/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090319.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, March 19, 2009, Vol. 13, No. 77 Headlines 750 JEFFERSON: Wants to Hire Joel M. Aresty as Bankruptcy Counsel 750 JEFFERSON: Section 341(a) Meeting Set for April 20 in Florida ALERIS INT'L: Receives Final Approval for $1.075BB DIP Facility AMERICAN GENERAL: Moody's Downgrades Long-Term Senior Debt Rating AMERICAN INT'L: Asks Financial Products Workers to Return Bonuses ANDERSON HOMES: To Restructure Debt under Chapter 11 ANDERSON HOMES: Creditors Meeting Set for April 22 in N. Carolina ARVINMERITOR INC: Weak Credit Metrics Cue Moody's Junk Rating ASARCO LLC: Balks At AMC's New Request Regarding Tax Sharing Pact ASARCO LLC: Environmental Settlement Pacts Will Be Heard in May ASARCO LLC: Amends Plan for 3rd Time to Include New Sterlite Bid ASARCO LLC: Hearing to Approve Sterling Settlement Set April 13 AVENTINE RENEWABLE: E&Y Has Going Concern Doubt; Waiver Ends April AVENTINE RENEWABLE: May File for Chapter 11 Absent Add'l Funding BANK OF AMERICA: House Committee Asks for Merill's Bonus Records BANK OF AMERICA: Merrill Bonus Info Won't be Kept Confidential BDRV MEZZ: Auction for Interests in Black Diamond Set for March 27 BEARINGPOINT INC: Delays Filing of Annual Financial Report BERNARD L. MADOFF: Prosecutors Eyeing Jewelry as Forfeiture BERNARD L. MADOFF: Trustee to Chase Assets in Gibraltar BILTRITE RUBBER: Provisional Relief under Chapter 15 Granted BILTRITE RUBBER: Granted Interim Sec. 362 Stay for U.S. Actions BLB MANAGEMENT: Moody's Issues Ca Rating; Forbearance Lapses BRAY & GILLESPIE: Wants to Woo Support for Plan Until June 1 BRIGHAM EXPLORATION: Liquidity Concerns Cues S&P's Junk Rating CANWEST MEDIA: Nonpayment of Interest Cues S&P's Rating Cut to D CARDINAL COMMS: Plan Confirmation Hearing Continued to April 24 CARRIAGE SERVICES: Moody's Downgrades Liquidity Rating CHEMTURA CORP: U.S. Units File Chapter 11; Has $400MM DIP Loan CHEMTURA CORPORATION: Voluntary Chapter 11 Case Summary CHOCTAW GENERATION: Moody's Downgrades Cert. Rating to 'Ba3' CHRYSLER LLC: Insists on Avoiding Bankruptcy; To Skip Bonuses CIB MARINE: Asks TruPS Holders to Accept Equity-for-Debt Swap COLIBRI GROUP: Employees Will Protest Auction of Assets CORNERSTONE-ORLANDO: Courts Extends Plan Deadline to June 5 CRUSADER ENERGY: In Talks With Lenders on Likely Covenant Breach DANA CORP: Files Post-Confirmation Report for Dec. 31 Quarter DANA CORP: Provides Updates to Pending Legal Issues DANA CORP: Releases 2008 Annual Report; Has $18 Mln. Net Income DANA CORP: Silver Point Disposes Of 21,000 Shares DANA CORP: To Cut 5,800 Jobs in 2009 to Maintain Liquidity DAYTON SUPERIOR: S&P Downgrades Corporate Credit Rating to 'CCC-' DBSI INC: Examiner to Probe States' Allegations of $2-Bil. Fraud DENNIS ALFIERI: Case Summary & 19 Largest Unsecured Creditors DISCOVER FINANCIAL: Fitch Gives BB+ Rating on $1.2BB Pref Stock DOLLAR THRIFTY: Aligns Minivan Pricing and Usage DORAL FINANCIAL: Moody's Cuts Senior Unsecured Rating to 'B2' DREIER LLP: Marc Dreier Allegedly Defrauds Investors $700 Million DRUG FAIR: Files for Chapter 11 & Sell 32 Pharmacies to Walgreens DRUG FAIR: Case Summary & 25 Largest Unsecured Creditors DUNMORE HOMES: Court Okays Bankruptcy Case Transfer to Sacramento ENERGY PARTNERS: Expects Going Concern Doubt from KPMG; May File EVERYTHING BUT WATER: Proposes $11-Mil. Loan and Quick Sale FAIRCHILD CORP: Files for Chapter 11 Protection in Delaware FAIRCHILD CORP: Case Summary & 45 Largest Unsecured Creditors FAIRPOINT COMMUNICATIONS: Moody's Reviews All Low-B Ratings FLEETWOOD ENTERPRISES: In Financing Talks With Bank of America FLUID ROUTING: Obtains Final OK to Borrow $12,058,250 from Sun FR FOAMEX INT'L: Receives Final Approval for $95-Mil. DIP Financing FORUM HEALTH: Court Okays Cash Collateral Access Until December FORUM HEALTH: Taps Huron Consulting's Dalton T. Edgecomb as CRO FORUM HEALTH: Taps Kurtzman Carson as Notice and Claims Agent FORUM HEALTH: Moody's Downgrades Rating on $146 Mil. Debt to 'Ca' FOXCO ACQUISITION: S&P Downgrades Corporate Credit Rating to 'B-' FREEDOM COMMUNICATIONS: S&P Cuts Credit Facilities Rating to CCC G-I HOLDINGS: Proponents Extend Effective Date of Plan to June 30 GENERAL GROWTH: Ackman Says Owners Can Keep Stake After Ch. 11 GRAND PRIX: Voluntary Chapter 15 Case Summary GTC BIOTHERAPEUTICS: Terminates License Pact with LEO PHARMA HARRAH'S ENTERTAINMENT: Moody's Downgrades Default Rating to 'Ca' HARRIS INTERACTIVE: To Slash 16% of Workforce to Reduce Costs HUNTSMAN CORP: S&P Downgrades Corporate Credit Rating to 'B' INNUA CANADA: Voluntary Chapter 15 Case Summary INTERNATIONAL LEASE: Moody's Downgrades Senior Unsecured Rating IRIDIUM SATELLITE: S&P Retains Positive Watch on 'B-' Rating JEFFERSON FEDERAL: Weiss Ratings Assigns "Very Weak" E- Rating JG WENTWORTH: S&P Downgrades Counterparty Credit Rating to 'CC' JOHN KAVANAGH: To Halt Biz in April; President Joins Another Firm JUST WINGIN': Files for Chapter 11 Bankruptcy Protection LAS VEGAS SANDS: S&P Downgrades Corporate Credit Rating to 'B-' LEAR CORP: Lenders' Waiver Expires May 15, Chapter 11 Looms LEAR CORP: Ernst & Young Raises Going Concern Doubt LEAR CORP: Hires Legal & Financial Advisors to Mull Options LEHMAN BROTHERS: District Court Upholds LBI Sale to Barclays LOCAL TV: S&P Downgrades Corporate Credit Rating to 'B-' MAHONING COUNTY: S&P Downgrades Rating on Bonds to 'C' From 'B+' MASONITE INT'L: Court OKs Cash Collateral & Other 1st Day Motions MASONITE INT'L: Ernst Files 1st Monitor's Report With CCAA Court MASONITE INT'L: Obtain CCAA Stay Order Until April 15 MASONITE CORPORATION: Chapter 11 Filing Cues Moody's 'D' Rating MEDIANEWS GROUP: Cash Flow Decline Cues S&P's Rating Cut to 'CCC' MERCEDES HOMES: Lists $30-Mil. in Assets, $280-Mil. in Debts MGM MIRAGE: Enters Into Amendment to Senior Credit Facility MIRABILIS VENTURES: Settles Forfeiture With U.S. Government MOMENTIVE PERFORMANCE: Risk of Default Cues S&P's Junk Rating MONTERRA ENTERPRISES: Case Converted to Chapter 7 Liquidation NEIMAN MARCUS: "Very Poor" Q2 Results Cue Moody's Junk Rating NEXSTAR FINANCE: Debt-Exchange Offer Cues Moody's Junk Rating NOVASTAR FINANCIAL: Court Rules Against Unit's Bankruptcy PREBUL AUTO: Trustee Wants Millions of Dollars Returned PRESIDENTIAL LIFE: S&P Gives Stable Outlook; Affirms 'B+' Rating PRIMUS TELECOM: Files Prepackaged Chapter 11 Plan PRIMUS TELECOM: Proposes Alvarez & Marsal as Consultant PRIMUS TELECOM: Taps Epiq Bankruptcy as Claims Agent PRIMUS TELECOM: Seeks Court Approval for Skadden Arps as Attorneys PRIMUS TELECOM: Wants May 15 Extension for Schedules & Statements PROTECTION ONE: Reports $50.5 Million Net Loss in 2008 QIMONDA NA: May Enter into Commitment Letter for $40MM Loan QUIKSILVER INC: S&P Downgrades Corporate Credit Rating to 'B-' RITZ CAMERA: Committee Says DIP Financing Pushing Liquidation RITZ CAMERA: Final Hearing on DIP Facility Set for March 19 ROCKWOOD SPECIALTIES: S&P Downgrades Corp. Credit Rating to 'B+' RYAN EAST: Public Auction for Inventory, A/R on April 1 SAKS INCORPORATED: Moody's Downgrades Corp. Family Rating to 'B2' SIMMONS CO: Robert Burch Resigns as EVP Operations SIST: Files for Chapter 11 Bankruptcy Protection With Affiliates SPECIAL DEVICES: May Face Patent-Infringement Trial from Orica STATION CASINOS: Will File for Bankruptcy by April 15 TEXTRON FINANCIAL: S&P Downgrades Counterparty Rating to 'BB+/B' TEXTRON INC: S&P Downgrades Counterparty Credit Rating to 'BB+' THORNBURG MORTGAGE: May File for Chapter 11 Bankruptcy Protection TRIBUNE CO: Can Hire PwC as Tax Advisors and Independent Auditors TURNKEY E&P: Reorganization Plan Filing Deadline Set for May 15 U.S. ACQUISITION: Voluntary Chapter 11 Case Summary U.S. ENERGY: Sells All Assets of Biogas to Silver Point VALLEY VIEW: Moody's Confirms 'Ba1' Rating on $12.7 Mil. Bonds VERASUN ENERGY: Court Approves Sale of 7 Facilities to Valero VICORP RESTAURANTS: Sells Four Bay Area Restaurants to Shari's WILDWOOD INDUSTRIES: Owes $13MM; May Be Forced Into Bankruptcy WL HOMES: Sec. 341(a) Meeting Scheduled for April 14 WOOLD STRUCTURES: Closes Plant & Offices, 180 Workers Laid Off WYNN RESORTS: Prices Public Offering of Shares at $19 Per Share * Fitch Extended Launch on Liquidity Scores and Rankings * Chapter 11 Cases With Assets and Liabilities Below $1,000,000 ********* 750 JEFFERSON: Wants to Hire Joel M. Aresty as Bankruptcy Counsel ----------------------------------------------------------------- 750 Jefferson Avenue LLC asks the U.S. Bankruptcy Court for the Southern District of Florida for authority to employ Joel M. Aresty, P.A., as counsel. Joel M. Aresty, Esq. will: a) advice the Debtor with respect to its powers and duties as a debtor-in-possession and the continued management of its business operations; b) advise the Debtor with respect to its responsibilities in complying with the U.S. trustee's Operating Guidelines and Reporting Requirements and with the rules of the court; c) prepare motions, pleadings, orders, applications, adversary proceedings, and other legal documents necessary in the administration of the case; d) protect the interest of the Debtor in all matters pending before the Court; e) represent the Debtor in negotiation with its creditors in the preparation of a plan. Mr. Aresty tells the Court that the retainer has been funded and may be funded further by corporate constituents as capital contributions or by motion. The amount of the retainer was not disclosed in the court documents. Mr. Aresty adds that no prepetition fees are owed and so those fees are not being waived. Mr. Aresty assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Aresty can be reached at: Joel M. Aresty, P.A. 13499 Biscayne Boulevard Suite T3, 18th Floor North Miami, Florida 33181-2061 Tel: (305) 899-9876 Fax: (305) 723-7893 About 750 Jefferson Avenue LLC Headquartered in Miami Beach, Florida, 750 Jefferson Avenue LLC filed for Chapter 11 protection on March 16, 2009, (Bankr. S.D. Fla. Case No.: 09-14451). Joel M. Aresty, Esq. represents the Debtor in its restructuring efforts. The Debtor's financial condition as of March 15, 2009, showed total assets of $16,000,000 and total debts of $17,082,600. The Debtor did not file a list of 20 largest unsecured creditors. 750 JEFFERSON: Section 341(a) Meeting Set for April 20 in Florida ----------------------------------------------------------------- The U.S. Trustee for Region 21 will convene a meeting of creditors in 750 Jefferson Avenue LLC's Chapter 11 case on April 20, 2009, at 2:30 p.m., at Claude Pepper Federal Bldg, 51 SW First Ave., Room 1021, Miami, Florida. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Miami Beach, Florida, 750 Jefferson Avenue LLC filed for Chapter 11 protection on March 16, 2009, (Bankr. S.D. Fla. Case No.: 09-14451). Joel M. Aresty, Esq. represents the Debtor in its restructuring efforts. The Debtor's financial condition as of March 15, 2009, showed total assets of $16,000,000 and total debts of $17,082,600. The Debtor did not file a list of 20 largest unsecured creditors. ALERIS INT'L: Receives Final Approval for $1.075BB DIP Facility --------------------------------------------------------------- Aleris International, Inc., said following a hearing on March 16 that the U.S. Bankruptcy Court for the District of Delaware has granted final approval for the company's debtor-in-possession credit facility in connection with its Chapter 11 filing on February 12, 2009. The $1.075 million DIP credit facility, which includes a new $500 million term loan and a $575 million revolving credit facility, will be used for the Company's normal operating and working capital requirements during its reorganization process. Steven J. Demetriou, Aleris Chairman and CEO, said, "We are pleased to have received the final approval of our DIP facility, and the continued support from our lenders. The DIP facility enables us to continue to provide our employees with pay and benefits, make post-petition payments to suppliers, and continue to satisfy our customer commitments." As reported by the Troubled Company Reporter, the DIP Facility provides for a roll-up of $575 million in prepetition secured loans. The DIP Facility was approved despite objections by lenders Babson Capital Management LLC and J. Aron & Co. According to Bloomberg News, Babson and J. Aron are prepetition secured lenders but they did not participate in the DIP financing. Under the terms of the DIP loan, prepetition claims of lenders who participate in the DIP financing will be rolled up as DIP loans. Babson and J. Aron opposed having their old loans take a lower priority than the DIP loan. Bloomberg said Babson pointed out that the Debtors seek to prime existing secured lenders by at least $1.585 billion, while citing the precipitous decline in the value of their assets as a primary basis for filing bankruptcy petitions. It added that the proposed roll-up does not benefit the Debtors' estates, only the lenders. "This is so detrimental to the interest of the" older lenders, Babson's attorney, John Ventola, also said in court. Babson claimed it shouldn't be bound by the terms of the DIP loan even though it signed a contract agreeing to join the group of lenders providing Aleris more than $1 billion. Babson sold its right to participate in that DIP loan, so it isn't providing any new money to Aleris, Ventola said. Judge Brendan Linehan Shannon ruled that the DIP loan contract was valid and that Babson continued to be bound by it. Shannon rejected Babson's claim that the terms of the loan changed at the last minute. Babson is owed about $48 million from its pre- bankruptcy loan to Aleris, Ventola said in court. J. Aron, a unit of Goldman Sachs Group Inc., argued that it should have the right to force Aleris to pay in full the $61 million it loaned the company before the bankruptcy. Judge Shannon, however, said that only lenders who agreed to participate in the new DIP loan to Aleris could have any of their old loan bought out. About $575 million of the new loan would pay off older loans, Bloomberg said, citing court records. About Aleris International Aleris International, Inc. produces and sells aluminum rolled and extruded products. Aleris operates primarily through two reportable business segments: (i) global rolled and extruded products and (ii) global recycling. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the Company operates over 40 production facilities in North America, Europe, South America and Asia, and employs approximately 8,400 employees. Aleris operates 27 production facilities in the United States with eight production facilities that provided rolled and extruded aluminum products and 19 recycling production plants. Aleris International, Inc., aka IMCO Recycling Inc., and various affiliates filed for bankruptcy on February 12, 2009 (Bankr. D. Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon presides over the cases. Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve as lead counsel for the Debtors. L. Katherine Good, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In Wilmington, Delaware, serves as local counsel. Moelis & Company LLC, acts as financial advisors; Alvarez & Marsal LLC a as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and noticing agent for the Debtors. As of Dec. 31, 2008, the Debtors had total assets of $4,168,700,000; and total debts of $3,978,699,000. Bankruptcy Creditors' Service, Inc., publishes Aleris International Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Aleris International, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) AMERICAN GENERAL: Moody's Downgrades Long-Term Senior Debt Rating ----------------------------------------------------------------- Moody's Investors Service lowered the long-term senior debt ratings of American General Finance Corporation to Baa2 from Baa1. The short-term rating of AGFC and the backed-commercial paper rating of CommoLoCo, Inc. were affirmed at Prime-2. The Prime-2 short-term rating of AGFC's direct parent, American General Finance Inc., was confirmed. The rating on AGFC's trust preferred security, AGFC Capital Trust I, was lowered to Ba2 from Baa3. The rating outlook for AGFC and its rated affiliates is negative. The rating action concludes the review for possible downgrade that was initiated on October 3, 2008, in conjunction with rating actions taken at that time on the firm's ultimate parent American International Group, Inc. On March 2, 2009, Moody's confirmed AIG's A3 senior unsecured debt and Prime-1 short-term debt ratings and assigned a negative outlook. Moody's said that the rating action on AGFC reflects continued deterioration in the finance company's intrinsic credit profile. Although AGFC possesses a good core consumer-finance franchise, with long-standing customer relationships and a presence across much of the U.S., the firm's intrinsic credit strength has declined from once-robust historical levels as a result of the turmoil across US mortgage and credit markets. Blaine Frantz, a Moody's Senior Vice President, noted: "Excluding the benefit of parental support, AGFC's intrinsic credit strength has fallen into the non-investment grade category." Moody's expects that AGFC's profitability and overall credit profile will be further pressured through 2009 by continued recessionary conditions and rising U.S. unemployment. AGFC's intrinsic liquidity position and financial flexibility are also constrained, with the company having to sharply curtail loan originations and look for opportunities to sell assets. Absent asset sales or other forms of portfolio monetization, the finance company will have to rely on AIG for liquidity support. The rating agency said that AGFC's Baa2/Prime-2 ratings receive a ratings lift relative to the company's intrinsic credit strength. Despite its challenges, ultimate parent AIG has been a demonstrable source of strength for the finance company, providing both capital and liquidity to AGFC. Though AGFC is not a core AIG holding, Moody's expects that as long as AIG owns AGFC, it will continue, within its capacity, to provide capital and liquidity support in order to preserve AGFC's franchise and economic value to the greatest degree possible. Although AGFI is a holding company, the entity also benefits from AIG support, with no material differentiation versus AGFC. This support by AIG underpins AGFI's Prime-2 short-term rating. Given that AGFC's ratings rely on significant AIG support, the outlook on AGFC mirrors that of AIG. Any decline in AIG's rating, depending upon the degree, could also result in a downgrade of AGFC's debt ratings. With respect to AGFC's trust preferred securities, Moody's lowered the ratings to Ba2 from Baa3. AGFC recently breached a mandatory non-payment trigger, which activated the Alternative Coupon Settlement Mechanism. Under the terms of the ACSM, AIG made a capital contribution to AGFC resulting in payment of the coupon. In the event that the trigger breach is not cured immediately due to current market pressures on AGFC, the rating reflects the concern that AIG may not continue to fund coupon payments due to its own liquidity strains and/or a need for additional government support. The risk of a potential restructuring at AIG is also a consideration. If these events happened, AGFC would not have the market access to issue preferred securities, which are the other form of ACSM settlement securities in addition to common equity. Any unpaid coupons will accumulate and investors may not receive payments for an extended period of time, thus resulting in an additional notch of the hybrid rating relative to AGFC's senior unsecured debt rating. The last rating action on AGFC was on October 3, 2008, when the company's long-term ratings were placed on review for possible downgrade. American General Finance Corporation, headquartered in Evansville, Indiana, is a financial service holding company with subsidiaries that provide retail consumer finance and credit insurance products to consumers via a network of 1,400 branches spread throughout 40 states. Excluding a one-time charge of $439.4 million for goodwill and intangibles, AGFC reported for the first nine months of 2008 a pretax loss of $244 million on net revenues of $1.2 billion. Downgrades: Issuer: AGFC Capital Trust I -- Preferred Stock Preferred Stock, Downgraded to Ba2 from Baa3 Issuer: American General Finance Corporation -- Issuer Rating, Downgraded to Baa2 from Baa1 -- Multiple Seniority Medium-Term Note Program, Downgraded to Baa2 from Baa1 -- Senior Unsecured Medium-Term Note Program, Downgraded to Baa2 from Baa1 -- Senior Unsecured Regular Bond/Debenture, Downgraded to Baa2 from Baa1 -- Senior Unsecured Shelf, Downgraded to (P)Baa2 from (P)Baa1 Outlook Actions: Issuer: AGFC Capital Trust I -- Outlook, Changed To Negative From Rating Under Review Issuer: American General Finance Corporation -- Outlook, Changed To Negative From Rating Under Review Issuer: American General Finance, Inc. -- Outlook, Changed To Negative From Rating Under Review Confirmations: Issuer: American General Finance, Inc. -- Senior Unsecured Commercial Paper, Confirmed at P-2 AMERICAN INT'L: Asks Financial Products Workers to Return Bonuses ----------------------------------------------------------------- American International Group CEO Edward Liddy has called on AIG Financial Products employees who received retention payments of $100,000 or more to return at least half of those payments. As reported by the Troubled Company Reporter on March 18, 2009, President Barack Obama said that he would block American International Group Inc.'s $165 million in bonuses to employees. AIG's bonuses caused an outrage on Capitol Hill. Legislators received irate e-mails and phone calls, and security was beefed up at AIG as death threats and hate mail flooded employees' mailboxes. Sen. Schumer and other senators sent a letter to Mr. Liddy demanding that he try to renegotiate the bonuses. Lawmakers moved to tax away almost all of the $165 million in bonuses paid to AIG employees. Mr. Liddy said, "We have heard the American people loudly and clearly these past few days. The payment of large bonuses to people in the very unit that caused so much of AIG's financial trouble does not sit well with the American taxpayer, and for very good reason. Accordingly, today [March 18] I have asked the employees of AIG Financial Products to step up and do the right thing. Specifically, I have asked those who received retention payments of $100,000 or more to return at least half of those payments. Some have already stepped forward and offered to give up 100% of their payments. The action we are taking today is the result of discussions with numerous parties, including Attorney General Cuomo of New York. We will work to ensure the highest level of employee participation in this effort in the days ahead. And we will keep the Congress and the American people informed of our progress." WSJ relates that Mr. Liddy warned that the request could backfire if the employees who received the retention bonuses decide to resign from AIG. "They will return it, but they will return it with their resignations," WSJ quoted Mr. Liddy as saying. Michael R. Crittenden and Patrick Yoest at The Wall Street Journal relate that lawmakers said they were planning to issue a subpoena for the names of AIG executives who received the $165 million in bonus payments. According to the report, House Financial Services Chairperson Barney Frank said that he would ask Mr. Liddy for the names of bonus recipients. The Congress will formally subpoena them if AIG doesn't provide those names, the report says, citing Mr. Frank. WSJ states Mr. Liddy asked that the names be kept confidential due to threats that have been made against the employees. Mr. Frank replied that he would consult with law-enforcement officials about the "despicable" threats, but said the information should be made public. "The American people have a right to know what is happening with massive amounts of their money. Mr. Liddy needs to understand this. If AIG is really serious about getting these bonuses back, they should comply with the subpoena we have issued," WSJ quoted New York Attorney General Andrew Cuomo as saying. Rep. Paul Kanjorski -- who chairs the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises -- claimed that the AIG management ignored warnings from him and other lawmakers not to make the payments due to potential public outcry, WSJ states. Mr. Liddy explained that competition for clients and employees influenced the Company's decision to make the payments, WSJ relates. "Because of this, and because of certain legal obligations, AIG has recently made a set of compensation payments, some of which I find distasteful," the report quoted Mr. Liddy as saying. The Office of Thrift Supervision, which shared partial oversight over the insurer after the company applied for and received a savings and loan charter, was also being blamed for AIG's problems, WSJ relates. WSJ quoted Acting Director Scott Polakoff as saying, "OTS should have in 2004 stopped this book of business with an understanding, with an anticipation, with an analysis, that the real-estate market might have gotten as bad as it's gotten." WSJ states that Mr. Polakoff said that OTS missed an opportunity to head off problems at AIG's financial-products division as it didn't expect the housing market to so badly deteriorate. Legislation on AIG Compensation According to WSJ, President Obama said that he will seek legal authority over the financial system that will give the federal government power to step into contract issues. WSJ relates that lawmakers have introduced or vowed to draft a legislation targeting AIG and its executive compensation. The report states that House Republicans were set on Wednesday to use a procedural maneuver to try to bring up a vote on legislation related to AIG. It would require the Treasury secretary to implement a plan to recover the AIG bonuses within two weeks and would require Treasury approval for any future bonus payments made by recipients of money under TARP, according to the report. The House would take up a bill that would impose a 90% tax on bonuses paid to top-earning employees -- who are making more than $250,000 a year -- at AIG and other firms receiving big government bailouts, WSJ reports, citing Rep. Charles Rangel. Sale of Headquarters, Office Building, & Interests WSJ relates that AIG said on Wednesday that it will sell its downtown Manhattan headquarters and a nearby office building. The report states that AIG spokesperson Mark Herr said that the Company is considering the sale of 70 Pine Street and 72 Wall Street as part of its efforts to boost operations. AIG Financial Products has closed the sale of its interests in three operating Spanish solar photovoltaic plants from its energy and infrastructure book. The plants have a combined capacity of 35.4MWp and an enterprise value of approximately EUR300 million. HG Capital, a London based private equity firm focused on renewable energy, acquired AIGFP's interests for an undisclosed sum. "This sale continues AIGFP's ongoing program of investment portfolio dispositions, further reducing its overall risk profile," said Gerry Pasciucco, AIGFP Chief Operating Officer. As previously disclosed, AIGFP began the process of unwinding its businesses and portfolios late last year. Some of Gov't Bailout Funds May Go to Hedge Funds According to Serena Ng at WSJ, sources said that some of the billions of dollars that the government lent AIG stand to benefit hedge funds that bet on a falling housing market. WSJ, citing documents, relate that Wall Street banks were middlemen in trades with hedge funds and AIG. Sources said that AIG has put in escrow some money for at least one major bank, Deutsche Bank AG, whose hedge-fund clients made bets against the housing market, WSJ relates. According to the report, the money will be released to the bank if mortgage defaults rise above a certain level. "AIG's financial-products division went heavily into the business of speculation, and its gambling debts are what taxpayers are paying off right now," WSJ quoted Martin Weiss of Weiss Research as saying. WSJ relates that many of the assets AIG insured were tied to subprime mortgages, and the deterioration of those high- risk mortgages, along with AIG's own financial woes, forced the Company to put up billions of dollars in collateral, mostly to the banks that were its trading partners. 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 September 8, 2008, to $4.76 on September 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 September 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 September 30, 2008, amounts owed under the facility created pursuant to the Fed Credit Agreement totaled $63 billion, including accrued fees and interest. Since September 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 September 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 September 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. The Troubled Company Reporter reported on March 4, 2009, that Moody's Investors Service 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. ANDERSON HOMES: To Restructure Debt under Chapter 11 ---------------------------------------------------- Anderson Homes, Inc., and sister-company Vanguard Homes Inc., have filed voluntary petitions before the U.S. Bankruptcy Court for the Eastern District of North Carolina to restructure their debt and capital. Anderson Homes, founded in North Carolina in 1980, has grown to become one the area's largest privately-held homebuilders. The 2-time Energy Star Partner of The Year recipient will continue to operate in the capacity of building and closing homes while working to satisfy its creditors. Vanguard Homes, established in 2006 as the outgrowth of Anderson Homes, will also continue building and closing homes as one of America's only homebuilder that is Energy Star qualified, GBI certified and built to WaterSense specifications. Anderson Homes -- based in Cary, North Carolina -- and Vanguard, based in Raleigh, are seeking approval from the Court to implement procedures that would allow them to deliver free and clear titles to ensure that ongoing home sales processes can continue without delay. Two related land developers, Bridgewater Land Resource and Land Resource Group of Raleigh, also filed separate petitions, The News & Observer reports. "It is unfortunate that we had to take this action in the short term," said David Servoss, president of the Company, "but we intend to reduce overhead, seek to restructure some of our debt, and shortly emerge from Chapter 11 a stronger company." The Debtors aim to emerge from bankruptcy in a year, The News & Observer reports. Customers, homeowners, vendors and other interested parties can reach Anderson Homes, Inc., at (919) 828-6030. Information will also be available at http://www.AndersonHomesNC.comand http://www.VanguardHomesNC.com Anderson Homes listed $17.2 million in assets and $13.7 million in liabilities in its petition. It disclosed between 100 and 199 creditors. Vanguard listed $11.1 million in assets and $9.9 million in liabilities in its petition. It disclosed between 50 and 99 creditors. ANDERSON HOMES: Creditors Meeting Set for April 22 in N. Carolina ----------------------------------------------------------------- A meeting of creditors in Anderson Homes, Inc., and its debtor- affiliates' Chapter 11 cases is scheduled for April 22, 2009, at 10:00 a.m., at USBA Creditors Meeting Room, Two Hannover Square, Room 610, 434 Fayetteville Street Mall, Raleigh, North Carolina. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Raleigh, North Carolina, Anderson Homes, Inc. and its debtor-affiliates filed for Chapter 11 protection on March 16, 2009, (Bankr. E. D. N.C. Lead Case No.: 09-02062). Gerald A. Jeutter, Jr., Esq. and John A. Northen, Esq. at Northen Blue, LLP, represent the Debtors in their restructuring efforts. The Debtors listed total assets of $17,190,001 and total debts of $13,742,840. ARVINMERITOR INC: Weak Credit Metrics Cue Moody's Junk Rating ------------------------------------------------------------- Moody's Investors Service lowered the Corporate Family and Probability of Default ratings of ArvinMeritor, Inc., to Caa1 from B2. In a related action, the rating of the senior secured revolving credit facility was lowered to B1 from Ba2, and the rating of the senior unsecured notes was lowered to Caa2 from B3. ArvinMeritor's Speculative Grade Liquidity Rating also was lowered to SGL-4 from SGL-3. The outlook is negative. The downgrade of ArvinMeritor's Corporate Family Rating to Caa1 reflects the weak credit metrics and tightening liquidity the company is expected to experience over the near term as a result of the deterioration in its end markets. The recessionary global economic environment is expected to result in weak demand for the commercial vehicle components that represent about 67% of the company's revenue base. Weak ton-miles driven, and tight credit markets are expected to drive lower purchases of new vehicles by commercial vehicle operators over the near-term. ArvinMeritor's light vehicle segment also will continue to experience lower original equipment demand as consumers defer automotive purchases due to concerns over weak global economies and employment outlooks. These conditions will result in ArvinMeritor generating credit metrics consistent with the Caa level over the intermediate-term and will pressure the company's operating flexibility as financial covenant cushion weakens under the senior secured credit facility. The negative outlook considers the challenges ArvinMeritor will face in implementing restructuring actions rapidly enough to address the deterioration in its businesses and the potential risks of its liquidity profile if the rate of cash consumption in the business cannot be stemmed. The negative outlook also considers the risk of financial covenant violations under the company's senior secured revolving credit facility over the near- term. ArvinMeritor's Speculative Grade Liquidity rating of SGL-4 indicates weak liquidity over the next twelve months. As of December 30, 2008, the company had approximately $158 million of cash on hand. Moody's anticipates that the continuing deterioration in the company's end markets will likely result in significant negative free cash flow over the next twelve months. ArvinMeritor's $700 million revolving credit facility had approximately $103 million of funding at December 31, 2008, with $38 million of LCs outstanding. The facility matures in June 2011. Moody's believes there are a number of cash uses over the next twelve months, including the potential run off of the company's securitization/factoring facilities. If current market conditions continue to deteriorate, the company may be required to refinance some of the outstanding securitizations/factoring arrangements with its revolving credit facility or with cash, limiting current liquidity levels. The principal financial covenant is a senior secured leverage test at each quarter-end of 2.5 times through March 31, 2009, and 2.0 times thereafter. Reduced operating performance due to industry pressures, combined with any additional revolver funding, will likely pressure covenant cushions over the near-term. The revolving credit is secured by a first lien on certain assets of the company of about $688 million of the company's assets, primarily consisting of eligible domestic U.S. accounts receivable, inventory, plant, property and equipment, intellectual property and the company's investment in all or a portion of certain of its wholly-owned subsidiaries. Negative covenants under the revolver limit both annual and cumulative amounts of asset sales. These ratings are lowered: -- ArvinMeritor, Inc. -- Corporate Family Rating, to Caa1 from B2; -- Probability of Default, to Caa1 from B2; -- Senior secured bank debt, to B1 (LGD1, 10%) from Ba2 (LGD1, 7%); -- Senior unsecured notes, to Caa2 (LGD4, 64%) from B3 (LGD4, 61%); -- Shelf unsecured notes, to (P)Caa2 (LGD4, 64%) from (P)B3 (LGD4, 61%); -- Speculative Grade Liquidity Rating, to SGL-4 from SGL-3 Arvin International PLC -- Unsecured notes guaranteed by ArvinMeritor, Inc., to (P)Caa2 (LGD4, 64%) from B3 (LGD4, 61%) The last rating action on ArvinMeritor was on January 13, 2009 when the Corporate Family Rating was lowered to B2 and left under review for further downgrade. ArvinMeritor, Inc., headquartered in Troy, Michigan, is a global supplier of a broad range of integrated systems, modules and components serving light vehicles, commercial trucks, trailers, and specialty original equipment manufacturers as well as certain aftermarkets. Revenues in fiscal 2008 were approximately $7.2 billion. ASARCO LLC: Balks At AMC's New Request Regarding Tax Sharing Pact ----------------------------------------------------------------- ASARCO LLC does not want to decide at this time as to whether to assume or reject a tax sharing agreement with Asarco Incorporated, its parent. ASARCO LLC has filed with the U.S. Bankruptcy Court for the Southern District of Texas an objection to the request by Asarco Inc. and Americas Mining Corporation that it be compelled to make a decision on the agreement. Jack L. Kinzie, Esq., at Baker Botts L.L.P., in Dallas, Texas, tells the Court that the Parent has not carried its burden of establishing a basis to shorten the time period in which the Debtors must assume or reject the TSA. If ASARCO LLC immediately assumes the TSA, any and all future obligations under the TSA automatically become administrative expenses of the bankruptcy estates, Mr. Kinzie says. Thus, he notes, a premature decision to assume would adversely affect all parties-in-interest. On the other hand, if ASARCO LLC prematurely decides to reject the TSA now and later determines that the TSA is the sole source of its entitlement to the tax refund, then ASARCO LLC would stand to lose more than $50,000,000, Mr. Kinzie argues. Hence, the renewed request to compel should be denied, he asserts. Parties Agree to a Protective Order ASARCO LLC, the Official Committee of Asbestos Claimants, the Official Committee of Unsecured Creditors, the Future Claims Representative, Americas Mining Corporation, ASARCO Incorporated, Enthone Inc., EI Liquidation, Inc., and OMI International Corporation stipulate to the entry of a protective order, which will apply to all information produced by the Parties or a third party in the consolidated adversary proceeding relating to the TSA between ASARCO LLC and the Parent. Pursuant to the stipulation, a producing party may designate as "Confidential" any of its discovery material that it believes in good faith constitutes, contains, reveals, or reflects non- public, proprietary or confidential business, technical, or financial information, including trade secrets, business strategies, marketing research, tax information, proprietary contracts, competitive analyses, costs, pricing, market development and planning, salaries and other employment terms, strategic plans, and analysis and discussion concerning possible business combinations. Court Refuses to Issue Protective Order Meanwhile, the Court denied Americas Mining's request for a protective order concerning a request by Montana Resources, Inc., for ASARCO LLC to produce certain documents designated by AMC as confidential in an unrelated litigation. The Court also directed ASARCO to produce the requested documents immediately. AMC had argued that MRI's request for AMC's confidential documents is improper for a number of reasons, including that it is premature to allow MRI to begin taking discovery of AMC by propounding extremely broad requests on ASARCO LLC to produce documents that AMC produced in an unrelated litigation. MRI insisted that, among other things, it is entitled to take "discovery [from ASARCO] regarding any non-privileged matter that is relevant to any party's claim or defense," citing Rule 26(b) of the Federal Rules of Civil Procedure. District Court Wants Update on Notes In another development, Judge Andrew S. Hanen of the U.S. District Court for the Southern District of Texas asks parties of ASARCO LLC's Adversary Complaint on the Southern Peru Copper Corporation transfers to apprise him of the current status of the $100 million promissory note made by Americas Mining in favor of the United States, and the $123,250,000 promissory note made by AMC in favor of Southern Peru Holdings Corporation. The District Court seeks to know the status of the payments that have been made and of any outstanding payments still due and owing, including the date and amount paid of any past payments and the date due, and amount due of all outstanding payments. "The [District] Court would prefer a joint letter, if possible, but will take separate submissions, if necessary," Judge Hanen says. He directs the parties to submit the required information by March 25, 2009. He also asks for the cooperation of all attorneys representing the United States in the Debtors' bankruptcy cases. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). The Debtors submitted to the Court a joint plan of reorganization and disclosure statement on July 31, 2008. The plan incorporates the sale of substantially all of the Debtors' assets to Sterlite Industries, Ltd., for US$2,600,000,000. Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, submitted a reorganization plan to retain its equity interest in ASARCO LLC, by offering full payment to ASARCO's creditors in connection with ASARCO's Chapter 11 case. AMC would provide up to US$2.7 billion in cash as well as a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ASARCO LLC: Environmental Settlement Pacts Will Be Heard in May --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas will commence a hearing on May 18 and 19, 2009, to consider ASARCO LLC's request to enter into various environmental settlement agreements: * The Amended Settlement Agreement regarding Miscellaneous Federal and State Environmental Sites, among the United States, ASARCO, the States of Arizona, Colorado, New Jersey, Oklahoma and Washington, and the New Jersey Department of Environmental Protection; * The Amended Consent Decree and Settlement Agreement establishing a Custodial Trust for Certain Owned Sites in Alabama, Arizona, Arkansas, Colorado, Illinois, Indiana, New Mexico, Ohio, Oklahoma, Utah and Washington, among the United States, ASARCO, ASARCO Master, Inc., AR Sacaton, LLC, CAPCO, Alta Mining and Development Company, the States of Alabama, Arizona, Arkansas, Colorado, Illinois, Indiana, New Mexico, Ohio, Oklahoma, Utah and Washington, LePetomane XXV, solely in its representative capacity as trustee of the custodial trust, and St. Paul Travelers; * The Consent Decree and Settlement Agreement regarding the Montana Sites, among the United States, the State of Montana, ASARCO LLC, ASARCO Consulting, Inc., American Smelting and Refining Company, ASARCO Master Inc., and the Montana Environmental Trust Group, LLC, solely in its representative capacity as trustee of the custodial trust; * The Consent Decree and Settlement Agreement establishing a Custodial Trust for the Owned Smelter Site in El Paso, Texas and the Owned Zinc Smelter Site in Amarillo, Texas, among the United States, the State of Texas, ASARCO LLC and American Smelting and Refining Company; and * The Amended Settlement Agreement and Consent Decree regarding Residual Environmental Claims for the Coeur D'Alene, Idaho, Omaha, Nebraska, and Tacoma, Washington Environmental Sites, among the United States, the States of Washington and Nebraska, and ASARCO. Copies of the agreements can be obtained for free at: http://bankrupt.com/misc/ASARCO_Settlement_MontanaSites.pdf http://bankrupt.com/misc/ASARCO_Settlement_MiscellaneousSites.pdf http://bankrupt.com/misc/ASARCO_Settlement_Coeur_d%27Alene_Sites.p df http://bankrupt.com/misc/ASARCO_Settlement_AlabamaEtAl.pdf Deadline for filing objections to the Debtors' request is April 6. Since the Petition Date, the Debtors have addressed numerous complex issues involving thousands of claims against their bankruptcy estates, including filing and prosecuting claims objections, motions to estimate, and conducting estimation hearings. A significant number of those claims involve environmental liabilities. ASARCO LLC has, for over 100 years, been engaged in the mining, smelting, and refining businesses. As a result of its historical activities, ASARCO acquired potential responsibility for liabilities arising under environmental law at over 100 sites, asserted in proofs of claim filed by the federal government as well as many state governments, Indian tribes, and private parties. When analyzed to eliminate obvious duplication, the proofs of claim assert approximately $6.5 billion in determined amounts, with a significant number of additional claims in "undetermined" amounts. The Environmental Claims would create an unsecured class too ill-defined to achieve confirmation of a plan of reorganization unless the vast majority of them were resolved either through estimation by the Court or settlement, the Debtors contend. ASARCO has thus asked the Court to estimate the Environmental Claims in January 2007, and after extensive negotiations with federal and state governments and potentially responsible parties, the Court entered in March 2007, a case management order establishing agreed-upon procedures for estimation of ASARCO's Environmental Claims at 21 sites, including past and future response and natural resource damage claims, but excluding toxic tort, property damage, and similar claims. The asserted liabilities at the Sites accounted for approximately $6 billion of the $6.5 billion in Environmental Claims. The CMO divided the Covered Sites into five groups, and set discovery and trial timetables for each group. As a result of the process initiated by the CMO, settlements were reached prior to scheduled estimation hearings as to all or part of 19 environmental sites, whereby $3 billion of Environmental Claims were resolved for approximately $529 million in allowed unsecured claims or cash. Three estimation hearings were held as to the Omaha, Nebraska site, and portions of the Coeur d'Alene, Idaho, and Tacoma, Washington sites, which represent approximately $3 billion of the Environmental Claims. Towards the end of the schedule established by the CMO, mediation was held in connection with estimation of the asbestos-related claims against the Asbestos Subsidiary Debtors. On the later part of 2007 through early 2008, mediation before Judge Elizabeth W. Magner was held for the estimation of the Derivative Asbestos Claims. The focus of the discussions quickly expanded from the Derivative Asbestos Claims against the Asbestos Subsidiary Debtors to encompass a consensual plan of reorganization, and Judge Magner began a dialogue between ASARCO and its key constituencies. The discussions ultimately resulted in development of an agreement in principle regarding the Debtors' environmental liabilities, which provided the framework for the Debtors' plan of reorganization. At that time, the Debtors and the U.S. Department of Justice asked the Court to defer hearings and ruling on the Residual Environmental Claims. The agreement in principle was incorporated into the proposed plan filed by the Debtors on July 31, 2008, as amended on September 12 and 25, 2008. The Plan, among other things, divided the Environmental Claims into three classes -- (1) the Previously Settled Environmental Claims; (2) the Miscellaneous Federal and State Environmental Claims; and (3) the Residual Environmental Claims. The Plan also provided for certain property of the Debtors to be transferred to environmental custodial trusts, which would be funded with sufficient cash to pay for remediation and restoration costs and for administration costs of the trusts. A key component of the Plan was the sale of substantially all of ASARCO's operating assets to Sterlite (USA) Inc. for $2.6 billion. Under the Plan, the proceeds from the sale to Sterlite, along with the Debtors' distributable cash, would have been used, among other things, to satisfy creditors' claims and fund various trusts to be created pursuant to the Plan. After other unsecured creditors were paid the principal amounts due on their claims, the class of Residual Environmental Claims and the asbestos trust were to receive $750 million each along with interests in a litigation trust that would be vested with various pending causes of action. Sterlite, however, informed ASARCO in October 2008, that it could not close the asset sale without a material price reduction due to the downturn in the global financial markets. ASARCO nevertheless sought to explore other options and ultimately, entered into a new agreement with Sterlite for a sale of its operating assets for $1.7 billion. Jack L. Kinzie, Esq., at Baker Botts L.L.P., in Dallas, Texas, relates that the Debtors continue to believe that the best way to reach their goal to maximize value of their Assets and negotiate the Plan's confirmation is through a settlement with their creditors. The salient terms of the Environmental Settlement Agreements are: (a) owned, non-operating sites with identified environmental issues are to be placed into environmental custodial trusts along with approximately $233.8 million for remediation and closure costs and $27.5 million for administration costs of the trusts; (b) environmental claims relating to the vast majority of previously unresolved state and federal environmental claims will be allowed as unsecured claims, totaling approximately $100 million; and (c) environmental claims of the United States and the states of Nebraska and Washington relating to the Residual Environmental Settlement Sites will be allowed as administrative claims, totaling approximately $14 million, and unsecured claims, totaling approximately $736 million. The Environmental Claims either have been the subject of estimation hearings, which provided a thorough examination of the legal and factual complexities of the claims, or were the product of arm's-length negotiations, Mr. Kinzie says. He asserts that the proposed resolutions of all the claims are reasonable, fair and equitable. In a news statement on Monday, Montana Gov. Brian Schweitzer and Attorney General Steve Bullock said the final agreement reached and signed by the parties provides $138 million to clean up industrial and mining sites owned by ASARCO. The agreement provides funding for cleanup of groundwater and soils contaminated by decades of lead smelting in East Helena. The agreement will also provide funding for the cleanup of additional ASARCO-owned property at the Upper Blackfoot River, Iron Mountain and the Black Pine/Combination Mining District sites. The cleanup will be directed by the Montana Department of Environmental Quality, the Montana Department of Justice, the U.S. Environmental Protection Agency and U.S. Forest Service. In addition, the state will receive a $5 million unsecured claim for natural resource damages occurring in East Helena and 232 acres of land to be used for public recreation and wildlife habitat. The settlement agreement is part of ASARCO's Third Amended Joint Plan of Reorganization filed March 16, 2009. Under the proposed plan, Sterlite, a subsidiary of an Indian mining company, will buy ASARCO's operating properties in Arizona and Texas for an estimated $1.3 billion. With those funds and additional cash on hand, ASARCO will pay creditors in the bankruptcy, including environmental claims, across the country. It is expected that the $138 million will be paid in full because it is for the cleanup of ASARCO-owned property. Other creditors may not be paid in full but could receive about 65 cents on the dollar. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). The Debtors submitted to the Court a joint plan of reorganization and disclosure statement on July 31, 2008. The plan incorporates the sale of substantially all of the Debtors' assets to Sterlite Industries, Ltd., for US$2,600,000,000. Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, submitted a reorganization plan to retain its equity interest in ASARCO LLC, by offering full payment to ASARCO's creditors in connection with ASARCO's Chapter 11 case. AMC would provide up to US$2.7 billion in cash as well as a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ASARCO LLC: Amends Plan for 3rd Time to Include New Sterlite Bid ---------------------------------------------------------------- ASARCO LLC and its debtor affiliates delivered to the U.S. Bankruptcy Court for the Southern District of Texas their Third Amended Joint Plan of Reorganization and accompanying Disclosure Statement on March 16, 2009. ASARCO LLC Chief Executive Officer Joseph F. Lapinsky relates that the Third Amended Plan contemplates that sale of substantially all of ASARCO LLC's operating assets to Sterlite (USA), Inc., pursuant to a renewed sale and purchase agreement among the parties dated March 6, 2009. Sterlite USA is the purchaser of the Assets and Sterlite Industries (India) Ltd. serves as guarantor of the purchaser's obligations under the Sale Agreement. ASARCO also seeks to subject the New Sterlite PSA to higher and better acquisition proposals. The previous versions of ASARCO LLC's Chapter 11 Plan also embodied the sale of its assets to Sterlite. However, as widely reported, Sterlite backed out from its initial $2.6 billion offer for ASARCO's assets in October 2008, citing reduced copper prices and unstable market conditions. Sterlite has renewed its interest in ASARCO LLC and has recently committed to acquire the ASARCO operating assets pursuant to these terms: (a) $1.1 billion in cash payment; (b) Assumption of the liabilities that were to be assumed under the Original Sterlite PSA; and (c) A non-interest bearing, secured $600 million note, payable over nine years. The Third Amended Plan also provides for the distribution of sale proceeds to allowed claim holders, the creation of an Asbestos Trust, and the imposition of a Section 524(g) injunction. Mr. Lapinsky discloses that majority of the proceeds from the sale to Sterlite, together with distributable cash and subsequent distributions, will be paid to holders of allowed claims largely in accordance with priorities established by the Bankruptcy Code: -- Holders of Administrative Claims, Priority Tax Claims and Priority Claims will be paid the allowed amount of their Claims. -- Holders of Secured Claims, at the applicable Debtor's option, will be either paid the allowed amount of their claims with any applicable postpetition interest or reinstated. -- Holders of Convenience Claims will be paid the allowed amount of their claims. -- Holders of Allowed General Unsecured Claims and the Asbestos Trust, on behalf of demands and holders of Unsecured Asbestos Personal Injury Claims, will receive pro rata distributions of all remaining Available Plan Funds as well as the Litigation Trust Interests. -- Holders of Late-Filed Claims, Subordinated Claims, and Interests will not receive or retain any property under the Plan on account of their claims and interests. An Asbestos Trust will be established for the benefit of Unsecured Asbestos Personal Injury Claims and Demands. In addition to the Plan Consideration, the Asbestos Trust will also receive the Asbestos Insurance Recoveries and 100% of the interests in Reorganized Covington Land Company. Moreover, the ASARCO Protected Parties will be protected from all Asbestos PI Claims and Demands by a channeling injunction pursuant to Section 524(g) of the Bankruptcy Code, which will channel those Claims to the Asbestos Trust. Reorganized ASARCO and the Plan Administrator will (i) make distributions pursuant to the Third Amended Plan, (ii) prosecute objections to claims, and (iii) supervise the liquidation of the Debtors' remaining assets. Designation & Treatment of Claims Under the Third Amended Plan, disputed claims have been classified into 10 classes plus the category on Administrative Claims and Priority Tax Claims. The Second Amended Plan classified 14 Classes of Claims. Certain class claim descriptions and claim treatment were also modified. The new claim designations and corresponding claim treatment are: Class Description Treatment & Recovery ----- ----------- -------------------- N/A Administrative Allowed claims will generally receive Claims allowed amount of claim, in cash, on the Plan's effective date, except as otherwise provided in the Plan. Est. Aggregate Amt: $423MM to $732MM Est. Recovery: 100% N/A Priority Tax Holders will receive the claims' Claims allowed amount, in cash, on the Effective Date. Est. Aggregate Amt: $4MM Est. Recovery: 100% 1 Priority Claims Holders will receive the allowed amount in cash, on the Effective Date, or, if later, the date on which a Priority Claim becomes due in the ordinary course. Status: Unimpaired Deemed to accept the Plan Not entitled to vote Est. Aggregate Amt: De Minimis Est. Recovery: 100% 2 Secured Claims Holders will, at the election of the Debtors, either (a) receive the allowed amount, with postpetition interest, in Cash, on the later of the Effective Date or the date that the Secured Claim becomes due in the ordinary course, or (b) be Reinstated on the Effective Date. Status: Holders will vote, but only the votes of claimants whose claims will be Reinstated will be counted. Est. Aggregate Amt: $28MM to $33MM Est. Recovery: 100% 3 General Holders will receive pro rata share Unsecured Claims of Plan Consideration, consisting of Cash and Litigation Trust Interests. Status: Impaired/Entitled to vote Est. Aggregate Amt: $2.1B to $2.4B Est. Recovery: 60% to 75%, (assuming the Class 4 Claims are allowed in the amount of $750 million), plus Litigation Trust Interests 4 Unsecured Will be channeled to the Asbestos Asbestos Trust, and processed, liquidated, and Personal paid pursuant to the terms and Injury provisions of the Asbestos TDP and the Claims Asbestos Trust Agreement. The Asbestos Trust will receive: (a) the Asbestos Trust's Pro Rata share of Plan Consideration, consisting of Cash and Litigation Trust Interests; (b) the Asbestos Insurance Recoveries; and (c) 100% of the interests in Reorganized Covington. Status: Impaired/Entitled to vote Est. Aggregate Amt: More than $1.3B to $2.1 B Est. Recovery: 60% to 75% (assuming the Class 4 Claims are allowed in the amount of $750 million), plus Litigation Trust Interests 5 Convenience Holders will generally receive the Claims allowed amount of the claim, in Cash, on the Effective Date. Status: Unimpaired Deemed to accept the Plan Not entitled to vote Est. Aggregate Amt: to be determined Est. Recovery: 100% 6 Late-Filed Holders will not receive or retain any Claims property under the Plan on account of the Late-Filed Claims Status: Impaired Deemed to reject the Plan Est. Aggregate Amt: $4MM to $15MM Est. Recovery: 0% 7 Subordinated Holders will not receive or retain any Claims property under the Plan on account of the claims. Status: Impaired Deemed to reject the Plan Not entitled to vote Est. Aggregate Amt: to be determined Est. Recovery: 0% 8 Interests in Interests are cancelled, and holders ASARCO will not receive or retain any property under the Plan on account of the Interests. Status: Impaired Deemed to reject the Plan Not entitled to vote Est. Aggregate Amt: N/A Est. Recovery: 0% 9 Interests in Interests are cancelled, and holders Asbestos will not receive or retain any Subsidiary property under the Plan on account of Debtors the Interests Status: Impaired Deemed to reject the Plan/ Not entitled to vote Estimated Aggregate Amount: N/A Estimated Recovery: 0% 10 Interests in Interests are cancelled, and holders Other Subsidiary will not receive or retain any Debtors property under the Plan on account of the Interests. Status: Impaired Deemed to reject the Plan Not entitled to vote Est. Aggregate Amt: N/A Est. Recovery: 0% Sources of payments to be made to the Claimants under the Third Amended Plan include the Debtors' cash, which could total as much as $1,250,000,000 and the Available Plan Sales Proceeds, which are expected to total $1,276,600,000, with the present value of the Sterlite's Note calculated using a 15% discount rate and a copper price of less than $6,000 per ton. The cash estimate, however, may change materially if actual results are less than projected results. All distributions on account of Allowed Bondholders' Claims will be made (i) to the respective Indenture Trustee for the particular issue of Bonds, or (ii) with the prior written consent of the Indenture Trustee, through the facilities of Depository Trust Company, if applicable. If a distribution is made to the Indenture Trustee, it will administer the distribution in accordance with the Third Amended Plan and the Indenture, and will be compensated for all of its services and disbursements related to the distributions. An Indenture Trustee will not be required to give any bond, surety, or other security for the performance of its duties with respect to the administration and implementation of distributions, which will be subject to the right of the Indenture Trustee to exercise its Charging Lien for any unpaid fee claims. More Disclosures The Third Amended Plan is also updated on matters relating to the Debtors' business operations and the bankruptcy cases, including: -- the termination of ASARCO's efforts to re-open a smelter in El Paso, Texas; -- the retention of Barclays Capital as financial advisor and investment banker to the Debtors; -- the Debtors' request to implement a procedure to set cure amounts on executory contracts and unexpired leases to be assumed by a Debtor in accordance with Sections 365(b)(1)(A), 1123, and 105(a) of the Bankruptcy Code; -- the Debtors' request seeking approval of procedures and deadlines in connection with their objections to administrative claims; -- resolution on certain of the Debtors' workers compensation claims; -- the Debtors' negotiations with the Future Claims Representative, the Official Committee of Asbestos Claimants, and the Asbestos Subsidiary Committee of a global resolution of all asbestos-related liabilities against all Debtors, which would provide for the establishment of an Asbestos Trust, and the channeling of the Unsecured Asbestos Personal Injury Claims and Demands to the Asbestos Trust, among other things; -- the entry of the Debtors, the federal government, and various state governments into global environmental settlements; and -- updates on the Debtors' adversary proceedings. Full-text copies of the Third Amended Plan and Disclosure Statement are available for free at: http://bankrupt.com/misc/ASARCO_3rd_DisclosureStatement.pdf http://bankrupt.com/misc/ASARCO_3rd_Chapter11Plan.pdf Plan-Related Schedules The Debtors have urged Judge Richard Schmidt to establish certain deadlines related to the hearings on the Third Amended Disclosure Statement approval and Plan confirmation. The Debtors propose this timeline: April 17, 2009 Deadline to file Disclosure Statement objections April 28, 2009 Disclosure Statement hearing May 6, 2009 Deadline for parties to serve confirmation discovery requests May 20, 2009 Deadline for parties to complete production of documents June 1, 2009 Deadline for parties to commence depositions of fact witnesses June 1, 2009 Deadline for parties to file and serve objections to the Plan June 16, 2009 Deadline for parties to commence depositions of expert witnesses June 19, 2009 Confirmation deposition cutoff date June 26, 2009 Pre-Confirmation status conference June 29 to July 2, 2009 Confirmation Hearing July 6-7, 2009 Confirmation Hearing, if necessary About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). The Debtors submitted to the Court a joint plan of reorganization and disclosure statement on July 31, 2008. The plan incorporates the sale of substantially all of the Debtors' assets to Sterlite Industries, Ltd., for US$2,600,000,000. Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, submitted a reorganization plan to retain its equity interest in ASARCO LLC, by offering full payment to ASARCO's creditors in connection with ASARCO's Chapter 11 case. AMC would provide up to US$2.7 billion in cash as well as a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ASARCO LLC: Hearing to Approve Sterling Settlement Set April 13 --------------------------------------------------------------- The hearing on the ASARCO LLC and certain of its subsidiaries' motion for the approval of the New Purchase and Sale agreement and settlement with Sterlite (USA), Inc. will be held on April 13, 2009, at 10:00 a.m. Central Time before the U.S. Bankruptcy Court for the Southern District of Texas. Objections to the motion must be filed with the Bankruptcy Court no later than April 1, 2009, at 4:00 p.m. Central Time. As reported in the Troubled Company Reporter on March 17, 2009, the New Sterlite PSA, which will be implemented under the amended plan of reorganization that the Debtors filed on March 16, 2009, provides for the sale of ASARCO's operating assets to Sterlite for: (a) $1.1 billion in cash; (b) assumption of the liabilities that were to be assumed under the Original Sterlite PSA; and (c) a non-interest bearing, secured $600 million note, payable over nine years. The New Sterlite deal comes at a critical time in ASARCO's three- and-a-half-year-old bankruptcy case, according to Jack L. Kinzie, Esq., at Baker Botts L.L.P., in Dallas, Texas. He avers that the ASARCO board of directors and advisors, together with its key creditor constituents, examined various plan alternatives and considered the anticipated assets available to the bankruptcy estates, including (i) an estimated $1.275 billion cash on hand at the end of March 2009, (i) the enterprise value of ASARCO, (iii) the fraudulent transfer litigation against ASARCO's indirect parent, Americas Mining Corporation and Asarco Incorporated, and (iv) a breach of contract claim against ASARCO's former plan sponsor, Sterlite and affiliated parties. The goal of the ASARCO Board, Mr. Kinzie notes, has been to maximize the value of the Debtor's assets under a plan of reorganization and to negotiate a consensual structure of the Plan. Ultimately, after four months of vigorous negotiations with Sterlite, the Board believes that a modified transaction and settlement with Sterlite would yield the highest and best value for the Debtors' estates and creditors. The New Sterlite Deal is memorialized in a new purchase and sale agreement entered into by the Debtors, as sellers; Sterlite USA, as purchaser; and Sterlite Industries (India) Ltd., as guarantor, on March 6, 2009. Nevertheless, ASARCO seeks to subject the New Sterlite PSA to higher and better acquisition proposals. The other salient terms of the New Sterlite PSA are: * Secured $600MM Note. The $600 million face amount of the Secured Note is subject to a post-closing, working capital adjustment based on the difference between the levels of accounts receivable, accounts payable, and market value of inventory at the closing date and $253 million. The principal amount of the Note, as adjusted up or down by working capital items, is the "Maximum Principal Amount." The Note is secured by certain of the Assets being purchased by Sterlite, and provides that if in any year during the Note's term the average copper daily price exceeds $6,000 per metric tonne, Sterlite will make a payment pursuant to a certain formula set forth in the Note. * Sterlite Deposit. Sterlite has agreed to a deposit in the form of three letters of credit to be issued by ABN AMRO Bank N.V., Chicago, in favor of ASARCO for the total amount of $125 million. Letters of credit for $100 million have been delivered, and the remaining $25 million will be delivered if and when Sterlite's disclosure statement is approved. * No-Shop Covenant. The New Sterlite PSA includes a limited non-solicitation covenant or the "No-Shop Covenant," coupled with a "Fiduciary Out" that gives ASARCO termination rights to pursue: (x) a superior proposal, if the Board determines in good faith that such action is necessary to comply with its fiduciary duties under applicable law; or (y) a more favorable stand-alone plan that is supported by ASARCO. For a proposal to be considered "superior," it must provide at least $51 million, which is equal to $25 million plus a $26 million break-up fee, more value than the New Sterlite PSA. The No-Shop Covenant is similar to the covenant the Court approved in connection with the Original Sterlite PSA, except that it is not effective until entry of an order approving the Sterlite Settlement Request. Prior to the approval, Sterlite has agreed to a "Go-Shop Covenant," whereby ASARCO and its advisors may use the New Sterlite PSA to solicit an alternate transaction for the Assets without any restrictions. * Back-up Bid Option. In the event ASARCO terminates the New Sterlite PSA by exercising the Fiduciary Out to pursue a Superior Proposal or a Stand-Alone Plan, but the alternative transaction does not close, Sterlite has a back-up bid option, under which ASARCO must offer Sterlite the right to consummate the transaction on substantially the same terms as the New Sterlite PSA. * Bid Protections. To incentivize Sterlite to enter into the modified transaction while allowing the Board to continue to exercise its duty to maximize the value of the ASARCO Assets through alternative transactions, the New Sterlite PSA provides Sterlite bid protections. (x) Upon the consummation of a superior acquisition proposal that meets the Superior Proposal Threshold or a more favorable stand-alone plan supported by the Board following a termination pursuant to ASARCO's Fiduciary Out, Sterlite will receive a $26 million break-up fee. The Break-up Fee is, depending on the discount rate used to calculate the present value of the Note, is approximately 2% of the total purchase price consideration. (y) The New Sterlite PSA also contains a matching right and provides for an expense reimbursement of up to $10 million in certain circumstances. The Matching Right allows Sterlite to match any subsequent acquisition proposal without having to meet the Superior Proposal Threshold. Sterlite Settlement & Release Request Sterlite has refused to entertain any purchase and sale transaction that does not include a release of the Debtors' claims for breach of the Original Sterlite PSA, according to Mr. Kinzie. After substantial negotiations, the Debtors ultimately agreed to a release as part of a global compromise, but only upon the occurrence of certain limited conditions. The limited conditions are: (1) The closing of the transaction contemplated by the New Sterlite PSA; or (2) The termination of the New Sterlite PSA due to the Court's approval of a bona fide written acquisition proposal that the ASARCO Board determines in good faith (i) is reasonably likely to be consummated in a timely manner, (ii) would result in a transaction more favorable to ASARCO and its stakeholders than the transactions under the New Sterlite PSA, and (iii) provides deemed value to ASARCO and its estate that exceeds by at least the Superior Proposal Threshold the deemed value of the New Sterlite PSA; and the subsequent consummation of that Superior Proposal between ASARCO and a third party; or (3) The termination of the New Sterlite PSA due to the Court's approval of a stand-alone plan, which the Board approves and determines would be more favorable than the New Sterlite PSA and is supported by ASARCO; and the subsequent consummation of that Stand-Alone Plan; or (4) The termination of the New Sterlite PSA due to these reasons: * Failure to meet any of these deadlines: (i) approval of the Sterlite disclosure statement by May 31, 2009, which may be extended through July 1, 2009; (ii) confirmation of the Sterlite Plan by August 31, 2009, which may be extended through September 30, 2009; (iii) closing by November 30, 2009, which may be extended through December 31, 2009; * ASARCO's breach of any representation, warranty or covenant, which would result in a failure of a condition to Sterlite's obligation to close and which is not cured pursuant to the New Sterlite PSA; or * Rejection by asbestos or governmental environmental creditors if the Sterlite Plan is submitted for voting. Subsequent to the termination of the Sterlite PSA, a Superior Proposal between ASARCO and a third party must also be consummated, provided that a definitive agreement with respect to the Superior Proposal is signed within 180 days after termination of the New Sterlite PSA; or (5) The termination of the New Sterlite PSA, after a 60-day notice and cure period, due to an intentional and willful material breach of any of these obligations of the Debtors, as sellers: * The covenant prohibiting any interim sale or other disposition of the Assets, other than inventory and receivables; * ASARCO's obligation to use reasonable best efforts to obtain prompt entry of the plan confirmation order; * ASARCO's obligation to provide Sterlite final drafts of relevant documents and filings, and ASARCO's obligation not to amend certain pleadings to the extent that amendment may be reasonably expected to have a material adverse effect on Sterlite or Sterlite India or on the ability of the parties to close the transactions under the New Sterlite PSA; * ASARCO's covenant to file a motion as necessary to extend exclusivity; * the No-Shop Covenant; or * ASARCO's obligation to provide Sterlite with information needed to exercise its Matching Right. If none of the conditions occurs or if Sterlite materially breaches the New Sterlite PSA, Sterlite does not receive the contemplated Release and the Debtors may pursue all of their claims against Sterlite and Sterlite India under the Original Sterlite PSA. A full-text copy of the New Sterlite Deal is available for free at: http://bankrupt.com/misc/ASARCO_Sterlite_NewPurchaseAgreement.pdf The Settlement Request does not seek approval of the sale transaction contemplated by the New Sterlite PSA, which will instead be evaluated by all stakeholders and the Bankruptcy Court as part of confirmation of an amended Sterlite-sponsored plan of reorganization, Mr. Kinzie clarifies. Rather, by this motion, ASARCO only seeks approval of: (a) the settlement and conditional release contained in the New Sterlite PSA; (b) the back-up bid provisions in the New Sterlite PSA; and (c) the revised bid protections, consisting of the Break-up Fee, No-Shop Covenant with Fiduciary Out, Matching Right, Superior Proposal Threshold, and Expense Reimbursement. ASARCO asserts that the proposed Sterlite Settlement is fair and reasonable, taking into account the uncertainty and likely length and cost of litigating the disputes surrounding the Original Sterlite PSA; the relevant information concerning current and projected copper, financial and credit markets, reorganization alternatives reasonably available to the Debtors; and the views and concerns of the major creditor constituents. The Court has also set these schedules with respect to the Settlement Request: March 20, 2009 Deadline to serve discovery requests March 24, 2009 Deadline to submit deposition notice requests March 25, 2009 Deadline to serve deposition witness lists March 27, 2009 Deadline for responses to discovery requests March 27, 2009 Completion of the production of documents March 30, 2009 Commencement of depositions April 3, 2009 Last day for depositions April 3, 2009 Deadline for parties to file and serve witness lists and proffers About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). The Debtors submitted to the Court a joint plan of reorganization and disclosure statement on July 31, 2008. The plan incorporates the sale of substantially all of the Debtors' assets to Sterlite Industries, Ltd., for US$2,600,000,000. Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, submitted a reorganization plan to retain its equity interest in ASARCO LLC, by offering full payment to ASARCO's creditors in connection with ASARCO's Chapter 11 case. AMC would provide up to US$2.7 billion in cash as well as a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) AVENTINE RENEWABLE: E&Y Has Going Concern Doubt; Waiver Ends April ------------------------------------------------------------------ "There is substantial doubt as to our ability to continue as a going concern," Aventine Renewable Energy Holdings, Inc., said in its annual report on Form 10-K for the year ended December 31, 2008. Ernst & Young LLP, as independent public account, has expressed substantial doubt about the Company's ability to continue as a going concern, because of these conditions (i) Aventine has incurred substantial losses from operations and has experienced a significant reduction in available liquidity in recent quarters, (ii) the Company is dependent on its revolving credit facility, which availability is upon maintenance of certain collateral levels, (ii) the Company is in default of its debt covenants on the senior unsecured fixed rate notes; payment of these notes may be accelerated unless the default is cured. The Company told the Securities and Exchange Commission that as a result of ethanol industry conditions that have negatively affected its business, it does not currently have sufficient liquidity to meet our anticipated working capital, debt service and other liquidity needs. "In particular, we do not expect to have adequate liquidity to satisfy the $15 million interest payment due on April 1, 2009 on our outstanding senior unsecured 10% fixed-rate notes or the $24.4 million due to our EPC contractor, Kiewit Energy Company. In addition, we are currently in default under our outstanding 10% fixed-rate notes which permits the holders thereof to accelerate the $300 million principal amount thereof upon 60 days notice. The default under our 10% fixed rate notes constitutes an event of default under our secured revolving credit facility, which has been waived by lenders under our secured revolving credit facility until April 15, 2009." As of March 12, 2009, $22.2 million in letters of credit and $16.5 million in revolving loans were outstanding under the amended secured revolving credit facility. After giving effect to the recent amendment to our secured revolving credit facility, the Company had $0.7 million of cash and $6.6 million of additional borrowing availability thereunder as of such date. All of its cash receipts are automatically applied to reduce amounts outstanding under our amended secured revolving credit facility and to cash collateralize our letters of credit. "As we continue to reduce the number of gallons of ethanol we sell and hold in inventory, working capital available to support borrowings under our secured revolving credit facility will reduce proportionately," Aventine said. Aventine added that the amendment to its secured revolving credit facility requires it to successfully complete an exchange offer of our outstanding senior unsecured 10% fixed-rate notes for a like principal amount of a new series of "pay-in-kind" notes. It expects the "pay in kind" notes to (i) require no cash interest prior to April 1, 2010, (ii) require an increase in the interest rate to 12% per annum and (iii) grant a second lien on substantially all of its assets which must be contractually subordinated to the obligations under our secured revolving credit facility. In addition, to encourage holders of its senior unsecured 10% fixed-rate notes to participate in the exchange offer, it expect to need to offer the holders of our senior unsecured 10% fixed-rate notes 8.4 million shares of its common stock (representing approximately 19.9% of our currently outstanding shares of common stock). Failure to have the holders of 80% of the existing senior unsecured 10% fixed-rate notes commit to participate in the exchange by March 31, 2009 or the failure to consummate the exchange for 90% of the existing senior unsecured 10% fixed-rate notes by April 15, 2009 would be an event of default under its secured revolving credit facility. "Even if we are successful with the senior unsecured 10% fixed- rate note exchange offer, we do not expect to have sufficient liquidity to meet anticipated working capital, debt service and other liquidity needs during the current year unless we experience a significant improvement in ethanol margins or obtain other sources of liquidity," the Company further stated. It noted that based on the current spread between corn and ethanol prices, the industry is operating at or near breakeven cash margins. On Monday, the Company reported a net loss of $47,096,000 on $2,248,301,000 of net sales for 2008, compared with a net profit of $33,799,000 on $1,571,607,000 of net sales the year before. As of December 31, 2008, the Company had $799.4 million in total assets and $490.6 million in total liabilities. In addition, although the Company suspended construction at both Aurora West and Mt. Vernon during the fourth quarter, it continues to have construction payment obligations to Kiewit. On March 9, 2009, the Company received a notice from Kiewit cancelling the engineering, construction and procurement contracts for Aurora West and Mt. Vernon, referencing its failure to make a recent payment under the change order agreements dated December 31, 2008. As a result, all remaining payments due to it and its sub- contractors totaling $24.4 million at February 28, 2009 are due and payable. The Company said it is currently engaged in discussions with Kiewit to negotiate a payment schedule that falls within the economic constraints with which we are currently operating. Because its obligations to Kiewit are past due, the liens securing these obligations violate the terms of its 10% fixed rate notes and constitute a default thereunder. Unless such default is cured through payment, the release of the liens, a negotiated resolution or otherwise, the holders of our 10% fixed rate notes may accelerate the $300 million principal amount thereof upon 60 days notice. In addition, the default under its 10% fixed rate notes constitutes an event of default under its secured revolving credit facility, which is our only current source of liquidity. We have obtained a waiver from the lenders under its secured revolving credit facility until April 15, 2009. Any foreclosure on such liens by Kiewit would constitute an event of default under our amended secured revolving credit facility that is not covered by the waiver. The Company says it remains contractually obligated to complete the suspended plants at Aurora and Mt. Vernon as well as an additional plant at Mt. Vernon capable of producing 110 million gallons of ethanol annually and may incur significant penalties because of its failure to complete these facilities as previously scheduled. "Although we are actively pursuing a number of liquidity alternatives, including seeking additional debt and equity financing and a potential sale of all or part of the company, there can be no assurance we will be successful. If we cannot obtain sufficient liquidity in the very near-term, we may need to seek to restructure under Chapter 11 of the U.S. Bankruptcy Code." About Aventine Renewable Based in Pekin, Illinois, Aventine Renewable Energy Holdings, Inc., produces and markets ethanol. It owns and operates a corn wet milling plant in Pekin, Illinois and a corn dry milling plant in Aurora, Nebraska. Its facilities have a total production capacity of 150 million gallons of ethanol per year. It markets and distributes ethanol to many energy companies in the U.S., including BP Products North America, Inc., ConocoPhilips Co., Chevron Corp., Shell Oil Products US, Marathon Petroleum Co. and Valero Marketing and Supply Co. It has distribution capabilities and lease space where its ethanol is blended with our customers' gasoline. At December 31, 2008, it had a total of 346 full-time equivalent employees, of whom 48% are represented by United Steelworkers International Union, Local 7-662. The Company had $799,459,000 in assets and debts of $352,200,000 as of Dec. 31, 2008. As reported by the TCR on March 3, Standard & Poor's has put a 'CCC+' corporate credit rating on Aventine and placed a 'CCC' senior unsecured rating on the company with a projection that that the debtholders would recover as much as 30% following payment default. Moody's Investors Service on mid-March downgraded Aventine's Corporate Family Rating to Ca from Caa2 and the rating on its senior unsecured notes to C from Caa3. The downgrade follows the company's announcement that it owes the construction contractor (and sub-contractors) of its two incomplete ethanol plants $24.4 million plus certain costs and expenses in connection with the early termination of the construction contracts. AVENTINE RENEWABLE: May File for Chapter 11 Absent Add'l Funding ---------------------------------------------------------------- Aventine Renewable Energy Holdings Inc. said in a filing with the U.S. Securities and Exchange Commission that it may have to file for Chapter 11 bankruptcy protection if it cannot raise sufficient cash in the very near-term. Aventine Renewable said that it doesn't have sufficient liquidity to meet its anticipated working capital, debt service, and other liquidity needs. It is actively pursuing a number of liquidity alternatives, including seeking additional debt and equity financing and a potential sale of all or part of the company. There can be no assurance we will be successful. As a result of the current poor operating environment for ethanol production, Aventine Renewable has been accelerating its efforts to preserve existing liquidity, and is attempting to raise additional sources of liquidity and capital. Aventine Renewable has suspended construction of its expansion facilities at both Mt. Vernon, Indiana and Aurora, Nebraska which were the largest outflows of cash. Aventine Renewable has also taken steps to reduce its fixed cost structure by rationalizing and reducing the size and scope of its distribution network. Aventine Renewable has taken and expects to take additional steps to preserve liquidity which include staff reductions and other such measures. As a result of ethanol industry conditions that have negatively affected its business, Aventine Renewable does not currently have sufficient liquidity to meet its anticipated working capital, debt service and other liquidity needs. In particular, Aventine Renewable does not expect to have adequate liquidity to satisfy the $15 million interest payment due on April 1, 2009, on its outstanding senior unsecured 10% fixed-rate notes or the $24.4 million due to its EPC contractor, Kiewit. In addition, Aventine Renewable is currently in default under its outstanding 10% fixed-rate notes, which permits the holders thereof to accelerate the $300 million principal amount thereof upon 60 days notice. The default under its 10% fixed rate notes constitutes an event of default under our secured revolving credit facility, which has been waived by lenders under its secured revolving credit facility until April 15, 2009. As a result, the Company's 2008 financial statements include an explanatory paragraph by its independent registered public accounting firm describing the substantial doubt as to its ability to continue as a going concern. Because of the default under its 10% fixed rate notes, Aventine Renewable has classified the entire $300 million principal amount as a current liability in its balance sheet at December 31, 2008. The amount of cash and borrowings available to Aventine Renewable under its secured revolving credit facility at the end of the fourth quarter of 2008 declined to $23.3 million, from $119.2 million at the end of the third quarter of 2008. On March 10, 2009, Aventine Renewable amended its secured revolving credit facility. The material terms of the amended facility include: -- an initial reduction in the revolving commitment on a graduated scale from $200 million to $75 million, and reducing to $60 million on April 1, 2009 and $50 million on May 1, 2009, and thereafter (subject to collateral availability); -- certain adjustments to the borrowing base calculation, including a decrease in the fixed asset component from $50 million amortized at $1.8 million per quarter under the prior facility to $10 million, with amortization of $1 million per month beginning on September 1, 2009; -- a reduction in the availability block from $50 million to $2.5 million; -- a provision that permits the filing by the Company's creditors of certain precautionary liens provided they do not commence enforcement action; -- an increase in interest rates and commitment fees; -- a shortening of the maturity date to March 1, 2010; -- the deletion of a fixed charge coverage covenant; -- a provision that permits our independent registered public accounting firm to express uncertainty regarding the Company's ability to remain a "going concern" in respect of its 2008 financial statements; -- adjustments to certain reporting requirements; and -- a requirement that the Company notify the Administrative Agent no later than March 31, 2009, that a formal written agreement or irrevocable tender is in place to complete an exchange offer between the Company and the holders of at least 80% in principal amount of its senior unsecured 10% fixed-rate notes. The exchange offer must be completed with the holders of at least 90% in principal amount of its senior unsecured 10% fixed-rate notes by April 15, 2009. As of March 12, 2009, $22.2 million in letters of credit and $16.5 million in revolving loans were outstanding under the amended secured revolving credit facility. After giving effect to the recent amendment to Aventine Renewable's secured revolving credit facility, the Company had $0.7 million of cash and $6.6 million of additional borrowing availability thereunder as of such date. All of the Company's cash receipts are automatically applied to reduce amounts outstanding under its amended secured revolving credit facility and to cash collateralize its letters of credit. As Aventine Renewable continues to reduce the number of gallons of ethanol it sells and holds in inventory, working capital available to support borrowings under its secured revolving credit facility will reduce proportionately. The amendment to Aventine Renewable's secured revolving credit facility requires the Company to successfully complete an exchange offer of its outstanding senior unsecured 10% fixed-rate notes for a like principal amount of a new series of "pay-in-kind" notes. Aventine Renewable expects the "pay in kind" notes to (i) require no cash interest prior to April 1, 2010, (ii) require an increase in the interest rate to 12% per annum and (iii) grant a second lien on substantially all of the Company's assets which must be contractually subordinated to the obligations under the Company's secured revolving credit facility. In addition, to encourage holders of Aventine Renewable's senior unsecured 10% fixed-rate notes to participate in the exchange offer, the Company expect to need to offer the holders of its senior unsecured 10% fixed-rate notes 8.4 million shares of its common stock (representing approximately 19.9% of its currently outstanding shares of common stock). There can be no assurances, however, that the required percentage or any holders of the senior unsecured 10% fixed-rate notes will agree to an exchange on these terms or at all. Failure to have the holders of 80% of the existing senior unsecured 10% fixed-rate notes commit to participate in the exchange by March 31, 2009, or the failure to consummate the exchange for 90% of the existing senior unsecured 10% fixed-rate notes by April 15, 2009, would be an event of default under the Company's secured revolving credit facility. Even if Aventine Renewable is successful with the senior unsecured 10% fixed-rate note exchange offer, it does not expect to have sufficient liquidity to meet anticipated working capital, debt service and other liquidity needs during the current year unless the Company experiences a significant improvement in ethanol margins or obtain other sources of liquidity. Based on the current spread between corn and ethanol prices, the industry is operating at or near breakeven cash margins. Aventine Renewable experienced negative gross margins during the second half of 2008 and expect negative gross margins to continue through the first quarter of 2009 due in part to the Company's fixed price obligations to purchase corn and natural gas at above current market prices. The current spread between ethanol and corn prices cannot support the long-term viability of the U.S. ethanol industry in general or the Company in particular. Although Aventine Renewable suspended construction at both Aurora West and Mt. Vernon during the fourth quarter, the Company continues to have construction payment obligations to Kiewit. On March 9, 2009, the Company received a notice from Kiewit cancelling the engineering, construction and procurement contracts for Aurora West and Mt. Vernon, referencing the Company's failure to make a recent payment under the change order agreements dated December 31, 2008. As a result, all remaining payments due to it and its sub-contractors totaling $24.4 million at February 28, 2009 are due and payable. Aventine Renewable is currently engaged in discussions with Kiewit to negotiate a payment schedule that falls within the economic constraints with which the Company is currently operating. Aventine Renewable cannot give any assurance that it will reach an agreement with Kiewit that works within our existing liquidity constraints. Because Aventine Renewable's obligations to Kiewit are past due, the liens securing these obligations violate the terms of its 10% fixed rate notes and constitute a default thereunder. Unless such default is cured through payment, the release of the liens, a negotiated resolution or otherwise, the holders of Aventine Renewable's 10% fixed rate notes may accelerate the $300 million principal amount thereof upon 60 days notice. In addition, the default under the Company's 10% fixed rate notes constitutes an event of default under its secured revolving credit facility, which is its only current source of liquidity. Aventine Renewable has obtained a waiver from the lenders under its secured revolving credit facility until April 15, 2009. Any foreclosure on such liens by Kiewit would constitute an event of default under Aventine Renewable's amended secured revolving credit facility that is not covered by the waiver. Aventine Renewable remains contractually obligated to complete the suspended plants at Aurora and Mt. Vernon as well as an additional plant at Mt. Vernon capable of producing 110 million gallons of ethanol annually and may incur significant penalties because of the Company's failure to complete these facilities as previously scheduled. Aventine Renewable recorded net gains of $17.1 million and net losses of $0.1 million, respectively, for the full-years ended December 31, 2008 and 2007 under "other non-operating income" in the Condensed Consolidated Statements of Operations for the changes in the fair value of its derivative financial instrument positions. Aventine Renewable recorded a loss of $4.3 million for the year- ended December 31, 2008, relating to an investment in a marketing alliance partner, which investment is now classified as available for sale. As of December 31, 2008, Aventine Renewable had total assets of $799,459,000, total liabilities of $490,663,000, and total stockholders' equity of $308,796. About Aventine Renewable Headquartered in Pekin, Illinois, Aventine Renewable Energy Holdings Inc. (NYSE:AVR) -- http://www.aventinerei.com-- produces and markets ethanol in the United States, based on both the number of gallons produced and the number of gallons sold. Through its own production facilities, marketing alliances with other ethanol producers and its purchase or resale operations, the company marketed and distributed 695.8 million gallons of ethanol during the year ended Dec. 31, 2006. For 2006, Aventine sold approximately 12.9% of the total volume of ethanol sold in the United States. The company markets and distributes ethanol to energy companies in the United States, including Royal Dutch Shell and its affiliates, Marathon Petroleum, BP, ConocoPhillips, Valero Marketing and Supply Company, Exxon/Mobil, and Texaco/Chevron. In addition to producing ethanol, the company's facilities also produce several co-products, such as distillers' grain, corn gluten feed, corn germ and brewers' yeast. As reported by the Troubled Company Reporter on March 18, 2009, Moody's Investors Service downgraded Aventine Renewable Energy Holdings, Inc.'s Corporate Family Rating to Ca from Caa2 and the rating on its senior unsecured notes to C from Caa3. According to the TCR on March 3, 2009, Standard & Poor's had put a 'CCC+' corporate credit rating on Aventine Renewable Energy Holdings Inc., and placed a 'CCC' senior unsecured rating on the company with a projection that that the debtholders would recover as much as 30 percent following payment default. BANK OF AMERICA: House Committee Asks for Merill's Bonus Records ---------------------------------------------------------------- Dan Fitzpatrick at The Wall Street Journal reports that U.S. Rep. Edolphus Towns, chairman of the House Committee on Oversight and Government Reform, has asked Bank of America Corp. CEO Ken Lewis and a Merrill Lynch & Co. lawyer for records and information relating to the $3.62 billion bonuses Merrill Lynch paid out last year. According to WSJ, the House Committee is trying to determine whether it was misled about the year-end incentives. WSJ relates that Merrill's lawyer, Raymond Calamaro, sent a letter to the House Committee on November 24, 2008, saying that "incentive compensation decisions for 2008 have not yet been made," but Merrill's compensation committee had approved the bonuses in a vote two weeks earlier. WSJ quoted Mr. Towns as saying, "These court filings raise the disturbing possibility that Merrill Lynch executives may have obstructed this committee's investigation into executive compensation and the awarding of bonuses at the company." WSJ relates that Mr. Towns asked Mr. Lewis to produce names of people who prepared, discussed, reviewed or approved the letter sent by Mr. Calamaro on November 24, including copies of any communications about the letter between Merrill Lynch, Bank of America, and Hogan and Hartson -- where Mr. Calamaro is a partner. WSJ states that Bank of America has been refusing to submit to New York Attorney General Andrew Cuomo the names of Merrill Lynch employees who received the bonuses. According to the report, Mr. Cuomo is asking a New York state judge to force Bank of America to give up the information. Mr. Lewis received a letter from Mr. Towns but "Merrill Lynch was an independent company in November and the person who wrote the letter represented Merrill Lynch," WSJ quoted a Bank of America spokesperson as saying. With Bank of America expected to begin mailing its 2009 proxy statement later this week, the CtW Investment Group has urged the Securities and Exchange Commission to compel the bank to disclose its secret bonus Agreement with Merrill Lynch. The undisclosed Agreement was uncovered by New York Attorney General Andrew Cuomo's investigation into Merrill Lynch's decision to "secretly and prematurely award approximately $3.6 billion in bonuses." "Public outrage over AIG's $165 million in bonuses reinforces shareholder anger at the $3.6 billion bonus fiasco perpetrated by BAC [Bank of America] and MER [Merill Lynch] last December," said William Patterson, the Investment Group's executive director. "It may be too late to recover the Merrill payouts, but shareholders can hold accountable the Bank of America directors responsible at the bank's upcoming director election. The secret bonus agreement is critical to that evaluation." BAC has already filed a preliminary proxy statement with the SEC for its 2009 meeting, which is scheduled for April 29 in Charlotte. In a letter to Shelly Parratt, Acting Director of the SEC's Division of Corporation Finance, Mr. Patterson wrote: This Agreement is material to Bank of America's director election since it suggests that, contrary to management's claims, BAC was complicit in Merrill Lynch's extraordinary 2008 bonus payments, which are now the subject of Attorney General Cuomo's investigation. And it takes on added significance since we recently informed Bank of America lead director Temple Sloan that we intend to oppose his re-election, that of Chairman and CEO Ken Lewis, and Corporate Governance Committee Chair Thomas Ryan at the 2009 annual meeting due to concerns relating to Bank of America's disastrous acquisition of Merrill Lynch. Separately, the Investment Group also called for the SEC to investigate whether Bank of America violated federal securities laws by failing to disclose Merrill Lynch's large fourth quarter losses prior to the December 5, 2008 merger vote and again before the January 1, 2009 merger closing. Bank of America only disclosed the losses after it received shareholder approval for the merger, allowed Merrill Lynch to prematurely pay $3.6 billion in bonuses via under the secret Agreement, and closed the merger. In a letter to Robert Khuzami, Director of the SEC's Division of Enforcement, Mr. Patterson said, "Given that the January 15 disclosure of the MER loss sent BAC's shares down 50% in three days, erasing $30 billion in shareholder value, the SEC has an obligation to determine when management first became aware of the loss." New York Attorney General Cuomo is already investigating similar matters to determine whether Bank of America and Merrill Lynch directors and officers violated New York's Martin Act. "Given significant matters of federal law in question," wrote Mr. Patterson, "we believe it is time for the SEC to open a formal investigation and work cooperatively with the Attorney General." The CtW Investment Group works with pension funds sponsored by unions affiliated with Change to Win, a coalition of unions representing six million members. These funds are substantial long-term Bank of America shareholders. During the past thirteen months, the Investment Group has detailed its concerns regarding risk oversight, 2008 bonus payments and Bank of America CEO succession in various letters to the Bank of America and Merrill Lynch boards and in meetings with directors at each firm. 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). BANK OF AMERICA: Merrill Bonus Info Won't be Kept Confidential -------------------------------------------------------------- Chad Bray at The Wall Street Journal reports that New York State Supreme Court Justice Bernard J. Fried has denied Bank of America Corp.'s request to keep details confidential about Merrill Lynch & Co. employees who received bonuses. As reported by the Troubled Company Reporter on March 12, 2009, Merrill Lynch has been under fire for paying $3.6 billion in bonuses to 700 employees just before the merger, despite net losses of $27 billion for the company in 2008. New York State Attorney General Andrew Cuomo subpoenaed Bank of America for a list of names of names of 39,000 people who received bonuses. Bank of America agreed to produce a list of the 200-highest bonuses but refused to provide the names. WSJ relates that Bank of America had asked Judge Fried to prevent Mr. Cuomo from publicly releasing the names of individuals who received bonuses and how much they made. According to WSJ, Bank of America claimed that disclosing details about who got bonuses and how much the awards were would cause the bank harm and put it at a competitive disadvantage. The information was proprietary data and some workers might leave because of privacy or security concerns if the list were made public, WSJ states, citing Bank of America. Judge Fried, says WSJ, denied the motion for a protective order modifying a subpoena by Mr. Cuomo to include a confidentiality provision and the motion to separately intervene and put a similar confidentiality restriction on testimony by former Merrill Lynch CEO John A. Thain. According to WSJ, Judge Fried ruled that Bank of America didn't make efforts to keep compensation data confidential, other than to urge workers not to discuss pay in the workplace. Judge Fried said that there is no evidence that Bank of America took measures to prevent employees from sharing compensation information with third parties, WSJ states. New York's Martin Act gives Mr. Cuomo the discretion to decide whether to keep information he gathers in the course of an investigation secret or make it public, WSJ says, citing Judge Fried. WSJ quoted Bank of America spokesperson Scott Silvestri as sayng, "We will, of course, comply with the order of the Court and turn over the information requested. We will continue to cooperate with the attorney general's investigation." Bank of America could submit the names of those who received the bonuses as early as Thursday, WSJ relates. DSP Merrill CEO to Retire, Sells Merrill Stake John Satish Kumar at WSJ reports that DSP Merrill Lynch India Chairperson Hemendra Kothari will retire on March 31, 2009. He said that he has sold his 10% stake in the company to Bank of America, WSJ states. The report quoted him as saying, "I have decided to retire with effect from March 31 to pursue other philanthropic interests, so I have sold the remaining 10% stake I held in DSP Merrill Lynch to Bank of America." Mr. Kothari said that his decision to retire was taken earlier, but he waited for the merger between Merrill Lynch and Bank of America to be smoothened out before making a public announcement, WSJ states. According to WSJ, DSP Merrill Lynch India President Kevan Watts will replace Mr. Kothari. WSJ quoted Mr. Kothari as saying, "Kevan has been appointed country head of India for the combined entity (DSP Merrill Lynch) and Vishwavir Ahuja continues as head of corporate banking at Bank of America." DSP Merrill Lynch India was formed by DSP Financial Consultants Ltd. and Merrill Lynch and Co., WSJ relates. The report says that Mr. Kothari has been leading DSP Merrill Lynch since the organization was formed in the summer of 1984. WSJ reports that Bank of America, through Merrill Lynch (Mauritius) Investments Ltd. and Merrill Lynch Holdings (Mauritius), will now hold a 99.93% stake in DSP Merrill Lynch India. DSP Merrill posted on its Web site that the remaining 0.07% as at March 31, 2008, was held by private corporate bodies and Indian public shareholders. 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). BDRV MEZZ: Auction for Interests in Black Diamond Set for March 27 ------------------------------------------------------------------ Madeleine L.L.C. will sell at a public auction on March 27, 2009, at 10:00 a.m. (Eastern Time) BDRV Mezz LLC's 100% membership interests in Black Diamond Resorts - Vail LLC, at Katten Muchin Rosenman LLP, 575 Madison Avenue, New York, NY 10022-2585. Black Diamond Resorts - Vail LLC is the developer of the Four Seasons Resort in Vail, Colorado. Pursuant to the Loan Agreements, BDRV Mezz is indebted to Madeleine L.L.C. for amounts totaling in excess of $41 million. The collateral will be sold only as a block to a single purchaser that makes the highest and best bid at the auction. For further information concerning the sale, please contact the attorney for Lender: Andrew D. Small, Esq. Katten Muchin Rosenman LLP 525 West Monroe Street Chicago, IL 60661 Tel: (312) 902-5489 BEARINGPOINT INC: Delays Filing of Annual Financial Report ---------------------------------------------------------- Jeff Clabaugh at Washington Business Journal reports that BearingPoint Inc. said that it failed to file its annual financial report for 2008 with regulators by the March 16 deadline due to the burdens associated with the Chapter 11 filing and financial and liquidity issues. According to Business Journal, BearingPoint said that the management has been focused on talks with creditors and reorganization plans. BearingPoint, says Business Journal, expects that its auditor will include a statement indicating substantial doubt about the Company's ability to continue as a going concern due to uncertainties related to the bankruptcy process. Business Journal relates that under agreements reached with creditors in February 2009, an existing $300 million loan will be replaced with a new term loan of about $300 million. According to the report, the remaining $700 million in debt will be exchanged for preferred and common stock in a reorganized BearingPoint. BearingPoint is seeking the bankruptcy court's permission to pay top-level executives millions of dollars in retention bonuses to keep them on board during reorganization, Business Journal reports. About BearingPoint Inc. BearingPoint, Inc. -- http://www.BearingPoint.com-- is currently one of the world's largest providers of management and technology consulting services to Global 2000 companies and government organizations in more than 60 countries worldwide. Based in McLean, Va., BearingPoint -- a former consulting arm of KPMG LLP -- has approximately 15,000 employees focusing on the Public Services, Commercial Services and Financial Services industries. BearingPoint professionals have built a reputation for knowing what it takes to help clients achieve their goals, and working closely with them to get the job done. The Company's service offerings are designed to help clients generate revenue, increase cost-effectiveness, manage regulatory compliance, integrate information and transition to "next-generation" technology. BearingPoint, Inc. fka KPMG Consulting, Inc., together with its units, filed for Chapter 11 on February 18, 2009 (Bankr. S.D. N.Y., Case No. 09-10691). Alfredo R. Perez, Esq. at Weil Gotshal & Manges LLP, has been tapped as counsel. Greenhill & Co., LLC, and AP Services LLC, have also been tapped as advisors. Davis Polk & Wardell is special corporate counsel. BearingPoint disclosed total assets of $1,762,689,000, and debts of $2,231,839,000 as of Sept. 30, 2008. Contemporaneous with their bankruptcy petitions, the Debtors filed a pre-packaged Joint Plan of Reorganization under Chapter to implement the terms of their agreement with the secured lenders. Under the Plan, the Debtors propose to exchange general unsecured claims for equity in the reorganized company. Existing shareholders are out of the money. The Plan and the explanatory disclosure statement remain subject to approval by the Bankruptcy Court. BERNARD L. MADOFF: Prosecutors Eyeing Jewelry as Forfeiture ----------------------------------------------------------- Chad Bray at The Wall Street Journal reports that prosecutors said that they will seek additional assets as forfeiture from Bernard Madoff and his wife, Ruth. Those assets would include more than $2.6 million of Mrs. Madoff's jewelry and Mr. Madoff's 35 watches and cuff links. As reported by the Troubled Company Reporter on March 17, 2009, prosecutors said that they will seek forfeiture of Mr. Madoff's millions of dollars in property and cash. They said that they could seek more than $170 billion in forfeiture, including money and property traceable to the fraud. Much of the $170 billion amount comes from funds deposited by investors into Mr. Madoff's fraudulent investment operation and later dispersed to other investors. Mr. Madoff disclosed $823 million to $826 million in assets weeks after his Ponzi scheme was disclosed. Most of Mr. Madoff's assets came in the $700 million he valued for Bernard L. Madoff Investment Securities. Many of the assets, except one of four houses, were held in Ruth Madoff's name. Prosecutors said that they are seeking forfeiture of $17 million in cash held in a bank account in Mrs. Madoff's name and $45 million in municipal bonds held in her name at Cohmad Securities Corp. Prosecutors said in court documents that they will seek any and all ownership that the Madoffs hold in 20 business entities, including the owner of Manhattan restaurant P.J. Clarke's on the Hudson. WSJ relates that several real-estate ventures associated with Sterling Equities were also listed. According to WSJ, a Sterling Equities spokesperson said that no member of the Madoff family had any interest in the New York Mets. WSJ states that Sterling Equities' co-founder and chairperson is New York Mets owner Fred Wilpon, who invested with Mr. Madoff. Citing the spokesperson, WSJ says that Mrs. Madoff and Mr. Madoff's brother, Peter, made investments in real-estate funds and venture-capital projects tied to affiliates of Sterling Equities, and that the potential forfeiture of the investments will have "no material impact" on those projects. WSJ relates that the government is seeking to confiscate proceeds from promissory notes for $31.55 million in loans to Mr. Madoff's sons, Andrew and Mark. WSJ states that the promissory notes would come due between 2010 and 2012. Accountant Faces Fraud Charges WSJ reports that David G. Friehling -- Friehling & Horowitz, CPAs, PC's sole practitioner and shareholder and Bernard L. Madoff Investment's former accountant -- has been arrested for aiding Mr. Madoff in his Ponzi scheme. According to WSJ, Mr. Friehling has been charged with securities fraud, aiding and abetting investment adviser fraud, and four counts of filing false audit reports with the U.S. Securities and Exchange Commission. Citing prosecutors, WSJ reports that Mr. Friehling allegedly made false filings with the SEC in 2004, 2005, 2006, and 2007. WSJ relates that the SEC separately brought civil charges against Mr. Friehling and Friehling & Horowitz in a lawsuit filed on Wednesday in the U.S. District Court in Manhattan. Citing prosecutors, WSJ states that Mr. Friehling created false and fraudulent certified financial statements for Bernard L. Madoff Investment from the early 1990s to December 2008. The government, according to the report, claimed that Mr. Friehling failed to conduct audits of Bernard L. Madoff Investment that complied with generally accepted auditing standards and conformed with generally accepted accounting principles. Mr. Friehling falsely certified he had done so, the report says, citing the government. Mr. Friehling's audit work papers for Bernard L. Madoff Investment were "inadequate to support the findings contained in the audited financial statements" and reflected "insufficient independent verification" of information provided to Mr. Friehling by employees of the Company, Federal Bureau of Investigation agent Keith D. Kelly said in court documents. WSJ, citing Mr. Kelly, states that the audit work papers didn't include documentation that Mr. Friehling: -- had conducted an independent verification of Bernard L. Madoff Investment's assets, -- had examined a bank account through which billions of dollars in client funds flowed, or -- had verified the purchase and custody of securities by the firm. The SEC said in court documents, "Friehling and F&H did not perform anything remotely resembling an audit of BMIS and, critically, did not perform procedures to confirm that the securities BMIS purportedly held on behalf of its customers even existed." Citing the SEC, WSJ relates that the financial statements portrayed Bernard L. Madoff Investment as "a financially sound broker-dealer." According to WSJ, prosecutors claimed that Bernard L. Madoff Investment paid Mr. Friehling $12,000 to $14,500 per month for his services between 2004 and 2007. The SEC alleged that Mr. Friehling and his firm received $186,000 per year in fees from Bernard L. Madoff Investment for providing the audit work and bookkeeping services for Mr. Madoff and various Madoff family members. Mr. Friehling and his accounting firm obtained "ill-gotten gains" through compensation paid by Mr. Madoff and Bernard L. Madoff Investment and by withdrawing "millions of dollars from accounts" held at Madoff's firm in the name of Mr. Friehling and his family members, WSJ states, citing the SEC. Mr. Kelly said in court documents that Mr. Friehling or his wife maintained a client account at Bernard L. Madoff Investment from the early 1980s to the present. WSJ, citing the SEC, relates that accounts held by Mr. Friehling and his family at Bernard L. Madoff Investment had a balance of more than $14 million as of November 30, 2008, and withdrawals from the largest account totaled more than $5.5 million since 2000. Prosecutors said that Bernard L. Madoff Investment had 4,800 client accounts as of November 30, 2008, WSJ reports. The firm issued on December 1, 2008, account statements claiming those client accounts had a balance of $64.8 billion as of the end of November, but the accounts actually only held a small fraction of that, WSJ relates, citing the government. Mr. Friehling was released on Wednesday on a $2.5 million bail after a brief hearing in federal court in Manhattan, WSJ states. WSJ relates that Mr. Friehling, 49 years old, could be imprisoned for up to 105 years on all charges if he were convicted and ordered to serve the sentences consecutively. WSJ notes that Mr. Friehling faces up to 20 years on each count of securities fraud and false filings. U.S. Attorney Lev Dassin in a statement, "Although Mr. Friehling is not charged with knowledge of the Madoff Ponzi scheme, he is charged with deceiving investors by falsely certifying that he audited the financial statements of Mr. Madoff's business. Mr. Friehling's deception helped foster the illusion that Mr. Madoff legitimately invested his clients' money." Mr. Dassin said that investigation is ongoing, WSJ states. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on Dec. 15, 2008, the Securities and Exchange Commission charged Bernard L. Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC, with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Madoff's fraud were allegedly at least $50 billion. Also on Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. Mr. Madoff, if found guilty of all counts, would be imprisoned for 150 years, but legal experts expect the actual sentence to be much lower and would still be an effective life sentence for the 70- year-old defendant, WSJ notes. Mr. Madoff, WSJ relates, would also face millions of dollars in possible criminal fines. The report says that Mr. Madoff has been free on bail since his arrest on December 11, 2008. There was no plea agreement with Mr. Madoff in which leniency in sentencing might be recommended, the report states, citing prosecutors. BERNARD L. MADOFF: Trustee to Chase Assets in Gibraltar ------------------------------------------------------- Irving Picard, the trustee overseeing the liquidation of the estate of Bernard L. Madoff Investment Securities Inc., is hiring a lawyer to chase down customers' assets that may be in Gibraltar. Mr. Picard said in a document submitted to the U.S. Bankruptcy Court for the Southern District of New York that issues have arisen overseas, and in Gibraltar in particular, that require the Trustee's participation and representation by counsel. The Trustee has become aware of assets that he believes to be customer property located within that country and requires counsel to pursue such customer property. The Trustee has determined that it will be necessary to engage counsel to represent him in Gibraltar. Such legal counsel will enable the Trustee to carry out his duties in this SIPA Liquidation Proceeding. The Trustee, therefore, proposes to retain and employ the law firm of Altias & Levy as its special counsel with regard to its recovery of customer property in Gibraltar, and any related matters as directed by the Trustee, effective as of March 13,2009. The Trustee seeks to retain Attias & Levy as special counsel because of its knowledge and expertise in the law of Gibraltar. The services of Anias & Levy are necessary and essential to enable the Trustee to execute faithfully his duties. Attias & Levy will be compensated at its normal hourly rates, less a 10% discount. Applications for compensation to Altias & Levy will be filed with this Court pursuant to applicable statutes and rules. Altias & Levy nonnal hourly rates are as follows: Level of Experience Rates ------------------- ------ Partner GBP200 per hour Associate GBP155-175 per hour About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on Dec. 15, 2008, the Securities and Exchange Commission charged Bernard L. Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC, with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Madoff's fraud were allegedly at least $50 billion. Also on Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. Mr. Madoff, if found guilty of all counts, would be imprisoned for 150 years, but legal experts expect the actual sentence to be much lower and would still be an effective life sentence for the 70- year-old defendant, WSJ notes. Mr. Madoff, WSJ relates, would also face millions of dollars in possible criminal fines. The report says that Mr. Madoff has been free on bail since his arrest on December 11, 2008. There was no plea agreement with Mr. Madoff in which leniency in sentencing might be recommended, the report states, citing prosecutors. BILTRITE RUBBER: Provisional Relief under Chapter 15 Granted ------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Ohio has granted RSM Richter Inc., the court-appointed monitor of Biltrite Rubber (1984) Inc. and Biltrite Rubber Inc. in proceedings before the Ontario Superior Court of Justice, provisional relief staying actions and proceedings against the Biltrite Group and their assets in the United States. A further hearing on the extension of the temporary relief will be held on March 23, 2009, at 1:30 p.m. The Biltrite Group's Chapter 15 cases are jointly administered under Case No. 09-31423. As reported in the Troubled Company Reporter on March 18, 2009, Biltrite Rubber Inc. and its Canadian parent filed Chapter 15 petitions on March 12 in Toledo, Ohio, the same day they filed for protection from creditors in the Ontario Superior Court of Justice under Canada's Companies' Creditors Arrangement Act. Bilrite and its parent asked the U.S. Bankruptcy Court for the Northern District of Ohio to recognize the Canadian court as the "foreign main proceeding." If the Chapter 15 petition is approved, the U.S. Court will preclude creditors from taking action in the U.S., in the process forcing even creditors in the U.S. to hash out their problems in front of the judge in Canada. According to Bill Rochelle, the monitor appointed in the Canadian case intends to sell the Biltrite Group's rubber compounds business as a going concern. The monitor is requiring initial bids by April 17. The company was forced to resort to bankruptcy when a sale-and- lease back transaction fell through. The Chapter 15 petition said assets and debts are both less than $50 million. BILTRITE RUBBER: Granted Interim Sec. 362 Stay for U.S. Actions --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Ohio has granted RSM Richter Inc., the court-appointed monitor of Biltrite Rubber (1984) Inc. and Biltrite Rubber Inc. in proceedings before the Ontario Superior Court of Justice, temporary provisional relief under Sections 1519 and 1521 of the Bankruptcy Code staying actions and proceedings against the Biltrite Group and their assets in the United States pursuant to Sec. 362 of the Bankruptcy Code. Sec. 1519 of the Bankruptcy Code allows for interim stay relief while the petition is still pending. Section 1521 of the Bankruptcy Code specifies the relief that may be granted by the bankruptcy court upon recognition. It includes a stay such as that provided in Sec. 362 of the Bankruptcy Code. A further hearing on the extension of the temporary relief will be held on March 23, 2009, at 1:30 p.m. The Biltrite Group's Chapter 15 cases are jointly administered under Case No. 09-31423. As reported in the Troubled Company Reporter on March 18, 2009, Biltrite Rubber Inc. and its Canadian parent filed Chapter 15 petitions on March 12 in Toledo, Ohio, the same day they filed for protection from creditors in the Ontario Superior Court of Justice under Canada's Companies' Creditors Arrangement Act. Bilrite and its parent asked the U.S. Bankruptcy Court for the Northern District of Ohio to recognize the Canadian court as the "foreign main proceeding." If the Chapter 15 petition is approved, the U.S. Court will preclude creditors from taking action in the U.S., in the process forcing even creditors in the U.S. to hash out their problems in front of the judge in Canada. According to Bill Rochelle, the monitor appointed in the Canadian case intends to sell the Biltrite Group's rubber compounds business as a going concern. The monitor is requiring initial bids by April 17. The company was forced to resort to bankruptcy when a sale-and- lease back transaction fell through. The Chapter 15 petition said assets and debts are both less than $50 million. BLB MANAGEMENT: Moody's Issues Ca Rating; Forbearance Lapses ------------------------------------------------------------ According to a report by Bloomberg's Bill Rochelle, Moody's Investors Service has issued, in a credit opinion, a Caa3 first- lien bank rating, a Ca corporate rating, and a C rating on the second-lien debt for BLB Management Services Inc. The forbearance agreement lapsed with regard to the interest payments BLB isn't making on its second-lien debt, Moody's said. BLB is a joint venture whose operating subsidiary UTGR Inc. owns the Twin River racino near Providence, Rhode Island. The participants in the joint venture are Kerzner International Ltd., Starwood Capital Group LLC, and Waterford Group LLC. BRAY & GILLESPIE: Wants to Woo Support for Plan Until June 1 ------------------------------------------------------------ Bray & Gillespie Management, LLC, et al., ask the U.S. Bankruptcy Court for the Middle District of Florida to extend to June 1, 2009, their exclusive period to solicit acceptances of their Plan of Reorganization. The Debtors filed their Plan of Reorganization on January 9, 2009. The Debtors tell the Court that the extension of the exclusive solicitation period is necessary to enable them to discuss the Plan's viability and to garner support for the Plan from both secured and unsecured creditors. As reported in the Troubled Company Reporter on February 11, 2009, the Court has set a March 23, 2009 hearing to consider the adequacy of Debtors' disclosure statement filed in support of the Debtors' Joint Plan of Reorganization. A full-text copy of the Disclosure statement is available at: http://bankrupt.com/misc/Bray&GillespieDSpart1.pdf http://bankrupt.com/misc/Bray&GillespieDSpart2.pdf http://bankrupt.com/misc/Bray&GillespieDSpart3.pdf Based in Daytona Beach, Florida Bray & Gillespie Management, LLC - - http://www.brayandgillespie.com-- and its debtor-affiliates are engaged in the business of renovating and redeveloping resort properties along Florida's Atlantic coastline. The Company owns over six miles of ocean property from Daytona Beach to Ormond Beach. B&G Management operates a total of 24 hotels located in Volusia County which are either affiliates or related companies. B&G Management is owned by partners Charles A. Bray and Joe Gillespie. Bray & Gillespie Management, LLC and 78 of its debtor-affiliates filed separate petitions for Chapter 11 relief on Sept. 12, 2008 (Bankr. M.D. Fla. Lead Case No. 08-05473). Jimmy D. Parrish, Esq., Marianne L. Dorris, Esq., R. Scott Shuker, Esq. at Latham Shuker Eden & Beaudine LLP, represent the Debtors as counsel. Peter N. Hill, Esq., at Wolff Hill McFarlin & Herron PA, represent the Official Creditors Committee as counsel. In its petition, Bray & Gillespie Management, LLC disclosed assets of $1 million to $10 million and debts of $1 million to $10 million. BRIGHAM EXPLORATION: Liquidity Concerns Cues S&P's Junk Rating -------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its corporate credit rating on Brigham Exploration Co. to 'CCC+' from 'B-'. The outlook is developing. As a result of the lower corporate credit rating, S&P lowered the issue-level rating on the company's senior unsecured debt to 'CCC' from 'CCC+', while leaving the recovery rating at '5', indicating modest (10% to 30%) recovery in the event of a payment default. If the company's capital structure changes, or upon receipt of updated reserve information, S&P's simulated default and recovery analysis is subject to reevaluation. "The downgrade reflects our concerns about Brigham's liquidity given that Brigham fully drew down its $145 million borrowing- based revolving line of credit at year-end 2008," said Standard & Poor's credit analyst Amy Eddy. The borrowing base is redetermined semiannually, with the next redetermination commencing in April 2009. Because commodity prices and reserve levels are the key factors in a borrowing base calculation, and commodity prices have declined rapidly since the last redetermination, S&P is concerned that Brigham's facility could be reduced. Any reduction to this facility could quickly impair the company's liquidity. As of March 10, 2009, the company had approximately $33 million of cash. Although the company is pursuing asset sales, which could enhance the company's liquidity position, given the uncertainty surrounding timing and proceeds, this is not currently factored into the rating. CANWEST MEDIA: Nonpayment of Interest Cues S&P's Rating Cut to D ---------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered the corporate credit rating to 'D' from 'CCC' and the senior subordinated debt rating to 'D' from 'CC' on Canwest Media Inc. At the same time, S&P affirmed the 'CCC+' senior secured debt rating on Canwest Media's wholly owned subsidiary Canwest Limited Partnership. In addition, S&P affirmed the 'CC' senior subordinated debt rating on Canwest LP. The recovery ratings on all debt obligations are unchanged. "The downgrade follows Canwest Media's nonpayment of US$30.4 million in interest expense due March 15 on its 8% senior subordinated notes due 2012," said Standard & Poor's credit analyst Lori Harris. "In the unlikely event that the company makes the payment within the 30-day cure period, S&P could raise the ratings," Ms. Harris added. The interest payments on Canwest LP's senior secured and senior subordinated debt remain current, hence S&P haven't lowered the ratings on these issues to 'D'. Canwest Media disclosed that it would like to complete a recapitalization of the business. The company's senior secured lenders have extended a previously approved waiver of certain borrowing conditions, including compliance with financial covenants, to April 7, 2009, to enable the company to continue negotiations regarding the potential recapitalization. CARDINAL COMMS: Plan Confirmation Hearing Continued to April 24 --------------------------------------------------------------- The confirmation hearing on the proposed plan of reorganization of Cardinal Communications, Inc., formerly known as USURF America, Inc., has been rescheduled to April 14, 2009, at 2:00 p.m. Unless a party receives direct notice otherwise, all deadlines for voting or filing objections remain unchanged. As reported in the Troubled Company Reporter on February 26, 2009, the voting deadline is March 23, 2009, at 4:00 p.m. Central Time. Objections to the Plan, if any, are due on or before March 23, 2009, at 4:00 p.m. Central time. A full-text copy of the Debtor's Plan of Reorganization, dated as of Jan. 19, 2009, is available at: http://bankrupt.com/misc/CardinalComms.PlanofReorganization.pdf Headquartered in Broomfield, Colorado, Cardinal Communications, Inc. provides voice, video, and data broadband networks for residential and business applications in the United States. It operates through two segments, Communications Services and Real Estate. The company was incorporated in 1996 under the name Media Entertainment, Inc. and changed it name to USURF America, Inc. in 1999. Subsequently, it changed its name to Cardinal Communications, Inc. in 2005. On December 31, 2008, Cardinal Communications Inc filed a voluntary petition for reorganization under Chapter 11 (Bankr. N.D. Tex. Case No. 08-20693). Roger S. Cox, Esq., at Sanders Baker PC, in Amarillo, Texas, represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed assets of between $100,000 and $1,000,000, and debts of between $1,000,000 and $100,000,000. The Debtor did not file a list of its 20 largest unsecured creditors. CARRIAGE SERVICES: Moody's Downgrades Liquidity Rating ------------------------------------------------------ Moody's Investors Service downgraded the speculative grade liquidity rating of Carriage Services, Inc. to SGL-3 from SGL-2. The SGL-3 rating indicates Moody's view that the company's liquidity profile is now adequate. However, the change to SGL-3 from SGL-2 reflects Moody's concern that the company's liquidity profile has weakened given the limited cushion under the financial covenants governing the credit facility. Moody's is particularly concerned over the March 2009 quarter given expectations for a year-over-year EBITDA decline and a tightening of the fixed charge requirement. The rating change also reflects the pending maturity of the revolving credit facility in April 2010. The SGL-3 rating is supported by Moody's expectation for positive free cash flow over the next twelve months. These ratings remain unchanged: -- Corporate family rating at B2; -- Probability-of-default rating at B2; -- $130 million 7.875% senior unsecured notes due 2015 at B1 (LGD3, 36%). The ratings outlook remains stable. The last rating action was on September 22, 2006 when Moody's assigned a B2 probability-of-default rating to Carriage and upgraded its senior unsecured notes to B1 from B2. Headquartered in Houston, Texas, Carriage Services, Inc. is a leading provider of death care services in the United States. The company operates two businesses: funeral homes and cemeteries, which currently account for approximately 75% and 25% of sales, respectively. The company reported sales of $177 million for the fiscal year ended December 31, 2008. CHEMTURA CORP: U.S. Units File Chapter 11; Has $400MM DIP Loan -------------------------------------------------------------- Chemtura Corporation and 26 of its U.S. affiliates have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. Chemtura's non-U.S. subsidiaries were not included in the filing and will not be subject to the requirements of the U.S. Bankruptcy Code. Chemtura's U.S. and worldwide operations are expected to continue without interruption during the restructuring process. Craig A. Rogerson, Chemtura's Chairman, President and Chief Executive Officer, said, "Like other companies in our industry and around the world, Chemtura's order volumes have declined markedly in recent months due to the impact of the global economic recession on our customers and the industries they serve. This has led to a significant decrease in our liquidity and cash flow. Despite our efforts to increase liquidity, including through the potential sale of a business, our reduced liquidity position, combined with the anticipated expiration of our bank waiver, led us to determine that a court-supervised restructuring was the best course of action. Through this process, we will continue to focus on operating our business while continuing our efforts to strengthen our balance sheet and gain financial flexibility in order to position Chemtura as a strong, viable, and profitable competitor in the specialty chemicals marketplace." $400-Mil. DIP Facility from Citibank Chemtura has received a commitment for up to $400 million in debtor-in-possession financing from Citibank, N.A., as administrative agent. Upon Court approval, the DIP financing, combined with cash from the Company's ongoing operations, will be used to support the business during the Chapter 11 process. In addition, the Company anticipates that it will continue to meet its obligations going forward to its employees, customers and suppliers. "Chemtura has a solid, diverse portfolio of businesses with strong operations around the world, and our lenders have shown tremendous confidence in our business by providing additional funding," Mr. Rogerson said. "We look forward to working together with all of our stakeholders to complete a successful financial restructuring. Our worldwide operations are expected to continue without interruption throughout the restructuring process, and Chemtura remains committed to providing our customers with the highest quality products and services. We appreciate the ongoing dedication of all our employees, whose hard work is critical to our success and the future of the Company. I would also like to thank our customers, suppliers and business partners for their continued support during this process." On December 11, 2008, in response to declining order volumes, the Company has taken a number of actions to reduce costs and improve liquidity, including realigning its businesses into strategic business units, suspending the payment of dividends, reducing inventories, reducing fixed costs by $50 million, adjusting plant production rates to meet reduced customer demand, aggressively managing working capital and establishing a new Executive Committee to oversee these initiatives. On February 25, 2009, the Company announced plans to further reduce inventories and to restrict capital expenditures to approximately $60 million during fiscal year 2009. Chemtura will file a series of motions with the Court to ensure the continuation of normal operations, including requesting Court approval to continue paying employee wages and salaries and providing employee benefits without interruption. The Company has also asked for authority to continue honoring all current customer policies and programs to ensure that the restructuring process will not negatively affect its customers. The Company expects that the Court will approve these requests. During the Chapter 11 process, suppliers will be paid in full for all goods and services provided after the filing date as required by the Bankruptcy Code, and Chemtura has taken steps to ensure continued supply of goods and services to its customers. As reported by the Troubled Company Reporter on January 21, 2009, Bloomberg News had said Chemtura Corp., and industry peers Ineos Group Holdings, Georgia Gulf Corp. are crashing on a mountain of takeover debt and may follow Lyondell Chemical Co. into bankruptcy, based on the trading in their bonds. As to Ineos, Georgia Gulf and Chemtura, Bloomberg said the combination of $11.7 billion in debt, frozen credit markets and the global recession are forcing the companies to negotiate with creditors to loosen terms of their loans. A glut in supplies that drove prices of polypropylene down by half since October will make it even harder for plastics makers to meet debt payments, just as manufacturers in the Middle East add millions of tons of new supplies. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. * * * The TCR said February 9 that Moody's Investors Service lowered Chemtura's Corporate Family Rating to B3 from B2, its PDR to Caa1 from B2 and lowered the company's outstanding debt ratings to B3. The ratings of Chemtura remain under review for possible downgrade. Despite the recent signing of $150 million three year U.S. accounts receivable facility, Moody's remain concerned over Chemtura's tight liquidity as evidenced by the maturity of the waiver on the revolving credit facility on March 30, 2009, and upcoming $370 million debt maturity due in early July 2009. The TCR said on February 17 that Standard & Poor's Ratings Services revised its ratings on Chemtura's senior unsecured notes following an update to S&P's recovery analysis which incorporates the company's $150 million reduction in its revolving credit facility in January 2009 and following the company's Feb. 4, 2009, press release regarding the subsidiary guarantee status for each of its three senior unsecured note issuances. Standard & Poor's affirmed its 'CCC' (same as the corporate credit rating) issue- level rating on Chemtura's 6.875% senior notes due 2016. The recovery rating on this issue was revised to '3' from '4', indicating S&P's expectation for meaningful (50%-70%) recovery in the event of a payment default. CHEMTURA CORPORATION: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: Chemtura Corporation 2711 Centerville Road, Suite 400 Middlebury, CT 19808 Bankruptcy Case No.: 09-11233 Debtor-affiliates filing subject to Chapter 11 petitions: Entity Case No. ------ -------- Aqua Clear Industries, LLC 09-11231 A&M Cleaning Products, LLC 09-11234 ASCK, Inc. 09-11235 ASEPSIS, Inc. 09-11236 BioLab Company Store, LLC 09-11237 BioLab Franchise Company, LLC 09-11238 Bio-Lab, Inc. 09-11239 BioLab Textile Additives, LLC 09-11240 CNK Chemical Realty Corporation 09-11241 Crompton Colors Incorporated 09-11242 Crompton Holding Corporation 09-11244 Crompton Monochem, Inc. 09-11245 GLCC Laurel, LLC 09-11246 Great Lakes Chemical Corporation 09-11247 Great Lakes Chemical Global, Inc. 09-11249 GT Seed Treatment, Inc. 09-11250 HomeCare Labs, Inc. 09-11251 ISCI, Inc. 09-11252 Kem Manufacturing Corporation 09-11253 Laurel Industries Holdings, Inc. 09-11254 Monochem, Inc. 09-11255 Naugatuck Treatment Company 09-11256 Recreational Water Products, Inc. 09-11257 Uniroyal Chemical Company Limited (Delaware) 09-11258 Type of Business: With 2008 sales of $3.5 billion, Chemtura is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. See: http://www.chemtura.com/ Chapter 11 Petition Date: March 18, 2009 Court: Southern District of New York (Manhattan) Debtor's Counsel: M. Natasha Labovitz, Esq. nlabovitz@kirkland.com Kirkland & Ellis LLP Citigroup Center 153 East 53rd Street New York, NY 10022 Tel: (212) 446-4907 Fax: (212) 446-4900 Special Counsel: Wolfblock LLP Auditor and Accountant: KPMG LLP Investment Banker: Lazard Freres & Co. Strategic Communications Advisor: Joele Frank, Wilkinson Brimmer Katcher Business Advisor: Alvarez & Marsal LLC Chief Restructuring Officer: Ray Dombrowski Claims Agent: Kurtzman Carson Consultants LLC The Debtors' financial condition as of December 31, 2008: Total Assets: $3.06 billion Total Debts: $1.02 billion The Debtors did not file a list of 20 largest unsecured creditors. The petition was signed by Craig A. Rogerson, president, chairman and chief executive officer. CHOCTAW GENERATION: Moody's Downgrades Cert. Rating to 'Ba3' ------------------------------------------------------------ Moody's Investors Service has downgraded the rating for Choctaw Generation Limited Partnership's (the Project) Pass Through Trust Certificates to Ba3 with a negative outlook. This concludes the review commenced on December 5, 2008. According to Moody's analyst Aaron Freedman, "the downgrade reflects the sharp deterioration of the project's financial performance in recent years due to continued operating difficulties. The negative outlook considers the possibility that the project may be forced to draw on its rent reserve fund in conjunction with its next scheduled rent payment in June." If a draw on the rent reserve is made, the rating is likely to be downgraded further. Following two years of declining rent coverage in 2006 (1.19x) and 2007 (0.94x), Moody's currently expects rent coverage for 2008 to be around .66x based upon nine months' actual results and a forecast for the final three months of the year due to the significant level of unbudgeted operating and capital expenditures incurred last year. This is lower than was expected just three months ago because of a $2.5mm shortfall in capacity payments from TVA in the fourth quarter, though the project still hopes to recover these amounts. The short payment was due to the extension of last fall's scheduled outage. The low 2008 coverage reflected an approximately $11mm cash flow shortfall which was funded in part by cash from the balance sheet, as a result of which cash balances declined from $12.8mm as of 12/31/2007 to $6.1mm on 12/31/2008 according to management. This reduced cash position does not fully incorporate a portion of the costs related to the fall outage that remained unpaid at year end. However, the project's sponsor contributed an additional $7.2 million in capital in the form of deeply subordinated debt in January and February 2009, demonstrating its commitment to the project and helping to temporarily improve its liquidity position. Because of the plant's continued operating difficulties, the project no longer expects to recover $2.1 million in on peak delivery deficiency penalties it occurred last year and revenues will be correspondingly lower than previously anticipated. The drop in revenues will be offset by $3.5 million in discretionary capital expenditures that management has elected to defer. As a result, rent coverage is still expected to improve somewhat for the first half of 2009. However, it is still not likely to exceed 1.0x even if the project achieves its forecast, which it has consistently failed to do in recent years due to ongoing operating challenges and overly optimistic budgeting. Though the current forecast appears to be relatively conservative, these trends appear likely to continue -- the plant has already experienced several brief forced outages during recommissioning following its extended scheduled outage last fall and it has not yet been able to complete post-outage performance testing. Management has indicated that it may have to access the project's rent reserve, which is equal to six months' rent or $17.8mm as of 12/31/08, to make the project's June 30, 2009 rent payment. Moody's note that the rent reserve requirement is satisfied by a letter of credit that is recourse to the sponsor, as are two letters of credit totaling $6.4 million posted by the project and its immediate parent in favor of the offtaker. As a result, the sponsor has already committed up to another $24 million to the project. Nevertheless, in the event of a cash flow shortfall, failure by the sponsor to provide additional financial support sufficient to preclude a draw on the reserve would likely result in further rating action. The plant's financial performance is expected to improve in the second half of 2009 due in part to a $4 million decrease in the semiannual rent payment. Based upon the operating budget as adjusted for the planned deferral of another $7.5 million in discretionary capex, it appears that coverage could increase up to 1.5x. However, the budget was based upon preliminary expectations for improvement in the facility's availability of nearly 10%, to 94% from approximately 85% in 2008, following last year's significant capital expenditures. Currently, management only expects a 6% improvement in the availability factor (as well as a 3% reduction in heat rate). In addition, the plant's operating challenges have been exacerbated by continuing problems with wet coal. While there are adjustments in the PPOA pricing provisions to account for this, it is unclear if they provide the project with adequate relief. Given this, there is a strong possibility that the project will again fail to meet its financial projections for the year. However, Moody's believes the project should be capable of achieving rent coverages of 1.2x-1.3x on a sustainable basis, which would be consistent with the current rating. Notwithstanding any expected efficiency gains, management does not anticipate that the plant will come close to achieving the project's proforma heat rate of 10,200 btu/kWh in the near-to- medium term due to a fundamental design flaw in the steam turbine, which has meaningfully impaired the project's operating efficiency and led to continued under recovery of fuel costs. Achieving the proforma heat rate would require extensive and costly upgrades, the funding for which is not currently available. While the project received a settlement payment from Toshiba, the manufacturer of the steam turbine, these funds have already been used to cover other costs. Furthermore, future operating and financial performance could be impaired as a result of this year's discretionary capital expenditure deferrals; at a minimum, further improvements in performance are likely to be limited in Moody's opinion. The rating could face further downward pressure if the project continues to experience operating difficulties and if it appears that the sponsor is unwilling to provide any additional financial support. Given the negative outlook, it is unlikely that the rating will be upgraded in the near to medium term. However, the outlook could be revised to stable if the project is able to achieve more consistent operations and its financial performance stabilizes with rent coverages of at least 1.2x. The last rating action on Choctaw occurred on December 5, 2008 when the rating was downgraded from Ba1 with a negative outlook to Ba2 and placed under review for possible further downgrade. Choctaw Generation Limited Partnership operates the 440 MW lignite-fired Red Hills Energy Facility located in Choctaw County, Mississippi. The Project sells all the power output of the facility pursuant to the terms of a long-term power purchase agreement to Tennessee Valley Authority (TVA: Aaa). CGLP is indirectly owned by Suez Energy North America, Inc., a subsidiary of GDF SUEZ SA (senior unsecured Aa3). The transaction is structured as a leveraged lease, with the pass through trust certificates secured by lease payments from the Project. CHRYSLER LLC: Insists on Avoiding Bankruptcy; To Skip Bonuses ------------------------------------------------------------- ABIWorld reports that Chrysler LLC insists that the Company will avoid bankruptcy. As reported by the Troubled Company Reporter on March 18, 2009, Chrysler CEO and Chairperson Robert L. Nardelli doubts that the Company could survive a government-sponsored bankruptcy. Chrysler said that it might run out of money without government assistance. The Company is asking the U.S. government for $5 billion in loans in addition to $4 billion it had already received. According to Mike Ramsey at Bloomberg News, Mr. Nardelli said, "I had no sense that they [auto task force] came in with a mandate or preconceived notion" that Chrysler be put into bankruptcy. Steve Rattner, one of President Barack Obama's chief auto advisers, said that bankruptcy for carmakers "is not our goal nor a desirable outcome," Bloomberg states. The TCR reported on March 17, 2009, that Mr. Nardelli said that the partnership with Fiat SpA isn't essential for Chrysler's survival, as the Company can stand on its own without Fiat. Mr. Nardelli admitted that Chrysler would be better off with its Fiat alliance, which would proceed only if the Company gets additional government aid. ABIWorld relates that Chrysler said a proposed deal with the Italian carmaker Fiat could be worth as much as $10 billion. 25 Executives Won't Get Bonus Citing Mr. Nardelli, Greg Gardner at Detroit Free Press reports that Chrysler's top 25 executives have signed a waiver forgoing any severance or bonus as a condition of the Company's $4 billion loan from the U.S. Treasury. Free Press relates that although no new bonuses will be paid in 2009 to the top 25 executives, Chrysler will pay substantial retention bonuses later this year under a plan crafted by DaimlerChrysler in 2007. According to Detroit Free Press, Mr. Nardelli told CNBC, "I think the entire organization is acting in a very responsible way to make sure we are protecting the integrity and the governance of the taxpayers' funds." Chrysler said in a statement, "The portion of the retention payments earned prior to the receipt of the TARP funds ... was reviewed and approved by the U.S. Treasury as part of Chrysler LLC's loan agreement." Chrysler Needs More Aid for Finance Arm Bloomberg, citing Mr. Nardelli, states that Chrysler has asked the U.S. Treasury for more aid for its finance arm, Chrysler Financial, to stimulate auto lending. The report quoted Mr. Nardelli as saying, "We have gone back to Treasury and said 'we need to re-up that amount.' We saw the evidence of how that works." According to the report, Mr. Nardelli said that providing more funds to Chrysler Financial may boost sales as much as 20% by expanding the range of clients who could qualify for loans. The repot state that Mr. Nardelli said that Chrysler started seeing benefits in sales to individuals in February from a $1.5 billion Treasury loan to Chrysler Financial. Mr. Nardelli said that the Treasury is working with Chrysler's secured bank lenders to reduce indebtedness by converting the loans into equity in Chrysler, Bloomberg reports. The talks haven't progressed because the banks, which include JPMorgan Chase & Co. and Citigroup Inc., have little incentive to trade for an ownership stake in Chrysler, Bloomberg relates, citing people familiar with the matter. 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. CIB MARINE: Asks TruPS Holders to Accept Equity-for-Debt Swap ------------------------------------------------------------- On February 20, 2009, CIB Marine Bancshares, Inc. -- the owner of Marine Bank in Wauwatosa, Wisconsin, and Central Illinois Bank in Champaign, Illinois -- proposed to restructure approximately $98.6 million of indebtedness underlying trust preferred securities issued in four series through four statutory trusts sponsored by CIB Marine. The Proposed Restructuring, if effected, will: * prevent CIB Marine from defaulting on the underlying Debentures issued to the four trusts; * provide CIB Marine with a more stable capital structure; * replace the underling Debentures with approximately $94.9 million in aggregate liquidation preference of newly-issued 7% Fixed Rate Noncumulative Preferred Stock in CBI Marine, thereby eliminating $98.6 million of indebtedness from CIB Marine's balance sheet and significantly improving its regulatory capital position; and * substitute noncumulative 7% dividends (on the New Preferred Stock) for higher-rate cumulative interest (on the Debentures), to improve the Company's operating results. By removing the short-term potential for default and improving its balance sheet, regulatory capital position and operating results, President & CEO John P. Hickey, Jr., explained, CIB Marine hopes to position itself to seek a business combination transaction on terms that could be more advantageous and result in greater value for both the holders of the Existing TruPS, as well as common shareholders, although, Ms. Hickey added, there can be no assurance that this strategy will be successful or that a business combination will occur at any particular time or at all. On March 16, 2009, CIB Marine provided the Trustees of the statutory trusts with a written plan to restructure the TruPS on the terms outlined in February for their use in soliciting consents from the holders of the TruPS. In the Consent Solicitation, CBI Marine established a deadline of April 10, 2009, for TruPS holders to provide their consent to the Plan of Restructuring, although the Company may extend that deadline at its discretion. CBI Marine indicates that the Plan of Restructuring will not be consummated unless the holders of all four series of TruPS give their consent. Between March of 2000 and September of 2002, CBI Marine issued approximately $61.9 million of junior subordinated debentures to four separate statutory trusts in conjunction with the offering of certain trust preferred securities by the Trusts. Pursuant to the terms of the indentures governing the Debentures, CIB Marine is permitted to defer interest payments on the Debentures for up to 20 quarters. In accordance with a written agreement entered into between CIB Marine and its primary federal regulator, it began deferring such interest payments on each series of the Debentures in 2004. The Company took full advantage of the deferral right under the Indentures and the final permissible interest deferral period on the first of such Debentures expired on February 22, 2009. CIB Marine's failure to bring all interest current by March 22, 2009, absent a waiver or forbearance agreement, will constitute a default under each of the Indentures. CIB Marine has made it clear that it doesn't have sufficient cash to make the required interest payments on the Debentures, nor do the Trusts have sufficient cash to make payments on the TruPS. Don Dodson at The News-Gazette notes that CIB Marine hired the investment banking firm of Stifel, Nicolaus & Co. some time ago to help evaluate strategic options, including a sale of the company. "The banks continue to be well-capitalized, the consent solicitation is out, and we're working with advisers on all contingencies," Mr. Hickey told Mr. Dodson Tuesday. COLIBRI GROUP: Employees Will Protest Auction of Assets ------------------------------------------------------- The Associated Press reports that The Colibri Group's former workers will protest an auction of the Company's assets. The AP relates that Colibri is set to sell its high-end cigarette lighters, cuff links, clocks, and other items on Thursday at its former East Providence headquarters. According to The AP, proceeds from the sale would be used to pay Colibri's creditors, HSBC Bank and Sovereign Bank, which are each owed $14 million. Colibri's former employees, The Providence Journal states, said that they should get some money as they are owed 60 days pay and two months of medical coverage that they claim was withheld when the Company shut down without notice in January 2009. Colibri Group is known in the cigar industry for its torch lighters. It is based in Providence, Rhode Island. As reported by the Troubled Company Reporter on January 20, 2009, Colibri Group shut down its operation, laid off about 280 workers, and went under receivership. CORNERSTONE-ORLANDO: Courts Extends Plan Deadline to June 5 ----------------------------------------------------------- Cornerstone-Orlando LLC has received from the U.S. Bankruptcy Court for the Middle District of Florida a June 5 extension of its exclusive period to file its Chapter 11 plan. With an extension, the Company will be entitled to propose a new plan with the Court, with out threats of a competing plan from other parties. According to Bloomberg's Bill Rochelle, Cornerstone-Orlando was unable to confirm its proposed Chapter 11 plan when a necessary tenant couldn't be found for its 149,000-square-foot office and condominium complex in Orlando, Florida. The Plan was designed to pay unsecured creditors, which, Mr. Rochelle says, is rare at these times in real estate bankruptcies where unsecured creditors are completely wiped out. The Plan called for payment to unsecured creditors half in cash when the plan becomes effective and the other half six months later. The Plan also proposed to cancel all existing equity interest in the Company and issue new equity to Orlando Medical Exchange LLC for about $2 million will be canceled under the Plan. LBUBS 2007- C2 Lake Eola Park Inc., which previously sought a foreclosure action against the Company, to seek payment of its $24.9 million in secured claims, will be paid $500,000, and retain its claim against the Company, Bloomberg said. Bill Rochelle previously said that LBUBS will be permitted to appoint a receiver and seek foreclosure on the property of the Company if it failed to obtain confirmation. Headquartered in Orlando, Florida, Cornerstone-Orlando LLC own a 149,000-square-foot office and condominium complex in Orlando, Florida. The Debtor filed for bankruptcy protection on Nov. 10, 2008 (Bankr. M.D. Fla., Case No.) Elizabeth A. Green, Esq., at Latham Shuker Eden & Beaudine LLP, has been tapped as bankruptcy counsel. In its petition, the Debtor listed assets of $20,000,000 and debts of $26,164,688. CRUSADER ENERGY: In Talks With Lenders on Likely Covenant Breach ---------------------------------------------------------------- Crusader Energy Group Inc. said it continues to review its strategic alternatives in connection with its efforts to address its $5 million borrowing base deficiency under its senior credit facility. Pursuant to the terms of the credit facility, the Company has notified the lenders that it has elected to address the borrowing base deficiency through six equal monthly payments of $833,000, with the first installment due on March 25, 2009. However, given the significant decrease in commodity prices and resulting actual and forecasted cash flow and financial results for 2009, management anticipates that the Company may not be able to remain in compliance with financial and other covenants under its credit facilities. The Company is in discussions with the lenders under its senior credit facility and the holders of its $249,750,000 second lien credit facility regarding possible solutions to address the borrowing base deficiency and current financial concerns. The alternatives include a potential recapitalization of Crusader Energy's balance sheet, continued cost reductions, continued reduction or elimination of its 2009 drilling budget, the sale of assets and the sale of the Company. The Company said if it is not able to achieve an acceptable resolution with its first and second lien holders in a timely manner, management anticipates that the report of KPMG LLP, the Company's independent public accountants, relative to the Company's 2008 consolidated financial statements will contain an explanatory paragraph indicating substantial doubt about the Company's ability to continue as a going concern, and, even if the Company and its lenders reach agreement on a proposed strategy to address these matters, the Company may be forced to seek protection under Chapter 11 of the United States Bankruptcy Code to effect any strategic alternative that it elects to pursue. The Company on Wednesday announced that, as part of its ongoing efforts to reduce its general and administrative budget, it has effected 34% reduction in personnel, including the Company's Senior Vice President and Chief Financial Officer, John G. Heinen, and Senior Vice President and Chief Operating Officer, Paul E. Legg. Messrs. Heinen and Legg, who had planned to retire during the Company's 2009 fiscal year, each voluntarily resigned in connection with the Company's effort to reduce its workforce. The majority of Mr. Heinen's duties will be assumed by Roy Fletcher who currently serves as vice president and controller of the Company. The COO responsibilities will be shared with David Le Norman, the company's CEO, and Charles Paulson, the vice president of engineering for the Company. David D. Le Norman, Crusader's President and CEO, said, "Both John and Paul were instrumental in building several companies with me over the years and will be greatly missed by myself and all the members of the Crusader family. Upon their departure, Roy Fletcher and Charlie Paulson will join me and Chip Mullens, General Counsel, on the senior management team going forward. Roy has significant public accounting experience and Charlie's over 25 years of engineering experience will add to and provide a core group to execute Crusader's strategic plans. Furthermore, we also have been able to preserve the majority of our technical staff including engineers, geologists, land, and accounting professionals to support the future achievement of Crusader's agenda." About Crusader Energy Oklahoma City-based Crusader Energy Group Inc. -- http://www.crusaderenergy.com-- is an oil and gas company with assets focused in various producing domestic basins. The Company has a primary focus on the development of unconventional resource plays which includes the application of horizontal drilling and cutting edge completion technology aimed at developing shale and tight sand reservoirs. The Crusader assets are located in various domestic basins, the majority of which are in the Anadarko Basin and Central Uplift, Ft. Worth Basin Barnett Shale, Delaware Basin, Val Verde Basin, and the Bakken Shale of the Williston Basin. DANA CORP: Files Post-Confirmation Report for Dec. 31 Quarter ------------------------------------------------------------- Dana Holding Corp. and its reorganized debtor-affiliates disclose that they made cash payments aggregating $491,085,000 for claims distribution and operations from October 1 to December 31, 2008: Reorganized Debtor Amount ------------------ -------------- Dana Corporation $491,085,000 Dana Risk Management Services, Inc. 464,000,000 EFMG, LLC 152,000,000 Torque-Traction Manufacturing Technologies, LLC 17,000,000 Torque-Traction Technologies, LLC 9,000,000 DTF Trucking Inc. 8,000,000 Coupled Products, Inc. 6,000,000 Torque-Traction Integration Technologies, Inc. 6,000,000 Reinz Wisconsin Gasket, LLC 5,000,000 Long USA, LLC 3,000,000 BWDAC, Inc. 2,000,000 Hose & Tubing Products, Inc. 2,000,000 United Brake Systems, Inc. 2,000,000 Dana Information Technology, LLC 1,000,000 Glacier Vandervell, Inc. 1,000,000 Pursuant to their Reorganization Plan, the Reorganized Debtors issued and set aside approximately 28,000,000 additional shares of Dana common stock for future distribution to holders of allowed unsecured non-priority claims in Class 5B under the Plan. The claim amount related to the 28,000,000 shares was estimated to be below $700,000,000. The Reorganized Debtors relate that since their emergence and through November 14, 2008, they have issued an additional 23,000,000 shares for allowed claim, increasing the total shares issued to 93,000,000 for unsecured claims of approximately $2,228,000,000. The corresponding decrease in disputed claims reserve leaves 5,000,000 shares valued in reorganization at $122,000,000. Since the Effective Date, the Reorganized Debtors have made payments of $100,000,000 for administrative claims, priority tax claims, settlement pool claims and other classes of allowed claims of $212,000,000. The remaining cash payments of $112,000,000 are primarily federal, state, and local tax claims and are expected to be made in 2009. Except as specifically provided in the Plan, distributions under the Plan were in exchange for, and in complete satisfaction, discharge and release of, all claims and third-party ownership interests in the Debtors arising on or before the Effective Date, including any interest accrued on those claims from and after the filing date, the Reorganized Debtors note. About Dana Holding Corporation Based in Toledo, Ohio, Dana Corporation -- http://www.dana.com/ -- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Dana has facilities in China in the Asia-Pacific, Argentina in the Latin-American regions and Italy in Europe. The Company and its affiliates filed for chapter 11 protection on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Nov. 30, 2007, the Debtors listed $7,131,000,000 in total assets and $7,665,000,000 in total debts resulting in a shareholders' deficit of $534,000,000. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represented the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, served as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners served as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represented the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC served as counsel to the Official Committee of Non-Union Retirees. The Debtors filed their Joint Plan of Reorganization on Aug. 31, 2007. On Oct. 23, 2007, the Court approved the adequacy of the Disclosure Statement explaining their Plan. Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York entered an order confirming the Third Amended Joint Plan of Reorganization of the Debtors on Dec. 26, 2007. The Debtors' Third Amended Joint Plan of Reorganization was deemed effective as of Jan. 31, 2008. Dana Corp., starting on the Plan Effective Date, operated as Dana Holding Corporation. (Dana Corporation Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on Jan. 15, 2009, Standard & Poor's Ratings Services lowered its ratings on Dana Holding Corp., including the corporate credit rating, which was lowered to 'B' from 'B+'. The ratings were also removed from CreditWatch, where they had been placed with negative implications on Nov. 13, 2008. The outlook is negative. "The downgrade reflects our view that very weak market conditions in most of its business segments in 2009 will hinder the company's post-bankruptcy restructuring efforts," said Standard & Poor's credit analyst Nancy Messer. "We expect revenues to be reduced by weak auto sales and production in North America, weak auto sales in Europe, and the U.S. recession, which has stalled the recovery of commercial truck sales. Lacking an expanding revenue base, S&P believes the benefit from Dana's ongoing initiative to optimize its manufacturing footprint will fall short of S&P's previous near-term expectations," she continued. For example, for the last three months of 2008, the seasonally adjusted annual rate of light-vehicle sales in the U.S. was below 11 million units, and S&P expects sales in 2009 to be 10 million units, 24% below 2008 actual sales. DANA CORP: Provides Updates to Pending Legal Issues --------------------------------------------------- Dana Holding Corporation provided updates on pending legal proceedings in its Form 10-K for the year ended December 31, 2008, filed with the U.S. Securities and Exchange Commission. * Asbestos Claimants' Appeal to Confirmation Order During January 2008, both an Ad Hoc Committee of Asbestos Personal Injury Claimants as well as an asbestos claimant, Jose Angel Valdez, filed notices of appeal of the Confirmation Order. The United States District Court for the Southern District of New York dismissed both appeals. Mr. Valdez, and then another plaintiff, attempted to appeal to the Second Circuit Court of Appeals. These matters were dismissed by the Court of Appeals. All appeals of the Confirmation Order have ended. * Class Action Lawsuit and Derivative Actions A securities class action entitled Howard Frank v. Michael J. Burns and Robert C. Richter was filed in October 2005 in the U.S. District Court for the Northern District of Ohio, naming Dana's former Chief Executive Officer, Michael J. Burns, and former Chief Financial Officer, Robert C. Richter, as defendants. In a consolidated complaint filed in August 2006, lead plaintiffs alleged violations of the U.S. securities laws and claimed that the price at which Dana's stock traded at various times between April 2004 and October 2005 was artificially inflated as a result of the defendants' alleged wrongdoing. In June 2007, the District Court denied lead plaintiffs' motion for an order partially lifting the statutory discovery stay which would have enabled them to obtain copies of certain documents produced to the Securities and Exchange Commission. By order dated August 21, 2007, the District Court granted the defendants' motion to dismiss the consolidated complaint and entered a judgment closing the case. On November 19, 2008, following briefing and oral arguments on the lead plaintiff' appeal, the Sixth Circuit vacated the District Court's judgment of dismissal on the ground that the decision on which it was based misstated the applicable pleading standard. In doing so, the Sixth Circuit gave no indication of its views as to whether, under the correct pleading standard, it would have affirmed the District Court's judgment. The Sixth Circuit remanded the case to the District Court to consider whether it would still dismiss under the correct articulation of the pleading standard. By Order filed February 11, 2009, the District Court established a schedule for the submission of new briefs on Plaintiff's motion to dismiss the consolidated complaint and scheduled oral arguments on the motion for May 19, 2009. A stockholder derivative action entitled Roberta Casden v. Michael J. Burns, et al. was originally filed in the U.S. District Court for the Northern District of Ohio in March 2006. An amended complaint filed in August 2006 added alleged non- derivative class claims on behalf of holders of Dana stock alleging, among other things, that the defendants had breached their fiduciary duties and acted in bad faith in determining to file for protection under the bankruptcy laws. These alleged non-derivative class claims are not asserted against Dana. In June 2006, the District Court stayed the derivative claims, deferring to the Bankruptcy Court on those claims. In July 2007, the District Court dismissed the non-derivative class claims asserted in the amended complaint and entered a judgment closing the case. On January 16, 2009, following briefing and oral argument on the plaintiff's appeal, the Sixth Circuit affirmed the District Court's judgment. * SEC Investigation In September 2005, Dana reported that management was investigating accounting matters arising out of incorrect entries related to a customer agreement in the company's Commercial Vehicle operations, and that the Prior Dana Audit Committee had engaged outside counsel to conduct an independent investigation of those matters as well. Outside counsel informed the SEC of the investigation, which ended in December 2005, the same month that Dana filed restated financial statements for the first two quarters of 2005 and the years 2002 through 2004. In January 2006, Dana learned that the SEC had issued a formal order of investigation with respect to matters related to the restatements. The SEC's investigation is a non-public, fact- finding inquiry to determine whether any violations of the law have occurred. Dana said it is continuing to cooperate fully with the SEC in the investigation. * Ordinary Course Legal Proceedings Dana said it is a party to various pending judicial and administrative proceedings arising in the ordinary course of business, including, among others, proceedings based on product liability claims and alleged violations of environmental laws. Dana said it has reviewed the pending legal proceedings, including the probable outcomes, its reasonably anticipated costs and expenses, the availability and limits of its insurance coverage and surety bonds and its established reserves for uninsured liabilities. * Asbestos Personal Injury Liabilities Dana had approximately 31,000 active pending asbestos personal injury liability claims at December 31, 2008, which is down from 41,000 claims pending at December 31, 2007. In addition, about 16,000 mostly inactive claims have been settled and are awaiting final documentation and dismissal, with or without payment. Dana has accrued $124,000,000 for indemnity and defense costs for settled, pending and future claims at December 31, 2008, compared to $136,000,000 at December 31, 2007. Dana said it used a 15-ear time horizon for its estimate of the liability as of December 31, 2008. Prior to 2006, Dana reached agreements with some of its insurers to commute policies covering asbestos personal injury claims. Dana applies proceeds from insurance commutations to reduce any recorded recoverable amount. At December 31, 2008, Dana had recorded $63,000,000 as an asset for probable recovery from its insurers for the pending and projected asbestos personal injury liability claims, compared to $69,000,000 recorded at December 31, 2007. * Other Product Liabilities Dana had accrued $2,000,000 for non-asbestos product liability costs at December 31, 2008, compared to $4,000,000 at December 31, 2007, with no recovery expected from third parties at either date. * Environmental Liabilities Accrued environmental liabilities at December 31, 2008, were $18,000,000 compared to $180,000,000 at December 31, 2007. The reduction is attributable to the discharge of the environmental claims upon emergence. The discharged claims include claims being addressed through the disputed claims process. One of the larger claims at emergence was a claim involving the Hamilton Avenue Industrial Park (Hamilton) site in New Jersey. Dana had been a potentially responsible party at this site, also known as the Cornell Dubilier Electronics or CDE site, under the Comprehensive Environmental Response, Compensation and Liability Act. Following several months of litigation and settlement discussions, Dana had concluded there was a probable settlement outcome and adjusted the liability at December 31, 2007, to the tentative $126,000,000 settlement amount. In April 2008, we reached a tentative agreement with the U.S. Government providing for an allowed general unsecured claim of $126,000,000. Following the Government's 30-day comment period, the Bankruptcy Court approved the settlement. Dana satisfied the claim in October 2008 with the distribution of 5.2 million shares of its common stock from the disputed claims reserve. * Other Liabilities Related to Asbestos Claims After the Center for Claims Resolution discontinued negotiating shared settlements for asbestos claims for its member companies in 2001, some former CCR members defaulted on the payment of their shares of some settlements and some settling claimants sought payment of the unpaid shares from other members of the CCR at the time of the settlements, including from Dana. Dana said it has been working with the CCR, other former CCR members, its insurers and the claimants over a period of several years to resolve the issues. Through December 31, 2008, Dana had paid $47,000,000 to claimants and collected $45,000,000 with respect to the claims. At December 31, 2008, Dana had a receivable of $2,000,000 for the claims to be recovered. Dana received $20,000,000 in the fourth quarter of 2008 as a result of resolving administrative disputes with several of its insurers. Efforts to recover additional CCR-related payments from surety bonds and other claims are continuing. About Dana Holding Corporation Based in Toledo, Ohio, Dana Corporation -- http://www.dana.com/ -- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Dana has facilities in China in the Asia-Pacific, Argentina in the Latin-American regions and Italy in Europe. The company and its affiliates filed for chapter 11 protection on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Nov. 30, 2007, the Debtors listed $7,131,000,000 in total assets and $7,665,000,000 in total debts resulting in a shareholders' deficit of $534,000,000. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represented the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, served as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners served as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represented the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC served as counsel to the Official Committee of Non-Union Retirees. The Debtors filed their Joint Plan of Reorganization on Aug. 31, 2007. On Oct. 23, 2007, the Court approved the adequacy of the Disclosure Statement explaining their Plan. Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York entered an order confirming the Third Amended Joint Plan of Reorganization of the Debtors on Dec. 26, 2007. The Debtors' Third Amended Joint Plan of Reorganization was deemed effective as of Jan. 31, 2008. Dana Corp., starting on the Plan Effective Date, operated as Dana Holding Corporation. (Dana Corporation Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on Jan. 15, 2009, Standard & Poor's Ratings Services lowered its ratings on Dana Holding Corp., including the corporate credit rating, which was lowered to 'B' from 'B+'. The ratings were also removed from CreditWatch, where they had been placed with negative implications on Nov. 13, 2008. The outlook is negative. "The downgrade reflects our view that very weak market conditions in most of its business segments in 2009 will hinder the company's post-bankruptcy restructuring efforts," said Standard & Poor's credit analyst Nancy Messer. "We expect revenues to be reduced by weak auto sales and production in North America, weak auto sales in Europe, and the U.S. recession, which has stalled the recovery of commercial truck sales. Lacking an expanding revenue base, S&P believes the benefit from Dana's ongoing initiative to optimize its manufacturing footprint will fall short of S&P's previous near-term expectations," she continued. For example, for the last three months of 2008, the seasonally adjusted annual rate of light-vehicle sales in the U.S. was below 11 million units, and S&P expects sales in 2009 to be 10 million units, 24% below 2008 actual sales. DANA CORP: Releases 2008 Annual Report; Has $18 Mln. Net Income --------------------------------------------------------------- Dana Holding Corporation announced its full-year and fourth- quarter 2008 results on Monday. Sales for the full-year 2008 were $8,095 million, down $626 million from $8,721 million in 2007. This decrease was driven primarily by sharply declining vehicle production levels in North America. Including a one-time gain of $754 million related to emergence from Chapter 11 reorganization, net income was $18 million, compared with a net loss of $551 million for 2007. Earnings before interest, taxes, depreciation, amortization, and restructuring (EBITDA) for the full year were $301 million, compared with $450 million in 2007. The decline was due to significantly lower vehicle production, which was partially offset by margin improvements and cost reductions. At year end, Dana had cash balances of $777 million and total liquidity of $866 million. Net debt was $474 million. "We continue to respond to difficult market conditions through aggressive cost-reduction and efficiency actions, comprehensive operational restructuring, and being responsive to our customers," said Chairman and CEO John Devine. "These are unprecedented times that make any projections uncertain. We believe we are taking the difficult actions necessary to survive in the current environment and compete over the long term. There can be no assurances, however, if the global economy deteriorates substantially beyond our planning assumptions." Three-Month Results Sales for the fourth quarter of 2008 were $1,521 million, down $636 million, or 29 percent, from the prior year. Sales were impacted by both sharply declining North American vehicle production and unfavorable currency changes. Fourth-quarter EBITDA was a negative $3 million, compared to $112 million for the same period in 2007. The impact of lower vehicle production drove the reduction in earnings. This decline was partially offset by higher pricing and cost savings from operational improvements. Free cash flow was a negative $50 million for the fourth quarter, compared to $83 million for the prior-year period, primarily due to lower earnings for the quarter. Working capital was a source of $177 million of cash during the quarter, primarily due to lower production volumes. The cash balance at year end also reflects the repayment of $150 million of outstanding principal under the term loan facility to support an amendment to the company's credit agreement. Devine added, "We expect 2009 to be even more challenging than 2008, but we believe Dana is prepared with plans to continue re-sizing our operations, improve operational performance and margins, and maintain adequate liquidity and earnings." Non-GAAP Measures In connection with Dana's emergence from bankruptcy on January 31, 2008, and the application of fresh start accounting in accordance with the provisions of the American Institute of Certified Public Accountants' Statement of Position 90-7, the post-emergence results of the successor company for the 11 months ended December 31, 2008, and the pre-emergence results of the predecessor company for the one month ended January 31, 2008, are presented separately as successor and predecessor results in the financial statements presented in accordance with generally accepted accounting principles (GAAP). This presentation is required by GAAP as the successor company is considered to be a new entity, and the results of the new entity reflect the application of fresh start accounting. A full-text copy of the Reorganized Debtor's 2008 Annual Report for the year ended December 31, 2008, filed with the U.S. Securities and Exchange Commission on Form 10-K is available for free at: http://ResearchArchives.com/t/s?3a64 Dana Holding Corporation Consolidated Unaudited Balance Sheet As of December 31, 2008 Assets Current assets Cash and cash equivalents $777,000,000 Restricted cash - Accounts receivable Trade, less allowance for doubtful accounts 827,000,000 Other 170,000,000 Inventories 901,000,000 Assets of discontinued operations Other current assets 58,000,000 -------------- Total current assets 2,733,000,000 Goodwill 108,000,000 Intangibles 569,000,000 Investments and other assets 207,000,000 Investments in affiliates 135,000,000 Property, plant and equipment, net 1,841,000,000 -------------- Total assets $5,593,000,000 ============== Liabilities and stockholders' equity (deficit) Current liabilities Notes payable, including current portion of long-term debt $70,000,000 Debtor-in-possession financing - Accounts payable 824,000,000 Accrued payroll and employee benefits 185,000,000 Liabilities of discontinued operations - Taxes on income 93,000,000 Other accrued liabilities 274,000,000 -------------- Total current liabilities 1,446,000,000 Liabilities subject to compromise - Deferred employee benefits and other Non-current liabilities 845,000,000 Long-term debt 1,181,000,000 Minority interest in consolidated subsidiaries 107,000,000 Commitments and contingencies - -------------- Total liabilities $3,579,000,000 Preferred stock Series A 242,000,000 Series B 529,000,000 Common stock 1,000,000 Prior Dana common stock, - Additional paid-in capital 2,321,000,000 Accumulated deficit (720,000,000) Accumulated other comprehensive loss (359,000,000) -------------- Total stockholders' equity (deficit) 2,014,000,000 -------------- Total liabilities and stockholders' equity $5,593,000,000 ============== Dana Holding Corporation Consolidated Unaudited Statement of Operations For the Three Months Ended December 31, 2008 Net sales $1,521,000,000 Costs and expenses Cost of sales 1,548,000,000 Selling, general and administrative expenses 67,000,000 Amortization of intangibles 17,000,000 Realignment charges, net 53,000,000 Impairment of goodwill (11,000,000) Impairment of assets 4,000,000 Other income, net (1,000,000) -------------- Income (loss) from continuing operations before interest, reorganization items and income taxes (158,000,000) Interest expense 43,000,000 Reorganization items, net 3,000,000 -------------- Loss from continuing operations before income taxes (204,000,000) Income tax benefit (expense) (51,000,000) Equity in earnings of affiliates (1,000,000) -------------- Loss from continuing operations (256,000,000) Loss from discontinued operations - -------------- Net loss (256,000,000) Preferred stock dividend requirements 8,000,000 -------------- Net loss available to common stockholders ($264,000,000) ============== Dana Holding Corporation Consolidated Statement of Operations Year Ended December 31, 2008 Net sales $8,095,000,000 Costs and expenses Cost of sales 7,829,000,000 -------------- Selling, general and administrative expenses 337,000,000 Amortization of intangibles 66,000,000 Realignment charges, net 126,000,000 Impairment of goodwill 169,000,000 Impairment of assets 14,000,000 Other income, net 61,000,000 -------------- Income (loss) from continuing operations before interest, reorganization items and income taxes (385,000,000) Interest expense 150,000,000 Reorganization items, net 123,000,000 Fresh start accounting adjustments 1,009,000,000 -------------- Income (loss) from continuing operations before income taxes 351,000,000 Income tax expense (306,000,000) Minority interests (8,000,000) Equity in earnings of affiliates (9,000,000) -------------- Income (loss) from continuing operations 28,000,000 Loss from discontinued operations (10,000,000) -------------- Net income (loss) $18,000,000 ============== Dana Holding Corporation Consolidated Statement of Cash Flows Twelve Months Ended December 31, 2008 Cash flows - operating activities Net income (loss) $18,000,000 Depreciation 292,000,000 Amortization of intangibles 81,000,000 Amortization of inventory valuation 15,000,000 Amortization of deferred financing charges and original issue discount 24,000,000 Loss on repayment of debt 13,000,000 Impairment of goodwill, intangibles, investments and other assets 183,000,000 Non-cash portion of U.K. pension charge - Minority interest 8,000,000 Unremitted earnings of affiliates 17,000,000 Deferred income taxes 213,000,000 Reorganization: Gain on settlement of liabilities subject to compromise (27,000,000) Payment of claims (100,000,000) Reorganization items net of cash payments 55,000,000 Fresh start adjustments (1,009,000,000) Payments to VEBAs (788,000,000) Pension - contributions paid in excess of expense (38,000,000) OPEB - cash paid in excess of expense (2,000,000) Loss on sale of businesses and assets 13,000,000 Change in accounts receivable 434,000,000 Change in inventories 14,000,000 Change in accounts payable (210,000,000) Change in accrued payroll and employee benefits (67,000,000) Change in accrued income taxes (42,000,000) Change in other current assets and liabilities, net (124,000,000) Change in other non-current assets and liabilities, net (8,000,000) -------------- Net cash flows used in operating activities (1,019,000,000) -------------- Cash flows - investing activities Purchases of property, plant and equipment (250,000,000) Proceeds from sale of businesses and assets 19,000,000 Change in restricted cash 93,000,000 Other (6,000,000) -------------- Net cash flows provided by (used in) investing activities (144,000,000) -------------- Cash flows - financing activities Proceeds from (repayment of) debtor-in-possession facility (900,000,000) Net change in short-term debt (88,000,000) Payment of DCC Medium Term Notes (136,000,000) Proceeds from Exit Facility debt 1,430,000,000 Original issue discount fees (114,000,000) Deferred financing fees (66,000,000) Repayment of Exit Facility debt (164,000,000) Issuance of Series A and Series B preferred stock 771,000,000 Preferred dividends paid (18,000,000) Other (10,000,000) --------------- Net cash flows provided by (used in) financing activities 705,000,000 --------------- Net increase (decrease) in cash and cash equivalents (458,000,000) Cash and cash equivalents - beginning of period 1,271,000,000 Effect of exchange rate changes on cash balances (40,000,000) Net change in cash of discontinued operations 4,000,000 --------------- Cash and cash equivalents end of period $777,000,000 =============== About Dana Holding Corporation Based in Toledo, Ohio, Dana Corporation -- http://www.dana.com/ -- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Dana has facilities in China in the Asia-Pacific, Argentina in the Latin-American regions and Italy in Europe. The Company and its affiliates filed for chapter 11 protection on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Nov. 30, 2007, the Debtors listed $7,131,000,000 in total assets and $7,665,000,000 in total debts resulting in a shareholders' deficit of $534,000,000. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represented the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, served as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners served as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represented the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC served as counsel to the Official Committee of Non-Union Retirees. The Debtors filed their Joint Plan of Reorganization on Aug. 31, 2007. On Oct. 23, 2007, the Court approved the adequacy of the Disclosure Statement explaining their Plan. Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York entered an order confirming the Third Amended Joint Plan of Reorganization of the Debtors on Dec. 26, 2007. The Debtors' Third Amended Joint Plan of Reorganization was deemed effective as of Jan. 31, 2008. Dana Corp., starting on the Plan Effective Date, operated as Dana Holding Corporation. (Dana Corporation Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on Jan. 15, 2009, Standard & Poor's Ratings Services lowered its ratings on Dana Holding Corp., including the corporate credit rating, which was lowered to 'B' from 'B+'. The ratings were also removed from CreditWatch, where they had been placed with negative implications on Nov. 13, 2008. The outlook is negative. "The downgrade reflects our view that very weak market conditions in most of its business segments in 2009 will hinder the company's post-bankruptcy restructuring efforts," said Standard & Poor's credit analyst Nancy Messer. "We expect revenues to be reduced by weak auto sales and production in North America, weak auto sales in Europe, and the U.S. recession, which has stalled the recovery of commercial truck sales. Lacking an expanding revenue base, S&P believes the benefit from Dana's ongoing initiative to optimize its manufacturing footprint will fall short of S&P's previous near-term expectations," she continued. For example, for the last three months of 2008, the seasonally adjusted annual rate of light-vehicle sales in the U.S. was below 11 million units, and S&P expects sales in 2009 to be 10 million units, 24% below 2008 actual sales. DANA CORP: Silver Point Disposes Of 21,000 Shares ------------------------------------------------- Silver Point Capital, L.P., disclosed with the U.S. Securities and Exchange Commission that it disposed of 21,000 shares of Dana Holding Corp. common stock in a transaction dated March 11, 2009. After the transaction, Silver Point beneficially owns 4,804,600 shares of Dana common stock, which represents about 5.0% of the 100,065,061 shares of Dana common stock outstanding as of December 31, 2008. Silver Point also holds 774,614 shares of Convertible Preferred Stock of Dana Holding Corp., convertible into 5,872,737 shares of common stock of Dana previously reported by Silver Point on June 10, 2008. Silver Point, as investment manager of Silver Point Capital Fund, L.P., and Silver Point Capital Offshore Fund, Ltd., may be deemed to be beneficial owners of shares of stocks held by the Funds. Silver Point Capital Management, LLC, being the general partner of Silver Point may be deemed to be the beneficial owner of all securities held by the Funds. Edward A. Mule and Robert J. O'Shea, who are members of Management, may also be deemed to be beneficial owners of all securities held by the Fund. Messrs. Mule and O'Shea, however, disclaim beneficial ownership of the reported securities held by the Funds except to the extent of their pecuniary interests. About Dana Holding Corporation Based in Toledo, Ohio, Dana Corporation -- http://www.dana.com/ -- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Dana has facilities in China in the Asia-Pacific, Argentina in the Latin-American regions and Italy in Europe. The company and its affiliates filed for chapter 11 protection on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Nov. 30, 2007, the Debtors listed $7,131,000,000 in total assets and $7,665,000,000 in total debts resulting in a shareholders' deficit of $534,000,000. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represented the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, served as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners served as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represented the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC served as counsel to the Official Committee of Non-Union Retirees. The Debtors filed their Joint Plan of Reorganization on Aug. 31, 2007. On Oct. 23, 2007, the Court approved the adequacy of the Disclosure Statement explaining their Plan. Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York entered an order confirming the Third Amended Joint Plan of Reorganization of the Debtors on Dec. 26, 2007. The Debtors' Third Amended Joint Plan of Reorganization was deemed effective as of Jan. 31, 2008. Dana Corp., starting on the Plan Effective Date, operated as Dana Holding Corporation. (Dana Corporation Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on Jan. 15, 2009, Standard & Poor's Ratings Services lowered its ratings on Dana Holding Corp., including the corporate credit rating, which was lowered to 'B' from 'B+'. The ratings were also removed from CreditWatch, where they had been placed with negative implications on Nov. 13, 2008. The outlook is negative. "The downgrade reflects our view that very weak market conditions in most of its business segments in 2009 will hinder the company's post-bankruptcy restructuring efforts," said Standard & Poor's credit analyst Nancy Messer. "We expect revenues to be reduced by weak auto sales and production in North America, weak auto sales in Europe, and the U.S. recession, which has stalled the recovery of commercial truck sales. Lacking an expanding revenue base, S&P believes the benefit from Dana's ongoing initiative to optimize its manufacturing footprint will fall short of S&P's previous near-term expectations," she continued. For example, for the last three months of 2008, the seasonally adjusted annual rate of light-vehicle sales in the U.S. was below 11 million units, and S&P expects sales in 2009 to be 10 million units, 24% below 2008 actual sales. DANA CORP: To Cut 5,800 Jobs in 2009 to Maintain Liquidity ---------------------------------------------------------- Dana Holding Corporation will reduce its global workforce by 5,800 in 2009 on top of the 5,000 jobs the auto parts maker eliminated in 2008, The Toledo Blade reported. Dana, the newspaper said, did not identify the affected locations. Dana, in its Form 10-K for the year ended December 31, 2008, said that, given the current environment, there is a high degree of uncertainty that it would not be able to comply with the financial covenants in its debt agreements or maintain sufficient liquidity. John M. Devine, Dana's chairman, chief executive officer, and president, related that during the second half of 2008, Dana's production volumes decreased significantly. Whereas year-over- year sales for the first half of 2008 were higher, year-over-year sales in the third quarter and fourth quarter were down 9% and 30%. Dana's cash position declined from $1,191,000,000 at June 30, 2008, to $777,000,000 at the end of 2008. The repayment of principal and fees in connection with the amendment of the financial covenants and other provisions of Dana's Exit Facility reduced cash by $174,000,000. The remaining $240,000,000 was used primarily for operating needs and capital expenditures. Dana has taken significant actions in the last quarter of 2008 and early 2009 to reduce its cost base and improve profitability, including workforce reductions, reduced capital spending and pricing adjustments with its customers. Based on Dana's current forecast for 2009, the company expects to be able to meet the financial covenants of its existing debt agreements and have sufficient liquidity to finance its operations. However, while Dana believes that the 2009 market demand assumptions underlying its current forecast are reasonable, the company has also considered the possibility of even weaker demand -- based generally on more pessimistic production level forecasts. In addition to the external factors potentially impacting Dana's sales, Mr. Devine said achieving the company's current forecast is dependent on a number of internal factors like its ability to execute its remaining cost reduction plans, to operate effectively within the reduced cost structure and to realize the projected pricing improvements. While Dana is confident of its ability to achieve the plan, the company is not confident that it will be successful. Mr. Devine pointed out to a number of factors that could potentially arise that could result in Dana not attaining the plan or otherwise creating liquidity issues: -- Failure to achieve the price increases and cost reduction goals; -- Sustained weakness or combined deterioration in global conditions; -- Failure of GM and Chrysler to meet the terms and conditions of U.S. government loans; -- Bankruptcy of any significant customer resulting in delayed payments and non-payment of trade accounts receivable and customer tooling receivables; -- Bankruptcy of any significant supplier resulting in delayed shipment of production materials or actions to accelerate payments for goods or services; and -- Loan covenant violations. According to Mr. Devine, sales to GM in 2008 were 6% of Dana's consolidated sales, while Chrysler represented approximately 3%. In the event of a bankruptcy filing on the part of either of these customers, Dana believes it is likely that most of its programs would be continued following a bankruptcy filing. Thus, Dana expects the adverse effects of GM or Chrysler's bankruptcies would be limited principally to recovering less than the full amount of the outstanding receivable from the customers at the time of any bankruptcy filing. Dana expects its exposure under a bankruptcy scenario to be in the range of $5,000,000 to $30,000,000 depending on a number of factors, including the age and level of receivables at the time of a bankruptcy filing and whether Dana is treated as a critical supplier. Non-compliance with the covenants, according to Mr. Devine, would provide Dana's lenders with the ability to demand immediate repayment of all outstanding borrowings under the Term Facility and the Revolving Facility and Dana said it would not have sufficient cash on hand to satisfy that demand. Accordingly, the inability to comply with covenants, obtain waivers for non- compliance, or obtain alternative financing would have a material adverse effect on Dana's financial position, results of operations and cash flows, Mr. Devine said. Based on Dana's current forecast and its assessment of reasonably possible scenarios, Dana said it does not believe that there is substantial doubt about its ability to continue as a going concern in 2009. About Dana Holding Corporation Based in Toledo, Ohio, Dana Corporation -- http://www.dana.com/ -- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Dana has facilities in China in the Asia-Pacific, Argentina in the Latin-American regions and Italy in Europe. The Company and its affiliates filed for chapter 11 protection on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Nov. 30, 2007, the Debtors listed $7,131,000,000 in total assets and $7,665,000,000 in total debts resulting in a shareholders' deficit of $534,000,000. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represented the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, served as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners served as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represented the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC served as counsel to the Official Committee of Non-Union Retirees. The Debtors filed their Joint Plan of Reorganization on Aug. 31, 2007. On Oct. 23, 2007, the Court approved the adequacy of the Disclosure Statement explaining their Plan. Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York entered an order confirming the Third Amended Joint Plan of Reorganization of the Debtors on Dec. 26, 2007. The Debtors' Third Amended Joint Plan of Reorganization was deemed effective as of Jan. 31, 2008. Dana Corp., starting on the Plan Effective Date, operated as Dana Holding Corporation. (Dana Corporation Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on Jan. 15, 2009, Standard & Poor's Ratings Services lowered its ratings on Dana Holding Corp., including the corporate credit rating, which was lowered to 'B' from 'B+'. The ratings were also removed from CreditWatch, where they had been placed with negative implications on Nov. 13, 2008. The outlook is negative. "The downgrade reflects our view that very weak market conditions in most of its business segments in 2009 will hinder the company's post-bankruptcy restructuring efforts," said Standard & Poor's credit analyst Nancy Messer. "We expect revenues to be reduced by weak auto sales and production in North America, weak auto sales in Europe, and the U.S. recession, which has stalled the recovery of commercial truck sales. Lacking an expanding revenue base, S&P believes the benefit from Dana's ongoing initiative to optimize its manufacturing footprint will fall short of S&P's previous near-term expectations," she continued. For example, for the last three months of 2008, the seasonally adjusted annual rate of light-vehicle sales in the U.S. was below 11 million units, and S&P expects sales in 2009 to be 10 million units, 24% below 2008 actual sales. DAYTON SUPERIOR: S&P Downgrades Corporate Credit Rating to 'CCC-' ----------------------------------------------------------------- Standard & Poor's Rating Services said that it lowered its ratings on Dayton Superior Corp., including its corporate credit rating to 'CCC-' from 'CCC'. The outlook is negative. At the same time, Standard & Poor's lowered its rating on the company's senior secured notes to 'CCC-' from 'CCC' with a recovery rating of '3', indicating expectations for meaningful (50%-70%) recovery of principal in the event of a payment default. "The downgrade reflects further near-term refinancing risk following the company's extension of its private exchange offer for its 13% senior subordinated notes due 2009 and concurrent solicitation," said Standard & Poor's credit analyst Michael Scerbo. Dayton extended the expiration date to April 9, 2009. As of March 13, 2009, about $9.6 million in aggregate principal amount of the notes had been tendered, a significant reduction from about $63.7 million of notes that had been tendered as of Oct. 22, 2008. "The ratings also reflect Dayton's announcement that the company is continuing negotiations with its senior lenders regarding the terms of a more comprehensive amendment to its credit facility or a forbearance arrangement," added Mr. Scerbo. On March 16, 2009, Dayton amended its credit facility to extend the maturity to March 23, 2009, in order to provide the company with additional time to refinance or restructure its existing outstanding indebtedness and/or evaluate possible strategic alternatives, including the possible sale of the company or a controlling interest in the company. If the company does not repay, refinance, or extend the maturity of its existing 13% notes, its $100 million term loan and revolving credit facility will mature in March 2009. The ratings on Dayton reflect the company's refinancing risk, cyclical commercial end markets, volatile raw-material costs, relatively small cash flow base, and aggressive leverage. Dayton is a leading manufacturer and provider of concrete construction products and forming and shoring equipment. It serves three primary end markets-infrastructure, institutional building, and commercial construction, each representing about one-third of sales. The negative outlook reflects the limited time Dayton has to repay, refinance, or extend the maturity of its existing 13% notes and S&P's assessment that the company's operating performance will continue to be under pressure due to weakening commercial construction end market demand. S&P could lower the ratings if Dayton is unable to refinance or extend the maturity of its senior subordinated notes and its liquidity becomes further constrained. S&P could also lower the ratings if Dayton enters into a forbearance arrangement with its senior lenders, which included a provision whereby interest under the credit agreement will accrue and would not be paid for a specific time period. S&P could raise the ratings, an outcome S&P considers unlikely given the challenging credit market conditions, if the company successfully refinances or extends the maturity of its senior subordinated notes in a manner that does not harm creditors and operating performance does not decline materially. DBSI INC: Examiner to Probe States' Allegations of $2-Bil. Fraud ---------------------------------------------------------------- The State of Idaho's Department of Finance has won approval for a court-appointed examiner in the closely watched bankruptcy proceedings of DBSI, Inc. The Hon. Peter Walsh of the U.S. Bankruptcy Court for the District of Delaware has given the examiner the authority to probe $2 billion in allegedly fraudulent securities transactions made by DBSI. The scheme involved more than 12,000 investors and 270 properties throughout the country. Idaho, the state where DBSI is located, was joined by other states in the action, including Alabama, California, Colorado, Hawaii, Montana, Nevada, Oregon, Pennsylvania, South Carolina, Tennessee, and Washington. "This is more than just a bankruptcy case. The State of Idaho alleges fraudulent activity that mirrors a Ponzi scheme, making it a sophisticated investor fraud," said David J. Baldwin, a partner with Potter Anderson & Corroon LLP and lead trial counsel to the State of Idaho. "We're pleased the court accepted our motion and appointed an examiner. It is important to have someone whose focus is on the potential wrongdoing of the companies and not just on the process of a typical bankruptcy proceeding." DBSI allegedly used powers of attorney, signed by investors at real estate closings, to convert non-recourse loans to recourse loans -- making investors personally liable without their knowledge. "Investors were also assured there would be 'accountable reserves' benefitting their properties," said Mr. Baldwin. "It's now been shown that DBSI never set aside such reserves at all. These investors arguably are now personally liable and the reserves they expected would be there with their properties don't exist." 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. DENNIS ALFIERI: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Dennis Alfieri aka Dennis Victor Alfieri 860 Fairfield Circle Pasadena, CA 91106 Bankruptcy Case No.: 09-16032 Chapter 11 Petition Date: March 17, 2009 Court: Central District Of California (Los Angeles) Judge: Vincent P. Zurzolo Debtor's Counsel: Allan D. Sarver, Esq. ADSarver@aol.com Law Offices of Allan D. Sarver 16633 Ventura Blvd Ste 800 Encino, CA 91436 Tel: (818) 981-0581 Estimated Assets: $10 million to $50 million Estimated Debts: $1 million to $10 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Anthony L. Federico Personal Loans $150,000 12306 Van Nuys Boulevard Lakeview Terrace CA 91342 ProCom Electric Inc Service Rendered $89,766 7 Glen Iris Trabuco Canyon CA 92679 Phone: (949) 589-7654 Zeolla Marble Company Inc Service Rendered $64,465 5327 Vanalden Ave Tarzana CA 91356 Phone: (310)285-3999 ABI Accent Builders Inc Service Rendered $28,615 California Golf Cars Inc Service Rendered $26,715 JSC Construction Service Rendered $16,970 Strasser & Associates PC Services $13,378 Pink Transfer Inc Moving & Storage $10,742 Services John H. Haigh & Associates Service Rendered $8,442 Faultless Electric Electrical $5,810 Services Rendered Internal Revenue Service Tax $4,804 GEorge's Pipe & Supply Service Rendered $4,000 Arroyo Plumbing Service Rendered $2,958 Boss Air Mechanical Service Rendered $2,669 In-N-Out Burger Judgment $1,377 SleepMed/Digitrace Care Svcs Service Rendered $1,110 Burkard Nurseries Inc Service Rendered $1,061 R.B. Perry & Associates Inc Service Rendered $780 Primex Clinical Laboratorie Service Rendered $131 DISCOVER FINANCIAL: Fitch Gives BB+ Rating on $1.2BB Pref Stock --------------------------------------------------------------- Fitch Ratings has assigned a rating of 'BB+' to the $1.2 billion in preferred stock issued by Discover Financial Services (rated 'BBB/F2' by Fitch), under the Treasury's Capital Purchase Program. The CPP is one of the U.S. Government programs established to help stabilize and restore confidence in the U.S. banking system. This preferred issuance represents 3% of DFS's total risk-weighted assets. Ratings Assigned: Discover Financial Services -- Preferred stock at 'BB+'. DOLLAR THRIFTY: Aligns Minivan Pricing and Usage ------------------------------------------------ Dollar Thrifty Automotive Group, Inc., said that, effective immediately, it has implemented excess mileage charges at all corporate-owned locations in the continental United States with respect to retail customer rentals of minivans. Mileage charges will apply at a rate of $0.25 per mile and will only apply to those customers who drive in excess of the established mileage caps of 150 miles per day on daily rentals, and 1,050 miles on weekly rentals. Base rental rates on these vehicles will not be impacted by this change, and the charges are not applicable to locations in Hawaii. "The vast majority of our customers drive our minivans below 150 miles a day, and without this pricing change we would be forced to raise our base rental rate on all minivans. This pricing change allows us to retain our value-priced base rental rate, while better aligning usage and cost as a whole on our minivan fleet," said Scott L. Thompson, President and Chief Executive Officer. 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. DORAL FINANCIAL: Moody's Cuts Senior Unsecured Rating to 'B2' ------------------------------------------------------------- Moody's Investors Service lowered the senior unsecured rating of Doral Financial Corporation to B2 from B1. The outlook is stable. Doral Financial Corporation is the immediate holding company of Doral Bank, an unrated commercial bank headquartered in San Juan, Puerto Rico. Doral Financial Corporation and Doral Bank are indirect subsidiaries of Doral GP Ltd. Moody's said the downward adjustment of Doral Financial Corporation's senior unsecured rating by one notch was made to bring the rating into alignment with Moody's current notching practices for bank holding companies with non-investment grade ratings. Moody's explained that its rating methodology begins with an assessment of bank-level credit worthiness, even if the bank in question is not a rated entity, and then notches downward to capture the structural subordination of holding company obligations. Moody's added that its current notching practice is to incorporate an additional notch into the debt ratings of non- investment grade banks, in order to reflect the impact of depositor preference at the bank level. That, in turn, moves the debt ratings of all related entities, including the bank holding company, a notch lower. Moody's stated that the downward adjustment of Doral's rating was not driven by a weakened assessment of Doral Financial Corporation. Downgrades: Issuer: Doral Financial Corporation -- Senior Unsecured Regular Bond/Debenture, Downgraded to B2 from B1 Moody's last rating on Doral Financial Corporation was on December 18, 2007, when the rating was upgraded to B1 from B2. Doral Financial Corporation, headquartered in San Juan, Puerto Rico, reported assets of $10 billion as of September 2008. DREIER LLP: Marc Dreier Allegedly Defrauds Investors $700 Million ----------------------------------------------------------------- Nathan Koppel at The Wall Street Journal reports that an amended indictment was disclosed on Tuesday, saying that Dreier LLP's Marc Dreier defrauded investors about $700 million. According to WSJ, the figure was higher than previously disclosed in the criminal case. As reported by the Troubled Company Reporter on February 18, 2009, Mr. Dreier was released on $10 million bond. Mr. Dreier left the Metropolitan Correctional Center in downtown Manhattan February 13 and was driven to his midtown Manhattan home, where he would be confined under guard pending trial. Under the terms of his bail, Mr. Dreier would be subject to electronic monitoring and watched around the clock by armed security guards to ensure he didn't flee. He was indicted by a federal grand jury on January 29, 2009, before the U.S. District Court for conspiracy, securities fraud and wire fraud. WSJ relates that federal prosecutors previously had claimed that Mr. Dreier sold almost $400 million in fictitious notes, but prosecutors now allege that from 2004 through December 2008, Mr. Dreier sold almost $700 million in notes to 13 different hedge funds and three individuals. Prosecutors, WSJ states, are demanding that Mr. Dreier to surrender $700 million, including all of his interest in a yacht, luxury cars, and more than 200 works of art. WSJ reports that prosecutors accused Mr. Dreier of depositing from 2004 to 2008 funds from his note sales into accounts held by Dreier LLP. WSJ states that Mr. Dreier filed on Monday a motion to dismiss the securities-fraud charge on the alleged grounds that promissory notes don't count as "securities" under U.S. Supreme Court precedent. Mr. Dreier is facing a total of eight criminal counts, including conspiracy, securities fraud, and five counts of wire fraud, WSJ says. About Marc S. Dreier Marc Dreier founded New York-based law firm Dreier LLP -- http://www.dreierllp.com/-- in 1996. On Dec. 8, 2008, the U.S. Securities and Exchange Commission filed a suit, alleging that Mr. Dreier made fraudulent offers and sales of securities in several cities, selling fake promissory notes to hedge and other private investment funds. The SEC asserted that Mr. Dreier also distributed phony financial statements and audit opinions, and recruited accomplices in connection with that scheme. Mr. Dreier has been charged by the U.S. government for conspiracy, securities fraud and wire fraud before the U.S. District Court for the Southern District of New York (Manhattan) (Case No. 09-cr-00085-JSR). Dreier LLP filed for Chapter 11 on Dec. 16, 2008 (Bankr. S. D. N.Y., Case No. 08-15051). Judge Robert E. Gerber handles the case. Stephen J. Shimshak, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, has been retained as counsel. The Debtor listed assets between $100 million to $500 million, and debts between $10 million to $50 million in its filing. Wachovia Bank National Association, Sheila M. Gowan as trustee for Chapter 11 estate of Dreier LLP, and Steven J. Reisman as postconfirmation representative of the bankruptcy estate of 360networks (USA) Inc. signed a petition that sent Mr. Dreier to bankruptcy under Chapter 7 on Jan. 26, 2009 (Bankr. S.D. N.Y., Case No. 09-10371). DRUG FAIR: Files for Chapter 11 & Sell 32 Pharmacies to Walgreens ----------------------------------------------------------------- Drug Fair Group, Inc., and its parent company CDI Group, Inc., filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. In connection with the Chapter 11 filing, Drug Fair entered into an agreement with a subsidiary of Walgreen Co. to sell substantially all of its assets associated with 32 of its stores to Walgreens. The proposed transaction remains subject to the marketing requirements of the Bankruptcy Code and the approval of the Bankruptcy Court. Prior to its Chapter 11 filing, Drug Fair sold various assets at 13 locations to third parties, including Walgreens who purchased prescription files from the following 11 Drug Fair locations: -- 400 Springfield Ave., Berkeley Heights, NJ -- 1046 Saint Georges Ave., Rahway, NJ -- 9 Kennedy Mall, Brick, NJ -- 175 Locust Ave., West Long Branch, NJ -- 620 South Ave. E, Cranford, NJ -- 338 Ramapo Valley Rd., Oakland, NJ -- 1408 South Ave., Plainfield, NJ -- 11-15 River Rd., N. Arlington, NJ -- 1006 US Hwy 46, Clifton, NJ -- 481 Union Ave., Bridgewater, NJ -- 51 State Rt. 17, East Rutherford, NJ Patients previously served by these 11 pharmacies now have access to their prescription histories at any nearby Walgreens, or any of the nearly 6,700 Walgreens locations nationwide. Drug Fair is committed to continuing to provide quality service and products to its valued customers throughout the course of the Chapter 11 process. Day-to-day operations will be uninterrupted at the locations that are to be sold as part of the proposed transaction with Walgreens. In connection with the Chapter 11 filing, Drug Fair has arranged a four-month secured debtor-in-possession financing facility in the amount of $40 million. If approved by the Court, proceeds from the DIP Financing will be used by Drug Fair to fund its operations during the Chapter 11 proceedings and should enable it to continue to satisfy its obligations associated with its remaining operations, including payment of employee wages and benefits and post-petition obligations to vendors. "After exploring alternatives following a thorough consultation with its legal and financial advisors, Drug Fair's board of directors determined that an orderly sale of the Company's assets through a Chapter 11 process, together with those assets sold prior to the Chapter 11 filing, would be the most prudent and effective way to maximize value for Drug Fair's stakeholders. The Board, Drug Fair's management and I would like to thank our customers, employees and vendors for their ongoing support in what has been a difficult and uncertain period for us," said Tim Boates, Drug Fair's Chief Restructuring Officer. "We have worked very hard to structure a transaction that is in the best interest of all parties, including our employees and the communities they serve. We feel we have identified a great company to carry that service forward into the future." "Drug Fair has been a respected pharmacy in this region for more than 50 years," said Walgreens market vice president for the Northeast, Tim Anhorn. "We're pleased to be able to keep most of the stores open and continue providing these communities with convenient access to high quality pharmacy services and basic needs. Customers will continue to see many of the familiar faces behind the counter they trust for their health care needs." About Drug Fair Group Based in Somerset, New Jersey, Drug Fair Group, Inc. -- http://www.drugfair.com/or http://www.costcuttersonline.com/-- operates pharmacies and general merchandise stores in northern and central New Jersey. Founded in 1954, the Company has two divisions: Drug Fair and Cost Cutters. The Drug Fair division includes stores which sell both pharmaceuticals and general merchandise and the Cost Cutters division which are larger format stores that offer value-oriented, general merchandise. DRUG FAIR: Case Summary & 25 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Drug Fair Group, Inc. fka Community Distributors, Inc. 800 Cottontail Lane Somerset, NJ 08873 Bankruptcy Case No.: 09-10897 Debtor-affiliates filing subject to Chapter 11 petitions: Entity Case No. ------ -------- CDI Group, Inc. 09-10898 Type of Business: The Debtors sell dietary health supplements. See: http://www.drugfair.com/ Chapter 11 Petition Date: March 18, 2009 Court: District of Delaware (Delaware) Judge: Brendan Linehan Shannon Debtor's Counsel: Domenic E. Pacitti, Esq. dpacitti@klehr.com Michael W. Yurkewicz, Esq. myurkewicz@klehr.com Klehr Harrison Harvey Branzburg & Ellers 919 Market St. Wilmington, DE 19801 Tel: (302) 426-1189 Fax: (302) 426-9193 Claims Agent: Epiq Bankruptcy Solutions, LLC Estimated Assets: $50 million to $100 million Estimated Debts: $100 million to $500 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Cardinal Health trade debt $17,990,274 c/o Stephen White 430 Downer Street Westfield, NJ 07090 Tel: (908) 232-5401 Fax: (203) 292-2632 Rockaway Pharmacy, lessors/contracts $1,473,697 Inc. Rockaway, NJ 07866 PO Box 230 Tel: (973) 627-5544 Fax: (973) 625-1441 Raritan Pharmacy lessors/contracts $880,618 25 West Somerset Street Raritan, NJ 08869 Tel: (908) 429-5544 Fax: (908) 725-3006 American Greetings trade debt $553,422 c/o Tony Whitaker 67-66 108th Street, #6D-64 Forest Hills, NY 11375 Tel: (347) 615-2671 Fax: (216) 252-6493 Creative Pharmacy lessors/contracts $546,218 Corp. t/a Rogers Pharmacy 364 Springfield Avenue Summit, NJ 07901 Tel: (908) 273-0074 Fax: (908) 273-2355 PSE&GCO trade debt $530,971 PO Box 14106 New Brunswick, NJ 08906-4106 Tel: (800) 436-7734 Fax: (973) 824-7056 Glennborough Properties LP lessors/contracts $463,384 Mead Products trade debt $419,243 Pepsi Cola of New Jersey trade debt $399,506 Johnson & Johnson trade debt $293,956 Procter & Gamble trade debt $287,034 Qualco, Inc. trade debt $271,158 CBA trade debt $252,303 Tatum, LLC trade debt $240,238 H.D. Smith trade debt $240,015 AGILYSY trade debt $239,966 Graphic Communications Holding trade debt $238,781 Inc. L & R Distributors, Inc. trade debt $236,095 Quality King trade debt $233,113 Distributors Burpee Garden Products Co. trade debt $231,391 Ingram Entertainment, Inc. trade debt $231,387 Nestle Waters North trade debt $223,346 America, Inc. L&R Distributors trade debt $211,243 Networking Unlimited Inc. trade debt $201,200 Russell Stover Candies trade debt $186,647 Flexocraft trade debt $182,243 Kinray, Inc. trade debt $181,847 Snapple Distributors Inc. trade debt $180,614 Protiviti trade debt $175,348 Horizon BCBSNJ Acct 00-85467 trade debt $163,348 The petition was signed by Timothy Boates, chief restructuring officer. DUNMORE HOMES: Court Okays Bankruptcy Case Transfer to Sacramento ----------------------------------------------------------------- Sacramento Business Journal reports that the Hon. Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York has granted creditors' request to transfer Dunmore Homes Inc.'s bankruptcy case to Sacramento. The Associated Press relates that Dunmore Homes filed for Chapter 11 bankruptcy protection in New York. Dunmore Homes listed more than $100 million in assets and more than $100 million in debts, court documents say. According to Business Journal, Dunmore Homes incorporated in New York in 2008 when all the assets were sold to a new owner. Business Journal relates that majority of the companies seeking payment for overdue bills are in California, where all of the building took place. Judge Glenn ruled that it will be more convenient to have the case in Sacramento, as 24 of the 30 top creditors are based in California, Business Journal states. Dunmore Homes, says Business Journal, has received permission to sell off property. Business Journal states that Dunmore Homes acquired 38 acres in Delhi, south of Modesto, in 2005 for $2.7 million. Dunmore Homes then discovered that "the ability to plan and develop the property in the short term would be severely hindered by the lack of availability of water and sewer capacity," Business relates, citing Dunmore Homes Central Valley Division President Michael Lutz. Business Journal reports that a buyer, listed as MCD-Delhi LLC in the sales agreement, later emerged and agreed to buy the acreage for $849,000. The sale received court approval in February 2009, according to the report. Dunmore Homes Inc. is a privately owned residential homebuilder based in Granite Bay, California. Michael A. Kane of Granite Bay is Company's owner. ENERGY PARTNERS: Expects Going Concern Doubt from KPMG; May File ---------------------------------------------------------------- Energy Partners, Ltd., sent a document to the Securities and Exchange Commission saying that it won't be able to file its annual report on Form 10-K on time. While KPMG LLP has not completed its audit procedures, Energy Partners management anticipates the independent auditor to express substantial doubt about the Company's ability to continue as a going concern. Energy Partners says its business was adversely impacted to a significant extent in 2008 as a result of a number of negative influences and factors, including: -- hurricanes in August and September of 2008 damaged third- party production pipelines, causing us to shut-in a significant amount of its production from September 2008 through January 2009; -- oil and natural gas prices declined in the fourth quarter of 2008 to the lowest levels since 2001 and have remained at low levels for much of the first quarter of 2009; -- the worldwide credit and capital markets collapsed in 2008 and the availability of debt and equity financing became significantly more scarce, thus reducing financial flexibility for most companies, including the Company; and -- the Minerals Management Service ("MMS") rejected its request for waiver of supplemental bonding requirements for the decommissioning of certain of its federal offshore properties, resulting in the requirement for us to provide cash or other financial support totaling $47.3 million, $12.5 million of which was provided as of December 31, 2008, $16.7 million of which is due by March 27, 2009 (which date is the end of a 30-day grace period), and the remaining $18.1 million of which is payable in equal quarterly amounts of $1.2 million beginning March 31, 2009. The Company is in a continuing dialogue with the MMS concerning this matter. If it does not resolve this matter successfully, the Company could be forced to shut in a portion of production. "These events have negatively impacted our business and caused us to experience a shortage of liquidity that jeopardizes our ability to continue as a going concern," the Company admitted. The Company is considering multiple alternatives to remedy its current liquidity situation, including the recapitalization of its balance sheet, targeted cost reductions, significantly reduced drilling expenditures during 2009, the sale of assets and the sale of the Company. "If we are not able to successfully negotiate relief from certain of our debt obligations or successfully implement one or more of these strategies, or in order for us to successfully implement one or more of these strategies, we may be forced to voluntarily seek bankruptcy protection." Effect of Recent Reduction of Borrowing Base In March 2009, the Company was notified by the administrative agent for its bank lending group that the semi-annual re- determination of the borrowing base under its revolving credit facility was performed, resulting in a new borrowing base of $45 million, down from the prior borrowing base of $150 million. The Company currently has $83 million drawn under this credit facility, which results in a borrowing base deficiency of $38 million. As a result, the Company is not able to borrow funds under the revolving credit facility. Among the alternatives available, the Company may elect to repay the Borrowing Base Deficiency in monthly installments of amounts to be approved by the administrative agent, not to exceed six monthly installments without the approval of a majority of the holders of the outstanding commitments. The Company is currently in discussions with its bank lender group regarding these payments. If its proposed monthly installment payments are not approved by the administrative agent or the Company cannot demonstrate to the satisfaction of the administrative agent that it has sufficient available monthly cash flow to pay such installment payments, the administrative agent may require us to immediately pay the full Borrowing Base Deficiency. In addition, the Company is required to pay approximately $45 million in interest annually on its $450 million principal amount of senior unsecured notes, including about $17 million on April 15, 2009. It is currently in discussions with its noteholders regarding these payments. Its forecasted cash flows for 2009 are not sufficient to fund the payment of the Borrowing Base Deficiency and to continue to make payments of interest on our senior unsecured notes. The failure to make either of these payments will result in an event of default under the instruments governing the applicable debt obligation and will ultimately trigger cross default provisions (and related possible acceleration of payment obligations) under each of its respective debt obligations. The Company does not have sufficient liquidity to repay all of its debt obligations in the event of an acceleration of payment of such obligations. Projected Covenant Defaults under Credit Facility After analyzing forecasted cash flow and results of operations for 2009, the Company believes it is reasonably likely that it will breach one or more of the financial covenants in its bank credit facility upon the completion of its financial statements for the first quarter of 2009, which breaches will constitute an immediate default under its bank credit facility. Furthermore, the anticipated inclusion in the auditors' report about the Company's ability to continue as a going concern will constitute a breach of a covenant under its bank credit facility, which, if not waived, will become a default after a 30-day grace period following the end of the first quarter of 2009. "We are attempting to negotiate amendments to our bank credit facility financial covenants to obtain increased flexibility in our debt compliance ratios and other covenant requirements," the Company said. Any default under the bank credit facility would also result in an event of default under its $450 million principal amount of senior unsecured notes. Potential Future Default under Senior Unsecured Notes The Company's forecasted cash flows for 2009 are not sufficient to fund the required bank credit facility principal reduction amounts and continue to make periodic payments of interest on its senior unsecured notes. Nonpayment of the interest on the senior unsecured notes, if not remedied within 30 days, is an event of default under the senior unsecured notes indenture and allows the trustee or 25% or more of the holders of the senior unsecured notes to declare all unpaid principal and interest immediately due and payable. The next interest payment of $17 million on the $450 million principal amount of senior unsecured notes is due on April 15, 2009. Surety Obligations In December 2008 and the first quarter of 2009, the Company posted cash collateral to restricted accounts for the benefit of certain of its indemnity companies totaling $5.7 million in response to requests by two indemnity companies to provide reserves against its surety bonds with them, and at least one of its indemnity companies has discussed with us increasing the cash reserves we provide to them. The Company's agreements with these indemnity companies allow them to demand cash reserves or letters of credit to support its outstanding surety bonds. The Company has outstanding $63.2 million in surety bonds with four different indemnity companies. If some or all of its indemnity companies formally request additional reserves with respect to these outstanding surety bonds, the Company projects that it will not have sufficient cash or borrowing capacity to comply with those requests. Changes to Production Levels Due to its current liquidity situation and currently depressed commodity prices, the Company expects to significantly reduce capital expenditures during 2009 and to suspend its exploratory drilling program. As a result, the Company does not expect to be able to maintain its current production levels and it expects its production to decline significantly during 2009 primarily due to natural reservoir declines combined with minimal investment in reserve replacement activities. In addition, the additional 2,000 Boe per day of production expected to come online in February 2009 has still not commenced production because the operator of the pipeline has not successfully completed the repairs and flow tests required to restore production. Potential NYSE Delisting At the current trading prices of its common stock, the Company says it may soon fail to meet one or more of the quantitative continued listing standards adopted by the New York Stock Exchange. If its common stock is ultimately delisted from the New York Stock Exchange, trading of its common stock most likely will be conducted in the over-the-counter market on an electronic bulletin board established for unlisted securities such as the "pink sheets" or the OTC Bulletin Board. Such trading will reduce the market liquidity of the common stock. Changes in the Board and Management The Company announced on February 23, 2009 that its Board of Directors was reduced from eleven to seven members to better reflect its current needs, and that we retained Parkman Whaling LLC as its financial advisor to assist the Board of Directors and senior management in its ongoing and active exploration of strategic alternatives, including a potential recapitalization of its balance sheet. In addition, on March 4, 2009, the Company announced the resignation of Joseph T. Leary as its Executive Vice President and Chief Financial Officer. On March 16, 2009, it announced the resignation of Richard A. Bachmann as its Chairman and Chief Excecutive Officer and the engagement of Alan D. Bell as its Chief Restructuring Officer. Anticipated Changes in Results of Operations "Our operating results for the year ended December 31, 2008 compared to the year ended December 31, 2007 reflect a decline in production from our existing core oil and natural gas properties due primarily to natural reservoir declines, and the impact of the hurricanes which curtailed a significant amount of our production from September 2008 through January 2009," the Company said. It added that production also declined as a result of sales of certain of its producing properties in June 2007 and March 2008. Higher average oil and natural gas prices contributed favorably to its revenue for the year ended December 31, 2008, during which it realized an estimated 44% increase in its average sales price per Boe (exclusive of derivative instruments) over the year ended December 31, 2007. The precipitous decline in oil and natural gas prices that began in the third quarter of 2008 is not fully reflected in its realizations for the full 2008 year because of the significant decline in its production as a result of the hurricanes which substantially reduced production rates from September 2008 through January 2009. The Company estimate its consolidated net loss for the year ended December 31, 2008 will be in the range of $40 million to $50 million, or $1.25 to $1.55 loss per diluted share. For the year ended December 31, 2007, it reported a net loss of $80.0 million, or $2.32 loss per diluted share. The Company estimates revenue for the year ended December 31, 2008 will be approximately $356 million as compared to $454.6 million for the year ended December 31, 2007. The Company expects lease operating expenses for the year ended December 31, 2008 of approximately $68 million, a slight decline from the year ended December 31, 2007 amount of $69.9 million. It expects general and administrative expenses to total approximately $45 million for the year ended December 31, 2008, a decline from the year ended December 31, 2007 amount of $61.7 million, which 2007 amount included $9.4 million of legal and financial advisory fees not present in 2008. The Company expects to report non-cash impairment charges of approximately $102 million associated with its oil and natural gas properties for the year ended December 31, 2008. Its non-cash impairment charges totaled $114.9 million for the year ended December 31, 2007. The 2008 impairments resulted primarily from a combination of lower oil and natural gas prices and anticipated reduced capital spending based on the lower commodity price environment described above. The Company expects to record approximately $22 million of losses related to plugging and abandonment work performed in the fourth quarter of 2008 and for estimated costs for work continuing into 2009 due to revisions to increase previously recorded estimates for asset retirement obligations ("ARO"). The additional ARO costs resulted from factors including scope changes, weather delays and changes in the equipment used in the planned work, which, for certain properties, included the use of a drilling rig previously under contract in the fourth quarter of 2008. We settled approximately $24 million of abandonment liabilities in 2008 and estimate its ARO will be approximately $100 million at December 31, 2008, compared with $77.9 million at December 31, 2007. The Company estimates its loss from operations for the year ended December 31, 2008 will be in the range of $15 million to $25 million as compared to the $56.0 million loss from operations reported for the year ended December 31, 2007. The estimated loss from operations for the year ended December 31, 2008 includes estimated amounts recoverable from business interruption insurance related to the insured portion of production deferred as a result of the 2008 hurricanes of approximately $4 million. At December 31, 2008, total debt was $497.5 million, which included $43.0 million of borrowings during the fourth quarter under its bank credit facility. These borrowings, which were continuing to occur during the first quarter 2009, have been necessary due to production volumes being severely curtailed as we awaited repairs to third party pipelines damaged by the 2008 hurricanes. Its bank credit facility balance is $83 million. About Energy Partners Energy Partners, Ltd. is an independent oil and natural gas exploration and production company. The Company had interests in 24 producing fields, six fields under development and one property on which drilling operations were then being conducted, all of which are located in the Gulf of Mexico Region. As reported by the TCR on March 18, Standard & Poor's Ratings Services lowered its corporate credit rating on independent exploration and production firm Energy Partners Ltd. to 'CCC-' from 'CCC+'. Moody's Investors Service earlier downgraded Energy Partners' Corporate Family Rating to Caa3 from Caa1. EVERYTHING BUT WATER: Proposes $11-Mil. Loan and Quick Sale ----------------------------------------------------------- According to a report by Bloomberg News, Everything But Water LLC has asked the U.S. Bankruptcy Court for the District of Delaware to approve its $11 million debtor-in-possession loan, which requires the immediate sale of its business. The DIP loan matures May 4. The Court has previously allowed the Debtor to access $4 million when it granted interim approval of the financing. Secured lender D.B. Zwirn Special Opportunities Fund LP has submitted an offer for business, by crediting bidding $19 million of its secured debt. Bill Rochelle says the official unsecured creditors committee of the Debtor wants the sale process slowed down by a month. Everything But, according to the report, however, says the business is in extremis and it does "not have the luxury" of slowing down the sale. Based in Orlando, Florida, Everything But Water, LLC -- http://www.everythingbutwater.com/-- owns and operates a chain of women's swim and resort-wear stores in the United States. Everything But Water and its affiliate, Just Add Water, Inc., filed for Chapter 11 bankruptcy protection on February 25, 2009 (Bankr. D. Del. Case Nos. 09-10649 and 09-10650). Judge Mary F. Walrath presides over the case. Neil Raymond Lapinski, Esq., and Rafael Xavier Zahralddin-Aravena, Esq., at Elliott Greenleaf in Wilmington, serve as bankruptcy counsel. When it filed for bankruptcy, Everything But Water disclosed $50,001 to $100,000 in assets and $1,000,001 to $10,000,000 in debts. FAIRCHILD CORP: Files for Chapter 11 Protection in Delaware ----------------------------------------------------------- The Fairchild Corporation filed for voluntary Chapter 11 bankruptcy reorganization in the District of Delaware. The Company intends to file a variety of first day motions with the court that, with Court approval, will allow it to continue to conduct its business as usual without interruption. The Company expects that it will continue to manage its properties and operate its business as a "debtor-in-possession" under the jurisdiction of the United States Bankruptcy Court for the District of Delaware and in accordance with the applicable provisions of the Bankruptcy Code. As is customary with public companies that have filed for Chapter 11, the Company expects the OTC bulletin board to temporarily halt trading of the company's stock pending receipt of additional information on the Company's financial condition and reorganization plans. The company will cooperate in providing any such information requested by the OTC bulletin board. The Company's principal bankruptcy attorneys are Curtis, Mallet- Prevost, Colt & Mosle LLP and Richards, Layton & Finger. The Company's independent financial advisor is CRG Consulting. The Company's claims agent is Epiq Systems Bankruptcy Solutions. Hein Gericke Unit Sold to ARRC for EUR1 The bankruptcy filing is on the heels of Fairchild's sale of one of its businesses. Michael L. McDonald, Fairchild's Senior Vice President and CFO, said in a regulatory filing with the Securities and Exchange Commission that on March 12, 2009, the Company's Board of Directors approved a sale of Hein Gericke Deutschland GmbH and its remaining subsidiaries to ARRC GmbH -- a group consisting of four members of existing Hein Gericke management. The purchase price was EUR1, plus future mandatory proceeds to repay inter-company loans: -- EUR500,000 due on or before September 30, 2009. -- EUR500,000 due on or before September 30, 2010. The Company may also receive future earn-out consideration, structured as inter-company loan repayments: -- 15% of EBITDA of Hein Gericke, up to a maximum of EUR750,000 for the fiscal year ending September 30, 2011, with payment due on May 31, 2012. -- 15% of EBITDA of Hein Gericke, up to a maximum of EUR750,000 for the fiscal year ending September 30, 2012, with payment due on May 31, 2013. -- 15% of EBITDA of Hein Gericke, up to a maximum of EUR750,000 for the fiscal year ending September 30, 2013, with payment due on May 31, 2014. In addition, if ARRC GbmH sells Hein Gericke during the next 10 years, Fairchild will receive 15% of the net proceeds. Fairchild said, despite the transaction, it faces an extremely critical and immediate liquidity issue. About The Fairchild Corporation Based in McLean, Virginia, The Fairchild Corporation (OTC:FCHD.PK) -- http://www.fairchild.com/-- operates under three segments: aerospace, real estate, and motorcycle apparel. Fairchild's aerospace segment is engaged in the aerospace distribution business which stocks and distributes a wide variety of parts to operators and aerospace companies providing aircraft parts and services to customers worldwide. Fairchild also owns and develops commercial real estate. Fairchild's motorcycle apparel business designs and produces apparel under private labels for third parties, including Harley-Davidson and also owns a 49% interest in PoloExpress, a business which designs and sells motorcycle protective apparel, helmets, and a large selection of technical accessories, for motorcyclists and operates approximately 96 retail shops in Switzerland and Germany. FAIRCHILD CORP: Case Summary & 45 Largest Unsecured Creditors --------------------------------------------------------- Debtor: The Fairchild Corporation 1750 Tysons Boulevard, Suite 1400 McLean, VA 22102 Bankruptcy Case No.: 09-10899 Debtor-affiliates filing subject to Chapter 11 petitions: Entity Case No. ------ -------- A10 Inc. 09-10900 Aero International, Inc. 09-10901 Banner Aerospace Holding Company I, Inc. 09-10902 Fairchild France, Inc. 09-10903 Banner Aerospace Holding Company II, Inc. 09-10904 Fairchild Holding Corp. 09-10905 Banner Aerospace Services, Inc. 09-10906 Fairchild International, Inc. 09-10907 Banner Aerospace-Singapore, Inc. 09-10908 Fairchild Realty, LLC 09-10909 Banner Capital Ventures, Inc. 09-10910 Fairchild Retiree Medical Services, Inc. 09-10911 Banner Energy Corporation of Kentucky, Inc. 09-10912 Banner Industrial Distribution, Inc. 09-10913 Fairchild Sports USA, Inc. 09-10914 Meow, Inc. 09-10915 Fairchild Sports, Inc. 09-10916 Banner Industrial Products, Inc. 09-10917 Fairchild Switzerland, Inc. 09-10918 NASAM Incorporated 09-10919 BAR DE, Inc. 09-10920 Fairchild Technologies IP, Inc. 09-10921 PB Herndon Aerospace, Inc. 09-10922 Fairchild Titanium Technologies, Inc. 09-10923 Plymouth Leasing Company 09-10924 Fairchild Trading Corp. 09-10925 DAC International, Inc. 09-10926 Professional Aircraft Accessories, Inc. 09-10927 Professional Aviation Associates, Inc. 09-10928 Faircraft Sales, Ltd. 09-10929 Recoil Australia Holdings, Inc. 09-10930 Dallas Aerospace, Inc. 09-10931 GCCUS, Inc. 09-10932 Recoil Holdings, Inc. 09-10933 DEM Mairoll, LLC 09-10934 Recoil Inc. 09-10935 Gobble Gobble, Inc. 09-10936 Discontinued Aircraft, Inc. 09-10937 Recycling Investments II, Inc. 09-10938 Recycling Investments III, Inc. 09-10939 Discontinued Services, Inc. 09-10940 Intersport Fashions West, Inc. 09-10941 Republic Thunderbolt North, LLC 09-10942 Jenkins Coal Dock Company, Inc. 09-10943 Republic Thunderbolt West, LLC 09-10944 Euro MLS, Inc. 09-10945 Mairoll, Inc. 09-10946 Marcliff Corporation 09-10947 Republic Thunderbolt, LLC 09-10948 Marson Creative Fastener, Inc. 09-10949 RHI Holdings, Inc. 09-10950 Fairchild Data Corporation 09-10951 Sheepdog, Inc. 09-10952 Matrix Aviation, Inc. 09-10953 Sovereign Air Limited 09-10954 Type of Business: The Debtors design and sell protective clothing, helmets and technical accessories for motorcyclists in Europe and the United States; and in aerospace distribution businesses which stock and distribute a wide variety of parts to aircraft operators and aerospace customers providing aircraft parts and services to customers worldwide. See: http://www.fairchild.com/ Chapter 11 Petition Date: March 18, 2009 Court: District of Delaware (Delaware) Debtor's Counsel: Jason M. Madron, Esq. merchant@rlf.com madron@rlf.com Michael Joseph Merchant, Esq. Richards Layton & Finger, P.A. One Rodney Square P.O. Box 551 Wilmington, DE 19899 Tel: (302) 651-7700 Fax: (302) 651-7701 The Debtors' financial condition as of January 31, 2009: Total Assets: $89,433,000 Total Debts: $228,095,000 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Pension Benefit Guaranty Benefit Plan $55,000,000 Corporation 1200 K Street, N.W. Washington, DC 20005-4026 Tel: (202) 326-4000 Fax: (202) 842-2643 AVI Juchen GmbH Letter of $33,658,000 Widdersdorfer Strasse 252 Comfort [EUR26,502,000] D-50933 Cologne, Germany Mr. Michael Martin Managing Director Tel: +49 221 94 97 32 0 Fax: +49 221 49 72 168 Retiree Health Plan for a Benefit Plan $18,671,000 Certain Class of Former Employees of Fairchild Republic Company c/o Mr. Richard Dorn Levy Ratner P.C. 80 8th Ave. 80 8th Avenue 8th Floor New York, NY 10011-5126 New York, NY 10011-5126 Tel: (212) 627-8100 Fax: (212) 627-8182 Ohio Workers Compensation Assumed Liability $9,590,000 Mr. Joseph T. Chapman Senior Assistant Attorney General 150 E. Gay Street, 21st Floor Columbus, Ohio Tel: (614) 466-6594 Fax: (614) 752-9070 AVI Lagertechnic GmbH Letter of $9,340,000 Widdersdorfer Strasse 252 Comfort [EUR7,353,750] 0-50933 Cologne, Germany Mr. Michael Martin Managing Director Tel: +49 221 9497320 Fax: +492214972 168 Stadtsparkasse DUsseldorf Guaranty $6,604,000 Berliner Alle 33 [EUR5,200,000] 40212 DUsseldorf, Germany Mr. Norbert Prenzel Tel: +49 211 878 5800 Fax: +49211 878 5805 HSBC Trinkaus & Burkhardt AG Guaranty $6,604,000 Konigsalle 21-23 [EUR5,200,000] 40212 DUsseldorf, Germany Mr. Stephan Beckers Tel: +49 211 910 1369 Fax: +49 211 910 2535 Column Financial Environmental $6,195,000 c/o Keybank Real Estate Capital Mr. Robert Van Biber 911 Main Street, Suite 1500 Kansas City, MO 64105 Tel: (816) 412-5181 Fax: (877) 379-1625 New York Dept. of Environmental $6,195,000 Environmental Conservation Division of Environmental Remedial Bureau A Mr. Steven Scharf, P.E. 625 Broadway, 11th Floor Albany, NY 12233 Tel: (518) 402-9620 Fax: (518) 402-9022 San Gabriel Valley BPOU Environmental $2,287,000 (Tubing Seal Cap; Azusa, CA) Mr. C. Scott Goulart Highway50 at Aemjet Road PG Rancho Cordova, CA 95670 Mr. Norman Dupont Esq. ndupont@rwglaw.com Reichhold,Inc. c/o Richards, Watson & Gershon 355 South Grand Ave. 40th Floor Los Angeles, CA 90071-3101 Mr. Steven Richtel srichtel@wm.com Chemical Waste Management c/o Waste Management, Inc. 8310 South Valley Highway Rd. Suite 200 Englewood,CO 80112 Mr. Wayne Praskings Environmental Protection Agency US Environmental Protection Agency Region 9 75 HawthorneStreet (SFD-7-3) San Francisco,CA 94105 Mr. Mark Allendorf Mark.allendorf@awin.com 1001 South Dairy Ashford Suite 400 Houston,TX 77077 Mr. Paul Tamborrino Special Assistant ptamborrino@hartwellcorp.com Hartwell Corporation 900 S. Richfield Road Placentia,CA 92870 Mr. Thomas L. Meyer Esq. tmeyer@parker,com Winco Enterprises Inc. c/o Parker-Hannifin Corporation 6035 ParklandBoulevard Mayfield Heights,OH 44124 Mr. Frederic A Fudacz Water Entities c/o Nossaman LLP 445 S. Figueroa Street 31st Floor Los Angeles, CA 90071 Jerry R. Lirette Deferred $1,575,000 Mr. Jerry R. Lirette Compensation 29111 Stephenson Highway Madison Heights, MI 48071 Tel: (248) 646-2191 Universal Avionics Systems Trade $1,350,000 3260 E. Universal Way Mr. Paul Deherrea Chief Operating Officer Tucson, AZ 85756-5097 Fax: (520) 434-4454 Schopf& Weiss LLP Trade $1,290,000 Peter Baugher Esq. One South Wacker Drive 28th Floor Chicago, IL 60606 Tel: (312) 701-9315 Fax: (312) 701-9335 BDO Seidman LLP Trade $857,000 Mr. Mark Ellenbogen 7101 Wisconsin Avenue Suite 800 Bethesda, MD 20814-4868 Tel: (301) 634-4975 Fax: (301) 654-3567 Ohio Casualty Insurance Co. Guaranty $825,000 c/o Mr. William Woods Esq. McNamara & McNamara 88 E. Broad Street, Suite 1250 Columbus Ohio 43215 Tel: (614) 228-6131 Fax: (614) 228-6126 Messier Services America, Inc. Trade $725,000 Ms. Alexaodra Causse 36 Hartford Street San Francisco, CA 94114 Tel: (415) 839-8485 Fax: (415) 215-1619 Donald Taylor Life Insurance $660,000 1 Runnymede Drive North Hampton, NH 03862 Tel: (603) 964-6467 Maryland Department of the Environmental $618,000 Environment Mr. Chau Nguyen 1800 Washington Blvd., Ste 625 Baltimore, MD 21230 Tel: (410) 537-3000 Stadtsparkasse DUsseldorf Loan Guaranty $598,000 Berliner Alle 33 Agreement [EUR470,400] Mr. Norbert Prenzel 40212 DUsseldorf, Germany Tel: +49 211 878 5800 Fax: +49211 878 5805 HSBC Trinkaus & Burkhardt AG Loan Guaranty $598,000 Agreement [EUR470,400] Mr. Stephan Beckers Konigsalle 21-23 40212 DUsseldorf, Germany Tel: +49211910 1369 Fax: +492119102535 Michigan Dept. of Env'l Environmental $568,000 Quality Ms. Elaine Pele 2100 West M-32 Gaylord, MI 49734 Tel: (989) 731-4920 Fax: (989) 731-6181 D-M-E Company, Inc. Indemnification $568,000 Milacron, Inc. David E. Lawrence, CEO 4165 Half Acre Road Batavia, OH 45103 Mr. Edward UhI SERP $550,000 PO Box 372 Trappe, MD 21673-0372 Tel: (410) 820-8269 Rexnord Industries, LLC and Judgment $540,916 Invensys, Inc. Mr. Jay S. Ehle Vice President and General Counsel 33 Commercial Street, B51-2J Foxboro, MA 02035 Tel: (508) 549-6717 Fax: (508) 549-6698 Mr. Wilbert Schauer Life Insurance $478,000 California Regional Water Environmental $475,000 Quality Control PricewaterhouseCoopers Trade $462,500 [EUR363,500] Peerless Insurance Co. Guaranty $328,000 Ganfer & Shore, LLP Trade $284,143 Errogassen & Co Trade Disputed $252,000 Mr. Warren Stumpe Life Insurance $250,000 San Gabriel Valley Environmental $250,000 Plastic Engineered Components Indemnification $250,000 Hawker Beechcraft Corp. Trade $236,000 Northrop Grumman Lite Trade $230,000 GmbH Fulbright & Jaworski, LLP Trade $196,418 Cahill Gordon & Reindel LLP Trade $196,336 Avidyne Corporation Trade $190,000 Mr. Kenworthy J. Thompson Life Insurance $184,000 Hogan & Hartson Trade $170,314 The petition was signed by Donald E. Miller, chief restructuring officer. FAIRPOINT COMMUNICATIONS: Moody's Reviews All Low-B Ratings ----------------------------------------------------------- Moody's Investors Service has placed all ratings of FairPoint Communications, Inc. under review for a possible downgrade, reflecting near term concerns about the company's liquidity as it is managing the transition of the acquired Verizon Communications' Maine, New Hampshire and Vermont wireline operations onto its systems. As part of the rating action, Moody's downgraded FairPoint's liquidity rating to SGL-4 from SGL-2. In addition, Moody's downgraded the ratings on the senior secured credit facilities to B1 from Ba3, reflecting the draw down of virtually the entire amount of its revolving credit facility. This rating downgrade also incorporates Moody's belief that the company will seek to reduce the outstanding balance on its senior unsecured notes over time, further reducing the loss absorption from the junior capital to the bank debt holders. These summarizes the rating actions taken by Moody's: Downgrades: Issuer: FairPoint Communications, Inc. -- Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-2 -- Senior Secured Bank Credit Facility, Downgraded to a range of B1, LGD3, 44% from a range of Ba3, LGD3, 42% (Remains on review for downgrade) On Review for Possible Downgrade: Issuer: FairPoint Communications, Inc. -- Probability of Default Rating, Placed on Review for Possible Downgrade, currently B1 -- Corporate Family Rating, Placed on Review for Possible Downgrade, currently B1 -- Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently B3, LGD6, 91% Outlook Actions: Issuer: FairPoint Communications, Inc. -- Outlook, Changed To Rating Under Review From Positive Moody's estimates that the company had a cash balance of about $100 million at the end of February 2009. The company has a scheduled $36 million senior note interest payment on April 1, 2009. In addition, the company is obligated to reduce its debt balances by $11.25 million by March 31, 2009, as required by the state regulators. If the company funds both payments, it would be left with roughly $55 million in liquidity to execute its business plan, which includes continuing funding of its network upgrade and broadband expansion deeper into its service territory. However, Moody's recognizes that the company generates roughly $30 million in operating cash flow each month, and will be able to build up its liquidity by the end of the year. The company has petitioned the state regulators to postpone the $11.25 million debt payment by one quarter through June 30, 2009. Recently, the company also suspended its dividend payment to preserve liquidity. The ratings review largely reflects the pressure on the company's liquidity position, as the delays in cutting over from Verizon's systems onto its own platform led to greater use of cash than the company had expected, due mostly to additional transition services payments to Verizon and FairPoint's inability to effectively market its services in the VZ-NE markets while still on Verizon's platform, resulting in lower than forecast revenues and EBITDA in 2008. As a result, the company drew down nearly the entire balance of its $170 million revolving credit facility to meet its cash needs through March 2009. In addition, following the systems cutover on February 8, 2009, the company experienced a two to three week delay in sending out bills, which further strained its liquidity in 1Q 09. Although the company believes that the billing issues have been rectified and it has nearly caught up on mailing the bills to its customers, the results of the collection efforts will not be fully known until the next several billing cycles. On top of the potential liquidity issues, the company's lower run- rate EBITDA and added debt will put it on the verge of a breach of its interest coverage covenant in the bank credit agreement in 2009. Moody's believes that the company will engage its lenders to give it more covenant headroom as it catches up to its business plan. In January, the lenders approved an amendment allowing FairPoint to buy back debt at a discount, and named Bank of America the new administrative agent, replacing Lehman Brothers. Overall, FairPoint's leverage profile is in line with the company's B1 corporate family rating. Moody's initial corporate family rating assignment recognized the significant integration risk of assuming the much larger VZ-NE operation, specifically reflecting the uncertainty that the systems upgrade, transition and integration would go smoothly. According to Moody's Vice President and Senior Analyst, Gerald Granovsky, "Although the switchover of systems from Verizon to Fairpoint is done, there are still several milestones to pass to make sure that the billing process is picking up the right call and work details, and the company is able to collect its receivables." If the company addresses its liquidity concerns, Fairpoint's adjusted Debt/EBITDA leverage is expected to be 4.5x at year end 2009. Moody's anticipates the company to generate over $200 million in free cash flow after 2009, and will likely use the free cash flow to reduce its debt balance and drive its leverage below 4.0x. Moody's also believes FairPoint will apply for stimulus grants to aid its broadband buildout efforts into the unserved territories in the VZ-NE markets. Moody's review will focus on FairPoint's a) ability to manage its short term liquidity, b) success in outlining a plan to operate under or obtaining an amendment from its lenders resetting the covenant levels to give it operating flexibility over the next 12 to 18 months, and c) Moody's comfort with the company's systems transition. Moody's most recent rating action for FairPoint was on February 27, 2008. At that time Moody's assigned a B1 CFR with a positive outlook upon the expected completion of the acquisition of the VZ-NE assets. Fairpoint, headquartered in Charlotte, North Carolina, is the eight largest wireline telecommunications company in the US, serving about 1.4 million access lines in primarily rural areas and small- and medium-sized cities. FLEETWOOD ENTERPRISES: In Financing Talks With Bank of America -------------------------------------------------------------- Court documents say that Fleetwood Enterprises Inc. is negotiating with Bank of America for bankruptcy financing. According to Chelsea Emery at Reuters, Fleetwood Enterprises spokesperson Rivian Bell wasn't able to specify the amount of debtor-in-possession financing being discussed. Court documents say that Fleetwood Enterprises has asked the U.S. Bankruptcy Court for the Central District of California to approve emergency funding to pay workers' compensation benefits to third-party administrators. Reuters relates that Fleetwood Enterprises is closing its travel trailer division and seeking a buyer for its motor home and manufactured housing units. Reuter quoted Mr. Bell as saying, "There has been outreach to strategic and financial buyers and there has been interest." Reuters states that Fleetwood Enterprises hopes to present a plan to the Court as early as next week, according to court documents. Headquartered Riverside, California, Fleetwood Enterprises, -- http://www.fleetwood.com-- produces recreational vehicles and manufactured homes. The Debtors have about 9,000 associates working in facilities strategically located throughout the nation. The company and 19 of its affiliates filed for Chapter 11 protection on March 10, 2009 (Bankr. C.D. Calif. Lead Case No. 09-14254). Craig Millet, Esq., atGibson, Dunn & Crutcher LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Ernst & Young LLP as auditor, FTI Consulting Inc. as consultant, and Greenhill & Co. LLC as financial advisor. FLUID ROUTING: Obtains Final OK to Borrow $12,058,250 from Sun FR ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware granted Fluid Routing Solutions Intermediate Holding Corp., et al., authority on a final basis to obtain postpetition financing of up to $12,058,250 from Sun Fluid Routing Finance, LLC, as agent for itself and other lenders to the DIP Credit Agreement. Sun FR is an affiliate of Sun Capital Partners, Inc., the parent of the Debtors. Loan proceeds will be used solely in accordance with a budget, to fund the Debtors' working capital needs, repay the Debtor's prepetition first lien obligations, and other permitted expenses. Pursuant to Section 5.16 of the DIP Credit Agreement, dated as of February 6, 2009, the sale of the Acquired Assets must be approved by the Bankruptcy Court within 35 days after the Petition Date, or by March 13, 2009, pursuant to As security for the DIP Facility Obligations, the DIP Lender is granted first priority liens in all now owned or hereafter acquired assets and property of the Debtors, and to the extent that the Prepetition First Lien Obligations are paid in full in accordance with this Final Order, first priority senior priming liens on the Prepetition Collateral. To the extent the Collateral does not satisfy the DIP Facility Obligations, the DIP Lender is granted an allowed super-priority administrative claim pursuant to Sec. 364(c)(1) of the Bankruptcy Code, subordinate only to the Carve-Out, the Prepetition First Priority Liens, the Replacement Liens and the Prepetition Superpriority Claim. The DIP Facility Obligations shall be due and payable on the Termination Date, whcih means the earliest of (i) June 6, 2009, (ii) the date of termination in whole of the Commitments pursuant to the DIP Credit Agreement, or (iii) the effective date of any plan of reorganization. A full-text copy of the Court's Final DIP Facility Order, dated as of March 16, 2009, is available at: http://bankrupt.com/misc/FluidRouting.FinalDIPOrder.pdf A full-text copy of the DIP Credit Agreement, dated as of February 6, 2009, is available at: http://bankrupt.com/misc/FluidRouting.DIPCreditAgreement.pdf Headquartered in Rochester Hills, Michigan, Fluid Routing Solutions Inc. -- http://www.markivauto.com-- makes automobile parts and accessories. The company has manufacturing facilities located in Lexington, Tennessee; Big Rapids, Michigan; Oscala, Florida; and Easley, South Carolina. The company's Detroit facility closed in 2008. The company had 1,039 employees before it filed for bankruptcy. Fluid Routing Solutions, Inc., and three affiliates filed for Chapter 11 on Feb. 6 (Bank. D. Del., Lead Case No. (09-10384). Judge Christopher Sonchi handles the case. Michael R. Nestor, Esq., and Kenneth J. Enos, Esq., at Young Conaway Stargatt & Taylor LLP, and Neil E. Herman, Esq., at Morgan Lewis & Bockuis LLP, are the Debtors' counsel. Mesirow Financial Interim Management, LLC, is the Debtors' financial advisors. Fluid Routing in its bankruptcy petition estimated assets of $10 million to $50 million and debts of $50 million to $100 million. FOAMEX INT'L: Receives Final Approval for $95-Mil. DIP Financing ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has granted final approval for up to $95 million in Foamex International Inc., debtor-in-possession financing provided by MatlinPatterson Global Opportunities Partners III L.P. and Bank of America. Jack Johnson, Foamex's President and Chief Executive Officer, stated, "The final approval we received from the Court for the full $95 million in DIP financing is a key step forward as we restructure our debt and position Foamex for a stable future. The DIP financing, coupled with cash flow from operations gives the Company the financial flexibility to maintain normal operations and continue to provide our customers with innovative products and solutions without interruption." As reported by the Troubled Company Reporter on March 17, 2009, Bloomberg's Bill Rochelle said the official creditors' committee for Foamex opposed MatlinPatterson facility as well as a bonus program that could pay the top 14 executives a total of more than $1.8 million. According to Bloomberg, the Creditors Committee argued that the $95 million loan from MatlinPatterson, which is also buying the business, is "illusory." The Committee argued the new loan is actually a $5 million reduction in the revolving credit in effect before bankruptcy, the report said. The Committee, Bloomberg said, asserts the loan is "mostly to facilitate" a sale to MatlinPatterson where the lender will buy the assets not with cash but by using secured debt. The Committee also balked at the $2 million in fees the lenders will get for making the new loan and a separate prepayment penalty of $1.8 million if the loan is repaid before its four-month maturity and someone other than MatlinPatterson is the buyer. The Committee, according to the report, said it's too soon for the bankruptcy court to be approving breakup fees in connection with a sale. The Committee, joined by some of the first-lien lenders, also asked the U.S. Bankruptcy Court for the District of Delaware to deny approval of the executives' bonus program where the chief executive officer stands to take down $755,000. According to Mr. Rochelle, the U.S. Trustee also objected, pointing out that no special duties are being required from the executives and they become eligible simply by remaining with the company until the vesting date. About Foamex International Foamex International Inc. (FMXL) -- http://www.foamex.com/-- headquartered in Media, PA, produces polyurethane foam-based solutions and specialty comfort products. The company services the bedding, furniture, carpet cushion and automotive markets and also manufactures high-performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The company and eight affiliates first filed for chapter 11 protection on September 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). On February 2, 2007, the U.S. Bankruptcy Court for the District of Delaware confirmed the Debtors' Second Amended Joint Plan of Reorganization. The Plan became effective and the company emerged from chapter 11 bankruptcy on February 12, 2007. Foamex missed $7.3 million in interest payments due at the end of the Jan. 21 grace periods on the Company's $325 million first-lien term loan and the $47 million second-lien term loan. On February 18, 2009, Foamex International Inc. and seven affiliates filed separate voluntary Chapter 11 petitions (Bankr. D. Del. Lead Case No. 09-10560). The Hon. Kevin J. Carey presides over the cases. Ira S. Dizengoff, Esq., Phillip M. Abelson, Esq., and Brian D. Geldert, Esq., at Akin Gump Strauss Hauer in New York; and Mark E. Felger, Esq., and Jeffrey R. Waxman, Esq., at Cozen O'Connor, in Wilmington, Delaware, serve as bankruptcy counsel. Investment Banker is Houlihan Lokey; accountant is McGladrey & Pullen LLP, and claims and noticing agent is Epiq Bankruptcy Solutions LLC. As of September 28, 2008, the Debtors had $363,821,000 in total assets, and $379,710,000 in total debts. FORUM HEALTH: Court Okays Cash Collateral Access Until December --------------------------------------------------------------- The Hon. Kay Woods of the U.S. Bankruptcy Court for the Northern District of Ohio authorized, on an interim basis, Forum Health and its debtor-affiliates to access the case collateral securing loans from the petition date to the date which is the earlier to occur of: a) for Debtor Western Reserve Care System, within 2 business days upon the giving notice by any of the Master Trustee, the Bond Trustees, the Bond Insurer, JP Morgan or Fifth Third to the Debtors that a termination event has occurred; b) for all Debtors, 3 business days after the notice by the Master Trustee to the Debtors that a termination event has occurred and is continuing; or c) Dec. 31, 2009. The court will consider the Debtors' request on a final hearing on April 1, 2009, at 9:45 A.M. in this Court. Any objections to the entry of the final order will be filed on or before March 30, 2009, at 5:00 p.m. The Court also authorized the Debtors to provide adequate protection by: a) granting the lenders additional and replacement continuing, valid, binding, enforceable, non-avoidable and automatically and properly perfect security interests in and liens; b) providing valid, binding, enforceable, non-avoidable and automatically and properly perfected security interests in and liens on all presently owned and hereafter acquired assets of the Non-Obligated Group Debtors to compensate the lenders for any diminution in their Prepetition Collateral; c) consenting to the allowance of a superpriority claim for the benefit of the lenders; d) paying as applicable, adequate protection payments: (i) in an amount equal to the amount of interest that would otherwise be payable under the applicable prepetition financing agreements and paid on the same schedule as interest would be paid as and when due under the applicable prepetition financing agreement; and (ii) in the amount of all reasonable fees, charges and expenses in accordance with the prepetition financing agreements; e) employing Dalton Edgecomb of Huron Consulting Group as chief restructuring officer. f) establishing an indemnity account, into which, upon the earlier of: (i) the first occurrence of an Event of Default or (2) the closing of any sale transaction for any of the Debtors' assets the net proceeds of any sales up to an amount of $500,000 will be deposited as security for any reimbursement, indemnification or similar continuing obligations of the Debtors in favor of the lenders under the prepetition financing agreements. The Court ordered that the cash collateral may be used only according to the budget. A full-text copy of the cash collateral budget is available for free at: http://bankrupt.com/misc/cashcollbudget.pdf About Forum Health Based in Warren, Ohio, Forum Health -- http://www.forumhealth.org/ -- offer health care services. The primary service area consists of the northeast Ohio counties of Mahoning, Trumbull and Columbiana; and northeast Ohio counties of Ashtabula, Geauga and Portage and the Pennsylvania counties of Mercer and Lawrence. The Debtor and its debtor-affiliates filed for Chapter 11 protection on March 16, 2009, (Bankr. N.D. Ohio Lead Case No.: 09- 40795) Paul W. Linehan, Esq. and Shawn M Riley, Esq. at McDonald Hopkins LLC represents the Debtors in heir resructuring efforts. The Debtors propose to employ Michael A. Gallo, Esq. at Nadler Nadler & Burdman Co., LPA as co-counsel; Kurtzman Carson Consultants LLC as claims, noticing and balloting agent; and Huron Consulting Services LLC as financial advisors. The Debtors listed estimated assets of $100 million to $500 million and estimated debts of $100 million to $500 million. FORUM HEALTH: Taps Huron Consulting's Dalton T. Edgecomb as CRO --------------------------------------------------------------- Forum Health and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Ohio for authority to employ Huron Consulting Services LLC as financial advisors and designate Dalton T. Edgecomb, managing director of Huron, as chief restructuring officer. Huron will: a) Compile and format data and analyses necessary to meet the financial reporting requirements mandated by the bankruptcy code and the U.S. Trustee's office; b) Monitor the Debtors' operational performance against the cash collateral budget and the cash collateral order covenants and report on covenant compliance; c) Prepare on-going forecasting of the Debtors' cash flows and their operations, and implement effective cash management; d) Prepare for meetings and discussions with creditor groups, the U.S. Trustee and other parties-of-interest; and address requests for information and other concerns; e) Implement identified operational restructuring initiatives; and on-going identification and assessment of the Debtors' restructuring options. These options may include closing operations, selling assets, operational improvements, etc.; and may include assessing the feasibility of breaking up the Debtors' legal entities to achieve the restructuring. f) Prepare analyses, research and financial modeling for the purpose of developing a plan of reorganization for the Debtors. g) Draft plan of reorganization and disclosure statement for review and approval by the bankruptcy court and creditor classes. Support the approval process for the plan of reorganization. h) Perform an economic review of all executory contracts for those to be assumed or rejected. i) Prepare for and attend bankruptcy court hearings on behalf of the Debtors and provide expert testimony as required. j) Prepare a going concern and liquidation value analysis of the Debtors' assets. k) Perform any other restructuring management duties relating to Mr. Edgecomb's role as CRO as requested directly by the CEO and the board. The hourly rates of Huron professionals are: Managing Directors $650 - $730 Directors $525 - $620 Managers $400 - $475 Associates $325 - $345 Analysts $230 - $245 On-Demand Consultants $140 - $300 Mr. Edgecomb tells the Court that as an accommodation to the Debtors, Huron has agreed to permanently reduce each month the total of monthly fees invoiced by 22%. In the event the Bankruptcy Court requires the continuation of interim fee holdbacks beyond each fee application period and hearing, Huron requests that the Court allow Huron a lesser amount of holdback in recognition of this permanent fee accommodation. Mr. Edgecomb adds that Huron has received a retainer of $100,000 in this matter. Mr. Edgecomb assures the Court that Huron is a "disinterested person" as that is defined in Section 101(14) of the Bankruptcy Code. About Forum Health Based in Warren, Ohio, Forum Health -- http://www.forumhealth.org/ -- offer health care services. The primary service area consists of the northeast Ohio counties of Mahoning, Trumbull and Columbiana; and northeast Ohio counties of Ashtabula, Geauga and Portage and the Pennsylvania counties of Mercer and Lawrence. The Debtor and its debtor-affiliates filed for Chapter 11 protection on March 16, 2009, (Bankr. N.D. Ohio Lead Case No.: 09- 40795) Paul W. Linehan, Esq. and Shawn M Riley, Esq. at McDonald Hopkins LLC represents the Debtors in heir resructuring efforts. The Debtors propose to employ Michael A. Gallo, Esq. at Nadler Nadler & Burdman Co., LPA as co-counsel; Kurtzman Carson Consultants LLC as claims, noticing and balloting agent; and Huron Consulting Services LLC as financial advisors. The Debtors listed estimated assets of $100 million to $500 million and estimated debts of $100 million to $500 million. FORUM HEALTH: Taps Kurtzman Carson as Notice and Claims Agent ------------------------------------------------------------- Forum Health and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Ohio for authority to employ Kurtzman Carson Consultants LLC as notice, claims and balloting agent and appoint KCC as agent of this Court. KCC will be responsible for the noticing, receiving, docketing and maintaining of proofs of claims. In addition, KCC will provide other noticing, claims processing, balloting and other administrative services as may be requested from time to time by the Debtors including: a) the preparation of their schedules, statements of financial affairs and master creditor list and any amendments thereto; b) the reconciliation and resolution of claims; c) the preparation, mailing and tabulation of ballots and other related services for the purposes of soliciting votes to accept or reject a plan of reorganization; and d) provide technical support in connection with these cases. Moreover, KCC will be appointed as agent of the Clerks Office and, will the authorized repository for all proofs of claims filed in these Chapter 11 cases and will be authorized and directed to maintain official claims registers for each of the Debtors and will provide the Clerk's Office with a certified duplicate thereof as directed by the Clerk's Office. The Debtors request authorizations to compensate KCC for services rendered under the terms of the Services Agreement without further order of the Court upon KCC's submission to the Debtors of invoices summarizing in reasonable detail the services and expenses for which compensation is sought. The Debtors further request that the fees and expenses of KCC incurred in the performance of the services be treated as administrative expenses of the Debtors' chapter 11 estates. A full-text copy of the KCC Services Agreement is available for free at: http://bankrupt.com/misc/kccserviceagreement.pdf Michael J. Frishberg, vice president of Corporate Restructuring Services, assures the Court that KCC is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Forum Health Based in Warren, Ohio, Forum Health -- http://www.forumhealth.org/ -- offer health care services. The primary service area consists of the northeast Ohio counties of Mahoning, Trumbull and Columbiana; and northeast Ohio counties of Ashtabula, Geauga and Portage and the Pennsylvania counties of Mercer and Lawrence. The Debtor and its debtor-affiliates filed for Chapter 11 protection on March 16, 2009, (Bankr. N.D. Ohio Lead Case No.: 09- 40795) Paul W. Linehan, Esq. and Shawn M Riley, Esq. at McDonald Hopkins LLC represents the Debtors in heir resructuring efforts. The Debtors propose to employ Michael A. Gallo, Esq. at Nadler Nadler & Burdman Co., LPA as co-counsel; Kurtzman Carson Consultants LLC as claims, noticing and balloting agent; and Huron Consulting Services LLC as financial advisors. The Debtors listed estimated assets of $100 million to $500 million and estimated debts of $100 million to $500 million. FORUM HEALTH: Moody's Downgrades Rating on $146 Mil. Debt to 'Ca' ----------------------------------------------------------------- Moody's Investors Service has downgraded the bond rating for Forum Health (Youngstown, OH) to Ca from Caa2, affecting $146 million of debt as listed at the end of this report. The rating outlook is negative. At this time Moody's are removing the rating from Watchlist for potential downgrade where it was placed on September 19, 2008 (extended on December 3, 2008). The rating downgrade is based on Forum's announcement this morning to voluntarily file to reorganize under Chapter 11 of the U.S. Bankruptcy Code and Moody's assessment that the recovery value of the bonds will be notably less than 100% and consistent with a Ca rating level. Forum's unrestricted cash position has declined to a very weak level of $20 million (17 days of cash on hand) as of January 31, 2009. Moody's believe the system will have difficulty operating over the next several months with minimal cash given continued operating losses, debt service requirements and pension funding requirements. Legal Security: Gross revenue pledge and mortgages on the primary facilities Interest Rate Derivatives: None Challenges * Significant declines in unrestricted cash to a minimal $20 million (17 days of cash on hand) as operating losses continue and the system has been required to transfer cash to the debt service reserve fund under a master forbearance agreement. As of January 31, 2009 the debt service reserve fund had $54 million. J.P.Morgan did not renew the standby bond purchase agreement supporting the Series 1997B bonds ($38 million) and so the bonds are being repaid under a 5-year term loan. * Heavily unionized workforce with about 75% of employees in unions, compared with a much smaller portion at Forum's primary competitor * Significant and multi-year declines in inpatient admissions and outpatient procedures, particularly at the Western Reserve facility from the loss of volumes to the competitor and economic challenges * Continued and growing operating losses through 2008 and the first month of 2009 * Competition from a financially strong and equally-sized hospital system, which opened a new hospital on August 1, 2007 * Economically weak service area, characterized by a declining population and below-average wealth levels, which have resulted in rising self-pay and charity care patients * Funding of capital needs in order to remain competitive Outlook The rating outlook is negative. A lower rating will be considered if the recovery on the bonds is lower than Moody's current estimates. Rated Debt -- Series 1997A ($74 million outstanding): Ca underlying rating; MBIA insured -- Series 1997B ($38 million): Ca underlying rating; MBIA insurance and standby bond purchase agreement from JPMorgan (as discussed above JPMorgan has not renewed the agreement) -- Series 2002A ($26 million): rated Ca -- Series 2002B ($8 million): Letter of credit from Fifth Third The last rating action was on December 3, 2008 when the Watchlist period was extended. FOXCO ACQUISITION: S&P Downgrades Corporate Credit Rating to 'B-' ----------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its corporate credit and issue-level ratings on FoxCo Acquisition LLC and its operating subsidiary, FoxCo Acquisition Sub LLC, which S&P analyzes on a consolidated basis. S&P lowered the corporate credit rating to 'B-' from 'B'. The rating outlook is negative. At the same time, S&P lowered the issue-level rating on FoxCo's senior secured credit facilities to 'B' (one notch above the corporate credit rating on the company) from 'BB-'. S&P revised the recovery rating on this debt to '2' from '1'. The '2' recovery rating indicates S&P's expectation of substantial (70%- 90%) recovery in the event of a payment default. In addition, S&P lowered the issue-level rating on the company's senior unsecured notes to 'CCC' (two notches lower than the corporate credit rating) from 'CCC+'. The recovery rating on this debt remains at '6', indicating S&P's expectation of negligible (0%-10%) recovery in the event of a payment default. "The downgrade reflects our expectation that EBITDA will decline sharply in 2009," said Standard & Poor's credit analyst Jeanne Mathewson, "causing leverage to increase above 12x, liquidity to become strained, and the company's cushion of compliance with covenants to narrow." S&P expects the recession's effect on key advertising categories and the absence of election revenues in the coming year to cause the declines in EBITDA. FREEDOM COMMUNICATIONS: S&P Cuts Credit Facilities Rating to CCC ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its issue-level ratings and revised its recovery ratings on the secured debt of newspaper publishers MediaNews Group Inc. and Freedom Communications Inc. The revised ratings reflect a more significant decline in cash flow than that used in S&P's previous analysis, as well as a reduction in S&P's assumed emergence multiple to 4.5x from 5.0x due to the challenging operating conditions in the newspaper sector. S&P lowered its issue-level rating on the secured credit facilities of MediaNews to 'CCC' (at the same level as the 'CCC' corporate credit rating on the company) from 'CCC+'. The recovery rating on these loans was revised to '4', indicating S&P's expectation of average (30% to 50%) recovery for lenders in the event of a payment default, from '2'. S&P also lowered the issue-level rating on Freedom's secured credit facilities to 'CCC' (one notch lower than the 'CCC+' corporate credit rating on the company) from 'CCC+'. The recovery rating was revised to '5', indicating S&P's expectation of modest (10% to 30%) recovery for lenders in the event of a payment default, from '3'. Ratings List MediaNews Group Inc. Corporate Credit Rating CCC/Negative/-- Freedom Communications Inc. Corporate Credit Rating CCC+/Negative/-- Ratings Revised MediaNews Group Inc. To From -- ---- Secured CCC CCC+ Recovery Rating 4 2 Freedom Communications Inc. To From -- ---- Secured CCC CCC+ Recovery Rating 5 3 G-I HOLDINGS: Proponents Extend Effective Date of Plan to June 30 ----------------------------------------------------------------- G-I Holdings, Inc., ACI Inc., the Legal Representative of Holders of Present and Future Asbestos-Related Demands, and the Official Committee of Asbestos Claimants have agreed to extend the deadline for the Effective Date of the Plan from February 17, 2009, to June 30, 2009. G-I, ACI, the Legal Representative, and the Asbestos Claimants Committee are the Plan Proponents as defined in section 1.189 of the Plan. Under Section 1.1.61 of the Plan, the Plan's Effective Date shall be that date by which conditions precedent to the effectiveness of the Plan have been satisfied, but which shall not be later than February 17, 2009. As reported in the Troubled Company Reporter on December 19, 2008, the U.S. Bankruptcy Court for the District of New Jersey approved the First Amended Disclosure Statement for the Second Amended Joint Plan of the Debtors, the Legal Represetnative, and the Asbestos Claimants Committee, dated Dec. 3, 2008. Under the Plan, holders of unsecured claims against G-I are expected to recover 8.6% while holders of unsecured claims against ACI will recover 100 cents on the dollar. The Debtors did not specify the expected recovery by asbestos claimants but acknowledged that these claimants are impaired under the plan. Holders of equity interests in G-I and ACI, with the exception of Class B shareholders, will not receive any distributions on account of their equity interests and thus, will be deemed to reject the plan. Existing equity interests in the Debtors will be extinguished pursuant to the Plan. The Debtors will issue G-I Class B Shares and ACI Class B Shares prior to the Plan's Effective Date, which will remain outstanding. A full-text copy of the Amended Chapter 11 Plan, dated Dec. 3, 2008, is available for free at: http://researcharchives.com/t/s?366d A full-text copy of the Amended Disclosure Statement, dated Dec. 3, 2008, is available for free at: http://researcharchives.com/t/s?366e About G-I Holdings Based in Wayne, New Jersey, G-I Holdings, Inc., is a holding company that indirectly owns Building Materials Corporation of America, a manufacturer of premium residential and commercial roofing products. The company filed for Chapter 11 protection on Jan. 5, 2001 (Bankr. D. N.J. Case No. 01-30135). An affiliate, ACI, Inc., filed its own voluntary chapter 11 petition on Aug. 3, 2001. The cases were consolidated on Oct. 10, 2001. Martin J. Bienenstock, Esq., Irena Goldstein, Esq., and Timothy Q. Karcher, Esq., at Dewey & Leboeuf LLP, represents the Debtors as counsel. Dennis J. O'Grady, Esq., and Mark E. Hall, Esq., at Riker, Danzig, Scherer, Hyland, represent the Debtors as co-counsel. Lowenstein Sandler PC represents the Official Committee of Unsecured Creditors. Judson Hamlin was appointed by the Court as the Legal Representative for Present and Future Holders of Asbestos Related Demands. Keating, Muething & Klekamp, P.L.L. is the principal counsel to the Legal Representative of Present and Future Asbestos-Related Demands. GENERAL GROWTH: Ackman Says Owners Can Keep Stake After Ch. 11 -------------------------------------------------------------- According to a report by Bloomberg News hedge-fund manager William Ackman says he expects General Growth Properties Inc. will be filing Chapter 11 "imminently," he believes the owner of 200 shopping malls can be reorganized so existing stockholders will survive "intact." Mr. Ackman, head of Pershing Square Capital Management LP, said in an interview with Bloomberg Television that he's taken what could work out to be a 25 percent interest in General Growth. Under the absolute priority rule of the Bankruptcy Code, secured creditors have priority over a company's unsecured creditors to the extent of the value of their collateral. Unsecured creditors, on the other hand, stand ahead of investors in the receiving line and their claims must be satisfied before any investment loss is compensated. In some cases where investors are "out of the money", investors purchase debt to keep control of the company. Investors could also provide additional financing in exchange of stock of the reorganized company. General Growth has $1.18 billion in past-due debt and $4.09 billion in debt that could be accelerated, excluding $2.25 billion in notes issued by The Rouse Company LP which it acquired in November 2004. TRCLP has extended the expiration date for its consent solicitation to 5:00 p.m., New York City time, on March 20, 2009. In the solicitation, TRCLP is seeking consents from the holders of TRCLP's unsecured notes -- five series with an aggregate outstanding principal amount of approximately $2.25 billion at December 31, 2008 -- to forbear from exercising remedies with respect to various payment and other defaults under the TRCLP Notes through December 31, 2009. The Company also noted that representatives of an ad hoc committee of holders of TRCLP Notes, the members of which hold in the aggregate approximately 41% of TRCLP Notes, that all of the members of the ad hoc committee have committed to consent to the forbearance. As of 5:00 p.m. on March 16, consents had been validly delivered (and not validly revoked) with respect to these amounts of TRCLP Notes: 3.625% Notes due 2009 $163,897,000 (41.5%) 8% Notes due 2009 $117,591,000 (58.8%) 7.20% Notes due 2012 $329,869,000 (82.5%) 5.375% Notes due 2013 $310,419,000 (69.0%) 6-3/4% Notes due 2013 $593,272,000 (75.4%) The minimum acceptance levels for each series of the TRCLP Notes are: 90% of the 3.625% Notes due 2009 and the 8% Notes due 2009; 75% of the 7.20% Notes due 2012, the 5.375% Notes due 2013 and the 6-3/4% Notes due 2013. Holders of TRCLP Notes who have previously validly delivered consents will continue to have the right to revoke their consents through the extended expiration date. Effectiveness of the forbearance under the 2006 Senior Credit Agreement will be conditioned on and subject to, among other things, the successful completion of the consent solicitation and effectiveness of the forbearance agreement relating to the TRCLP Notes. About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. (NYSE:GGP) -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self-administered and self-managed real estate investment trust. General Growth said in a regulatory filing Sept. 30 that its potential inability to address its 2008 or 2009 debt maturities in a satisfactory fashion raises substantial doubts as to its ability to continue as a going concern. * * * As reported by the Troubled Company Reporter on Dec. 11, 2008, Fitch Ratings, has downgraded the Issuer Default Ratings and outstanding debt ratings of General Growth Properties to 'C' from 'B'. GRAND PRIX: Voluntary Chapter 15 Case Summary --------------------------------------------- Chapter 15 Petitioner: Plaza Management Overseas S.A. as the foreign representative Chapter 15 Debtor: Grand Prix Associates Inc. West Suite, Old Clarence Thomas Building Wickham's Cay II Road Town, Tortola British Virgin Islands Chapter 15 Case No.: 09-16545 Debtor-affiliates filing subject to Chapter 11 petitions: Entity Case No. ------ -------- Bundora Associates Inc. 09-16549 Bundora Investments Limited 09-16551 Bundora Investments N.V. 09-16554 Ruby Investments Sp. z.o.o. 09-16556 Bundora Corp. 09-16558 Lockhart Overseas Investments Corp. 09-16560 Lockhart Limited 09-16561 Naven Investments Sp. z.o.o. 09-16562 Lockhart Corp. I 09-16563 Shelby Overseas Invest & Trade Ltd. 09-16564 Type of Business: The Debtors operate a private investment holding company. See: http://www.grandprixassociates.vg/ Chapter 15 Petition Date: March 18, 2009 Court: District of New Jersey (Newark) Judge: Donald H. Steckroth Chapter 15 Petitioner's Counsel: Michael D. Sirota, Esq. Cole, Schotz, Meisel, Forman & Leonard 25 Main St. Hackensack, NJ 07601 (201) 489-3000 msirota@coleschotz.com Estimated Assets: unstated Estimated Debts: unstated GTC BIOTHERAPEUTICS: Terminates License Pact with LEO PHARMA ------------------------------------------------------------ GTC Biotherapeutics sent a notification to LEO Pharma on March 13, 2009, to terminate the Licensing and Supply Agreement with LEO which is approved on October 31, 2005. The agreement provided for commercialization and development of ATryn (R), GTC's recombinant form of human antithrombin, in the territories of Europe, Canada and the Middle East. GTC considers LEO to be in breach of its obligations under the contract and is terminating the contract pursuant to its terms and seeking damages under International Chamber of Commerce arbitration procedures. GTC has taken this step to provide it a pathway to accelerate and expand progress in Europe, Canada, and the Middle East for both commercialization and further clinical development of ATryn (R). According to the company, terminating their agreement with LEO will enable them to pursue a number of ATryn (R) program commercialization and development opportunities, including expanding commercial availability of the said product in Europe. GTC also decide to expand the approved indication to include prophylactic treatment of hereditary antithrombin deficient patients undergoing childbirth, submitting a request for market authorization with the Canadian health authorities, establishing appropriate health authority approvals and commercialization opportunities in the Middle East, and developing ATryn(R) for acquired deficiency indications, including as a potential treatment of disseminated intravascular coagulation, or DIC, associated with severe sepsis. LEO had attempted to terminate its 2005 collaboration agreement with GTC for alleged cause. LEO made it clear that its decision to seek termination was not based on any safety or efficacy issues regarding ATryn (R). GTC, however, affirms that LEO did not have any basis for such termination and instead believes it is to protect GTC's legal rights that they take the steps to arbitration process and the notice of termination. The process and the consequential matters which follow termination are still in the preliminary stages, and while GTC is confident of its position, it cannot predict likely outcomes or, in the event of any unfavorable outcome, the potential consequences to GTC, including cost. About GTC Biotherapeutics Headquartered in Framingham, Massachusetts, GTC Biotherapeutics, Inc. (NASDAQ: GTCB) -- http://www.gtc-bio.com-- develops, supplies, and commercializes therapeutic proteins produced through transgenic animal technology. The company is also developing a portfolio of recombinant human plasma proteins with known therapeutic properties. The company also has a monoclonal antibody portfolio focused on follow-on biologics, including a CD20 monoclonal antibody. The intellectual property of the company includes a patent in the United States through 2021 for the production of any therapeutic protein in the milk of any transgenic mammal. Its transgenic production platform is particularly well suited to enabling cost effective development of proteins that are difficult to express in traditional recombinant production systems as well as proteins that are required in large volumes. * * * John B. Green, senior vice president, treasurer and chief financial officer of the Company, related that on November 6, 2008, the company received a deficiency letter from the staff of The Nasdaq Stock Market notifying it that it no longer satisfies the $2.5 million minimum stockholders' equity requirement for continued listing of its common stock on the Nasdaq Capital Market. GTC Biotherapeutics' September 28, 2008, balance sheet showed total assets of $33,007,000 and total liabilities of $33,654,000, resulting in total shareholders' deficit of $647,000. For the three months ended September 28, 2008, the company posted a net loss of $6,060,000 on revenues of $2,929,000, compared with a net loss of $8,388,000 on revenues of $2,576,000 in the same period in 2007. HARRAH'S ENTERTAINMENT: Moody's Downgrades Default Rating to 'Ca' ----------------------------------------------------------------- Moody's Investors Service downgraded Harrah's Entertainment Inc.'s Probability of Default rating to Ca from Caa3 following its announcement that it commenced a second private debt exchange offer. Moody's also placed Harrah's PDR, Corporate Family, and all other ratings on review for possible downgrade. HET's Speculative Grade Liquidity rating of SGL-3 was affirmed. The downgrade of the PDR rating reflects Harrah's announcement that it is offering up to $2.8 billion of new 10% second priority senior secured notes due 2018 for specified classes of existing debt (the Exchange Transaction). If successful, the Exchange Transaction will result in a swap of junior debt (at significant discounts to par) for new second lien notes and could result in the elimination of all restrictive covenants under certain indentures. If there is a relatively high degree of participation in the Exchange Transaction -- particularly with respect to existing bonds with near-term maturities -- HET's CFR could be confirmed as it could result in the extinguishment of a material amount of debt. However, even if the CFR were to be confirmed, the existing bank facility ratings could be downgraded as a result of a lower level of junior debt in the capital structure post exchange. If there is limited participation in the Exchange Transaction, ratings could face downward pressure given the company's thinning liquidity cushion and high leverage. After consideration of capital spending and scheduled debt maturities, HET is expected to generate negative free cash flow in 2009 and 2010. The SGL-3 Speculative Grade Liquidity rating reflects adequate liquidity over the next four quarters based on expected negative free cash offset by sufficient cash balances. Moody's will view the exchange as a distressed exchange, and Moody's reflect the likelihood of this event occurring through the assignment of the Ca Probability of Default rating. Moody's will classify this distressed exchange as a limited default based upon the capital structure in effect upon closing of the Exchange Transaction. Ratings downgraded and placed on review for possible downgrade: -- Harrah's Entertainment, Inc. -- Probability of Default to Ca from Caa3 Ratings placed on review for possible downgrade and LGD rates and point estimates subject to change: -- Harrah's Entertainment, Inc. -- Corporate Family Rating at Caa3 -- Harrah's Operating Company, Inc. -- Senior secured guaranteed revolving credit facility at Caa1 (LGD 2, 22%) -- Senior secured guaranteed term loans at Caa1 (LGD 2, 22%) -- Senior unsecured guaranteed notes at Ca (LGD 5, 72%) -- Senior unsecured debt at Ca (LGD 5, 89%) -- Senior subordinated notes at Ca (LGD 6 96%) Moody's last action on Harrah's took place on March 4, 2009 when Moody's downgraded Harrah's PDR and CFR to Caa3. Harrah's Entertainment, Inc., through its wholly-owned subsidiary, Harrah's Operating Company, Inc., owns or manages approximately 50 casinos that comprise around 40,000 hotel rooms, three million square feet of gaming space and two million square fee of convention center space. HET generated consolidated revenues of $10.8 billion for the last twelve months ended March 31, 2008. Affiliates of Apollo Global Management, LLC and TPG Capital, LP (the Sponsors) acquired the company through a $31 billion leverage buy-out in early 2008. HARRIS INTERACTIVE: To Slash 16% of Workforce to Reduce Costs ------------------------------------------------------------- To reach approximately $10 million in annualized cost savings, Harris Interactive Inc. is cutting back 90 full-time employees or about 16% of its total U.S. full-time workforce. Harris believes that the expenses regarding the reduction will not exceed $2.8 million in one-time termination benefits, all of which will involve cash payments. The company anticipated that all such cash payments will be completed by March 2010. Severance charges related to this action will be recorded in the Company's results of operations for the third quarter of fiscal 2009. The company estimates that by strategically reducing headcount at its U.S. facilities, they will be able to expand the $9.5 million resulting from the headcount reduction and reorganization on December 17, 2008. Harris Interactive continuously reviews its operations and cost structure, and while it does not have any specific commitments to do so at this time, may pursue additional cost reduction actions in the future. Harris Interactive Inc. -- http://www.harrisinteractive.com/-- provides custom market research. Harris Interactive serves clients globally through our North American, European and Asian offices and a network of independent market research firms. HUNTSMAN CORP: S&P Downgrades Corporate Credit Rating to 'B' ------------------------------------------------------------ Standard & Poor's Ratings Services said it lowered its ratings on Salt Lake City, Utah-based Huntsman Corp., including its corporate credit rating to 'B' from 'BB-'. The ratings remain on CreditWatch with negative implications. At the same time, S&P assigned its '5' recovery rating, indicating the expectation of modest recovery (10%-30%) in the event of a default, to Huntsman International LLC's existing $300 million senior unsecured notes. S&P also assigned a '6' recovery rating, indicating the expectation of negligible recovery (0%-10%) in the event of a default, to Huntsman International LLC's existing subordinated notes aggregating $1.285 billion. "The ongoing CreditWatch listing reflects our concerns related to Huntsman's highly leveraged financial profile and meaningful near- term debt maturities and refinancing requirements including a $575 million accounts receivable securitization facility that matures in November 2009," said Standard & Poor's credit analyst Paul Kurias. The company also has $296 million in senior secured notes, and a $650 million revolving credit facility, which had over $600 million in availability as of Dec. 31 mature in the second-half of 2010. These debt maturities represent nearly 30% of the $5.1 billion of total adjusted debt outstanding as of Dec. 31, 2008. (S&P adjust debt to include capitalized operating leases, tax-adjusted underfunding of post-retirement liabilities, and a receivables securitization facility). The initial CreditWatch placement in June 2007 followed the proposed acquisition of Huntsman by Basell AF SCA (not rated), and subsequently reflected Hexion Specialty Chemicals Inc.'s proposed debt-financed acquisition of Huntsman Corp. Neither transaction was consummated. In December 2008, Huntsman announced the termination of its merger agreement with Hexion, and a settlement of a related litigation process against Hexion and Apollo Management L.P. That settlement provided Huntsman with about $1 billion, mitigating some of the concern related to the deterioration of the company's financial profile in the current economic downturn. "The downgrade reflects our expectations for further deterioration in operating performance in 2009, resulting in substantially weaker credit ratios relative to our expectation at the previous rating," added Mr. Kurias. S&P is concerned that Huntsman's 2009 operations and earnings will be hurt by the ongoing recession. S&P expects the global nature of the economic downturn to drive down overall demand for the company's products in key businesses, despite the depth of Huntsman's diversified portfolio of businesses, and geographically diverse operations that generate more than two-third of revenues from outside of North America. S&P also expects that the impact of the ongoing economic slowdown will offset strengths including favorable competitive and cost positions in key businesses including the polyurethanes business and performance products business that together contribute slightly more than three-quarters of revenue. S&P will resolve the CreditWatch in the next few months as more information becomes available about any possible steps by management to refinance the company's near-term debt maturities or to increase comfort levels on its covenant compliance. S&P will also review the outcome of the company's litigation against banks that is scheduled for a court ordered mediation beginning May 2009 and to go to trial in June 2009. S&P might lower ratings if management does not proactively take steps to resolve concerns related to near-term debt maturity requirements and liquidity management. S&P could also lower ratings if liquidity unexpectedly deteriorates, and the current comfortable cash balance of about $650 million is reduced meaningfully, or if earnings deterioration in 2009 exceeds S&P's expectation without indication of recovery in 2010. INNUA CANADA: Voluntary Chapter 15 Case Summary ----------------------------------------------- Chapter 15 Petitioner: RSM Richter Inc. Court Appointed Receiver and Duly Appointed Foreign Representative Chapter 15 Debtor: Innua Canada Ltd. 330-3310 S. Service Road Burlington L7N3M6 Canada Chapter 15 Case No.: 09-16362 Type of Business: The Debtor makes and distributes PVC and plasticizers. see: http://www.innua.com/ Chapter 15 Petition Date: March 16, 2009 Court: District of New Jersey (Newark) Judge: Donald H. Steckroth Chapter 15 Petitioner's Counsel: Eric H. Horn, Esq. ehorn@lowenstein.com Michael S. Etkin, Esq. metkin@lowenstein.com Lowenstein Sandler, P.C. 65 Livingston Avenue Roseland, NJ 07068 Tel: (973) 597-2500 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million INTERNATIONAL LEASE: Moody's Downgrades Senior Unsecured Rating --------------------------------------------------------------- Moody's Investors Service downgraded the senior unsecured rating of International Lease Finance Corporation to Baa2 from Baa1 and confirmed its short-term rating of Prime-2. The ratings on ILFC's trust preferred securities, E-Capital Trusts I and II, were lowered to Ba1 from Baa3. ILFC's rating outlook is negative. This concludes the review with direction uncertain that was placed on ILFC's ratings on October 3, 2008, in conjunction with rating actions taken at that time on the firm's ultimate parent, American International Group, Inc., and in consideration of AIG's plans to divest ILFC. On March 2, 2009, Moody's confirmed AIG's A3 senior unsecured debt and Prime-1 short-term debt ratings and assigned a negative outlook. Moody's said the rating action lowers ILFC's ratings to a level that currently approximates the firm's intrinsic, non-supported credit profile. ILFC's ratings have historically been uplifted from its stand-alone profile due to support from AIG, which has periodically provided capital to ILFC to maintain its leverage and help it meet its debt repayment and aircraft purchase obligations. During its ongoing efforts to divest ILFC, AIG is expected to continue to provide funding support to ILFC. The rating agency said that a sale to a strong, highly-rated strategic investor could strengthen ILFC's ratings, while a sale to a financial investor-led consortium would be unlikely to enhance the company's ratings. "There is considerable uncertainty regarding the outcome of the sales process and the strength of any support from potential new owners of the firm, and hence the ratings now reflect predominantly the fundamental qualities of ILFC's operations," said Moody's senior analyst Mark Wasden. Moody's also noted that ILFC's acquirer could require ILFC to pay dividends to service the debt used to fund the purchase, which could reduce the firm's financial flexibility. Moody's emphasized that ILFC's ability to secure reliable long-term funding and sound contingent liquidity remain crucial rating considerations that will likely be influenced by the firm's eventual ownership structure. ILFC's Baa2 rating continues to be supported by its strong worldwide franchise; its well-balanced portfolio in terms of geographic, aircraft type, and customer mix; the benefits to its liquidity and cash flow from lower aircraft purchase obligations over the next two years; and its history of profitable operations. The negative rating outlook considers the heightened potential that a deeper and lengthier economic downturn could negatively affect the performance of ILFC's portfolio of aircraft leases. Though AIG reported strong preliminary 2008 operating results for ILFC, pressure on airlines' earnings and the potential for higher lease defaults and lower aircraft lease rates could weaken ILFC's profitability. The global economic slowdown could further dampen air travel, potentially weakening demand for leased aircraft, putting further downward pressure on lease rates and terms. ILFC has shown operating resiliency in previous cycles, a tribute to its global reach and capable asset management, but the current cycle presents greater challenges than previously encountered by the company, given its larger scale and higher volume of maturing leases. The negative outlook also incorporates the uncertainty regarding ILFC's ultimate ownership and associated implications for the firm's long-term capital structure and operating and financial strategies. With respect to ILFC's trust preferred securities (E-Capital Trusts I & II), Moody's lowered the ratings one notch to Ba1 from Baa3. In the event that a sales transaction of ILFC is not consummated, the ratings on the E-Capital Trusts I and II would be equalized with those of AIG's and AGFC's hybrid capital securities, both currently at Ba2. Ratings downgraded as a result of this action include: -- International Lease Finance Corporation: senior unsecured debt to Baa2 from Baa1, preferred stock to Ba1 from Baa3. -- ILFC E-Capital Trusts I & II: backed preferred stock to Ba1 from Baa3. These ratings were confirmed: -- International Lease Finance Corporation: short-term debt at Prime-2. International Lease Finance Corporation, headquartered in Los Angeles, California, is a major owner-lessor of commercial aircraft. IRIDIUM SATELLITE: S&P Retains Positive Watch on 'B-' Rating ------------------------------------------------------------ Standard & Poor's Ratings Services said the ratings on Bethesda, Maryland-based satellite services provider Iridium Satellite LLC, including the 'B-' corporate credit rating, remain on CreditWatch with positive implications, where they were placed on Sept. 25, 2008. As of Dec. 31, 2008, Iridium had about $160 million of debt outstanding. S&P expects to raise its corporate credit rating on Iridium to 'B' from 'B-' if the merger between Iridium and GHL Acquisition Corp., a special-purpose acquisition company sponsored by Greenhill & Co. Inc., is consummated under the contemplated terms. S&P expects the merger to close in the second quarter of 2009. The outlook would be stable. At the close of the transaction, S&P would also raise the issue- level ratings on Iridium's first-lien credit facilities to 'BB-' (two notches above the corporate credit rating) from 'B-' and revise the recovery rating on the debt to '1' from '4'. S&P would also raise the issue-level rating on the company's second-lien term loan to 'B', the same as the corporate credit rating, from 'CCC' and revise the recovery rating on that debt to '4' from '6'. The '1' recovery rating indicates the expectations for full (90%- 100%)) recovery of principal in the event of a payment default, while the '4' recovery rating indicates the expectations for average (30%-50%) recovery of principal in the event of a payment default. The recovery rating changes would be due to the improved recovery prospects resulting from the anticipated paydown of the loans as part of this transaction. "The prospective rating actions are driven by expectations for lower leverage over the intermediate term," said Standard & Poor's credit analyst Naveen Sarma, "and a somewhat better business risk profile, which is aided by the ongoing operational issues at its principal mobile satellite voice competitor, Globalstar." Debt to latest-12-month EBITDA, as of the Dec. 31, 2008, quarter is modest for the rating, at about 1.7x. When the GHL transaction closes, Iridium is required under its October 2008 amendments to its first-lien credit facility to prepay $80 million of that credit facility. "We expect leverage to remain low for this rating level over the next few years," added Mr. Sarma, "as the company begins to design and develop its second-generation satellite constellation, Iridium NEXT." However, cash on hand and future cash flow generation is far short of the approximately $2 billion cost to construct and launch the new satellites. Therefore, S&P expects the company will likely need to issue significant new debt beyond 2011 to finance the project. "The 'B' corporate credit rating incorporates S&P's expectations for much higher leverage over the longer term," added Mr. Sarma. JEFFERSON FEDERAL: Weiss Ratings Assigns "Very Weak" E- Rating -------------------------------------------------------------- Weiss Ratings has assigned its E- rating to Tennessee-based Jefferson Federal 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." Jefferson Federal is a chartered FDIC Savings Bank. Deposits have been insured by the Federal Deposit Insurance Corporation since the financial institution was established on Feb. 21, 1996. Jefferson Federal maintains a Web site at http://www.jeffersonfederal.com/and operates 13 branches located in Tennessee. At Dec. 31, 2008, Jefferson Federal disclosed $658 million in assets and $579 million in liabilities in its regulatory filings. JG WENTWORTH: S&P Downgrades Counterparty Credit Rating to 'CC' --------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its long- term counterparty credit rating on J.G. Wentworth LLC (Wentworth) to 'CC' from 'CCC+'. At the same time, S&P lowered the rating on Wentworth's $325 million senior secured bank loan to 'CC' from 'CCC+' and revised the recovery rating to '6' from '4'. The ratings on Wentworth remain on CreditWatch with negative implications, where they were placed Nov. 26, 2008. S&P will update this CreditWatch listing within 90 days. "The downgrade reflects the company's severely weakened financial position as the standstill agreement with warehouse lender Deutsche Bank nears expiration (March 20, 2009)," said Standard & Poor's credit analyst Rian M. Pressman, CFA. This standstill agreement has allowed Wentworth to continue operating its core structured settlement rediscounting business to a limited degree, while delaying any further margin calls on its $250 million warehouse facility. (The standstill agreement pertains to the $16.9 million margin call from fourth-quarter 2008. Deutsche Bank granted the standstill agreement following additional cash and collateral contributions by Wentworth and a $52 million reduction in warehouse indebtedness.) Negotiations to extend the standstill agreement are ongoing; however, the outcome of such discussions is uncertain. In the worst case, the warehouse lender could provide a notice of default, which S&P believes could lead to a cross- default on Wentworth's other debt, including the senior secured bank loan. In addition, Wentworth's ability to continue operations is limited without further financial assistance from private equity owners JLL Partners. Despite a significant reduction in headcount, the cash flow generated from Wentworth's ongoing business does not fully offset operating expenses, including debt service (estimated at more than $6 million due at the end of March). JOHN KAVANAGH: To Halt Biz in April; President Joins Another Firm ----------------------------------------------------------------- Laura Youngs, Staff writer at The Business Journal of the Greater Triad Area, reports that John Kavanagh, president of John Kavanagh Co., has confirmed that he is closing his 23-year-old home building firm by April 2009, citing the poor housing market as the source of the company's problems. Kavanagh Development, part of John Kavanagh Co., also will close. According to the report, Mr. Kavanagh said he has joined a newly formed company, KMW Builders, as a general contractor. KMW Builders, the report says, is owned by Weaver Investment Co., and will focus primarily on building affordable housing. Earlier this year, "it became obvious," "We weren't getting any sales, that's the main thing. The market just totally dried up for us. And for whatever activity there was, there were extremely low offers," the report quotes Mr. Kavanagh as saying. JUST WINGIN': Files for Chapter 11 Bankruptcy Protection -------------------------------------------------------- John Boyle at Citizen-Times.com reports that Just Wingin' It, Inc., dba Wild Wings Cafe, has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for Western District of North Carolina. Court documents say that Just Wingin' listed $1,621,758 in total debts and $33,500 in total assets. According to court documents, Just Wingin's largest creditors include: -- Internal Revenue Service, which is owed $658,547; -- Sysco Food Systems, which is owed $128,009; and -- the state of North Carolina, which is owed $66,677 in sales taxes. Citizen-Times.com relates that several individuals are owed more than $100,000 each. Just Wingin' listed its "estimated average future gross monthly income" at $200,000 and its net monthly employee payroll at $62,000, Citizen-Times.com reports. Asheville, North Carolina-based Just Wingin' It, Inc. -- dba Wild Wings Caf� -- filed for Chapter 11 bankruptcy protection on February 17, 2009 (Bankr. W.D. N.C. Case No. 09-10169). David G. Gray, Esq., at Westall, Gray, Connolly & Davis, P.A., assists the Company in its restructuring effort. The Company listed $33,500.00 in assets and $1,621,758.09 in debts. LAS VEGAS SANDS: S&P Downgrades Corporate Credit Rating to 'B-' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating and issue-level ratings on the Las Vegas Sands Corp. family of companies, including Las Vegas Sands LLC, its Venetian Casino Resort LLC subsidiary, and affiliate VML U.S. Finance LLC. The corporate credit rating was lowered to 'B-' from 'B'. The ratings were removed from CreditWatch, where they were initially placed with negative implications on July 16, 2008. The rating outlook is negative. At the same time, S&P revised its recovery rating on LVSC's $250 million senior notes and LVSL's $5 billion senior secured credit facility to '3', indicating S&P's expectation of meaningful (50% to 70%) recovery for lenders in the event of a payment default, from '2'. The issue-level rating on the facilities was lowered to 'B-' (at the same level as the 'B-' corporate credit rating on the company) from 'B+', in accordance with S&P's notching criteria for a recovery rating of '3'. S&P also lowered the issue rating on the secured loan facilities at VML U.S. Finance LLC to 'B-' from 'B'. "The ratings downgrade reflects our concern around the company's ability to fund its development pipeline, while at the same time maintaining compliance with its credit facilities in the U.S. and Macau," said Standard & Poor's credit analyst Ben Bubeck. The company made significant revisions/reductions to its aggressive development plan in conjunction with a capital raise of more than $2.5 billion completed late in 2008 and has also initiated a cost-containment plan targeting $250 million in annual savings. Still, S&P's projections for performance in 2009 and 2010 at the company's properties in the U.S., Macau, and Singapore, combined with additional spending requirements of more than $4.5 billion, translate into a liquidity shortfall absent potential asset sales in Macau. S&P's outlook for the Las Vegas properties calls for year-over- year EBITDA to decline in the mid-teens percentage area in 2009, followed by only a modest rebound in 2010, reflecting difficult economic conditions in the U.S. that are continuing to pressure visitation, room rates, and spend on the Las Vegas Strip. S&P's projections for the Macau properties contemplate an EBITDA decline in the high-single-digit percentage area across the portfolio this year, and only a low- to mid-single-digit percentage increase in 2010, driven by a continuation of weak visitation and spend trends due to tightened visa restrictions and weaker overall economic conditions, as well as increased competition. S&P assume that Sands Bethlehem opens as scheduled in May 2009, and ramps up to an EBITDA run rate of slightly above $100 million in 2010. S&P is also incorporating an expectation for the Marina Bay Sands in Singapore to generate about $825 million in EBITDA in 2010, which would approximate about a 15% return on investment. Under the scenario outlined above, the company would face a substantial liquidity shortfall in 2010, and would also likely violate covenants under its Macau credit facility by the September 2009 quarter, absent the sale of noncore assets in Macau. However, S&P's 'B-' corporate credit rating also incorporates the expectation that the company is successful in selling at least one of the three noncore Macau assets for sale, which include the Four Seasons Apartments and the malls at the Venetian Macau and Four Seasons Macau. A further lowering of the rating would likely occur absent progress in completing the sale of one or more of these assets over the next several months. The rating downgrade also reflects the fact that S&P expects the company to continue to be required to fund equity cure payments (to the extent permitted) over at least the next several quarters in order to remain in compliance with covenants within its bank facilities. The company elected to contribute $50 million to U.S. operations in the September 2008 quarter and $20 million to Macau operations in the December 2008 quarter under the equity cure provisions in each credit agreement. The consistent reliance on equity cure provisions -- rather than just cash flow generated from operations -- to maintain compliance with bank facilities is not consistent with the previous rating. LEAR CORP: Lenders' Waiver Expires May 15, Chapter 11 Looms ----------------------------------------------------------- In its annual report on Form 10-K, Lear Corp., said, "We are currently reviewing strategic and financing alternatives available to us and have retained legal and financial advisors to assist us in this regard. We are engaged in continuing discussions with the lenders under our primary credit facility and others regarding a restructuring of our capital structure. Such a restructuring would likely affect the terms of our primary credit facility, our other debt obligations, including our senior notes, and our common stock and may be effected through negotiated modifications to the agreements related to our debt obligations or through other forms of restructurings, which we may be required to effect under court supervision pursuant to a voluntary bankruptcy filing under Chapter 11 of the U.S. Bankruptcy Code." Lear Corporation said March 17 it has reached an agreement with its lenders and JPMorgan Chase Bank N.A., as general administrative agent, for an amendment and waiver to its amended and restated credit and guarantee agreement dated April 25, 2006. On January 6, 2009, Lear said it was seeking an amendment and waiver under its primary credit facility in light of financial covenant defaults and adverse current and longer-term industry conditions. The March 17 agreement provides, through May 15, 2009, a waiver of Lear's existing defaults under its primary credit facility and an amendment of the financial covenants and certain other provisions of the primary credit facility. The Company and its lenders remain in active discussions regarding further modifications to its primary credit facility in light of existing and projected industry conditions. "Despite the challenging conditions we are facing, we continue to have a strong liquidity position and we remain focused on maintaining operational excellence globally," said Bob Rossiter, Lear's chairman, chief executive officer and president. "We appreciate the support and cooperation we have received from our supplier partners, our customers and our lenders as we work together through the industry downturn." Lear Corp., however, noted that if an acceptable restructuring agreement with lenders is not obtained, it will be in default under our primary credit facility as of May 16, 2009, and the lenders would have the right to accelerate the obligations upon the vote of the lenders holding a majority of outstanding commitments and borrowings thereunder. Acceleration of its obligations under the primary credit facility would constitute a default under our senior notes and would likely result in the acceleration of these obligations. In addition, a default under our primary credit facility could result in a cross-default or the acceleration of our payment obligations under other financing agreements. "In any such event, we may be required to seek reorganization under Chapter 11," the Company said. During the fourth quarter of 2008, the Company elected to borrow $1.2 billion under its primary credit facility to protect against possible disruptions in the capital markets and uncertain industry conditions, as well as to further bolster our liquidity position. As of Dec. 31, 2008, the company had approximately $1.6 billion in cash and cash equivalents on hand, providing adequate resources to satisfy ordinary course business obligations. The Company elected not to repay the amounts borrowed at year-end in light of continued market and industry uncertainty. As a result, as of Dec. 31, 2008, the Company was no longer in compliance with the leverage ratio covenant contained in our primary credit facility. The company has been engaged in active discussions with a steering committee consisting of several significant lenders to address issues under its primary credit facility. A full-text copy of the second amendment and waiver is available for free at http://ResearchArchives.com/t/s?3a6e About Lear Corp. Based in Southfield, Michigan, Lear Corp. is a global automotive supplier, conducting business in two product operating segments: seating and electrical and electronic. The seating segment includes seat systems and the components. The electrical and electronic segment includes electrical distribution systems and electronic products, primarily wire harnesses, junction boxes, terminals and connectors, various electronic control modules, as well as audio sound systems and in-vehicle television and video entertainment systems. The assembly process with respect to the electrical and electronic segment is performed in low-cost labor sites in Mexico, Honduras, the Philippines, Eastern Europe and Northern Africa. Lear has divested substantially all of the assets of its interior segment, which included instrument panels and cockpit systems, headliners and overhead systems, door panels, flooring and acoustic systems and other interior products. * * * As reported by the Troubled Company Reporter on January 30, 2009, Lear Corp. had approximately $1.6 billion in cash and cash equivalents as of December 31, 2008, providing more than adequate resources to satisfy ordinary course business obligations, according to the Company. Lear had $6.8 billion in total assets, and $3.5 billion in reported debt as of December 31, 2008. In January, Moody's Investors Service lowered the Corporate Family and Probability of Default ratings of Lear, to Caa2 from B3. In a related action, the rating of the senior secured term loan was lowered to Caa1 from B2, and the rating on the senior unsecured notes was lowered to Caa2 from B3. The ratings remain on review for further possible downgrade. Standard & Poor's Ratings Services also lowered its corporate credit rating on Lear to 'B-' from 'B'. At the same time, S&P also lowered its issue-level ratings on the company's debt. The ratings remain on CreditWatch, where they had been placed with negative implications on Nov. 13, 2008. LEAR CORP: Ernst & Young Raises Going Concern Doubt --------------------------------------------------- Ernst & Young LLP of Detroit, Michigan, raised substantial doubt to Lear Corporation's ability as a going concern after auditing the Company's consolidated financial statement for the fiscal year ended Dec. 31, 2008. The firm pointed out that, if the Company failed to enter into an agreement with its lenders under the company's primary credit facility, the company will be in default in 2009. As a result, the company has classified the amounts outstanding under its primary credit facility as current liabilities as of Dec. 31, 2008. The Company's consolidated balance sheets showed $6,872,900,000 in total assets and $6,674,100,000, resulting to a $198,900,000 stockholders' equity. The Company has $689,900,000 net loss on $13,570,500,000 in net sales for the year ended Dec. 31, 2008, compared with $241,500,000 net income on $15,995,000,000 in net sale a year earlier. A full-text copy of the company's Form 10-K Annual Report for the fiscal year ended Dec. 31, 2008, is available for free at: http://ResearchArchives.com/t/s?3a6f About Lear Corp. Based in Southfield, Michigan, Lear Corp. is a global automotive supplier, conducting business in two product operating segments: seating and electrical and electronic. The seating segment includes seat systems and the components. The electrical and electronic segment includes electrical distribution systems and electronic products, primarily wire harnesses, junction boxes, terminals and connectors, various electronic control modules, as well as audio sound systems and in-vehicle television and video entertainment systems. The assembly process with respect to the electrical and electronic segment is performed in low-cost labor sites in Mexico, Honduras, the Philippines, Eastern Europe and Northern Africa. Lear has divested substantially all of the assets of its interior segment, which included instrument panels and cockpit systems, headliners and overhead systems, door panels, flooring and acoustic systems and other interior products. * * * As reported by the Troubled Company Reporter on January 30, 2009, Lear Corp. had approximately $1.6 billion in cash and cash equivalents as of December 31, 2008, providing more than adequate resources to satisfy ordinary course business obligations, according to the Company. Lear had $6.8 billion in total assets, and $3.5 billion in reported debt as of December 31, 2008. In January, Moody's Investors Service lowered the Corporate Family and Probability of Default ratings of Lear, to Caa2 from B3. In a related action, the rating of the senior secured term loan was lowered to Caa1 from B2, and the rating on the senior unsecured notes was lowered to Caa2 from B3. The ratings remain on review for further possible downgrade. Standard & Poor's Ratings Services also lowered its corporate credit rating on Lear to 'B-' from 'B'. At the same time, S&P also lowered its issue-level ratings on the company's debt. The ratings remain on CreditWatch, where they had been placed with negative implications on Nov. 13, 2008. LEAR CORP: Hires Legal & Financial Advisors to Mull Options ----------------------------------------------------------- According to Reuters, Lear Corp. said that it hired legal and financial advisers to help review its strategic alternatives and that its auditors have cast doubt on the supplier's ability to survive as a "going concern." Lear has reached an agreement with its lenders for an amendment and waiver to its primary credit facility. On January 6, 2009, Lear said it was seeking an amendment and waiver under its primary credit facility in light of financial covenant defaults and adverse current and longer-term industry conditions. Since then, the Company has been in active discussions with lenders under its primary credit facility. The agreement provides, through May 15, 2009, a waiver of Lear's existing defaults under its primary credit facility and an amendment of the financial covenants and certain other provisions of the primary credit facility. The Company and its lenders remain in active discussions regarding further modifications to its primary credit facility in light of existing and projected industry conditions. "Despite the challenging conditions we are facing, we continue to have a strong liquidity position and we remain focused on maintaining operational excellence globally," said Bob Rossiter, Lear's chairperson, chief executive officer and president. "We appreciate the support and cooperation we have received from our supplier partners, our customers and our lenders as we work together through the industry downturn." Lear is reviewing strategic and financing alternatives available to the Company and has retained legal and financial advisors to assist us in this regard. Lear is engaged in continuing discussions with the lenders under our primary credit facility and others regarding a restructuring of our capital structure. Such a restructuring would likely affect the terms of Lear's primary credit facility, the Company's other debt obligations, including its senior notes, and its common stock and may be effected through negotiated modifications to the agreements related to its debt obligations or through other forms of restructurings, which it may be required to effect under court supervision pursuant to a voluntary bankruptcy filing under Chapter 11 of the U.S. Bankruptcy Code. There can be no assurance that an agreement regarding any such restructuring will be obtained on acceptable terms with the necessary parties or at all. If an acceptable agreement is not obtained, Lear will be in default under its primary credit facility as of May 16, 2009, and the lenders would have the right to accelerate the obligations upon the vote of the lenders holding a majority of outstanding commitments and borrowings thereunder. Acceleration of Lear's obligations under the primary credit facility would constitute a default under the Company's senior notes and would likely result in the acceleration of these obligations. In addition, a default under Lear's primary credit facility could result in a cross-default or the acceleration of the Company's payment obligations under other financing agreements. In any such event, the Company may be required to seek reorganization under Chapter 11. "In the event that we are unable to achieve an acceptable negotiated restructuring of our indebtedness, we may be forced to seek reorganization under the U.S. Bankruptcy Code," Lear said. Although Lear's immediate focus is on reducing operating costs and efficiently managing its business through challenging industry conditions and the overall economic downturn, the Company believes that there is significant longer-term opportunity for continued growth in our seating and electrical and electronic businesses and are pursuing a strategy focused around its global product capabilities. This strategy includes investing in new products and technologies, as well as selective vertical integration. Lear believes its commitment to superior customer service and quality, together with a cost competitive manufacturing footprint, will result in a global leadership position in each of its product segments and improved operating margins. Auditor Ernst & Young LLP said that Lear has classified the amounts outstanding under its primary credit facility as current liabilities as of December 31, 2008. Ernst & Young raised substantial doubt about the Company's ability to continue as a going concern. About Lear Corp. Based in Southfield, Michigan, Lear Corp. is a global automotive supplier, conducting business in two product operating segments: seating and electrical and electronic. The seating segment includes seat systems and the components. The electrical and electronic segment includes electrical distribution systems and electronic products, primarily wire harnesses, junction boxes, terminals and connectors, various electronic control modules, as well as audio sound systems and in-vehicle television and video entertainment systems. The assembly process with respect to the electrical and electronic segment is performed in low-cost labor sites in Mexico, Honduras, the Philippines, Eastern Europe and Northern Africa. Lear has divested substantially all of the assets of its interior segment, which included instrument panels and cockpit systems, headliners and overhead systems, door panels, flooring and acoustic systems and other interior products. * * * As reported by the Troubled Company Reporter on January 30, 2009, Lear Corp. had approximately $1.6 billion in cash and cash equivalents as of December 31, 2008, providing more than adequate resources to satisfy ordinary course business obligations, according to the Company. Lear had $6.8 billion in total assets, and $3.5 billion in reported debt as of December 31, 2008. In January, Moody's Investors Service lowered the Corporate Family and Probability of Default ratings of Lear, to Caa2 from B3. In a related action, the rating of the senior secured term loan was lowered to Caa1 from B2, and the rating on the senior unsecured notes was lowered to Caa2 from B3. The ratings remain on review for further possible downgrade. Standard & Poor's Ratings Services also lowered its corporate credit rating on Lear to 'B-' from 'B'. At the same time, S&P also lowered its issue-level ratings on the company's debt. The ratings remain on CreditWatch, where they had been placed with negative implications on Nov. 13, 2008. LEHMAN BROTHERS: District Court Upholds LBI Sale to Barclays ------------------------------------------------------------ Judge Denise L. Cote of the U.S. District Court for the Southern District of New York has affirmed an order by the Bankruptcy Court approving the sale of Lehman Brother Holding Inc.'s North American brokerage and office buildings to Barclays Plc. According to Bloomberg's Christopher Scinta, U.S. District Judge Denise Cote dismissed an appeal by investors including Bay Harbour Management LC, Trophy Hunter Investments Ltd. and MSS Distressed & Opportunities 2 asking for revisions to terms of the $1.54 billion sale. In his opinion, Judge Cote wrote that Bay Harbour and the other investors didn't show Bankruptcy Court Judge Peck made a mistake approving the sale free and clear of liens. "The bankruptcy court's determination of Barclays's good faith status is therefore affirmed," she said. In September 2008, Judge James M. Peck approved LBHI's request to sell Lehman Brothers, Inc. -- which runs its U.S. brokerage assets -- two days after the proposal was submitted to the Court, and five days after LBHI entered Chapter 11. The sale hearing concluded at approximately 1:40 a.m. Saturday morning with, literally, a round of applause in Judge Peck's courtroom. Despite a limited opportunity to stop the sale, about 90 parties filed objections in Court, and many more packed the courtroom in order to, among other things, seek a delay or clarifications regarding the deal. Creditors called for a delay of the sale to accommodate competing bids for LBI and to seek disclosure about their billions of claims and collateral affected by the rush- sale. The Official Committee of Unsecured Creditors, however, did not file an objection, citing that there was no viable alternative. Representatives of the Federal Reserve, the U.S. Treasury Department, the Securities and Exchange Commission and the Office of the U.S. Trustee arrived in Court to urge the Judge Peck to approve the US$1.7-billion sale, arguing the global financial markets would be harmed by a delay. Judge Peck approved the deal and acknowledged that rejecting the sale "could prove to be truly disastrous" given the 10,000 jobs and billions of customer accounts at stake. LBHI's counsel, Harvey Miller, Esq., at Weil Gotshal & Manges, LLP, said a rejection of the deal would have resulted to a "major shock to the financial system." He added that there were accounts totaling US$138 billion that depended on the sale. Courtroom observers had gasped when Mr. Miller announced that LBI has US$47.4 billion of securities and US$45.5 billion of liabilities to be assumed by Barclays, or a net value of US$1.9 billion -- a reduction from the US$72 billion in securities and US$68 billion of debts, or a net value of US$4 billion. Lehman's headquarters building in New York and two data centers in New Jersey were valued at US$1.29 billion -- a reduction of up to US$200 million from earlier estimates. Barclays will also assume as much as US$2.5 billion in liabilities related to Lehman workers, 10,000 of whom are to be absorbed by Barclays, and about US$1.5 billion in costs for altering contracts. The facts, Mr. Miller had told Judge Peck, show that the ice cube's melting. If the Barclays transaction isn't approved now, Mr. Miller had stressed, there won't be any business left to sell to anybody. "The old deal had Barclays giving Lehman the first US$500 million in profit on sales of some assets and splitting the profit on next US$500 million," The Wall Street Journal had reported. "In the new deal that is gone." LBI and other units that were not part of the Chapter 11 filing were included in the sale. The Securities Investor Protection Corp. began a liquidation proceeding September 19 that would pave way for the sale of LBI. James W. Giddens, who was appointed as trustee for the SIPA liquidation of LBI on the same day, had said that after reviewing the Asset Purchase Agreement, having made reasonable inquiries, and on the understanding that the SIPC, SEC, and the Fed, among others, support the transaction, he determined that the course of action is in the best interests of LBI's customers, creditors, and the general estate. Judge Peck approved the sale despite arguments by creditors that the assets could fetch more from competing bidders and that Lehman failed to provide adequate disclosure about the specific assets and debts included in the transaction. Lehman Brothers' Collapse Founded in 1850, Lehman Brothers Holdings Inc. -- http://www.lehman.com-- was the fourth largest investment bank in the United States, offering a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. Lehman filed for chapter 11 on Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555) after Barclays PLC and Bank of America Corp. backed out of a deal to acquire the company, and the U.S. Treasury refused to provide financial support that would have eased out a sale. Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several affiliates filed bankruptcy petitions thereafter. On Sept. 19, 2008, Lehman Brothers, Inc., was placed in liquidation pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119). James W. Giddens was appointed trustee for the SIPA liquidation of the business of LBI. Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code on February 10, 2009. Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc., estimated both its assets and liabilities at more than $1 billion. LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, has been placed into administration, together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to wind down the business of LBI (Europe) on Sept. 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on Sept. 16. The two units have combined liabilities of JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited suspended operations upon the bankruptcy filing of their U.S. counterparts. Asset Sales Barclays Bank Plc has acquired Lehman's North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on Sept. 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only US$2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LOCAL TV: S&P Downgrades Corporate Credit Rating to 'B-' -------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on Ft. Wright, Kentucky-based Local TV LLC and its operating subsidiary, Local TV Finance LLC, which S&P analyzes on a consolidated basis. The corporate credit rating was lowered to 'B-' from 'B'. The rating outlook is stable. At the same time, S&P revised its recovery rating on Local TV Finance's senior secured credit facilities to '4', indicating S&P's expectation of average (30% to 50%) recovery for lenders in the event of a payment default, from '2'. S&P lowered the issue- level rating on this debt to 'B-' (at the same level as the 'B-' corporate credit rating on the company) from 'B+', in accordance with S&P's notching criteria for a '4' recovery rating. In addition, the issue-level rating on the company's senior notes was lowered to 'CCC' (two notches lower than the 'B-' corporate credit rating) from 'CCC+'. The recovery rating on this debt remains at '6', indicating S&P's expectation of negligible (0% to 10%) recovery in the event of a payment default. "The ratings downgrade reflects S&P's expectation that Local TV's liquidity will become limited and leverage will become extremely high in 2009 from a lack of meaningful political revenue and steep declines in local and national advertising revenue," said Standard & Poor's credit analyst Jeanne Mathewson. S&P expects EBITDA coverage of total interest to be very thin through the point when the company is required to resume cash interest payments on its payment-in-kind toggle notes in 2011. S&P also expect the declines in EBITDA to cause leverage to climb above 15x and prevent Local TV from borrowing on the $30 million revolving credit facility by the end of 2009. The 'B-' rating reflects the company's thin liquidity, high debt leverage, sensitivity to election cycles, and TV broadcasting's mature revenue growth prospects. Local TV's good cash flow diversity among its major network affiliated TV stations in midsize markets, competitive local news positions in most of its markets, and broadcasting's good margin and cash flow potential minimally temper these factors. MAHONING COUNTY: S&P Downgrades Rating on Bonds to 'C' From 'B+' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term rating and underlying rating on Mahoning County, Ohio's series 1997A and 2002A bonds, issued for Forum Health to 'C' from 'B+' after Forum Health filed for bankruptcy Chapter 11 on March 16, 2009. The outlook remains negative. According to management, Forum Health is current on both its monthly principal and interest payments to the trustee and its payments to bondholders. Management indicates that despite the bankruptcy filing they intend to continue making interest payments to bondholders, however, scheduled principal payments will be made from a debt service reserve fund held with the trustee, which totals approximately $54 million. All future payments are still subject to bankruptcy court approval. Total debt outstanding as of January 2009 is approximately $139 million, but when including the $54 million in a debt service reserve, net debt outstanding declines to $85 million. "The negative outlook reflects the uncertainty surrounding future principal and interest payments to bondholders, and the potential for a lowering of the rating to 'D', should a payment be missed," said Standard & Poor's credit analyst Stephen Infranco. According to management's unaudited internal statements, Forum generated an operating and excess loss of approximately $18 million and $24 million, respectively, in fiscal 2008, generating coverage of maximum annual debt service at less than 1x. The fiscal 2008 results compare unfavorably to the previous fiscal year in which Forum generated a $12 million operating gain. Furthermore, Forum's balance sheet has weakened considerably, as liquidity has declined to 30 days' cash on hand from nearly 70 days in 2007; while unrestricted cash to net debt totals just 38% (excluding $54 million held in a debt service reserve fund). At the end of January 2009, liquidity declined further, with just 18 days' cash on hand and 24% unrestricted cash to net debt (excluding the debt service reserve fund). MASONITE INT'L: Court OKs Cash Collateral & Other 1st Day Motions ----------------------------------------------------------------- Masonite International Inc. on Wednesday received interim court authorization to continue to meet its obligations to trade suppliers on normal terms in the ordinary course of business. The Company also has received court authorization to continue to utilize its cash collateral to help meet its obligations to suppliers, employees and customers. As of March 12, 2009, Masonite had more than $150 million of cash on hand. "We are very pleased that the U.S. court has granted interim approval for our 'All-Trade Motion,' which allows us to continue to meet our obligations to our trade suppliers for goods and services that they provide to the Company," said Fred Lynch, President and Chief Executive Officer of Masonite. "We intend to pay our suppliers under customary terms going forward." Mr. Lynch continued, "Our restructuring plan calls for all trade creditors to be 'unimpaired,' meaning that suppliers would be paid in full. This was a critical issue for us in our negotiations with our secured lenders and bondholders, and we are pleased to note that more than 75 percent of our secured lenders and more than 80 percent of our bondholders have entered into lock-up agreements supporting this plan, which is significantly higher than the 67% required for approval of the plan." Masonite is moving forward with a debt restructuring plan that has already received strong support from the Company's secured lenders and bondholders. If implemented as proposed, the plan will enable Masonite to reduce its outstanding debt by nearly $2 billion, from $2.2 billion today to up to $300 million upon consummation of the plan, and reduce its annual cash interest costs by approximately $145 million. Masonite's subsidiaries and affiliates outside of North America have not initiated reorganization cases and are not expected to be adversely impacted by the legal proceedings. Masonite's "First Day Motions" were approved on either a final or interim basis at a hearing in Wilmington on March 17. These included court orders that provide for the continued payment of employee wages and other compensation, reimbursable employee expenses, and medical and other benefits without interruption; the continued payment of supplier invoices on normal terms in the ordinary course of business; the continuation of customer programs; and, the continued use of its cash collateral and cash management systems. The Company has received similar authorization in Canada as well. A hearing at which the Company will seek final U.S. Court approval for the interim orders has been scheduled for April 13, 2009. Masonite noted that customer programs, such as rebates, incentives and warranties, will continue to remain in effect during the legal proceedings. Under final orders entered by the Court, the Company has the right to pay in full any such valid claims that are due. Separately, Masonite said it is no longer obligated to make filings with the Securities and Exchange Commission, including reports on Form 6-K. Under terms of the Lock Up and Restructuring Agreement executed by holders of more than two-thirds in principal amount of its senior secured obligations and its senior subordinated notes due 2015, Masonite will be a privately held enterprise upon consummation of the proposed plan of reorganization. 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. Masonite International, Inc., and six affiliates filed petitions on March 16, 2009, before the Ontario Superior Court of Justice (Commercial List) under the Companies' Creditors Arrangement Act. The Honorable Justice Campbell presides over the CCAA proceedings. Derrick Tay and Orestes Pasparakis at Ernst & Young, Inc. serve as monitor. Jay A. Carfagnini, Esq., and Brian F. Emprey, Esq., at Goodmans LLP in Toronto, serve as the Applicants' counsel. Masonite Corporation, based in Tampa, Florida, and several U.S. affiliates filed for Chapter 11 bankruptcy protection on the same day (Bankr. D. Del. Case No. 09-10844). Judge Peter J. Walsh handles the cases. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP; and Daniel J. DeFranceschi, Esq., Jason M. Madron, Esq., and Katisha D. Fortune, Esq., at Richards, Layton & Finger, P.A., serve as bankruptcy counsel. The Debtors' Investment Banker and Financial Advisor is Perella Wenberg Partners LLP; the Debtors' Restructuring Advisors is Alvarez & Marsal North American LLC; and the Debtors' Claims Agent is Kurtzman Carson Consultants LLC. As of January 31, 2009, the Debtors had total assets of $1,527,495,443 and total debts of $2,641,590,842. The Debtors filed with the Bankruptcy Court a pre-negotiated reorganization plan together with their petitions. The Plan provides that Masonite's existing senior secured obligations will be converted on a pro rata basis subject to the election of each existing holder of Senior Secured Obligations into: (i) a new first-priority senior secured term loan; (ii) a new second- priority senior secured PIK loan; and (iii) 97.5% of the common equity of the reorganized Masonite. Holders of Masonite's existing senior subordinated notes will be allocated 2.5% of the common equity in the reorganized Masonite plus warrants for 17.5% of the common stock of the reorganized Company, subject to dilution under certain conditions. Holders of Class 5 General Unsecured Claims under the Plan will be unimpaired and is expected to recover 100% under the Plan. Bankruptcy Creditors' Service, Inc., publishes Masonite Bankruptcy News. The newsletter tracks the CCAA proceedings in Canada and parallel chapter 11 proceedings in Delaware undertaken by company and its various affiliates. http://bankrupt.com/newsstand/or 215/945-7000) MASONITE INT'L: Ernst Files 1st Monitor's Report With CCAA Court ---------------------------------------------------------------- Ernst & Young, Inc., the monitor in the restructuring proceedings under the Canadian Companies' Creditors Arrangement Act of Masonite International, Inc., and its affiliates, filed its first monitor's report with the CCAA Court on March 16, 2009. The Honorable Mr. Justice Campbell of the Superior Court of Justice (Commercial List) for the Province of Ontario, in Canada, appointed Ernst & Young as the Applicants' monitor. The Monitor relates that Masonite Holdings (Canada) has leased head office premises in Mississauga, Ontario, and operates from leased and owned manufacturing facilities in, among others, Concord, Ontario, Lac-Megantic, Quebec, and Bethierville, Quebec. Masonite Canada also has 12 leased and owned warehouse facilities in sales offices in Quebec, Ontario, and British Columbia. In addition, through a joint venture Masonite Canada has a 75% interest in a door facing manufacturing facility named Sacopan, Inc., located in Sacre Coeur, Quebec, that supplies moulded door facings to the Lac-Megantic manufacturing facility and to certain Masonite U.S. interior door manufacturing facilities. As of March 16, 2009, Masonite Canada has about 847 unionized and 316 non-unionized active employees. BMO Cash Management Charge The Applicants maintain a centralized cash management system that is operated by the Bank of Montreal. BMO has requested a charge of C$1.5 million in respect to any losses it many incur in connection with the provision of the Cash Management System. Financial Thresholds The Initial CCAA Order contemplates that the Applicants may cease, downsize or shut down any of their businesses or operations and dispose of redundant or non-material assets no exceeding C$5 million in any one transaction or C$10 million in the aggregate. Employee Retention/Incentive Plans The Applicants have a variable incentive plan in place, which covers all non-commissioned salaried staff from the plant manager level to the senior executives of the Masonite Group. These senior managers are divided into six distinct groups, each of which has specific targets to achieve based on EBITDA, fill rates, inventory levels, controllable costs and certain other criteria. Management, according to the Monitor, has advised that the next quarterly payment under the variable incentive plan, which is payable in respect of the first quarter of 2009, is estimated to be approximately $2.6 million for Masonite U.S. and approximately C$280,000 for Masonite Canada. Summary of Assets and Liabilities The balance sheet of the operating company, MIC, as of January 24, 2009, indicates that the company's liabilities exceed the net book value of its assets by approximately $608 million: Total Assets $1,021,000,000 Liabilities: Senior Secured Credit Facilities 814,000,000 11% Unsecured Notes 358,000,000 Due to Affiliates 432,000,000 Taxes Payable and Future Income Taxes 22,000,000 Accounts payable and other liabilities 4,000,000 -------------- Total liabilities 1,629,000,000 Excess of total liabilities over total assets $608,000,000 ============== In addition to its direct obligations, MIC has guaranteed direct obligations of Masonite U.S. under the Senior Secured Credit Facilities in the aggregate amount of $657.9 million and direct obligations of Masonite U.S. to holders of $412.0 million in 11% Unsecured Notes issued directly by Masonite U.S. The direct obligations of MIC under the Senior Secured Credit Facilities consist of: -- a revolving facility with an outstanding balance of $250.7 million; and -- an eight-year term loan due 2013 that bears interest at LIBOR plus 2.00% and amortizes at 1% annually. Current Liquidity & 13-Week Cash Flow Forecast As of March 6, 2009, the Applicants had $63.5 million cash on hand, while Masonite U.S. had $48.7 million. The foreign subsidiaries and the Sacopan joint venture collectively had cash on hand of approximately $51.9 million. The Applicants, with the assistance of Alvarez & Marsal, have prepared a 13-week cash flow forecast that estimates the CCAA Applicants financing requirements. The cash flow estimates that for the period of March 16, 2009, to June 14, 2009, the Applicants will have total receipts of $48.4 million and total disbursements of $72.0 million for a net cash flow outflow of $23.6 million. At June 14, 2009, the Applicants are forecast to have available liquidity, consisting of cash on hand, of approximately $31.2 million. The Applicants said no debtor-in-possession loan will be required during the 13-week cash flow forecast period. For Masonite U.S., it is estimated that for the period of March 16 to June 14, 2009, the companies will have a net cash flow outflow of $33.8 million. The amount exceeds Masonite U.S.'s projected operating cash balance of $31.3 million, and accordingly, Masonite U.S. is forecasted to exhaust its cash on hand during the week ending May 31, 2009. Masonite U.S. has chosen not to arrange a DIP financing for its Chapter 11 proceedings. Should Masonite U.S. experience significant negative variances in its projected cash flows, it may have insufficient liquidity to continue its operations in the ordinary course, the Monitor said. Due to the high degree of operational integration between the companies of the Masonite Group and the critical nature of the services provided by Masonite U.S. to the Applicants, if Masonite U.S. were unable to continue to provide goods and services to the Applicants during the Chapter 11 proceedings, it would have a material negative impact on the business of the Applicants. A full-text copy of the Monitor's Report is available for free at: http://bankrupt.com/misc/ccaamonitor_1streport.pdf 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. Masonite International, Inc., and six affiliates filed petitions on March 16, 2009, before the Ontario Superior Court of Justice (Commercial List) under the Companies' Creditors Arrangement Act. The Honorable Justice Campbell presides over the CCAA proceedings. Derrick Tay and Orestes Pasparakis at Ernst & Young, Inc. serve as monitor. Jay A. Carfagnini, Esq., and Brian F. Emprey, Esq., at Goodmans LLP in Toronto, serve as the Applicants' counsel. Masonite Corporation, based in Tampa, Florida, and several U.S. affiliates filed for Chapter 11 bankruptcy protection on the same day (Bankr. D. Del. Case No. 09-10844). Judge Peter J. Walsh handles the cases. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP; and Daniel J. DeFranceschi, Esq., Jason M. Madron, Esq., and Katisha D. Fortune, Esq., at Richards, Layton & Finger, P.A., serve as bankruptcy counsel. The Debtors' Investment Banker and Financial Advisor is Perella Wenberg Partners LLP; the Debtors' Restructuring Advisors is Alvarez & Marsal North American LLC; and the Debtors' Claims Agent is Kurtzman Carson Consultants LLC. As of January 31, 2009, the Debtors had total assets of $1,527,495,443 and total debts of $2,641,590,842. The Debtors filed with the Bankruptcy Court a pre-negotiated reorganization plan together with their petitions. The Plan provides that Masonite's existing senior secured obligations will be converted on a pro rata basis subject to the election of each existing holder of Senior Secured Obligations into: (i) a new first-priority senior secured term loan; (ii) a new second- priority senior secured PIK loan; and (iii) 97.5% of the common equity of the reorganized Masonite. Holders of Masonite's existing senior subordinated notes will be allocated 2.5% of the common equity in the reorganized Masonite plus warrants for 17.5% of the common stock of the reorganized Company, subject to dilution under certain conditions. Holders of Class 5 General Unsecured Claims under the Plan will be unimpaired and is expected to recover 100% under the Plan. Bankruptcy Creditors' Service, Inc., publishes Masonite Bankruptcy News. The newsletter tracks the CCAA proceedings in Canada and parallel chapter 11 proceedings in Delaware undertaken by company and its various affiliates. http://bankrupt.com/newsstand/or 215/945-7000) MASONITE INT'L: Obtain CCAA Stay Order Until April 15 ----------------------------------------------------- Masonite International, Inc., Masonite International Corporation, Masonite Holding Corporation, Crown Door Corporation, Castlegate Entry Systems, Inc., 3061275 Nova Scotia Company, and Rochman Universal Doors, Inc., sought and obtained an initial order from the Superior Court of Justice (Commercial List) for the Province of Ontario, on March 16, 2009, granting them protection from creditors under the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended. Pursuant to the Initial CCAA Stay Order, the Honorable Mr. Justice Campbell ruled that until April 15, 2009, no proceeding or enforcement process in any court or tribunal should be commenced or continued against the Applicants, Ernst & Young, as the court-appointed monitor, or affecting the Applicants' properties and business except with their written consent or with leave of the Court. All proceedings currently under way against or in respect of the Applicants are stayed and suspended pending further order of the Canadian Court. No proceedings may also be commenced or continued against the former, current or future directors and officers of the Applicants with respect to any claim against the directors and officers that arose before March 16, 2009. Honorable Mr. Justice Campbell prohibits any person from discontinuing, altering, interfering with, repudiating, terminating or ceasing to perform any right, contract, agreement, license or permit in favor of or held by the Applicants except with their written consent or leave of the Court. All persons having oral or written agreements with the Applicants or with third parties on behalf of the Applicants for the supply of goods or services are restrained until further court order from discontinuing, altering, interfering with or terminating the supply of those goods or services. No creditor of the Applicants will be under any obligation to advance or re-advance any amounts or otherwise extend any credit to the Applicants. Nothing in the Initial Order will derogate from the rights conferred and obligations imposed by the CCAA, Honorable Justice Campbell adds. Directors and officers of the Applicants will be entitled to the benefit of and granted a charge on the Property, which charge will not exceed an aggregate amount of $5,000,000, as security for the indemnities to the directors and officers. No insurer will be entitled to be subrogated to or claim the benefit of the Director's Charge, and the Applicants' director and officers will only be entitled to the benefit of the Director's Charge to the extent that they do not have coverage under any directors' and officers' insurance policy, or to the extent that that coverage is insufficient to pay amount indemnified. 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. Masonite International, Inc., and six affiliates filed petitions on March 16, 2009, before the Ontario Superior Court of Justice (Commercial List) under the Companies' Creditors Arrangement Act. The Honorable Justice Campbell presides over the CCAA proceedings. Derrick Tay and Orestes Pasparakis at Ernst & Young, Inc. serve as monitor. Jay A. Carfagnini, Esq., and Brian F. Emprey, Esq., at Goodmans LLP in Toronto, serve as the Applicants' counsel. Masonite Corporation, based in Tampa, Florida, and several U.S. affiliates filed for Chapter 11 bankruptcy protection on the same day (Bankr. D. Del. Case No. 09-10844). Judge Peter J. Walsh handles the cases. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP; and Daniel J. DeFranceschi, Esq., Jason M. Madron, Esq., and Katisha D. Fortune, Esq., at Richards, Layton & Finger, P.A., serve as bankruptcy counsel. The Debtors' Investment Banker and Financial Advisor is Perella Wenberg Partners LLP; the Debtors' Restructuring Advisors is Alvarez & Marsal North American LLC; and the Debtors' Claims Agent is Kurtzman Carson Consultants LLC. As of January 31, 2009, the Debtors had total assets of $1,527,495,443 and total debts of $2,641,590,842. The Debtors filed with the Bankruptcy Court a pre-negotiated reorganization plan together with their petitions. The Plan provides that Masonite's existing senior secured obligations will be converted on a pro rata basis subject to the election of each existing holder of Senior Secured Obligations into: (i) a new first-priority senior secured term loan; (ii) a new second- priority senior secured PIK loan; and (iii) 97.5% of the common equity of the reorganized Masonite. Holders of Masonite's existing senior subordinated notes will be allocated 2.5% of the common equity in the reorganized Masonite plus warrants for 17.5% of the common stock of the reorganized Company, subject to dilution under certain conditions. Holders of Class 5 General Unsecured Claims under the Plan will be unimpaired and is expected to recover 100% under the Plan. Bankruptcy Creditors' Service, Inc., publishes Masonite Bankruptcy News. The newsletter tracks the CCAA proceedings in Canada and parallel chapter 11 proceedings in Delaware undertaken by company and its various affiliates. http://bankrupt.com/newsstand/or 215/945-7000) MASONITE CORPORATION: Chapter 11 Filing Cues Moody's 'D' Rating --------------------------------------------------------------- Moody's Investors Service lowered the probability of default rating of Masonite Corporation to D from Ca following its filing for protection under Chapter 11 of the U.S. Bankruptcy Code. In addition, Masonite International Corporation filed to reorganize under the Companies' Creditors Arrangement Act in Canada. Subsequent to Moody's rating action, the rating agency will withdraw all of Masonite's ratings. These ratings/assessments have been affected: -- Corporate family rating, affirmed at Ca; -- Probability of default rating, lowered to D from Ca; -- $1.172 billion Gtd. Sr. Sec. Term Loan due 2013, affirmed at Caa3 (LGD3, 32%); -- $350 million Gtd. Sr. Sec. Revolver due 2011, affirmed at Caa3 (LGD3, 32%); -- Speculative grade liquidity rating, affirmed at SGL-4. Moody's most recent announcement concerning the ratings for Masonite was on November 17, 2008, at which time Moody's lowered Masonite's corporate family rating to Ca from Caa3. Masonite is headquartered in Ontario, Canada. The company is a leading global manufacturer of doors and door components with customers in over 70 countries and manufacturing facilities in 18 countries in North America, Europe, Latin America, Asia and Africa. Revenues for the trailing twelve month period ended September 30, 2008, were approximately $1.9 billion. MEDIANEWS GROUP: Cash Flow Decline Cues S&P's Rating Cut to 'CCC' ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its issue-level ratings and revised its recovery ratings on the secured debt of newspaper publishers MediaNews Group Inc. and Freedom Communications Inc. The revised ratings reflect a more significant decline in cash flow than that used in S&P's previous analysis, as well as a reduction in S&P's assumed emergence multiple to 4.5x from 5.0x due to the challenging operating conditions in the newspaper sector. S&P lowered its issue-level rating on the secured credit facilities of MediaNews to 'CCC' (at the same level as the 'CCC' corporate credit rating on the company) from 'CCC+'. The recovery rating on these loans was revised to '4', indicating S&P's expectation of average (30% to 50%) recovery for lenders in the event of a payment default, from '2'. S&P also lowered the issue-level rating on Freedom's secured credit facilities to 'CCC' (one notch lower than the 'CCC+' corporate credit rating on the company) from 'CCC+'. The recovery rating was revised to '5', indicating S&P's expectation of modest (10% to 30%) recovery for lenders in the event of a payment default, from '3'. Ratings List MediaNews Group Inc. Corporate Credit Rating CCC/Negative/-- Freedom Communications Inc. Corporate Credit Rating CCC+/Negative/-- Ratings Revised MediaNews Group Inc. To From -- ---- Secured CCC CCC+ Recovery Rating 4 2 Freedom Communications Inc. To From -- ---- Secured CCC CCC+ Recovery Rating 5 3 MERCEDES HOMES: Lists $30-Mil. in Assets, $280-Mil. in Debts ------------------------------------------------------------ Mercedes Homes Inc. has filed with the U.S. Bankruptcy Court for the Southern District of Florida its schedules of assets and liabilities. According to Bloomberg's Bill Rochelle, the Company said it listed assets on the books for $309 million against debt of $280 million. Claims include $224 million owing to secured creditors. Mercedes Homes has already received authorization from the Bankruptcy Court to use its secured lenders' cash collateral. Mercedes Homes may use the cash collateral until a hearing on April 9, Bloomberg's Bill Rochelle said. Mercedes owes almost $159 million to a first-lien lender, and (i) more than $70 million on a secured revolving loan. Headquartered in Melbourne, Florida, Mercedes Homes Inc. -- http://www.mercedeshomes.com-- operates a homebuilding company that was established in 1983 by Howard Buescher, a 23-year veteran of the homebuilding business and his daughter Susan Girard. The company employs approximately 400 people who sell, and construct, homes of distinctive quality in over 80 communities in Florida, Texas and North and South Carolina. The company and 10 of its affiliates filed for Chapter 11 protection on Jan. 26, 2009 (Bankr. S.D. Fla. Lead Case No. 09- 11191). Tina M. Talarchyk, Esq., at Squire, Sanders & Dempsey, LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Richard M. Williamson and Alvarez & Marsal North American LLC as their chief restructuring officer, Odyssey Capital Group LLC as valuation expert, Michael P. Kahn & Associates LLC as financial advisor and Kurtzman Carson Consultants LLC as claims and noticing agent. When the Debtors filed for protection from their creditors, they listed assets and debts between $1 million to $10 million each. M. Bryant Gatrell, Esq., at Moore & Van Allen PLLC, represents the agent for the Debtors' prepetition first lien facilities. Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Exelrod, LLP, represents the agent for the Debtors' prepetition second lien facility. MGM MIRAGE: Enters Into Amendment to Senior Credit Facility ----------------------------------------------------------- MGM Mirage obtained on March 17, 2009, from the lenders under its senior credit facility a waiver of the requirement that the Company comply with the senior credit facility's financial covenants through May 15, 2009. Under the terms of the amendment, the Company repaid $300 million of the outstanding borrowings under its senior revolving credit facility. The amendment provides for a 100 basis point increase to the interest rate under the senior credit facility, prohibits the Company from prepaying or repurchasing any debt or disposing of assets, and allows the Company to continue to make its required equity contributions to CityCenter through May 15, 2009. "We are pleased to have obtained this waiver and amendment of our senior credit facility. While there is still work to be done, this is a positive step that provides us with the opportunity to continue to work with our financial advisors and our bank group in addressing the Company's current financial position," said Jim Murren, Chairperson and Chief Executive Officer of MGM Mirage. "The current economic climate remains challenging, but we are still driving high occupancy at our resorts, which are in terrific shape. We continue to provide our guests with world-class customer service and a renewed value proposition." At December 31, 2008, the Company had approximately $13.5 billion of total long-term debt. In late February 2009, the Company borrowed $842 million under its senior credit facility, which amount represented -- after giving effect to $93 million in outstanding letters of credit -- the total amount of unused borrowing capacity available under its $7.0 billion senior credit facility. In connection with the waiver and amendment, the Company repaid $300 million under the senior revolving credit facility, which amount is not available for re-borrowing without the consent of the lenders. The Company was in compliance with its financial covenants under its senior credit facility at December 31, 2008. However, if the recent adverse conditions in the economy in general -- and the gaming industry in particular -- continue, the Company believes that it will not be in compliance with those financial covenants during 2009. In fact, given these conditions and the recent borrowing under its senior credit facility, the Company does not expect to be in compliance with these financial covenants at March 31, 2009. As a result, on March 17, 2009, the Company obtained an amendment to the senior credit facility, as discussed above, which included a waiver of the requirement to comply with such financial covenants through May 15, 2009. Following expiration of the waiver on May 15, 2009, the Company will be subject to an event of default related to the expected noncompliance with financial covenants under the senior credit facility at March 31, 2009. The Company intends to work with its lenders to obtain additional waivers or amendments prior to that time to address future noncompliance with the senior credit facility; however, the Company provided no assurance that it will be able to secure such waivers or amendments. The lenders holding at least a majority of the principal amount under the Company's senior credit facility could, among other actions, accelerate the obligation to repay borrowings under our senior credit facility in such an event of default. As a result of such event of default, under certain circumstances, cross defaults could occur under the Company's indentures and the CityCenter $1.8 billion senior secured credit facility, which could accelerate the obligation to repay amounts outstanding under such indentures and the CityCenter credit facility and could result in termination of the unfunded commitments under the CityCenter credit facility. As a result of the conditions described above, the report of the Company's independent registered public accounting firm on the Company's consolidated financial statements for the year ended December 31, 2008, contains an explanatory paragraph with respect to the Company's ability to continue as a going concern. "We view the recently executed waiver and amendment as a strong show of support by our long-term relationship banks," said Executive Vice President and Chief Financial Officer of MGM Mirage, Dan D'Arrigo. "We look forward to further dialog with our lenders as we consider all viable options to improve our capital structure, which may include asset dispositions, raising additional debt and/or equity capital, and modifying or extending our outstanding debt." Fourth Quarter & Full Year Financial Results MGM Mirage reported its 2008 fourth quarter and full year financial results and provided details of a waiver and amendment of its senior credit facility. Fourth Quarter Operating Results The Company reported a fourth quarter diluted loss per share from continuing operations of $4.15, including a non-cash goodwill and indefinite-lived intangible asset impairment charge of $1.2 billion, or $4.25 per share, compared to earnings per share of $2.85 in the prior year quarter, which included a $1.03 billion, or $2.23 per share, gain on the CityCenter transaction. The Company notes that fourth quarter results were impacted by global economic conditions and market trends, and that these trends have continued into the first quarter. The Company earned net revenues of $1.6 billion and Property EBITDA(2) of $327 million in the fourth quarter of 2008, which included $27 million of preopening and start-up expenses and net property transactions. The non-cash impairment charge, which is included in "Property transactions, net," relates to goodwill and other indefinite-lived intangible assets recognized in the 2005 acquisition of Mandalay Resort Group. Goodwill was assigned primarily to Mandalay Bay, Luxor, Excalibur, and Gold Strike Tunica; this impairment charge represents substantially all of the goodwill recognized at the time of the Mandalay acquisition and a minor portion of the value of trade names related to the Mandalay resorts. The charge resulted from several factors: 1) lower market valuation multiples for gaming assets; 2) higher discount rates resulting from turmoil in the credit markets; and 3) reduced cash flow forecasts for the affected resorts based on current market conditions. Gaming revenues decreased 17% for the fourth quarter. The Company's total table games volume (including baccarat) decreased 17% in the quarter, with the overall table games hold percentage near the midpoint of the Company's normal 18% to 22% range in the 2008 period, lower than the 2007 period when the hold percentage was near the top end of the range. Slots revenues decreased 12% company-wide. Rooms revenue decreased 21% as market conditions impacted rates and occupancy leading to a 21% decrease in Las Vegas Strip REVPAR. Average room rates decreased 15% at the Company's Las Vegas Strip resorts and occupancy decreased from 93% to 85%. The Company's non-gaming revenues excluding rooms decreased 9%. Such revenues were impacted by the decreased customer spending and lower occupancy at the Company's resorts. The Company continues to generate a significant portion of its revenue from its non- gaming businesses by providing new and exciting experiences for its guests. For example, the Company recently opened the Terry Fator show at The Mirage and, in conjunction with its partners at Disney Theatrical Productions, plans to open the Broadway sensation The Lion King at Mandalay Bay in May 2009. Corporate expense decreased to $26 million compared to $53 million in the prior year quarter as a result of cost reduction efforts throughout the year. The Company continues to implement new cost saving programs to maximize its margins and cash flows. MGM Grand Macau, which opened in December 2007, earned Property EBITDA of $17 million during the 2008 quarter and Property EBITDA of $119 million for the full year. The Company recognized its share of MGM Grand Macau's fourth quarter results as follows: $2 million of expense in the "Income from unconsolidated affiliates" line and $4 million of expense in "Non-operating items from unconsolidated affiliates." Operating income decreased 60% on a comparable basis to the prior year quarter, excluding the non-cash goodwill and indefinite-lived intangible asset impairment charge in 2008, the CityCenter gain in 2007, property transactions, insurance recoveries, profits from The Signature at MGM Grand, and preopening and start-up expenses. Property EBITDA of $327 million was also impacted by certain of the items discussed above and was down 41% on a comparable basis to the prior year quarter with a margin of 22% compared to 31%. Full Year 2008 Results For the full year 2008, net revenues decreased 6% to $7.2 billion. The decrease in revenues was largely a result of decreases in market conditions discussed above which began earlier in the year and accelerated after the financial and credit market crisis in the fall of 2008. Las Vegas Strip REVPAR decreased 10% for the full year compared to 2007. Property EBITDA was $2 billion for the full year of 2008. EPS from continuing operations for the full year was a loss of $3.06 per share versus income of $4.70 per share earned in 2007. Liquidity and Financial Position During the fourth quarter of 2008, these were relevant to the Company's liquidity and financial position: -- Issued $750 million of 13% senior secured notes due 2013 at a discount to yield 15%, with net proceeds to the Company of $687 million. -- Repurchased $345 million of face amount of outstanding senior notes at a purchase price of $263 million. A substantial portion of the repurchased notes were from the October 2009 and September 2010 maturities of senior notes. -- Redeemed $149 million of senior subordinated notes assumed in the Mandalay acquisition as a result of a one- time put option by the bondholders. -- Announced that the Company's 50% owned venture CityCenter closed on a $1.8 billion senior secured bank credit facility. Under the terms of the credit facility, at March 16, 2009, the Company and Dubai World were each required to fund remaining construction costs of up to $494 million; such amounts may be reduced by any additional financing obtained by CityCenter. In addition, the Company and Dubai World have each provided partial completion guarantees up to $600 million. -- Entered into an agreement to sell Treasure Island for $775 million, or $755 million if the amount is paid in full by April 30, 2009; the sale is expected to close by March 31, 2009. -- In the fourth quarter of 2008 capital expenditures totaled approximately $120 million. About MGM Mirage Headquartered in Las Vegas, Nevada, MGM Mirage (NYSE: MGM) -- http://www.mgmmirage.com/-- is a hotel and gaming company. It owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. * * * As reported by the Troubled Company Reporter on March 12, 2009, Moody's Investors Service downgraded MGM Mirage's Probability of Default rating to Caa2 from Caa1 and its Corporate Family Rating to Caa1 from B3. As reported by the Troubled Company Reporter on March 3, 2009, Fitch Ratings downgraded MGM MIRAGE's Issuer Default Rating to 'CCC' from 'B'. Fitch said that the rating outlook remains negative. According to the TCR on March 3, 2009, Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on Las Vegas-based MGM MIRAGE by two notches; the corporate credit rating was lowered to 'B-' from 'B+'. These ratings remain on CreditWatch with negative implications, where they were initially placed on Jan. 30, 2009. MIRABILIS VENTURES: Settles Forfeiture With U.S. Government ----------------------------------------------------------- Mirabilis Ventures Inc. has received from the U.S. Bankruptcy Court for the Middle District of Florida in Orlando an extension until May 31 of its exclusive right to propose a Chapter 11 plan. As reported in yesterday's Troubled Company Reporter, the Bankruptcy Court has authorized Mirabilis to enter into a settlement with the U.S. government in connection with a dispute over whether a forfeiture action against the company's property was automatically halted when it filed bankruptcy. According to Bloomberg's Bill Rochelle, Mirabilis had earlier wanted the U.S. Government held in contempt of the Bankruptcy Curt for continuing a forfeiture action aimed at taking away the Company's property based on a fraud the U.S. Attorney says was perpetrated by Frank Amodeo, the principal of the Company. The settlement, Bloomberg relates, divided property between what will go to the government in forfeiture and what the company will retain. The settlement obliges Mirabilis to set up a liquidating trust in which the government will have an oversight role. The trust is to receive and distribute money collected in the Chapter 11 case. In addition, the government has an approved unsecured claim for $200 million in the bankruptcy. Mr. Amodeo, Mr. Rochelle recalls, was indicted in August and later pleaded guilty to four counts. The government describes him as having conducted a "systematic and pervasive theft of payroll taxes" amounting to $182 million. Orlando, Florida-based Mirabilis Ventures Inc., together with two of its affiliates, filed for Chapter 11 protection on May 27, 2008 (Bankr. M.D. Fla. Lead Case No. 08-04327). Elizabeth A. Green, Esq., at Latham Shuker Eden & Beaudine LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of $50 million to $100 million. MOMENTIVE PERFORMANCE: Risk of Default Cues S&P's Junk Rating ------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its ratings on Momentive Performance Inc. and its subsidiaries by two notches, including its corporate credit rating to 'CCC' from 'B-' and placed them on CreditWatch with negative implications. "These rating actions reflect a near-term risk of default. They follow a sharp decline in earnings and cash flow during the fourth quarter of 2008 and management's projection of extremely weak EBITDA of $5 million to $15 million in the first quarter of 2009," said Standard & Poor's credit analyst Cynthia Werneth. "The decline is due to a significant, broad-based drop in demand and production volumes across most of the company's product lines." If EBITDA does not improve, S&P believes Momentive could violate the senior secured leverage covenant in its primary bank credit facility by the third quarter of 2009. As of Dec. 31, 2008, Momentive had total adjusted debt of $3.9 billion. S&P adjust debt to include about $500 million of seller notes issued by the holding company parent, $125 million of tax-effected unfunded postretirement liabilities, and $40 million of capitalized operating leases. Total adjusted debt to EBITDA was very aggressive at more than 12x. In addition, Momentive and its affiliates including Apollo Management, the owner of about 90% of the company, are evaluating potential transactions to reduce Momentive's debt including tender offers and exchanges that S&P may regard as distressed and treat as a selective default. Finally, Momentive has indicated that a Chinese subsidiary expects to breach a financial covenant in a $60 million construction loan in April 2009. The lender could require accelerated payment of the loan if the borrower is in breach of a financial covenant and it is not cured within 30 days after notice from the lender. Momentive's management has indicated that interest on the loan is current and that it expects to address the situation during the next several weeks. Momentive is a leading global producer of silicones used in a wide variety of end uses and also produces quartz, primarily for semiconductors. S&P expects to resolve the CreditWatch during the next several weeks after evaluating prospects for earnings, cash flow, and covenant compliance, as well as any developments related to debt restructuring. MONTERRA ENTERPRISES: Case Converted to Chapter 7 Liquidation ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Utah approved at a hearing on February 26, 2009, the conversion of the Chapter 11 bankruptcy case of Monterra Enterprises, LLC to one under Chapter 7 of the Bankruptcy Code. As reported in the Troubled Company Reporter on February 5, 2009, Charles F. McVay, the U.S. Trustee for Region, 19, requested the Court to dismiss or convert the Debtor's case to one under Chapter 7 of the Bankruptcy Code. The U.S. Trustee said that relief from the automatic stay has been granted as to each of the real property interests of the Debtor in Pheasant Hollow, Fox Hollow, and Heatherwood Subdivision Phases 1 & 2. Absent substantial business or reliable stream of income, the Debtor has no current prospects for reorganization, and has no further need for bankruptcy protection. In addition, the U.S. Trustee related that the Debtor has not filed monthly financial reports for the period September through December 2008. The Debtor has also failed to pay the quarterly fees owing the Office of the U.S. Trustee for the last two quarters of 2008. Based in St. George, Utah, Monterra Enterprises, LLC filed for Chapter 11 bankruptcy protection on June 6, 2008 (D. Utah Case No. 08-23641). Anna W. Drake, Esq., at Anna W. Drake, P.C., represents the Debtor as counsel. When the Debtor filed its schedules, it disclosed total assets of $31,855,727 and total liabilities of $36,367,256. NEIMAN MARCUS: "Very Poor" Q2 Results Cue Moody's Junk Rating ------------------------------------------------------------- Moody's Investors Service downgraded Neiman Marcus Group Inc.'s long term ratings including its Probability of Default Rating to Caa1 from B1, its Corporate Family Rating to Caa1 from B1, and its Speculative Grade Liquidity Rating to SGL-3 from SGL-2. The rating outlook is negative. The downgrade reflects Neiman Marcus' very poor second quarter operating results which resulted in a significant decline in debt protection measures. The downgrade also reflects Moody's expectation that its operating results will continue to be poor as it weathers a significant contraction in the high end luxury goods market. Given this, Moody's expect Neiman Marcus' debt protection measures to erode quickly over the next six months. This will result in the company exhibiting a weak and deteriorating credit profile as it approaches the September 2010 expiration of its revolving credit facility. Moody's believes that the luxury goods market is susceptible to the risk that the current recession, financial market turmoil, and material decline in financial wealth of many consumers results in a fundamental shift in consumer shopping habits over the medium to longer term. Given this, Moody's believes that Neiman Marcus' sales performance will be constrained and is not likely to revert to its pre-recession levels over the medium term. The Caa1 probability of default rating reflects the company's very poor credit metrics, its very high debt levels, as well as Moody's expectation that the overall luxury market will contract further. In addition, the rating reflects Moody's expectation that Neiman Marcus' earnings will remain pressured making it likely that interest coverage will deteriorate and fall well below one time by its fiscal year ended August 2009. The rating also considers the expiration of the company's $600 million revolving credit facility in October 2010. Positive ratings consideration was given to Neiman Marcus' adequate liquidity and its solid competitive position within the luxury market. The SGL-3 Speculative Grade Liquidity rating represents adequate liquidity. Neiman Marcus has adequate sources of internal liquidity including its excess cash and the expectation that it will be able to generate modestly positive free cash flow. However, the company will need to address its revolving credit expiration at a point in time when its credit metrics will be significantly weaker. This fact constrains the company's liquidity rating. The negative outlook reflects the pressures Neiman Marcus currently faces from the challenging economic environment and the overall contraction of the luxury market. These ratings were downgraded: -- Corporate family rating to Caa1 from B1; -- Probability of default rating to Caa1 from B1; -- Speculative grade liquidity rating to SGL-3 from SGL-2; -- Senior secured bank facility to B3 (LGD3, 40%) from Ba3 (LGD3, 38%); -- Senior secured debentures to B3 (LGD3, 40%) from Ba3 (LGD3, 38%); -- Senior unsecured debt to Caa2 (LGD5, 79%) from B3 (LGD5, 78%); -- Senior subordinated debt to Caa3 (LGD6, 93%) from B3 (LGD6, 93%). The last rating action on Neiman Marcus was on January 12, 2009 when its long term ratings, including corporate family rating of B1, were placed on review for possible downgrade. Neiman Marcus Group, Inc., headquartered in Dallas, Texas, operates 40 Neiman Marcus stores, 2 Bergdorf Goodman stores, 21 clearance centers, and a direct business. Total revenues are about $4.2 billion. NEXSTAR FINANCE: Debt-Exchange Offer Cues Moody's Junk Rating ------------------------------------------------------------- Moody's Investors Service has downgraded Nexstar Finance Holdings, Inc.'s Corporate Family rating to Caa1 from B3 and its Probability of Default rating to Ca from B3 following the company's announcement that it has commenced a tender offer to exchange its cash-paying senior subordinated notes for new subordinated notes of similar amount and maturity, but which do not pay cash interest until January 2011. Moody's views this transaction, upon its assumed successful completion, as tantamount to a default. The proposed new exchange notes are not rated. Moody's has taken these rating actions: Nexstar Finance Holdings, Inc. * Corporate family rating -- downgraded to Caa1 from B3 * Probability-of-default rating -- downgraded to Ca from B3 * 11.375% senior discounts notes due 2013 -- downgraded to Ca (LGD 5, 84%) from Caa2 (LGD 6, 94%) Nexstar Broadcasting, Inc. (including Mission Broadcasting, Inc.) * Revolving credit facilities due 2012 -- affirmed B1 (to LGD 2, 14% from LGD 2, 25%) * Senior secured term loans due 2012 -- affirmed B1 (to LGD 2, 14% from LGD 2, 25%) * 7% Senior subordinated notes due 2014 -- downgraded to Ca (LGD 4, 55%) from Caa1 (LGD 5, 74%) Nexstar's SGL-4 liquidity rating is unaffected by this rating action. The rating outlook is negative. Moody's does not rate Nexstar's privately-placed $36 million of senior subordinated notes due 2014. The downgrade of the CFR to Caa1 reflects Nexstar's reliance upon the success of a current exchange offer to avert a potential liquidity squeeze and the likelihood that, even if the proposed exchange is successfully concluded, the company still faces the heightened prospect of further default under the terms of its credit agreement, absent an amendment. Furthermore, the downgrade incorporates Moody's view that the company's broadcast assets are likely worth substantially less than the current level of its debt, particularly given currently weak investor appetite for broadcast acquisitions, although above-average recovery for the corporate enterprise relative to historic norms for large corporates is noted, nonetheless. The downgrade of the subordinated debt rating in particular to Ca specifically reflects Moody's estimate of ultimate credit losses to be realized by these creditors at the time of the limited default, consistent with both terms of the exchange offer and current trading prices for the securities subject to exchange. The downgrade of the PDR to Ca reflects Moody's view that Nexstar's proposed exchange offer, if successfully concluded, constitutes an effective distressed exchange event of default. Moody's expects to change the PDR to "Caa2/LD" upon completion of the exchange offer which is set to expire on or prior to March 26, 2009, incorporating this view of a limited default occurring and ongoing Caa2-type risk of subsequent default. While Moody's recognizes that the proposed exchange will bring an immediate improvement to the company's covenant compliance cushion, the forward-looking Caa2 PDR underscores Moody's view that the company faces a high probability of another subsequent default. In conjunction with a meaningful layer of junior capital to cushion loss absorption for the bank group, this risk is exacerbated by step-downs in the senior secured bank leverage covenant scheduled to occur in Q409, which will likely prove difficult to comply with if the current pace of declining market spending on TV advertising continues unabated over the near term. Moody's anticipates that subordinated debt not subject to the exchange and which remain cash pay instruments will carry a Caa2 rating when the limited default event passes. The negative rating outlook incorporates Moody's concern that the immediate benefits provided to the company by the proposed debt exchange (including lower cash interest expense and a wider margin of covenant compliance), along with the benefits of increasing digital and retransmission-based revenues and a moderation of capex (following the completion of major facility upgrades) more broadly, will be insufficient to offset the effects of continuing top line erosion in the face very soft market conditions. On February 27, 2009, Nexstar commenced an offer to exchange up to $144 million of outstanding 7% Senior Subordinated Notes due 2014 for (i) up to $142 million of new Senior Subordinated PIK Notes due 2014 and (ii) cash consideration of $93.10 per $1,000 principal amount of old notes and an early participation payment of $30.00 in cash per $1,000 principal amount of old notes. The exchange notes will PIK interest at 0.5% through January 2011, at which time the notes will commence paying cash at a rate of 7% per annum. Management considers that failure to successfully conclude this transaction (or obtain waivers or amendments from its senior secured lenders) will raise substantial doubt about the Company's ability to continue as a going concern. The last rating action was on December 4, 2008 when Moody's downgraded Nexstar's CFR to B3 from B2 and revised its outlook to negative. Nexstar Broadcasting Group, Inc., based in Irving, Texas, operates 52 television stations in 30 markets pro-forma for announced acquisitions. The company recorded revenue of approximately $285 million in 2008. NOVASTAR FINANCIAL: Court Rules Against Unit's Bankruptcy --------------------------------------------------------- Kansas City Business Journal reports that the Hon. Dennis Dow at the U.S. Bankruptcy Court for the Western District of Missouri has ruled against forcing NovaStar Financial Inc. subsidiary, NovaStar Home Mortgage Inc., into bankruptcy to collect $48.9 million it owes for a judgment rendered against it in June 2008. According to Business Journal, American Interbanc Mortgage LLC won its judgment after a California court ruled that NovaStar Home had engaged in false advertising and unfair competition. The report says that NovaStar Home is filing an appeal on that ruling. Business Journal relates that Judge Dow ordered NovaStar Home to set up a bank account to deposit funds payable to the company until the amount of the judgment is reached. According to Business Journal, this includes tax refunds that the company may be eligible to receive. NovaStar Financial, Business Journal states, terminated in September 2008 its status as a real estate investment trust retroactive to January 1, 2006. Business Journal says that the real estate investment trust status gave NovaStar tax exemptions in return for distributing 90% of its income in the form of dividends. NovaStar, since it cancelled distribution of $157 million in dividends related to its 2006 income, became liable for income taxes, penalties, and interest, according to Business Journal. NovaStar said that it would offset those tax costs with an expected refund generated by carryback of tax losses in 2007, Business Journal states. Judge Dow ruled that NovaStar Home already received $50,000 in tax refund checks, which must now be deposited in the court-ordered account. Novastar Financial, Inc. -- http://www.novastarfinancial.com/-- originated and serviced "nonconforming" residential loans to borrowers who generally did not qualify for conventional mortgages. NovaStar retained interests in the nonconforming loans it originated and purchased through its mortgage securities investment portfolio and was taxed as a real estate investment trust. Exposed by the subprime mortgage crisis, NovaStar ceased lending operations at the end of 2007. Its four operating units were mortgage portfolio management, mortgage lending, loan servicing and branch operations. It no longer originates mortgages, and all servicing rights were sold to Saxon Mortgage Services, Inc. PREBUL AUTO: Trustee Wants Millions of Dollars Returned ------------------------------------------------------- The Chattanoogan reports that Jerry Farinash, the trustee in the Prebul Auto Group bankruptcy, is asking that Bankruptcy Judge John Cook direct Joe Prebul's brother-in-law, Bensusan, to return millions of dollars wired to him in May 2006. Wdef.com relates that Prebul Automotive filed for Chapter 7 bankruptcy protection, due to the arrest of Mr. Prebul. According to Wdef.com, Mr. Prebul was found guilty of 11 counts of wire fraud, for receiving several million dollars from a relative for investment purposes but used it instead on his business and a quote "lavish lifestyle". "Unfortunately, the family dispute over repayment of a loan which is the subject matter of yesterday's [February 10] events involving Joe Prebul has prevented the sale of the dealerships to other parties who agreed to continue their operation. Because of this, 250 jobs will be lost in Chattanooga. "Mr. Prebul had plans in place that would protect valued employees and dealerships with long standing in the community. He simply had no choice in this matter and was forced to make this very difficult decision," Wdef.com quoted Tom Ray, local bankruptcy counsel for the Prebul dealerships, as saying. Prebul Auto was already insolvent at the time and the transfers should be voided and should be considered "fraudulent", The Chattanoogan states, citing Mr. Farinash. The Chattanoogan relates that Mr. Farinash demanded that these payments be returned: -- May 4, 2006 payment to Brilliant Jewelers; -- $600,000 payment to TSE Group on July 10, 2007; -- October 15, 2007 payment to Alliance Investments; -- $300,000 payment to Danny and Lillie Bensusan on March 13, 2008; -- $1.5 million payment to Haberman and Goldenberg on July 23, 2008; -- $3 million payment to the Bensusans on July 29, 2008. According to The Chattanoogan, Danny Bensusan claimed that he is still owed over $7 million by Mr. Prebul. Mr. Bensusan said that he transferred over $15 million to Mr. Prebul over a number of years believing that it was being invested in a Chrysler account. The money was "commingled" with funds for use of the Prebul Auto Group and Mr. Prebul, The Chattanoogan states, citing Mr. Farinash. According to the report, Mr. Farinash said that the account was zeroed out each night to help pay down a large loan made by FSG Bank. Lillie Prebul Bensusan -- Mr. Prebul's sister -- and Mr. Bensusan should be considered "insiders", The Chattanoogan relates, citing Mr. Farinash. According to the report, Mr. Farinash said that the Bensusans, through the transfers, received more than would have been their share through handling of the case in a Chapter 7 trustee. Mr. Farinash, according to The Chattanoogan, asked a judgment of $4.8 million against the Bensusans and $4.3 million against the other defendants listed as getting transfers. The Chattanoogan relates that Mr. Farinash asked for approval to accept offers for these dealerships: -- $300,000 Prebul Jeep, Inc. For the sale of Kias Attorney John P. Konvalinka, agent for an undisclosed buyer -- Prebul Imports of Dalton For the sale of Kias -- Prebul Motors of Dalton For the sale of Pontiac, Cadillac, GMC Trucks, Buicks -- $85,000 Prebul Automotive of Dalton For the sale of Mazdas Edd Kirby's Adventure Chevrolet, Chrysler and Jeep 1501 West Walnut Ave., Dalton -- $125,000 Prebul Motorcars, LLC For the sale of Volvos Marshall Mize Ford, Highway 153 at Hixson Pike, Chattanooga -- $101,000 Prebul Infiniti of Chattanooga For the sale of Infinitis LMKS, LLC, 2121 Chapman Road, Chattanooga Prebul Automotive Group is based in Chattanooga. It is owned by car dealer Joe Prebul. PRESIDENTIAL LIFE: S&P Gives Stable Outlook; Affirms 'B+' Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services said it revised its outlook on Presidential Life Corp. and its subsidiary, Presidential Life Insurance Co., to stable from positive. At the same time, S&P affirmed its 'B+' counterparty credit rating on PLFE and S&P's 'BB+' counterparty credit and financial strength ratings on PLIC. Subsequently, S&P will withdraw its ratings on PLFE and PLIC at the company's request. "The ratings on PLIC reflect our view that the company has strong capital, which is aided by a lack of new-business strain," said Standard & Poor's credit analyst Adrian Pask. "However, PLIC is vulnerable to a broad array of risks, including its narrow competitive position, a large block of fixed-annuity contracts with little or no surrender protection, and reliance on investment income produced by risky limited partnerships." Partially offsetting these risks is the improvement in its interest rate risk management through a derivative-use policy implemented in late 2005. PLIC's capital position, using either the regular or enhanced asset stress version of Standard & Poor's capital model, is well in excess of the levels required by the rating. Standard & Poor's believes that PLIC has an adequate risk- management framework, and S&P expects it to improve as the company focuses on its development. PRIMUS TELECOM: Files Prepackaged Chapter 11 Plan ------------------------------------------------- Primus Telecommunications Group Incorporated and its affiliated debtors submitted their proposed joint Chapter 11 plan of reorganization dated March 16, 2009, and explanatory disclosure statement to the United States Bankruptcy Court for the District of Delaware. The Plan is built around a plan support agreement reached with holders of more than the majority of the outstanding principal amount of IHC's 14-1/4% Senior Secured Notes due May 2011 and of the outstanding principal amount of Holding's 5% Exchangeable Senior Notes due June 2010 and 8% Senior Notes due January 2014. The parties have agreed to these terms: * Reinstate $96 million in outstanding variable rate Term Loan debt due 2011; * Exchange $173.2 million of outstanding 14-1/4 % Senior Secured Notes for a pro rata share of $123.4 million of 14-1/4 % Senior Secured Notes to be issued by Primus Telecommunications IHC, Inc., subject to certain modifications, and for a pro rata share of 50% of the equity of the reorganized company distributed to creditors of the Holding Companies; * Exchange the 8% Senior Notes and 5% Exchangeable Notes for 50% of the equity of the reorganized company distributed to creditors of the Holding Companies and warrants exchangeable into additional equity in the reorganized company at predetermined levels of enterprise value; * Exchange the 12-3/4% Senior Notes, 3-3/4% Convertible Senior Notes and 8% Step Up Convertible Subordinated Debentures for warrants exchangeable into equity in the reorganized company at predetermined levels of enterprise value; * Cancel all of the existing equity interests in the parent Holding Company and issue contingent value rights exchangeable into up to 15% of the fully diluted value of the reorganized company after a predetermined level of enterprise value is reached; * Key employees can attain up to 4% of the equity of the reorganized company through a combination of shares vesting upon attaining performance benchmarks and warrants for up to 6% exchangeable into equity in the reorganized company based upon achieving predetermined levels of enterprise value. * Suppliers to be paid in full in the ordinary course. Overview of the Plan According to the Disclosure Statement Under the Plan, there are seven classes of impaired claims and two classes of impaired interests. All other claims and interests are unimpaired. Holders of class non-tax priority claims, other secured claims, first lien secured term loan claims, general unsecured claims, intercompany claims, and equity interests in BearingPoint's affiliated debtors will be unaffected by the Plan. To the extent that the Court determines that all or a portion of any class holding first lien secured term loan claim is an impaired claim, the Plan will provide the same treatment to such first lien secured term loan claim and the Debtors reserve the right to seek confirmation with respect to that claim pursuant to section 1129(b) of the Bankruptcy Code. Furthermore, holders of second lien notes have security interests and a pledge on 65% of the stock in the foreign operating subsidiaries that are subordinate to the security interests of the holding first lien secured term lenders. Based upon the Debtors' liquidation value analysis, the value available for distribution to holders of claims and interests upon a liquidation of the Debtors, after payment of the holding first lien secured term loan claims, would be substantially less than the amount required to satisfy the claims held by the holders of second lien notes. In the absence of the consensual restructuring of the Debtors' debt provided for by the plan, the Debtors do not believe that holding notes claims, group notes claims, general unsecured claims, intercompany claims, equity interests in affiliate debtors, old common stock interests, other interests, and subordinated claims would be entitled to receive or retain any property on account of such claims and interests in the event of a liquidation. The Debtors and the consenting noteholders recognize that the continued dedication of the Debtors' employees, trade, and other unsecured creditors to the Debtors' business is critical to maximizing value. The noteholders have authorized and consented to the restructuring of their debt to provide for (i) the reinstatement of general unsecured claims, intercompany claims and equity interests in affiliate debtors, and (ii) a contingent distribution of new equity to old common stock interests. Specifically, the plan provides for the Debtors' balance sheet to be restructured by: -- reinstating the other secured claims and holding first lien secured term loan claims, provided that if the Court determines that all or a portion of any holding first lien secured term loan claim is an impaired claim, the Plan will provide the same treatment to such holding first lien secured term loan claim and the Debtors reserve the right to seek confirmation with respect to such holding first lien secured term loan claim pursuant to section 1129(b) of the Bankruptcy Code; -- modifying the second lien notes and distributing new equity to holders of second lien note claims; -- distributing new equity to holders of holding notes claims; -- issuing warrants to holders of holding notes claims and group notes claims; -- reinstating all other unsecured creditors; and -- granting holders of class old common stock interests contingent rights to receive shares of New Common Stock. Holders of other interests and subordinated claims will not be entitled to receive or retain any property on account of such interests or claims under the plan. The new common stock issued pursuant to the plan will be subject to the terms and conditions of the new stockholders agreement, which will be deemed binding on and enforceable by the reorganized Debtors, the consenting noteholders, and any party that receives new common stock. Unsecured claims, other than those based on purchases of the Debtors' notes or shares of old common stock, are classified in as general unsecured claims and will be unimpaired. The Debtors' capital and equity structure: A. Holding First Lien Secured Term Loan A $100 million senior secured term loan facility entered into on Feb. 18, 2005, due in 2011, by the Debtors and certain other subsidiaries, secured by first priority liens on certain assets of the Debtors and pledges of 65% of the capital stock of first-tier foreign subsidiaries. Approximately $96.25 million remained outstanding as of the Debtors' bankruptcy filing. B. Second Lien Notes Second Lien Notes, issued February 2007, March 2007, and May 2008 by Primus Telecommunications IHC Inc. and due in 2011. Certain obligations under the IHC Second Lien Notes are guaranteed by the Debtors and certain subsidiaries and affiliates and secured by certain assets of IHC and the guarantor subsidiaries and additional stock pledges. In connection with the settlement embodied in the Plan, and in consideration for the IHC Second Lien Noteholders' forbearance with respect to guarantee claims against certain of the Debtors' operating subsidiaries, and as further provided in the Supplemental Indenture attached to the Plan as Exhibit 1.65, the definition of "Obligations" secured by the IHC Second Lien Notes' collateral will be amended to provide that all obligations of the Issuer and PTII are secured by PTII's assets, including 65% of voting stock of foreign subsidiaries owned by PTII. Approximately $173 million of the IHC Second Lien Notes remained outstanding as of the Petition Date C. Holding Notes i) Step Up Convertible Subordinated Debentures: Issued in January 2004 by Primus Telecommunications Holding Inc. and due in 2014. The 8% Senior Notes are guaranteed by the Debtors. Approximately $186 million of 8% Senior Notes remained outstanding as of the Debtors' bankruptcy filing. ii) 5% Exchangeable Senior Notes: Issued in June 2006 by Primus Telecommunications Holding Inc. and due in 2010. The 5% Exchangeable Senior Notes are guaranteed by the Debtors. Approximately $23.4 million of the 5% Exchangeable Senior Notes remained outstanding as of the Debtors' bankruptcy filing. D. Group Notes i) Step Up Convertible Subordinated Debentures: Issued in February 2006 by Primus Telecommunications Group Incorporated and due August 2009. Approximately $8.6 million of the Step Up Convertible Subordinated Debentures remained outstanding as of the Debtors' bankruptcy filing. ii) 3 3/4% Convertible Senior Notes: Issued in September 2003 by Primus Telecommunications Group Incorporated and due September 2010. Approximately $34.2 million of the convertible senior notes remained outstanding as of the Debtors' bankruptcy filing. iii) 12 3/4 Senior Notes: Issued in October 1999 by Primus Telecommunications Group Incorporated and due Oct. 15, 2009. Approximately $14.2 million of the 12 3/4 senior notes remained outstanding as of the Debtors' bankruptcy filing. E. Equity Interests A total of 300 million shares of common stock was authorized and 142,632,540 shares were issued and outstanding as of Sept. 30, 2008. The plan classifies interests against and liens in the Debtors in 10 groups. The classification of interest and Claims are: Treatment of Claims Type Estimated Estimated Class of Claims Treatment Amount Recovery ----- --------- --------- --------- ---------- 1 non-tax priority unimpaired claims 2 other secured unimpaired claims 3 holding first unimpaired $96,250,000 [ %] lien secured term loan claims 4 IHC second lien impaired $173,000,000 [ %] note claims 5 holding note impaired $209,400,000 [ %] claims 6 group notes impaired $57,000,000 [ %] claims 7 general unsecured unimpaired claims 8 intercompany unimpaired claims 9 equity interest unimpaired 10(a) old common stock impaired 0% 10(b) other interest impaired 0% 10(c) subordinated impaired 0% claims A full-text copy of the Debtors' disclosure statement is available for free at: http://ResearchArchives.com/t/s?3a6a A full-text copy of the Debtors' joint Chapter 11 plan of reorganization is available for free at: http://ResearchArchives.com/t/s?3a6b About Primus Telecom PRIMUS Telecommunications Group, Incorporated (OTCBB: PRTL) -- http://www.primustel.com-- is an integrated communications services provider offering international and domestic voice, voice-over-Internet protocol (VOIP), Internet, wireless, data and hosting services to business and residential retail customers and other carriers located primarily in the United States, Canada, Australia, the United Kingdom and Western Europe. PRIMUS provides services over its global network of owned and leased transmission facilities, including approximately 500 points-of-presence (POPs) throughout the world, ownership interests in undersea fiber optic cable systems, 18 carrier-grade international gateway and domestic switches, and a variety of operating relationships that allow it to deliver traffic worldwide. Founded in 1994, PRIMUS is based in McLean, Virginia. The Company and four its affiliates filed for Chapter 11 protection on March 16, 2009 (Bankr. D. Del. Lead Case No. 09-10867). Davis L. Wright, Esq., and Eric M. Davis, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. The Debtor proposed CRT Investment Banking LLC as financial adviser and investment banker. When the Debtors filed for protection from their creditors, they listed assets between $100 million and $500 million, and debts between $500 million and $1 billion. PRIMUS TELECOM: Proposes Alvarez & Marsal as Consultant ------------------------------------------------------- Primus Telecommunication Group Incorporated and its debtor- affiliates ask the United States Bankruptcy Court for the District of Delaware for permission to employ Alvarez & Marsal as financial advisors and turnaround consultants. The firm is expected to: a) assist in identification and execution of cost reduction and operations improvement opportunities; b) perform a comprehensive review of the 13-week cash flow projections and process; c) review and analyze the country unit business plans for 2009 -- beginning with Canada -- and assist the Debtors on executing performance improvements; d) review and analyze the company's 3 year business plan and assist the company in improving the plan to enhance its positioning in 2009; e) assist the company in operational improvements, strategic and M&A activities requested by the company; and f) engage in other activities as are approved by the Company and agreed to by the firm. The firm will receive fees based on these hourly rates: Designation Hourly Rate ----------- ----------- Managing Directors $625-$850 Directors $450-$625 Associates $300-$450 Analysts $225-$300 Mark A. Roberts, managing director of the firm, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Primus Telecom PRIMUS Telecommunications Group, Incorporated (OTCBB: PRTL) -- http://www.primustel.com-- is an integrated communications services provider offering international and domestic voice, voice-over-Internet protocol (VOIP), Internet, wireless, data and hosting services to business and residential retail customers and other carriers located primarily in the United States, Canada, Australia, the United Kingdom and Western Europe. PRIMUS provides services over its global network of owned and leased transmission facilities, including approximately 500 points-of-presence (POPs) throughout the world, ownership interests in undersea fiber optic cable systems, 18 carrier-grade international gateway and domestic switches, and a variety of operating relationships that allow it to deliver traffic worldwide. Founded in 1994, PRIMUS is based in McLean, Virginia. The Company and four its affiliates filed for Chapter 11 protection on March 16, 2009 (Bankr. D. Del. Lead Case No. 09-10867). Davis L. Wright, Esq., and Eric M. Davis, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. The Debtor proposed CRT Investment Banking LLC as financial adviser and investment banker. When the Debtors filed for protection from their creditors, they listed assets between $100 million and $500 million, and debts between $500 million and $1 billion. PRIMUS TELECOM: Taps Epiq Bankruptcy as Claims Agent ---------------------------------------------------- Primus Telecommunication Group Incorporated and its debtor- affiliates ask the United States Bankruptcy Court for the District of Delaware for permission to employ Epiq Bankruptcy Solutions, Llc as their claims, noticing, soliciting, and balloting agent. The firm is expected to: a) establish and maintain the creditor matrix; b) prepare and serve required notices in these chapter 11 cases, including, but not limited to: -- a notice of commencement of these chapter 11 cases and the initial meeting of creditors under Bankruptcy Code section 341(a); -- a notice of the claims bar date; -- notices of any hearings on a disclosure statement and confirmation of a plan of reorganization; -- other miscellaneous notices as the Debtors or the Court may deem necessary or appropriate for an orderly administration of these chapter 11 cases; and -- assist in the publication of required notices, as necessary; c) within five business days after the service of a particular notice, prepare for filing with the Clerk's Office an affidavit of service that includes: -- a copy of the notice served; -- an alphabetical list of persons on whom the notice was served, along with their addresses; and -- the date and manner of service; d) assist the Debtors preparing and filing their Schedules of Assets and Liabilities, Schedules of Executory Contracts and Unexpired Leases, and Statements of Financial Affairs; e) provide the filing location for all proofs of claim and proofs of interest, at its office located at 757 Third Avenue, New York, NY 10017; and receive and maintain copies of all proofs of claim and proofs of interest filed in these cases; f) maintain official claims registers in these cases by docketing all proofs of claim and proofs of interest in a claims database that includes the following information for each such claim or interest asserted: -- the name and address of the claimant or interest holder and any agent thereof if the proof of claim or proof of interest was filed by an agent; -- the date the proof of claim or proof of interest was received by Epiq and the Court; -- the claim number assigned to the proof of claim or proof of interest; and -- the asserted amount and classification of the claim; g) implement necessary security measures to ensure the completeness and integrity of the claims registers; h) transmit to the Clerk's Office a copy of the claims registers on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis; i) maintain a current mailing list for all entities that have filed proofs of claim or proofs of interest and make such list available to the Clerk's Office or any party in interest upon request; j) provide access to the public for examination of copies of the proofs of claim or proofs of interest filed in these cases without charge during regular business hours; k) create and maintain a public access website setting forth pertinent case information and allowing access to electronic copies of proofs of claim or proofs of interest; l) record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and give notice of such transfers as required by Bankruptcy Rule 3001(e); m) assist the Debtors in the reconciliation and resolution of claims; n) comply with applicable federal, state, municipal, and local statutes, ordinances, rules, regulations, orders, and other requirements; o) assign temporary employees to process claims, as necessary; p) promptly comply with such further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; q) provide balloting and solicitation services, including preparing ballots, producing personalized ballots, and tabulating creditor ballots on a daily basis; and r) provide such other claims processing, noticing, soliciting, balloting, and administrative services as may be requested from time to time by the Debtors. The firm will be paid for it services in accordance to the engagement agreement. A full-text copy of the engagement agreement is available for free at: http://ResearchArchives.com/t/s?3a6d Daniel C. McElhinney, executive director of the firm, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Primus Telecom PRIMUS Telecommunications Group, Incorporated (OTCBB: PRTL) -- http://www.primustel.com-- is an integrated communications services provider offering international and domestic voice, voice-over-Internet protocol (VOIP), Internet, wireless, data and hosting services to business and residential retail customers and other carriers located primarily in the United States, Canada, Australia, the United Kingdom and Western Europe. PRIMUS provides services over its global network of owned and leased transmission facilities, including approximately 500 points-of-presence (POPs) throughout the world, ownership interests in undersea fiber optic cable systems, 18 carrier-grade international gateway and domestic switches, and a variety of operating relationships that allow it to deliver traffic worldwide. Founded in 1994, PRIMUS is based in McLean, Virginia. The Company and four its affiliates filed for Chapter 11 protection on March 16, 2009 (Bankr. D. Del. Lead Case No. 09-10867). Davis L. Wright, Esq., and Eric M. Davis, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. The Debtor proposed CRT Investment Banking LLC as financial adviser and investment banker. When the Debtors filed for protection from their creditors, they listed assets between $100 million and $500 million, and debts between $500 million and $1 billion. PRIMUS TELECOM: Seeks Court Approval for Skadden Arps as Attorneys ------------------------------------------------------------------ Primus Telecommunication Group Incorporated and its debtor- affiliates ask the United States Bankruptcy Court for the District of Delaware for permission to employ Skadden, Arps, Slate, Meagher & Flom LLP as their attorneys. The firm is expected to: a) advise the Debtors with respect to their powers and duties as debtors and debtors-in-possession in the continued management and operation of their businesses and properties; b) attend meetings and negotiating with representatives of creditors and other parties in interest and advising and consulting on the conduct of these Chapter 11 Cases, including all of the legal and administrative requirements of operating in Chapter 11; c) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on behalf of the Debtors' estates, the defense of any actions commenced against those estates, negotiations concerning litigation in which the Debtors may be involved, and objections to claims filed against the estates; d) prepare, on behalf of the Debtors, motions, applications, answers, orders, reports, and papers necessary to the administration of the estates; e) prepare and negotiate on the Debtors' behalf plan(s) of reorganization, disclosure statement(s) and all related agreements and/or documents and taking any necessary action on behalf of the Debtors to obtain confirmation of such Plan(s); f) advise the Debtors in connection with any sale of assets; g) perform other necessary legal services and providing other necessary legal advice to the Debtors in connection with these Chapter 11 Cases; and h) appear before this Court, any appellate courts, and the United States Trustee and protecting the interests of the Debtors' estates before such courts and the United States Trustee. The firm's hourly rates under the bundled rate structure range are: Designation Hourly Rate ----------- ----------- Partners $730-$1,050 Counsel $695-$835 Associates $360-$680 Legal Assistants $175-$295 George N. Panagakis, Esq., member of the firm, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Primus Telecom PRIMUS Telecommunications Group, Incorporated (OTCBB: PRTL) -- http://www.primustel.com-- is an integrated communications services provider offering international and domestic voice, voice-over-Internet protocol (VOIP), Internet, wireless, data and hosting services to business and residential retail customers and other carriers located primarily in the United States, Canada, Australia, the United Kingdom and Western Europe. PRIMUS provides services over its global network of owned and leased transmission facilities, including approximately 500 points-of-presence (POPs) throughout the world, ownership interests in undersea fiber optic cable systems, 18 carrier-grade international gateway and domestic switches, and a variety of operating relationships that allow it to deliver traffic worldwide. Founded in 1994, PRIMUS is based in McLean, Virginia. The company and four its affiliates filed for Chapter 11 protection on March 16, 2009 (Bankr. D. Del. Lead Case No. 09-10867). Davis L. Wright, Esq., and Eric M. Davis, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. The Debtor proposed CRT Investment Banking LLC as financial adviser and investment banker. When the Debtors filed for protection from their creditors, they listed assets between $100 million and $500 million, and debts between $500 million and $1 billion. PRIMUS TELECOM: Wants May 15 Extension for Schedules & Statements ----------------------------------------------------------------- Primus Telecommunications Group Incorporated and its debtor- affiliates ask the United States Bankruptcy Court for the District of Delaware to extended until May 15, 2009, to file their (i) schedules of assets and liabilities, (ii) schedules of executory contracts and unexpired leases, (iii) schedules of current income and expenditures, and (iv) statements of financial affairs. The extension of time, the Debtor says, will ensure that the their schedules and statements are accurate and avoid the need for the them to file subsequent amendments. The Debtors tell the Court that they require substantial time to gather, review, prepare and complete the schedules and statements. About Primus Telecom PRIMUS Telecommunications Group, Incorporated (OTCBB: PRTL) -- http://www.primustel.com-- is an integrated communications services provider offering international and domestic voice, voice-over-Internet protocol (VOIP), Internet, wireless, data and hosting services to business and residential retail customers and other carriers located primarily in the United States, Canada, Australia, the United Kingdom and Western Europe. PRIMUS provides services over its global network of owned and leased transmission facilities, including approximately 500 points-of-presence (POPs) throughout the world, ownership interests in undersea fiber optic cable systems, 18 carrier-grade international gateway and domestic switches, and a variety of operating relationships that allow it to deliver traffic worldwide. Founded in 1994, PRIMUS is based in McLean, Virginia. The Company and four its affiliates filed for Chapter 11 protection on March 16, 2009 (Bankr. D. Del. Lead Case No. 09-10867). Davis L. Wright, Esq., and Eric M. Davis, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. The Debtor proposed CRT Investment Banking LLC as financial adviser and investment banker. When the Debtors filed for protection from their creditors, they listed assets between $100 million and $500 million, and debts between $500 million and $1 billion. PROTECTION ONE: Reports $50.5 Million Net Loss in 2008 ------------------------------------------------------ Protection One, Inc. has issued financial results for the fourth quarter and the year ended December 31, 2008. The CEO of the company., Richard Ginsburg reported a 3% increase in EBITDA to $28.3 million on a modest increase in revenues during the fourth quarter. Consolidated revenue for the fourth quarter of 2008 increased 1.6% over the fourth quarter of 2007 to $94.0 million as a result of increases in Wholesale monitoring revenue and in Retail installation revenue arising from higher amortization of previously deferred revenue. Operating income increased to $4.4 million in the fourth quarter of 2008 from $2.4 million one year earlier on higher contribution from monitoring and service revenues. Higher net installation and selling expenses were offset by lower amortization and depreciation expense. The Company's net loss for the fourth quarter improved to $7.2 million in 2008, from $10.2 million in 2007 on higher operating income and lower interest expense. Consolidated full year revenue in 2008 increased 6.9% to $372.0 million in 2007, principally because the Company's 2008 results included a full year of IASG revenue, while the 2007 results reflected only nine months of IASG activity. In addition, Wholesale revenue in 2008 increased 3.8% over 2007 excluding the impact of the merger. Operating income fell to $10.3 million in 2008 compared to $15.4 million in the year ago period, resulting from higher installation and selling costs in excess of installation revenues, partially offset by improved monitoring and service results that included a full year of IASG revenue. The Company's net loss for the year fell to $50.5 million in 2008 from $32.2 million in 2007. Most of the difference arises from a $12.8 million loss on retirement of debt in connection with the refinancing of the Company's senior subordinated notes in March 2008, of which $7.0 million was non-cash. Lower operating income, for the reasons previously noted, also contributed to the decrease. The company, according to Mr. Ginsburg, is focused on delivering growth in EBITDA and free cash flow for this year. With almost 90% of Protection One's revenue generated from recurring revenue streams and an improved cost structure that could lead to lower the customer acquisition costs in 2009 than in 2008. The Company ended 2008 with $38.9 million of cash and cash equivalents, with excess cash and cash equivalents invested in United States treasury portfolios. As of March 5, 2009, the Company also had $19.7 million available for borrowing under its revolving credit facility. Protection One's total debt and capital leases, excluding debt discounts and premiums, as of December 31, 2008 was $522.6 million, compared to $526.0 million as of December 31, 2007. The net debt decreased to $483.7 million at December 31, 2008 from $485.0 million at December 31, 2007. A full copy the company's 2008 earnings release is available at no charge at: http://ResearchArchives.com/t/s?3a69 About Protection One Based in Lawrence, Kansas, Protection One, Inc. (Nasdaq:PONE), and its affiliate, Protection One Alarm Monitoring, Inc. -- http://www.ProtectionOne.com-- are vertically integrated national providers of sales, installation, monitoring, and maintenance of electronic security systems to homes and businesses, as measured by recurring monthly revenue, and has been recognized as one of "America's Most Trustworthy Companies" by Forbes.com. Network Multifamily, Protection One's wholly owned subsidiary, is the largest security provider to the multifamily housing market. The company also owns the nation's largest provider of wholesale monitoring services, the combined operations of CMS and Criticom International. As of Sept. 30, 2008, the company served approximately 837,000 residential and business customers and approximately 1.0 million sites through its wholesale operations. The company's net loss for the quarter ended Sept. 30, 2008, increased to $11.1 million, from $8.7 million in 2007 and adjusted EBITDA declined to $27.1 million from $30.2 million. As of Sept. 30, 2008, the company's balance sheet shows $644.9 million in total assets, $708.6 million in total liabilities, resulting in $63.7 million in stockholders' deficit. QIMONDA NA: May Enter into Commitment Letter for $40MM Loan ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware granted Qimonda Rimond, LLC, et al., permission to enter into a commitment letter with GB Merchant Partners, LLC in connection with GBMP's commitment to provide a $40 million in Debtor-in-Possession financing for the Debtors, pay GBMP a commitment fee, and reimburse GBMP for reasonable out-of-pocket expenses incurred with connection with the DIP Facility and related agreements. The Commitment Fee and the expenses shall be accorded administrative priority status of the kind specified in Sections 503(b) and 507(a)(2) of the Bankruptcy Code. In its motion, the Debtors told the Court that the Court's authorization is necessary in order to induce GBMP to invest the requisite time, money and effort to conduct the diligence and negotiations required to complete a full credit facility. In papers filed with the Court, the Debtors related that the DIP Facility is absolutely essential to maintaining the Debtors' liquidity so they can continue to operate, wind-down and eventually sell assets with minimal disruption. The principal terms and conditions of the $40 million DIP Facility are: Principal Terms and Conditions for $40 Million DIP Credit Facility Borrower : Qimonda North American Corp. and Qimonda Richmond, LLC Lenders : GB Merchant Partners, LLC or any of its affiliates and possibly, other banks to which Agent may syndicate Amount : $40,000,000 Maturity Date: The date which is the earliest to occur of: -- the one year anniversary of the entry of the Interim Order; -- 25 days after the entry of the Interim Order if the Final Order has not been entered prior to the expiration of such 25-day period; -- the effective date of a plan of reorganization or liquidation that is confirmed pursuant to an order entered by the Bankruptcy Court in the cases; and -- the acceleration of the DIP Loans in accordance with the DIP Credit Agreements. Purpose : The Senior Credit Facility may be used for working capital and general corporate purposes consistent with the Budget, to pay transaction costs, fees and expenses and to pay the costs and expenses related to the administration of the cases. Interest and Certain Fees : The DIP Loans will bear interest at a rate equal to LIBOR plus the Applicable Margin. Interest rate shall be paid on the last day of each month during the term of the Senior DIP Credit Facility and on the Termination Date. Collateral : First priority lien on all tangible and intangible property of the Debtors' respective estates in the cases. Borrowers agree to pay, for GBMP's benefit and the ratable benefit of any other Lenders, the fees set forth in the Rate and Fee Letter. This includes a non-refundable commitment fee in the amount set forth in the Rate & Fee Letter, to be filed under seal pursuant to the seal motion and the proposed seal order. About Qimonda Richmond, LLC Qimonda Richmond, LLC makes semiconductor products. The Debtor and its debtor-affiliate filed for separate Chapter 11 protection on Feb. 20, 2009, (Bankr. D. Del. Case Nos.: 09-10589 to 09-10590) Simpson Thacher & Bartlett LLP and Mark D. Collins, Esq. and Michael Joseph Merchant, Esq. at Richards Layton & Finger PA represent the Debtors in their restructuring efforts. Alvarez & Marsal serves as restructuring managers. Epiq Bankruptcy Solutions LLC serves as its claims agent. The Debtors listed estimated assets of more than $1 billion and estimated debts of more than $1 billion. QUIKSILVER INC: S&P Downgrades Corporate Credit Rating to 'B-' -------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its ratings on Huntington Beach, California-based Quiksilver Inc., including its corporate credit rating, to 'B-' from 'B+'. At the same time, S&P placed Quiksilver's ratings on CreditWatch with developing implications, meaning that S&P could lower the ratings further, or raise them following the completion of S&P's review. As of Jan. 31, 2009, Quiksilver had about $1.4 billion in adjusted debt. "The downgrade and CreditWatch placement follow Quiksilver's announcement of an extension on the maturity of its EUR55 million line of credit agreement, and that it intends to conclude a strategic or refinancing transaction in the period covered by this extension," said Standard & Poor's credit analyst Bea Chiem. Quiksilver's French subsidiary, Pilot S.A.S. (not rated), entered into an amendment to this line of credit agreement to extend the maturity from March 14, 2009 to June 30, 2009. As of Jan. 31, 2009 the company had $42 million in cash and $81 million available, of which only $41 million was committed, under its lines of credit and asset-based revolver. "Standard & Poor's will monitor developments and meet with Quiksilver's management to review the company's ongoing operating strategies, capital structure plans, and financial policy," she continued. S&P's resolution of the CreditWatch listing will focus on Quiksilver's ability to meet its near-term debt obligations, maintain adequate liquidity, and improve its operating business trends and financial metrics. If the company can complete a refinancing or strategic transaction, then S&P may review the ratings for an upgrade. RITZ CAMERA: Committee Says DIP Financing Pushing Liquidation ------------------------------------------------------------- The official committee of unsecured creditors of Ritz Camera Centers Inc., says the proposed $85 million debtor-in-possession financing does not benefit the Debtor's estates, and only serves the purpose of DIP lenders. The Creditors Committee, Bill Rochelle of Bloomberg News relates, said in papers submitted to the U.S. Bankruptcy Court for the District of Delaware that the DIP Loan "provides a phantasm of increased availability" and serves no purpose "other than to fund a platform for the rapid liquidation" in a "process controlled entirely by the DIP lenders." The Creditors Committee contends the financing improperly allows the lenders to "convert their pre- petition debt into post-petition debt, while forcing the debtor to liquidate its assets, at lightening speed, for their sole benefit after taking their $1.7 million fee." The existing secured lenders are providing for the DIP Loan. The Court will consider final approval of the proposed DIP financing on March 19. The Court will also consider of the proposed auction procedures for 400 of 800 camera stores. The Debtor, Bill Rochelle reported, has said it intends to close 400 camera stores. According to the same report, an auction where liquidators can bid for the right to conduct going-out-of-business sales will be held April 1. Ritz Camera has received authorization from the Bankruptcy Court to hold a March 17 auction for the assets of the 130-store Boater's World Marine Centers. The Court will seek approval of the results of the auction on March 19. About Ritz Camera Centers Inc 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. RITZ CAMERA: Final Hearing on DIP Facility Set for March 19 ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has granted Ritz Camera Centers, Inc., permission to obtain postpetition loans and advances on an interim basis through and including the date of the Final Hearing from Wachovia, National Association, as agent for itself and other lenders, to pay employee salaries, payroll, taxes, and all other expenses, in such amounts as may be made available in accordance with an initial 13-week budget. On February 23, 2009, the Debtor sought the entry of interim and final orders authorizing it to, among others, obtain postpetition financing from the Lenders of up to $85,000,000 (subject to a Borrowing Base), in accordance with a Budget. The final hearing on the motion is scheduled for March 19, 2009, at 2:00 p.m. Pursuant to the Court's order, Debtor is authorized to borrow and use loan proceeds pursuant to the terms and conditions of the Existing Loan Agreement and the other Financing Agreements, as amended and ratified by the Ratification Agreement. As of the Petition Date, the aggregate amount of all loans, letter of credit obligations and other prepetition obligations owing by the Debtor and Ray Enterprises, LLC to Lenders amounted to $54,523,522. To secure the prompt payment and performance of any and all postpetition obligations, Lenders are granted valid and perfected security interests in all of the Prepetition Collateral and the Postpetition Collateral. Lenders are also granted an allowed superpriority administrative claim pursuant to Sec. 364(c) of the Bankruptcy Code. The foregoing liens and superpriority claim will be subject only to the right of payment of "Carve Out" expenses for U.S. Trustee fees, fees of the Bankruptcy Court, and unpaid and outstanding reeasonable fees of the Debtor's professionals and other professionals retained by any Committee in the Debtor's bankruptcy case. As further adequate protection, Debtor is authorized to provide adequate protection to the Lenders in the form of: (a) payment interest, fees and other amounts due under the Prepetition Financing Ageement to the Agent on behalf of the Lenders, and (b) onging payment of the fees, costs and expenses, including reasonable legal and ther professionals' fees and expenses, of the Agent and the Lenders as required under the Prepetition Financing Agreements. The Official Committee of Unsecured Creditors objects to the motion of the Debtor for approval of the DIP Facility in its current form for the follwoing reasons: (1) The proposed rollup of the prepetition obligations into postpetition debt is not only unnecessary, but it is also illegal and unauthorized under the bankruptcy law. (2) A full waiver of the prepetition lenders obligation to reimburse the costs of preserving and disposing of their Prepetition Collateral pursuant to Sec. 506(c) of the Bankruptcy Code should not be allowed. (3) The imposition of a $1.7 million underwriting fee in exchange for providing the DIP Facility is excessive and unwarranted. (4) The Prepetition Lenders should not be granted liens or superpriority claims on proceeds of the Debtor's Leases or Avoidance Actions. (5) The DIP Lenders should not be granted a lien on Avoidance Actions. (6) The Prepetition Lenders are not entitled to interest payments until confirmation of a Plan of Reorganization. (7) The Prepetition Lenders have not established that they are entitled to any adequate protection. A full-text copy of the Court's Interim DIP Financing order is available at: http://bankrupt.com/misc/RitzCamera.InterimDIPFinancingOrder.pdf About Ritz Camera Centers Inc 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. ROCKWOOD SPECIALTIES: S&P Downgrades Corp. Credit Rating to 'B+' ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered all its ratings on Princeton, New Jersey-based Rockwood Specialties Group Inc. by one notch and placed them on CreditWatch with negative implications. S&P lowered the corporate credit rating to 'B+' from 'BB-'. "These rating actions reflect our concerns that sales and earnings will be on a downward trend in the currently weak economic environment, narrowing the cushion for compliance with the maximum leverage covenant in the company's primary credit agreement," said Standard & Poor's credit analyst Cynthia Werneth. The maximum leverage covenant tightens in the current quarter. Although Rockwood could use a portion of its significant cash balance ($468 million as of Dec. 31, 2008) to reduce debt and thereby aid covenant compliance, that would reduce liquidity. Moreover, if EBITDA drops significantly in 2009, it could be difficult for the company to avert a covenant breach. A covenant amendment may be possible, but is likely to be costly and would therefore weaken free cash flow and credit quality. For the purposes of the covenant compliance calculation, Rockwood's net debt was $2.8 billion as of Dec. 31, 2008. S&P adjust debt to include about $240 million of tax-adjusted unfunded postretirement obligations, $50 million of capitalized operating leases, and $35 million of after-tax environmental liabilities, bringing total debt to $3.1 billion at year-end 2008. The ratings on Rockwood reflect a strong business risk profile with an attractive portfolio of specialty chemical businesses, a highly leveraged capital structure, and narrowing liquidity. S&P expects to resolve the CreditWatch during the next several weeks after evaluating early 2009 operating performance and prospects for near-term earnings, cash flow, liquidity, and covenant compliance. RYAN EAST: Public Auction for Inventory, A/R on April 1 ------------------------------------------------------- A.E. Holding Co., Inc., will sell at a public auction to the highest bidder the assets of Ryan East, Ltd., securing the obligations to it on Apri1 1, 2009, at 10:30 p.m. at 6325 Erdman Avenue, in Baltimore, Maryland 21205. Assets consist of: a) Inventory (To be Sold as One Lot) - novelty rubber goods and sex toys (approx. wholesale cost $107,344) and remainder (out-of-date) x-rated magazines (approx. wholesale cost $84,800). b) Accounts Receivable: Approximately $109,734, of which approximately $48,000 is current and the balance is over 30 days in arrears. c) Fixtures & Equipment: Adjustable steel shelving, 2 shrink wrap machines, miscellaneous shop carts and furniture. Full payment in cash or by certified or cashier's check will be required of the purchaser at time of sale. Company checks will be accepted with approved bank letter of guarantee. Manner of sale to be announced on premises. For more information, please contact A.J. Billig & Co. at (410) 752-8440. SAKS INCORPORATED: Moody's Downgrades Corp. Family Rating to 'B2' ----------------------------------------------------------------- Moody's Investors Service downgraded Saks Incorporated's long term ratings including its Probability of Default rating to B3 from B1 and its Corporate Family Rating to B2 from B1. The rating outlook is negative. The downgrade reflects Saks' significant level of operating losses and Moody's expectation that it will continue to generate operating losses for the next twelve months as it weathers a significant contraction in the high end luxury goods market. Moody's believes that the luxury goods market is susceptible to the risk that the current recession, financial market turmoil, and material decline in financial wealth by many consumers results in a fundamental shift in consumer shopping habits over the medium to longer term. Given this, Moody's believe that Saks' sales performance will be constrained and is not likely to revert to its pre-recession levels over the medium term. However, Moody's do expect Saks to improve its gross margin over the level experienced in the fourth quarter of 2008 but that this improvement will not be enough to abate an operating loss during 2009. The B3 probability of default rating reflects the company's very poor credit metrics, significant operating losses, as well as Moody's expectation that the overall luxury market will contract further. In addition, the rating reflects Moody's expectation that Saks' sales will contract further and will result in further operating losses for fiscal year 2009. Supporting the rating is the company's adequate liquidity as provided by both its internal sources of cash as well as its $500 million asset based revolving credit facility. Positive ratings consideration was given to the fact that Saks has minimal near term debt maturities as well as the fact that its revolving credit facility does not expire until September 2011. In addition, positive rating consideration was given to the company's unencumbered real estate holdings which include its flagship store in New York City. Moody's believe that Saks' unecumbered real estate assets provide the company with additional financial flexibility. In addition, Moody's believe that the value of the company's assets as compared to its debt levels should provide a higher than average recovery value in a stress scenario. Given this, Saks' recovery estimate increased to 65% from 50% which results in the Corporate Family Rating being one notch higher at B2 than the B3 Probability of Default Rating. The negative outlook reflects the pressures Saks currently faces from the challenging economic environment and the overall contraction of the luxury market. These ratings were downgraded: -- Corporate Family Rating to B2 from B1; -- Probability of Default Rating to B3 from B1; -- Various senior unsecured notes to Caa1 (LGD4, 59%) from B2 (LGD5, 74%). The last rating action on Saks was on November 19, 2008 when its long term ratings, including Corporate Family Rating of B1, were placed on review for possible downgrade. Saks Incorporated, headquartered in New York, New York, operates 53 Saks Fifth Avenue luxury department stores, 51 Off Fifth off- price stores, and saks.com. Total revenues are about $3 billion. SIMMONS CO: Robert Burch Resigns as EVP Operations --------------------------------------------------- Simmons Company says on March 16, 2009, Robert P. Burch announced his resignation from the position of Executive Vice President - Operations of Simmons Co. and its operating subsidiary Simmons Bedding Company. Mr. Burch will be leaving the Company to assume the position of President and Chief Executive Officer of Berkline/Benchcraft Holdings, LLC, an upholstery furniture manufacturer. Mr. Burch's last day with the Company will be March 27, 2009. As reported by the Troubled Company Reporter, on February 5, 2009, an ad hoc committee of holders of Simmons Bedding Company's $200 million 7.785% senior subordinated notes approved a forbearance agreement with the Company, pursuant to which the members of that committee have agreed to refrain from enforcing their respective rights and remedies under the Notes and the related indenture for the duration of the forbearance period, which runs through March 31, 2009. The Company and the committee have agreed not to seek approval from any additional Note holders but instead to make the agreement effective immediately. The committee has the obligation under the forbearance agreement to take any actions that are necessary to prevent an acceleration of the Notes during the forbearance period. Moreover, because the committee's holdings represent more than a majority of the Notes, the committee has the power under the indenture to rescind any acceleration of the Notes by either the trustee or the minority holders of the Notes, allowing the forbearance period to run through March 31, 2009, and providing time for the Company to pursue an organized financial restructuring. "Our restructuring is progressing as planned and we look forward to its completion," said Stephen G. Fendrich, Simmons Bedding's President and Chief Operating Officer. "We thank the ad hoc committee of the Notes for their support." About Simmons Company Headquartered in Atlanta, Georgia, Simmons Company -- http://www.simmons.com/-- is a mattress manufacturer and marketer of a range of products through its indirect subsidiary Simmons Bedding Company. Products includes Beautyrest(R), Beautyrest Black(TM), ComforPedic by Simmons(TM), Natural Care(TM), BackCare(R), Beautyrest Beginnings(TM) and Deep Sleep(R). Simmons Bedding Company operates 21 conventional bedding manufacturing facilities and two juvenile bedding manufacturing facilities across the United States, Canada and Puerto Rico. Simmons also serves as a key supplier of bedding to hotel groups and resort properties. The Troubled Company Reporter reported on January 23, 2009, that Standard & Poor' Ratings Services said that it lowered its corporate credit rating on Atlanta, Georgia-based Simmons Co. to 'SD' from 'CCC'. S&P also lowered the ratings on wholly-owned subsidiary Simmons Bedding Co.'s 7.875% subordinated notes due 2014 to 'D' from 'CCC'. The recovery rating for these notes remains '3'. In addition, S&P lowered the ratings on Simmons Bedding's senior secured bank facility to 'CC' from 'B-', and the recovery rating remains a '1'. Standard & Poor's also lowered the ratings for both Simmons Co.'s unsecured notes and holding company Simmons Holdco Inc.'s unsecured notes to 'C' from 'CC'. The recovery ratings for these remain a '6'. S&P also removed the ratings from CreditWatch with developing implications, where S&P originally placed them with negative implications on Aug. 12, 2008, following the company's drawdown of its revolving credit facility. S&P subsequently lowered the ratings to the current levels following two separate rating actions on Oct. 22, 2008 and Nov. 14, 2008. On the latter date, S&P revised the CreditWatch listing to developing from negative. SIST: Files for Chapter 11 Bankruptcy Protection With Affiliates ---------------------------------------------------------------- SIST and its affiliates filed on March 16, 2008, a Chapter 11 bankruptcy protection. The affiliates are: -- U.S. Acquisitions & Oil, Inc.; -- Midwest Oil of Wisconsin, LLC; -- Midwest Hotels & Motels, LLC; -- Midwest Oil of Minnesota, LLC; -- Midwest Oil of Shawano, LLC; and -- Midwest Properties of Shawano, LLC. "Due to intentional business interference and interference with our financing relationships by certain persons and entities, primarily in the form of an intense, wide spread media smear campaign, the companies were forced to file for Chapter 11 reorganization bankruptcy," according to SIST CEO Naomi Isaacson. SIST has retained Mark Lane, the internationally famous trial lawyer and author. "Outrageous attacks in various forms have been launched against SIST and its companies based in part upon religious and other forms of discrimination over a sustained period of time. SIST has tried to withstand these attacks and the interference with their ongoing business affairs but in the face of the current and severe national economic downturn they have been unable to function normally," Mr. Lane stated. "It has been alleged that SIST is under investigation by the FBI but we have no knowledge that such an investigation exists. No one from SIST or any of it's business subsidiaries has ever been questioned by anyone from FBI," Mr. Lane said. "Both Shawano County Judges, Habeck and Grover, have openly stated that they never believed the allegations about SIST and do not believe that SIST or its affiliates would harm anyone," according to Ms. Isaacson, who was referring to the "media smear campaign." "Plans are underway to counter these outrageous attacks against SIST with legal action," Mr. Lane continued, "and in the meantime they are determined to remain in business and to continue to provide the same high level of customer service in their local communities throughout the reorganization and into perpetuity." SIST has been in the community for two and a half decades. SIST and its affiliates have done nothing but good for their local community. SIST and its affiliates will continue to provide excellent customer service and quality goods and services at reasonable prices. SPECIAL DEVICES: May Face Patent-Infringement Trial from Orica -------------------------------------------------------------- Bloomberg's Bill Rochelle reports that Special Devices Inc., may be facing a patent-infringement lawsuit from Orica Explosives Technology Pty. if the U.S. Bankruptcy Court for the District of Delaware favors the latter's request. Orica Explosives Technology Pty. has filed a motion with the Court for the lifting of the automatic stay to allow it to pursue a lawsuit it filed against Special Devices, which is in Chapter 11 protection. Orica filed a patent-infringement suit against Special Devices prepetition and three unaffiliated companies. Orica is seeking permission from the Bankruptcy Court to move with the suit because of the "automatic stay", which is imposed against creditors upon bankruptcy filing by a debtor. A bankruptcy filing triggers an injunction against the continuance of any action by any creditor against the debtor or the debtor's property. Key constituents in the case want the automatic stay in place. Special Devices, its official committee of unsecured creditors, and Wayzata Opportunities Fund LLC, one of the pre-bankruptcy lenders, oppose Orica's request. According the Bloomberg report, Special Devices, for its part, says allowing the suit to continue "could result in the total loss of the debtor's mining and blasting business." Orica has said, according to Mr. Rochelle, IP lawsuit is "poised for trial" and that cross-motions for summary judgment have been filed. The Bankruptcy Court is scheduled to hear the lift stay request at the end of the week. Moorpark, California-based Special Devices Inc. -- http://www.specialdevices.com/-- was founded in the 1950s to manufacture explosives for film special effects, also makes initiators for the defense and mining industries. The company makes a component that causes car air-bags to deploy. Special Devices filed for Chapter 11 protection on December 15, 2008 (Bankr. D. Del. 08-13312) after failing to refinance $73.6 million in debt. The Hon. Mary F. Walrath oversees the case. Jason M. Madron, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., serve as the Debtor's counsel. Gibson, Dunn & Crutcher LLP acts as special corporate counsel, and Kurztman Carson Consultants LLC acts as claims agent. When it filed for bankruptcy, the Debtor estimated both assets and debts to be between $50 million and $100 million. STATION CASINOS: Will File for Bankruptcy by April 15 ----------------------------------------------------- Kerry E. Grace at The Wall Street Journal reports that Station Casinos Inc. said that it will file for bankruptcy protection on or before April 15. As reported by the Troubled Company Reporter on February 4, 2009, Station Casinos was negotiating a pre-packaged Chapter 11 plan. Station Casinos proposed a prepackaged bankruptcy transaction and said some senior secured lenders agreed to support the plan. WSJ relates that Station Casinos said on Wednesday that it opposed a motion brought against it by bondholder S. Blake Murchison seeking an injunction aimed at stopping its efforts to restructure more than $5 billion in debt, largely assumed by the Company's leveraged buyout in 2007. Mr. Murchison claimed that seeking the advance consent of Station Casinos qualified institutional noteholders for the prepackaged bankruptcy will result in those holders getting "priority ahead of previously equal bond holders," making the Company's notes worthless, WSJ states, citing Station Casinos. According to the report, Station Casinos said that Mr. Murchison would get the same new notes and cash as every other holder of the same class of notes. Station Casinos said that it won't discriminate or subordinate against any holder of the senior notes, the report states. WSJ relates that Station Casinos said it won't make a scheduled $9.9 million interest payment that was due Sunday. Boyd Gaming Corp. told Station Casinos in February that it may be interested in acquiring most of the Company for $950 million, WSJ reports. 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 March 5, 2009, Standard & Poor's Ratings Services said that it lowered its issue- level rating on Las Vegas, Nevada-based Station Casinos Inc.'s 6.875% senior subordinated notes to 'D' from 'C'. 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 February 15, 2009 interest payment on the notes. TEXTRON FINANCIAL: S&P Downgrades Counterparty Rating to 'BB+/B' ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its counterparty credit ratings on Providence, Rhode Island-based Textron Financial Corp., captive finance company of Textron Inc. (Textron; BBB-/Developing/A-3), to 'BB+/B' from 'BBB/A-2'. At the same time, S&P removed the ratings on TFC from CreditWatch, where they were placed with negative implications on Jan. 30, 2009. The outlook is developing, incorporating the possibility that S&P could downgrade, upgrade, or affirm the rating. The main factor in the two-notch downgrade was S&P's assessment of the stand-alone credit profile of Textron Financial. "We have lowered our stand-alone rating on TFC's creditworthiness to 'BB' from 'BBB-' because S&P expects its credit quality to grow worse and the company to become less diverse as it moves toward being a captive aircraft and golf equipment lender," said Standard & Poor's credit analyst Jeffrey Zaun. "We have also considered the parent's significant support of TFC by designating the finance company as strategically important to the parent and incorporating one notch of support to the finance company." Although S&P had anticipated credit quality deterioration at TFC and had factored it into the previous rating, S&P's outlook on the economy and TFC's aircraft lending business has dimmed. S&P believes credit quality at TFC will continue to suffer from both a weak economy and dislocation due to the finance company's exit from noncaptive businesses. S&P's concerns are only partially offset by management's proactive stance amid poor economic and capital market conditions. TEXTRON INC: S&P Downgrades Counterparty Credit Rating to 'BB+' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Textron Inc., including lowering the long-term corporate credit rating to 'BBB-' from 'BBB+' and the short-term corporate credit rating to 'A-3' from 'A-2'. S&P also lowered its long-term counterparty credit rating on wholly owned finance unit Textron Financial Corp. to 'BB+' from 'BBB' and the short-term rating to 'B' from 'A-2' (please see research update on TFC to be published immediately following this report for full rating rationale). All ratings are removed from CreditWatch, where they were placed with negative implications on Jan. 30, 2009. The outlook on both entities is developing. "The ratings downgrade on Textron reflects the risks surrounding plans to exit TFC's noncaptive businesses in the current recessionary environment and the possible impact on the firm's liquidity and earnings," said Standard & Poor's credit analyst Christopher DeNicolo. "In addition, the downgrade takes into account weaker earnings and cash flow at the Cessna business jet unit in 2009." In December 2008, Textron announced that it would be exiting the noncaptive portfolio of TFC, reducing the portfolio by $2.6 billion in 2009. This resulted in $461 million of charges in the fourth quarter of 2008 to write down goodwill at TFC and to mark to market certain receivables held for sale. In order to remain in compliance with the fixed-charge coverage covenant in the TFC support agreement, Textron also made a $625 million capital contribution in the fourth quarter of 2008 and further capital contributions are expected in 2009 to maintain compliance. Further charges and more significant capital contributions could be required if losses are more than expected or assets are sold at lower than expected prices. Textron also replaced management at TFC, including the CEO, who was also CFO of Textron. The two-notch rating downgrade on TFC follows the two-notch rating downgrade on its parent and reflects S&P's assessment of the finance unit's stand-alone credit profile. S&P has lowered its stand-alone assessment of TFC's creditworthiness to 'BB' from 'BBB-' because S&P believes the outlook for its credit quality has deteriorated and because TFC will become less diverse as it moves toward being a captive aircraft and golf equipment lender. S&P has considered the parent's significant support of TFC by designating the finance company as strategically important to the parent and incorporating one notch of support to the finance company. S&P's ratings on TFC will remain linked to those of Textron Inc. The ratings on Providence, R.I.-based Textron are supported by its leading market positions in selected segments of aircraft (Cessna business jets and Bell helicopters), fairly steady results of expanded defense operations, and sufficient cash flow for operating needs and required capital contributions to TFC. The ratings also take into account Textron's exposure to TFC because of its earnings and funding problems, participation in highly competitive and cyclical industries, and consolidated profit margins somewhat below those of its peers. The challenging economic environment in 2009, larger-than-expected losses at TFC and possible material additional capital contributions required by Textron, and reduced liquidity could lead us to lower the long-term ratings. Although not expected in the next year, S&P could raise the ratings on Textron modestly if the plan to transform TFC into a captive is successful, earnings and cash generation of the manufacturing businesses are better than expected, and liquidity improves. THORNBURG MORTGAGE: May File for Chapter 11 Bankruptcy Protection ----------------------------------------------------------------- Jonathan Stempel at Reuters reports that Thornburg Mortgage Inc. said that it may file for Chapter 11 bankruptcy protection. According to Reuters, Thornburg Mortgage has struggled with liquidity problems since 2007, when the value of mortgages on its balance sheet started to tumble. Thornburg Mortgage, says Reuters, suffered a series of margin calls from its own creditors. Reuters relates that Thornburg Mortgage has specialized in making mortgages larger than $417,000 to borrowers with good credit, but the Company ran short of capital as investors stopped purchasing its loans. Thornburg Mortgage, says the report, has continued operations mainly through a series of agreements to restructure or otherwise delay paying its debts. Thornburg Mortgage said in a statement that it is considering strategic alternatives to restructure its financing agreements, make deferred payments, and meet obligations to bondholders. As reported by the Troubled Company Reporter on March 18, 2009, Thornburg Mortgage said it engaged Kirkland and Ellis LLP as lead restructuring counsel to advise the Company on restructuring matters, and Houlihan Lokey Howard & Zukin Capital, Inc., as a financial advisor to assist the Company in discussions with creditors, current shareholders, and prospective new investors, and to help evaluate and implement a recapitalization solution that addresses the issues currently facing the Company. Thornburg Mortgage said that its Amended and Restated Override Agreement dated December 12, 2008, with JPMorgan Chase Funding Inc. (formerly Bear Stearns Investment Products Inc.), Citigroup Global Markets Limited, Credit Suisse Securities (USA) LLC, Credit Suisse International, Greenwich Capital Markets, Inc., Greenwich Capital Derivatives, Inc., The Royal Bank of Scotland plc, and UBS AG, expired in accordance with its terms. Thorburg Mortgage said it had reached agreement with all of the Counterparties to forebear from demanding payment or exercising any remedies under their various financing agreements through March 31, 2009, to provide the Company with additional time to negotiate and implement a restructuring plan. Reuters relates that Thornburg Mortgage arranged in March 2008 a $1.35 billion bailout from the distressed debt investor MatlinPatterson Global Advisors LLC and other investors to stay out of bankruptcy. MatlinPatterson, according to a Tuesday regulatory filing, gave up its Thornburg Mortgage common stock -- 120.8 million shares -- on March 12 and 16 without any compensation. Reuters states that principals David Matlin and Mark Patterson resigned from Thornburg Mortgage's board of directors on March 12 due potential conflicts of interest. MatlinPatterson will retain a role in the restructuring, Reuters reports, citing Thornburg Mortgage spokesperson Suzanne O'Leary Lopez. "March 31 really is the time frame in which we are working with all of our constituencies on our restructuring plan," Reuters quoted Ms. O'Leary Lopez as saying. About Thornburg Mortgage Based in Santa Fe, New Mexico, Thornburg Mortgage Inc. (NYSE: TMA) -- http://www.thornburgmortgage.com/-- is a single-family residential mortgage lender focused principally on prime and super-prime borrowers seeking jumbo and super-jumbo adjustable- rate mortgages. It originates, acquires, and retains investments in adjustable and variable rate mortgage assets. Its ARM assets comprise of purchased ARM assets and ARM loans, including traditional ARM assets and hybrid ARM assets. * * * As reported in the Troubled Company Reporter on Dec. 22, 2008, Standard & Poor's Ratings Services raised its counterparty credit rating on Thornburg Mortgage Inc. to 'CC' from 'D'. At the same time, S&P also raised its rating on Thornburg's senior notes to 'CC' from 'D'. The outlook is negative. TRIBUNE CO: Can Hire PwC as Tax Advisors and Independent Auditors ----------------------------------------------------------------- Judge Kevin Carey of the U.S. Bankruptcy Court for the District of Delaware has authorized Tribune Company and its debtor-affiliates to employ PricewaterhouseCoopers LLP as compensation and tax advisors and independent auditors nunc pro tunc to the Petition Date. The Debtors entered into an engagement agreement with PwC, which agreement outlines the firm's responsibilities and compensation. PwC acted as the Debtors' outside advisors and independent auditor for many years, gaining considerable experience with their current corporate, financial and internal structures. As tax advisors, PwC will provide five categories of services: (1) General Compensation Advisory Services, including: -- advising on the design of annual and long-term incentive programs; -- preparing cost estimates for implementing any arrangements; -- advising on participant target levels for the incentive programs; and -- advising on severance and retention programs; (b) Integrated Auditing Services at December 28, 2008 and for the year then ending; (c) a review on Tribune Company's unaudited consolidated quarterly financial information; (d) General Tax Consulting Services, including: -- advising on tax issues resulting from the Debtors' Chapter 11 cases; -- advising on tax planning or reporting matters; and -- preparing or reviewing original and amended returns for all taxes including federal, state and local income taxes, gross receipts, license, sales and use taxes and property taxes; (e) Claims Response and Settlement Services including: -- assisting in managing, responding to and verifying the accuracy of claims submitted for federal income taxes, state and local net income taxes, franchise, sales use, property and business license or gross receipts taxes as a result of the Debtors' Chapter 11 cases; -- assist in negotiating settlements with taxing authorities with respect to claims submitted due to the Debtors' Chapter 11 cases, as well as tax assessments for which the Debtors requests assistance during the pendency of their cases; and (f) additional compensation, tax and accounting consulting, as requested by the Debtors. The Engagement Letter provides that: (a) PwC will not be entitled to indemnification, contribution, or reimbursement for services other than the services provided in the Engagement Letter, unless the services and the indemnification, contribution, or reimbursement is approved by the Court; (b) the Debtors will have no obligation to indemnify any person or provide contribution or reimbursement for any claim or expense to the extent that it is (i) judicially determined to have arisen from gross negligence or willful misconduct; (ii) for a contractual dispute in which the Debtors allege that breach of PricewaterhouseCoopers' contractual obligations unless the Court determines that indemnification, contribution, or reimbursement would be permissible; and (c) if before the confirmation of Chapter 11 plan or the closing of the Chapter 11 cases, PricewaterhouseCooper believes it is entitled to the payment by the Debtors on account of indemnification, contribution, or reimbursement obligations, the Debtors may not pay any amount without the Court's order. The Debtors propose to pay PricewaterhouseCoopers based on the firm's hourly rates: Partner $625-$760 Managing Director $600-$625 Director $450-$500 Manager $280-$320 Senior Associate $200-$240 Associate $155-$180 Professional Assistant $145 The Debtors relate that the estimated fees in connection with the PwC's auditing services are approximately $1,815,000, not including out-of-pocket expenses. Prior to the Petition Date, the Debtors provided PwC with a retainer of $50,000 for services rendered and reimbursement of expenses. William T. England, a partner of PwC, said his firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code and as required by Section 327(a). In a separate filing, Mr. England said that in addition to the compensation retainer, PwC received total payments of $4,482,990 from the Debtors within one year of the Petition Date. He adds that the Debtors have revised PwC's Claims Engagement Letter and represent that PwC will only be a messenger to their conclusions and not directly negotiating on their behalf. Mr. England also said PwC has worked with the Federal Communications Commission, the Official Committee of Unsecured Creditors and the United States Trustee to resolve their concerns regarding the firm's retention. Mr. England submitted to the Court a certification of counsel that includes a revised proposed order to reflect changes in PwC's representation with the Debtors. A full-text copy of the revised proposed order is available for free at: http://bankrupt.com/misc/revisedproposedorder.pdf The Court signed the revised proposed order. About Tribune Co. Headquartered in Chicago, Illinois, Tribune Company -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08-13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TURNKEY E&P: Reorganization Plan Filing Deadline Set for May 15 --------------------------------------------------------------- Turnkey E&P Inc. reported that on March 13, the U.S. Bankruptcy Court for the Southern District of Texas granted Turnkey's wholly- owned subsidiary, Turnkey E&P Corporation an extension to file a Plan to emerge from Chapter 11 of Title 11 of the U.S. Bankruptcy Code. The filing deadline has been extended to May 15, 2009. The Plan is set to be confirmed by the Court on July 14, 2009. Operations Update: Turnkey has a 25% working interest in the Vieman #1 well in Brazoria County, Texas, which has been temporarily suspended after initial tests did not produce hydrocarbons. Partners will review the data to determine if the well has potential to be sidetracked. Turnkey's McPherson #1 well at Hurricane Creek, Louisiana continues to be gas lifted at a rate of 50 BOPD with 5 % water. McPherson #2 is currently being evaluated for gas lift pending the availability of gas on location from McPherson # 1 and the use of a portable nitrogen production unit. The Valjean Richard #1 well was placed on production on March 6, 2009, and is currently producing at a rate of 1.3 million SCFPD of natural gas and 30 barrels of condensate per day from the Homeseeker E sand. Before payout Turnkey has a 16.67% working interest and a 12.46% net revenue. After payout Turnkey will have a 15% working interest and an 11.1% net revenue. Turnkey's total net production is approximately 150 BOE. Houston, Texas-based Turnkey E&P Corporation -- http://www.turnkeyep.com/-- is engage in gas and oil exploration. The Company filed for Chapter 11 bankruptcy protection on November 17, 2008 (Bankr. S.D. Texas Case No. 08-37358). Micheal W. Bishop, Esq., Mugdha S Kelkar, Esq., at Looper Reed, et al., assist the Company in its restructuring effort. The Company listed $10 million to $50 million in assets and $10 million to $50 million in debts. U.S. ACQUISITION: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: U.S. Acquisitions & Oil, Inc. 1206 East Green Bay Street Shawano, WI 54166 Tel: (715) 526-5400 Bankruptcy Case No.: 09-10875 Debtor-affiliates filing subject to Chapter 11 petitions: Entity Case No. ------ -------- Dr. R.C. Samanta Roy Institute of Science & Techno 09-10876 Midwest Oil of Wisconsin, LLC 09-10877 Midwest Oil of Minnesota, LLC 09-10878 Midwest Oil of Shawano, LLC 09-10879 Midwest Properties of Shawano, LLC 09-10880 Midwest Hotels & Motels of Shawano, LLC 09-10881 Type of Business: The Debtors operate gasoline service stations. Chapter 11 Petition Date: March 16, 2009 Court: District of Delaware (Delaware) Judge: Kevin Gross Debtor's Counsel: Eric J. Monzo, Esq. emonzo@cohenseglias.com Cohen Seglias Pallas Greenhall Furman PC 1007 North Orange Street, Suite 1130 Wilmington, DE 19806 Tel: (302) 425-5089 Fax: (302) 425-5097 Estimated Assets: $10 million to $50 million Estimated Debts: $1 million to $10 million The Debtor's Largest Unsecured Creditors: The Debtor did not file a list of 20 largest unsecured creditors. The petition was signed by Naomi Isaacson, chief financial officer. U.S. ENERGY: Sells All Assets of Biogas to Silver Point ------------------------------------------------------- The Hon. Robert D. Drain of United States Bankruptcy Court for the Southern District of New York approved the sale of substantially all assets of U.S. Energy Biogas Corp., a unit of U.S. Energy Systems Inc. and its debtor-affiliates, to Silver Point Finance LLC, which made the highest and best offer for the sale of Biogas assets submitted at the auction. As part of the sale, the Debtors' unit, Biogas Financial Corp. fka Zahren Financial Corporation, will sell and transfer its 10% general partner interest in Biomass Energy Partners I L.P. to Silver Point free and clear of the assignment dated Sept. 1, 1994, between Zahren Financial and ZFC Royalty Trust. Silver Point will pay the cure amounts after the closing date. As reported in the Troubled Company Reporter on Feb. 4, 2009, Silver Point, the designated stalking-horse bidder, agreed to purchase USEB's assets for about $94.5 million including: a) the assumption of the entire amount of the outstanding USEB indebtedness, which amount currently is $83.8 million, but is subject to adjustment prior to closing in accordance with the terms of the USEB indebtedness; b) the assumption of the entire outstanding amount under the Net Profit Interest agreement dated May 31, 2007, between the Debtors and Silver Point, which amount will be fixed solely for purposes of calculating the purchase price at $5.8 million; c) the assumption or release of at least $500,000 of the U.S. Energy Overseas Investments LLC indebtedness in accordance with the terms of the USEO indebtedness; d) cash in the amount of $100,000 payable by wire transfer of immediately available funds made to the account of USEY designated in writing by the company on behalf of USEY to proposed purchaser at least two business days prior to the closing date; e) the assumption of the reasonable, documented administrative expenses of the Debtors under Section 503(b)(1) of the Bankruptcy Code in the USEB bankruptcy Case, regardless of whether incurred prior to or after the consummation of the transactions contemplated by the agreement plus reasonable, documented administrative expenses of USEY and the Debtors under Section 503(b)(1) of the Bankruptcy Code in the USEY bankruptcy case, provided that in no event will the administrative expenses assumed and payable by Silver Point hereunder exceed $4.3 million in the aggregate; and f) the assumption of the other assumed liabilities listed in the asset purchase agreement dated Jan. 23, 2009. A full-text copy of the Debtors' asset purchase agreement is available for free at: http://ResearchArchives.com/t/s?390b A full-text copy of the cure amounts is available for free at: http://ResearchArchives.com/t/s?3a6c About U.S. Energy Systems Based in Avon, Connecticut, U.S. Energy Systems, Inc., (Pink Sheets: USEY) -- http://www.usenergysystems.com/-- owns green power and clean energy and resources. USEY owns and operates energy projects in the United States and United Kingdom that generate electricity, thermal energy and gas production. The company filed for Chapter 11 protection on Jan. 9, 2008 (Bank. S.D. N.Y. Case No. 08-10054). Subsequently, 34 affiliates filed separate Chapter 11 petitions. Peter S. Partee, Esq., at Hunton & Williams LLP, represents the Debtor in its restructuring efforts. Jefferies & Company, Inc., serves as the company's financial advisor. The Debtor selected Epiq Bankruptcy Solutions LLC as noticing, claims and balloting agent. The Official Committee of Unsecured Creditors has yet to be appointed in these cases by the U.S. Trustee for Region 2. When the Debtors filed for protection from their creditors, they listed total assets of $258,200,000 and total debts of $175,300,000. On Jan. 23, 2009, U.S. Energy Biogas Corp and eight of its subsidiaries filed their respective voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. The USEB Debtors' cases are being jointly administered for procedural purposes with the cases of the USEY Debtors. VALLEY VIEW: Moody's Confirms 'Ba1' Rating on $12.7 Mil. Bonds -------------------------------------------------------------- Moody's Investors Service has confirmed Valley View Hospital Authority's Ba1 rating and removed the rating from Watchlist. The rating applies to $12.7 million of Series 1996 bonds secured by a 1% sales tax and gross revenue pledge of the hospital. The sales tax levied by the City of Ada, Oklahoma, is irrevocable and solely dedicated to the payment of principal and interest related to the Series 1996 bonds; sales tax revenues are deposited to a lock-box and not intermingled with hospital revenues, and has been sufficient to satisfy debt service since 2001. Any excess sales tax remains in the lockbox; as of September 30, 2008, the surplus stands at $4.0 million. There is also a fully funded debt service reserve fund of $2.6 million. The rating outlook is negative, reflecting continued volume pressures and a challenged liquidity position. The confirmation of the rating follows the recent closing of the Series 2009 bonds in the amount of $2.3 million; the bonds are secured by a gross revenue pledge of the hospital only. The proceeds of the bonds will be used to reimburse the hospital for prior capital expenditures and fund working capital needs. While the transaction relieves immediate liquidity needs, in the event of further liquidity declines, a bankruptcy filing by the hospital would represent an event of default under the loan agreement that could result in acceleration of the bonds. For further information, please reference Moody's November 6, 2008 credit report on VVHA. Outlook Rated Debt (debt outstanding as of September 30, 2008): -- Series 1996 ($12.7 million outstanding) rated Ba1 The last rating action was on November 6, 2008, when the ratings of VVHA were downgraded to Ba1 from Baa1 and remained on Watchlist for potential downgrade. VERASUN ENERGY: Court Approves Sale of 7 Facilities to Valero ------------------------------------------------------------- The U.S. Bankruptcy Court approved the sale of all VeraSun Energy Corp.'s assets. On Tuesday, at an auction in Wilmington, Del., VeraSun selected Valero Renewable Fuels as the successful bidder for assets contained in the "VSE Group", in addition to ethanol production facilities in Albion, Neb., and Albert City, Iowa. The secured lenders submitted credit bids for each of the remaining facilities. The sales are expected to close during the next two to six weeks. The VSE Group consists of production facilities in Aurora, S.D.; Charles City, Fort Dodge and Hartley, Iowa, and Welcome, Minn., and a development site in Reynolds, Ind. Valero Renewable Fuels is a subsidiary of Valero Energy Corporation, North America's largest petroleum refiner and marketer based in San Antonio, Texas. Valero has agreed to purchase the VSE Group facilities for a base purchase price of $350 million, $72 million for the US Bio Energy facility in Albert City, Iowa and $55 million for the ASA facility in Albion, Neb., plus working capital and other certain adjustments. The secured lenders for the remaining facilities submitted successful credit bids. Dougherty Funding, LLC submitted a credit bid of $93 million for the Marion, S.D. production facility. A group of lenders led by AgStar Financial Services submitted a credit bid of $324 million for the remaining "US BioEnergy Group", which includes ethanol production facilities in Central City and Ord, Neb.; Dyersville, Iowa; Hankinson, N.D.; Janesville, Minn., and Woodbury, Mich. A group of lenders led by West LB AG submitted a credit bid of $99 million for the remaining "ASA Group" facilities, consisting of production facilities in Bloomingburg, Ohio and Linden, Ind. According to Valero, ethanol plants have an annual production capacity of 780 million gallons. Valero said the aggregate purchase price of $477 million represented roughly 30% of the plants' replacement cost. The purchase price excludes working capital and inventory currently estimated at about $75 million. Credit Suisse advised Valero on the transaction. Valero said the purchase of the plants in the original bid -- in Charles City, Fort Dodge and Hartley, Iowa; Aurora, S.D.; Welcome, Minn.; and the site under development in Reynolds, Ind. -- is expected to close on April 1. The purchase of the additional plants -- in Albion, Neb. and Albert City, Iowa -- is expected to close shortly afterward, subject to regulatory approval. Valero plans to operate all of the plants through its subsidiaries. "These are high-quality, relatively new assets in good locations for buying feedstocks," said Valero Chairman and Chief Executive Officer Bill Klesse. "We expect increases in the Renewable Fuels Standard to continue. We are also pleased to have such quality people join Valero." This is Valero's initial entry into ethanol production, but it has made investments in other alternative energy companies in recent months. Valero has also completed the first phase of a wind farm near its McKee Refinery in the Texas Panhandle that when complete will generate 50 megawatts of electricity. In 2008, Valero established an Alternative Energy and Project Development Group to explore opportunities in alternative and renewable energy sources. About Valero Valero Energy Corporation -- http://www.valero.com/-- is a Fortune 500 company based in San Antonio, Texas, with roughly 22,000 employees and 2008 revenues of $119 billion. The company owns and operates 16 refineries throughout the United States, Canada and the Caribbean with a combined throughput capacity of approximately 3 million barrels per day, making it the largest refiner in North America. Valero is also one of the nation's largest retail operators with roughly 5,800 retail and branded wholesale outlets in the United States, Canada and the Caribbean under various brand names including Valero, Diamond Shamrock, Shamrock, Ultramar, and Beacon. About VeraSun Energy Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp. -- http://www.verasun.comor http://www.VE85.com/-- produces and markets ethanol and distillers grains. Founded in 2001, the company has a fleet of 16 production facilities in eight states, with 14 in operation. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 31, 2008, (Bankr. D. Del. Case No. 08-12606) Mark S. Chehi, Esq. at Skadden Arps Slate Meagher & Flom LLP represents the Debtors in their restructuring efforts. AlixPartners LLP serves as their restructuring advisor. Rothschild Inc. is their investment banker and Sitrick & Company is their communication agent. The Debtors' claims noticing and balloting agent is Kurtzman Carson Consultants LLC. The Debtors' total assets as of June 30, 2008, was $3,452,985,000 and their total debts as of June 30, 2008, was $1,913,214,000. VeraSun Bankruptcy News; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). VICORP RESTAURANTS: Sells Four Bay Area Restaurants to Shari's -------------------------------------------------------------- Kevin McCallum at The Press Democrat reports that restaurant chain Shari's has acquired Vicorp Restaurants Inc.'s four Bay Area Baker's Square restaurants. The Press Democrat relates that after Vicorp filed for Chapter 11 bankruptcy protection in April, it closed 56 Bakers Square and Village Inn restaurants to cut costs, including the Bakers Square on Farmer's Lane in Santa Rosa. Vicorp, according to The Press Democrat, said that its bottom line had been hurt by the poor economy, heavy debt, and higher operating costs. The Press Democrat states that the acquisition of the restaurants will increase the number of Shari's locations to 105 restaurants in six states. According to the report, Shari's said that the restaurants will be converted to the Shari's brand in the coming weeks, and will start 24-hour service. Headquartered in Denver, Colorado, VICORP Restaurants, Inc. and VI Acquisition Corp. -- http://www.vicorpinc.com/-- operate family- dining restaurants under the Village Inn and Bakers Square brands. The Debtors also operate 3 pie production facilities that produce pies that are offered in the Debtors' restaurants and are sold to select third-party customers including supermarkets and other restaurant chains. The Debtors filed separate petitions for Chapter 11 relief on April 3, 2008 (Bankr. D. Del. Lead Case No. 08-10623). Kimberly Ellen Connolly Lawson, Esq., Kurt F. Gwynne, Esq., and Richard A. Robinson, Esq., at Reed Smith LLP, Ann C. Cordo, Esq., and Donna L. Culver, Esq., at Morris Nichols Arsht & Tunnell, and Joseph E. Cotterman, Esq., at Gallagher & Kennedy, P.A., represent the Debtors as counsel. The Debtors selected The Garden City Group, Inc. as their claims agent. Abhilash M. Raval, Esq., Dennis Dunne, Esq., and Samuel Khalil, Esq., at Milbank Tweed Hadley & McCloy LLP, Domenic E. Pacitti, Esq., and Michael W. Yurkewicz, Esq., at Klehr Harrison Harvey Branzburg & Ellers, represent the Official Committee of Unsecured Creditors of the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets of $100 million to $500 million and debts of $100 million to $500 million. WILDWOOD INDUSTRIES: Owes $13MM; May Be Forced Into Bankruptcy -------------------------------------------------------------- The Pantagraph reports that Wildwood Industries, Inc., may be forced into Chapter 11 bankruptcy due to mounting debts. Court documents say that debts owed to Lyon Financial Services Inc., U.S. Bancorp Equipment Financial Inc., and Velocity Financial Group Inc. total more than $13 million. Three companies filed for Wildwood Industries' bankruptcy in the U.S. Bankruptcy Court for the Central District of Illinois on March 5, The Pantagraph states. According to The Pantagraph, Wildwood Industries asked last week for more time to respond to a claim of the pending federal action. Wildwood Industries, says The Pantagraph, has about 20 days to respond to the bankruptcy action and may continue operations while the action is pending. The Pantagraph relates that Wildwood Industries faces more than 20 lawsuits in McLean County court due to failure to make loan payments. Most of them, says The Pantagraph, are related to leasing agreements for manufacturing equipment. According to The Pantagraph, six federal lawsuits are pending against Wildwood Industries for non-payment of debts. The report states that the Banc of American federal claim for alleged default is about $3.8 million. Wildwood Industries, according to court documents, is also behind with the final payment of a proposed settlement of a federal claim. Investment banking firm Piper Jaffrey claimed in July 2008 that Wildwood Industries hired its staff to assist with efforts to locate financing for a warehouse project in Normal, The Pantagraph relates. Court documents state that when Wildwood Industries refused to close on a $23.8 million loan, Piper Jaffrey lost out on a $357,000 fee. According to The Pantagraph, a settlement agreement between Wildwood Industries and Piper Jaffrey required three payments by the Debtor. The final payment was due several months ago, says the report. Wildwood Industries attorneys told Piper Jaffrey it is working on refinancing "despite some increasing credit difficulties," court documents say. Bloomington, Illinois-based Wildwood Industries, Inc., provides paper mill services. Creditors including Lyon Financial Services, Inc., filed a Chapter 11 bankruptcy petition against the Company on March 5, 2009 (Bankr. C.D. Ill. Case Number 09-70602). WL HOMES: Sec. 341(a) Meeting Scheduled for April 14 ---------------------------------------------------- Roberta A. DeAngelis, Acting U.S. Trustee for Region 3, has requested the U.S. Bankruptcy Court for the District of Delaware to schedule a meeting of creditors of WL Homes, Inc., for April 14, 2009, at 10:30 a.m., at J. Caleb Boggs Federal Building, 2nd Floor, Room 2112, 844 King Street, in Wilmington, Delaware. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtors under oath about the Debtors' financial affairs and operations that would be of interest to the general body of creditors. About WL Homes LLC Headquartered in Irvine, California, WL Homes LLC dba John Laing Homes -- sells and builds houses. The Debtor and five of its affiliates filed for Chapter 11 protection on February 19, 2009 (Bankr. D. Del. Lead Case No. 09-10571). Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, represent the Debtors in their restructuring efforts. When the Debtors sought protection from their creditors, they listed assets of more than $1 billion, and debts between $500 million to $1 billion. WOOLD STRUCTURES: Closes Plant & Offices, 180 Workers Laid Off -------------------------------------------------------------- Ann S. Kim and Noel K. Gallagher at Kennebec Journal & Morning Sentinel report that Wood Structures Inc. has closed its manufacturing plant and offices in Biddeford. Kennebec Journal relates that about 180 employees were laid off. Wood Structures, according to Kennebec Journal, told workers on Monday that it was unsure whether it could continue to pay them and had closed. The report says that Wood Structures told workers in a memo that they would be on an "unpaid leave of absence" and that their future employment status would be determined by the trustee in charge of the case. Kennebec Journal states that Wood Structures expects to file for Chapter 7 bankruptcy this week. Wood Structures CEO Frank Paul said that the Company has to liquidate its assets because it was unable to reach an agreement with its creditors, says Kennebec Journal. Wood Structures said in court documents that it has been struggling mainly due to the sharp decline in housing, which has dropped 63% since 2005. The Biddeford, Maine-based Wood Structures Inc. is a manufacturer of trusses and other wood products for residential and commercial construction. As reported by the Troubled Company Reporter on March 10, 2009, Wood Structures filed for Chapter 11 protection before the U.S. Bankruptcy Court for the District of Maine (Portland). Wood Structures filed after the secured lender, Orix Financial Corp., declared the Company in default under a $28.9 million secured debt. WYNN RESORTS: Prices Public Offering of Shares at $19 Per Share --------------------------------------------------------------- Wynn Resorts, Limited, has priced a public offering of 9,600,000 newly issued shares of its common stock at a price to the public of $19 per share. The net proceeds to Wynn Resorts after deducting discounts and commissions and estimated expenses, will be approximately $175 million. The offering is expected to close on March 20, 2009, subject to the satisfaction of customary closing conditions. Kerry E. Grace at The Wall Street Journal reports that Wynn Resorts is selling the shares at a 3.3% discount to Monday's closing price on the Nasdaq Stock Market. WSJ relates that if demand is sufficient, as many as 1.4 million more shares could be sold. Wynn Resorts, says WSJ, will use the proceeds for debt repayment and other purposes. According to the report, Wynn Resorts said on Monday that it would offer seven million shares. The report says that Wynn Resorts has 107 million shares outstanding. Wynn Resorts' stock, due to the dilution from the increased share count, dropped 1.2% to $19.42 early Tuesday, WSJ reports. According to WSJ, the share price has declined 60% in the past three months. In connection with the offering, Wynn Resorts granted an option to purchase up to an additional 1,440,000 shares of common stock to Deutsche Bank Securities Inc. and Merrill Lynch & Co., who acted as joint book running managers and underwriters for the offering, and J.P. Morgan Securities Inc., Moelis & Company and Wachovia Capital Markets, LLC, who acted as co-managers and underwriters for the offering. Additionally, Moelis & Company served as financial adviser to the Company in connection with this transaction. Wynn Resorts intends to use the proceeds for general corporate purposes, including repayment of debt. About Wynn Resorts Headquartered in Las Vegas, Wynn Resorts Limited (Nasdaq: WYNN) -- http://www.wynnresorts.com/-- owns and operates Wynn Las Vegas and Wynn Macau. * * * As reported by the Troubled Company Reporter on March 2, 2009, Standard & Poor's Ratings Services affirmed its ratings on Wynn Resorts Ltd. and its wholly owned subsidiary, Wynn Las Vegas LLC, including the 'BB' corporate credit rating. At the same time, S&P revised its rating outlook on each entity to negative from stable. According to the TCR on July 22, 2008, Moody's Investors Service changed the rating outlook of Wynn Resorts, Limited to negative. Wynn Resorts' Ba3 Corporate Family Rating and long-term debt ratings were affirmed, as were the long-term debt ratings of Wynn Las Vegas, LLC. * Fitch Extended Launch on Liquidity Scores and Rankings -------------------------------------------------------- Fitch Solutions, a division of the Fitch Group, has now extended the launch of its liquidity scores and percentile rankings for widely traded credit derivative assets to buy-side market participants, to help them strengthen their liquidity risk management procedures and meet regulatory commitments. Buy-side users are able to benefit from new features including regional sector scores for corporate assets in Asia-Pacific, Europe and the Americas, as well as global sovereigns. As of 13 March, Korea Development Bank, British Telecom plc, General Electric Capital Corporation and the United Mexican States were the most liquid CDS names respectively. "Our research has highlighted that whilst global CDS market liquidity hit an all time low in January, liquidity has begun to return to the market during this year and, for the first time, the Americas region became more liquid than Europe earlier this month," said Thomas Aubrey, Managing Director, Fitch Solutions, London. "Better understanding the relative liquidity of an asset remains a critical market issue and through this launch the buy- side community will now be able to assess the relative liquidity of global CDS assets and the global CDS market," he added. To coincide with the launch, and in a step to further enhance transparency in the CDS market, Fitch Solutions will now publish on its free public website a fortnightly list of the top five most liquid CDS corporate names in Europe, North America and Asia- Pacific, as well as the top five most liquid global sovereigns. The liquidity scores and rankings are derived from Fitch's proprietary statistical model which provides a unique insight into the liquidity of the CDS market, covering over 3,000 of the most widely traded CDS assets. Each asset is assigned a score, representing the most through to least liquid names, and then given a global percentage ranking according to its liquidity profile against the overall CDS universe. * Chapter 11 Cases With Assets and Liabilities Below $1,000,000 --------------------------------------------------------------- In Re Infinity Home Builders, Inc. Bankr. E.D. Ark. Case No. 09-11654 Chapter 11 Petition filed March 10, 2009 See http://bankrupt.com/misc/areb09-11654.pdf In Re Southern Pine Homes, Inc. Bankr. E.D. Ark. Case No. 09-11655 Chapter 11 Petition filed March 10, 2009 See http://bankrupt.com/misc/areb09-11655.pdf In Re Breland, Charles K. Jr. Bankr. S.D. Ala. Case No. 09-11139 Chapter 11 Petition filed March 11, 2009 See http://bankrupt.com/misc/alsb09-11139.pdf In Re Bahrami-Daghigh, Navid aka Bahrami, Navid aw Navid Bahrami DDS, Inc. dba Dr. Bahrami's Dental Care aw Navid Bahrami DDS, Inc. fdba Access Dental Bankr. C.D. Calif. Case No. 09-15490 Chapter 11 Petition filed March 11, 2009 See http://bankrupt.com/misc/cacb09-15490.pdf In Re Gyurec, Ernesto Daniel aka Daniel Gyurec Bankr. C.D. Calif. Case No. 09-14497 Chapter 11 Petition filed March 11, 2009 See http://bankrupt.com/misc/cacb09-14497.pdf In Re La Cofradia Restaurant, LLC Bankr. S.D. Fla. Case No. 09-14143 Chapter 11 Petition filed March 11, 2009 See http://bankrupt.com/misc/flsb09-14143.pdf In Re Delta Delivery Service LLC Bankr. N.D. Ga. Case No. 09-66431 Chapter 11 Petition filed March 11, 2009 See http://bankrupt.com/misc/ganb09-66431.pdf In Re Kevin Misch Trucking & Excavating, Inc. Bankr. N.D. Ind. Case No. 09-20794 Chapter 11 Petition filed March 11, 2009 See http://bankrupt.com/misc/innb09-20794p.pdf See http://bankrupt.com/misc/innb09-20794c.pdf In Re PWP, Inc. dba The Artful Hand Bankr. D. Mass. Case No. 09-11964 Chapter 11 Petition filed March 11, 2009 See http://bankrupt.com/misc/mab09-11964.pdf In Re Button Hill Estates, Inc. Bankr. D. N.J. Case No. 09-15856 Chapter 11 Petition filed March 11, 2009 Filed as Pro Se In Re Phoenix Family Trust aka Shari J. Galardi Bankr. D. Ore. Case No. 09-60962 Chapter 11 Petition filed March 11, 2009 Filed as Pro Se In Re All Vending Services Inc. Bankr. D. P.R. Case No. 09-01847 Chapter 11 Petition filed March 11, 2009 See http://bankrupt.com/misc/prb09-01847.pdf In Re Low Country Custom Construction, Inc. fdba Property Maintenance Professionals, Inc. Bankr. D. S.C. Case No. 09-01832 Chapter 11 Petition filed March 11, 2009 See http://bankrupt.com/misc/scb09-01832.pdf In Re RPM Outlet, Inc. Bankr. S.D. Tex. Case No. 09-31675 Chapter 11 Petition filed March 11, 2009 See http://bankrupt.com/misc/txsb09-31675p.pdf See http://bankrupt.com/misc/txsb09-31675c.pdf In Re High Maintenance Bitch LLC Bankr. W.D. Wash. Case No. 09-12228 Chapter 11 Petition filed March 11, 2009 See http://bankrupt.com/misc/wawb09-12228.pdf In Re Selma ZX1, LLC Bankr. N.D. Ala. Case No. 09-70622 Chapter 11 Petition filed March 12, 2009 See http://bankrupt.com/misc/alnb09-70622.pdf In Re Coverston, Kirk D. Coverston, Cynthia R. Bankr. E.D. Calif. Case No. 09-11998 Chapter 11 Petition filed March 12, 2009 See http://bankrupt.com/misc/caeb09-11998.pdf In Re Team Resurrection Inc. dba Resurrection Enterprises Inc. dba Resurrection Custom & Hot Rods Bankr. C.D. Calif. Case No. 09-12093 Chapter 11 Petition filed March 12, 2009 Filed as Pro Se In Re Via Sierra LLC Bankr. N.D. Calif. Case No. 09-51741 Chapter 11 Petition filed March 12, 2009 See http://bankrupt.com/misc/canb09-41869.pdf In Re Floor Factory Outlet - Palatka, LLC Bankr. M.D. Fla. Case No. 09-01786 Chapter 11 Petition filed March 12, 2009 See http://bankrupt.com/misc/flmb09-01786.pdf In Re Clective GA, Incorporated Bankr. N.D. Ga. Case No. 09-66475 Chapter 11 Petition filed March 12, 2009 Filed as Pro Se In Re Bender Corporation, Inc. dba Petals in Bloom Bankr. E.D. Mich. Case No. 09-47278 Chapter 11 Petition filed March 12, 2009 See http://bankrupt.com/misc/mieb09-47278.pdf In Re Commercial Driver License Training School, LLC Bankr. E.D. Mich. Case No. 09-47235 Chapter 11 Petition filed March 12, 2009 See http://bankrupt.com/misc/mieb09-47235.pdf In Re Douglas R. Wilbur, Inc. dba DRW Electric Bankr. E.D. Mich. Case No. 09-47293 Chapter 11 Petition filed March 12, 2009 See http://bankrupt.com/misc/mieb09-47293p.pdf See http://bankrupt.com/misc/mieb09-47293c.pdf In Re DTS Inc. Bankr. E.D. Mich. Case No. 09-47272 Chapter 11 Petition filed March 12, 2009 See http://bankrupt.com/misc/mieb09-47272p.pdf See http://bankrupt.com/misc/mieb09-47272c.pdf In Re Bass, Jerry L. Bankr. D. Mont. Case No. 09-60325 Chapter 11 Petition filed March 12, 2009 See http://bankrupt.com/misc/mtb09-60325.pdf In Re Lusitano Wine Imports, Inc. Bankr. D. N.J. Case No. 09-15979 Chapter 11 Petition filed March 12, 2009 See http://bankrupt.com/misc/njb09-15979.pdf In Re Singh, Dalbir Bankr. E.D. N.Y. Case No. 09-41817 Chapter 11 Petition filed March 12, 2009 See http://bankrupt.com/misc/nyeb09-41817.pdf In Re Williams, Valerie Denise Bankr. W.D. N.C. Case No. 09-30570 Chapter 11 Petition filed March 12, 2009 Filed as Pro Se In Re Brown, Terrence Dion Montague Brown, Karla aka Montague-Brown, Karla Patrice Bankr. M.D. Tenn. Case No. 09-02819 Chapter 11 Petition filed March 12, 2009 See http://bankrupt.com/misc/tnmb09-02819.pdf In Re Second Missionary Baptist Church Bankr. M.D. Tenn. Case No. 09-02837 Chapter 11 Petition filed March 12, 2009 See http://bankrupt.com/misc/tnmb09-02837.pdf In Re Grupo Victoria Corporation, Inc. dba Los Tejanos Meat Market Bankr. S.D. Tex. Case No. 09-50079 Chapter 11 Petition filed March 12, 2009 See http://bankrupt.com/misc/txsb09-50079.pdf In Re Agave Azul, Inc. Bankr. S.D. Tex. Case No. 09-50078 Chapter 11 Petition filed March 12, 2009 See http://bankrupt.com/misc/txsb09-50078.pdf In Re Brian Lee Day Bankr. S. Tex. Case No. 09-70203 Chapter 11 Petition filed March 12, 2009 See http://bankrupt.com/misc/txsb09-70203p.pdf See http://bankrupt.com/misc/txsb09-70203c.pdf In Re SNH Aerospace Services Inc. dba SNH Aerospace Services Bankr. W.D. Tex. Case No. 09-50920 Chapter 11 Petition filed March 12, 2009 See http://bankrupt.com/misc/txwb09-50920.pdf In Re Gallery Heights Partners LLC Bankr. C.D. Calif. Case No. 09-14639 Chapter 11 Petition filed March 13, 2009 Files as Pro Se In Re Gelhart, Robert Preston Gelhart, Heather Star Bankr. C.D. Calif. Case No. 09-12167 Chapter 11 Petition filed March 13, 2009 See http://bankrupt.com/misc/cacb09-12167.pdf In Re Affordable Dental Group, Inc. fdba Austin R. Rust D.M.D., P.C. fdba Ozark Family Dentistry fdba Rust Family Dentistry Bankr. W.D. Mo. Case No. 09-60455 Chapter 11 Petition filed March 13, 2009 See http://bankrupt.com/misc/mowb09-60455.pdf In Re Pacific Sun Tanning Company, LLC Bankr. D. Nev. Case No. 09-50667 Chapter 11 Petition filed March 13, 2009 See http://bankrupt.com/misc/nvb09-50667.pdf In Re Ronald M. Staub, D.D.S., P.C. Bankr. E.D. N.Y. Case No. 09-41869 Chapter 11 Petition filed March 13, 2009 See http://bankrupt.com/misc/nyeb09-41869.pdf In Re Cornerstone Health Systems, LLC Bankr. M.D. Tenn. Case No. 09-02915 Chapter 11 Petition filed March 13, 2009 See http://bankrupt.com/misc/tnmb09-02915.pdf In Re Hathaway, Kevin Wayne Hathaway, Laura Devonne Bankr. M.D. Tenn. Case No. 09-02872 Chapter 11 Petition filed March 13, 2009 See http://bankrupt.com/misc/tnmb09-02872.pdf In Re Americas Flags & Poles, Inc. Bankr. N.D. Tex. Case No. 09-41516 Chapter 11 Petition filed March 13, 2009 See http://bankrupt.com/misc/txnb09-41516.pdf In Re Wineman, Donald Leonard Bankr. D. S.C. Case No. 09-01906 Chapter 11 Petition filed March 15, 2009 See http://bankrupt.com/misc/scb09-01906.pdf In Re Tuscaloosa ZX1, LLC Bankr. N.D. Ala. Case No. 09-70646 Chapter 11 Petition filed March 16, 2009 See http://bankrupt.com/misc/alnb09-70646p.pdf See http://bankrupt.com/misc/alnb09-70646c.pdf In Re Downey, Patrick Michael Downey, Norma Marie Bankr. C.D. Calif. Case No. 09-10860 Chapter 11 Petition filed March 16, 2009 Filed as Pro Se In Re Binkowski, James Bankr. N.D. Ill. Case No. 09-08668 Chapter 11 Petition filed March 16, 2009 See http://bankrupt.com/misc/ilnb09-08668.pdf In Re Dass, Sanjiv K. Dass, Judith M. Bankr. D. Md. Case No. 09-14388 Chapter 11 Petition filed March 16, 2009 See http://bankrupt.com/misc/mdb09-14388.pdf In Re Rodriquez, Michael Antonio Bankr. D. Md. Case No. 09-14390 Chapter 11 Petition filed March 16, 2009 See http://bankrupt.com/misc/mdb09-14390.pdf In Re K2 Restaurant Concepts, Inc. Bankr. W.D. Mo. Case No. 09-60481 Chapter 11 Petition filed March 16, 2009 See http://bankrupt.com/misc/mowb09-60481.pdf In Re Skin City Tattoo, Inc. Bankr. W.D. Mo. Case No. 09-60482 Chapter 11 Petition filed March 16, 2009 See http://bankrupt.com/misc/mowb09-60482.pdf In Re RLADH Properties LLC Bankr. S.D. Ohio Case No. 09-11383 Chapter 11 Petition filed March 16, 2009 See http://bankrupt.com/misc/ohsb09-11383.pdf In Re Mullins, Newton C. fdba Chadds Ford Dental Associates fdba Drexel Hill Dental Associates Bankr. W.D. Va. Case No. 09-70595 Chapter 11 Petition filed March 16, 2009 See http://bankrupt.com/misc/vaeb09-70595.pdf In Re Cota-Birenbaum, Nidia aka Cota, Nidia aka Birenbaum, Nidia Bankr. C.D. Calif. Case No. 09-12923 Chapter 11 Petition filed March 17, 2009 Filed as Pro Se In Princess Taylor dba Vigor Business Enterprises, LLC Bankr. N.D. Ga. Case No. 09-66933 Chapter 11 Petition filed March 17, 2009 Filed as Pro Se In Re Munoz-Garcia Enterprises, Inc. dba Tamazula Grill Bankr. N.D. Ill. Case No. 09-08932 Chapter 11 Petition filed March 17, 2009 See http://bankrupt.com/misc/ilnb09-08932.pdf In Re Hunt, Sharon Jean Hunt, David Wayne Bankr. S.D. Ind. Case No. 09-03163 Chapter 11 Petition filed March 17, 2009 See http://bankrupt.com/misc/insb09-03163.pdf In Re Hawks Watch, LLC Bankr. D. Md. Case No. 09-14492 Chapter 11 Petition filed March 17, 2009 See http://bankrupt.com/misc/mdb09-14492.pdf In Re Penn Shop, LLC Bankr. D. Md. Case No. 09-14469 Chapter 11 Petition filed March 17, 2009 See http://bankrupt.com/misc/mdb09-14469.pdf In Re Modern Industries, Inc. Bankr. E.D. Mich. Case No. 09-31333 Chapter 11 Petition filed March 17, 2009 See http://bankrupt.com/misc/miwb09-31333p.pdf See http://bankrupt.com/misc/miwb09-31333c.pdf In Re BJM Construction, Inc. Bankr. D. N.J. Case No. 09-16393 Chapter 11 Petition filed March 17, 2009 See http://bankrupt.com/misc/njb09-16393.pdf In Re Duemilla, Inc. Bankr. W.D. Pa. Case No. 09-21839 Chapter 11 Petition filed March 17, 2009 See http://bankrupt.com/misc/pawb09-21839.pdf In Re Tri City Homes Inc. Bankr. W.D. Tenn. Case No. 09-22965 Chapter 11 Petition filed March 17, 2009 Filed as Pro Se In Re j c Pohick Valley Real Estate LLC Bankr. E.D. Va. Case No. 09-11946 Chapter 11 Petition filed March 17, 2009 See http://bankrupt.com/misc/mdb09-11946.pdf In Re B&D Excavating Inc. Bankr. W.D. Va. Case No. 09-50359 Chapter 11 Petition filed March 17, 2009 See http://bankrupt.com/misc/vawb09-50359.pdf ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2009. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***