to be significant weaknesses and has also failed some of the basic tests Weiss uses to identify fiscal stability. "Even in a favorable economic environment," Weiss says, "it is our opinion that depositors or creditors could incur significant risks." Greater Atlantic Bank is chartered as a savings association and is primarily regulated by the Office of Thrift Supervision. Deposits have been insured by the Federal Deposit Insurance Corporation since May 27, 1988. Greater Atlantic Bank maintains a Web site at http://www.gab.com/and has five offices, three in Virginia and one in Maryland. At Dec. 31, 2008, Greater Atlantic Bank reported $215 million in assets and $212 million in liabilities in its regulatory filings. HALLWOOD ENERGY: Hallwood Group Not Included in Bankruptcy ---------------------------------------------------------- The Hallwood Group Incorporated said that it is not included in Hallwood Energy's bankruptcy. As reported by the Troubled Company Reporter on March 3, 2009, The Hallwood Group reported that on March 1, 2009, Hallwood Energy, L.P. and certain of its affiliates, in which The Hallwood Group, is an investor, filed petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Texas. Hallwood Group clarified its announcement, saying that the bankruptcy filing was only by Hallwood Energy, the general partner of Hallwood Energy, and Hallwood Energy's subsidiaries. Hallwood Group is only an investor in and creditor of Hallwood Energy. The bankruptcy filing does not include any other of Hallwood Group's assets. 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. -- http://www.hallwoodenergy.com/-- 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. Dallas, Texas-based Hallwood Energy and its affiliates filed for Chapter 11 bankruptcy protection on March 1, 2009 (Bankr. N.D. Texas Case No. 09-31253). Scott Mark DeWolf, Esq., at Rochelle McCullough L.L.P., assists the Debtors in their restructuring efforts. The Debtors' business consultant and CRO is Blackhill Partners LLC. The Debtors listed $50 million to $100 million in assets and $100 million to $500 million in debts. HEXCEL CORP: S&P Changes Outlook to Stable; Affirms 'BB' Rating --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on aerospace supplier Hexcel Corp. to stable from positive. At the same time, S&P affirmed its ratings, including the 'BB' long-term corporate credit rating, on the company. About $400 million of debt is outstanding. "The outlook revision reflects deteriorating prospects for commercial aerospace, Hexcel's largest market, caused by a weakening global economy, declining air traffic, capacity cuts by airlines, and reduced availability of previously ample aircraft financing," said Standard & Poor's credit analyst Roman Szuper. "Although S&P expects the company's credit protection measures to remain relatively strong for the rating, S&P consider an upgrade unlikely in the current environment." The ratings on Hexcel reflect its participation in the competitive and cyclical commercial aerospace industry, now in an early downturn, and its need to make significant investment in additional carbon fiber capacity to support increased demand from newer, wide-body planes. Those factors are partly offset by the company's position as a leading global manufacturer of advanced composite materials and a financial profile that is somewhat better than average for the rating. Stamford, Connecticut-based Hexcel is a leader in the composites industry, producing lightweight, high-performance carbon fibers, industrial fabrics, specialty reinforcements, carbon prepregs, structural adhesives, honeycomb, and composite structures for the commercial aerospace, defense and space, and industrial sectors. The company concentrates on serving growing markets in which it has a competitive advantage. Consolidated operating margins have decreased slightly to about 14% in 2008, in part due to incremental start-up costs at new facilities as well as higher commodity costs. The return on permanent capital is respectable, at 18%. S&P expects incremental improvements in profitability in 2009, aided by cost reduction efforts and favorable product mix. Although Hexcel incurred additional debt in 2008 to finance higher capital expenditures, earnings have continued to improve, with debt to EBITDA increasing only moderately to 2.4x, still a relatively low level for the rating. The company's book equity has also improved considerably because of the conversion of the preferred stock to common and a reversal of a $118 million deferred tax valuation allowance. As a consequence, debt to capital is now much lower, at about 48%. S&P expects key credit protection measures, such as funds from operations to debt and EBITDA interest coverage, to be somewhat better than average for the rating, at about 30% and 6x-7x, respectively. S&P expects relatively steady results in 2009 and reduced capital expenditures to allow Hexcel to maintain a financial profile appropriate for the rating. S&P could revise the outlook to negative if the downturn in commercial aerospace is more severe than expected, resulting in weaker credit protection, with FFO to adjusted debt declining to below 25% or adjusted debt to EBITDA rising above 3x. S&P is unlikely to revise the outlook to positive in the current commercial aerospace environment. HSBC HOLDINGS: Seen to Support Finance Unit's Closing, Says Fitch ----------------------------------------------------------------- In light of HSBC Holdings plc's announcement that HSBC Finance Corporation will no longer originate consumer loans through its branch network; with the exception of credit cards, Fitch Ratings expects HSBC to continue to support HFC as it liquidates its current portfolio, including additional capital contributions and/or maturing debt payments. HSBC expected support is reflected in Fitch's Support Rating of '1' on HFC. As part of the announcement, HSBC plans to close the majority of the HFC branch network. According to HSBC management, HFC will manage its current loan portfolio through runoff, with HSBC providing the necessary support to HFC to meet its commitments. Fitch rates approximately $111 billion of HFC debt. Fitch rates (HSBC's long-term IDR 'AA' with a Negative Outlook, while HFC is rated 'AA-/F1+', also with Negative Outlook. Fitch recognizes HSBC's decision to close the HFC network given the current economic environment and future profitability prospects. Fitch revised the Rating Outlook on the IDRs of HFC, its ultimate parent HSBC ('AA') and those of many other HSBC group companies were revised to Negative from Stable on Jan. 15, 2009, primarily reflecting concerns that growing revenue and asset quality pressures outside the U.S., which are arising because of the sharp global economic and market downturn, would weaken the group's ability to generate capital to offset the continuing poor earnings outlook for HSBC Finance. In addition, HFCs Individual Rating was downgraded to 'D' from 'C' at that time recognizing the substantial asset quality deterioration and poor operating performance. The 'D' Individual rating denotes a bank, which has weaknesses of internal and/or external origin. There are concerns regarding its profitability and balance sheet integrity, franchise, management, operating environment or prospects. Fitch expects impairment charges to remain very high at HFC in 2009-2010 because of the economic and housing market stresses in the US and may also be adversely affected by borrower behavioural changes, now that much of the company's business is effectively in run-off. Asset quality is likely to deteriorate outside the U.S. because of the slowing global economy. Overall, Fitch expects HSBC's profitability to be much weaker in 2009 than it was prior to H208. The substantial, fully underwritten rights issue announced by HSBC (GBP12.5bn) helps to mitigate, but has not completely offset, these concerns. The new capital will allow HSBC to invest both organically and via acquisition in selected markets (principally Asia, Fitch believes). HSBC's 'AA' IDR benefits from the strong funding and liquidity profiles of its banking subsidiaries, which have been a particularly important differentiator for the group during the recent periods of extreme market stresses; the diversity of its franchise both geographically and by business line; and its banking subsidiaries' relatively conservative risk appetites. HSBC is the holding company of one of the world's largest banking groups. Its main subsidiaries are HSBC Bank plc (UK), The Hongkong and Shanghai Banking Corporation (Hong Kong), HSBC Bank USA and HSBC Finance (mainly the US). INDEPENDENCIA SA: Files for Chapter 15 to Shield US Bank Accounts ----------------------------------------------------------------- Independencia S.A., a beef exporter based in Brazil, filed for Chapter 15 bankruptcy protection before the U.S. Bankruptcy Court for the Southern District of New York. Bankruptcy Law360 says the filing was made to shield the Company's U.S. bank accounts from creditor actions as the company pursues reorganization at home. The petition, Bankruptcy Law360 relates, says Independencia has commenced restructuring "a crippling debt burden" under Brazilian insolvency law. The report says the Company is saddled with $1.2 billion in debts. Independencia SA in documents submitted together with its Chapter 15 petition cited falling beef exports, volatility in currencies and debt of US$1.2 billion, Bloomberg News reports. The company simultaneously commenced a restructuring process under Brazilian insolvency law, according to Reuters. "Independencia has witnessed as a result of the current economic crisis a dramatic disruption in the international beef markets," Chief Financial Officer Tobias Bremer said in court papers obtained by Bloomberg News. Brazilian beef exports have dropped about 34% by volume since Sept. 30, Mr. Bremer said as cited by the news agency. Reuters relates in its filing, the company said it had seen a fall of about 41% in sales between October 2008 and January 2009 adding non-payment in its export business had exceeded 20 percent of overall sales in the fourth quarter of 2008. Of the company's total debt, about US$575 million was in Brazil and US$525 million was in the form of private debt issues in the U.S. and elsewhere outside Brazil, Reuters says citing court filings. According to Reuters, Independencia said in the court filings about 86 percent of its debt was in U.S. dollar denominated trade lines and the recent fall of the Brazilian real against the U.S. dollar led to a rise in debt. The company's assets in the U.S. include funds in bank accounts and money owed by customers, Bloomberg News says citing court documents. Most of the company's assets and employees are in Brazil. Independencia S.A. is based in Sao Palo, Brazil. Independencia S.A. filed for bankruptcy on February 27, 2009 (Bankr. S.D. N.Y. Case No. 09-10903). Paul R. DeFilippo, Esq., at Wollmuth Maher & Deutsch LLP, in New York, serves as counsel to the Chapter 15 Debtor. The Chapter 15 petition does not state the Company's financial status as of the bankruptcy filing. The petition was signed by Tobias Bremer, the Company's chief financial 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 is a beef exporter based in Sao Paolo, Brazil. See: http://www.independencia.com.br/ Chapter 15 Petition Date: February 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. INDEPENDENCIA SA: Bankruptcy Filing Cues Moody's Junk Rating ------------------------------------------------------------ Moody's lowered the corporate family rating and guaranteed foreign-currency debt ratings to Ca from B3 of Independ�ncia S.A. and Independ�ncia International Ltd., which concludes the review, started on February 27th, 2009. Following this action Moody's will withdraw the company's ratings because the company has filed for court protection under the New Brazilian Bankruptcy and Reorganization Law in Brazil and Chapter 15 of the U.S. Bankruptcy Code in the United States. Ratings lowered and to be withdrawn: -- Independ�ncia S.A.'s Corporate Family Rating to Ca from B3 -- US$225 million 9.875% senior unsecured guaranteed notes due 2017 to Ca from B3 -- US$300 million 9.875% senior unsecured guaranteed notes due 2015 to Ca from B3 The rating action follows the announcement that the company has filed for bankruptcy (equivalent to Chapter 11 in the U.S.) in Cajamar, Sao Paulo on Friday, February 27th, 2009. "A combination of a significant deterioration of Brazilian beef export volumes and prices since September 2008 to key foreign markets and relatively stable cattle prices paid to farmers have significantly pressured Independ�ncia's gross and operating margins causing the company to report negative margins at current prices," said Moody's VP Senior Analyst, Soummo Mukherjee. "Furthermore, the more adverse credit environment since September 2008, also led many banks to not renew Independ�ncia's short-term credit lines and the company experienced double-digit levels of non-payments by some of its export clients, pressuring working capital needs and aggravating its liquidity situation," adds Mukherjee. Moody's last rating action on Independ�ncia was on February 27th, 2009, when Moody 's downgraded Independ�ncia's ratings to B3, and placed the ratings under review for further possible multi-notch downgrade. Headquartered in Cajamar, Sao Paulo, Brazil, Independ�ncia is Brazil's fourth largest producer of fresh and frozen beef and the second largest producer of wet blue leather with operations in seven Brazilian states and Paraguay. At the end of September 30th, 2008, Independ�ncia had twelve beef slaughtering and deboning facilities, three tanneries, two dry and salted beef units, five biodiesel production modules and four cold and dry storage and distribution facilities. INVISTA BV: S&P Downgrades Corporate Credit Rating to 'B+' ---------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its corporate credit and senior unsecured debt ratings on INVISTA B.V. and its subsidiaries and removed them from CreditWatch where they had been placed with negative implications on Aug. 18, 2008. S&P lowered the corporate credit rating to 'B+' from 'BB', and the outlook is negative. Standard & Poor's lowered the senior unsecured debt rating on the company's notes to 'B' from 'BB'. The recovery rating was revised to '5' from '4', which indicates S&P's expectation for modest recovery (10% to 30%) in a payment default. At the same time, S&P withdrew its bank loan and related recovery ratings on INVISTA and its subsidiaries after the rated bank debt was repaid in full. "The downgrades follow severe and rapid deterioration in operating results in recent months and a new capital structure that, despite $1.7 billion in equity infusions from unrated and privately held parent Koch Industries Inc. and the reduction of INVISTA's book debt by more than half, leaves the company with very high debt to EBITDA," said Standard & Poor's credit analyst Cynthia Werneth. Other risks associated with INVISTA's private ownership include less transparency than public companies because of more limited and less timely reporting requirements. As of Feb. 6, 2009, INVISTA had total debt of about $1.6 billion, after adjusting for about $660 million of capitalized operating leases and tax- effected unfunded postretirement and environmental liabilities. This represents about 3x trailing 12-month EBITDA as of Sept. 30, 2008. However, given the deterioration in the global economy and demand for most chemical products since then, S&P believes this ratio could exceed 5x before restructuring benefits that management expects to total about $1 billion. If the restructuring is completed as planned and the targeted savings are realized, total adjusted debt to EBITDA could be less than 3x in 2010. The outlook is negative. S&P could lower the ratings again in the near term if, contrary to expectations, operating results worsen and liquidity narrows meaningfully. On the contrary, S&P could revise the outlook to stable if global economic and chemical industry conditions improve and INVISTA realizes restructuring benefits, causing operating performance to strengthen and liquidity to expand. For us to revise the outlook to stable, total adjusted debt to EBITDA would have to stabilize at about 5x, with an expectation that free operating cash flow would be positive. If earnings and cash flow rebound more strongly and credit measures exceed this threshold, and S&P had no concerns regarding liquidity or refinancing risk, S&P would likely revise the outlook to positive, with a view to a somewhat higher rating. INVISTA is a leading global producer of nylon, polyester, and spandex fibers and chemical intermediates used to produce them. It holds large positions in downstream applications such as fibers used in nylon carpeting and airbags and benefits from brands including STAINMASTER and LYCRA. ISTAR FINANCIAL: S&P Downgrades Counterparty Credit Rating to BB ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its ratings on New York-based iStar Financial Inc., including lowering the counterparty credit rating to 'BB' from 'BBB-'. The outlook is negative. "The two-notch downgrade reflects continued growth in the number and value of troubled assets in its portfolio, coupled with the likelihood that loan repayments will slow and recovery values for its troubled assets will deteriorate," said Standard & Poor's credit analyst Jeffrey Zaun. "These negative factors are only partially offset by the company's announcement that it is likely to receive additional funding and covenant relief from a new secured credit facility." Stress testing indicates that the company's reserve is adequate for the current level of problem assets, but S&P expects further deterioration because S&P's outlook for commercial real estate has become increasingly pessimistic as the recession deepens. J.A. BRUNTON: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: J.A. Brunton, Inc. 1 Ocean Wood Way Birch Harbor, ME 04613 Bankruptcy Case No.: 09-10208 Chapter 11 Petition Date: March 2, 2009 Court: District of Maine (Bangor) Debtor's Counsel: George J. Marcus, Esq. bankruptcy@mcm-law.com Marcus, Clegg & Mistretta, PA One Canal Plaza, Suite 600 Portland, ME 04101-4102 Tel: (207) 828-8000 Estimated Assets: $1 million to $100 million Estimated Debts: $1 million to $100 million The Debtor did not file a list of 20 largest unsecured creditors. The petition was signed by James A. Brunton, Jr., president. JOURNAL REGISTER: Court Sets April 13 as Claims Bar Date -------------------------------------------------------- The Hon. Allan L. Gropper of the United States Bankruptcy Court for the Southern District of New York set April 13, 2009, as the deadline for creditors of Journal Register Company and its affiliated debtors to file their proofs of claim. Judge Gropper also set Aug. 4, 2009, as deadline for all governmental units to file their proofs of claim. Proofs of claim may be delivered to: a) If Delivered by Mail: Journal Register Company Claims Processing Center c/o Epiq Bankruptcy Solutions, LLC FDR Station, P.O. Box 5082 New York, NY 10150-5082 b) If Delivered by Overnight or Hand Delivery: Journal Register Company Claims Processing Center c/o Epiq Bankruptcy Solutions, LLC 757 Third Avenue, 3rd Floor New York, NY 10017 About Journal Register Yardley, Pennsylvania-based Journal Register Company (PINKSHEETS: JRCO) -- http://www.JournalRegister.com-- owns 20 daily newspapers, more than 180 non-daily publications and operates over 200 individual Web sites that are affiliated with the Company's daily newspapers, non-daily publications and its network of employment Web sites. All of the Company's operations are strategically clustered in six geographic areas: Greater Philadelphia; Michigan; Connecticut; Greater Cleveland; and the Capital-Saratoga and Mid-Hudson regions of New York. The Company also owns JobsInTheUS, a network of 20 employment Web sites. The Company, along with its affiliates, filed for Chapter 11 bankruptcy protection on February 21, 2009 (Bankr. S.D. N.Y. Case No. 09-10769). Marc Abrams, Esq., Rachel C. Strickland, Esq., Shaunna D. Jones, Esq., and Jennifer J. Hardy, Esq., at Willkie Farr & Gallagher LLP assist the company in its restructuring effort. The company's financial advisor is Lazard FrSres & Co.. Its restructuring advisor is Conway, Del Genio, Gries & Co., LLC. Robert P. Conway is the company's chief restructuring officer. The company listed $100 million to $500 million in assets and $500 million to $1 billion in debts KIRK PIGFORD: Asks Court to Dismiss its Chapter 11 Case ------------------------------------------------------- Kirk Pigford Construction, Inc., asks the U.S. Bankruptcy Court for the Eastern District of North Carolina to dismiss its Chapter 11 case. The Debtor tells the Court that it has been unable to formulate a plan of reorganization, and desires to negotiate with its creditors outside of the Chapter 11 proceeding. The Debtor believes the dismissal of its case is in the best interest of all parties in interest. As reported in the Troubled Company Reporter on Jan. 14, 2009, Kirk Pigford asked the Court to extend its exclusive period to file a Plan of Reorganization and Disclosure Statement to and including Jan. 30, 2009. Pursuant to the Court's Order of Oct. 23, 2008, the Debtor's Plan of Reorganization and Disclosure Statement are due Jan. 16, 2009. The Debtor told the Court that it requires additional time to formulate and finalize a Plan. About Kirk Pigford Based in Wrightsville Beach, N.C., Kirk Pigford Construction Inc. -- http://www.kirkpigfordconstruction.com/-- is engaged in the construction of residential homes primarily in the New Hanover County, North Carolina areas. The Company filed for Chapter 11 relief on Oct. 14, 2008 (Bankr. E.D. N.C. Case No. 08-07139). George M. Oliver, Esq., and Trawick H. Stubbs, Jr., Esq., at Stubbs & Perdue, P.A. represent the Debtor as counsel. In its schedules, the Debtor listed total assets of $13,960,930 and total debts of $14,930,779. LENNAR CORP: Unit Enters Into Amended Aircraft Dry Lease Pact ------------------------------------------------------------- On February 17, 2009, Lennar Aircraft I, LLC, of which Lennar Corporation is the sole member, entered into an Amended and Restated Aircraft Dry Lease Agreement, dated as of the 1st day of December 2008, with US Home Corporation, a wholly-owned subsidiary of the Company, and Stuart Miller, the Company's President and Chief Executive Officer. Pursuant to FAA regulations under which the aircraft operates, Mr. Miller reimburses the Company for actual operating expenses incurred during personal use of the aircraft. Under the relationship created by the Agreement, Mr. Miller will now be permitted to additionally reimburse the Company for the Company's full cost of business use of the aircraft, which Mr. Miller intends to do, as permitted by the Agreement. The Agreement was prepared in November 2008 and submitted to the independent directors of the Company for their approval at their regular meeting on January 13, 2009. The independent directors approved the Agreement, and it was signed by the Company and Mr. Miller on February 17, 2009. The Agreement adds Mr. Miller as a party to the Agreement solely in the capacity of an optional payor. Mr. Miller previously entered into an Aircraft Time-Share Agreement with the Company in August 2005, amended by Amendment No. 1 to the Aircraft Time-Share Agreement in September 2005, which will remain in effect and requires him to reimburse the Company for operating expenses incurred in connection with personal use of the aircraft. A full-text copy of the Amended Aircraft Dry Lease Agreement is available for free at: http://researcharchives.com/t/s?3a06 About Lennar Corp. Based in Miami, Fla., Lennar Corporation (NYSE: LEN and LEN.B) -- http://www.lennar.com/-- builds affordable, move-up and retirement homes primarily under the Lennar brand name. Lennar's Financial Services segment provides primarily mortgage financing, title insurance and closing services for both buyers of the company's homes and others. * * * As reported by the Troubled Company Reporter on June 11, 2008, Moody's Investors Service lowered all of the ratings of Lennar Corporation, including its corporate family rating to Ba3 from Ba1 and the ratings on its various issues of senior unsecured notes to Ba3 from Ba1. At the same time, a speculative grade liquidity rating of SGL-2 was assigned. The ratings outlook remains negative. As reported by the TCR on Dec. 16, 2008, Fitch Ratings downgraded Lennar Corp.'s Issuer Default Ratings and outstanding debt ratings: -- IDR to 'BB+' from 'BBB-'; -- Senior unsecured to 'BB+' from 'BBB-'; -- Unsecured bank credit facility to 'BB+' from 'BBB-'; -- Short Term IDR from 'F3' to 'B'; -- Commercial Paper from 'F3' to 'B'. Fitch said the rating outlook remains negative. LOUISIANA-PACIFIC CORP: Moody's Assigns 'Ba3' Notes Rating ---------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Louisiana- Pacific Corporation's proposed $350 million senior secured notes due 2017 and affirmed the company's Ba3 corporate family rating. The ratings on the company's existing senior unsecured notes will be lowered to B2 from Ba3. LP's speculative grade liquidity rating was affirmed at SGL-3 and the rating outlook is negative. The Ba3 rating on LP's proposed senior secured notes is in line with the company's corporate family rating and reflects the superior position of the proposed notes relative to the existing unsecured notes which will be downgraded to B2 from Ba3. The proposed notes are expected to be secured by first-security interests in most of LP's US fixed assets and will have a second- priority interest in the inventory and receivables that secure the proposed ABL revolving credit facility. The proposed notes will be guaranteed on a joint and several basis by LP's material US subsidiaries. The net proceeds from the proposed notes offering will be used to refinance of some the company's existing debt and improve the company's cash position. Since the proposed notes constitute the largest class of debt in the capital structure and since the amount of unsecured debt below them is not relatively large, they will be rated at the same level as the corporate family rating. The liens on the proposed notes and new ABL revolving credit facility will rank senior to the company's senior unsecured indebtedness, causing the rating on the existing unsecured notes to be downgraded two notches below the corporate family rating to B2. LP's ratings reflect the company's industry leading market share, oriented strand board's (OSB -- the company's primary product) positive long-term industry fundamentals as it continues to take market share from plywood, and expectations that the company's financial performance will eventually improve to generate credit protection metrics in line with its rating. Key challenges for LP include its modest scale, its lack of product line and geographic diversification, and the continued volatility in its financial performance due to the extreme pricing volatility of its core business products. The company's cash position has decreased significantly as LP generated negative free cash flow and made significant investments in new capacity and in mill improvements during a weak OSB market. Moody's expects that the company's recent initiatives of reducing capex, idling high cost mills, reducing personnel expenses and other announced initiatives will significantly reduce the company's cash burn rate. Downgrades: Issuer: Louisiana-Pacific Corporation -- Senior Unsecured Regular Bond/Debenture, Downgraded to B2, LGD6, 90% from Ba3, LGD4, 58% Assignments: Issuer: Louisiana-Pacific Corporation -- Senior Secured Regular Bond/Debenture, Assigned a Ba3, LGD3, 45% The company's speculative grade liquidity rating was affirmed at SGL-3 reflecting anticipated adequate liquidity over the next 12 months. The liquidity rating reflects the company's unrestricted cash position, projected continuing cash burn over the next several quarters and limited committed external liquidity sources. The company's primary source of liquidity is its unrestricted cash balance that stood at approximately $120 million on December 31, 2008. Although LP is taking measures to preserve cash, the ongoing cash needs to fund its operations continue to deplete the company's liquidity. The company's proposed senior secured note offering along with its proposed ABL revolving credit facility is expected to improve the company's liquidity position when completed. If the company is successful with its recently announced initiatives to reduce its cash burn, Moody 's believe that the company should have sufficient liquidity to cover its cash needs during the next two years. The negative outlook reflects continued pressure on LP's debt protection measurements given the prospects for a protracted weak OSB pricing environment. Should financial results deteriorate from expected levels, or should the company's liquidity arrangements become impaired, LP's ratings may be lowered. Moody's last rating action was on December 10, 2008 when LP's corporate family rating and the rating on the company's senior unsecured notes were downgraded to Ba3 from Ba2 concluding a review for possible downgrade initiated on November 4, 2008. MAGNA ENTERTAINMENT: To Be Delisted From TSX Effective April 1 -------------------------------------------------------------- Magna Entertainment Corp. was provided on March 2, 2009, with a letter from The Toronto Stock Exchange indicating that the Listings Committee of the TSX determined to delist the Company's Class A Subordinate Voting Shares effective at the close of market on April 1, 2009. The delisting was imposed for failure by MEC to meet the continued listing requirements of the TSX, as detailed in Part VII of The TSX Company Manual. Based in Aurora, Ontario, Magna Entertainment Corp. (MECA) is North America's largest owner and operator of horse racetracks, based on revenue. The Company develops, owns and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities. MEC also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. MEC owns and operates AmTote International, Inc., a provider of totalisator services to the pari-mutuel industry, XpressBet(R), a national Internet and telephone account wagering system, as well as MagnaBet(TM) internationally. Pursuant to joint ventures, MEC has a fifty percent interest in HorseRacing TV(R), a 24-hour horse racing television network, and TrackNet Media Group LLC, a content management company formed for distribution of the full breadth of MEC's horse racing content. At Sept. 30, 2008, the company's balance sheet showed total assets of $1.1 billion, total liabilities of $891.0 million and shareholders' equity of $272.7 million. * * * As reported by the Troubled Company Reporter on March 2, 2009, Magna received written notice from its lenders that Pimlico Racing Association, Inc., Laurel Racing Association Limited Partnership, Laurel Racing Assoc., Inc. and The Maryland Jockey Club of Baltimore City, Inc., each a subsidiary of MEC, are in default under the PNC Bank, National Association loan agreement for failure to comply with certain financial covenants relating to the financial position and results of operation of MJC and related entities. PNC Bank informed MEC that it has chosen not to exercise its rights and remedies under such loan agreement at this time as a consequence of this event of default, but may choose to do so at any time in the future without any further written notice. MEC also has not met certain financial covenants under its loan agreements with Wells Fargo Bank, National Association and a Canadian chartered bank with which MEC has a US$40 million credit facility. The lenders have not exercised their default-related rights under their respective loan agreements. As reported in the TCR on March 20, 2008, Ernst & Young LLP in Toronto, Canada, expressed substantial doubt about Magna Entertainment Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years Dec. 31, 2007, and 2006. The auditing firm pointed to the company's recurring operating losses and working capital deficiency. On February 19, 2009, MI Developments Inc., the Company's controlling shareholder, decided not to proceed with its reorganization proposal, which includes the spin-off of MEC to MID's existing shareholders. In accordance with the terms of certain of MEC's loan agreements, the maturity date of the first tranche of the new loan that a subsidiary of MID made available to MEC on December 1, 2008, in connection with the reorganization proposal; the maturity date of the bridge loan from MID Lender; and the deadline for repayment of US$100 million under the Gulfstream project financing facility from MID Lender has been accelerated to March 20, 2009. The maturity date of the second tranche of the New Loan has already been accelerated to May 13, 2009. As of February 18, 2009, there is roughly US$48.5 million outstanding under the first tranche of the New Loan, roughly US$0.7 million outstanding under the second tranche of the New Loan and roughly US$126.2 million outstanding under the bridge loan. In accordance with its terms, the maturity date of MEC's US$40 million credit facility with a Canadian chartered bank will also accelerate to March 5, 2009. If MEC is unable to repay its obligations when due or satisfy required covenants in its loan agreements, substantially all of its other current and long-term debt will also become due on demand as a result of cross-default provisions within loan agreements, unless MEC is able to obtain waivers, modifications or extensions. In the event MEC is unsuccessful in its efforts to raise additional funds, through an alternative transaction with MID, assets sales, by taking on additional debt or by some other means, MEC will not be able to meet such obligations. MASONITE INTERNATIONAL: To File For Ch. 11 with Pre-Arranged Plan ----------------------------------------------------------------- Masonite International Inc. said March 3 that it has reached an agreement in principle with members of a steering committee representing its senior secured lenders and representatives of an ad-hoc committee representing holders of its senior subordinated notes due 2015 on the terms of a restructuring plan that will enable the Company to significantly reduce its outstanding debt and create an appropriate capital structure to support the Company's long-term strategic plan and business objectives. Support for this plan is currently being solicited by the Company from its broader lender and bondholder constituencies. If approved by the requisite percentages of the lender and bondholder groups and implemented as proposed, the restructuring plan will enable Masonite to reduce its total funded debt by nearly $2 billion, from $2.2 billion today to up to $300 million upon consummation of the plan. This debt reduction would reduce annual cash interest costs by approximately $145 million and provide Masonite with greater liquidity and financial flexibility as it continues to take aggressive action to address challenges created by the downturn in the global housing and credit markets. "We are very pleased to have reached an agreement in principle on a plan that will allow us to reduce our debt substantially and put Masonite in a stronger, financially healthier position for the future," said Fred Lynch, President and Chief Executive Officer of Masonite. "With an appropriately sized capital structure and greater financial flexibility, along with our excellent market position, strong brand, and industry-leading products, we believe we will be well-positioned to take advantage of market opportunities and grow our business over the long term." Under terms of the agreement in principle, Masonite's existing Senior Secured Obligations would be converted on a pro rata basis, subject to the election of each existing holder of Senior Secured Obligations, into (i) a new senior secured term loan of up to $200 million, (ii) a new second-lien PIK Loan of up to $100 million, and/or (iii) 97.5% of the common equity of a reorganized Masonite subject to dilution for warrants issued to the Senior Subordinated Noteholders and management equity and/or options. Senior Subordinated Notes would be converted to 2.5% of the common equity in Masonite plus warrants for 17.5% of the common stock of the Company, subject to dilution for management equity and/or options. It is anticipated that the restructuring would be implemented by means of a "pre-negotiated" Plan of Reorganization filed in conjunction with voluntary Chapter 11 proceedings in the United States and similar proceedings under the Companies' Creditors Arrangement Act (CCAA) in Canada. These legal proceedings would be initiated upon receipt of approvals for the restructuring plan from the requisite percentages of the lender and bondholder constituencies. Pre-negotiated restructuring plans typically require only 90 to 120 days to effectuate. The implementation of the agreement in principle is subject to closing conditions. Masonite fully expects to continue to operate in the normal course of business during the restructuring process. All of the Company's manufacturing and distribution facilities around the world will remain open and continue to serve customers in the normal course. Masonite's subsidiaries and affiliates outside of North America are not expected to be adversely impacted by the legal proceedings. The proposed restructuring plan further provides for all trade creditors to be "unimpaired," which means that trade suppliers and vendors would be paid in full under the plan. To this end, the Company intends to seek authorization from the US and Canadian courts to continue to pay trade creditors under normal terms in the ordinary course of business. As of March 2, 2009, the Company had more than $160 million in cash on hand that will be available to satisfy obligations associated with conducting the Company's business in the ordinary course. About Masonite International Based in Ontario, Canada, Masonite International Corporation -- http://www.masonite.com/-- (TSE:MHM) is a vertically integrated producer, manufacturing key components of doors, including composite molded and veneer door facings, glass door lites and cut stock. The company provides these products to its customers in more than 70 countries around the world. The company is a wholly owned subsidiary of Masonite International Inc. It offers a range of interior and exterior doors. Masonite Canada operates Masonite International's Canadian subsidiaries, well as certain other non- United States subsidiaries. * * * As reported in the Troubled Company Reporter on Sept. 1, 2008, Standard & Poor's Ratings Services lowered its long-term corporate credit ratings on Masonite International Inc. (Masonite) and its subsidiaries, Masonite International Corp. and Masonite US Corp., to 'CCC+' from 'B-'. S&P also lowered the senior secured debt rating on Masonite to 'B' from 'B+'. The ratings remain on CreditWatch with negative implications, where they were placed April 18, 2008. As reported by the Troubled Company Reporter, Masonite entered into a further extension, to February 9, 2009, of its forbearance agreements with its bank lenders and with holders of a majority of the senior subordinated notes due 2015 issued by two of the Company's subsidiaries. MCCLATCHY CO: Posts $4.0 Million Net Loss in Year 2008 ------------------------------------------------------ The McClatchy Company reported that it filed its Annual Report on Form 10-K for the year ended December 28, 2008, with the Securities and Exchange Commission, which includes its final fourth quarter and full year 2008 results. The company's fourth quarter 2008 after-tax loss from continuing operations was unchanged from the previously reported $20.4 million. The company's total net loss, including the results of discontinued operations, was $27.0 million. The income from continuing operations for full year 2008 was unchanged from the $2.8 million. The company's total net loss, including the results of discontinued operations, was $4.0 million. As of December 28, 2008, the Company had $3.52 billion in total assets, including $4.99 million in cash and cash equivalents, and $3.12 billion in total liabilities, including $347.5 million in total current liabilities. The Company has $31.0 million of public notes maturing in April 2009 which are expected to be refinanced on a long-term basis by drawing on the Company's revolving credit facility. A total of $111.8 million was available under the revolving credit facility at December 28, 2008, all of which could be borrowed under the Company's current leverage covenant and trailing operating cash flow. On January 8, 2009, letters of credit totaling $47.2 million expired increasing the amount available under the revolving credit facility to approximately $159.0 million. McClatchy noted that as of December 28, 2008, it had roughly $2.038 billion in total consolidated debt outstanding. This debt could increase the Company's vulnerability to general adverse economic and industry conditions. Debt service costs are subject to interest rate changes as well as any changes in the Company's leverage ratio (ratio of debt to operating cash flow as defined in the Company's credit agreement with its banks). Higher leverage ratios could increase the level of debt service costs and also affect the Company's future ability to refinance certain maturing debt, or the ultimate structure of such refinancing. In addition, the Company's credit ratings could affect its ability to refinance its debt on favorable terms. On September 17, 2008, Moody's Investor Services downgraded the Company's corporate credit rating to `B2' from `Ba2'. On February 6, 2009, Standard & Poor's lowered its corporate credit rating on the Company to `CCC+' from `B', with a negative rating outlook. The ratings on the Company's bonds were lowered from `CCC+' to `CCC-'. The Troubled Company Reporter said Feb. 10, 2009, that Fitch Ratings downgraded the Issuer Default Rating and outstanding debt ratings of McClatchy: -- Issuer Default Rating to 'CCC' from 'B-'; -- Senior secured credit facility to 'CCC/RR4' from 'B+/RR2'; -- Senior secured term loan to 'CCC/RR4' from 'B+/RR2'; -- Senior unsecured notes/debentures to 'C/RR6' from 'CCC/RR6'. There is no Rating Outlook assigned. Approximately $2.1 billion of debt is affected by the action. The Company expects that over the next several years its primary use of cash flow from operations will be to reduce debt. In early 2009 various newspapers formerly owned by the Company filed for bankruptcy under Chapter 11 of the Bankruptcy Code. Certain amounts owed to the Company by these former newspapers may no longer be collectible and as a result, the Company has recorded reserves related to such amounts, net of taxes, of $5.3 million in discontinued operations. Also, for fiscal year 2009 the Company will reevaluate the guarantees of up to $77.0 million made to the Pension Benefit Guaranty Corporation related to pension plans maintained by certain of these newspapers to take into account any actions proposed to be taken or taken under the relevant plans of reorganization or by the Bankruptcy Court or the PBGC in connection with the pension plans of the relevant newspapers. Currently the Company does not believe that there is a liability that it can reliably estimate and is probable of payment related to such guarantees. About The McClatchy Company Headquartered in Sacramento, California, The McClatchy Company (NYSE: MNI) -- http://www.mcclatchy.com/-- is the third largest newspaper company in the United States, with 30 daily newspapers, approximately 50 non-dailies, and direct marketing and direct mail operations. McClatchy also operates leading local websites in each of its markets. McClatchy-owned newspapers include The Miami Herald, The Sacramento Bee, the Fort Worth Star-Telegram, The Kansas City Star, the Charlotte Observer, and The (Raleigh) News & Observer. McClatchy also owns a portfolio of premium digital assets, including 14.4% of CareerBuilder, an online job site, and 25.6% of Classified Ventures, a newspaper industry partnership that offers the auto website, cars.com, and the rental site, apartments.com. MCCLATCHY CO: Receives NYSE Non-Compliance Notice; Faces Delisting ------------------------------------------------------------------ The McClatchy Company said in a regulatory filing with the Securities and Exchange Commission that it was notified on February 4, 2009 by the New York Stock Exchange that it is not in compliance with the NYSE's continued listing standards. The NYSE's notice indicated that on February 2, 2009, the Company's average share price over the previous 30 trading days was $0.98, which is below the NYSE's quantitative listing standards. Such standards require NYSE listed companies to maintain an average closing price of any listed security above $1.00 per share for any consecutive 30 trading-day period. McClatchy plans to notify the NYSE of its intent to cure this deficiency and has six months from the date of the NYSE notice to cure the non-compliance. However, should the Company be unsuccessful in curing its non-compliance or be de-listed for other reasons, its stock could be traded in an over-the-counter or pink sheet basis which would be less liquid than a more established stock exchange. Such limited trading could negatively impact the share price of the Company's Class A common stock and lower the value of its equity. On February 26, 2009, the NYSE indicated that it had made an application to the Securities and Exchange Commission to suspend the share price requirement initially through June 30, 2009. MEDIACOM COMM: Reports Results for 4th Quarter & Full Year 2008 --------------------------------------------------------------- On February 25, 2009, Mediacom Communications Corporation (Nasdaq: MCCC) reported financial results for the three months and year ended December 31, 2008. Fourth Quarter 2008 Financial Highlights * Revenues increased 8.3% to $360.2 million * Adjusted operating income before depreciation and amortization rose 8.4% to $129.6 million * Operating income rose 37.5% to $73.7 million * Average monthly revenue per basic subscriber increased 8.9% to $90.88 * Revenue generating units grew sequentially by 33,000 Full Year 2008 Financial Highlights * Revenues increased 8.4% to $1,401.9 million * Adjusted OIBDA rose 10.6% to $512.0 million * Operating income grew 25.4% to $278.9 million * Capital expenditures of $289.8 million * RGUs grew a record 222,000 to 2,946,000 "It was an excellent year for us, as we solidly executed in all aspects of our business," stated Rocco B. Commisso, Mediacom's Chairman and CEO. "Despite worsening economic conditions in 2008, we produced record RGU growth, exceeded our financial guidance that was revised upwards three times and generated our highest annual growth rate in Adjusted OIBDA since 2002." "In 2009, we are cautiously optimistic that our business will once again show its historical resilience in this recessionary environment and grow in the face of deepening economic pressures across the markets we serve. Equally important, however, is that with a significant decline in planned capital spending and with our shares outstanding reduced by 30% as a result of the Morris Transaction, we expect to deliver in 2009 meaningful and sustainable after-tax free cash flow per share for the first time in our history. Our internal cash flow generation, together with about $650 million of currently available revolving credit commitments, puts Mediacom in the enviable position of avoiding persistently unattractive financing markets until at least mid- 2011," concluded Mr. Commisso. 2009 Guidance "Despite the current economic uncertainties, we still expect to increase revenues and Adjusted OIBDA in 2009, although at reduced growth rates than achieved in 2008. Moreover, due to an expected 20% - 25% decline in capital expenditures in 2009 and the reduction in common shares outstanding resulting from the Morris Transaction, we anticipate generating after-tax free cash flow of about $1.00 per share for full year 2009, up from less than $0.10 per share in 2008." Three Months Ended December 31, 2008 Compared to Three Months Ended December 31, 2007 "Revenues rose 8.3% to $360.2 million, largely due to growth in high-speed data and phone customers, and basic video rate increases. * Video revenues increased 3.5% from the fourth quarter of 2007, largely due to basic video rate increases and higher service fees from our advanced video products and services, including DVRs and HDTV, partially offset by a lower number of basic subscribers. During the quarter, we lost 6,000 basic subscribers, as compared to a loss of 7,000 for the same period last year. During the quarter, digital customers grew by 19,000, compared to an increase of 16,000 in the prior year period, ending the year with 643,000 customers, or 48.8% penetration of basic subscribers. As of December 31, 2008, 33.2% of digital customers were taking DVR and/or HDTV services. * High-speed data revenues rose 16.3%, primarily due to a 12.0% year-over-year unit growth. During the quarter, high- speed data customers grew by 11,000, compared to a gain of 22,000 in the prior year period, ending the year with 737,000 customers, or 25.8% penetration of estimated homes passed. * Phone revenues grew 47.6%, mainly due to a 34.1% year-over- year increase in phone customers and, to a lesser extent, a reduction in discounted pricing. During the quarter, phone customers grew by 9,000, as compared to a gain of 20,000 in the prior year period, ending the year with 248,000 customers, or 9.5% penetration of estimated marketable phone homes. * Advertising revenues were down 0.2%, largely as a result of a sharp decline in local and national automotive advertising, offset by an increase in political and other local advertising. "Total operating costs grew 8.2%, primarily due to increases in programming unit costs and, to a lesser extent, higher expenses related to phone customer growth and employee staffing, offset in part by a reduction in high-speed data delivery costs. "Adjusted OIBDA rose 8.4%, resulting in a margin of 36.0%, which was unchanged from the fourth quarter last year. Operating income increased by 37.5% mainly due to the increase in Adjusted OIBDA and lower depreciation and amortization expense." Liquidity and Capital Resources "Significant sources of cash for the 12 months ended December 31, 2008 were: * Net cash flows from operating activities of $268.7 million; and * Net bank financing of $101.0 million. "Significant uses of cash for the twelve months ended December 31, 2008 were: * Capital expenditures of approximately $289.8 million; * Additions to cash balances of $47.7 million; * Repurchases of shares of our Class A common stock totaling $22.4 million; and * Financing costs of $10.9 million. "Free cash flow was positive $8.8 million for the twelve months ended December 31, 2008, as compared to negative $3.6 million in the prior year period." Morris Transaction "On September 7, 2008, we entered into a Share Exchange Agreement with Shivers Investments, LLC, and Shivers Trading & Operating Company. On February 13, 2009, we completed the Exchange Agreement pursuant to which we exchanged all of the outstanding shares of stock of a wholly owned subsidiary, which held (i) non- strategic cable television systems located in Western North Carolina serving approximately 24,800 basic subscribers, and (ii) approximately $110 million in cash, for 28,309,674 shares of Mediacom Class A common stock owned by Shivers. Both STOC and Shivers are affiliates of Morris Communications Company, LLC, and STOC, Shivers and Morris Communications are controlled by William S. Morris III, a then member of our Board of Directors. The $110 million cash portion of the Exchange Agreement was funded with borrowings made under the revolving commitments of our bank credit facilities. "Pursuant to the terms of the Exchange Agreement, William S. Morris III and Craig S. Mitchell resigned from the Board on February 13, 2009. Messrs. Morris and Mitchell also resigned as members of the Compensation and Audit Committees of the Board, respectively." Financial Position "At December 31, 2008, our total debt outstanding was $3.316 billion, an increase of $101 million from year-end 2007. As of the same date, cash and cash equivalents were $67.1 million, an increase of $47.7 million from year-end 2007. Given the instability in the credit markets, in 2009 and possibly beyond, we plan to pursue a financial policy of keeping sizable cash balances on our balance sheet. As of December 31, 2008, our unused credit facilities were $762 million, all of which could be borrowed and used for general corporate purposes based on the terms and conditions of our debt arrangements. After giving effect to the completion of the Exchange Agreement, our unused credit facilities would have been about $650 million. As of February 25, about 68% of our total debt was at fixed interest rates or subject to interest rate protection." Stock Repurchase Program and Activity "In the first half of 2008, we repurchased approximately 4.8 million shares of our Class A common stock for an aggregate cost of $22.4 million. At December 31, 2008, we had approximately 94.8 million shares of Class A and Class B common stock outstanding, and $47.6 million remained available under our stock repurchase program. On the same date, after giving effect to the completion of the Exchange Agreement, our total outstanding shares were approximately 66.5 million, representing 39.5 million shares of our Class A common stock and 27.0 million shares of our Class B common stock." As of December 31, 2008, the Company's balance sheet showed total assets of $3,718,989,000 and total liabilities of $4,065,633,000, resulting in total stockholders' deficit of $346,644,000. A full-text copy of the Company's press release and selected financial data is available for free at: http://researcharchives.com/t/s?3a07 About Mediacom Communications Based in Middletown, New York, Mediacom Communications Corporation (Nasdaq: MCCC) -- http://www.mediacomcc.com/-- is a cable television company focused on serving the smaller cities and towns in the United States. The company offers a wide array of broadband products and services, including traditional video services, digital television, video-on-demand, digital video recorders, high-definition television, high-speed Internet access and phone service. * * * As disclosed in the Troubled Company Reporter on June 3, 2008, Fitch Ratings affirmed the 'B' Issuer Default Rating for Mediacom Communications Corporation and its wholly owned subsidiaries Mediacom LLC and Mediacom Broadband LLC. In addition Fitch assigned a 'BB/RR1' rating to Mediacom Broadband LLC's $300 million incremental term loan E. Lastly, Fitch has upgraded Mediacom LLC's senior unsecured debt to 'B-/RR5' from 'CCC+/RR6'. Approximately $3.2 billion of debt as of March 31, 2008 is affected. The Rating Outlook for all of Mediacom's ratings is Stable. As reported in the Troubled Company Reporter on March 6, 2008, Moody's Investors Service affirmed its 'B1' corporate family rating for Mediacom Communications Corp. The rating outlook remains stable. MEDIACOM COMMUNICATIONS: Compensation Panel OKs Executive Pay ------------------------------------------------------------- On February 26, 2009, the Compensation Committee of Mediacom Communications Corporation approved the compensation arrangements of the Company' executive officers: * Annual Base Salary Based on the recommendation of the Chairman and Chief Executive Officer, the Compensation Committee determined that no salary increase will be awarded to the Chairman and Chief Executive Officer in 2009, who last received a salary increase in 2006. Based on the recommendation of the Chairman and Chief Executive Officer, the Compensation Committee also determined that no salary increases will be awarded to the other Named Executive Officers in 2009. * Bonus The Compensation Committee approved for the Named Executive Officers bonus payments for their performance in 2008: Rocco B. Commisso $1,275,000 Mark E. Stephan $165,000 John G. Pascarelli $165,000 Italia Commisso Weinand $125,000 Joseph E. Young $125,000 * Stock Option Grants The Compensation Committee approved for the Named Executive Officers stock option grants under the Company's 2003 Incentive Plan for their performance in 2008 at an exercise price of $3.95 per share, which was the closing price of the Company's Class A common stock on February 26, 2009: Rocco B. Commisso 510,000 (1) Mark E. Stephan 102,000 (2) John G. Pascarelli 102,000 (2) Italia Commisso Weinand 59,000 (2) Joseph E. Young 59,000 (2) (1) The options are subject to vesting in three equal annual installments, commencing on February 26, 2010, and expire on February 25, 2019. (2) The options are subject to vesting in four equal annual installments, commencing on February 26, 2010, and expire on February 25, 2019. * Restricted Stock Unit Grants The Compensation Committee approved for the Named Executive officers restricted stock unit grants under the Company's 2003 Incentive Plan for their performance in 2008: Rocco B. Commisso 290,000 (1) Mark E. Stephan 60,000 (2) John G. Pascarelli 55,000 (2) Italia Commisso Weinand 32,000 (2) Joseph E. Young 32,000 (2) (1) The restricted stock units are subject to vesting in three equal annual installments, commencing on February 25, 2010. (2) The restricted stock units are subject to vesting in four equal annual installments, commencing on February 25, 2010. About Mediacom Communications Based in Middletown, New York, Mediacom Communications Corporation (Nasdaq: MCCC) -- http://www.mediacomcc.com/-- is a cable television company focused on serving the smaller cities and towns in the United States. The company offers a wide array of broadband products and services, including traditional video services, digital television, video-on-demand, digital video recorders, high-definition television, high-speed Internet access and phone service. * * * As disclosed in the Troubled Company Reporter on June 3, 2008, Fitch Ratings affirmed the 'B' Issuer Default Rating for Mediacom Communications Corporation and its wholly owned subsidiaries Mediacom LLC and Mediacom Broadband LLC. In addition Fitch assigned a 'BB/RR1' rating to Mediacom Broadband LLC's $300 million incremental term loan E. Lastly, Fitch has upgraded Mediacom LLC's senior unsecured debt to 'B-/RR5' from 'CCC+/RR6'. Approximately $3.2 billion of debt as of March 31, 2008 is affected. The Rating Outlook for all of Mediacom's ratings is Stable. As reported in the Troubled Company Reporter on March 6, 2008, Moody's Investors Service affirmed its 'B1' corporate family rating for Mediacom Communications Corp.. The rating outlook remains stable. As of December 31, 2008, the Company's balance sheet showed total assets of $3,718,989,000 and total liabilities of $4,065,633,000, resulting in total stockholders' deficit of $346,644,000. MICHAEL VICK: Court Sends Plan to Confirmation Stage ---------------------------------------------------- Bloomberg's Bill Rochelle said that the U.S. Bankruptcy Court for the Eastern District of Virginia has approved the disclosure statement explaining Michael D. Vick's Chapter 11 plan. The NFA quarterback's plan will proceed to confirmation hearings on April 2 and 3. According to Bloomberg, the disclosure statement says unsecured creditors' claims range between $13.9 million and $31.3 million. The plan is supported by the unsecured creditors' committee. Mr. Vick, who could be released into home confinement, will give a liquidating trustee the "vast majority" of his assets, according to the disclosure statement. In addition, Vick will pay unsecured creditors a portion of his future income. While Vick will retain the first $750,000 of his earnings, creditors will take 20% percent to 33% of his income. Creditors wanted to be sure Mr. Vick could earn enough that he would have an incentive to sign a new contract. How much creditors receive depends on whether he is reinstated by the National Football League. The Plan has intricate provisions dealing with signing bonuses, Mr. Rochelle points out. Bloomberg also said that the bankruptcy judge is requiring Vick to appear personally at the confirmation hearing. According to the report, if he isn't there, the judge said he won't approve the plan. About Michael Vick Michael Dwayne Vick, born June 26, 1980 in Newport News, Virginia, is a suspended National Football League quarterback under contract with the Atlanta Falcons team. In 2007, a U.S. federal district court convicted him and several co-defendants of criminal conspiracy resulting from felonious dog fighting and sentenced him to serve a 23 months in prison. He is being held in the United States Penitentiary at Leavenworth, Kansas. Mr. Vick is also under indictment for two related Virginia state felony charges for his role in the dogfighting ring and related gambling activity. His state trial has been delayed until he is released from federal prison. He faces a maximum 10-year state prison term if convicted on both counts. Mr. Vick filed a chapter 11 petition on July 7, 2008 (Bankr. E.D. Va. Case No. 08-50775). Dennis T. Lewandowski, Esq., and Paul K. Campsen, Esq., at Kaufman & Canoles, P.C., represent the Debtor in his restructuring efforts. Mr. Vick listed assets of $10 million to $50 million and debts of $10 million to $50 million. MICHAEL STERN: Files for Chapter 11 Bankruptcy Protection --------------------------------------------------------- Paul Brinkmann at South Florida Business Journal reports that Michael A. Stern has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Florida. According to Business Journal, Mr. Stern listed $10 million to $50 million in assets and more than $37 million in liabilities. Court documents say that the largest claim against Mr. Stern comes from Colonial Bank at $16.5 million, part of which is listed as contingent with other claims. Business Journal says that other claimants include: -- Nicolas Brocherie of Miami Beach, $6.55 million; -- Countrywide Mortgage, $6.5 million; -- Howtan Rahbarzadeh, $6.5 million (contingent); -- College Health II GP, $5.25 million (disputed); and -- Harding Investments, $2.55 million (contingent and unliquidated). Joel Aresty is the attorney assisting Mr. Stern in his restructuring effort, Business Journal states. Michael A. Stern is a Miami Beach businessman. He has been involved in several Miami Beach property development companies. NATIONAL CENTURY: Ex-Vice President Sentenced to 2 Years Prison --------------------------------------------------------------- Bankruptcy Law360 reports that Judge Algenon L. Marbley of the U.S. District Court for the Southern District of Ohio sentenced Jon Beacham, a former vice president of National Century Financial Enterprises Inc., to two consecutive terms of one year. Bankruptcy Law360 notes that NCFE's collapse in 2002 cost investors $1.9 billion. In November, the Troubled Company Reporter said Lance K. Poulsen, one of the founders and former CEO of NCFE, was found guilty by a 12-member jury on all of the charges against him, including one count each of conspiracy to commit securities fraud, wire fraud, conspiracy to commit money laundering, three counts of money laundering, and six counts of securities fraud. Mr. Poulsen faces between 30 years to life in prison, the Bloomberg News reported. Prior to his fraud conviction, Mr. Poulsen was serving a 10-year sentence after he tried to bribe Sherry Gibson to have "amnesia" during his trial. Ms. Gibson was National Century's former employee, has served her term in prison in connection with NCFE's fraud, and was the U.S. Government's star witness. In January 2009, Rebecca S. Parrett, an executive and one of the owners of NCFE, was again featured on the Web site of America's Most Wanted -- http://www.amw.com/fugitives/case.cfm?id=55267 America's Most Wanted is a reality-based show featuring stories about alleged criminals sought by law enforcement powered by News Corp.'s Fox television. Ms. Parrett was featured in AMW in 2008 after she failed to show up for a court appearance. She was found guilty on charges of conspiracy, securities fraud, wire fraud and money laundering, and faces a maximum penalty of 75 years in prison and $2,500,000 in fines. She remains at large. The Southern District of Ohio Bankruptcy Court has dismissed Ms. Parrett's claims and complaints under the fugitive disentitlement doctrine, after she failed to comply to the Court's order to show cause why the Court should not dismiss the complaints at the behest of several defendants in the multi-district litigation. Deputy U.S. Marshal Andrew Shadwick, the lead investigator in Ms. Parrett's fugitive case, said in a statement that he was pleased with the AMW feature. "The greed of powerful corporate executives like those with NCFE is terrible. Finding Rebecca Parrett will be a priority to the United States Marshals Service until the day she is captured and forced to face what she did," Mr. Shadwick said. The statement revealed that a new Internet site has been developed for those interested in Ms. Parrett's case: http://www.rebeccaparrett.com The U.S. Marshals also asks anyone with information regarding Ms. Parrett to contact them at (614) 469-5540. About National Century Financial Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- through the CSFB Claims Trust, the Litigation Trust, the VI/XII Collateral Trust, and the Unencumbered Assets Trust, is in the midst of liquidating estate assets. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. S.D. Ohio Case No. 02-65235). The Court confirmed the Debtors' Fourth Amended Plan of Liquidation on April 16, 2004. Paul E. Harner, Esq., at Jones Day, represented the Debtors. (National Century Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) NATIONAL HERITAGE: Transferred $1MM to Unit Before Bankruptcy ------------------------------------------------------------- Court documents say that National Heritage Foundation wired $1 million to affiliate Congressional District Programs Inc. two days before the charity filed for Chapter 11 bankruptcy protection. According to court documents, National Heritage filed for bankruptcy, saying that it was "unable to meet its obligations." Forbes relates that the money transfer to Congressional District kept the money out of the potential reach of National Heritage's outside creditors for the time being, raising many questions. The move would be a focus of attention during the creditors' meeting set for Thursday. Forbes states that National Heritage's bankruptcy filing gave the Company a temporary respite from its debts and halted $2 million in yearly payments to holders of charitable gift annuities issued by National Heritage. Falls Church, Virginia-based National Heritage Foundation, Inc. -- http://www.nhf.org/-- is a non-profit tax-exempt charitable institution. The company filed for Chapter 11 bankruptcy protection on Jan. 24, 2009 (Bankr. E.D. Va. Case No. 09-10525). Alan Michael Noskow, Esq., at Patton Boggs LLP assists the company in its restructuring effort. The company listed more than $100 million in assets and $1 million to $100 million in debts. NEWARK GROUP: Has No Forbearance for $84-Million Loan ----------------------------------------------------- The Newark Group, Inc. said that on February 20, 2009, it executed a forbearance agreement with Wachovia Bank, National Association, and the requisite lenders under its asset-based senior secured revolving credit facility. Pursuant to the Forbearance Agreement, the ABL Lenders agreed to forbear from exercising certain rights as a result of the occurrence of certain events of default under the Company's asset- based senior secured revolving credit facility. The events of default for which the ABL Lenders agreed to forbear relate to the Company's failure to comply with its fixed charge coverage ratio and availability tests and similar defaults under the Company's credit-linked facility. The ABL Forbearance Agreement also provides, among other things, that: (i) all revolving loans after February 6, 2009 will be Prime Rate Loans, not Eurodollar Loans; (ii) the interest rate for Prime Rate Loans will be the Prime Rate plus 4.00%; (iii) the Prime Rate will be the greater of (a) the prime rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1% and (c) 3.00%; and (iv) the ABL Lenders will receive certain additional fees from the Company. On February 16, 2009, the Company received a letter from the Bank in connection with the Company's credit-linked loan facility, which gave notice that an event of default had occurred under the CL Agreement as a result of the Company's failure to comply with its fixed charge coverage ratio and availability test and as a result of similar defaults under the ABL Agreement. The interest rate under the CL Agreement was increased by 2% per annum and the Bank otherwise reserved its rights, but did not accelerate the loan. The Company agreed as part of the ABL Forbearance Agreement to enter into a forbearance agreement with the Company's lenders under the CL Agreement by February 24, 2009. The Company had not entered into a forbearance agreement with the CL Lenders by such date, and no assurance can be provided that such an agreement will be reached. The Company is continuing to discuss financing matters with both the ABL Lenders and the CL Lenders. As of February 20, 2009, the Company was indebted under the ABL Agreement in the aggregate principal amount of approximately $38.7 million, and under the CL Agreement, the Company had outstanding a term loan of $15.3 million and letters of credit of $68.6 million. Neither the ABL Lenders nor the CL Lenders have taken any action to accelerate the obligations due under their respective agreements. About Newark Group Founded in 1912, The Newark Group -- http://newarkgroup.com/-- is a major producer of paper products from recycled materials. Its paperboard division recovers some 2.5 million tons of paper (corrugated containers, newspaper, and mixed paper) annually. The Newark Group's converted products group operates in three segments: laminated products and graphicboard, tube and core manufacturing, and solidboard packaging. Brands include Fiberwrap (paperboard), NewEx (graphicboard), NewForm and Poli-NewForm (concrete forming tubes), and Fortex (coverboard). * * * As reported by the Troubled Company reporter on March 3, 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 announcement of a forbearance agreement under the ABL facility. Bloomberg's Bill Rochelle notes that the new S&P rating -- the second downgrade for this year -- is nevertheless one level higher than the downgrade issued in January by Moody's Investors Service. NRG ENERGY: To Acquire Reliant's Texas Retail Unit for $287.5MM --------------------------------------------------------------- NRG Energy, Inc., disclosed a definitive agreement to acquire Reliant Energy Inc.'s Texas retail business, creating a strong, reliable and competitive business for the benefit of Texas customers. NRG will use cash on hand to fund the $287.5 million acquisition price. NRG also has arranged with Merrill Lynch to provide continuing credit support to the retail business subsequent to closing. The combination of Reliant's retail business, the second largest mass market electricity provider in Texas with approximately 1.8 million customers, and NRG's generation will create a stronger player in the competitive Texas market. NRG is one of the nation's foremost competitive energy providers with power generating facilities capable of generating more than 24,000 megawatts. NRG entered the Texas market in early 2006 when it bought nearly 11,000 megawatts of assets from Texas Genco and formed NRG Texas which employs 1,100 people in Texas, primarily in the Houston area. "Reliant has built a premier retail business with a brand that is synonymous with a superior customer service focus," said David Crane, NRG's President and Chief Executive Officer. "We are confident that our physical assets and commercial and risk management capabilities will provide a strong foundation, that when combined with Reliant's consumer business, will give us the ideal business model to deliver value for our Texas customers, employees and shareholders." Supplemental to this acquisition, NRG negotiated a transitional credit sleeve facility with Merrill Lynch, the current credit provider for Reliant, under which NRG will inject $200 million of cash into the retail entity. The credit sleeve will provide collateral support at the retail enterprise for up to 18 months while an orderly transition to NRG supplying the retail entity's power requirements occurs, with limited ongoing collateral requirements. "Matching NRG's generation with Reliant's retail load reduces the need for third party power contracts and collateral support for the retail business," commented Robert Flexon, NRG Chief Financial Officer. "Merrill Lynch's credit support allows this transformation to happen in a structured and rational way." Strategic & Financial Benefits Complementary Generation and Retail Portfolios NRG Texas becomes the primary supplier of power to Reliant, thereby creating a more stable, reliable and competitive business for the benefit of Texas customers, employees and stockholders. Credit Synergies Backing Reliant's load-serving requirements with NRG's generation significantly reduces the need to sell and buy power from the remaining financial institutions and other intermediaries that trade in the ERCOT market which will result in reduced transaction costs and credit exposures. Significant Collateral Reduction This combination, due to NRG's diverse asset base, provides for an efficient credit structure as it allows for significant reduction in actual and contingent collateral. The reductions will be achieved initially through offsetting transactions and over time by minimizing the need to hedge the retail power supply through third parties and thereby eliminating associated collateral postings. EBITDA and Cash Flow Accretion Excluding transaction and other one-time costs, NRG expects the transaction to be immediately accretive to EBITDA and free cash flows and fully accretive in 2010. Enhanced, Downstream 'Green' Capabilities With Reliant retail, NRG will obtain a platform to build on the entire class of distributed generation and retail alternative energy technologies that are aimed directly at consumers. These technologies include smart meters, solar powered rooftop installations, and ultimately, electric vehicles, among other distributed technologies. Financial Terms NRG will acquire Reliant for $287.5 million in cash, and remit acquired net working capital to Reliant over the six months following the closing date. As of December 31, 2008, the net working capital was approximately $111 million. Approvals and Time to Close NRG expects to close the transaction late in the second quarter of 2009. The transaction is subject to customary closing conditions and regulatory approvals, including pre-merger notification under the Hart-Scott-Rodino Act. About NRG Headquartered in Princeton, NRG Energy, Inc., owns and operates power generating facilities, primarily in Texas and the northeast, south central and western regions of the United States. NRG also owns generating facilities in Australia and Germany. As reported in the Troubled Company Reporter on Oct. 22, 2008, Fitch Ratings kept its 'CCC+/RR6' convertible preferred stock rating on NRG. NRG ENERGY: Moody's Reviews 'Ba3' Rating for Possible Upgrade ------------------------------------------------------------- Moody's Investors Service is continuing its review for possible upgrade of NRG Energy, Inc.'s long-term ratings, including its Corporate Family Rating of Ba3, following the announcement that it would acquire the retail energy business from Reliant Energy, Inc. for approximately $287.5 million. In conjunction with the announcement, Moody's has affirmed NRG's speculative grade liquidity rating of SGL-1. "While the retail supply business introduces new risks for NRG to manage, the transaction offers strategic benefits and does not detract from NRG's overall credit quality as it will likely be additive to cash flow and earnings and not materially weaken NRG's current liquidity profile" said A.J. Sabatelle, lead analyst for NRG at Moody's. NRG's long-term ratings remain under review for possible upgrade, where they were placed on November 12, 2008, following the commencement of an exchange offer by Exelon Corporation (Baa1: senior unsecured; under review for possible downgrade) to acquire NRG for $6.2 billion. As mentioned in the November 12th press release, while several uncertainties concerning the Exelon-NRG merger remain, including the final legal structure and the terms of any related required financing, Moody's believes that should the merger be consummated, a multi-notch rating change is possible for both Exelon and NRG. The rating affirmation of NRG's speculative grade liquidity rating of SGL-1 reflects Moody 's expectation that after consideration of the Reliant acquisition, NRG will maintain a very good liquidity profile over the next 4-quarter period as a result of its generation of strong internal cash flows, maintenance of significant cash balances plus continued access to substantial credit availability. Total liquidity at December 31, 2008 exceeded $3.35 billion, including unrestricted cash on hand of nearly $1.5 billion. While the Reliant transaction will utilize $487.5 million cash at closing, including $287.5 million to acquire the business plus an immediate $200 million capital contribution into a ringed fenced entity for working capital requirements, NRG's pro-forma's total liquidity is expected to be around $3 billion due to the planned sale of NRG's 50% interest in Mibrag for $259 million announced last week. Based upon recent guidance provided by company management in its February earnings call and incorporating the impact of the Reliant transaction, Moody's believes NRG will generate $300 million of free cash flow during 2009. Moody's understands that the company remains comfortably in compliance with the covenants in its bank facilities and as demonstrated by the Mibrag sale, continues to demonstrate an ability to enhance its liquidity profile from the sale of non-strategic assets. NRG's continuing rating review will assess the credit implications of the proposed merger on the company's prospective credit metrics and will factor in the benefits of a larger more diverse generation company, the ability to achieve potential synergies from the combination with Exelon. The review will consider the rating implications for each legal entity once details of the final legal structure emerge, the prospects for attaining the necessary regulatory and shareholder approvals, and the possibility that other issues may surface as the transaction proceeds forward. The last rating action on NRG occurred on November 12, 2008, when its ratings were placed under review for possible upgrade. NRG'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 NRG versus others within its industry or sector, ii) the capital structure and financial risk of NRG, iii) the projected performance of NRG over the near to intermediate term, and iv) NRG's history of achieving consistent operating performance and meeting financial plan goals. These attributes were compared against other issuers both within and outside of NRG's core peer group and NRG's ratings are believed to be comparable to ratings assigned to other issuers of similar credit risk. Headquartered in Princeton, NRG owns approximately 24,000 megawatts of generating facilities, primarily in Texas and the northeast, south central and western regions of the US. NRG also owns generating facilities in Australia and Germany. NWL HOLDINGS: Court Converts Case to Chapter 7 Liquidation ---------------------------------------------------------- The Hon. Mary F. Walrath of the United States Bankruptcy Court for the District of Delaware converted the Chapter 11 cases of NWL Holdings Inc. and its debtor-affiliates to liquidation proceedings under Chapter 7. In accordance with the case conversion, Roberta A. DeAngelis, the United States Trustee for Region 3, appointed Alfred T. Guiliano as interim trustee of the Debtors' Chapter 7 cases. General Electric Capital Corporation and other senior secured lenders, who provided as much as $7 million in debtor-in- possession financing to the Debtor to be used to pay for general operations, have advised the Debtors that they no longer have interest to continue financing their Chapter 11 cases. The secured lenders said that liquidation under Chapter 7 was a less expensive course. About National Wholesale West Hempstead, New York-based NWL Holdings, Inc. -- http://www.nationalwholesaleliquidators.com/-- aka National Wholesale Liquidators, is 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. The company filed for Chapter 11 protection on Nov. 10, 2008 (Bankr. D. Delaware Case No. 08- 12847). Paul Traub, Esq., Steven E. Fox, Esq., Maura I. Russell, Esq., and Brett J. Nizzo, Esq., at Epstein Becker Green, P.C assists the company in its restructuring effort. Mark D. Collins, Esq., John H. Knight, Esq., at Michael J. Merchant, Esq., at Richards, Layton & Finger, P.A.. The United States Trustee appointed seven creditors to serve on an Official Committee of Unsecured Creditors. Scott L. Hazan, Esq., and David M. Posner, Esq., at Otterbourg, Steindler, Houston & Rosen, PC; and Mark J. Politan, Esq., at Cole, Schotz, Meisel, Forman & Leonard, PA represent the Committee in these cases. The company listed assets of $100 million to $500 million and debts of $100 million to $500 million. OCEAN WOOD: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Ocean Wood Enterprises 1 Ocean Wood Way Birch Harbor, ME 04613 Bankruptcy Case No.: 09-10209 Chapter 11 Petition Date: March 2, 2009 Court: District of Maine (Bangor) Debtor's Counsel: George J. Marcus, Esq. bankruptcy@mcm-law.com Marcus, Clegg & Mistretta, PA One Canal Plaza, Suite 600 Portland, ME 04101-4102 Tel: (207) 828-8000 Estimated Assets: $1 million to $100 million Estimated Debts: $1 million to $100 million The Debtor did not file a list of 20 largest unsecured creditors. The petition was signed by James A. Brunton, Jr., managing member. ONESTAR LONG DISTANCE: Trustee Can Assert Claims vs. WorldCom ------------------------------------------------------------- The Honorable Arthur Gonzalez of the U.S. Bankruptcy Court for the District of New York issued a 26-page opinion in respect to the request of former Chapter 11 filer WorldCom Inc. and its affiliates to enforce their Court-confirmed Joint Plan of Reorganization, specifically by stopping OneStar Long Distance, Inc., which also filed for bankruptcy in Indiana, from asserting claims against it. WorldCom, Inc. and certain of its subsidiaries, starting July 21, 2002, filed for bankruptcy under chapter 11, and obtained confirmation of their Plan on October 31, 2003, which Plan became effective April 20, 2004. On December 31, 2003, certain creditors of OneStar filed an involuntary chapter 7 bankruptcy petition against OneStar in the Bankruptcy Court for the Southern District of Indiana. The case was converted to Chapter 11 on February 3, 2004, then back to Chapter 7 on January 13, 2005, after substantially all of its assets were sold. Elliot D. Levin was appointed as Chapter 7 trustee. Before and after the OneStar Petition Date, a WorldCom subsidiary, MCI, provided OneStar with telecommunications services pursuant to various telecommunications services agreements, for which OneStar paid WorldCom, and which OneStar resold to its customers. All the payments for the services were received by WorldCom after WorldCom filed its petition. On August 16, 2005, the OneStar Trustee commenced an adversary proceeding against WorldCom in the Indiana Bankruptcy Court seeking the avoidance and recovery of certain transfers under Sections 547, 549, and 550 of the Code that OneStar made to WorldCom during the 90-day period prior to the OneStar Petition Date. Upon motion by WorldCom, the Adversary Proceeding was stayed by the Indiana Bankruptcy Court pending resolution of its motion to enforce the WorldCom Plan before the Court. The Adversary Proceeding asserts that payments received by WorldCom are avoidable by the OneStar Trustee as preferential and unauthorized postpetition transfers under Sections 547 and 549, and seeks to recover those transfers for the benefit of the OneStar estate. Of these transfers, the OneStar Trustee asserts that WorldCom received $981,243 after the commencement of WorldCom's case, during the OneStar preference period and before the WorldCom Confirmation Order Date, and $1,490,615 was received during the OneStar preference period and between the WorldCom Confirmation Order Date and WorldCom Effective Date. Further, the OneStar Trustee seeks to avoid $100,000.00 that was received by WorldCom between the OneStar Petition Date and the WorldCom Effective Date. WorldCom argues the OneStar Trustee violated the New York Court's discharge injunction by knowingly commencing the Adversary Proceeding seeking to avoid transfers made prior to the effective date of the WorldCom Plan. WorldCom asserts that these claims, which arose prior to the WorldCom Effective Date, were discharged by the WorldCom Plan, the WorldCom Confirmation Order and under the Code. The OneStar Trustee argues that since the OneStar estate's causes of action arose postpetition in WorldCom's case, they do not fit the definition of a "claim" as provided by the WorldCom Plan and were not discharged by the WorldCom Plan. The OneStar Trustee contends that since the claims in the Adversary Proceeding do not fit the WorldCom Plan's definition of a claim, he is not enjoined under the WorldCom Plan or the WorldCom Confirmation Order from prosecuting the Adversary Proceeding. WorldCom argues that since the OneStar Trustee is the successor in interest to OneStar, the WorldCom Plan and all its provisions bind him since the WorldCom Confirmation Order was a final order binding upon OneStar. However, according to Judge Gonzalez, even though the OneStar Trustee is a successor in interest to the causes of actions and judgments of OneStar, the avoidance actions at issue were never an interest in property of OneStar, but rather belong to OneStar's creditors. Judge Gonzalez held that the OneStar Trustee may assert the avoidance actions on behalf of OneStar's creditors since OneStar never had an interest in those causes of actions and could not bind the OneStar Trustee from pursuing them. "Although the OneStar Trustee is bound by the WorldCom Plan in pursuing causes of action derivative of OneStar's rights and interests, such binding effect does not apply to the OneStar Trustee's pursuit of causes of actions for the benefit of the estate's creditors. Consequently, the parties' remaining arguments concerning the applicability of the WorldCom Plan's provisions to the OneStar Trustee's claims need not be addressed." Accordingly, the New York Bankruptcy Court denied WorldCom's request. Judge Gonzalez ruled that the OneStar Trustee may pursue the Adversary Proceeding as filed. He noted that the OneStar Trustee is not otherwise bound by the WorldCom Plan to adjudicate any administrative expense claim before the Court, however the parties are directed to submit briefs regarding whether the Code requires, based upon the current status of the administration of this case, a request for payment of an administrative expense claim be sought before the New York Court. About WorldCom WorldCom, Inc., a Clinton, MS-based global communications company, filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, WorldCom listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on Oct. 31, 2003, and on Apr. 20, 2004, the Company formally emerged from U.S. Chapter 11 protection as MCI, Inc. On Jan. 6, 2006, MCI merged with Verizon Communications, Inc. MCI is now known as Verizon Business, a unit of Verizon Communications. (WorldCom Bankruptcy News, Issue No. 127; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PARMALAT SPA: To Award Investors 10.5 Million Shares in Settlement ------------------------------------------------------------------ Parmalat said in a statement that the Southern District of New York has on March 2, 2009 approved the settlement reached by Parmalat S.p.A. with class plaintiffs, and has certified the class, inclusive of all its members world-wide and for all claims, vis-a-vis Parmalat S.p.A. Parmalat will deliver 10.5 million Parmalat shares as total and final consideration for the settlement, to be issued and delivered within 30 days from when the order becomes final. According to David Glovin of Bloomberg, Parmalat Finanziaria SpA filed Italy's biggest bankruptcy in December 2003, later disclosing more than EUR14 billion ($22 billion) of debt after what investors claimed was a lengthy fraud. The successor company shortened its name to Parmalat SpA. Parmalat investors lost as much as $8 billion and consequently sued Parmalat, its banks and auditors over the company's implosion. U.S. District Judge Lewis Kaplan in New York approved the settlement. Bloomberg said that the 10.5 million shares award to investors is a partial settlement of the "massive worldwide fraud" lawsuit. James Sabella, the plaintiffs' lawyer revealed that the shares in Parmalat S.p.A. closed at EUR1.478, making the pact worth about EUR15.5 million ($19.5 million) and adds that, thousands of Parmalat stockholders and bondholders will share in the award. Bloomberg states that Judge Kaplan said the lawyers deserve a significant fee for taking on a fraud case of this complexity and thus awarded investor lawyers 18.5% of the Parmalat shares and $9.25 million for resolution of the legal claims against FirstBoston and BNL. Lawyers for the investors said they've expended about $56 million worth of legal time against all the defendants in the case. Bankruptcy Law360 reports that the settlement is on top of a $50 million agreement approved a year and a half ago. Bankruptcy Law360 also relates that Judge Kaplan approved roughly $13 million in attorneys' fees and more than $4.1 million in expenses related to the securities fraud class action. About Parmalat S.p.A. Headquartered in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/-- sells nameplate milk products that can be stored at room temperature for months. It also has about 40 brand product lines, which include yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company's U.S. operations filed for chapter 11 protection on Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than US$200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on Dec. 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Parmalat has three financing arms: Dairy Holdings Ltd., Parmalat Capital Finance Ltd., and Food Holdings Ltd. Dairy Holdings and Food Holdings are Cayman Island special-purpose vehicles established by Parmalat S.p.A. The Finance Companies are under separate winding up petitions before the Grand Court of the Cayman Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as Joint Provisional Liquidators in the cases. On Jan. 20, 2004, the Liquidators filed Sec. 304 petition, Case No. 04- 10362, in the United States Bankruptcy Court for the Southern District of New York. In May 2006, the Cayman Island Court appointed Messrs. MacRae and Cleaver as Joint Official Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presides over the Parmalat Debtors' U.S. cases. On June 21, 2007, the U.S. Court granted Parmalat permanent injunction. (Parmalat Bankruptcy News; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). PARMALAT SPA: District Court Rejects Deloitte's Bid to Appeal ------------------------------------------------------------- Bankruptcy Law360 reports that Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York squashed the hopes of Deloitte Touche Tohmatsu and its U.S. subsidiary for an interlocutory appeal in a securities fraud class action against Parmalat SpA and its financial and accounting advisers. Judge Kaplan issued a firm ruling Monday denying DTT's motion to certify an interlocutory appeal, Bankruptcy Law360 says. In January, Judge Kaplan denied Deloitte Touche Tohmatsu, Deloitte & Touche LLP, and former Deloitte CEO James Copeland's motion for summary judgment dismissing the complaint filed by investors of Parmalat S.p.A. and its affiliates. The Parmalat Investors seek damages against Parmalat's accountants and banks, including Deloitte US, for a massive fraud that involved the understatement of Parmalat's debt by nearly $10,000,000,000, and the overstatement of its net assets by $16,400,000,000. The claims against Deloitte US arise from a liability for the alleged fraud of Deloitte Italy, one of Parmalat's former auditors. Deloitte Italy has not joined in the summary judgment motion. The Deloitte defendants moved for summary judgment dismissing plaintiffs' claims, or, in the alternative, a summary judgment determining that they are not jointly and severally liable pursuant to Section 21D(f)(2)(A) of the Private Securities Litigation Reform Act of 1995. Judge Kaplan opined that although the allegations were made against Deloitte Italy and not the Deloitte Defendants, he will not dismiss the Parmalat Investors' complaint. He said that the facts supporting the Deloitte Defendants' assertion that they were not involved in the fraud by Deloitte Italy was inconclusive. "Obviously, we are disappointed in the Judge's decision, but we are confident of victory at any trial of this matter," the Deloitte Defendants told the press. "As the Court pointed out, the evidence presented by the Deloitte defendants would support a jury verdict in their favor, but for purposes of summary judgment, it was 'obliged to view the evidence in the light most favorable to the plaintiffs,' and therefore could not grant the motion 'as a matter of law." "This is huge," the Wall Street Journal quoted Stuart Grant, Esq., at Grant & Eisenhoff, the investors' counsel, as saying. Accounting firms, Mr. Grant continued, often assert that their foreign affiliates are legally separate, thus limiting the asset pool available to investors who file suit. "They always argue that you can't pursue the worldwide organization, sometimes successfully," Mr. Grant noted. A full-text copy of Judge Kaplan's January ruling is available at no charge at: http://bankrupt.com/misc/ParmaMDLDelUSMoDenied.pdf In an action against Citigroup Inc. in Bergen County Superior Court in New Jersey, Judge Jonathan Harris has denied Parmalat's motions for a new trial of Parmalat's claim against Citigroup. The New Jersey Superior Court also has denied Parmalat's request for dismissal of the counterclaims against it. Parmalat stated that the case is proceeding to appeal. Citigroup is currently involved in three proceedings: (1) a committal to trial in Parma, Italy, for its alleged co-liability in the fraudulent bankruptcy at Parmalat; (2) another criminal proceeding in Milan, Italy, for alleged market rigging; and (3) in a further trial for damages before the New Jersey Court. About Parmalat S.p.A. Headquartered in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/-- sells nameplate milk products that can be stored at room temperature for months. It also has about 40 brand product lines, which include yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company's U.S. operations filed for chapter 11 protection on Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than US$200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on Dec. 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Parmalat has three financing arms: Dairy Holdings Ltd., Parmalat Capital Finance Ltd., and Food Holdings Ltd. Dairy Holdings and Food Holdings are Cayman Island special-purpose vehicles established by Parmalat S.p.A. The Finance Companies are under separate winding up petitions before the Grand Court of the Cayman Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as Joint Provisional Liquidators in the cases. On Jan. 20, 2004, the Liquidators filed Sec. 304 petition, Case No. 04- 10362, in the United States Bankruptcy Court for the Southern District of New York. In May 2006, the Cayman Island Court appointed Messrs. MacRae and Cleaver as Joint Official Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presides over the Parmalat Debtors' U.S. cases. On June 21, 2007, the U.S. Court granted Parmalat permanent injunction. (Parmalat Bankruptcy News, Issue No. 110; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). PATRIOT HOMES: U.S. Trustee Appoints 11-Member Creditors Committee ------------------------------------------------------------------ Nancy J. Gargula, the United States Trustee for Region 10, appointed 11 creditors to serve on the Official Committee of Unsecured Creditors in Patriot Homes, Inc., and its debtor- affiliates' Chapter 11 cases. The Creditors Committee members are: a) Grant R. Brooker - Co-Chairperson General Counsel Bennett Truck Transport, LLC 1001 Industrial Parkway McDonough, GA 30253 Tel: (770) 957-1866 ext. 779 Fax: (678)569-1265 email: grant.brooker@bennettig.com b) Craig Smith Esco Industries 1701 Conant Street Elkhart, IN 46516 Tel: (574) 522-4500 Fax: (574) 522-0900 email: craigsmith@escoindustries.com c) Jeff Miller Acting Controller BBC Distribution, LLC 426 N. Main Street Elkhart, IN 46516 Tel: (574) 389-5400 Fax: (574)389-5463 email: jeff@myreach360.com d) Chris Kintzele C.E.O. Alpha Systems 5120 Beck Drive Elkhart, IN 46516 Tel: (574) 295-5206 Fax: (574) 970-2703 Email: ckintzele@alphallc.us e) Russ Chappell President Basic Components Inc. 1201 S. Second Ave. Mansfield, TX 76063 Tel: (817) 473-7224 Fax: (817)473-3388 email: rchappell@basiccomp.com f) Wayne Hunnell President Continental Axle 185 Rural Ave. Washington, PA 15301 Tel: (412) 780-0900 Fax: (724)249-2084 email: whunnell@comcast.net g) Steve Tomlinson - Co-Chairperson Corporate Credit Manager Patrick Industries, Inc. 107 W. Franklin Street Elkhart, IN 46515 Tel: (574) 206-7748 Fax: (574)524-7748 email: tomlinss@patrickind.com h) Clifford C. Mentrup Senco Products, Inc. 8485 Broadwell Road Cincinnati, OH 45244 Tel: (513) 388-2523 Fax: (513) 388-3161 email: Cmentrup@GFSBrands.com cmentrup@globalfasteningsolutions.com i) Keith Burch General Manager Dave Carter & Associates Inc. 1136 Verdant Drive Elkhart, IN 46516 Tel: (574) 522-2857 Fax: (574)522-1528 email: Kburch@davecarter.com j) James Gaston, Sr. 6277 Hwy. 612 Lucedale, MS 39452 c/o Nathaniel Peter Holzer Jordan, Hyden, Womble, Culbreth & Holzer, P.C. 500 North Shoreline Dr. Suite 900 Corpus Christi, TX 78471 Tel: (361) 884-5678 Fax: (361)888-5555 email: pholzer@jhwclaw.com k) Wendy Gaston-Green 6277 Hwy. 612 Lucedale, MS 39452 c/o Nathaniel Peter Holzer Jordan, Hyden, Womble, Culbreth & Holzer, P.C. 500 North Shoreline Dr. Suite 900 Corpus Christi, TX 78471 Tel: (361) 884-5678 Fax: (361) 888-5555 email: pholzer@jhwclaw.com Headquartered in Middlebury, Indiana, Patriot Homes, Inc. -- http://www.patriothomes.com/-- makes modular houses. The Debtor and 7 of its debtor-affiliates filed separate motions for Chapter 11 relief on Sept. 28, 2008 (Bankr. N.D. Ind. Lead Case No. 08-33347). Bell Boyd & Lloyd, LLP, is the Debtors' bankruptcy counsel. Rebecca Hoyt Fisher, Esq., at Laderer & Fischer, reresents the Official Committee of Unsecured Creditors as counsel. In its schedules, Patriot Homes disclosed total assets of $1,715,900 and total debts of $17,918,377. PATRIOT HOMES: May Sell Personal Property at Alabama Facility ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Indiana granted Patriot Homes, Inc., and its debtor-affiliates, permission to sell certain personal property of the Debtors' Alabama facility, free and clear of all liens, claims, and encumbrances. As reported in the Troubled Company Reporter on Feb. 3, 2009, the Debtors told the Court that they have ceased operations at this facility. As part of the agreement to use cash collateral, Wells Fargo Business Credit, which holds the security interest in the personal property, has consented to the sale. The auction of the personal property will be conducted by Fulton Auction & Realty Co., Inc. Headquartered in Middlebury, Indiana, Patriot Homes, Inc. -- http://www.patriothomes.com/-- makes modular houses. The Debtor and 7 of its debtor-affiliates filed separate motions for Chapter 11 relief on Sept. 28, 2008 (Bankr. N.D. Ind. Lead Case No. 08-33347). Bell Boyd & Lloyd, LLP, is the Debtors' bankruptcy counsel. Rebecca Hoyt Fisher, Esq., at Laderer & Fischer, represents the Official Committee of Unsecured Creditors as counsel. In its schedules, Patriot Homes disclosed total assets of $1,715,900 and total debts of $17,918,377. PETROHAWK ENERGY: Share Issuance Won't Affect Moody's 'B2' Rating ----------------------------------------------------------------- Moody's commented that Petrohawk Energy Corporation's (HK) announcement that it had issued 22 million shares of equity for approximately $400 of proceeds would have no immediate impact on HK's B2 corporate family rating or B3 (LGD 4; 69%) senior unsecured note rating, and negative outlook. For more information, please see the issuer comment posted on Moodys.com. Moody's last rating action for Petrohawk dates from January 22, 2009, at which time Moody 's assigned ratings to its new notes offering, affirmed existing ratings, and changed the outlook to negative from stable. Petrohawk Energy Corporation is headquartered in Houston, Texas and is engaged in the exploration, production, acquisition, and exploitation of oil and natural gas. PHILADELPHIA NEWSPAPERS: Wants Dilworth Paxson as Co-Counsel ------------------------------------------------------------ Philadelphia Newspapers, LLC, and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Eastern District of Pennsylvania to employ Dilworth Paxson LLP as co-counsel. Dilworth will: a) provide the Debtors with legal services with respect to their powers and duties as debtors-in-possession; b) prepare on behalf of the debtors or assist the Debtors in preparing all necessary pleadings, motions, applications, complaints, answers, responses, orders, United States Trustee reports and other legal papers; c) represent the Debtors in any matter involving contests with secured or unsecured creditors, including the claims reconciliation process; d) assist the Debtors in providing legal services required to prepare, negotiate and implement a plan of reorganization; and e) perform all other legal services for the Debtors which may be necessary herein, other than those requiring specialized expertize for which special counsel, if necessary, may be employed. The Debtors relate that Dilworth and co-counsel Proskauer Rose will ensure that their services are not duplicative. Dilworth professionals' hourly rates are: Larry G. Michael $675 Anne M. AAronson $325 Scott J. Freedman $290 Jennifer L. Maleski $290 Catherine G. Pappas $215 Mr. Michael, a partner at Dilworth, adds that the firm received an advanced payment for the filing of the Debtors' Chapter 11 petitions in the approximate amount of $110,000. Dilworth also received $643,886 within the past 90 days on account of other matters in which Dilworth represents or represented one or more of the Debtors. As of Feb. 22, 2009, the Debtors owed Dilworth approximately $650,000 on account of services provided. Mr. Michael assures the Court the Dilworth is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Michael can be reached at: Dilworth Paxson LLP 1500 Market St. 3500E Philadelphia, PA 19102 Tel: (215) 575-7000 Fax: (215) 575-7200 About Philadelphia Newspapers Philadelphia Newspapers, LLC -- http://www.philly.com/-- owns and operate numerous print and online publications in the Philadelphia market, including the Philadelphia Inquirer, the Philadelphia Daily News, several community newspapers, the region's number one local Web site, philly.com, and a number of related online products. The Company's flagship publications are the Inquirer, the third oldest newspaper in the country and the winner of numerous Pulitzer Prizes and other journalistic recognitions, and the Daily News. Philadelphia Newspapers and its debtor-affiliates filed for Chapter 11 bankruptcy protection on February 22, 2008 (Bankr. E.D. Pa. Case No. 09-11204). Lawrence G. McMichael, Esq., at Dilworth Paxson LLP is the Debtors' local counsel. Garden City Group, Inc., is the Debtors' notice, claims and solicitation agent. The Debtors' financial advisor is Jefferies & Company Inc. The Debtors listed $100 million to $500 million in assets and $100 million to $500 million in debts. PHILADELPHIA NEWSPAPERS: U.S. Trustee Forms Three-Member Committee ------------------------------------------------------------------ Roberta A. DeAngelis, the United States Trustee for Region 3, appointed three creditors to serve on an Official Committee of Unsecured Creditors of Philadelphia Newspapers LLC and its debtor- affiliates. The members of the Committee are: 1) United Brotherhood of Carpenters & Joiners of America Attn: David Costello 1803 Spring Garden Street Philadelphia, PA 19130 Tel: (215) 901-3270 Fax: (215) 569-0263 2) Communications Workers of America Attn: Daniel J. Gross The Newspaper Guild Local #3801 1329 Buttonwood Street Philadelphia, PA 19123 Tel: (215) 928-0118 Fax: (215) 928-9177 3) Airlie Opportunity Master Fund, LTD. Attn: Joshua Blue Eaves 115 East Putnam Avenue Greenwich, CT 06830 Tel: (203) 661-6200 Fax: (203) 661-0479 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtor's expense. They may investigate the Debtor's business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About Philadelphia Newspapers Philadelphia Newspapers, LLC -- http://www.philly.com/-- owns and operate numerous print and online publications in the Philadelphia market, including the Philadelphia Inquirer, the Philadelphia Daily News, several community newspapers, the region's number one local Web site, philly.com, and a number of related online products. The Company's flagship publications are the Inquirer, the third oldest newspaper in the country and the winner of numerous Pulitzer Prizes and other journalistic recognitions, and the Daily News. Philadelphia Newspapers and its debtor-affiliates filed for Chapter 11 bankruptcy protection on February 22, 2008 (Bankr. E.D. Pa. Case No. 09-11204). Proskauer Rose LLP is the Debtors' bankruptcy counsel, while Lawrence G. McMichael, Esq., at Dilworth Paxson LLP is the local counsel. The Debtors' financial advisor is Jefferies & Company Inc. The Debtors listed assets and debts of $100 million to $500 million. PHOENIX COS: S&P Downgrades Counterparty Credit Rating to 'BB' -------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its counterparty credit rating on Phoenix Cos. Inc. to 'BB' from 'BB+'. S&P also lowered its counterparty credit and financial strength ratings on Phoenix Cos. Inc.'s operating subsidiaries-- Phoenix Life Insurance Co., PHL Variable Insurance Co., and AGL Life Assurance Co. -- to 'BBB' from 'BBB+'. At the same time, Standard & Poor's removed the ratings from CreditWatch, where they had been placed with negative implications on Feb. 10, 2009. The outlook is negative. "We lowered our ratings to reflect Phoenix's weakened competitive position, as evidenced by declining life insurance sales and new annuity deposits," said Standard & Poor's credit analyst Adrian Pask. Standard & Poor's ratings reflect the weaker statutory operating performance at the lead insurance company, reduced financial flexibility, and reduced capital at PLIC. Its statutory net gain from operations was lower in 2008 than in the past few years. The workforce reduction, which was announced during Phoenix's earnings call, will result in lower personnel expenses and may have a secondary effect--a reduction in Phoenix's ability to originate new business, which could put further pressure on its competitive position. PILGRIM'S PRIDE: Seeks 1st Exclusivity Extension to Sept. 30 ------------------------------------------------------------ Pilgrim's Pride Corp. and its affiliates ask the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division to extend their exclusive period to file a chapter 11 plan through and including September 30, 2009 and solicit acceptances through and including November 30, 2009. Pilgrim's Pride said that the extension will afford them a full and fair opportunity to propose a consensual plan and solicit acceptances of the plan without deterioration and disruption. Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, in Dallas, Texas, tells the Court that the Debtors' cases are both large and complex, with liabilities of approximately $3,000,000,000. Even though these cases are only three months old, the Debtors have already made significant progress in these chapter 11 cases, Mr. Youngman avers. The Debtors are formulating a business plan and are evaluating and implementing various operational restructuring alternatives. Nonetheless, significant unresolved contingencies still exist, like the determination of outstanding claims against the Debtors, resolution of several material non-bankruptcy lawsuits, and completion of the analysis of the Debtors' unexpired leases and executory contracts, Mr. Youngman explains. The Debtors are not seeking an extension of the Exclusive Periods to delay creditors or force them to accede to their demands. In fact, operational restructuring has already proceeded on a fast track, and the Debtors intend to formulate a plan as soon as practicable. In light of ongoing efforts to finalize which leases and contracts will be assumed or rejected, and to quantify the Debtors' potential exposure to the different types of claims that may be filed against the estates and the value of its remaining assets for distribution to creditors, additional time is needed for the Debtors to develop and negotiate a plan of reorganization and prepare a disclosure statement that contains adequate information under Section 1125 of the Bankruptcy Code, Mr. Youngman asserts. According to Mr. Youngman, the extension of the Exclusive Periods will increase the likelihood of a greater distribution to the Debtors' stakeholders by facilitating an orderly, efficient and cost-effective plan process for the benefit of all creditors. Termination of the Exclusive Periods, on the other hand, could significantly delay, if not completely undermine the Debtors' ability to confirm any plan in these cases. Judge D. Michael Lynn will convene a hearing to consider the exclusivity Motion on March 24, 2009 at 10:30 a.m., Eastern Time. Responses will be due by Marcy 17, 4:00 p.m., Eastern Time. About Pilgrim's Pride Corp. Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation (NYSE: PPC) -- http://www.pilgrimspride.com/-- produces, distributes and markets poultry processed products through retailers, foodservice distributors and restaurants in the U.S., Mexico and in Puerto Rico. In addition, the company owns 34 processing plants in the United States and 3 processing plants n Mexico. The processing plants are supported by 42 hatcheries, 31 feed mills and 12 rendering plants in the United States and 7 hatcheries, 4 feed mills and 2 rendering plants in Mexico. Moreover, the company owns 12 prepared food production facilities in the United States. The company employs about 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico, and Puerto Rico, with other facilities in Arizona, Florida, Iowa, Mississippi and Utah. Pilgrim's Pride Corp. and six other affiliates filed Chapter 11 petitions on December 1, 2008 (Bankr. N.D. Tex. Lead Case No. 08-45664). The Debtors' operations in Mexico and certain operations in the United States were not included in the filing and continue to operate as usual outside of the Chapter 11 process. Pilgrim's Pride has engaged Stephen A. Youngman, Esq., Martin A. Sosland, Esq., and Gary T. Holzer, Esq., at Weil, Gotshal & Manges LLP, as bankruptcy counsel. The Debtors have also tapped Baker & McKenzie LLP as special counsel. Lazard Freres & Co., LLC is the company's investment bankers and William K. Snyder of CRG Partners Group LLC as chief restructuring officer. The company's claims and noticing agent is Kurtzman Carson Consulting LLC. A nine-member committee of unsecured creditors has been appointed in the case. As of December 27, 2008, the Company had $3,215,103,000 in total assets, $612,682,000 in total current liabilities, $225,991,000 in total long-term debt and other liabilities, and $2,253,391,000 in liabilities subject to compromise. Bankruptcy Creditors' Service, Inc., publishes Pilgrim's Pride Bankruptcy News. The newsletter tracks the chapter 11 proceeding of Pilgrim's Pride Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) PILGRIM'S PRIDE: Names Jerry Wilson as Sales & Marketing VP ----------------------------------------------------------- Pilgrim's Pride Corp. has appointed Jerry D. Wilson as executive vice president of sales and marketing, subject to approval of the United States Bankruptcy Court for the Northern District of Texas. He will join the company immediately on an interim basis. Mr. Wilson brings 29 years of poultry industry experience to his new role. He previously served nine years as vice president of sales and marketing for Keystone Farms LLC, a privately owned poultry producer based in Huntsville, Alabama. Prior to that, he spent seven years as vice president of sales and marketing with Seaboard Farms, Inc., a poultry producer based in Athens, Georgia. He also has held operations, quality assurance and management positions with Simmons Foods and Sanderson Farms. "Jerry is a proven leader with considerable experience in building a customer-focused culture," said Don Jackson, president and chief executive officer. "As Pilgrim's Pride moves toward a market- driven business model, Jerry will play an integral role in making sure that we capitalize on our growth opportunities and exceed our customers' expectations." As previously announced, the Company filed voluntary Chapter 11 petitions on December 1, 2008. The Chapter 11 cases are being jointly administered under case number 08-45664. The Company's operations in Mexico and certain operations in the United States were not included in the filing and continue to operate as usual outside of the Chapter 11 process. Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation (NYSE: PPC) -- http://www.pilgrimspride.com/-- produces, distributes and markets poultry processed products through retailers, foodservice distributors and restaurants in the U.S., Mexico and in Puerto Rico. In addition, the company owns 34 processing plants in the United States and 3 processing plants n Mexico. The processing plants are supported by 42 hatcheries, 31 feed mills and 12 rendering plants in the United States and 7 hatcheries, 4 feed mills and 2 rendering plants in Mexico. Moreover, the company owns 12 prepared food production facilities in the United States. The company employs about 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico, and Puerto Rico, with other facilities in Arizona, Florida, Iowa, Mississippi and Utah. Pilgrim's Pride Corp. and six other affiliates filed Chapter 11 petitions on December 1, 2008 (Bankr. N.D. Tex. Lead Case No. 08-45664). The Debtors' operations in Mexico and certain operations in the United States were not included in the filing and continue to operate as usual outside of the Chapter 11 process. Pilgrim's Pride has engaged Stephen A. Youngman, Esq., Martin A. Sosland, Esq., and Gary T. Holzer, Esq., at Weil, Gotshal & Manges LLP, as bankruptcy counsel. The Debtors have also tapped Baker & McKenzie LLP as special counsel. Lazard Freres & Co., LLC, is the company's investment bankers and William K. Snyder of CRG Partners Group LLC as chief restructuring officer. The company's claims and noticing agent is Kurtzman Carson Consulting LLC. A nine-member committee of unsecured creditors has been appointed in the case. As of December 27, 2008, the Company had $3,215,103,000 in total assets, $612,682,000 in total current liabilities, $225,991,000 in total long-term debt and other liabilities, and $2,253,391,000 in liabilities subject to compromise. Bankruptcy Creditors' Service, Inc., publishes Pilgrim's Pride Bankruptcy News. The newsletter tracks the chapter 11 proceeding of Pilgrim's Pride Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) PLIANT CORP: Wants to Hire McMillan LLP as Canadian Counsel ----------------------------------------------------------- Pliant Corporation and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware for permission to employ McMillan LLP as Canadian counsel. McMillan will: a) prepare an application for relief pursuant to Section 18.6 of the CCAA for the Canadian debtors; b) prepare motions and other court papers, documents and agreements that may be called for under the Canadian proceedings in connection with the Chapter 11 cases; c) represent the Debtors and prepare for all attendant court appearances and out-of-court planning and negotiations to the Canadian Debtors; d) negotiate, prepare and prosecute any relief with respect to the Canadian Debtors related to Chapter 11 plans and related solicitation and disclosure statements and other r related documents; and e) otherwise represent the Debtors, together with the Debtors' primary bankruptcy counsel, Sidley Austin LLP, in all aspects of these cases related to the Canadian Debtors. Wael Rostom, a partner at McMillan tells the Court that the firm's standard hourly rates for professionals are: Lawyers $260 - $722 Paralegal $100 - $240 Mr. Rostom adds that McMillan has received $202,559 for the prepetition services and related expenses. In addition, McMillan received an evergreen retainer of $75,000. McMillan has applied, after reconciliation, $66,930 for additional fees and expenses related to prepetition services and expenses. McMillan has also received a $17,142 retainer for services of local counsel retained by McMillan to perform services required under the term of the proposed debtor in possession financing. Mr. Rostom assures the Court that McMillan LLP is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Rostom can be reached at: McMillan LLP Brookfield Place, Suite 4400 181 Bay Street Toronto, Ontario Canada M5J 2T3 Tel: (416) 865-7000 1-888-622-4624 (Toll-free) Fax: (416) 865-7048 About Pliant Corp. Headquartered in Schaumburg, Illinois, Pliant Corporation produces polymer-based films and flexible packaging products for food, beverage, personal care, medical, agricultural and industrial applications. The company has operations in Australia, New Zealand, Germany, and Mexico. The Debtor and 10 of its affiliates filed for Chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06- 10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway Stargatt & Taylor, represented the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy counsel. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. The Debtors emerged from chapter 11 protection on July 19, 2006. Pliant Corp. and its affiliates again filed for Chapter 11 after reaching terms of a pre-packaged restructuring plan. The voluntary petitions were filed Feb. 11, 2009 (Bank. D. Del. Case Nos. 09-10443 through 09-10451). The Hon. Mary F. Walrath presides over the cases. Jessica C.K. Boelter, Esq., at Sidley Austin LLP, in Chicago, Illinois, and Edmon L. Morton, Esq., at Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, provide bankruptcy counsel to the Debtors. Epiq Bankruptcy Solutions LLC acts as claims and noticing agent. As of September 30, 2008, the Debtors had $688,611,000 in total assets and $1,032,631,000 in total debts. PLIANT CORP: Wants to Hire Sidley Austin as Bankruptcy Counsel -------------------------------------------------------------- Pliant Corporation and its affiliated debtors applies for permission from the United States Bankruptcy Court for the District of Delaware to employ Sidley Austin LLP as general reorganization and bankruptcy counsel. Sidley Austin will: a) provide legal advice with respect to the Debtors' powers and duties as debtors in possession in the continued operation of their business; b) take all necessary actions on behalf of the Debtors to protect and preserve the Debtors' estates, including prosecuting actions on behalf of the Debtors, negotiating litigation in which the Debtors are involved, and objecting to claims filed against the Debtors' estates; c) prepare on behalf of the Debtors all necessary motions, answers, orders, reports, and other legal papers in connection with administration of the Debtors' estates; d) attend meetings and negotiate with representatives of creditors and other parties in interest, attend court hearings and advise the Debtors on the conduct of their Chapter 11 cases; e) advise and assist the Debtors regarding all aspects of the plan confirmation process, including, but not limited to, negotiating and drafting a plan of reorganization and accompanying disclosure statement, securing the approval of a disclosure statement, soliciting votes in support of plan confirmation, and securing confirmation of the plan; f) perform any and all other legal services for the Debtors in connection with these Chapter 11 cases and with implementation of the Debtors' plan of reorganization; g) provide legal advice and representation with respect to various obligations of the Debtors and their directors and officers and matter involving the fiduciary duties of the Debtors and their officers and directors; h) provide legal advice and perform legal services with respect to matters involving the negotiation of the terms and the issuance of corporate securities, matters relating to corporate governance, and the interpretation, application or amendment of the Debtors' organizational documents, including their articles of incorporation, bylaws, material contracts; i) provide legal advice and legal services with respect to litigation, tax, and other general non-bankruptcy legal issues for the Debtors to the extent requested by the Debtors; and j) render other services as may be in the best interest of the Debtors in connection with any of the foregoing and all other necessary or appropriate legal services in connection with these Chapter 11 cases. Larry J. Nyhan, partner at Sidley Austin LLP, tells the Court that the hourly rates of Sidley's bankruptcy and other professionals and paraprofessionals expected to render services on the Chapter 11 cases range from $90 to 925 per hour. Mr. Nyhan adds that prior to the petition date, Sidley Austin received an advance payment retainer of $300,000, which was supplemented by a further advance payment of $250,000, in connection with preparing for the filing of these Chapter 11 cases and for its proposed postpetition representation of the Debtors. As of the petition date, Sidley held an advance payment retainer of $550,000. In addition to the advance payment retainer, Sidley Austin received $1,547,571 in fees and $15,890 in expenses from the Debtors within 1 year prior to the petition date on account of legal services rendered in contemplation of or in connection with these Chapter 11 cases. Mr. Nyhan assures the Court that Sidley Austin is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Nyhan can be reached at: Sidley Austin LLP One South Dearborn Chicago, IL 60603 Tel: (312) 853-7000 Fax: (312) 853-7036 About Pliant Corp. Headquartered in Schaumburg, Illinois, Pliant Corporation produces polymer-based films and flexible packaging products for food, beverage, personal care, medical, agricultural and industrial applications. The company has operations in Australia, New Zealand, Germany, and Mexico. The Debtor and 10 of its affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represented the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy counsel. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. The Debtors emerged from chapter 11 protection on July 19, 2006. Pliant Corp. and its affiliates again filed for Chapter 11 after reaching terms of a pre-packaged restructuring plan. The voluntary petitions were filed Feb. 11, 2009 (Bank. D. Del. Case Nos. 09-10443 through 09-10451). The Hon. Mary F. Walrath presides over the cases. Jessica C.K. Boelter, Esq., at Sidley Austin LLP, in Chicago, Illinois, and Edmon L. Morton, Esq., at Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, provide bankruptcy counsel to the Debtors. Epiq Bankruptcy Solutions LLC acts as claims and noticing agent. As of September 30, 2008, the Debtors had $688,611,000 in total assets and $1,032,631,000 in total debts. PLIANT CORP: Taps Sonnenschein Nath & Rosenthal as Special Counsel ------------------------------------------------------------------ Pliant Corporation and its affiliated debtors ask the United States Bankruptcy Court for the District of Delaware for authority to employ Sonnenschein Nath & Rosenthal LLP as special counsel. SNR will provide general legal matters, including, but not limited to, labor and employment, benefits, environmental, corporate, litigation and immigration matters. SNR will also assist the Debtors in other non-bankruptcy related matters which may arise in these Chapter 11 cases in the ordinary course of business of the Debtors' operations. The Debtors relate that Sidley Austin LLP and SNR will confer on certain matters in order to minimize duplicative efforts and billing. SNR's billing rates range from approximately $190 to $985 per hour for lawyers and other professionals and from approximately $125 to $360 per hour for paraprofessionals. SNR received approximately $2,120,200 within the year prior to the petition date on account of services rendered with regard to certain of the general legal matters. To the best of the Debtors' knowledge SNR is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. SNR can be reached at: 4520 Main Street, Suite 1100 Kansas City, MO 64111-7700 Tel: (816) 460-2400 Fax: (816) 531-7545 About Pliant Corp. Headquartered in Schaumburg, Illinois, Pliant Corporation produces polymer-based films and flexible packaging products for food, beverage, personal care, medical, agricultural and industrial applications. The company has operations in Australia, New Zealand, Germany, and Mexico. The Debtor and 10 of its affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represented the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy counsel. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. The Debtors emerged from chapter 11 protection on July 19, 2006. Pliant Corp. and its affiliates again filed for Chapter 11 after reaching terms of a pre-packaged restructuring plan. The voluntary petitions were filed Feb. 11, 2009 (Bank. D. Del. Case Nos. 09-10443 through 09-10451). The Hon. Mary F. Walrath presides over the cases. Jessica C.K. Boelter, Esq., at Sidley Austin LLP, in Chicago, Illinois, and Edmon L. Morton, Esq., at Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, provide bankruptcy counsel to the Debtors. Epiq Bankruptcy Solutions LLC acts as claims and noticing agent. As of September 30, 2008, the Debtors had $688,611,000 in total assets and $1,032,631,000 in total debts. QIMONDA N.A.: Sets Machinery for Auction of Virginia Plant ---------------------------------------------------------- Qimonda North America Corp. is filing papers setting up machinery for the auction and sale of its plant in Sandston, Virginia, that makes DRAM chips from 200-millimeter and 300-millimeter wafers, Bloomberg's Bill Rochelle said. According to Bloomberg, Qimonda N.A., also wants the ability to sell particular assets or equipment for less than $100,000 without court permission. For assets fetching between $100,000 and $1 million, Qimonda wants authority to sell so long as it has given notice to the official creditors' committee and no one objects. QNA, parent of Qimonda Richmond LLC, said it intends to locate a purchaser for all of QR's assets and consummate a transaction. "The Debtors believe that QR's Richmond, Virginia operation is a state-of-the-art facility and could be a valuable asset to a strategic purchaser," says Miriam Martinez, president and chief financial officer of QNA. "In addition, the Debtors' other assets, including its customer lists and equipment, are potentially valuable properties that can be sold to a strategic purchaser." QNA, according to Ms. Martinez, may separate from QR and be included in the sale or reorganization of Germany-based parent Qimonda AG. About Qimonda N.A. Qimonda North America Corp. and Qimonda Richmond LLC are U.S. subsidiaries of German semiconductor memory product maker Qimonda AG. QNA is the North American sales and marketing subsidiary of QAG and all its subsidiaries and is also the parent of Qimonda Richmond. QR performs part of the manufacturing of products sold by the Global Company. QNA and QR filed for Chapter 11 on February 20 (Bankr. D. Del., Lead Case No. 09-10589). Mark D. Collins, Esq., at Richards Layton & Finger PA, has been tapped as counsel. In its bankruptcy petition, QNA estimated assets and debts of more than $1 billion Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- is a leading global memory supplier with a diversified DRAM product portfolio. The company generated net sales of EUR1.79 billion in financial year 2008 and had -- prior to its announcement of a repositioning of its business -- approximately 12,200 employees worldwide, of which 1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond (Virginia, USA). The company provides DRAM products with a focus on infrastructure and graphics applications, using its power saving technologies and designs. Qimonda is an active innovator and brings high performance, low power consumption and small chip sizes to the market based on its breakthrough Buried Wordline technology. Qimonda AG, filed an application with the local court in Munich, Germany, on January 23, 2009, to open insolvency proceedings. QUICKSILVER RESOURCES: S&P Cuts Corporate Credit Rating to 'B' -------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its corporate credit rating on Quicksilver Resources Inc. to 'B' from 'B+'. The outlook is negative. In addition, Standard & Poor's lowered the issue-level rating on the company's senior notes, second-lien term loan, and senior subordinated notes to 'CCC+' (two notches below the corporate credit rating) from 'B-'. The recovery rating is 6, indicating negligible (0%-10%) recovery in the event of a default. As of Dec. 31, 2008, Fort Worth, TX-based, Quicksilver had more than $2.6 billion in debt. "The rating actions reflect ongoing concerns that Quicksilver's credit metrics due to its high debt burden will weaken in 2009 and worsen markedly in 2010 if prices do not improve," said Standard & Poor's credit analyst Amy Eddy. "Despite the fact that more than 70% of its natural gas production is hedged in 2009, Quicksilver's meaningful debt levels and lower commodity price environment will heavily weigh on the company's ability to remain in compliance with its four financial covenants in 2009." In addition, with more than 70% outstanding under its $1.2 billion borrowing-based revolving line of credit, liquidity could tighten, as a result of any borrowing base redeterminations. The ratings on Quicksilver reflect its highly leveraged financial profile, limited covenants cushion, and a highly cyclical and capital-intensive industry. The ratings also reflect the company's competitive cost structure as well as good internal growth prospects. The outlook is negative. S&P could lower the rating if the company's availability on its borrowing base decreases materially from current levels due to increased use or due to a reduction in the facility. S&P could stabilize the rating if S&P gain greater clarity on whether or not the company will receive an affirmation of its borrowing base at its next redetermination and that the company will be able to meet compliance with all four of its financial covenants. REGENCY ENERGY: Alinda Joint Venture Won't Affect Moody's Ratings ----------------------------------------------------------------- Moody's Investors Service said that Regency Energy Partners LP's ratings (Ba3 Corporate Family Rating, Ba3 Probability of Default Rating and B1 senior unsecured note rating) and negative outlook are not affected by the planned joint venture formation with Alinda Capital Partners LLC and General Electric Capital Corporation to fund the construction of the $650 million Regency Intrastate Gas expansion in the Haynesville shale region. The last rating action on Regency was an affirmation of the company's Ba3 Corporate Family Rating with a negative outlook on September 11, 2008. Headquartered in Dallas, Texas, Regency Energy Partners LP is a publicly traded master limited partnership engaged in natural gas gathering, processing, and transportation. RELIANT ENERGY: To Sell Texas Retail Unit to NRG for $287.5MM ------------------------------------------------------------- Reliant Energy has reached an agreement to sell its Texas retail business to NRG Energy for $287.5 million in cash plus working capital. "This transaction creates value for our shareholders and eliminates the capital requirements of the retail business," said Mark Jacobs, president and chief executive officer of Reliant Energy. "Going forward, Reliant will be well positioned, with a diversified portfolio of generating assets, a strong balance sheet and ample liquidity. Our board of directors continues to examine ways to enhance shareholder value and this sale represents an important milestone in the strategic alternatives process." Reliant Energy will continue to own a well-diversified portfolio of more than 14,000 megawatts of power generation assets. As of February 13, the company had available liquidity of $2.0 billion, comprised of $1.5 billion in cash and $0.5 billion of unused credit facilities capacity. On a pro-forma basis, gross debt is expected to be approximately $3 billion. The closing of the sale, which is expected to occur in the second quarter of 2009, will resolve the litigation regarding Reliant's credit arrangements with Merrill Lynch. Net proceeds will be offered to secured debt holders to reduce outstanding debt. The sale is subject to customary closing conditions, including Hart-Scott-Rodino review. Reliant Energy's 1.8 million customers in Texas will continue to be served under their existing contracts. Employees who primarily support the retail business will be transferred to NRG. The transaction also includes the company's brand name, Reliant Energy. Following the closing of the sale, the company will adopt a new name which has not yet been determined. "I'm proud of the work that the Reliant Energy team has done to create an industry-leading retail franchise," added Mr. Jacobs. "We are committed to working together with NRG to ensure a seamless transition for our customers." Morgan Stanley and Goldman Sachs are serving as financial advisors to Reliant Energy. About NRG Headquartered in Princeton, NRG Energy, Inc., owns and operates power generating facilities, primarily in Texas and the northeast, south central and western regions of the United States. NRG also owns generating facilities in Australia and Germany. About Reliant Energy Channelview Based in Houston, Reliant Energy Channelview L.P. owns a power plant located near Houston, and is an indirect wholly owned subsidiary of Reliant Energy Inc. -- http://www.reliant.com/-- The company and its three affiliates, Reliant Energy Channelview (Texas) LLC, Reliant Energy Channelview (Delaware) LLC, and Reliant Energy Services Channelview LLC filed for chapter 11 protection on Aug. 20, 2007 (Bankr. D. Del. Lead Case No. 07-11160). Jason M. Madron, Esq., Lee E. Kaufman, Esq., Mark D. Collins, Esq., Paul Noble Heath, Esq., Richards, Robert J. Stearn Jr., Esq., at Layton & Finger P.A., and Timothy P. Cairns, Pachulski Stang Ziehl & Jones represent the Debtors. The U.S. Trustee for Region 3 appointed an Official Committee of Unsecured Creditors in these cases. David B. Stratton, Esq., and Evelyn J. Meltzer, Esq., at Pepper Hamiltion LLP, represent the Committee. When the Debtors filed for protection from their creditors, they listed total assets of $362,000,000 and total debts of $342,000,000. RITZ CAMERA: Accepts GOB, Going Concern Offers for Boating Stores ----------------------------------------------------------------- Ritz Camera Centers Inc. began the process of liquidating some of its stores, specifically its boating stores chain. Ritz is the largest specialty camera and image chain in the United States. The Debtor operates approximately 800 photo stores in over 40 states throughout the country. The chain of Photo Stores, includes Ritz Camera, Wolf Camera, Kits Cameras, Inkley's and The Camera Shop. Ritz also operates a chain of 130 boating stores, under the name "Boater's World Marine Centers", which sell fishing, boating and water sport products. According to Karen M. McKinley, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., the Debtor has determined that it is critical to its long-term viability and successful reorganization to exit the Boater's World business, and to sell the Boater's World business or assets, simultaneously seeking going concern and other (i.e., liquidation) bids, and/or a combination of the foregoing, or on such other terms that will provide the Debtor's estate with the greatest recovery. The Debtor has also determined, in its business judgment that the net proceeds of the sale of the Boater's World Assets will be maximized by soliciting bids for a "stalking horse" purchaser and then conducting an auction to sell the Boater's World Assets to the bidder making the highest or best bid. The Debtor proposes this timeline to effectuate the sale transaction(s): Event Date ----- ----- Deadline to object to bidding procedures March 9, 2009 at 12:00 noon (EST) Hearing to approve bidding procedures March 10, 2009 at 2:00 p.m. (EST) Deadline to submit bids March 16, 2009 at 12:00 noon (EST) Auction March 17, 2009 at 10:00 a.m. (EST) Deadline to object to sale March 12, 2009 at 4:00 p.m. (EST) Hearing to approve sale March 19, 2009 at 2:00 p.m. (EST) The Debtor seeks authority from the U.S. Bankruptcy Court for the District of Delaware to conduct an auction for all types of bids for all or substantially all of its Boater's World Assets, including, but not limited to, Bids for: (a) the Debtor's retail locations and leaseholds (which may include Bids for "designation rights" for some or all of the Debtor's leasehold interests); (b) goods and merchandise, or agency rights for the disposition of such assets, including the right to augment the Debtor's inventory interests; or (c) in intellectual property and other intangibles. The Debtor, with the cooperation of its professional advisors, has already begun to solicit expressions of interest in the Boater's World Assets. The Debtor anticipates that some bids received will include proposals for "store closing" sales for the assets located in the Boater's World Stores. The Debtor proposes that any Store Closing Sales in connection with any bid would commence as early as the first day following the entry of an order approving such transaction, in order to stem the incurrence of unnecessary administrative obligations under the Boater's World leases, among other potential administrative expense obligations. Accordingly, as part of the sale process, the Debtor will seek authority to enter into an asset purchase agreement, liquidation agency agreement or consulting agreement, as the circumstances may dictate based on the nature of the bids, which will allow the successful bidders from the Auction to serve as the Debtor's agent in conducting Store Closing Sales at the Boater's World Stores. Any Store Closing Sales will be conducted in a manner consistent with the Store Closing Sales Procedures, which procedures and guidelines are typical of and consistent with the procedures approved in this jurisdiction in previously filed chapter 11 cases. The Debtor also recognizes that in the event the Successful Bidder's winning bid contemplates a going concern transaction, whether in whole or in part, including the requirement that the Debtor assume and assign any executory contract or unexpired lease to the successful Bidder, the Debtor must satisfy its obligations under Section 365 of the Bankruptcy Code. Any order approving the Bid Procedures will, therefore, also accommodate the requirement for the Debtor to supply any affected contract counter-parties and affected landlords with notice of the identity of the Successful Bidder, any proposed use of the leased premises, and the ability of the Successful Bidder to provide adequate assurance of future performance, as well as the ability of any affected landlord(s) to conduct expedited discovery with respect thereto. Between the filing of this Motion and the hearing to be held in connection with the approval of the Bid Procedures, the Debtor intends to work with its landlord community in an effort to arrive at a series of consensual procedures that address each of these issues. About Ritz Camera Headquartered in Beltsville, Maryland, Ritz Camera Centers Inc. -- http://www.ritzcamera.com-- sells digital cameras and accessories, and electronic products. The company filed for Chapter 11 protection on February 22, 2009 (Bankr. D. Del. Case No. 09-10617). Karen M. McKinley, Esq., and Norman L. Pernick, Esq., at Cole Scholtz Meisel Forman Leonard, P.A., represent the Debtor in its restructuring efforts. The Debtor proposed Thomas & Libowitz PA as corporate counsel; FTI Consulting Inc. t/a FTI Palladium Partners as financial advisor; and Kurtzman Carson Consultants LLC as claims agent. When the Debtor filed for protection from its creditors, it listed assets and debts between $100 million and $500 million. SANTA ROSA BAY BRIDGE: Moody's Cuts Rating on Bonds to 'B3' ----------------------------------------------------------- Moody's Investors Service has downgraded the rating for the Santa Rosa Bay Bridge Authority's (FL) Revenue Bonds, Series 1996, to B3 from B2, and revised the outlook to negative from stable. The downgrade is based on a significant 13.6% decrease in FY2008 (based on the FL Department of Transportation's June 30 fiscal year) traffic, a slight decline in revenues despite the 33% rate increase, and projections that show depletion of the debt service reserve within the next several years. The authority began drawing on its DSRF in 2002, with no notable replenishment. The authority has not been able to maintain indenture covenanted debt service coverage of 1.2 times, putting the bonds in technical default. The negative outlook is based on the continued 11% decrease in traffic year to date, and the expectation that traffic will be slow to recover in the region given the economic slowdown. Legal Security: Gross toll revenues of the 3.5-mile Garcon Point Bridge and a debt service reserve fund secure the bonds. The DSRF was $6.7 million at June 30, 2007, and based on Moody's calculations, is currently estimated at approximately $5.9 million. Operations and maintenance of the bridge are funded by the Florida Department of Transportation. Interest Rate Derivatives: None Strengths * Gross revenue pledge; per the lease purchase agreement O&M expenses are paid by FDOT * While the DSR has been drawn down significantly, it has an estimated balance of $5.9 million, which can be used to offset revenue shortfalls in the near term Challenges * Traffic decreased a sharp 13.6% in FY2008, eliminating projected revenue growth from a 33% rate increase and putting negative pressure on the authority's already weak financial position; the authority was forced to withdraw funds from the DSRF to make its July 2007 semi-annual debt service payment, and was required to make a withdrawal in 2008 as well * Annual debt service payments escalate rapidly through life of bonds * The July 1, 2007 toll increase to $3.50 from $3.00 (round-trip fare of $7.00) gives drivers further incentive to use the Pensacola Bay Bridge to the west (no toll) and highway 87 to the east * Based on year-to-date traffic trends and cash flow projections, a debt service payment default is likely within the next several years * Increased competition from Route 87 following its widening to four lanes from two (construction is scheduled to be completed in 2011) Recent Developments The 3.5-mile Garcon Point Bridge spans Pensacola Bay and connects Garcon Point to the north and Redfish Point to the south. It provides access to Gulf Breeze and other areas on the peninsula from areas north and east of Pensacola Bay. The Santa Rosa Bay Bridge Authority, established in 1984, oversaw the construction of the bridge, which opened on May 14, 1999. Original traffic forecasts were grossly overestimated causing less-than-expected toll revenues and a strain on the authority's finances from the first year of operation. For example, URS Consultant's initial revenue forecasts in 1996 for the first five full years of operations were roughly 90% over actual revenue figures, which equaled between $2.5 and $3.3 million each year. Updated traffic forecasts over the last few years have proven to be inflated as well, exacerbating the authority's financial problems. The Garcon Point Bridge's traffic volume, from July 1, 2007 through June 30, 2008, decreased 13.6% from the prior year period due to increased rates, high gas prices, and the slowing national economy. As a result, revenues declined 0.5% during the period, despite a 33% rate increase effective July 1, 2007. Total estimated revenues were $4.8 million, providing only 0.80 times coverage of debt service ($6 million). The last reported draw from the debt service reserve fund was in 2007, however based on the cash flows, Moody's expects an additional withdrawal was likely in 2008, and estimates the current balance at $5.9 million. Per the 2008 recommendation of URS Corporation, there was no additional toll increase in 2008 -- despite a projected revenue shortfall -- due to the high likelihood that another increase would further divert traffic from the toll road. Traffic levels year to date show a continued 11% decrease, resulting in a 10% decrease in revenues. If these trends continue through the year, annualized cash flows project 2009 coverage would be 0.73x, requiring a further draw on the debt service reserve. At this rate of withdrawal, the debt service reserve may be fully depleted within the next several years. The Garcon Point Bridge has significant competition from free alternatives SR 87, the Pensacola Bay Bridge, and I-10, however construction on these routes in the past several years has positively affected traffic flow over the Garcon Point Bridge. The widening to four lanes from two of SR 87 east of Garcon Point Bridge has been a short-term benefit, but in the long term, the newly expanded highway will provide competition and divert traffic from the bridge since it will be a more affordable route to areas east and north of Gulf Breeze peninsula. The I-10 Escambia Bay Bridge to the northwest of and almost perpendicular to Garcon Point Bridge was severally damaged by Hurricane Ivan in 2004, requiring reconstruction that was completed in 2007. The reopening of the Escambia Bridge is a likely contributor to Garcon Point's loss of traffic in 2008. The service area population is expected to grow only modestly, and tourism is expected to stagnate in the medium term due to the national and regional economic and housing downturn. Combined with rising unemployment, and increased competition from SR 87 to the east and the I-10 Escambia Bridge to the north, it is unlikely that Garcon Point Bridge will see drastic increases in traffic and/or revenue. In order to make one times coverage in 2010, traffic would have to increase more than 20%. Moody's will continue to monitor traffic and revenue levels and act accordingly if the authority's situation improves or declines. Outlook The negative outlook is based on Moody's expectation that revenues will decrease in 2009 based on year to date traffic reports, and that coverage will continue to be below one times for the next several years barring a more than 20% increase in traffic. As a result, the authority's DSRF will likely be depleted within the next several years. What could change the rating -- UP The rating could face upward pressure if traffic over the Garcon Point Bridge improves at least 20%, increasing revenues to provide at least sum sufficient debt service coverage. The rating could also improve if the FL DOT, which currently pays annual operating and maintenance expenditures, materially increased its level of financial support resulting in improved coverage and/or debt service reserve levels. What could change the rating -- DOWN The rating will face additional downward pressure if traffic and revenue continue to significantly lag forecasts or decrease, and the authority is forced to make additional withdrawals from its DSRF. Key Indicators: * Type of System: Toll bridge * Size of System: 3.5 miles, two lanes * Transactions, FY 2008: 1.4 million * Compounded Annual Traffic Growth Rate, FY03 - FY08: 3.1% * Compounded Annual Revenue Growth Rate, FY03 - FY08: 9.5% * Debt Service Coverage, FY08: 0.79 times * Projected Debt Service Coverage, FY09: 0.73 times * Rate Covenant: 120% of all senior outstanding bonds and 100% of the reserve account deposit requirement * Debt Service Reserve Fund Balance (July 12, 2007): $6.702 million * Moody's estimated Debt Service Reserve Fund Balance: $5.9 million Rated Debt: * Series 1996; $92 million The authority's bond rating was last rated on August 30, 2007, when it was downgraded to B2/Stable from B1/Stable. SELECT COMFORT: Bankruptcy Possible, Says Analyst ------------------------------------------------- Raymond James analyst Budd Bugatch has raised the possibility of Select Comfort filing for bankruptcy, Liz Fedor at Star Tribune reports. According to Star Tribune, Mr. Bugatch said in a report that there is "financial stress mounting" at Select Comfort, whose stock he downgraded to "underperform". Based on the current credit environment, "any potential, prudent buyer would feel no urgency to act before a potential filing for reorganization," the report says, citing Mr.Bugatch. Star Tribune relates that Select Comfort said on Monday that it is postponing release of fourth quarter results, which was initially to be released on Wednesday. According to the report, analysts have been expecting a loss of 3 cents per share and a sales decline of 23% for the fourth quarter 2008. Citing Select Comfort, Star Tribune states that Select Comfort is exploring "strategic and financing alternatives." The report quoted Select Comfort spokesperson Gabby Nelson as saying, "At this point, we are not able to talk about the strategic alternatives.... We believe a strategic buyer is unlikely, given most industry players are contending with their own business and financial issues." Select Comfort, Star Tribune report, said that it had amended its credit agreement with a consortium of five banks, with J.P. Morgan serving as the lead financial institution. According to the report, Select Comfort's $90 million line of credit was scheduled to be reduced to $85 million on Sunday, but the Company said in a regulatory filing that it entered into a new agreement on Saturday, in which the lender commitments would be cut to about $85 million on March 31 and $80 million on July 1. Star Tribune, citing Mr. Bugatch, relates that Select Comfort has had to secure four separate amendments to its credit agreements since December 2008 to defer a scheduled reduction of its credit line and waive compliance with certain covenants. Select Comfort is a manufacturer of premium-priced air beds in Minneapolis. Select Comfort makes adjustable-firmness mattresses with air-chamber technology. It has about 450 company-owned stores across the United States. SLM CORPORATION: Fitch Puts 'BB+' Rating on Negative Watch ---------------------------------------------------------- Fitch Ratings has placed these ratings on Rating Watch Negative: SLM Corporation: --Long-term Issuer Default Rating 'BBB'; --Short-term IDR 'F3'; --Senior Debt 'BBB'; --Short-term debt 'F3'; --Preferred Stock 'BB+'. Approximately $39.7 billion of debt and preferred stock is affected by this action. The Rating Watch Negative is in response to the President's proposal to cut all government subsidies to Federal Family Education Loan Program lenders and fund all new government guaranteed student loans in the direct lending program. This would effectively eliminate FFELP loans, which as of Dec. 31, 2008, accounted for approximately 81% of SLM's managed loan portfolio. If the budget proposal is passed, there could be a transitional period for colleges and universities to move to the FDLP program, but SLM's FFELP portfolio would eventually begin to amortize, and managed loans would become more heavily weighted toward higher-risk private education loans, which are not guaranteed by the government against default. While legislative risk has always been a key rating factor for SLM, the proposal to essentially eliminate FFELP is not incorporated in the current ratings, as the announcement follows a concerted effort to support FFELP lenders in recent months to ensure uninterrupted access to funding for students. Fitch's current ratings do not incorporate a large degree of credit for FFELP spread income, as the majority of the portfolio is encumbered and spread income on FFELP loans has declined materially following legislative cuts to special allowance payments (subsidies) and higher funding costs. But Fitch does give credit for associated fee income, residual cash flows, and SLM's ability to leverage borrower information on FFELP loans into private education loans. While the President's budget overview does allude to the continued involvement of FFELP lenders in the origination and servicing of government guaranteed student loans, Fitch does not believe there is significant clarity, at present, about SLM's role going forward. The resolution of the Rating Watch will be driven by the ultimate outcome of the budget proposal. If SLM's role is reduced significantly, Fitch expects to downgrade the company's ratings from current levels to reflect the altered business model. Conversely, rating stability could result if the proposal allows SLM to maintain or increase its market share in the origination and servicing of government guaranteed loans. SMURFIT-STONE: To Take $2.76 Billion Impairment Charge ------------------------------------------------------ Smurfit-Stone Container Corp. said that as a result of the significant decline in value of its equity securities and its debt instruments, and the downward pressure placed on earnings by the weakening U.S. economy, the Company evaluated the carrying amount of its goodwill and intangible assets for potential impairment in the fourth quarter of 2008. The Company obtained third-party valuation reports as of December 31, 2008 that indicated the carrying amount of its goodwill and intangible assets should be fully impaired based on declines in current and projected operating results and cash flows due to the current economic conditions. On February 26, 2009, the Company's board of directors authorized the recognition of charges to write-off the entire balance of goodwill and other intangible assets as of December 31, 2008. As a result, the Company recognized non-cash impairment charges on goodwill and intangible assets of $2,727 million and $34 million, respectively, in the fourth quarter of 2008. The goodwill consisted primarily of amounts recorded in connection with our merger with Stone Container Corporation in November 1998. The Company does not expect to incur any cash expenditures related to these impairment charges. For the fourth quarter ended December 31, 2008, the Company expects to report a net loss of $2,836 million, or $11.04 per diluted share, on sales of $1.53 billion. These results will include non-cash impairment charges on goodwill and other intangible assets of $2,761 million, or $10.73 per diluted share, primarily related to the impairment of goodwill acquired in connection with the Company's merger with Stone Container Corporation in November 1998. In addition, the fourth quarter of 2008 results include restructuring charges of $40 million, a loss of $12 million related to certain interest rate swap contracts that were marked-to-market because they were deemed to be ineffective, and non-cash foreign currency gains of $17 million. For the fourth quarter of 2007, the Company reported a net profit of $41 million, or $0.16 per diluted share, on total sales of $1.84 billion. The 2007 results included restructuring income of $29 million, non-cash foreign currency losses of $5 million and a $5 million income tax benefit due to a reduction in the Canadian statutory income tax rates. For the year ended December 31, 2008, the Company expects to report a net loss of $2,830 million, or $11.01 per diluted share, on net sales of $7.04 billion. These results will include non- cash impairment charges on goodwill and other intangible assets of $2,761 million, or $10.73 per diluted share, primarily related to the impairment of goodwill acquired in connection with the Company's merger with Stone Container Corporation in November 1998. In addition, the 2008 results include an $84 million income tax benefit from the resolution of prior years' income tax matters, restructuring charges of $67 million, a loss of $12 million related to certain interest rate swap contracts that were marked-to-market because they were deemed to be ineffective and non-cash foreign currency gains of $36 million. For the year ended December 31, 2007, the Company reported a net loss of $115 million, or $0.45 per diluted share, on sales of $7.42 billion. The 2007 results included a after-tax loss of $97 million on the sale of the Company's Brewton, Alabama paper mill, restructuring charges of $16 million, non-cash foreign currency losses of $52 million, a loss on early extinguishment of debt of $29 million and a $5 million income tax benefit due to a reduction in the Canadian statutory income tax rates. About Smurfit-Stone Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The company employs approximately 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the company reported approximately $7.450 billion in total assets and $5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed to reorganize under Chapter 11 on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. According to Bloomberg News, Smurfit-Stone joins other pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corp. Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCooper LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC, acts as the Debtors' notice and claims agent. Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Smurfit-Stone Container Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SPANSION LLC: Chapter 11 Filing Cues S&P's Rating Cut to 'D' ------------------------------------------------------------ Standard & Poor's Ratings Services said it lowered its issue-level ratings on Sunnyvale, California-based Spansion LLC's floating- rate senior secured notes to 'D' from 'C'. S&P also lowered the issue-level rating on the company's 2.25% exchangeable senior subordinated debentures to 'D' from 'C'. The action reflects the company's filing for Chapter 11 bankruptcy on March 1, 2009. The corporate credit and issue-level ratings on Spansion LLC's 11.25% senior unsecured notes had been lowered to 'D' from 'CCC' on Jan. 15, 2009, following the expiration of the 30-day cure period on a missed Dec. 15, 2008, interest payment on the company's senior unsecured notes. The recovery ratings remain unchanged. Ratings List Spansion Inc. Corporate Credit Rating D/--/-- Downgraded Spansion LLC To From -- ---- Senior Secured (1 issue) D C Recovery Rating 4 4 Subordinated (1 issue) D C Recovery Rating 6 6 STANDARD PACIFIC: Two Execs Resign; Babel & Stephens Named SVPs --------------------------------------------------------------- Standard Pacific Corp. disclosed in a regulatory filing dated February 25, 2009, that in connection with the settlement of employment related claims primarily related to change in control agreements in place since December 2006, Clay A. Halvorsen, the Company's Executive Vice President, General Counsel and Secretary and Andrew H. Parnes, the Company's Executive Vice President and Chief Financial Officer, resigned from their positions with the Company, effective February 20, 2009 and February 24, 2009, respectively. In accordance with applicable law, the settlement and release agreements between the Company and each of Mr. Halvorsen and Mr. Parnes provide the executive with a period of seven calendar days after the date the executive signs the agreement to revoke the agreement. Appointment of Executive Officers On February 25, 2009, John P. Babel was appointed as the Company's Senior Vice President, General Counsel and Secretary. Before that, Mr. Babel served the Company for six years in various capacities, including as the Company's Associate General Counsel since October 2002. Prior to joining the Company, Mr. Babel was a senior associate at international law firm Gibson, Dunn & Crutcher LLP. Mr. Babel is 38 years old. In 2009, Mr. Babel will receive a base salary of $400,000 and is eligible for a discretionary bonus. In addition, he will receive a grant of 300,000 stock options in connection with the appointment, vesting over four years. On February 25, 2009, John M. Stephens, was appointed as the Company's Senior Vice President and Chief Financial Officer. Before that, Mr. Stephens served the Company for twelve years in various capacities, including as the Company's Corporate Controller since November 1996. Prior to joining the Company, Mr. Stephens was an audit manager for an international accounting firm. Mr. Stephens is 40 years old. In 2009, Mr. Stephens will receive a base salary of $400,000 and is eligible for a discretionary bonus. In addition, he will receive a grant of 300,000 stock options in connection with the appointment, vesting over four years. Mr. Stephens brother is an employee and tax partner at Wright Ford Young & Co., one of the accounting firms that provides internal audit and tax services to the Company. The Company anticipates that it will pay in excess of $120,000 in fees to Wright Ford Young & Co. during 2009. About Standard Pacific Corp. Headquartered in Irvine, California, Standard Pacific Corp. (NYSE: SPF) -- http://www.standardpacifichomes.com/-- operates in many of the largest housing markets in the country with operations in major metropolitan areas in California, Florida, Arizona, the Carolinas, Texas, Colorado and Nevada. The company also provides mortgage financing and title services to its homebuyers through its subsidiaries and joint ventures, Standard Pacific Mortgage Inc., SPH Home Mortgage and SPH Title. * * * As reported in the Troubled Company Reporter on Aug. 27, 2008, Fitch Ratings affirmed and removed Standard Pacific Corp.'s Issuer Default and outstanding debt ratings from Rating Watch Negative as: (i) IDR at 'B-'; (ii) secured borrowings under bank revolving credit facility at 'BB-/RR1'; (iii) unsecured borrowings under bank revolving credit facility at 'B-/RR4'; (iv) senior unsecured at 'B-/RR4'; and (v) senior subordinated debt at 'CCC/RR6'. Standard Pacific's outlook is stable. STANFORD INT'L BANK: U.S. Judge Extends Freeze Order to March 12 ---------------------------------------------------------------- U.S. District Judge David Godbey has extended to March 12 his freeze order on millions of dollars held in Stanford Group Co. accounts at the urging of U.S. regulators investigating an alleged $8 billion fraud, Bloomberg News reported. The order, according to the report, gave the Securities and Exchange Commission a partial victory in its bid to maintain the freeze, previously set to expire March 2. Judge Godbey scheduled a March 12 hearing to decide on the SEC's request to make the temporary injunction permanent. 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. STANFORD INT'L BANK: U.S. Investigators Locate $250-Mil. in Assets ------------------------------------------------------------------ Bloomberg reports that a Federal Bureau of Investigation agent testified at the arraignment of Chief Investment Officer Laura Pendergest-Holt in Houston federal court that U.S. investigators have located as much as $250 million in assets from the Stanford Financial Group. Ms. Pendergest-Holt was arrested Feb. 26 at the firm's Houston headquarters on a charge of obstruction of justice in the investigation of a $8 billion Ponzi scheme by Stanford and its officers. She was released on $300,000 bail and didn't enter a plea, the source adds. Ms. Pendergest-Holt agreed and was ordered to cease from disposing of her assets, including a $2 million residence, pending the outcome of the suit. Laurel Brubaker Calkins of Bloomberg also pointed out that FBI Special Agent Vanessa Walther testified during Ms. Pendergest- Holt's appearance before U.S. Magistrate Judge Mary Milloy, that the defendant signed over to a receiver an account at Credit Suisse worth as much as $160 million, and that the receiver for Stanford has located an additional $90 million. Pendergest-Holt Claims Innocence Dan Cogdell, Ms. Pendergest-Holt's attorney, said his client is innocent. Mr. Cogdell said that Ms. Pendergest-Holt "is extremely disappointed in the path the SEC and law enforcement are taking. The lawyer noted that Ms. Pendergest-Holt has been cooperating for weeks, yet she is now she is falsely charged for a crime she didn't commit. According to the federal criminal complaint, Ms. Pendergest-Holt made "several" misrepresentations to the SEC while under oath to obstruct its investigation. In meetings with the Stanford executives, Ms. Pendergest-Holt had presented a pie chart that showed $3 billion in assets in a third tier were invested in real estate and another $1.6 billion was a loan to a Stanford shareholder, according to court papers. "At no point did Ms. Pendergest-Holt reveal that the $1.6 billion loan had been discussed with corporate officers in Miami," the government alleged in court papers. She also allegedly withheld the extent of her knowledge about Stanford International's Tier III portfolio, which the FBI said comprised 81 percent of its investments, the report noted. Paul Pelletier, principal deputy for litigation in the Justice Department's criminal fraud section, asked Agent Walther at the hearing how much of the $6 billion in Tier III funds the receiver has been able to locate so far. Ms. Walther responded, "The receiver has located approximately $90 million, but that doesn't include the potential $160 million in Credit Suisse". 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 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. STATION CASINOS: Pens Forbearance Pacts; Plan Votes Due April 10 ---------------------------------------------------------------- Station Casinos, Inc. has entered into forbearance agreements with the holders of a majority in principal amount of its senior and senior subordinated notes and the lenders holding a majority of the commitments under its Credit Agreement, dated November 7, 2007. The Company said that these forbearance agreements will provide the Company with additional time to continue discussions regarding the terms of its plan of reorganization with its lenders and the holders of its senior and senior subordinated notes. The forbearance covers the Company's: * 6% Senior Notes due 2012; * 7-3/4% Senior Notes due 2016; * 6-1/2% Senior Subordinated Notes due 2014; * 6-7/8% Senior Subordinated Notes due 2016; and * 6-5/8% Senior Subordinated Notes due 2018 The forbearance agreements with the holders of the Old Notes and the lenders under the Credit Agreement will expire April 15, 2009, unless earlier terminated pursuant to their terms. The Company is extending the Voting Deadline on its restructuring proposal to 5:00 p.m., New York City time, on April 10, 2009, unless otherwise extended, in its solicitation of acceptances from eligible institutional holders of the Old Notes. As reported by the Troubled Company Reporter on February 5, 2009, Station Casinos elected not to make a scheduled $14.6 million interest payment that was due to holders of its $450 million 6-1/2% Senior Subordinated Notes due February 1, 2014, as it launched the proposed restructuring plan to its bondholders. The Old 2014 Subordinated Notes provide for a 30-day grace period which ends March 3, 2009. Station Casinos also has elected not to make a scheduled $15.5 million interest payment that was due on February 15, 2009, to holders of the Company's $400 million 7-3/4% Senior Notes due August 15, 2016. The grace period with respect to the payment of interest on the 2016 Senior Notes ends on March 17, 2009. The Company has started votes from its bondholders in favor of the restructuring plan that the Company's equity sponsors and lead senior secured lenders have already agreed to support. The Company said it is soliciting from eligible institutional holders of its outstanding: -- 6% Senior Notes due 2012, -- 7-3/4% Senior Notes due 2016, -- 6-1/2% Senior Subordinated Notes due 2014, -- 6-7/8% Senior Subordinated Notes due 2016, and -- 6-5/8% Senior Subordinated Notes due 2018, ballots for a vote in favor of a plan of reorganization for the resolution of outstanding claims against the Company. The Company is offering the bondholders a combination of secured notes and cash in exchange for their outstanding bonds. Under the plan, senior bondholders would get 50 cents on the dollar while subordinate bondholders would receive 7 cents on the dollar in new notes and 3 cents on the dollar in cash, Las Vegas Review states. The Company said that affiliates of the Fertitta family and Colony Capital have committed, as part of the restructuring plan, to contribute in the aggregate up to $244 million in cash if an acceptable agreement is reached with all of the Company's lending constituents. Members of the Fertitta family that would be participating in this contribution of additional capital include Frank J. Fertitta III, Chairman and Chief Executive Officer of the Company, and Lorenzo J. Fertitta, Vice Chairman of the Company. If the Company obtains sufficient acceptances of the Plan, the Company may determine to implement the Plan by commencing a voluntary case under chapter 11 of the U.S. Bankruptcy Code. The TCR said February 24 that Boyd Gaming Corporation delivered a non-binding preliminary indication of interest to Mr. Fertitta and the Company's Board of Directors. In a letter dated February 23, 2009, Keith E. Smith, Boyd Gaming's president and CEO, and William S. Boyd, the Executive Chairman of Boyd Gaming's Board, said Boyd is interested in exploring an acquisition of 100% of Station Casino's OpCo Assets. In addition, should Station Casinos determine to pursue sale transactions with respect to its PropCo Assets, Boyd would consider an acquisition that includes those assets as well. Boyd is offering $950 million for the OpCo Assets. "OpCo Assets" means all of Station's assets other than (i) the assets that secure the CMBS mortgage loan and related mezzanine financings, due November 12, 2009 -- PropCo Assets -- and (ii) the assets that secure Station's $250 million delay-draw term loan due February 7, 2011. About Station Casinos Station Casinos, Inc. is a gaming and entertainment company that currently owns and operates nine major hotel/casino properties (one of which is 50% owned) and eight smaller casino properties (three of which are 50% owned), in the Las Vegas metropolitan area, as well as manages a casino for a Native American tribe. * * * As reported by the Troubled Company Reporter on February 24, Moody's Investors Service said Station Casinos's ratings are not affected by the announcement that it failed to make a February 15, 2009 scheduled interest payment on its 7.75% senior notes due 2016. Standard & Poor's Ratings Services lowered its issue-level rating on Station Casinos' 7.75% senior notes to 'D' from 'CC'. The rating action reflects the missed Feb. 15, 2009 interest payment on the notes. STERLING MINING: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Sterling Mining Company P.O. Box 2838 Coeur D Alene, ID 83816 Bankruptcy Case No.: 09-20178 Type of Business: The Debtor (OTCBB:SRLM and FSE:SMX) -- 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. See: http://www.SterlingMining.com/ Chapter 11 Petition Date: March 3, 2009 Court: District of Idaho (Coeur dAlene) Debtor's Counsel: Bruce A. Anderson, Esq. baafiling@ejame.com Elsaesser Jarzabek Anderson Marks & Elliott 1400 Northwood Ctr., Ct. #C Coeur d'Alene, ID 83814 Tel: (208) 667-2900 Fax: (208) 667-2150 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million 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. The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ TD Securities Financial advisor $806,131 77 King Street RTT 17th Fl services Toronto CANADA Roger Van Voorhees Director fees: $314,538 PO Box 358 $34,538; Note Marble Falls, TX 78654 7/2008: $280,000 New Bunker Hill Mining Co Business loan $208,000 PO Box 29 Kellogg, ID 83837 Haggie Rand North America Import/export $172,501 services Carol Stephan indemnified legal $165,144 fees Avista Utilities Utilities $130,452 WF McCasland Investor holding $105,000 debenture: $100,000 Ray DeMotte Director fees $103,998 Byrnes and Keller LLP Legal services $98,705 Northwest Energetic Services Explosives $74,051 Microsoft Financing Software and $68,114 Computer Hardware Williams and Webster CPA/auditor $62,755 services James N. Meek Employee Expense $56,117 Houser Family LLC Services $47,250 K L Gates Legal services $47,180 Kevin Shiell Director fees $46,000 Atlas Copco Compressors maintenance $45,194 equipment Eastside Electric contractor $43,521 services Hull and Branstetter Inc Legal Services $35,716 Cavalcanti Hume Funfer Inc Business Expense $35,112 - Wire transfer The petition was signed by Roger Van Voorhees, chairman of the board of directors. SUMMITT LOGISTICS: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Summitt Logistics & Brokerage, LLC 1800 Progress Way Clarksville, IN 47129-9246 Bankruptcy Case No.: 09-90630 Debtor-affiliates filing subject to Chapter 11 petitions: Entity Case No. ------ -------- Summitt Trucking, LLC 09-90631 Tractor Leasing, LLC 09-90632 Trailer Leasing, LLC 09-90633 Type of Business: The Debtors offer transportation and logistic services. See: http://www.summitttrucking.com/ Chapter 11 Petition Date: March 2, 2009 Court: Southern District of Indiana (New Albany) Judge: Basil H. Lorch III Debtor's Counsel: Terry E. Hall, Esq. terry.hall@bakerd.com Baker & Daniels 300 N Meridian St., Ste. 2700 Indianapolis, IN 46204 Tel: (317) 237-0300 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 ------ --------------- ------------ Key stops, LLC/Key oil $200,079 PO Box 2809 Franklin, KY 42135 Transport International Pool $105,823 Dept 0536 75 Remittance Dr, Ste. 1333 Chicago, IL 60675-1333 Indiana Dept Of Revenue $104,543 PO Box 6175 Indianapolis, IN 46206-6175 National City $94,139 Peterson Truck Leasing $83,089 S&R Truck Tire Center, Inc. $68,322 Qualcomm $66,856 Kentucky State Treasurer $62,478 Michelin North America, Inc. $57,735 TMW Systems, Inc. $47,380 Pilot Travel Centers, LLC $44,921 Trailmobile Parts & Service Corp. $30,957 Harry Owen $30,000 Prepass $29,434 Thermo King Corporation $26,617 UHL Idealease $22,909 Thermo King of Indiana, Inc. $19,048 TMW Systems Inc $18,750 NEC Financial Services, Inc. $18,040 Peterson Truck Center $14,543 US Voice & Data $14,452 Transcore $12,900 Fleetpride $9,622 Scopelitis, Garvin, Light, Hanson, Feary $8,804 Ewald Spring & Radiator Co. Inc $8,066 Raben Tire Co., Inc. $7,530 Dyatech Corporation $7,431 Kentucky Truck Sales $6,954 The petition was signed by David L. Summitt, manager. SUNWEST MANAGEMENT: Charged by SEC for $300-Mil. Securities Fraud ----------------------------------------------------------------- The Securities and Exchange Commission on March 2 charged Oregon- based Sunwest Management Inc. with securities fraud and is seeking an emergency court order freezing its assets. The SEC alleges that Sunwest, which operates hundreds of retirement homes across the United States, lied to investors about its operations and concealed the risks of the investments, exposing investors to massive losses when the economic downturn triggered Sunwest's collapse. According to the SEC's complaint, Sunwest raised at least $300 million from more than 1,300 investors nationwide by promising a steady income stream and touting its success in running the properties. "Investors are entitled to accurate information about the securities they are buying and the risks involved," said Marc J. Fagel, Regional Director of the SEC's San Francisco Regional Office. "This is a tragic example of investors being defrauded out of millions of dollars because they were far more exposed to a downturn in the real estate market than they had been led to believe." The SEC's complaint, filed March 2 in federal district court in Eugene, Ore., charges Sunwest, its former President and CEO Jon M. Harder of Salem, Ore., and several related entities with securities fraud. According to the complaint, Sunwest, which operates more than 200 retirement homes at one point valued at $2 billion, told investors that they would be investing in a particular property. Investors were told that the property would generate sufficient profits to pay annual returns of around 10 percent, and that Sunwest had a track record of never missing a payment. Between 2006 and 2008, Sunwest raised more than $300 million from investors, which was used for the down payments on approximately 100 retirement homes, with the balance financed by institutional lenders and banks. The SEC alleges that at least half of the properties had lost money, and Sunwest concealed this information from investors by commingling all of its finances and making investor payments from this pot of cash. The SEC further alleges that investor returns came not just from these commingled assets, but from mortgage refinancings as well as loans from Harder. According to the SEC's complaint, Sunwest concealed its precarious financial position and the risks it posed to investors by failing to disclose that Sunwest was being run as a single massive enterprise with its fortunes tied to the success of hundreds of properties and contingent on future financing ability. When the recent credit crisis derailed Sunwest's ability to continue to refinance the properties, payments to investors ceased and many of them stood to lose their entire investments. The SEC further alleges that, even after Sunwest encountered difficulties refinancing properties and lenders began foreclosing, the defendants continued raising money from investors. Sunwest obtained millions more in investments up through June 2008, continuing to misrepresent that the money was designated for a specific property when, according to the SEC, it was being used to prop up the failing business. The SEC's complaint alleges that Harder, Sunwest, and related entities Canyon Creek Development Inc. and Canyon Creek Financial LLC, violated the antifraud provisions of the federal securities laws, and seeks relief including disgorgement and civil monetary penalties. The SEC's complaint also seeks disgorgement from several relief defendants, including Sunwest Chief Operating Officer Darryl E. Fisher, General Counsel J. Wallace Gutzler, and Chief Restructuring Officer Hamstreet & Associates and its principal Clyde Hamstreet, as well as Harder's wife and several entities he controls. The SEC acknowledges the assistance of the Oregon Division of Finance and Corporate Securities in this matter. The SEC's investigation is ongoing. TARRAGON CORP: DSC Advisors Disclose Zero Equity Stake ------------------------------------------------------ DSC Advisors, L.P., and Andrew Bluhm, the principal of DSC Advisors, L.L.C., which serves as the general partner of DSC disclosed in a regulatory filing that they no longer own shares of common stock of 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. TEXAS PETROCHEMICALS: S&P Downgrades Corp. Credit Rating to 'B-' ---------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its ratings on Texas Petrochemicals L.P., including its corporate credit rating to 'B-' from 'B+'. The outlook is negative. Standard & Poor's also lowered its issue-level rating on TPC's $280 million first-lien secured term loan to 'B-' (The same as the corporate credit rating) from 'BB-'. The recovery rating on this loan was revised to '4' from '2', indicating an average (30%-50%) recovery in the event of a default. As of year-end 2008, the company had about $353 million in adjusted debt outstanding. S&P adjusts debt to include capitalized operating leases. "The downgrade reflects our expectation for a significant deterioration in fiscal 2009 operating performance relative to fiscal 2008, resulting in constrained liquidity, and weak credit metrics," said Standard & Poor's credit analyst Paul Kurias. "TPC's operating performance and liquidity are expected to deteriorate due to the ongoing weakness in demand for the company's products including butadiene." More than half of the company's revenues, and about one-third of its volumes, are derived from the automobile sector, notably the tire industry. The ongoing economic recession has lowered demand for TPC's products from this sector, and resulted in lower overall volumes. Though the company's contractual pricing arrangements with many of its customers have traditionally insulated earnings somewhat from raw material and product price volatility, the company's earnings are vulnerable to a reduction in volumes. In addition, the lower volumes have resulted in a lower borrowing base in the company's $140 million asset based loan, which has in turn reduced availability. As of Feb. 16, 2009, the company's borrowing base was about $74 million, and availability was about $35 million, after accounting for a 'block' or reserve of $15 million on the million borrowing base. This represents a meaningful reduction in availability from the previous fiscal year. Still, the company recently amended its ABL and eliminated potentially onerous covenants, which partly mitigates liquidity risks. The deterioration in operating performance is expected to result in a decline in the key ratio of funds from operations to total debt to a level between 5% and 10% for fiscal 2009, from the 15% achieved as of Dec., 31 2008, well below S&P's expectations of 20% at the previous rating. The rating on privately owned Houston-based Texas Petrochemicals L.P. reflects its narrow product range, concentration of revenue and earnings from a few customers and products, potential for cyclicality in its revenues and earnings, and uncertainty regarding demand growth in key markets. These risk factors are partially offset by the company's favorable competitive position with leading market shares in key products, including butadiene and contracts with suppliers of feedstock which offer it some margin protection. The outlook is negative. Standard & Poor's expects TPC to use any free cash flow to reduce debt. S&P could lower ratings in the near term if in S&P's view the prospects for fiscal 2009 earnings decline below S&P's expectations, so that the ratio of funds from operations to total debt is likely to be less than S&P's lowered expectations of between 5% and 10%. S&P will lower ratings if free cash flow is meaningfully negative, or liquidity is not maintained at the very least at current levels with availability near $30 million. S&P could also lower the ratings if debt levels increase unexpectedly, or if the company faces other unforeseen events, such as litigation. TRIAXX FUNDING: Moody's Junks Ratings on Four Classes of Notes -------------------------------------------------------------- Moody's Investors Service announced that it has downgraded these notes issued by Triaxx Funding High Grade I, Ltd.: (1) US $80,000,000 Class B-1 Mezzanine Floating Rate Notes Due 2047 -- Current Rating: Ca -- Prior Rating: B1, on review for downgrade (2) US $41,000,000 Class B-2 Mezzanine Floating Rate Notes Due 2047 -- Current Rating: C -- Prior Rating: B2, on review for downgrade (3) US $149,375,000 Class C Mezzanine Floating Rate Deferrable Interest Notes Due 2047 -- Current Rating: C -- Prior Rating: Caa2, on review for downgrade (4) US $8,000,000 Class D Mezzanine Floating Rate Deferrable Interest Notes Due 2047 -- Current Rating: C -- Prior Rating: Ca Moody's rating actions reflect the further deterioration in the market value and credit quality of the Issuer's portfolio, which consists of prime RMBS with a preponderance of Alt A mortgages. In particular, the recent downgrades in the Alt-A RMBS sector have a significant negative impact on this transaction. Triaxx Funding High Grade I, Ltd. is a Structured Investment Vehicle - Lite managed by ICP Asset Management LLC. Given that the Issuer is a SIV -- Lite and the severe degree of its portfolio deterioration, Moody's performed a liquidation sensitivity analysis based on the current market value of the portfolio, the result of which formed a part of the basis for the rating actions. Due to the fact that the Issuer's portfolio consists of all asset backed securities and under the most optimistic scenario, the market value triggers in this transaction will not be tripped, Moody's analyzed the transaction similar to a cash flow ABS CDO. Therefore, these rating actions were also the result of the application of the methodology and its supplements for ABS CDOs as described in Moody's Special Reports below: -- Moody's Approach to Rating Multisector CDOs (9/15/2000) -- Moody's Modeling Approach to Rating Structured Finance Cash Flow CDO Transactions (9/26/2005) The last rating action on Triaxx Funding High Grade I occurred on June 23, 2008. On that date, the Class B-1 Mezzanine Floating Rate Notes Due 2047 was downgraded to B1 on review for downgrade from Ba1 with direction uncertain; the Class B-2 Mezzanine Floating Rate Notes Due 2047 was downgraded to B2 on review for downgrade from Ba2 with direction uncertain; the Class C Mezzanine Floating Rate Deferrable Interest Notes Due 2047 was downgraded to Caa2 on review for downgrade from Caa1 with direction uncertain; and Class D Mezzanine Floating Rate Deferrable Interest Notes Due 2047 was downgraded to Ca from Caa2 with direction uncertain. TROPICANA OPCO: Lenders Say Atty. Fees Should Also be Controlled ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware is expected to issue its ruling on Tropicana Entertainment LLC's to stop adequate protection payments to lenders. The Company said it needs to preserve cash in order to meet its June 30 target of emerging from bankruptcy protection. According to Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., the Court should take back an earlier ruling that granted a group of lenders, known as the Opco Lenders, payments that would protect them from diminution in value of their collateral. At the early stages of its bankruptcy proceedings, Tropicana said that the OpCo Lenders were oversecured. However, after filing its Chapter 11 reorganization plan in January 2009, Tropicana now says that it has determined that the OpCo Lenders -- who are owed at least $1.3 billion for partly funding Tropicana's acquisition of Aztar Corp.'s five casinos pre-bankruptcy -- have claims exceeding the value of the collateral backing them. Tropicana estimates that the OpCo Lenders are likely to recover between 58.1% and 72.7% of the value of their claims if the OpCo Plan is continued and between 36% and 48% in a liquidation scenario, if the Debtors' cases are converted to chapter 7 liquidations. According to Mr. Collins, Tropicana needs to avoid liquidity issues as it moves with the confirmation process for the OpCo Plan, which contemplates a June 30 effective date. "As this Court is well aware, the precipitous decline in the U.S. economy, and in the gaming industry in particular, has hurt the Debtors' revenues, which has impaired their liquidity." The steering committee of OpCo Lenders, while saying it does not object to the proposal, said Tropicana did not "cast a broad enough net" in their search for ways to preserve liquidity. The group's counsel, Michael R. Lastowski, Esq., at Duane Morris LLP, in Wilmington, Delaware, pointed out that the attorneys of Tropicana and its official creditors committee have billed the estates a total of approximately $4,000,000 per month. He said that aside from the cessation of the adequate protection payments, professional fees should be reigned at reasonable levels. He proposed that the (i) the hold back amount for fees and expenses paid on an interim basis be increased from 20% to 30%, and (ii) the fees and expenses of professionals be limited to no more than $10,000,000 from February 1, 2009, until confirmation and consummation of a Plan. In response, Lee E. Kaufman, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, on behalf of Tropicana, said the proposal is not justified and would "paint with broad strokes" and impose extraordinary restraints on professional compensation across the board. A $10,000,000-cap on professional fees until a plan is consummated is arbitrary and inconsistent with the Congress' directive that professionals be compensated for the reasonable, actual, and necessary cost of services rendered and expenses incurred in bankruptcy cases. About Tropicana Entertainment Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada, and Atlantic City, New Jersey. Tropicana Entertainment LLC filed for Chapter 11 protection on May 5, 2008, (Bankr. D. Del. Case No. 08-10856). Its debtor- affiliates filed for separate Chapter 11 petitions but with no case numbers assigned yet. Kirkland & Ellis LLP and Mark D. Collins, Esq., at Richards Layton & Finger, represent the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors' Web site administration agent. AlixPartners LLP is the Debtors' restructuring advisor. Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell LLP represent the Official Committee of Unsecured Creditors in this case. Capstone Advisory Group LLC is financial advisor to the Creditors' Committee. Bankruptcy Creditors' Service, Inc., publishes Tropicana Bankruptcy News. The newsletter tracks the chapter 11 restructuring proceedings commenced by Tropicana Entertainment LLC and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) US CENTURY: Fitch Affirms Issuer Default Rating at 'BB' ------------------------------------------------------- Fitch Ratings has affirmed the ratings of U.S. Century Bank: --Long-term Issuer Default Rating at 'BB'; --Short-term IDR at 'B'; --Individual at 'C'; --Support at '5'; --Support floor 'NF'. --Long-term deposits at 'BB+'; --Short-term deposits at 'B'; The Rating Outlook for USCB has been revised to Negative from Stable. Fitch has affirmed the ratings based on the company's solid capital position and good funding profile. In addition, the bank's ratings were affirmed based on the likelihood that the company's downside will be more limited than its banking peers. USCB operates with a comparatively strong tangible common equity to tangible assets ratio, which provides a moderate buffer against further deterioration in credit quality. USCB's liquidity profile has also improved over the past 12 months, as loan growth has been fully funded by deposit growth. USCB introduced a relatively expensive money market promotion in May 2008, which accounted for almost the entire increase in the bank's deposit funding for the year. Somewhat offsetting these factors and contributing to the Negative Outlook are the expectation for weaker earnings and deteriorating asset quality. Fitch had expected weaker performance in 2008 relative to prior years given planned investments in the bank's branch network, new business lines, and expanded product offerings. However, considerable margin compression, largely a result of the abovementioned deposit promotion, also contributed to weaker performance. Combined with higher credit costs, Fitch expects USCB's financial performance in 2009 will likely be worse and could easily slip into a net loss position. While NPA levels remain surmountable in the context of the bank's rating category and the current economic environment, the absolute level of NPAs and their trend, combined with a high level of loans 30-89 days past due, raises the potential for increasing levels of losses in the future. Reserve coverage of nonaccrual assets is also considered weak, and may necessitate greater provisioning needs over the next several quarters as the bank recognizes losses in its book of problem assets. Fitch expects that USCB's asset quality will continue to deteriorate in the challenging Florida real estate market, and pressure financial performance. USCB's ratings reflect the expectation that the company will maintain good capital levels, a solid funding base, and report more moderate loan growth. If asset quality deterioration materially worsens, this would likely result in a downgrade of USCB's ratings, particularly if accompanied by a reduction in the company's capital position or loan loss reserves. W.R. GRACE: Files Amended Plan Documents With SEC ------------------------------------------------- W.R. Grace & Co. and its debtor subsidiaries on February 27, 2009, filed a proposed amended joint plan of reorganization, a proposed disclosure statement in support of the Joint Plan and certain proforma and prospective financial information with the Delaware Bankruptcy Court. The Disclosure Statement and proforma and prospective financial information have been prepared in accordance with Section 1125 of the United States Bankruptcy Code and Rule 3016 of the Federal Rules of Bankruptcy Procedure. The Official Committee of Asbestos Personal Injury Claimants, the legal representative of future asbestos personal injury claimants and the Official Committee of Equity Security Holders are joint proponents of the Joint Plan; however, the Official Committee of Unsecured Creditors, the Official Committee of Asbestos Property Damage Claimants and the legal representative of future asbestos property damage claimants are not proponents of the Joint Plan. The Joint Plan and the Disclosure Statement and the exhibits thereto amend the proposed Joint Plan of Reorganization and Disclosure Statement filed by the Debtors and the Joint Proponents on September 19, 2008 and previously amended on December 18, 2008 and February 3, 2009. Bankruptcy Law360 says the Disclosure Statement summarizes the various settlements reached with asbestos claimants and the U.S. Environmental Protection Agency in addition to setting a course for the future. 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 TCR said yesterday 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 bankruptcy plan. The Debtors will put the Plan up for voting upon approval of the Disclosure Statement. Pursuant to the current schedule, Ballots and Master Ballots must be received by the Debtor's Voting Agent May 20, 2009. Objections to the confirmation of the Plan are also due May 20. The Court is expected to conduct a two-phase Plan confirmation hearing. Phase I is expected to be held June 22 to 25, 2009; Phase II is expected to be held September 8 to 11, 2009. The Plan is hinged on the settlement struck by Debtors with the Asbestos Personal Injury Claimants Committee, the Asbestos PI FCR and the Equity Committee. The Asbestos PI Settlement requires these assets to be paid into the Asbestos PI Trust to be established pursuant to Section 524(g) of the Bankruptcy Code: -- Cash in the amount of $250 million plus interest thereon from January 1, 2009 until (and including) the Effective Date at the same rate applicable to the Debtors' senior debt; -- A Warrant to acquire 10 million shares of the Parent's common stock at an exercise price of $17.00 per share, expiring one year from the effective date of the Plan; -- Rights to proceeds under the Debtors' asbestos-related insurance coverage; -- Certain cash and stock under certain litigation settlement agreements with Sealed Air Corporation, Cryovac, Inc. and Fresenius Medical Care Holdings, Inc.; and -- Deferred payments at $110 million per year for five years, beginning in 2019, and $100 million per year for ten years beginning in 2024; the deferred payments will be obligations of the Reorganized Debtors backed by 50.1% of the Parent's common stock to meet the requirements of section 524(g) of the Bankruptcy Code. The Plan also provides for the resolution of Unresolved Asbestos Property Damage Claims, U.S. ZAI PD Claims and Canadian ZAI PD Claims. Pursuant to the Plan, all Asbestos PD Claims, and Successor Claims arising out of or based on any Asbestos PD Claim will be channeled to the Asbestos PD Trust. Grace filed the Joint Plan as exhibit to its Annual Report on Form 10-K as filed with the Securities and Exchange Commission. A full-text copy of the proposed Disclosure Statement for Proposed Joint Plan of Reorganization of W. R. Grace & Co. and its debtor subsidiaries dated as of February 27, 2009, is available at no charge at: http://ResearchArchives.com/t/s?3a0a A full-text copy of the Proforma and Prospective Financial Information is available at no charge at: http://ResearchArchives.com/t/s?3a0b 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: Dec. 31 Balance Sheet Upside-Down By $426.9 Million --------------------------------------------------------------- W.R. Grace & Co. on Monday filed its annual report on Form 10-K for the year ended December 31, 2008, with the Securities and Exchange Commission. W.R. Grace reported net income of $121.5 million on net sales of $3.31 billion for the year, an increase from net income of $88.8 million on net sales of $3.11 billion in 2007, and from net income of $8.6 million on net sales of $2.82 billion in 2006. W.R. Grace had $3.87 billion in total assets, including $460.1 million in cash and cash equivalents, and $4.30 billion in total liabilities, including $533.1 million in total current liabilities as of December 31, 2008, resulting in $426.9 million in shareholders' deficit. For the first quarter of 2009, Grace expects pre-tax income from core operations to be negative. Grace expects first quarter results to be unfavorably affected by three factors: -- Grace Construction Products sales volumes are typically lowest in the first quarter of each year due to seasonal factors. -- Grace expects costs of goods sold in the first quarter to reflect the high raw materials and energy costs that Grace experienced in the fourth quarter of 2008. Further, Grace intends to further reduce production volumes and inventory levels in the first quarter and, as a result, Grace will experience less favorable fixed cost absorption resulting in a lower gross profit percentage. -- Grace expects to incur restructuring charges of roughly $20 million in the first quarter from cost reduction actions. Grace expects cash flow to be positive for the first quarter. Grace expects improvements in net working capital, including the reduction in inventories, and reductions in capital expenditures. In addition, Grace expects pre-tax income from core operations to include significant non-cash costs in the first quarter, including in cost of goods sold and in pension expense. A full-text copy of Grace's 2008 Annual Report is available at no charge at http://ResearchArchives.com/t/s?3a0c 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) WENDY'S/ARBY'S: S&P Cuts Arby's Corporate Credit Rating to 'B-' --------------------------------------------------------------- Bloomberg News reports that Standard and Poor's has downgraded its corporate credit rating on Arby's Restaurant Group Inc., now owned by Wendy's/Arby's Restaurant Group Inc., two notches to 'B-', due to a "very poor performance" in the fourth quarter. Bloomberg relates that the new S&P rating for Arby's is a level below the downgrade issued in October 2008 by Moody's Investors Service. According to Bloomberg, S&P affirmed the 'B+' ratings for Wendy's/Arby's and Wendy's International Inc., but said that the two firms may be downgraded in the future given the decision to combine the revolving credits of the two restaurant chains. Wendy's/Arby's Group, Inc. -- http://www.wendysarbys.com/-- is the third largest quick service restaurant company in the U.S. and is comprised of the Wendy's and Arby's brands, two companies distinguished by traditions of quality food and service. The company, with approximately $12 billion in system-wide sales, owns or franchises over 10,000 restaurants WINDSOR AT GRAND: Case Summary & Six Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Windsor at Grand Parkway, L.P. 402 W. Grand Parkway S. Suite 110 Katy, TX 77494 Bankruptcy Case No.: 09-31469 Type of Business: The Debtor owns the Times Square Plaza Shopping Center, which consists of about 92,200 square feet of space, and is located at 402 West Grand Parkway South, Katy, Texas 77494. Chapter 11 Petition Date: March 2, 2009 Court: Southern District of Texas (Houston) Debtor's Counsel: Preston T. Towber, Esq. preston@towberlaw.com The Towber Law Firm 6750 West Loop South, Ste. 920 Bellaire, TX 77401 Tel: (832) 485-3555 Fax: (832) 485-3550 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 ------ --------------- ------------ State Comptroller franchise tax $12,000 111 East 17th Street 2008 Austion Texas 78774-0100 Civil-Surv Land Surveying LC survey $2,235 4710 Bellaire Blvd., Suite 250 Bellaire, Texas 77401 Wirtcrest Co. management fees $3,000 4545 Mount Vermon Houston, Texas 77006 L&L Maintenance lawn service $1,650 Allied Waste Services trash service $640 Cycorp Financial Group accounting fees $300 The petition was signed by Barry Chapman, managing member. WOODSIDE GROUP: Ceramista Debtors & Alabama Investments Bar Dates ----------------------------------------------------------------- On Feb. 24, 2009, the U.S. Bankruptcy Court for the Central District of California set: (1) the 45th day after the Notice Service Deadline (or the first business day thereafter if the 45th day falls on a holiday, Saturday or Sunday) as the last day for the filing and service of proofs of claim or interests in the bankruptcy cases of Woodside Ceramista Village, LLC and Woodside Ceramista City, LLC for all claims against or interest in the Ceramista Debtors arising on or before Dec. 19, 2008. The "Notice Service Deadline" as to the Ceramista Debtors is the fifth business day after entry of this Order. (2) the 45th day after the Notice Service Deadline (or the first business day thereafter if the 45th day falls on a holiday, Saturday or Sunday) as the last day for the filing and service of proofs of claim or interests in the bankruptcy case of Alabama Investments, LLC for all claims against or interest in Alabama Investments arising on or before Jan. 9, 2009. The "Notice Service Deadline" as to Alabama Investments is the fifth business day after the filing of its Schedules with the Court. The Governmental Unit Bar Date as to the Ceramista Debtors is June 17, 2009. The Governmental Unit Bar Date as to Alameda Investments is July 8, 2009. The applicable Bar Date for any and all Additional Debtor Affiliates will be the 45th day after the Notice Service Deadline as to those Subject Debtors (or the first business day thereafter if the 45th day falls on a holiday, Saturday or Sunday). The "Notice Service Deadline" as to each Additional Debtor Affiliate will be the fifth business day after the filing of its Schedules. The applicable Governmental Unit Bar Date as to any and all Additional Debtor Affiliates will be the 180th day after the Additional Debtor Affiliate's applicable petition date (or the first business day thereafter if the 180th day falls on a holiday, Saturday or Sunday). Claims must be filed on or before the applicable Bar Date and the Governmental Unit Bar Date at: Woodside Group Claims Processing c/o Kurtzman Carson Consultants LLC PO Box 1070 Riverside, CA 92502 or (for overnight deliveries) United States Bankruptcy Court Central District of California Woodside Group Claims Processing c/o Intake Department 3420 Twelfth Street Riverside, CA 92501-3819 About Woodside Group Headquartered in North Salt Lake, Utah, Woodside Group LLC http://www.woodside-homes.com/-- is the parent company of multiple subsidiaries and through approximately 185 of those subsidiaries is primarily engaged in homebuilding operations in eight states. The operations of the Woodside Group are financed through Woodside Group's affiliate Pleasant Hill Investments, LC. Woodside Group, Pleasant Hill Investments and each of the 185 subsidiaries are the Debtors. Woodside Group also has subsidiaries and affiliates that are not debtors. On March 31, 2008, Woodside AMR 107, Inc. and Woodside Portofino, Inc. filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. On Aug. 20, 2008, an Ad Hoc Group of Noteholders commenced the filing of involuntary petitions against the Debtors (other than AMR 107 and Portofino). On Aug. 20, 2008, JPMorgan Chase Bank, N.A., on behalf of the Bank Group, commenced the filing of certain Joinders in the Involuntary Petition. On Sept. 16, 2008, the Debtors filed a "Consolidated Answer to Involuntary Petitions and Consent to Order for Relief" and the Court entered the "Order for Relief Under Chapter 11." The Debtors are jointly administered under Case No. 08-20682. The Bankruptcy Cases are currently pending before the Honorable Peter Carroll in the United States Bankruptcy Court for the Central District of California (Riverside). Jeremy V. Richards, Esq., Linda F. Cantor, Esq., and Maxim B. Litvak, Esq., at Pachulski Stang Ziehl & Jones LLP, in Los Angeles, represent the Debtors as counsel. Susy Li, Esq., and Michael A. Sherman, Esq., at Bingham McCutchen LLP, in Los Angeles, Michael J. Reilly, Esq., Jonathan B. Alter, Esq., and Mark W. Deveno, Esq., at Bingham McCutchen LLP, in Hartford, Connecticut, act as counsel to the Ad Hoc Group of Noteholders. Donald L. Gaffney, Esq., at Snell & Wilmer LLP, in Phoenix Arizona, Michael B. Reynolds, Esq., Eric S. Pezold, Esq., at Snell & Wilmer LLP, in Costa Mesa, California, are counsel for JPMorgan Chase Bank, N.A., as Administrative Agent to Participant Lenders. David L. Gaffney, Esq., at Snell & Wilmer LLP, in Phoenix Arizona, and Michael B. Reynolds, Esq., and Eric S. Pezold, Esq., at Snell & Wilmer LLP, in Costa Mesa, California, are the proposed counsel to the Official Committee of Unsecured Creditors. During 2007, the Woodside Entities generated revenues exceeding $1 billion on a consolidated basis. As of Dec. 31, 2007, the Woodside Entities had consolidated assets and liabilities of approximately $1.5 billion and $1.1 billion, respectively. As of the Sept. 16, 2008 petition date, the Debtors have approximately $70 million in cash. The Woodside Entities employ approximately 494 employees. In its schedules, Woodside Group, LLC listed total assets of $1,000,285,578 and total liabilities of $691,352,742. The schedules are unaudited. WOLVERINE TUBE: S&P Puts 'CC' Corporate Rating on Negative Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it placed its ratings, including its 'CC' corporate credit rating and 'C' senior unsecured debt ratings, on Wolverine Tube Inc. on CreditWatch with negative implications. These actions follow the company's announcement that it is commencing an exchange offer to the holders of its senior notes due 2009 for new senior secured notes due 2012, cash considerations, and/or a cash option. S&P deem the options in the exchange offer for the new notes as less than the original promise, because the new notes' maturity extends beyond the original notes maturity in April 2009. As a result, S&P views the exchange as being tantamount to default given the distressed financial condition of the company and S&P's concerns about Wolverine's ability to service its current capital structure absent this exchange offer (reflected in S&P's previous 'CC' corporate credit rating on the company). "Upon consummation of the transaction, S&P would lower its ratings on the senior secured notes exchanged to 'D', and the corporate credit rating to selective default," said Standard & Poor's credit analyst Tobias Crabtree. As soon as possible thereafter, S&P will reassess Wolverine's capital structure and assign new ratings (including new ratings on the existing notes) based on the amount of notes successfully tendered. It is S&P's preliminary expectation that the new corporate credit rating could be in the 'CCC' category following the successful consummation of the exchange transactions. S&P recognize that the post-exchange capital structure would remove Wolverine's near-term liquidity constraints and likely allow the company to continue as a going concern. Still, Wolverine's ability to successfully service its debt obligations over the intermediate term would still rely on a substantial improvement to revenue and EBITDA. S&P believes this is an unlikely outcome, given the weak overall economy and challenging end-market demand for the company's metal tubing and joining products. In addition, the expected 'CCC' category corporate credit rating reflects Wolverine's poor profitability, highly leveraged capital structure, very competitive and cyclical markets, narrow product line, and volatile raw material costs. In resolving the CreditWatch listing, S&P will continue to monitor the progress of the company's exchange offer. WORLDCOM INC: Judge Rules OneStar Trustee Can Assert Claims ----------------------------------------------------------- The Honorable Arthur Gonzalez of the U.S. Bankruptcy Court for the District of New York issued a 26-page opinion in respect to the request of former Chapter 11 filer WorldCom Inc. and its affiliates to enforce their Court-confirmed Joint Plan of Reorganization, specifically by stopping OneStar Long Distance, Inc., which also filed for bankruptcy in Indiana, from asserting claims against it. WorldCom, Inc. and certain of its subsidiaries, starting July 21, 2002, filed for bankruptcy under chapter 11, and obtained confirmation of their Plan on October 31, 2003, which Plan became effective April 20, 2004. On December 31, 2003, certain creditors of OneStar filed an involuntary chapter 7 bankruptcy petition against OneStar in the Bankruptcy Court for the Southern District of Indiana. The case was converted to Chapter 11 on February 3, 2004, then back to Chapter 7 on January 13, 2005, after substantially all of its assets were sold. Elliot D. Levin was appointed as Chapter 7 trustee. Before and after the OneStar Petition Date, a WorldCom subsidiary, MCI, provided OneStar with telecommunications services pursuant to various telecommunications services agreements, for which OneStar paid WorldCom, and which OneStar resold to its customers. All the payments for the services were received by WorldCom after WorldCom filed its petition. On August 16, 2005, the OneStar Trustee commenced an adversary proceeding against WorldCom in the Indiana Bankruptcy Court seeking the avoidance and recovery of certain transfers under Sections 547, 549, and 550 of the Code that OneStar made to WorldCom during the 90-day period prior to the OneStar Petition Date. Upon motion by WorldCom, the Adversary Proceeding was stayed by the Indiana Bankruptcy Court pending resolution of its motion to enforce the WorldCom Plan before the Court. The Adversary Proceeding asserts that payments received by WorldCom are avoidable by the OneStar Trustee as preferential and unauthorized postpetition transfers under Sections 547 and 549, and seeks to recover those transfers for the benefit of the OneStar estate. Of these transfers, the OneStar Trustee asserts that WorldCom received $981,243 after the commencement of WorldCom's case, during the OneStar preference period and before the WorldCom Confirmation Order Date, and $1,490,615 was received during the OneStar preference period and between the WorldCom Confirmation Order Date and WorldCom Effective Date. Further, the OneStar Trustee seeks to avoid $100,000.00 that was received by WorldCom between the OneStar Petition Date and the WorldCom Effective Date. WorldCom argues the OneStar Trustee violated the New York Court's discharge injunction by knowingly commencing the Adversary Proceeding seeking to avoid transfers made prior to the effective date of the WorldCom Plan. WorldCom asserts that these claims, which arose prior to the WorldCom Effective Date, were discharged by the WorldCom Plan, the WorldCom Confirmation Order and under the Code. The OneStar Trustee argues that since the OneStar estate's causes of action arose postpetition in WorldCom's case, they do not fit the definition of a "claim" as provided by the WorldCom Plan and were not discharged by the WorldCom Plan. The OneStar Trustee contends that since the claims in the Adversary Proceeding do not fit the WorldCom Plan's definition of a claim, he is not enjoined under the WorldCom Plan or the WorldCom Confirmation Order from prosecuting the Adversary Proceeding. WorldCom argues that since the OneStar Trustee is the successor in interest to OneStar, the WorldCom Plan and all its provisions bind him since the WorldCom Confirmation Order was a final order binding upon OneStar. However, according to Judge Gonzalez, even though the OneStar Trustee is a successor in interest to the causes of actions and judgments of OneStar, the avoidance actions at issue were never an interest in property of OneStar, but rather belong to OneStar's creditors. Judge Gonzalez held that the OneStar Trustee may assert the avoidance actions on behalf of OneStar's creditors since OneStar never had an interest in those causes of actions and could not bind the OneStar Trustee from pursuing them. "Although the OneStar Trustee is bound by the WorldCom Plan in pursuing causes of action derivative of OneStar's rights and interests, such binding effect does not apply to the OneStar Trustee's pursuit of causes of actions for the benefit of the estate's creditors. Consequently, the parties' remaining arguments concerning the applicability of the WorldCom Plan's provisions to the OneStar Trustee's claims need not be addressed." Accordingly, the New York Bankruptcy Court denied WorldCom's request Judge Gonzalez ruled that the OneStar Trustee may pursue the Adversary Proceeding as filed. He noted that the OneStar Trustee is not otherwise bound by the WorldCom Plan to adjudicate any administrative expense claim before the Court, however the parties are directed to submit briefs regarding whether the Code requires, based upon the current status of the administration of this case, a request for payment of an administrative expense claim be sought before the New York Court. About WorldCom WorldCom, Inc., a Clinton, MS-based global communications company, filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, WorldCom listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on Oct. 31, 2003, and on Apr. 20, 2004, the Company formally emerged from U.S. Chapter 11 protection as MCI, Inc. On Jan. 6, 2006, MCI merged with Verizon Communications, Inc. MCI is now known as Verizon Business, a unit of Verizon Communications. (WorldCom Bankruptcy News, Issue No. 127; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) YOUNG BROADCASTING: U.S. Trustee Forms 7-Member Committee --------------------------------------------------------- Diana G. Adams, United States Trustee, has appointed seven members to the official committee of unsecured creditors of Young Broadcasting, Inc.: 1. U.S. Bank National Association, as Indenture Trustee One Federal Street Boston, MA 02110 Attn: Robert Butzier, Vice President Tel. No. (617) 603-6430 2. Capital Research and Management Company 11100 Santa Monica Blvd. Los Angeles, CA 90025 Attn: Susan Tolson Tel. No. (310) 996-6101 3. Gannaway Web Holdings, LLC 747 Third Avenue New York, NY 10017 Attn: George R. Fearon, Secretary & General Counsel Tel. No. (212) 931-1263 4. Global Leveraged Capital Credit Opportunity Fund I 623 Fifth Ave. 29th Floor New York, NY 10022 Attn: Avin Dwivedy, Vice President Tel. No. (212) 835-9951 5. Kingworld Productions, Inc. 2401 Colorado Avenue, Suite 110 Santa Monica, CA 90404 Attn: Steven L. Weinberg, Esq. Senior Attorney Business Affairs and Local Tel. No. (310) 264-3490 6. Swiss Re 55 East 52nd Street New York, New York 10055 Attn: Timothy Daggett Vice President Tel. No. (917) 368-4519 7. Harris Corporation 1025 W. NASA Blvd., A-11A Melbourne, FL 32919 Attn: Anthony Deglomine, III Vice President Tel. No. (321) 727-9100 Dated: New York, New York February 26, 2009 About Young Broadcasting Inc. Headquartered in New York, Young Broadcasting Inc. -- http://www.youngbroadcasting.com-- own 10 television stations and the national television representation firm, Adam Young Inc. Five stations are affiliated with the ABC Television Network (WKRN-TV - Nashville, TN, WTEN-TV - Albany, NY, WRIC-TV -Richmond, VA, WATE-TV - Knoxville, TN, and WBAY-TV -Green Bay, WI), three are affiliated with the CBS Television Network (WLNS-TV - Lansing, MI, KLFY-TV - Lafayette, LA and KELO- TV - Sioux Falls, SD), one is affiliated with the NBC Television Network (KWQC-TV - Davenport, IA) and one is affiliated with MyNetwork (KRON-TV - San Francisco, CA). In addition, KELO-TV-Sioux Falls, SD is also the MyNetwork affiliate in that market through the use of its digital channel capacity. As reported by the Troubled Company Reporter on Jan. 19, 2009, Young Broadcasting did not make the $6.125 million interest payment due Jan. 15 on the company's 8.75% Senior Subordinated Notes due 2014 to preserve liquidity. Under the indenture relating to the Notes, a 30-day grace period will apply to the missed interest payment. Jo Christine Reed, Esq., at Sonnenschein Nath & Rosenthal LLP, presents the Debtors in their restructuring efforts. The Debtors proposed UBS Securities LLC as consultant, Ernst & Young LLP as accountant, Epiq Bankruptcy Solutions LLC as claims agent, and David Pauker as chief restructuring officer. When the Debtors filed for protection from their creditors, they listed $575,600,070 in total assets and $980,425,190 in total debts. * Factory Index Falls in February for 13th Month ------------------------------------------------ Economic activity in the manufacturing sector failed to grow in February for the 13th consecutive month, and the overall economy contracted for the fifth consecutive month, say the nation's supply executives according to a March 2 report by the Institute for Supply Management. According to the report by Norbert J. Ore, C.P.M., chair of the ISM Manufacturing Business Survey Committee, "Manufacturing continues to decline at a rapid rate in February. While production has slowed its rate of decline, employment continues to fall precipitously. Prices continue to decline, but price advantages are not sufficient to overcome manufacturers' apparent loss of demand. Survey respondents appear generally pessimistic about recovery in 2009. Some express hope that the stimulus package will help their industry." Bloomberg's Bill Rochelle says that manufacturing continued its decline in February as the ISM's factory index came in at 35.8, compared with 35.6 in January. Anything below 50 indicates contraction. According to PMI, overall economy has been contracting for the past five months, and the manufacturing sector contracting for 13 months. Performance By Industry The ISM said that none of the 18 manufacturing industries reported growth. The industries reporting contraction in February - listed in order - are: Primary Metals; Wood Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Paper Products; Textile Mills; Fabricated Metal Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Chemical Products; Machinery; Transportation Equipment; Computer & Electronic Products; Petroleum & Coal Products; Printing & Related Support Activities; Apparel, Leather & Allied Products; and Food, Beverage & Tobacco Products. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Feb. 25-27, 2009 AMERICAN BANKRUPTCY INSTITUTE Valcon Four Seasons, Las Vegas, Nevada Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 2, 2009 ASSOCIATION OF INSOLVENCY AND RESTRUCTURING ADVISORS Chicago Regional Conference Union League Club of Chicago, Chicago, Illinois Contact: 1-541-858-1665; http://www.airacira.org/ Mar. 13, 2009 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Battleground West Beverly Wilshire, Beverly Hills, California Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 14-16, 2009 AMERICAN BANKRUPTCY INSTITUTE Conrad Duberstein Moot Court Competition St. John's University School of Law, New York City Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 1-4, 2009 AMERICAN BANKRUPTCY INSTITUTE 27th Annual Spring Meeting Gaylord National Resort & Convention Center, National Harbor, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 16-19, 2009 COMMERICAL LAW LEAGUE OF AMERICA 2009 Chicago/Spring Meeting Westin Hotel on Michigan Ave., Chicago, Ill. Contact: (312) 781-2000; http://www.clla.org/ Apr. 17-18, 2009 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES NABT Spring Seminar The Peabody, Orlando, Florida Contact: http://www.nabt.com/ Apr. 20, 2009 AMERICAN BANKRUPTCY INSTITUTE Consumer Bankruptcy Conference John Adams Courthouse, Boston, Massachusetts Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 27-28, 2009 TURNAROUND MANAGEMENT ASSOCIATION Corporate Governance Meetings Intercontinental Hotel, Chicago, Illinois Contact: www.turnaround.org Apr. 28-30, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference Intercontinental Hotel, Chicago, Illinois Contact: www.turnaround.org May 1, 2009 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts for Young Practitioners Alexander Hamilton Custom House, New York City Contact: 1-703-739-0800; http://www.abiworld.org/ May 4, 2009 AMERICAN BANKRUPTCY INSTITUTE New York City Bankruptcy Conference New York Marriott Marquis, New York City Contact: 1-703-739-0800; http://www.abiworld.org/ May 7-8, 2009 RENASSANCE AMERICAN MANAGEMENT, INC. 6th Annual Conference on Distressted Investing - Europe The Le Meridien Piccadilly Hotel, London, U.K. Contact: 1-903-595-3800 or http://www.renaissanceamerican.com/ May 7-10, 2009 AMERICAN BANKRUPTCY INSTITUTE 27th Annual Spring Meeting Gaylord National Resort & Convention Center National Harbor, Maryland Contact: http://www.abiworld.org/ May 12-15, 2009 AMERICAN BANKRUPTCY INSTITUTE Litigation Skills Symposium Tulane University, New Orleans, La. Contact: http://www.abiworld.org/ May 14-16, 2009 ALI-ABA Chapter 11 Business Reorganizations Langham Hotel, Boston, Massachusetts Contact: http://www.ali-aba.org June 11-14, 2009 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa Traverse City, Michigan Contact: http://www.abiworld.org/ June 21-24, 2009 INTERNATIONAL ASSOCIATION OF RESTRUCTURING, INSOLVENCY & BANKRUPTCY PROFESSIONALS 8th International World Congress TBA Contact: http://www.insol.org/ July 16-19, 2009 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Mt. Washington Inn Bretton Woods, New Hampshire Contact: http://www.abiworld.org/ July 29-Aug. 1, 2009 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Conference The Westin Hilton Head Island Resort & Spa, Hilton Head Island, S.C. Contact: http://www.abiworld.org/ Aug. 6-8, 2009 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Conference Hotel Hershey, Hershey, Pa. Contact: http://www.abiworld.org/ Sept. 10-11, 2009 AMERICAN BANKRUPTCY INSTITUTE Complex Financial Restructuring Program Hyatt Regency Lake Tahoe, Incline Village, Nevada Contact: http://www.abiworld.org/ Sept. 10-12, 2009 AMERICAN BANKRUPTCY INSTITUTE 17th Annual Southwest Bankruptcy Conference Hyatt Regency Lake Tahoe, Incline Village, Nevada Contact: http://www.abiworld.org/ Oct. 2, 2009 AMERICAN BANKRUPTCY INSTITUTE ABI/GULC "Views from the Bench" Georgetown University Law Center, Washington, D.C. Contact: http://www.abiworld.org/ Oct. 5-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org/ Oct. 20, 2009 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Paris Las Vegas, Las Vegas, Nev. Contact: http://www.abiworld.org/ Dec. 3-5, 2009 AMERICAN BANKRUPTCY INSTITUTE 21st Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 29-May 2, 2010 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 17-20, 2010 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ July 7-10, 2010 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Ocean Edge Resort, Brewster, Massachusetts Contact: 1-703-739-0800; http://www.abiworld.org/ July 14-17, 2010 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Conference The Ritz-Carlton Amelia Island, Amelia, Fla. Contact: http://www.abiworld.org/ Aug. 5-7, 2010 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 4-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ Dec. 2-4, 2010 AMERICAN BANKRUPTCY INSTITUTE 22nd Annual Winter Leadership Conference Camelback Inn, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 31-Apr. 3, 2011 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 9-12, 2011 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa Traverse City, Michigan Contact: http://www.abiworld.org/ Dec. 1-3, 2011 AMERICAN BANKRUPTCY INSTITUTE 23rd Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. Last Updated: Feb. 9, 2009 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, 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 ***