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/raid1/www/Hosts/bankrupt/TCR_Public/090511.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, May 11, 2009, Vol. 13, No. 129 Headlines 155 EAST: Moody's Cuts Probability of Default Rating to 'Ca/LD' 1ST KEY MANAGEMENT: Case Summary & 6 Largest Unsecured Creditors AGRIPROCESSORS INC: Unidentified Firm Buys $10MM Credit Line ALCOA INC: Sued by B&C Corp. for Collapse, Breach of Contract ALON USA: Moody's Confirms Corporate Family Rating to 'B2' ARROWHEAD GENERAL: Moody's Downgrades Corp. Family Rating to 'B3' ARTISTDIRECT INC: Dec. 31 Balance Sheet Upside-Down by $42.9MM ATHILON ASSET: Moody's Downgrades Counterparty Rating to 'Ba1' ATLANTA LIFE: A.M. Best Cuts Financial Strength Rating to 'B' B&C CORP: Blames Alcoa for Collapse, Sues for Breach of Contract BANK OF AMERICA: Board Seeking New Directors BANK OF AMERICA: Among Banks Needing More Capital in Stress Test BANK OF AMERICA: To Raise $17BB in Common Equity to Cover Deficit BEARINGPOINT INC: Closes Sale of Public Services Biz to Deloitte BENJAMIN CABRERA: Case Summary & Largest Unsecured Creditor BERNARD L MADOFF: Picard Sues Investor for Principal Repayments BERNARD L. MADOFF: Cohmad's Broker Registration Revoked BLAKE ROAD: Voluntary Chapter 11 Case Summary BORGER ENERGY: Moody's Confirms 'Ba3' Rating on Mortgage Bonds BROOKE CORP: Chapter 11 Trustee Wants Case Converted to Chapter 7 CANWEST MEDIA: Senior Lenders Extend Waiver Until May 19 CARITAS HEALTH: Proposes June 1 Auction for Medical Equipment CENTENE CORPORATION: Moody's Affirms 'Ba3' Senior Unsecured Debt CENTRO NP: Moody's Downgrades Senior Unsec. Debt Rating to 'Caa2' CHRYSLER LLC: DBRS Comments on Fiat Alliance and GM Europe Talks CHRYSLER LLC: Proposes Interim Compensation Procedures CHRYSLER LLC: Motion to Deem Utilities Adequately Assured CITIGROUP INC: Among 10 Banks Needing More Capital in Stress Test CITIZENS REPUBLIC: Moody's Cuts Preferred Stock Rating to 'Ba1' CLARK'S LTD: Files for Chapter 11 Bankruptcy Protection COACHMEN INDUSTRIES: Posts $6.1MM Q1 Loss on Continuing Operations COALT PROPERTIES: Voluntary Chapter 11 Case Summary COHR HOLDINGS: High Liquidity Concerns Cue S&P's to Junk Rating COMMERCIAL CAPITAL: CCI Taps Otten Johnson as Litigation Counsel COMMERCIAL CAPITAL: CCI Taps Weinman as Bankruptcy Counsel CONMED CORP: Moody's Comments on Ratings Following Q1 Results CROWN CORK: Moody's Assigns 'B1' Rating on Senior Unsecured Notes DAYTON SUPERIOR: U.S. Trustee Forms Seven-Member Creditors Panel DAYTON SUPERIOR: Taps Edward Howard for Corporate Communications DECODE GENETICS: Licenses Products to Celera Corp. DELPHI CORP: Court Hearing on New Plan on May May 21 DESIGNLINE CONSTRUCTION: Case Summ. & 20 Largest Unsec. Creditors DOLLAR THRIFTY: Posts $8.9 Million Net Loss for Q1 2009 DOMTAR CORP: DBRS Assigns Recovery Ratings, Upgrades Secured Debt DR HORTON: Moody's Assigns 'Ba3' Rating on $450 Mil. Notes FAIRPOINT COMMUNICATIONS: Fitch Downgrades Issuer Rating to 'B-' FAIRPOINT COMMUNICATIONS: Moody's Cuts Corp. Family Rating to 'B3' FANNIE MAE: Will Need $19BB From Gov't After Posting $23.2BB Loss FIFTH THIRD: Among 10 Banks Needing More Capital in Stress Test FIRST DATA: Moody's Downgrades Corporate Family Rating to 'B3' FLEETWOOD ENTERPRISES: Krystal to Buy Mexicali Assets for $150,000 FLEETWOOD ENTERPRISES: Wants Use of Cash Collateral Until Sept. 30 FORTUNOFF HOLDINGS: Taps CONSOR for Sale of Assets FREESCALE SEMICONDUCTOR: Draws Spending Plan Amid Phone Biz Exit GENCORP INC: Lenders Agree to Place French Unit in Bankruptcy GENERAL GROWTH: DBRS Reviews CMBS Exposure Amid Bankruptcy GENERAL MOTORS: CEO Henderson to Host Restructuring Call Today GENERAL MOTORS: DBRS Comments on Fiat Alliance and GM Europe Talks GENERAL MOTORS: Taps Spencer Stuart to Help in Board Member Search GENTEK INC: Moody's Affirms 'B1' Corporate Family Rating GEORGIA GULF: Extends Early Participation Deadline to May 14 GMAC LLC: To Get More Govt Aid After Gaining Biz. with Chrysler GMAC LLC: Among 10 Requiring Add'l Capital; May Need Taxpayer Aid GMAC LLC: Unlikely to Raise $11.5BB in Public Markets, Says WSJ GOODYEAR TIRE: Moody's Assigns 'B1' Rating on $500 Mil. Notes GOODYEAR TIRE: S&P Assigns 'B+' Rating on $500 Mil. Senior Notes GREAT ATLANTIC: S&P Puts 'B' Rating on Negative CreditWatch GREENBRIER HOTEL: Justice Family Buys Hotel, Seeks Case Dismissal HANOVER INSURANCE: AM Best Hikes Capital Securities Rating to bb+ HARRINGTON HOLDINGS: Moody's Affirms 'B2' Corporate Family Ratings HARTMARX CORP: Chicago Workers Take Stand Against Plant Closure HAWKER BEECHCRAFT: Moody's Downgrades Default Rating to 'Ca' HAYES LEMMERZ: S&P Downgrades Corporate Credit Rating to 'CC' INTERMET CORP: Seek Until June 1 to File Chapter 11 Plan JERRY BENFIELD: Case Summary & 10 Largest Unsecured Creditors JG WENTWORTH: Moody's Downgrades Corporate Family Rating to 'C' JOHN J. D'AMATO: Case Summary & 20 Largest Unsecured Creditors KEYCORP: Among Largest Banks Needing More Capital in Stress Test KNIGHT ENERGY: Taps Patton Boggs as Special Counsel, HD Objects KNIGHT ENERGY: Wants to Hire McElree & Smith as Bankruptcy Counsel KNIGHT ENERGY: Voluntary Chapter 11 Case Summary KNIGHT INC: Moody's Affirms 'Ba3' Junior Subordinated Ratings LEHMAN BROTHERS: To Pay PBGC $127.6 Million to Settle Pensions LOUISIANA HOSPITAL: Involuntary Chapter 11 Case Summary LUMINENT MORTGAGE: District Court OKs $8MM Class Action Settlement LYONDELL CHEMICAL: 13 Non-Operating Entities Added to Chapter 11 LYONDELL CHEMICAL: Updated Voluntary Chapter 11 Case Summary LYONDELL CHEMICAL: Parent Sees Mid-December Ch. 11 Emergence MAGNA ENTERTAINMENT: Hearing on State's Appeal to Ruling Moved MARCOS DEVARIE DIAZ: Wants Additional 20 Days in Schedules Filing MARK IV: Court Extends Schedules and SOFA Filing Until June 15 MARK IV: Proposes to Hire Skadden Arps as Bankruptcy Counsel MICHEAL VICK: Court to Consider "Realistic" Plan on June 9 MORGAN STANLEY: Among 10 Banks Needing More Capital in Stress Test MPC CORPORATION: Gateway Wants Cases Converted to Chapter 7 MT DEVELOPMENT: Case Summary & 10 Largest Unsecured Creditors MUELLER WATER: S&P Downgrades Corporate Credit Rating to 'B' N AMERICAN SCIENTIFIC: Closes $2MM Sale of Brachytherapy Unit NATCO INC: Case Summary & 20 Largest Unsecured Creditors NATIONAL PROCESSING: S&P Downgrades Corp. Credit Rating to 'B-' NCI BUILDING: Moody's Downgrades Corporate Family Rating to 'B1' NEW YORK TIMES: Boston Globe May Cut Pay, Lifetime Warranties NORBORD INC: DBRS Assigns 'BB' Issuer Ratings NTK HOLDINGS: Moody's Changes Default Rating to 'Caa2/LD' ON ASSIGNMENT: S&P Assigns Corporate Credit Rating at 'B+' OWENS ILLINOIS: Moody's Affirms 'Ba3' Corporate Family Rating PALMETTO GREENS: Case Summary & 15 Largest Unsecured Creditors PANOLAM INDUSTRIES: Moody's Downgrades Default Rating to 'Ca/LD' PARK LANE: Dusseldorfer, et al., Wants Chapter 11 Case Dismissed PARK LANE: Files List of 20 Largest Unsecured Creditors PARVIZ SERVATJOO: Case Summary & 7 Largest Unsecured Creditors PGI COMPANIES: Case Summary & 20 Largest Unsecured Creditors PHILADELPHIA NEWSPAPERS: Gets 60-Day Stay of Pending Lawsuits PNC FINANCIAL: Among Banks Needing More Capital in Stress Test QIMONDA NA: Files Schedules of Assets and Liabilities QIMONDA NA: Qimonda Richmond Files Schedules of Assets and Debts REGIONS FINANCIAL: Among Banks Needing More Capital in Stress Test RH DONNELLEY: Net Loss Down to $401 Million in 1st Quarter 2009 RH DONNELLEY: Not Sure Whether to Pay $54.6MM Interest This Week ROBERT F RICKERL: Case Summary & 12 Largest Unsecured Creditors SHINGLE SPRINGS: Weak Ramp-Up Cues Moody's to Junk Corp. Ratings SKILLED HEALTHCARE: Moody's Affirms 'B2' Corporate Family Rating SOUTH DAKOTA MEDICAL: A.M. Best Lowers Issuer Credit Rating to bb SOUTHERN LANDFILL: Voluntary Chapter 11 Case Summary STANDARD MOTOR: Moody's Changes Default Rating to 'Caa3/LD' STATER BROS: S&P Puts 'B+' Rating on Negative CreditWatch SUNTRUST BANKS: Among 10 Banks Needing More Capital in Stress Test PNC FINANCIAL: Among Banks Needing More Capital in Stress Test TERESITA PANGANIBAN FERRER: Voluntary Chapter 11 Case Summary TH PROPERTIES: Court Okays 30-Day Delay of SALs and SOFAs Deadline TH PROPERTIES: Wants to Let Lenders to Finance Projects' Insurance THORNBURG MORTGAGE: U.S. Trustee Forms 7-Member Creditors Panel THORNBURG MORTGAGE: Wilmington Trust Named to Creditors Committee TITLEMAX HOLDINGS: Section 341(a) Meeting Scheduled for June 1 TOUSA INC: Hearing on Amended Disclosure Statement on Thursday WARDAL W HOUSTON: Case Summary & 16 Largest Unsecured Creditors WASHINGTON MUTUAL: Seeks July 23 Extension of Plan Filing Period WASHINGTON MUTUAL: Seeks Rule 2004 Discovery on JPMorgan WASHINGTON MUTUAL: Seeks July 23 Extension of Plan Filing Period WASHINGTON MUTUAL: To Employ Elliott Greenleaf as Special Counsel WASHINGTON MUTUAL: San Buenaventura Alleges Fraud vs. Officers WELLCARE HEALTH: Resolution Won't Affect S&P's 'B-' Rating WELLS FARGO: Among 10 Needing More Capital in Stress Test WESTSOUND BANK: Closed May 8; Kitsap Bank Assumes All Deposits WL HOMES: Committee Wants Case Converted to Chapter 7 Liquidation WR GRACE: Montana Court Acquits Grace & Execs. From Libby Case * A.M. Best's U.S. Banking First Quarter Interest Rate Review * A.M. Best Special Report: U.S. Health-2008 GAAP Financial Review * Implications for DBRS U.S. Bank Ratings of SCAP Results * Westsound Bank Closing Hikes 2009 Failed Banks to 33 * Stress Test Results of 19 Largest U.S. Banks * BOND PRICING -- For the Week From May 4 to 8, 2009 ********* 155 EAST: Moody's Cuts Probability of Default Rating to 'Ca/LD' --------------------------------------------------------------- Moody's Investors Service lowered 155 East Tropicana LLC's probability of default rating to Ca/LD from Ca, as the company failed to make the interest payment to the holders of the 8.75% senior secured notes due 2012 prior to May 1, 2009, which was the expiration of the 30-day grace period provided in the indenture. Moody's also downgraded the rating of the 8.75% senior secured notes to C from Ca, reflecting Moody's current view of recovery. The other ratings were affirmed and the outlook remained negative. The Ca/LD probability of default rating recognizes the payment default for the senior secured notes. At this junction, 155 East Tropicana's obligations under its senior secured notes and secured revolver have not been accelerated, although no forbearance agreement has been executed yet. Moody's also revised the expected family recovery rate to 35% from 50%, based on a fundamental valuation analysis. The downgrade of the senior secured notes rating reflects the expected low recovery prospects for the bondholders in a bankruptcy scenario. The rating outlook is negative, reflecting the risk of bankruptcy. Ratings lowered: -- Probability of default rating to Ca/LD from Ca -- 8.75% senior secured notes rating to C (LGD5; 72%) from Ca (LGD4; 56%) Ratings affirmed: -- Corporate family rating at Ca -- SGL-4 Speculative Grade Liquidity rating The last rating action was on December 12, 2008, when Moody's lowered 155 East Tropicana's corporate family rating to Ca from Caa3. 155 East Tropicana LLC owns the Hooters Casino Hotel in Las Vegas, Nevada. The property is located one-half block from the intersection of Tropicana Avenue and Las Vegas Boulevard, a major intersection on the Las Vegas Strip. The company generated net revenues of approximately $60 million in 2008. 1ST KEY MANAGEMENT: Case Summary & 6 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: 1st Key Management Inc. 6416 Del Amo Blvd # 203 Lakewood, CA 90713 Bankruptcy Case No.: 09-20997 Chapter 11 Petition Date: May 7, 2009 Court: United States Bankruptcy Court Central District of California (Los Angeles) Judge: Ernest M. Robles Debtor's Counsel: Maria Cristina Armenta The Armenta Law Firm APC 11900 W Olympic Blvd Ste 730 Los Angeles, CA 90064 Tel: (310) 826-2826 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including its list of 6 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-20997.pdf The petition was signed by Elsrick D. Potts, president of the Company. AGRIPROCESSORS INC: Unidentified Firm Buys $10MM Credit Line ------------------------------------------------------------ Nigel Duara at The Associated Press reports that an unidentified company has bought a $10 million credit line to Agriprocessors Inc. The buyer purchased the First Bank Business Capital loan "presumably" because it wants to buy the plant in Postville, The AP says, citing Agriprocessors bankruptcy trustee Joseph Sarachek. Agriprocessors, says The AP, has failed to attract a buyer for First Bank, which wants $20 million for the $37 million it had lent the Company. According to The AP, Mr. Sarachek said that at least three parties are pursuing purchase of the plant. Headquartered in Postville, Iowa, Agriprocessors Inc. -- http://www.agriprocessor.com/-- operates a kosher meat and poultry packing processors located at 220 North West Street. The Company maintains an executive office with 50 employees at 5600 First Avenue in Brooklyn, New York. The Company filed for Chapter 11 protection on November 4, 2008 (Bankr. E. D. N.Y. Case No. 08- 47472). The case, according to McClatchy-Tribune, has been transferred to Iowa. Kevin J. Nash, Esq., at Finkel Goldstein Rosenbloom & Nash represents the Company in its restructuring effort. The Company listed assets of $100 million to $500 million and debts of $50 million to $100 million. ALCOA INC: Sued by B&C Corp. for Collapse, Breach of Contract ------------------------------------------------------------- Tom Jennemann at AMM reports that B&C Corp. claims that Alcoa Inc. forced the Company into bankruptcy. B&C, according to AMM, filed for Chapter 11 bankruptcy after losing Alcoa as a customer. AMM relates that B&C is suing for alleged breach of contract, theft, and fraud. Norton-based B&C Corp., doing business as JR Engineering and JR Wheel, is a privately owned wheel-making company. B&C makes and polishes aluminum automotive and truck wheels. The Company filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Ohio. B&C listed $10 million to $50 million in assets and $10 million to $50 million in liabilities. Alcoa Inc. -- http://www.alcoa.com/-- is the world leader in the production and management of primary aluminum, fabricated aluminum and alumina combined. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components including flat-rolled products, hard alloy extrusions, and forgings, Alcoa also markets Alcoa(R) wheels, fastening systems, precision and investment castings, and building systems. The company operates in 34 countries and has been named one of the top most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland. As of September 30, 2008, Alcoa had $39.0 billion in total assets and $21.2 billion in total liabilities. As reported by the Troubled Company Reporter on February 17, 2009, Moody's Investors Service downgraded Alcoa Inc's senior unsecured ratings to Baa3 from Baa1, its short-term rating to Prime-3 from Prime-2, its rating on its shelf registration for senior unsecured debt to (P)Baa3 from (P)Baa1 and its preferred stock rating to Ba2 from Baa3. At the same time Moody's downgraded Alcoa Trust 1's shelf registration rating for preferred stock to (P)Ba1 from (P)Baa2. The rating outlook is stable. ALON USA: Moody's Confirms Corporate Family Rating to 'B2' ---------------------------------------------------------- Moody's Investors Service confirmed Alon USA Energy, Inc.'s ratings. The confirmed ratings are Alon's B2 Corporate Family Rating, the B3 Probability of Default Rating, and the B1 (LGD 2, 23%) on the Alon USA term loan. Moody's also confirmed the B1 (LGD 2, but the point estimate is changing to 27% from 26%) rating on the Alon Refining Krotz Springs term loan. The outlook is positive. This concludes the review initiated on 12/23/08. The confirmation of the B2 CFR reflects the company successfully obtaining the needed covenant amendment at its ARKS subsidiary, removing immediate concerns over covenant violations and liquidity. The additional room under the ARKS credit agreements allow for more room to allow for significant refining margin weakness and/or any potential operating disruptions that may occur, especially now that the ARKS subsidiary is no longer benefiting from the crack spread hedge that was unwound as part of the amendment process. The B2 also reflects company's set of refining assets that offers good diversification in terms of markets and products it offers. With its current configuration of essentially three refineries and a network of over 1,020 retail sites along the southwest, Alon is spread across multiple markets, providing cushion against the volatility of any one market having too great of an impact on the company's earnings and cash flows. "The positive outlook reflects the improved financial profile after the company significantly reduced its total outstanding debt, bringing its leverage in-line with a higher rating" said Moody's Vice President, Ken Austin. "However, while the lower leverage is more compatible with a higher Corporate Family Rating, an upgrade would require that the company's operating and financial performance meet the company's and Moody's expectations over the next twelve months." Pro forma for the more than $240 million of debt reduction at the Alon Refining Krotz Springs subsidiary, and $100 million of net debt reduction at the other entities, Alon's total debt is about 30% lower. This has translated into pro forma leverage greatly improving to about $522 per complexity barrel compared to $734 per complexity barrel at 12/31/08. This leverage profile is more consistent with a higher rating, however, an upgrade would require a period of clear and consistent operating performance. While the company has enhanced its overall diversification with the Paramount/Edgington acquisitions and the addition of Krotz Springs, there has been no steady track record of all of the units simultaneously operating according to plan and generating the earnings and cash flows expected and is resulting in further debt reduction. In addition, now that the heating oil crack spread hedge at the ARKS level has been unwound, consideration of an upgrade would also need to include Krotz achieving projected earnings and cash flows on a stand alone basis without the benefit of the hedge. Alon's liquidity position is solid. Pro forma for the amendment of the ARKS credit facilities and associated debt repayments as well as the reduction of the Alon USA revolving credit facility with proceeds from a tax refund, the company will have a total over $600 million of availability under its three credit facilities. This availability along with consolidated EBITDA in the range of $300 million, should provide sufficient cover of the company's planned capex of $127 million, interest expense of about $20 million, and working capital needs for the next 12 months. In addition, the covenants under the ARKS facilities were amended to provide additional room, ensuring continued accessibility over the next 12 months. Under Moody's Loss Given Default Methodology, the ARKS facility is rated one notch above the B2 Alon USA family CFR. Although the ARKS facility is non-recourse to Alon USA and is run independently through the LGD methodology, Moody's use the family CFR as the base rating to determine notching due to Moody's view of the implied support from Alon USA. This implied support was evidenced by Alon's capital injection as part of the amendment process at ARKS as well as the additional L/C support provided by Alon Israel, the majority shareholder of Alon USA Energy, to ARKS for its crude purchases. The last rating action for Alon USA was on 12/23/08, when Moody's placed the ratings under review for possible downgrade. Alon USA Energy, Inc., headquartered in Dallas, Texas, is an independent refiner and marketer of petroleum products and owner and operator of convenience stores in the Southwestern and South Central U.S. ARROWHEAD GENERAL: Moody's Downgrades Corp. Family Rating to 'B3' ----------------------------------------------------------------- Moody's Investors Service has downgraded the corporate family rating of Arrowhead General Insurance Agency, Inc. to B3 from B2 following the company's amendment of its credit facilities and related restructuring initiatives. Also downgraded were the ratings of Arrowhead's first-lien credit facilities (to B3 from B2) and its second-lien credit facility (to Caa1 from B3). The rating outlook for Arrowhead is stable. This concludes a review for possible downgrade that was initiated on December 24, 2008. Arrowhead and its lenders have amended the first-lien and second- lien credit facilities to provide for prepayment of a portion of the first-lien term loan, a permanent reduction of the revolving credit facility, resetting of covenants through the life of the facilities to allow a cushion relative to Arrowhead's revised financial projections, increased pricing on borrowings, allowance for Arrowhead's equity sponsor to repurchase debt through a Dutch tender process under certain conditions, one-time amendment fees and other modifications to the facilities. The amendments, combined with other restructuring initiatives, will help Arrowhead to weather the difficult market conditions, in Moody's view. Absent the amendments, the company would likely have breached its financial covenants in early 2009. "Arrowhead's performance has been hurt by the prolonged soft market for property & casualty insurance and the severe economic recession," said Bruce Ballentine, Moody's lead analyst for Arrowhead. These factors have reduced the volume of insurance premiums placed by Arrowhead, and in turn, its commissions and fees, which are its main sources of revenue. In response to these challenges, Arrowhead has taken significant steps to reduce its costs, including headcount reductions, divestitures of underperforming business units, subleasing of real estate, shifting a portion of management compensation to restricted stock instead of cash, and trimming administrative costs. "Arrowhead has emerged from the restructuring as a smaller firm but with reasonably strong EBITDA and operating cash flows relative to its remaining debt," said Mr. Ballentine. Moody's noted that Arrowhead's business is somewhat concentrated among its largest insurance carriers, leaving the company exposed to potential financial problems of a leading carrier or to a carrier's withdrawal from a target line of business. Arrowhead may mitigate this risk by having alternative carriers involved in its major programs. The rating agency said that Arrowhead will continue to benefit from its established position as a general agent and program specialist along with its healthy profit margins. Moody's cited these factors that could lead to an upgrade of Arrowhead's ratings: (i) profitable growth to restore revenues and EBITDA to pre-restructuring levels, (ii) adjusted (EBITDA - capex) coverage of interest exceeding 2.5 times, (iii) adjusted free- cash-flow-to-debt ratio exceeding 5.0 percent, and (iv) adjusted debt-to-EBITDA ratio below 5.0 times. Moody's cited these factors that could lead to a downgrade of the company's ratings: (i) failure to maintain headroom under financial covenants, (ii) adjusted (EBITDA - capex) coverage of interest below 1.5 times, (iii) adjusted debt-to-EBITDA ratio above 6.5 times, or (iv) loss of a major carrier relationship or comparable disruption to a key insurance program. Arrowhead, based in San Diego, California, is a US general agency and program manager, providing product development, marketing, underwriting and administrative services to national insurance carriers. Arrowhead develops specialized insurance products in cooperation with major carriers and distributes those products through a network of retail and wholesale brokers. Arrowhead generated total revenues of $115 million and an after-tax net loss of $1 million in 2008. Shareholders' equity was $46 million as of December 31, 2008. The last rating action affecting Arrowhead occurred on December 24, 2008, when the ratings were placed on review for possible downgrade. ARTISTDIRECT INC: Dec. 31 Balance Sheet Upside-Down by $42.9MM -------------------------------------------------------------- ARTISTdirect, Inc. reported 2008 revenues of $12.1 million versus $24.2 million for 2007. Gross profit for the same period was $1.8 million for 2008 against $9.5 million for 2007. The Company posted a net loss of $47.9 million for 2008 compared to a net income of $11.5 million for 2007. As of December 31, 2008, the Company had $7.4 million in total assets, $50.2 million in total current liabilities, and $159,000 in total long-term liabilities, resulting in $42.9 million in stockholders' deficit. Since the end of the 2008 fiscal year, ARTISTdirect has made great strides to enhance its capital structure. On January 30, 2009, the Company paid off its senior debt and subordinated debt with a combination of cash, shares of restricted stock and new five-year subordinated notes. The total principal amount of senior and subordinated debt eliminated from the Company's balance sheet was approximately $13 million of senior debt and approximately $27.6 million of subordinated debt. The Company's stockholders' equity was increased as a result of these transactions. ARTISTdirect is also actively seeking acquisition targets to complement its current business segments. On March 30, 2009 the Company acquired the MediaSentry unit of SafeNet, Inc. MediaSentry provides the world's largest entertainment and media companies with the most effective means available to globally detect, track, and deter the unauthorized distribution of their digital content. This acquisition complements ARTISTdirect's MediaDefender segment, creating a true powerhouse in the field of intellectual property protection. "Given the challenges facing the advertising and music industry, as well as the economy in general over the past year, ARTISTdirect is laying the foundation for solid growth going forward," said Dimitri Villard, Chief Executive Officer. "After the successful restructuring of our capital structure in January 2009 we believe we are in an excellent position to grow organically and acquire strategically related businesses, such as MediaSentry, to build a diversified media technology company. We expect our commitment to controlling costs, expanding our existing advertising and E- commerce sales channels, and further restructuring and rebranding of our business units, should lead to better performance in 2009 for both ARTISTdirect and our shareholders." A full-text copy of ARTISTdirect's 2008 Annual Report is available at no charge at http://ResearchArchives.com/t/s?3ca8 About ARTISTdirect Headquartered in Santa Monica, California, ARTISTdirect Inc. (OTC.BB: ARTD) -- http://artistdirect.com/-- is a digital media entertainment company that is home to an online music network and, through its MediaDefender subsidiary, is a provider of anti-piracy solutions in the Internet-piracy-protection industry. Going Concern Doubt Gumbiner Savett Inc., in its audit report on the Company's 2008 Annual Report, raised substantial doubt about the Company's ability to continue as a going concern. Gumbiner Savett said the Company has experienced declining revenues, negative working capital, a net loss, and uncertainty relating to its ability to improve its operating results under current economic conditions. As a result of communications with the Staff of the Securities and Exchange Commission in 2006, in particular regarding the application of accounting rules and interpretations related to embedded derivatives associated with the Company's subordinated convertible notes payable issued in July 2005, ARTISTdirect determined that it was necessary to restate previously issued financial statements. As a result, in December 2006, the Company was required to suspend the use of its then effective registration statement for the holders of its senior and subordinated indebtedness. In addition to this initial default, the Company has since entered into other events of default which continued to be in effect as of December 31, 2008. As of December 31, 2008, approximately $12,994,000 principal amount was outstanding with respect to ARTISTdirect's Senior Financing, and approximately $27,658,000 principal amount was outstanding with respect to its Sub-Debt Financing. In addition, at December 31, 2008, approximately $2,415,000 was outstanding with respect to accrued registration delay liability to the holders of the Sub-Debt Financing and approximately $6,475,000 was outstanding with respect to accrued interest payable to the holders of the Senior Financing and the Sub-Debt Financing. The Senior Notes and the Subordinated Notes were due in June and July 2009, respectively. The Senior Financing and Sub-Debt Financing have been restructured. In accordance with the restructure, the Company paid $3,500,000 to the Senior Note Holders, issued new subordinated notes in the aggregate principal amount of $1,000,000 to the Senior Note Holders, issued 9,000,000 restricted shares of the Company's common stock to the Senior Note Holders, which are subject to a lock-up period of 12 months, and converted the Sub- Debt to equity. In order to obtain funds to accomplish the restructure, and to fund future operations, the Company obtained financing by factoring its accounts receivable. As a result of the successful debt restructuring, ARTISTdirect anticipates that it will have sufficient access to working capital from operations and the factoring of account receivable. ATHILON ASSET: Moody's Downgrades Counterparty Rating to 'Ba1' -------------------------------------------------------------- Moody's Investors Service announced that it has downgraded the counterparty rating of Athilon Asset Acceptance Corp. and the counterparty and senior debt ratings of Athilon Capital Corp.: Athilon Asset Acceptance Corp. -- Current Counterparty Rating: Ba1 -- Prior Counterparty Rating: Baa1 -- Prior Rating Action: Downgraded from Aaa on review for possible downgrade to Baa1 on December 18, 2008 Athilon Capital Corp. -- Current Counterparty Rating: Ba1 -- Prior Counterparty Rating: Baa1 -- Prior Rating Action: Downgraded from Aaa on review for possible downgrade to Baa1 on December 18, 2008 Athilon Capital Corp. -- US$62,500,000 Senior Subordinated Deferrable Interest Notes- Series A -- Current Rating: Caa2 -- Prior Counterparty Rating: B3 -- Prior Rating Action: Downgraded from B1 on review for possible downgrade to B3 on December 18, 2008 Athilon Capital Corp. -- US$62,500,000 Senior Subordinated Deferrable Interest Notes- Series B -- Current Rating: Caa2 -- Prior Counterparty Rating: B3 -- Prior Rating Action: Downgraded from B1 on review for possible downgrade to B3 on December 18, 2008 Athilon Capital Corp. -- US$62,500,000 Senior Subordinated Deferrable Interest Notes- Series C -- Current Rating: Caa2 -- Prior Counterparty Rating: B3 -- Prior Rating Action: Downgraded from B1 on review for possible downgrade to B3 on December 18, 2008 Athilon Capital Corp. -- US$62,500,000 Senior Subordinated Deferrable Interest Notes- Series D -- Current Rating: Caa2 -- Prior Counterparty Rating: B3 -- Prior Rating Action: Downgraded from B1 on review for possible downgrade to B3 on December 18, 2008 Athilon Capital Corp. -- US$100,000,000 Senior Subordinated Deferrable Interest Notes, Series E -- Current Rating: Caa2 -- Prior Counterparty Rating: B3 -- Prior Rating Action: Downgraded from B1 on review for possible downgrade to B3 on December 18, 2008 Moody's explained that the key driver behind the downgrades was the application of revised and updated key modeling parameter assumptions that Moody's uses to rate and monitor ratings of corporate synthetic collateralized debt obligations and credit derivative product companies. The revisions in modeling assumptions affect key parameters in Moody's model for rating CDPCs: default probability, asset correlation, and other credit indicators such as ratings reviews and outlooks. Moody's announced the changes to these assumptions in a press release titled "Moody's Updates its Key Assumptions for Rating Corporate Synthetic CDOs," published on January 15, 2009. However, as mentioned in the press release accompanying the Athilon rating actions of December 18, 2008, the deteriorated credit quality of an asset-backed collateral debt obligation against which Athilon has written protection continues to have a major impact on Athilon ratings. The rating of this ABS CDO was downgraded on February 26, 2009 to Ca from Caa3 on review for possible downgrade. ATLANTA LIFE: A.M. Best Cuts Financial Strength Rating to 'B' ------------------------------------------------------------- A.M. Best Co. has downgraded the financial strength rating to B (Fair) from B+ (Good) and issuer credit rating to "bb+" from "bbb- " for the Atlanta Life Insurance Company (Atlanta Life) (Atlanta, GA). Atlanta Life is the life insurance member of Atlanta Life Financial Group, Inc. The outlook for both ratings has been revised to stable from negative. The rating actions reflect the considerable decline in the absolute capital and surplus level incurred in 2008 due to investment losses in its unaffiliated common stock portfolio, write-offs of intercompany balances and overall net operating losses. This decline in capital and surplus has accelerated the declining trend in the company's risk-adjusted capitalization level in recent years as measured by Best's Capital Adequacy Ratio (BCAR) and state regulators. Without a meaningful infusion of capital, A.M. Best believes that Atlanta Life will be challenged to reverse this trend, given its modest historical operating performance. Additionally, the reduced level of absolute capital and surplus further diminishes Atlanta Life's financial flexibility, which has been limited in recent years by asset pledges and loans made to affiliates. Partially mitigating these factors are Atlanta Life's disciplined premium growth strategy and the generally profitable operating performance of its core assumed group life business, as well as a conservative fixed-income investment portfolio that has thus far avoided significant realized and unrealized investment losses. Additionally, A.M. Best views positively the company's decision to cease writing final expense life insurance, as this line of business was a source of significant statutory new business expense strain. B&C CORP: Blames Alcoa for Collapse, Sues for Breach of Contract ---------------------------------------------------------------- Tom Jennemann at AMM reports that B&C Corp. claims that Alcoa Inc. forced the Company into bankruptcy. B&C, according to AMM, filed for Chapter 11 bankruptcy after losing Alcoa as a customer. AMM relates that B&C is suing for alleged breach of contract, theft, and fraud. Norton-based B&C Corp., doing business as JR Engineering and JR Wheel, is a privately owned wheel-making company at 5208 Wooster Road W. B&C makes and polishes aluminum automotive and truck wheels. The Company filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Ohio. B&C listed $10 million to $50 million in assets and $10 million to $50 million in liabilities. BANK OF AMERICA: Board Seeking New Directors -------------------------------------------- Bank of America Corp.'s board seeking new directors in the wake of a revolt that resulted in a shareholder vote last week to oust CEO Kenneth Lewis of as chairperson, Dan Fitzpatrick and Joann S. Lublin at The Wall Street Journal report, citing people familiar with the matter. BofA will still hire an executive-search firm to handle the assignment, WSJ says, citing a source. WSJ relates that Walter Massey took over as chairperson last week after receiving the highest "yes" votes of any director. Mr. Massey, according to WSJ, said on Thursday that the acquisitions of Merrill Lynch and Countrywide Financial demonstrated a "need" for directors with more experience in banking and finance." WSJ reports that Mr. Massey said that he is leading a five-person committee -- which include Frank Bramble, Charles Gifford, Thomas May, and Charles Rossotti -- that will recommend any changes in the board's structure and size while supervising Company's response to a U.S. stress test showing the need for $33.9 billion in equity. The report says that investors sought to defeat the re-election of several directors last week and some received high "no" votes. Based in Charlotte, North Carolina, Bank of America -- http://www.bankofamerica.com/-- 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 serves more than 59 million consumer and small business relationships with more than 6,100 retail banking offices, nearly 18,700 ATMs and 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 support to more than 4 million small business owners. The company serves clients in more than 150 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). As reported by the Troubled Company Reporter on March 27, 2009, Moody's Investors Service lowered the senior debt rating of Bank of America Corporation to A2 from A1, the senior subordinated debt rating to A3 from A2, and the junior subordinated debt rating to Baa3 from A2. The preferred stock rating was downgraded to B3 from Baa1. The holding company's short-term rating was affirmed at Prime-1. BANK OF AMERICA: Among Banks Needing More Capital in Stress Test ---------------------------------------------------------------- The results of a comprehensive, forward-looking assessment of the financial conditions of the nation's 19 largest bank holding companies (BHCs) by the federal bank supervisory agencies were officially released on Thursday, May 7. The exercise -- conducted by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation -- was conducted so that supervisors could determine the capital buffers sufficient for the 19 BHCs to withstand losses and sustain lending -- even if the economic downturn is more severe than is currently anticipated. In a detailed summary of the results of the Supervisory Capital Assessment Program (SCAP), the supervisors identified the potential losses, resources available to absorb losses, and resulting capital buffer needed for the 19 participating BHCs. The SCAP is a complement to the Treasury's Capital Assistance Program (CAP), which makes capital available to financial institutions as a bridge to private capital in the future. According to the stress test results, after taking account of losses, revenues and reserve build requirements, in the aggregate, the BHCs need to add $185 billion to capital buffers to reach the target SCAP capital buffer at the end of 2010 under the more adverse scenario. With respect to this estimate: -- the $185 billion accrues to 10 of the 19 firms, meaning 9 of the 19 firms already have capital buffers sufficient to get through the adverse scenario in excess of 6 percent Tier 1 capital and 4 percent Tier 1 Common capital. -- the vast majority of this $185 billion comes from a shortfall in Tier 1 Common capital in the more adverse scenario, with virtually no shortfall in overall Tier 1 capital. This result means that while nearly all the firms have sufficient Tier 1 capital to absorb the unusually high losses of the more adverse scenario and still end 2010 with a Tier 1 risk-based ratio in excess of 6%, 10 of these firms had capital structures that are too strongly tilted toward capital other than common equity. Thus, each of the 10 firms needing to augment their capital as a result of this exercise must do so by increasing their Tier 1 Common capital. Including the capital actions made by banks and their first quarter 2009 annual results, the 10 BHCs will only need to raise a combined $74.6 billion in capital. ($ in billions) Required Capital Buffer ------------------ After Capital Actions & 2009 & 2010 As of After Q1 Bank Loss Estimates 12/31/08 Results ---- -------------- -------- ------- Citigroup Inc. $104.7 $92.6 $5.5 Bank of America Corporation 136.6 46.5 33.9 Wells Fargo & Company 86.1 17.3 13.7 Morgan Stanley 19.7 8.3 1.8 GMAC LLC 9.2 6.7 11.5 SunTrust Banks Inc. 11.8 3.4 2.2 Regions Financial Corp 9.2 2.9 2.5 Fifth Third Bancorp 9.1 2.6 1.1 KeyCorp 6.7 2.5 1.8 PNC Financial Services Group Inc 18.8 2.3 0.6 American Express Company 11.2 0.0 0.0 BB&T Corporation 8.7 0.0 0.0 The Bank of New York Mellon 5.4 0.0 0.0 Capital One Financial Corp 13.4 0.0 0.0 The Goldman Sachs Group Inc 17.8 0.0 0.0 JPMorgan Chase & Co. 97.4 0.0 0.0 MetLife Inc. 9.6 0.0 0.0 State Street Corporation 8.2 0.0 0.0 U.S. Bancorp 15.7 0.0 0.0 ------ ------ ------ $599.2 $185.0 $74.6 A copy of the Stress Test results is available for free at: http://bankrupt.com/misc/May09-StressTest.pdf According to Federal Reserve Chairman Ben S. Bernanke, the 19 banks covered by the "stress tests" play a vital role in our economy, holding among them two-thirds of the assets and more than one-half of the loans in the U.S. banking system. Not Tests of Solvency With respect to the stress tests, Mr. Bernanke clarified, "These examinations were not tests of solvency; we knew already that all these institutions meet regulatory capital standards. Rather, the assessment program was a forward-looking, "what-if" exercise intended to help supervisors gauge the extent of the additional capital buffer necessary to keep these institutions strongly capitalized and lending, even if the economy performs worse than expected between now and the end of next year." "The results released [May 7] should provide considerable comfort to investors and the public," Mr. Bernanke said. He noted that the examiners found that nearly all the banks that were evaluated have enough Tier 1 capital to absorb the higher losses envisioned under the hypothetical adverse scenario. Roughly half the firms, though, need to enhance their capital structure to put greater emphasis on common equity, which provides institutions the best protection during periods of stress. Many of the institutions have already taken actions to bolster their capital buffers and are well-positioned to raise capital from private sources over the next six months. "However, our government, through the Treasury Department, stands ready to provide whatever additional capital may be necessary to ensure that our banking system is able to navigate a challenging economic downturn." The estimates reported by the Federal Reserve represent values for a hypothetical 'what-if' scenario and are not forecasts of expected losses or revenues for the firms, a joint press release by the Federal Reserve, the U.S. Treasury and the FDIC also clarified. Nov. 9 Deadline for Capital Plan According to the joint release, any U.S. bank holding company (BHC) needing to augment its capital buffer at the conclusion of the SCAP will have until June 8th, 2009 to develop a detailed capital plan, and until November 9th, 2009 to implement that capital plan Over the next 30 days, any BHC needing to augment its capital buffer will develop a detailed capital plan to be approved by its primary supervisor, in consultation with the FDIC, and will have six months to implement that plan. In light of the potential for new commitments under the Capital Assistance Program or exchanges of existing CPP preferred stock, supervisors will consult with Treasury on the development and evaluation of the plans. The capital plan will consist of three main elements: * A detailed description of the specific actions to be taken to increase the level of capital and/or to enhance the quality of capital consistent with establishing the SCAP buffer. BHCs are encouraged to design capital plans that, wherever possible, actively seek to raise new capital from private sources. These plans should include actions such as: -- Issuance of new private capital instruments; -- Restructuring current capital instruments; -- Sales of business lines, legal entities, assets or minority interests through private transactions and through sales to the PPIP; -- Use of joint ventures, spin-offs, or other capital enhancing transactions; and -- Conservation of internal capital generation, including continued restrictions on dividends and stock repurchases and dividend deferrals, waivers and suspensions on preferred securities including trust preferred securities, with the expectation that plans should not rely on near-term potential increases in revenues to meet the capital buffer it is expected to have. * A list of steps to address weaknesses, where appropriate, in the BHC's internal processes for assessing capital needs and engaging in effective capital planning. * An outline of the steps the firm will take over time to repay government provided capital taken under the Capital Purchase Program (CPP), Targeted Investment Program (TIP), or the CAP, and reduce reliance on guaranteed debt issued under the TLGP. In addition, as part of the 30-day planning process, firms will need to review their existing management and Board in order to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment and maintain balance sheet capacity sufficient to continue prudent lending to meet the credit needs of the economy A copy of the joint release is available for free at: http://www.federalreserve.gov/newsevents/press/bcreg/20090506a.htm Comments to Stress-Test Results According to NewsBlaze, Scott Talbott, vice president of the Financial Services Roundtable, a Washington-based association representing the biggest U.S. financial companies, the $75 billion is not a huge sum for the 10 banks to raise. He said, the report relates, that nine of the 10 can do so through private means such as stock conversions or selling assets. Only GMAC, the auto finance company linked to General Motors, faces the prospect of seeking further government relief funds, he said. Louise Story and Eric Dash at The New York Times said, "Broadly speaking, the test results suggested that the banking industry was in better shape than many had feared." The two noted that the $75 billion in equity capital needed by 10 banks is "far less than many had forecast." The hypothetical scenarios created by bank examiners assume the unemployment rate would hit 10.3% and house prices would fall more than 22%. That scenario is worse than the current state of the economy, in which the jobless rate is below 9%, NewsBlaze said. In addition, the examiners assume in a worst-case scenario that 9% of all loans might sour -- a figure that is even higher than it was during the Great Depression, NYT said. According to Reuters, citing the Wall Street Journal, the government made concessions to banks that pushed back against its conclusions in its stress tests. The $13.7 billion projected capital shortfall for Wells Fargo -- from $17.3 billion -- came about after two weeks of bargaining, The Journal said. In addition, beyond the concessions, Financial Times, according to Reuters, reported that the U.S. government has assured the banks that they will be allowed to raise less than the $74.6 billion in equity mandated if earnings over the next six months beat regulators' forecasts. According to MarketWatch, Ken Lewis, chief executive of Bank of America Corp., on Friday called the government's stress-test results "pretty aggressive" but said the financial-services giant will comply and raise the required $33.9 billion. Asked about the health of his firm, Mr. Lewis said mortgage-lending arm Countrywide is "on fire, in a positive sense," right now, and added that "business is good" at Merrill Lynch. The Washington Post said U.S. stocks rose last week, erasing the year-to-date loss in the Standard & Poor's 500-stock index, as results from the government's "stress tests" of major banks reassured investors and the Labor Department said the pace of job cuts slowed in April. Bank of America and Citigroup, the Post relates, helped drive financial stocks in the S&P 500 to a 23% percent gain as the government said only one of the 19 large banks that were reviewed was likely to need additional taxpayer aid. BANK OF AMERICA: To Raise $17BB in Common Equity to Cover Deficit ----------------------------------------------------------------- Marshall Eckblad at Dow Jones Newswires reports that Bank of America said that it would begin to cover its $34 billion shortfall by raising $17 billion in common equity. BofA said that the Federal Reserve has notified the Company of the stress test results. The test shows that to weather two years of the most severe economic circumstance, BofA would need to increase Tier 1 common capital by $33.9 billion. According to Dow Jones, BofA will sell new shares straight into the market and exchange some of the Company's privately-held preferred shares into common shares. BofA CEO Ken Lewis, Dow Jones relates, said that the Company would raise $10 billion by selling some of its assets to raise cash, including its First Republic bank, asset manager Columbia Management, "joint ventures and various others." Dow Jones states that BofA said that it is in "discussions to terminate and abandon" an insurance policy it purchased from the government to protect itself against losses on more than $110 billion in troubled assets. This would help the Company raise an additional $4 billion or more, according to the report. BofA said that it would add $7 billion from earnings and "various other items," Dow Jones reports. BofA, according to Dow Jones, made clear on Thursday that it will avoid drawing out its relationship with the U.S. government, which promises to re-trench further if the government becomes a voting shareholder. Dow Jones relates that the government previously invested about $45 billion in BofA through preferred shares. The report says that converting some of those shares to common shares is BofA's quickest path to meeting regulator's demands. Dow Jones quoted Mr. Lewis as saying, "In fact, our game plan is designed to help get the government out of our bank as quickly as possible." Under the stress test results, BofA's total Tier 1 Capital Ratio would remain above the federal regulatory target over the two-year period. Tier 1 common equity would be below the guideline, necessitating an increase in the company's common equity to meet the government's most adverse economic scenario. "We are comfortable with our current capital position in the present economic environment," said Mr. Lewis. "The stress test asks what if the economy does much worse than most experts project. We are working on a plan to submit to the government for such a contingency, which is due by June 8. While it would have a number of components, we will not need any new government money. The plan will be implemented by the Nov. 9 deadline. Bank of America will continue to be the leading financial services company for consumers and businesses. We are well capitalized with the best liquidity of any large bank. We continue to lead the industry in making new loans and to serve our customers and clients with innovative products. We understand our responsibility to our communities, customers and shareholders." Walter E. Massey, chairman of the BofA Board of Directors said, "The precautionary actions being taken by our country's banking regulators are an appropriate and balanced response in a time of lingering economic uncertainty. While we have considerable work to do, we are pleased that the supervisory capital assessment process has provided much-needed clarity on the path forward to move decisively beyond the current crisis. The board will assure that the company moves aggressively to build the capital buffer identified by the regulatory stress test. Our management team is already in the process of developing a comprehensive capital plan, and we will be thorough in considering the various alternatives to meet our goal." At March 31, BofA's ratio of Tier 1 common to risk-weighted assets was 4.5 percent, well above the 4% that the Federal Reserve has targeted in the stress test. Total Tier 1 capital was 10.09%, making the bank "well capitalized" under the regulatory formula. In more normal times, the company targets 8% total Tier 1 capital with at least half in common equity. Using the most severe economic assumptions, the Company's internal projections for loan losses and income over the next two years differ from the Federal Reserve's because the agency tended to use standardized loss rates for the 19 banks. Bank of America estimates its particular loss rates will in many cases be less, but in some cases may be higher. The bank has also told the Federal Reserve that it believes the agency's estimate of income over the next two years is too low. BofA believes its pre-provision net revenue will significantly exceed the government's estimate in the stress scenario over 2009- 2010. The Company also believes that the Federal Reserve's projected non-credit losses over that period are too high. "While we may differ on some elements of the test, we understand the need to reassure those doing business with or investing in the company that we will be well capitalized even in a highly adverse scenario," said Joe L. Price, chief financial officer. "Our capital plan will therefore reflect the Federal Reserve's conclusions. Our goal will be to continue to run the bank in a safe and sound manner but to minimize dilution of our common shareholders, while at the same time being positioned to continue to help the economy through appropriate extension of credit. Our strategy will also, even under the most adverse scenario, put the highest possible priority on paying back the taxpayers as soon as possible." Mr. Price said that the Company could increase the Tier 1 common ratio in a number of ways. He said the Company intends to sell common stock and/or convert existing privately held preferred stock into common shares. BofA has already announced it will sell First Republic Bank and is considering the sale of several other business units including Columbia Management. It may also consider several joint ventures. "Our intention will be to reach the government's target on our own without exchanging any of the current U.S. investment in Bank of America into mandatory convertible preferred stock," Mr. Price said. "That would allow us to minimize the use of government money and put us into a position to repay the government's investment sooner." In addition to such strategic moves, the Company over the next two quarters expects that its performance will exceed projections by the Federal Reserve, which would reduce the amount of Tier 1 common required. In a related development, BofA is seeking to end negotiations and terminate its term sheet with respect to the proposed guarantee of approximately $118 billion in capital markets assets by the U.S. Government. This is an important first step in reducing the government's support of the Company. "We believe that the expense of the asset wrap exceeds the potential benefit, especially since, even under our stress test conclusions, losses never exceed the initial $10 billion we would have to cover," Mr. Price said. "We have already taken substantial action on our own to reduce exposure to the covered assets while incurring minimal losses." Board Actions BofA chairperson Walter Massey emphasized that the board is committed to being recognized as an exemplar of good corporate governance practices and to listening carefully to shareholder views. "To this end," he continued, "the board has established a committee chaired by me and including four other non-executive directors: Frank P. Bramble Sr., Charles K. Gifford, Thomas J. May and Charles O. Rossotti. In addition to overseeing BofA's response to the Supervisory Capital Assessment Process, the committee is charged with reviewing and recommending changes in all aspects of the board's activities, from the structure and charters of its standing committees, to board meetings and agendas, to board composition and size." Ms. Massey noted that the increased complexity of the company following the major acquisitions of Merrill Lynch and Countrywide, and the challenges of the current environment, have demonstrated a need on the board of directors for enhanced expertise and experience in banking and financial matters. "The committee has already begun its work," Mr. Massey said, "and will be moving expeditiously to bring recommendations for changes to the board." Mr. Massey remarked, "While I have assumed the Chairmanship of our Board at a particularly challenging time, I could not be more encouraged by the energy and resolve of the people of this great company to engage fully to address the issues before us. We plan to make the most of this opportunity to ensure that our business and governance practices are state-of-the-art and that Bank of America continues as America's leading financial institution. "We will continue our successful strategy calling for Bank of America to operate in businesses and markets where we are a market leader, to take full advantage of scale and to maintain diversity of income," Mr. Massey concluded. "The model works." About Bank of America Based in Charlotte, North Carolina, Bank of America -- http://www.bankofamerica.com/-- 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 serves more than 59 million consumer and small business relationships with more than 6,100 retail banking offices, nearly 18,700 ATMs and 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 support to more than 4 million small business owners. The Company serves clients in more than 150 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 Company 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). As reported by the Troubled Company Reporter on March 27, 2009, Moody's Investors Service lowered the senior debt rating of Bank of America Corporation to A2 from A1, the senior subordinated debt rating to A3 from A2, and the junior subordinated debt rating to Baa3 from A2. The preferred stock rating was downgraded to B3 from Baa1. The holding company's short-term rating was affirmed at Prime-1. BEARINGPOINT INC: Closes Sale of Public Services Biz to Deloitte ---------------------------------------------------------------- BearingPoint, Inc. said the sale of its North American Public Services business to Deloitte LLP has been completed. Under the terms of the previously disclosed transaction, Deloitte acquired the majority of the Company's Public Services unit for $350 million. BearingPoint and Deloitte are working together to help ensure a seamless transition for clients and employees, including the continuity of existing engagement teams, to provide uninterrupted, world-class consulting services. Also, Robin Lineberger, executive vice president of Public Services, and his management team have joined Deloitte, providing leadership stability and continuity that will aid in the successful integration. BearingPoint on April 17, 2009, said it entered into definitive agreements with PricewaterhouseCoopers LLP to sell a significant portion of the Company's North American Commercial Services business and associated Global Delivery Centers for $25 million. On May 27, 2009, a hearing is scheduled for the Court to review the proposed sale, which remains subject to the satisfaction of certain closing conditions and the rules of the Court, which require BearingPoint to consider all "higher or better" offers from other potential buyers and obtain Court approval. There can be no assurance that the proposed sale will be approved by the Court or that the transaction will be completed. About BearingPoint 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 September 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. BENJAMIN CABRERA: Case Summary & Largest Unsecured Creditor ----------------------------------------------------------- Debtor: Benjamin Cabrera dba Atom Construction Co. 400 Second Ave. Apt. 18A New York, NY 10010 Bankruptcy Case No.: 09-12932 Chapter 11 Petition Date: May 7, 2009 Court: United States Bankruptcy Court Southern District of New York (Manhattan) Judge: Stuart M. Bernstein Debtor's Counsel: Joel K. Bohmart, Esq. Bohmart & Sacks, P.C. 60 East 42nd Street 46th Floor New York, NY 10165 Tel: (212) 972-3557 Fax: (212) 972-3607 Email: jbohmart@aol.com Total Assets: $1,605,800 Total Debts: $1,143,616 According to its schedules of assets and liabilities, $1,143,616 of the debt is owing to secured creditors. A full-text copy of Mr. Cabrera's petition, including his list of 1 largest unsecured creditor, is available for free at: http://bankrupt.com/misc/nysb09-12932.pdf The petition was signed by Mr. Cabrera. BERNARD L MADOFF: Picard Sues Investor for Principal Repayments --------------------------------------------------------------- The trustee for Bernard L. Madoff Investment Securities Inc., the largest Ponzi scheme in world history, is now going after investors to recover more than fictitious profits, Bloomberg's Bill Rochelle said. On May 7, Irving Picard, trustee for BLMIS, sued Gabriel Capital LP and its managing partner, Ezra Merkin, saying they withdrew more than $500 million of "non-existent" principal on behalf of investment funds when people within their own organization suspected a fraud was being conducted. According to Bloomberg, the trustee's complaint cites one of Merkin's investment managers as saying that profits by the Madoff firm were "inconsistent with what could possibly take place in reality." The complaint also refers to an accountant who advised Merkin that the Madoff firm "looked like a fraud to him." The complaint, Mr. Rochelle notes, uses New York state law to seek the recovery of principal returned within six years of bankruptcy, not merely the two years allowed under U.S. bankruptcy law. The new complaint, the report adds, is notable for seeking not only the return of fictitious profits but also principal investments that in reality disappeared in the course of the Ponzi scheme. According to Mr. Rochelle, though the law in the area is not crystal clear, some theories say an investor in a Ponzi scheme can be required to pay back fictitious profits even if the investor had no reason to believe a fraud was being conducted. Another theory holds that an investor can be compelled to return repayment of principal if the investor knew or had seen enough red flags to suspect that a fraud was ongoing. 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 Mr. Madoff and his investment firm 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 December 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: Cohmad's Broker Registration Revoked ------------------------------------------------------- Robert Frank at The Wall Street Journal reports that Cohmad Securities Corp., a brokerage that referred investors to Bernard Madoff, has lost its broker registration on failure to provide adequate information to state regulators in a probe on its relationship to Mr. Madoff and Bernard L. Madoff Investment Securities LLC. According to WSJ, a Massachusetts hearing officer ruled that Cohmad Securities provide an accounting of the fees that the company or its agents earned for referring Massachusetts investors to the Madoff firm and levied a $100,000 fine on Cohmad Securities. WSJ relates that Steven Paradise, Cohmad Securities' lawyer, said that the ruling was unfair because, among other things, the hearing officer works for Secretary of the Commonwealth William F. Galvin, who filed a lawsuit against Robert Jaffe on January 14, 2009, to testify about his role in the Madoff fraud. "It's our belief that Cohmad was a front organization for Madoff," WSJ quoted Mr. Galvin as saying. WSJ relates that Mr. Paradise said that Cohmad Securities had no knowledge of the fraud. Cohmad Securities is considering an appeal to a "truly independent and neutral judge" in a Massachusetts Superior Court, WSJ says, citing Mr. Paradise. Mr. Paradise, according to WSJ, said that Cohmad Securities is still operating, but "in cooperation with other regulators is in the process of attempting to wind down." Cohmad Securities submitted over thousands of pages of documents to Mr. Galvin's office and responded to several questions, WSJ relates. Mr. Galvin, according to the report, said that his office will continue to the probe on Cohmad Securities. 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 Mr. Madoff and his investment firm 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 December 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. BLAKE ROAD: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Blake Road Partners, Inc. 42 Main Street Littleton, NH 03561 Bankruptcy Case No.: 09-11693 Chapter 11 Petition Date: May 7, 2009 Court: United States Bankruptcy Court District of New Hampshire (Manchester) Judge: J. Michael Deasy Debtor's Counsel: Brian G. Luneau, Esq. 1067 Lake Ave Sunapee, NH 03751 Tel: (606) 616-9278 Total Assets: $352,100 Total Debts: $787,343 According to its schedules of assets and liabilities, $737,187 of the debt is owing to secured creditors and the remaining debt to creditors holding unsecured nonpriority claims. The Company says it does not have unsecured creditors who are non insiders when they filed their petition. The petition was signed by Lauren J. Sharfman, president of the Company. BORGER ENERGY: Moody's Confirms 'Ba3' Rating on Mortgage Bonds -------------------------------------------------------------- Moody's Investors Service has confirmed the Ba3 rating on Borger Energy Associates L.P.'s 7.26% first mortgage bonds due 2022, concluding the review for upgrade that was initiated on November 14, 2008. The rating outlook is stable. The rating review had been prompted by an improvement in operational and financial performance at the plant. Availability at the plant under the terms of the PPA had averaged 93% from 2006 through September 2008 and the debt service coverage ratio calculated by Moody's had improved steadily year over year from 1.29x in 2006 to 1.42x for the trailing 12-months ended September 30, 2008, due at least in part to higher steam sales to ConocoPhillips. The challenges at Borger's facility in 2005 and 2006, which had seen much reduced coverage ratios due to the combination of unplanned outages and a reduction in steam revenues, appeared at the time to be behind the project. Since then, however, the project has seen a deterioration in operating and financial performance such that its debt service coverage for the first three months of 2009 is below 1.0x. Moody's expects coverages to be weak through the end of 2009. The facility experienced another unplanned outage combined with a significant reduction in gas prices. Borger's Unit #1 generator had an unplanned outage on December 19, 2008, caused by a generator ground fault. This necessitated repairs and a rewinding of the unit. Management has said that this is an insurable event and is in the process of seeking a claim. The unit was returned to service on February 13, 2009. During this period, there was also a sharp drop in gas prices (from approx. $6/MMBtu in December 2008 to $2.675/MMBtu for March 2009). As a result, revenues for the first three months of 2009 were down due to (i) a lower availability factor due to the generator winding failure resulting in a lower capacity payment (92% average availability is needed under the terms of the Power Purchase Agreement with Southwestern Public Service to avoid capacity payment penalties); (ii) lower than anticipated power generation and steam production also due to the generator winding failure; and (iii) lower gas prices. In addition, higher operating and maintenance expenses as a result of the generator failure contributed to the decline in coverage ratios. Preliminary projections for 2009 show that debt service coverage is projected to be close to 1.0x; however, the project currently anticipates it will be able to fully fund its major maintenance reserve and that it will not need to access the debt service reserve. The stable outlook reflects Moody's view that the Ba3 rating is not likely to be revised in the near term, and assumes that the project will be able to maintain coverages around 1.0x in 2009 and 2010 and will not need to utilize the debt service reserve. The rating could be revised downward should there be recurring operating difficulties and outages or if there was a need to utilize the debt service reserve. Moody's will closely monitor the project's financial and operating performance. The rating could come under positive ratings pressure or the outlook could be revised to positive if the project were able to produce debt service coverage ratios above 1.20 times on a sustainable basis. However, the project's operating history and financial performance has been volatile, and its cash flow too closely tied to volatile gas prices for the rating to be much above the lower end of the Ba range. The last rating action on Borger occurred on November 14, 2008, when the project's senior secured rating was placed under review for possible downgrade. Borger Energy Associates, L.P. is a limited partnership that owns and operates a 230-megawatt, gas-fired cogeneration facility located near Borger, Texas. Power generated by the project is sold to Southwestern Public Service Company (SPS: Baa1; senior unsecured), a wholly-owned utility operating subsidiary of Xcel Energy (Baa1 senior unsecured), and steam is sold ConocoPhillips Company (A1; senior unsecured). Borger is 100% wholly-owned by affiliates of Energy Investors Funds. BROOKE CORP: Chapter 11 Trustee Wants Case Converted to Chapter 7 ----------------------------------------------------------------- Albert A. Riederer, Chapter 11 Trustee for Brooke Corporation and its debtor-affiliates, asks the U.S. Bankruptcy Court for the District of Kansas to convert the Debtors' Chapter 11 cases to Chapter 7 liquidation proceedings. The Chapter 11 Trustee states that there is no prospect of reorganization and all of the Debtors' employees have been terminated and. The Trustee says that it has been able to effectuate a settlement that helps transition former agents to other carriers. The settlement was approved by the Court on March 13, 2009. According to the Chapter 11 Trustee, the conversion of the Debtors' cases would preserve the base of critical working knowledge, which the Trustee and its counsel have about these proceedings. Moreover, it allows the liquidation to continue in an orderly and uninterrupted fashion, the Trustee notes. Husch Blackwell Sanders LLP in Kansas City, Missouri, represents the Chapter 11 Trustee. Headquartered in Kansas, Brooke Corp. (NASDAQ: BXXX) -- http://www.brookebanker.com/-- is an insurance agency and finance company. The company owns 81% of Brooke Capital. The majority of the company's stock was owned by Brooke Holding Inc., which, in turn was owned by the Orr Family. A creditor of the family, First United Bank of Chicago, was foreclosed on the BHI stock. The company's revenues are generated from sales commissions on the sales of property and casualty insurance policies, consulting, lending and brokerage services. Brooke Corp. and its affiliate, Brooke Capital Corp. filed for Chapter 11 protection on Oct. 28, 2008 (Bankr. D. Kan. Case No. 08-22786). Angela R. Markley, Esq., is the Debtors' in-house counsel. Richard A. Wieland, the U.S. Trustee for Region 20, appointed seven creditors to serve on an Official Committee of Unsecured Creditors for the Debtors' Chapter 11 cases. The Debtors listed assets of $512,855,000 and debts of $447,382,000. CANWEST MEDIA: Senior Lenders Extend Waiver Until May 19 -------------------------------------------------------- Canwest Global Communications Corp. said its subsidiary, Canwest Media Inc. and its senior lenders have agreed to extend the waiver of certain borrowing conditions until May 19, 2009. The members of an ad hoc committee of 8% noteholders, which collectively hold approximately 72% of the outstanding notes, have also agreed not to demand payment of their notes for a period ending May 19, 2009 to coincide with the expiry date of CMI's waiver agreement with its senior lenders. During the extension period, CMI's senior lenders have agreed to provide the Company with additional access to credit. CMI continues discussions with its senior lenders and representatives of an ad hoc committee of 8% noteholders. About Canwest Global Canwest Global Communications Corp. -- http://www.canwest.com/-- (TSX: CGS and CGS.A,) an international media company, is Canada's largest media company. In addition to owning the Global Television Network, Canwest is Canada's largest publisher of English language daily newspapers and owns, operates and/or holds substantial interests in conventional television, out-of-home advertising, specialty cable channels, web sites and radio stations and networks in Canada, New Zealand, Australia, Turkey,Indonesia, Singapore, the United Kingdom and the United States. * * * As reported in the Troubled Company Reporter on May 5, 2009, Standard & Poor's Ratings Services said it assigned its 'CCC' long-term corporate credit rating to Toronto-based newspaper publisher Canwest Limited Partnership. The outlook is negative. At the same time, S&P lowered the senior secured debt rating on the company to 'CCC' (the same as the corporate credit rating) from 'CCC+'. S&P also revised the recovery rating on Canwest LP's senior secured debt to '3' from '2'. The '3' recovery rating indicates S&P's opinion of an expectation of meaningful (50%-70%) recovery in the event of a default, in contrast to a '2' recovery rating, which indicates S&P's opinion of an expectation of substantial (70%-90%) recovery. Standard & Poor's revised the recovery rating due to S&P's use of a lower EBITDA amount andEBITDA multiple in the event of default. CARITAS HEALTH: Proposes June 1 Auction for Medical Equipment ------------------------------------------------------------- Caritas Health Care, Inc., et al., ask the U.S. Bankruptcy Court for the Eastern District of New York for authority to approve auction procedures for the sale of the Debtors' medical equipment and supplies. After the auction, the Debtors will seek entry of a second order to approve the sale of the assets to the successful bidder at the auction, free and clear of all liens, claims and encumbrances. The Debtors relate that since filing for bankruptcy, the Debtors have completed the shut down of all medical operations, ceased providing health care services, terminated all health-care-related operations and are in the process of liquidating their assets and winding up their affairs. The Debtors propose to conduct the auction on June 1, 2009, at 10:00 a.m. (New York City time), with bids due no later than 4:00 p.m. on May 27, 2009. The Debtors request the Court to set a sale hearing for June 3, 2009. Centurion Service Group, LLC and Perfection Plant Liquidations, LLC (collectively, the "Stalking Horse Bidder") have offered to pay Caritas $3,400,000 for the medical equipment. The Debtors also request the Court for authority to pay the Stalking Horse Bidder a Break-Up Fee a Break-Up Fee equal to 2% of the Equipment purchase price, or $68,000, should the sale be consummated in favor of another competing bidder. With respect to the supplies, the Debtors request the Court for authority to employ the Stalking Horse Bidder as disposition agent in an auction process. In accordance with the agreement, for a period of 90 days from the closing date of the sale of the Equipment (not later than 5 days following the entry of the sale order, unless parties agree on another time or date), the Stalking Horse Bidder will conduct auctions at the Debtors' facilities and online, charging a buyer's premium of 10% in respect of sales occurring at the Debtors' facilities and 17% in respect of sales occurring online, but charging no additional commission to the Debtors. The net proceeds, after subtraction of the Buyer's Premium and any sales and similar taxes, will be remitted to Caritas on the next business day following said sales. A full-text copy of the proposed bid procedures and the agreement with the Stalking Horse Bidder dated April 30, 2009, is available at http://bankrupt.com/misc/Caritas.EquipmentProtocol.pdf About Caritas Health Care Inc. Caritas Health Care Inc. is the owner of Mary Immaculate Hospital and St. John's Queens Hospital. Caritas, created by Wyckoff Heights Medical Center, purchased the two hospitals in a bankruptcy sale in early 2007 from St. Vincent Catholic Medical Centers of New York. St. John's has 227 generate acute-care beds while Mary Immaculate has 189. Caritas Health Care and eight of its affiliates filed for Chapter 11 on February 6, 2009 (Bankr. E.D. N.Y., Lead Case No. 09-40901). Jeffrey W. Levitan, Esq., and Adam T. Berkowitz, Esq., at Proskauer Rose, LLP, represent the Debtors as counsel. JL Consulting LLC, is the Debtors' restructuring consultant. Montclair Partners, LLC is the financial advisor to the Debtors. Alson & Bird LLP represents the official committee of unsecured creditors as counsel. SilvermanAcampora LLP is the Committee's conflicts counsel. In its bankruptcy petition, Caritas listed assets of $50 million to $100 million, and debts of $100 million to $500 million. CENTENE CORPORATION: Moody's Affirms 'Ba3' Senior Unsecured Debt ---------------------------------------------------------------- Moody's Investors Service has affirmed the ratings of Centene Corporation senior unsecured debt at Ba3 and corporate family rating at Ba3. The outlook remains stable. Moody's said that Centene's ratings reflect the company's concentration in the Medicaid market, acquisitive nature, and relatively high financial leverage, offset by its multi-state presence, relatively stable financial profile, strong unregulated cash flows, and adequate capitalization level - NAIC consolidated risk-based capital of approximately 160% of company action level as of December 31, 2008. While the company's acquisitive nature could possibly increase business and operational risks, the rating agency noted that Centene's acquisition of Celtic Insurance Company in July 2008 positions the company to participate in the individual health insurance market if health care reform incorporates coverage mandates. Additionally, Moody's stated that Centene's ratings continue to reflect the unique risks associated with the managed care Medicaid segment. First, each of the state contracts is renewed on a periodic basis, and the loss of one of Centene's larger contracts would have a considerable impact on the revenues and earnings of the company. Second, the Medicaid business is very reliant on company reputation, and an operating problem in one state could jeopardize the Medicaid contracts in other states. Lastly, Moody's cited concerns with respect to the uncertainty surrounding the future level of reimbursements as states fall under budgetary and political pressures. On the positive side, the rating agency noted that recent legislation in Washington has provided increased federal funding for Medicaid. The rating agency stated that the ratings could be upgraded if NAIC RBC increases and is sustained above 180% of company action level, debt to capital falls below 40% (where debt includes operating leases), EBIT to interest expense exceeds 7x, and specialty segment earnings continue to be at least 20% of total earnings. However, if there is a loss or impairment of one or more of Centene's Medicaid contracts, EBIT to interest expense falls below 4x, debt to EBIT increases above 5x, or if the overall annual health benefits ratio increases above 86%, the ratings could be lowered. These ratings were affirmed with a stable outlook: * Centene Corporation -- senior unsecured debt rating of Ba3; corporate family rating of Ba3; * Managed Health Services Insurance Corp. -- insurance financial strength rating of Baa3; * Peach State Health Plan, Inc. -- insurance financial strength rating of Baa3; * Coordinated Care Corp. Indiana, Inc. -- insurance financial strength rating of Baa3; * Superior HealthPlan, Inc. -- insurance financial strength rating of Baa3. Centene Corporation is headquartered in St. Louis, Missouri. For the first three months of 2009 the company reported total revenue $936 million (including investment income) with managed care membership as of March 31, 2009 of approximately 1.34 million. As of March 31, 2009 the company reported shareholders' equity of approximately $550 million. Moody's most recent rating action on Centene was on March 8, 2007 when the ratings were assigned. Moody's insurance financial strength ratings are opinions about the ability of insurance companies to punctually pay senior policyholder claims and obligations. CENTRO NP: Moody's Downgrades Senior Unsec. Debt Rating to 'Caa2' ----------------------------------------------------------------- Moody's Investors Service has downgraded the senior unsecured debt ratings of Centro NP LLC (formerly New Plan Excel Realty Trust, Inc.) to Caa2, from Caa1. This concludes Moody's review. The outlook is negative reflecting Centro NP's liquidity constraints due to limited access to its revolving credit facility and the need to continually transfer assets out of Centro NP to its joint venture entity or sell assets to pay down debt, thus weakening its profile. These rating actions incorporate the completion of Centro NP's stabilization plan, but also take into account the upcoming refinancings given the decline in asset values, weakening prospects for cash flows, and more stringent lending environment. In addition, Centro NP's credit metrics have continued to weaken with fixed charge coverage of 2.0x at YE 2008 (vs. 2.2x at 3Q08) and net debt/EBITDA of 7.5x at YE 2008 (vs. 7.1x at 3Q08). Moody's notes that Centro NP is dependent upon asset sales or borrowings from the Residual Joint Venture Credit Facility (Residual Facility) or equity contributions from Super LLC funded through the Residual Facility to meet short and long term obligations. With the tender of its senior notes due September 2009, Centro has approximately $90 million remaining maturities in 2009. The Residual LLC is 51% owned by Super LLC and 49% owned by Centro NP. The Centro NP Credit Facility currently has $307 million outstanding, but may not be tapped anymore and the Residual Facility has approximately $100 million available ($370 million original amount). Although Moody's acknowledges that Centro NP has a defensive portfolio that may afford opportunities for asset sales or financing to pay off debt, such actions will continue to heighten leverage and secured debt and may not be feasible in the current economic environment. Centro NP is currently in compliance with its bond covenants. The maturity date of both the Super LLC bridge facility and the Centro NP line of credit are December 2010. Affirmation of the Caa2 rating with a stable outlook would be contingent upon Centro NP demonstrating adequate liquidity over a 24-month period and continued covenant compliance. A downgrade would most likely occur should Centro NP show a significant deterioration in cash from operations; an inability to execute on asset sales or encounter other difficulties in refinancing upcoming obligations or addressing liquidity needs; additional transfers of assets out of Centro NP; or noncompliance with bond covenants at the Centro NP level. The last rating action with respect to Centro NP was on December 17, 2008 when its ratings were affirmed at Caa1 with a continuation of the review for possible downgrade. These ratings were downgraded to Caa2, with a negative outlook: * Centro NP LLC -- Senior unsecured debt at Caa2, from Caa1; medium-term notes at Caa2, from Caa1. Centro NP LLC, headquartered in New York City, owns and operates community and neighborhood shopping centers. The company had assets of $4.2 billion and equity of $2.0 billion at December 31, 2008. Centro Properties Group, headquartered in Melbourne, Victoria, Australia, is an Australian Listed Property Trust that specializes in the ownership, management and development of retail shopping centers in Australia, New Zealand and the USA. The company has A$24 billion in assets under management. CHRYSLER LLC: DBRS Comments on Fiat Alliance and GM Europe Talks ---------------------------------------------------------------- Fiat S.p.A. and Chrysler LLC announced on April 30, 2009, that they have signed agreements to establish a global alliance (the Alliance). Dominion Bond Rating Service notes that the announcement of the Alliance coincided with Chrysler's filing for bankruptcy protection in the United States. DBRS notes that the Alliance in isolation has no immediate impact on the ratings of Fiat amid highly uncertain global market conditions and many other factors affecting the ratings. The main objectives of the Alliance are to increase the geographic and product diversities of both Fiat and Chrysler. The Alliance is to be formed through Chrysler's submitting a motion under Section 363 of the Bankruptcy Code requesting approval of the Alliance as well as the sale of Chrysler's principal assets to the new company (NewCo) being formed with Fiat. Fiat is to obtain an initial 20% equity interest in NewCo. Additional equity participants in NewCo include the Voluntary Employee Benefit Association (VEBA), which will be issued an equity interest of approximately 55%, as well as the U.S. Treasury and the Canadian government, which will collectively hold a 10% equity interest. DBRS notes that Fiat will be able to receive an additional 15% equity interest that can be obtained in three tranches of 5%. Each of these additional tranches remains subject to the achievement of the following established targets: (1) approval to build the Fully Integrated Robotised Engine (FIRE) engines in the United States; (2) achievement of sales of Chrysler vehicles outside of North America; and (3) regulatory approval to build a Chrysler model based on Fiat technology. Furthermore, Fiat will have the option to acquire a further 16% shareholding in Chrysler from the beginning of 2013 through June 30, 2016. DBRS notes that Fiat's shareholding in Chrysler will, however, be capped at 49%, subject to the repayment in full of the loans made to Chrysler by the U.S. Treasury. While there is no immediate rating impact, DBRS considers the Alliance to be modestly positive to the business profile of Fiat. The Alliance would appear to present an opportunity for the Company to re-enter the North American market, which remains among the most significant automotive markets despite an alarming decline in 2008 that is expected to persist through this year and possibly into 2010. DBRS notes that the North American market is likely to be more receptive to Fiat's product portfolio than in the past in light of the apparent shift in segmentation toward smaller vehicles. DBRS further notes that there are no firm commitments from Fiat to invest cash into the Alliance; this is critical as automotive original equipment manufacturers worldwide seek to preserve their liquidity positions to help them survive the current severe industry downturn. DBRS also notes that Fiat has entered into discussions regarding a possible merger between Fiat Group Automobiles, Chrysler and the European operations of General Motors Corporation (GM Europe). DBRS notes that, in the event that such a merger is executed, the resulting automotive concern (New Fiat) would be among the world's largest OEMs as combined sales in the range of six to seven million units would rank only behind Toyota Motor Corporation and roughly on par with Volkswagen AG. This would provide New Fiat with the requisite scale to compete more effectively on a global basis. DBRS notes that many details of the proposed merger remain to be addressed, including antitrust approvals. With respect to required financing, European countries where Fiat and GM Europe have plants are likely to be requested to provide guarantees in support of the debt of New Fiat. Furthermore, it is possible that Fiat Group Automobiles would be spun off from Fiat. As such, New Fiat would likely be a purely automotive concern. Unlike the acquisition of Chrysler in isolation, DBRS notes that the transactions resulting in New Fiat, if completed, could lead to rating actions. Any rating action would depend on many factors, including but not limited to the resulting business profiles, capital structures and the financial profiles of both New Fiat and Fiat. DBRS will monitor the progress of Fiat's actions regarding the expansion of its automotive activities and will provide commentaries or new rating actions when appropriate. CHRYSLER LLC: Proposes Interim Compensation Procedures ------------------------------------------------------ Chrysler LLC and its affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to approve a procedure for the payment of fees and expenses of their retained professionals. Pursuant to Section 331 of the Bankruptcy Code, all professionals are entitled to submit applications for interim compensation and reimbursement of expenses every 120 days, or more often if the court permits. In addition, Section 105(a) authorizes a court to issue any order "that is necessary or appropriate to carry out the provisions of [the Bankruptcy Code]," thereby codifying the bankruptcy court's inherent equitable powers. By this motion, the Debtors ask the Court to issue an order (a) establishing an orderly, regular process for the allowance and payment of compensation and reimbursement for attorneys and other professionals whose services are authorized by the Court pursuant to Sections 327 or 1103 of the Bankruptcy Code and who are required to file applications for allowance of compensation and reimbursement of expenses pursuant to Sections 330 and 331 and Rule 2016(a) Federal Rules of Bankruptcy Procedure; and (b) establishing a procedure for reimbursement of reasonable out-of- pocket expenses incurred by members of any statutory committees appointed in the Chapter 11 cases. The Debtors propose that the payment of fees and reimbursement of expenses of the Professionals be governed by these procedures: (a) On or before the 20th day of each month following the month for which compensation is sought, each Retained Professional seeking compensation pursuant to an order approving the Motion will serve a monthly statement on: (i) The Debtors, (ii) Jones Day, (iii) counsel to any appointed statutory committees, (iv) Peter Pantaleo, Esq. and David Eisenberg, Esq. Simpson Thacher & Bartlett LLP, (v) The Office of the United States Trustee for the Southern District of New York, and (vi) Cadwalader, Wickersham & Taft LLP (b) The Monthly Statement need not be filed with the Court and a courtesy copy need not be delivered to the presiding judge's chambers. (c) Each Monthly Statement must contain a list of the individuals and their titles who provided services during the statement period; billing rates; aggregate hours spent by each individual; a detailed breakdown of the disbursements incurred; and contemporaneously maintained time entries for each individual in increments of tenths of an hour. (d) Each Notice Party will have at least 15 days after its receipt of a Monthly Statement to review it and, if the Notice Party has an objection to the compensation or reimbursement sought, the Notice Party will serve upon the Retained Professional, a written "Notice of Objection to Fee Statement." (e) At the expiration of the 40-day period, the Debtors will promptly pay 80% of the fees and 100% of the expenses identified in each Monthly Statement to which no objection has been served. (f) If the Debtors receive an objection to a particular Monthly Statement, they will withhold payment of that portion of the Monthly Statement to which the objection is directed and promptly pay the remainder of the fees and disbursements in the percentages. (g) If the objecting parties and the Retained Professional are able to resolve their dispute following the service of a Notice of Objection, then the Debtors will promptly pay that portion of the Monthly Statement that is no longer subject to an objection. (h) All objections that are not resolved by the parties will be preserved and scheduled for hearing before the Court at the next interim or final fee application hearing. (i) Every 120 days, each Retained Professional will serve and file with the Court an application for interim or final Court approval and allowance of the compensation and reimbursement of expenses. (j) Any Retained Professional that fails to file an application seeking approval of compensation and expenses previously paid under the order approving the Motion when due will: (i) be ineligible to receive further monthly payments of fees or reimbursement of expenses until the Retained Professional files the delinquent fee application and an order of the Court authorizes the Debtors to resume monthly payments to the Retained Professional; and (ii) may be required to disgorge any fees paid since retention or the last fee application, whichever is later. (k) The pendency of an application or a Court order that payment of compensation or reimbursement of expenses was improper as to a particular Monthly Statement will not disqualify a Retained Professional from the future payment of compensation or reimbursement of expenses, unless otherwise ordered by the Court. (l) Counsel for any statutory committee may collect and submit statements of expenses, with supporting vouchers, from members of the committee he or she represents; provided, however, that the committee counsel ensures that these reimbursements comply with the Court's Administrative Orders dated June 24, 1991 and April 21, 1995. The Debtors propose that each Retained Professional whose retention has been approved by the Court as of the Petition Date may seek, in its first Monthly Statement, compensation for work performed and reimbursement for expenses incurred during the period beginning on the Petition Date and ending on May 31, 2009. The first interim fee application for the Retained Professionals will seek compensation and reimbursement of expenses for the period from the Petition Date through August 31, 2009. All Retained Professionals not retained as of the Petition Date will file their first Monthly Statement for the period from the effective date of the retention through the end of the first full month following the effective date of their retention, and otherwise in accordance with the procedures in the Motion. Corinne Ball, Esq., at Jones Day, in New York, tells the Court that the proposed procedures will enable the Debtors to closely monitor the costs of administration, maintain level cash flow and implement efficient cash management procedures. Moreover, the procedures also will allow the Court and the key parties in interest to insure the reasonableness and necessity of the compensation and reimbursement sought pursuant to the procedures. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- manufactures 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. In 2007, Cerberus Capital Management LP acquired an 80.1% stake in Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Pursuant to the U.S. Government's Automotive Industry Financing Program, the U.S. Department of the Treasury made emergency loans to General Motors Corp., Chrysler Holding LLC, and Chrysler Financial Services Americas LLC. The Treasury purchased senior preferred stock from GMAC LLC. In exchange, Chrysler and GM submitted restructuring plans to the Treasury on February 17, 2009. Upon submission, President Obama's Designee on the Auto Industry determined that the restructuring plans did not meet the threshold for long-term viability. However, on March 30, 2009, both GM and Chrysler were granted extensions to complete the restructuring plans to comply with the requirements set forth under the Automotive Industry Financing Program. The U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Motion to Deem Utilities Adequately Assured --------------------------------------------------------- Pursuant to Section 366(a) of the Bankruptcy Code, Chrysler LLC and its affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for an interim order: (a) prohibiting third-party utility companies currently providing utility services, or that will provide services, to the Debtors from altering, refusing or discontinuing services to the Debtors on account of the filing of the Chapter 11 cases or on account of unpaid prepetition invoices, pending entry of a final order granting the relief sought; (b) determining that the Utility Companies have received adequate assurance of payment for future utility services on the terms provided in the request, pending entry of the Final Order; (c) establishing certain procedures for determining requests for additional assurance for most of the Utility Companies; (d) permitting the Utility Companies subject to the procedures to opt out of the procedures established in the request; and (e) scheduling a final hearing on the request within 30 days of the Petition Date. The Debtors also seek the entry of a Final Order granting the requested relief on a permanent basis. The Debtors currently use electric, natural gas, heat, water, sewer and other similar services pursuant to hundreds of separate accounts provided by 62 different Utility Companies. The Debtors estimate that their average monthly obligations to the Utility Companies on account of services rendered postpetition will total approximately $16.1 million prior to and pending the anticipated transfer of the Debtors' operating assets pursuant to the sale transaction with Fiat S.p.A. or similar other sale transaction. A full-text copy of the list of the Utility Companies is available for free at: http://bankrupt.com/misc/Chrysler_List_Utility_Companies.pdf Corinne Ball, Esq., at Jones Day, in New York, proposed counsel to the Debtors, asserts that uninterrupted utility service is necessary for the Debtors to preserve and maintain their assets pending consummation of the Sale Transaction. She notes that as a leading global automobile manufacturer, temporary or permanent discontinuation of utility services could irreparably disrupt the Debtors' ability to maintain the facilities in a safe and prudent manner and, as a result, fundamentally undermine the Debtors' ability to maximize value for stakeholders and achieve their restructuring goals. The Debtors intend to pay their postpetition obligations to the Utility Companies in a timely manner through cash reserves as of the Petition Date and from anticipated access to a new debtor in possession financing facility, Ms. Ball assures Judge Gonzalez. Adequate Assurance Deposit The Debtors propose to deposit, as adequate assurance under Section 366(c)(2), $5,991,487 into a newly created, segregated, interest bearing escrow account by May 20, 2009. The Adequate Assurance Deposit equals approximately two weeks of the Debtors' estimated aggregate postpetition utility expenses, excluding utility expenses subject to a certain "Daimler Guarantee," pursuant to which Daimler North America Corporation unconditionally and irrevocably guaranteed to DTE Energy Center LLC, as primary obligor and not merely as surety, the prompt and complete performance by Debtor Utility Assets LLC of all its obligations under certain utility service agreements. DNAC is formerly known as DaimlerChrysler North America Holding Corporation. The Debtors submit that the Adequate Assurance Deposit, in conjunction with the Debtors' ability to pay for future utility services in the ordinary course of business constitutes sufficient adequate assurance of future payment to the Utility Companies that are not subject to the Daimler Guarantee to satisfy the requirements of Section 366. Nonetheless, if any Utility Company believes additional assurance is required, they may request that assurance pursuant to the Debtors' proposed procedures. Adequate Assurance Procedures To address the right of any Utility Company under Section 366(c)(2) to seek additional adequate assurance satisfactory to it, the Debtors propose that these procedures be adopted: -- Any Utility Company desiring assurance of future payment for utility service beyond the Proposed Adequate Assurance must serve an additional assurance request no later than May 30, 2009; -- Any Additional Assurance Request must specify the amount and nature of assurance of payment that would be satisfactory to the Utility Company and must, among other things, explain why the requesting Utility Company believes the Proposed Adequate Assurance is not sufficient adequate assurance as future payment; -- Upon the Debtors' receipt of an Additional Assurance Request, the Debtors will have the greater of (i) 20 days from the receipt of an Additional Assurance Request, or (ii) 40 days from the Petition Date to negotiate with the requesting Utility Company to resolve its Additional Assurance Request; -- The Debtors, in their discretion, may resolve any Additional Assurance Request by mutual agreement with the requesting Utility Company and without further Court order, and may, in connection with any resolution, provide the requesting Utility Company with additional assurance of future payment in a form satisfactory to the Utility Company; -- If the Debtors determine that an Additional Assurance Request is not reasonable, and the parties are not able to resolve that request during the Resolution Period, the Debtors will request a hearing before the Court to determine the adequacy of assurances of payment made to the requesting Utility Company; -- Pending the resolution of the Additional Assurance Request at a Determination Hearing, the Utility Company making the request will be restrained from discontinuing, altering or refusing service to the Debtors on account of unpaid charges for prepetition services or on account of any objections to the Proposed Adequate Assurance; and -- Other than through the Debtors' proposed "Opt-Out Procedures," any Utility Company that does not comply with the Adequate Assurance Procedures is deemed to find the Proposed Adequate Assurance satisfactory to it and is prohibited from discontinuing, altering or refusing service on account of any unpaid prepetition charges, or requiring additional assurance of payment. The Interim Order will be deemed the Final Order with respect to all Utility Companies that do not timely file and serve an objection on the proposed adequate assurance procedures. Daimler Guarantee Ms. Ball relates that DCNAC was not released of its Daimler Guarantee when Daimler sold its controlling interest in the Chrysler Companies to affiliates of Cerberus Capital Management LC. In conjunction with that transaction, however, Chrysler agreed to reimburse DCNAC for any payment made by DCNAC pursuant to the Daimler Guarantee. To secure Chrysler's reimbursement obligations, Chrysler deposited funds into certain accounts at JPMorgan Chase Bank and granted a security interest in the account to DCNAC. Although the Daimler Guarantee to DTE remains outstanding, Chrysler must maintain funds in the accounts equal to the Daimler Guarantee and other credit support documents. As of December 1, 2008, the amount required to be maintained in the account equaled $302 million, of which $250 million was earmarked for the Daimler Guarantee. The Debtors submit that DCNAC's Daimler Guarantee and the Utility Security Interest constitutes sufficient adequate assurance of future payment to DTE in accordance with the Utility Service Agreements for these manufacturing plants, and thus, satisfies the requirements of Section 366: * Indiana Transmission, Plant 1 (Kokomo); * Indiana Transmission, Plant 2 (Kokomo); * Mack Avenue Engine, Plant 1; * Mack A venue Engine, Plant 2; * Sterling Heights, Assembly Plant; * Sterling Heights, Stamping Plant; * Toledo North Assembly Plant; and * Warren Truck Assembly Plant. The Debtors propose that DTE will be deemed to have adequate assurance for the locations for which there are Utility Service Agreements on an interim basis until the Final Hearing. If DTE disagrees that the Daimler Guarantee and the Utility Security Interest constitute adequate assurance within the meaning of Section 366, the Debtors propose that DTE be required to file a written objection at least eight days prior to the Final Hearing and that the issue be heard and determined at the Final Hearing. If, in the course of the bankruptcy cases, DCNAC is released of the Daimler Guarantee, the Debtors will increase the Adequate Assurance Deposit by an amount equal to two weeks of the Debtors' estimated utility obligations to DTE for utility services to the manufacturing facilities, which amount may be modified as necessary. Opt-Out Procedures Under the Adequate Assurance Procedures, the Debtors may seek a determination of appropriate adequate assurance at a Determination Hearing held more than 30 days after the Petition Date without providing interim assurances deemed "satisfactory" to the Utility Company. If any Utility Companies wish to opt out of the Adequate Assurance Procedures, the Debtors submit that the Court should schedule a hearing and issue a ruling on the amount of adequate assurance to be provided to the Utility Companies within 30 days of the Petition Date. The Debtors propose certain opt out procedures, pursuant to which a Utility Company that desires to opt-out of the Adequate Assurance Procedures must file an objection with the Court within 11 days of entry of the Interim Order identifying and explaining the basis of the Utility Company's proposed adequate assurance requirement under Section 366(c)(2). The Debtors, in their discretion, may resolve any Procedures Objection by mutual agreement with the objecting Utility Company and without further Court order, and may provide a Utility Company with assurance of future payment. If the Debtors determine that a Procedures Objection is not reasonable and are not able to reach a prompt alternative resolution with the objecting Utility Company, the Procedures Objection will be heard at the Final Hearing. It is possible that, despite the Debtors' efforts, certain Utility Companies have not yet been identified by the Debtors or included on the Utility Service List, Ms. Ball tells Judge Gonzalez. Thus, she says, promptly upon the discovery of an Additional Utility Company, the Debtors will increase the Adequate Assurance Deposit by an amount equal to approximately two weeks of the Debtors' estimated aggregate postpetition utility expense for each Additional Utility Company and will file with the Court a supplement to the Utility Service List incorporating the new information. Upon the consummation of the Sale Transaction that results in the discontinuation of or decreased level of utility services to the Debtors, the Debtors seek the Court's authority to reduce the Adequate Assurance Deposit to an amount equal to approximately two weeks of the Debtors' estimated aggregate utility expense based on their anticipated decreased level of utility service. BP Canada Objects BP Canada Energy Marketing Corp. relates that the Debtors seek to compel it to continue to provide natural gas to the Debtors' facilities under its Base Contract for Sale and Purchase of Natural Gas, dated July 1, 2003, with the Debtors by deeming BP Canada a utility. James S. Carr, Esq., at Kelley Drye & Warren LLP, in New York, contends that the Debtors' requested relief should not and cannot be granted because it is inappropriate for the Debtors to seek -- by way of a utility order or otherwise -- an injunction prohibiting BP Canada from exercising its right to terminate the Base Contract. He argues that Section 556 of the Bankruptcy Code expressly prohibits any injunction that seeks to compel BP Canada to sell natural gas to the Debtors because the Base Contract is a forward contract. Section 556 of the Bankruptcy Code provides, among other things, that neither the automatic stay nor an "order of a court in any proceeding under this title," which includes the injunctive relief sought in the Utility Motion, applies to contracts between a debtor and a forward contract merchant under a forward contract, Mr. Carr points out. BP Canada is not a utility subject to Section 366, which section is not intended to create rights for debtors against entities that do not operate as monopolies, Mr. Carr tells Judge Gonzalez. He explains that BP Canada is merely a marketer of natural gas and the Debtors can obtain natural gas from other marketers. Hence, he notes, BP Canada is not a monopoly. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- manufactures 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. In 2007, Cerberus Capital Management LP acquired an 80.1% stake in Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Pursuant to the U.S. Government's Automotive Industry Financing Program, the U.S. Department of the Treasury made emergency loans to General Motors Corp., Chrysler Holding LLC, and Chrysler Financial Services Americas LLC. The Treasury purchased senior preferred stock from GMAC LLC. In exchange, Chrysler and GM submitted restructuring plans to the Treasury on February 17, 2009. Upon submission, President Obama's Designee on the Auto Industry determined that the restructuring plans did not meet the threshold for long-term viability. However, on March 30, 2009, both GM and Chrysler were granted extensions to complete the restructuring plans to comply with the requirements set forth under the Automotive Industry Financing Program. The U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler has reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler's says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CITIGROUP INC: Among 10 Banks Needing More Capital in Stress Test ----------------------------------------------------------------- The results of a comprehensive, forward-looking assessment of the financial conditions of the nation's 19 largest bank holding companies (BHCs) by the federal bank supervisory agencies were officially released on Thursday, May 7. The exercise -- conducted by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation -- was conducted so that supervisors could determine the capital buffers sufficient for the 19 BHCs to withstand losses and sustain lending -- even if the economic downturn is more severe than is currently anticipated. In a detailed summary of the results of the Supervisory Capital Assessment Program (SCAP), the supervisors identified the potential losses, resources available to absorb losses, and resulting capital buffer needed for the 19 participating BHCs. The SCAP is a complement to the Treasury's Capital Assistance Program (CAP), which makes capital available to financial institutions as a bridge to private capital in the future. According to the stress test results, after taking account of losses, revenues and reserve build requirements, in the aggregate, the BHCs need to add $185 billion to capital buffers to reach the target SCAP capital buffer at the end of 2010 under the more adverse scenario. With respect to this estimate: -- the $185 billion accrues to 10 of the 19 firms, meaning 9 of the 19 firms already have capital buffers sufficient to get through the adverse scenario in excess of 6 percent Tier 1 capital and 4 percent Tier 1 Common capital. -- the vast majority of this $185 billion comes from a shortfall in Tier 1 Common capital in the more adverse scenario, with virtually no shortfall in overall Tier 1 capital. This result means that while nearly all the firms have sufficient Tier 1 capital to absorb the unusually high losses of the more adverse scenario and still end 2010 with a Tier 1 risk-based ratio in excess of 6%, 10 of these firms had capital structures that are too strongly tilted toward capital other than common equity. Thus, each of the 10 firms needing to augment their capital as a result of this exercise must do so by increasing their Tier 1 Common capital. Including the capital actions made by banks and their first quarter 2009 annual results, the 10 BHCs will only need to raise a combined $74.6 billion in capital. ($ in billions) Required Capital Buffer ------------------ After Capital Actions & 2009 & 2010 As of After Q1 Bank Loss Estimates 12/31/08 Results ---- -------------- -------- ------- Citigroup Inc. $104.7 $92.6 $5.5 Bank of America Corporation 136.6 46.5 33.9 Wells Fargo & Company 86.1 17.3 13.7 Morgan Stanley 19.7 8.3 1.8 GMAC LLC 9.2 6.7 11.5 SunTrust Banks Inc. 11.8 3.4 2.2 Regions Financial Corp 9.2 2.9 2.5 Fifth Third Bancorp 9.1 2.6 1.1 KeyCorp 6.7 2.5 1.8 PNC Financial Services Group Inc 18.8 2.3 0.6 American Express Company 11.2 0.0 0.0 BB&T Corporation 8.7 0.0 0.0 The Bank of New York Mellon 5.4 0.0 0.0 Capital One Financial Corp 13.4 0.0 0.0 The Goldman Sachs Group Inc 17.8 0.0 0.0 JPMorgan Chase & Co. 97.4 0.0 0.0 MetLife Inc. 9.6 0.0 0.0 State Street Corporation 8.2 0.0 0.0 U.S. Bancorp 15.7 0.0 0.0 ------ ------ ------ $599.2 $185.0 $74.6 A copy of the Stress Test results is available for free at: http://bankrupt.com/misc/May09-StressTest.pdf According to Federal Reserve Chairman Ben S. Bernanke, the 19 banks covered by the "stress tests" play a vital role in our economy, holding among them two-thirds of the assets and more than one-half of the loans in the U.S. banking system. Not Tests of Solvency With respect to the stress tests, Mr. Bernanke clarified, "These examinations were not tests of solvency; we knew already that all these institutions meet regulatory capital standards. Rather, the assessment program was a forward-looking, "what-if" exercise intended to help supervisors gauge the extent of the additional capital buffer necessary to keep these institutions strongly capitalized and lending, even if the economy performs worse than expected between now and the end of next year." "The results released [May 7] should provide considerable comfort to investors and the public," Mr. Bernanke said. He noted that the examiners found that nearly all the banks that were evaluated have enough Tier 1 capital to absorb the higher losses envisioned under the hypothetical adverse scenario. Roughly half the firms, though, need to enhance their capital structure to put greater emphasis on common equity, which provides institutions the best protection during periods of stress. Many of the institutions have already taken actions to bolster their capital buffers and are well-positioned to raise capital from private sources over the next six months. "However, our government, through the Treasury Department, stands ready to provide whatever additional capital may be necessary to ensure that our banking system is able to navigate a challenging economic downturn." The estimates reported by the Federal Reserve represent values for a hypothetical 'what-if' scenario and are not forecasts of expected losses or revenues for the firms, a joint press release by the Federal Reserve, the U.S. Treasury and the FDIC also clarified. Nov. 9 Deadline for Capital Plan According to the joint release, any U.S. bank holding company (BHC) needing to augment its capital buffer at the conclusion of the SCAP will have until June 8th, 2009 to develop a detailed capital plan, and until November 9th, 2009 to implement that capital plan Over the next 30 days, any BHC needing to augment its capital buffer will develop a detailed capital plan to be approved by its primary supervisor, in consultation with the FDIC, and will have six months to implement that plan. In light of the potential for new commitments under the Capital Assistance Program or exchanges of existing CPP preferred stock, supervisors will consult with Treasury on the development and evaluation of the plans. The capital plan will consist of three main elements: * A detailed description of the specific actions to be taken to increase the level of capital and/or to enhance the quality of capital consistent with establishing the SCAP buffer. BHCs are encouraged to design capital plans that, wherever possible, actively seek to raise new capital from private sources. These plans should include actions such as: -- Issuance of new private capital instruments; -- Restructuring current capital instruments; -- Sales of business lines, legal entities, assets or minority interests through private transactions and through sales to the PPIP; -- Use of joint ventures, spin-offs, or other capital enhancing transactions; and -- Conservation of internal capital generation, including continued restrictions on dividends and stock repurchases and dividend deferrals, waivers and suspensions on preferred securities including trust preferred securities, with the expectation that plans should not rely on near-term potential increases in revenues to meet the capital buffer it is expected to have. * A list of steps to address weaknesses, where appropriate, in the BHC's internal processes for assessing capital needs and engaging in effective capital planning. * An outline of the steps the firm will take over time to repay government provided capital taken under the Capital Purchase Program (CPP), Targeted Investment Program (TIP), or the CAP, and reduce reliance on guaranteed debt issued under the TLGP. In addition, as part of the 30-day planning process, firms will need to review their existing management and Board in order to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment and maintain balance sheet capacity sufficient to continue prudent lending to meet the credit needs of the economy A copy of the joint release is available for free at: http://www.federalreserve.gov/newsevents/press/bcreg/20090506a.htm Comments to Stress-Test Results According to NewsBlaze, Scott Talbott, vice president of the Financial Services Roundtable, a Washington-based association representing the biggest U.S. financial companies, the $75 billion is not a huge sum for the 10 banks to raise. He said, the report relates, that nine of the 10 can do so through private means such as stock conversions or selling assets. Only GMAC, the auto finance company linked to General Motors, faces the prospect of seeking further government relief funds, he said. Louise Story and Eric Dash at The New York Times said, "Broadly speaking, the test results suggested that the banking industry was in better shape than many had feared." The two noted that the $75 billion in equity capital needed by 10 banks is "far less than many had forecast." The hypothetical scenarios created by bank examiners assume the unemployment rate would hit 10.3% and house prices would fall more than 22%. That scenario is worse than the current state of the economy, in which the jobless rate is below 9%, NewsBlaze said. In addition, the examiners assume in a worst-case scenario that 9% of all loans might sour -- a figure that is even higher than it was during the Great Depression, NYT said. According to Reuters, citing the Wall Street Journal, the government made concessions to banks that pushed back against its conclusions in its stress tests. The $13.7 billion projected capital shortfall for Wells Fargo -- from $17.3 billion -- came about after two weeks of bargaining, The Journal said. In addition, beyond the concessions, Financial Times, according to Reuters, reported that the U.S. government has assured the banks that they will be allowed to raise less than the $74.6 billion in equity mandated if earnings over the next six months beat regulators' forecasts. According to MarketWatch, Ken Lewis, chief executive of Bank of America Corp., on Friday called the government's stress-test results "pretty aggressive" but said the financial-services giant will comply and raise the required $33.9 billion. Asked about the health of his firm, Mr. Lewis said mortgage-lending arm Countrywide is "on fire, in a positive sense," right now, and added that "business is good" at Merrill Lynch. The Washington Post said U.S. stocks rose last week, erasing the year-to-date loss in the Standard & Poor's 500-stock index, as results from the government's "stress tests" of major banks reassured investors and the Labor Department said the pace of job cuts slowed in April. Bank of America and Citigroup, the Post relates, helped drive financial stocks in the S&P 500 to a 23% percent gain as the government said only one of the 19 large banks that were reviewed was likely to need additional taxpayer aid. CITIZENS REPUBLIC: Moody's Cuts Preferred Stock Rating to 'Ba1' --------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Citizens Republic Bancorp, Inc. (issuer rating to Baa3/Prime-3 from A3/Prime-2) and its subsidiaries, including its lead bank, Citizens Bank, Michigan (bank financial strength to C- from C+, deposits to Baa2/Prime-2 from A2/Prime-1). Following the downgrade, the outlook on Citizens and its subsidiaries is negative. This rating action concludes the review for possible downgrade that began on March 12, 2009. The downgrade reflects Moody's view that Citizens' credit profile has weakened as a result of deterioration in the firm's profitability. Citizens' core profitability metrics, which have historically lagged those of similarly-rated peers, weakened considerably in the first quarter of 2009 as a result of margin compression and higher credit-related expenses. Moody's view that Citizens' core profitability will continue to be pressured in the near- to medium-term resulted in a more severe downgrade than originally anticipated when it put the firm's ratings under review. Moreover, Moody's loss expectations for Citizens' commercial real estate exposure have increased. As a result, the rating agency believes that credit costs stemming from this portfolio will remain elevated in the near- to medium-term. Additionally, given the weak economic outlook for Michigan, where Citizens is concentrated, it is likely that Citizens' other loan portfolios, such as its C&I and indirect consumer books, will come under pressure. Therefore, in Moody's view, the resulting credit costs will exceed Citizens' core profitability for an extended period, thereby weakening its capital ratios. Additionally, the downgrade reflects Moody's concern that a prolonged period of reporting poor results could have negative implications for Citizens' franchise. However, as a result of actions taken by the company in 2008 to improve its capital position, including a dividend cut, a capital raise, and the sale of TARP preferred stock to the U.S. Treasury, Moody's believes that although Citizens' capital position is likely to significantly deteriorate from current levels, it should be sufficient to absorb anticipated credit costs. The negative outlook reflects the potential impact that a more severe downturn could have on Citizens' ability to absorb higher credit costs while maintaining a capital position commensurate with its current ratings. Moody's last rating action on Citizens was on March 12, 2009 when Moody's placed the ratings under review for possible downgrade. The rating action concluded that review and is consistent with Moody's February 2009 announcement that it is placing greater relative importance on certain rating factors within it current bank rating methodologies. Capital adequacy, in particular, has taken on greater importance in determining ratings in the current environment. Citizens Republic Bancorp, Inc. is headquartered in Flint, Michigan and reported assets of $13.0 billion at March 31, 2009. Downgrades: Issuer: Citizens Bank, Michigan -- Bank Financial Strength Rating, Downgraded to C- from C+ -- Issuer Rating, Downgraded to Baa2 from A2 -- OSO Rating, Downgraded to P-2 from P-1 -- Deposit Rating, Downgraded to P-2 from P-1 -- OSO Senior Unsecured OSO Rating, Downgraded to Baa2 from A2 -- Senior Unsecured Deposit Rating, Downgraded to Baa2 from A2 Issuer: Citizens Funding Trust I -- Preferred Stock Preferred Stock, Downgraded to Ba1 from Baa1 Issuer: Citizens Republic Bancorp, Inc. -- Issuer Rating, Downgraded to a range of Baa3 to P-3 from a range of A3 to P-2 -- Subordinate Regular Bond/Debenture, Downgraded to Ba1 from Baa1 Outlook Actions: Issuer: Citizens Bank, Michigan -- Outlook, Changed To Negative From Rating Under Review Issuer: Citizens Funding Trust I -- Outlook, Changed To Negative From Rating Under Review Issuer: Citizens Republic Bancorp, Inc. -- Outlook, Changed To Negative From Rating Under Review CLARK'S LTD: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------- Wichita Eagle Blogs states that Clark's Ltd. has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Kansas. According to court document, Clark's listed $1,590,894 in assets and $1,037,437 in liabilities. Wichita Eagle Blogs quoted Clark's owner Gary Clark as saying, "For us to survive in a downturn economy we've had to reorganize our payments to pay our vendors in a fashion that is doable. That's the purpose of reorganization." According to Wichita Eagle Blogs, Mr. Clark said that his problems started a year and a half ago when gas prices went over $2. Wichita Eagle Blogs relate that Legacy Bank filed in April 2009 a lawsuit to foreclose on Clark's. Wichita, Kansas-based Clark's Ltd., dba Clark's Fine Jewelry and Clark Jewelers, opened in 1946. The Company filed for Chapter 11 bankruptcy protection on May 6, 2009 (Bankr. D. Kan. Case No. 09- 11344). Edward J. Nazar, Esq., who has an office in Wichita, Kansas, assists the Company in its restructuring efforts. The Company listed $1,590,894 in assets and $1,037,437 in debts. COACHMEN INDUSTRIES: Posts $6.1MM Q1 Loss on Continuing Operations ------------------------------------------------------------------ Coachmen Industries filed its quarterly report on Form 10-Q for the three months ended March 31, 2009. Coachmen Industries reported net loss from continuing operations for the quarter ended March 31, 2009, of $6.1 million compared to net income from continuing operations of $1.3 million for 2008. Net income for the quarter ended March 31, 2009, was $8.3 million compared to net income of $1.3 million for 2008. Coachmen Industries generally relies on funds from operations as its primary source of working capital and liquidity. Previously, the Company had maintained a $55.0 million line of credit to meet its seasonal working capital needs. At December 31, 2008 this bank line of credit had been fully paid and was terminated except for outstanding letters of credit totaling $6.8 million as of March 31, 2009 that were fully backed by cash collateral. The Company has also borrowed against the cash surrender value of the Company's investment in life insurance contracts. As of March 31, 2009 and December 31, 2008, $48.9 million and $47.0 million, respectively, had been borrowed against the cash surrender value of Company-owned life insurance contracts. As of March 31, 2009, the cash surrender value of life insurance is approximately $51.5 million, with $48.9 million borrowed, resulting in a cash surrender value net of loans of $2.6 million. At March 31, 2009, working capital decreased to $2.0 million from $4.7 million at December 31, 2008. The $14.0 million decrease in current assets at March 31, 2009 versus December 31, 2008 was primarily due to the decrease in cash and cash equivalents of $13.3 million. The $11.3 million decrease in current liabilities at March 31, 2009 versus December 31, 2008 was primarily due to a decrease in accounts payable of $2.8 million, decreases in accrued expenses and other liabilities of $7.7 million, and a net decrease in short-term borrowings of $800,000. On February 26, 2009, Coachmen Industries entered into an agreement with Forest River, Inc. with respect to certain financial obligations under the Asset Purchase Agreement of November 20, 2008 between the Company and Forest River. Forest River agreed to accept a fully collateralized short-term note from the Company. As of March 2, 2009, the outstanding balance on the note was $2.3 million. The note was paid in full on March 23, 2009. On March 23, 2009, Coachmen Industries and one of the Company's directors entered into an agreement for a $2.3 million short-term note from the Company in exchange for cash. The note is collateralized by several properties, bears interest at a rate of 10% per annum and may be called by the note holder on or after April 20, 2009. On April 9, 2009, Coachmen Industries and Lake City Bank entered into an agreement for a $2 million three-year note from the Company in exchange for cash loaned to the Company by Lake City Bank. The note is fully collateralized by certain properties, bears interest at the rate of 6.250% per annum, and has a maturity date of April 9, 2012. On April 9, 2009, Coachmen Industries gave a promissory note to Lake City Bank in connection with the bank's provision of a $0.5 million working capital line of credit. The note is fully collateralized by certain properties, and borrowings against this line will bear interest at a variable rate, with a minimum interest rate of 5% per annum. This line of credit has a maturity date of March 31, 2012. In February 2009 the Company received a favorable verdict against Crane Composites, Inc. f/k/a Kemlite for breach of contract and multiple warranty claims arising from the sale of defective sidewall material to Coachmen Industries, Inc. subsidiaries. All of the counts alleged in the original complaint were found in favor of the Company. On April 17, 2009, the Company entered into a settlement agreement with Crane Composites, Inc., f/k/a Kemlite, with respect to this verdict rendered in favor of the Company and its subsidiaries, on the liability portion of this lawsuit. Pursuant to the terms of the settlement, Crane Composites will pay the Company a total of $17.75 million in three installments, with the first installment of $10 million due on or before May 8, 2009, the second installment of $3.875 million due on or before June 1, 2009 and the final installment of $3.875 million due on or before July 1, 2009. Upon full and complete payment of these amounts, the litigation currently pending against Crane Composites will be dismissed by the Company with prejudice. The settlement with Crane Composites, Inc. resulted in income of $14.7 million net of contingent attorney fees and taxes. The parent Company acquired the claims that were subject to the settlement for fair value from its RV Group subsidiaries during the fourth quarter of 2008, prior to trial. Because the settlement is related to damages originally incurred by the recreational vehicle business, accounting rules required the Company to record this income under discontinued operations, even though the settlement is owned by the parent Company and not the RV Group. As of March 31, 2009, the Company had $104.5 million in total assets and $43.4 million in total liabilities. On April 30, 2009, Coachmen Industries held its Annual Shareholder's Meeting at the Company's headquarters in Elkhart, Indiana. During the meeting, John A. Goebel and Donald W. Hudler were both re-elected by shareholders to serve three-year terms on the Company's board, which will expire in 2012. Mr. Hudler was first elected to the Company's board in 1999, while Mr. Goebel was first elected in 2006. Additionally, the proposal to amend the Company's Articles of Incorporation to authorize the issuance of up to 10,000,000 shares of preferred stock was defeated by shareholders. A full-text copy of the Company's first quarter 2009 report is available at no charge at http://ResearchArchives.com/t/s?3caa NYSE Delisting New York Stock Exchange LLC has notified the Securities and Exchange Commission of its intention to remove the entire class of Common Stock of Coachmen Industries from listing and registration on the Exchange at the opening of business on May 11, 2009, pursuant to the provisions of Rule 12d2-2 (b), because, in the opinion of the Exchange, the Common Stock is no longer suitable for continued listing and trading on the Exchange. The decision to suspend the Company's common stock was reached in view of the fact that the Company has fallen below NYSE continued listing standard regarding average global market capitalization over a consecutive 30 trading day period of not less than $15 million. This $15 million level is temporarily in effect. The Company had previously fallen below the NYSE's continued listing standard for average global market capitalization over a consecutive 30 trading day period of less than $75 million and latest reported shareholders' equity of less than $75 million. The Company was in the process of submitting business plan materials, however, in light of the subsequent non-compliance with the minimum market capitalization standard; this plan process is no longer available. About Coachmen Industries Coachmen Industries, Inc., is one of America's premier systems- built construction companies under the ALL AMERICAN HOMES(R) and MOD-U-KRAF(R) brands, as well as a manufacturer of specialty vehicles. Coachmen Industries, Inc. is a publicly held company with stock listed on the New York Stock Exchange (NYSE) under the ticker COA. * * * In March 2009, Coachmen's independent public accounting firm -- Ernst & Young LLP -- said despite the Company's sale of the assets related to its RV Segment, the Company's recurring net losses and lack of current liquidity raise substantial doubt about its ability to continue as a going concern. Coachmen said its ability to continue as a going concern is highly dependent upon its ability to obtain financing or other sources of capital. Coachmen temporarily closed a plant in Rutherfordton, North Carolina early in March. The Company plans to reopen the facility when the market recovers and demand is sufficient. "[T]iming depends on market conditions," the Company said. COALT PROPERTIES: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Coalt Properties & Investments Inc. 215 Slade Lane Longwood, FL 32750 Bankruptcy Case No.: 09-06246 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court Middle District of Florida (Orlando) Judge: Arthur B. Briskman Debtor's Counsel: Patricia K. Herman, Esq. 1631 Rock Springs Rd #305 Apopka, FL 32712-2229 Tel: (407) 688-8082 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of 20 largest unsecured creditors when it filed its petition. The petition was signed by Michael J. Coates, president of the Company. COHR HOLDINGS: High Liquidity Concerns Cue S&P's to Junk Rating --------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its corporate credit rating on Cohr Holdings Inc. (d/b/a Masterplan Inc.) to 'CCC+' from 'B-'. At the same time, S&P lowered the rating on the company's senior secured first-lien credit facilities to 'CCC+' from 'B-'. The outlook is negative. "The action reflects our heightened concern regarding the company's liquidity profile, as well as its highly leveraged financial risk profile," said Standard & Poor's credit analyst Alain Pelanne. The company's very concentrated customer base and uncertain business prospects are additional factors. "Recent cash burn, while mainly due to one-time items, has exceeded our expectations," added Mr. Pelanne, "and the company's liquidity will be a key rating factor in the near term." COMMERCIAL CAPITAL: CCI Taps Otten Johnson as Litigation Counsel ---------------------------------------------------------------- CCI Funding I, LLC, a debtor-affiliate of Commercial Capital, Inc., asks the U.S. Bankruptcy Court for the District of Colorado for permission to employ Otten, Johnson, Robinson, Neff & Ragonetti, P.C., as its general litigation counsel. Otten Johnson assists CCI Funding to assess and evaluate issues relating to CCI Funding's relationship to its primary secured creditor and, under appropriate circumstances, represent CCI Funding in any litigation relating thereto. Darrell G. Waas, director and shareholder of Otten Johnson, tells the Court that the firm received a $20,000 retainer. A portion of the retainer was expended on prepetition services and costs. The balance of the retainer was kept in a Coltaf account. The firm claims an attorneys' lien in the retained funds for services provided and approved by the Court postpetition. Mr. Waas adds that his hourly rate is $395 while the rates of other personnel are: David T. Brennan $360 Bill E. Kyriagis $190 Mr. Waas assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Waas can be reached at: Otten, Johnson, Robinson, Neff & Ragonetti, P.C. 950 17th Street, Suite 1600 Denver, CO 80202, About Commercial Capital, Inc. Greenwood Village, Colorado-based Commercial Capital, Inc. -- http://www.commercialcapitalinc.com/-- and its affiliate, CCI Funding I, LLC, are commercial real estate lenders and investment partners engaging in short-term commercial mortgage. Commercial Capital and CCI Funding filed for separate Chapter 11 on April 22, and April 27, 2009, (Bankr. D. Colo. Case No. 09-17238 and Bankr. D. Colo. Case No. 09-17437). Robert Padjen, Esq., at Laufer and Padjen LLC assists Commercial Capital in its restructuring efforts. The Debtors each listed $100 million to $500 million in assets. Commercial Capital listed $50 million to $100 million in debts, wile CCI Funding listed $100 million to $500 million in liabilities. COMMERCIAL CAPITAL: CCI Taps Weinman as Bankruptcy Counsel ---------------------------------------------------------- CCI Funding I, LLC, a debtor-affiliate of Commercial Capital, Inc., asks the U.S. Bankruptcy Court for the District of Colorado for authority to employ Weinman & Associates, P.C. Weinman & Associates will represent the Debtors in matters of administration including preparation of the statements and schedules, the Plan of Reorganization and Disclosure Statement, and other related matters. Jeffrey A. Weinman, Esq., president of Weinman & Associates, tells the Court that the firm received a $40,000 retainer from the Debtor. A portion of the retainer was expended on prepetition services and costs including the filing fee. The balance of the retainer is being kept in a Coltaf account. The firm claims an attorneys' lien in the retained funds for services provided and approved by the Court postpetition. Mr. Weinman adds that his hourly rate $375, the hourly rates of other personnel are: William A. Richey, Esq. $275 Lisa Barenberg, paralegal $130 Mr. Weinman assures the Court that the firm is a "disinterested person as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Weinman can be reached at: Weinman & Associates, P.C. 730 17th Street, Suite 240, Denver, CO 80202 About Commercial Capital, Inc. Greenwood Village, Colorado-based Commercial Capital, Inc. -- http://www.commercialcapitalinc.com/-- and its affiliate, CCI Funding I, LLC, are commercial real estate lenders and investment partners engaging in short-term commercial mortgage. Commercial Capital and CCI Funding filed for separate Chapter 11 on April 22, 2009 (Bankr. D. Colo. Case No. 09-17238 and Bankr. D. Colo. Case No. 09-17437). Robert Padjen, Esq., at Laufer and Padjen LLC assists Commercial Capital in its restructuring efforts. The Debtors each listed $100 million to $500 million in assets. Commercial Capital listed $50 million to $100 million in debts, wile CCI Funding listed $100 million to $500 million in liabilities. CONMED CORP: Moody's Comments on Ratings Following Q1 Results ------------------------------------------------------------- Moody's commented on the ratings of Conmed following the company's first quarter results. Moody's acknowledges that recent results have been below Moody's previous expectations. However, there is no immediate impact on the company's ratings, including the Ba3 Corporate Family Rating, or stable ratings outlook because there was sufficient cushion in the ratings to absorb some business challenges and Moody's believe many of these challenges will eventually reverse (namely weak hospital capital spending, restructuring costs, and foreign currency). However, Moody's believe near-term results will continue to be pressured and Conmed's cushion within the Ba3 rating category has substantially declined. Any further negative developments outside of Moody's current expectations could result in a negative outlook or rating action. For Moody's Issuer Comment, please see www.moodys.com. The last rating action was on November 28, 2007 when the outlook was changed to stable from negative. Conmed, headquartered in Utica, New York is a medical products manufacturer with a focus on surgical devices and equipment for minimally invasive procedures and monitoring. The company conducts business through five operating units, Linvatec (includes Arthroscopy and Powered surgical instruments), Electrosurgery, Endosurgery, Endoscopic technologies and Patient Care. Revenues for the twelve months ended March 31, 2009 approximated $715 million. CROWN CORK: Moody's Assigns 'B1' Rating on Senior Unsecured Notes ----------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to the new senior unsecured notes due 2017 and affirmed the Ba3 corporate family rating of Crown Cork and Seal Company, Inc. The rating is in response to the company's issuance on May 5, 2009 of $400 million 7 5/8% senior secured notes. The notes are issued by Crown Americas, LLC and Crown Capital Corp. II, each a subsidiary of the company, and will be unconditionally guaranteed by the company and substantially all of its U.S. subsidiaries. The proceeds are to be used for general corporate purposes consisting of the repayment of indebtedness of the company's senior secured credit facilities, the repurchase of Crown European Holdings' first priority notes and/or the funding of one or more acquisitions. Pending such application, the company intends to repay existing indebtedness under its revolver and accounts receivable securitization facility. Moody's believes the immediate transaction is credit neutral given the repayment of outstanding indebtedness. Moody's took these rating actions for Crown Americas, LLC: * Affirmed $410 million US Revolving Credit Facility due 2011, Baa3 (LGD 2 -12%) from (LGD 2-15%) * Affirmed $365 million US Term Loan B due 2012, Baa3 (LGD 2 -12%) from (LGD 2-15%) * Affirmed $500 million senior notes due 2013, B1 (LGD 4-60%) from (LGD 4-62%) * Affirmed $600 million Crown Americas senior notes due 2015, B1 (LGD 4-60%) from (LGD 4-62%) * Rated new $400 million senior unsecured notes due 2017, B1 (LGD 4 -- 60%) Moody's took these rating actions for Crown, Cork and Seal Company, Inc: * Affirmed corporate family rating, Ba3 * Affirmed probability of default rating, Ba3 * Affirmed a stable ratings outlook * Affirmed speculative grade liquidity rating, SGL-2 * Affirmed $150 million senior unsecured notes due 2096, B2 (LGD 6 -- 93%) from (LGD 6 - 92%) * Affirmed $200 million senior unsecured notes due 2023, B2 (LGD 6 -- 93%) from (LGD 6 - 92%) * Affirmed $350 million senior unsecured notes due 2026, B2 (LGD 6 -- 93%) from (LGD 6 - 92%) Moody's took these rating actions for Crown European Holdings S.A. * Affirmed $350 million European revolving credit facility due 2011, Baa3 (LGD 2 -12%) from (LGD 2-15%) * Affirmed ?278 million ($388 million) Euro Term Loan B due 2012, Baa3 (LGD 2 -12%) from (LGD 2-15%) * ?460 million ($558 million) European Holdings 6.25% First Lien Notes due Sep 1, 2011, Baa3 (LGD 2 -12%) from (LGD 2-15%) Moody's took these rating actions for Crown Metal Packaging Canada L.P. * Affirmed $40 million Canadian Revolving Credit Facility due 2011, Baa3 (LGD 2 -12%) from (LGD 2-15%) Crown's Ba3 Corporate Family Rating reflects the company's leading position in an oligopolistic industry, strong contract structures and relatively stable profitability and end markets. The rating also reflects the company's focus on debt reduction and cushion within the rating category. The company's broad geographic exposure, including exposure to faster growing developing markets, is both a benefit and a source of some potential volatility. The ratings are constrained by Crown's concentration of sales, asbestos liability and EBIT margins that are weak for the rating category. Moody's last rating action on Crown occurred on July 20, 2006 when Moody's rated the company's senior secured credit facility and affirmed the Ba3 corporate family rating. DAYTON SUPERIOR: U.S. Trustee Forms Seven-Member Creditors Panel ---------------------------------------------------------------- Roberta A. DeAngelis, United States Trustee for Region 3, appointed seven creditors to serve on the Official Committee of Unsecured Creditors of Dayton Superior Corporation. The members of the Committee are: 1) OCM Principal Opportunities Fund IV, L.P. c/o Oaktree Capital Management Attn: David Quick 333 S. Grand Ave., 28 th Floor Los Angeles, CA 90071 Tel: (213) 830-6374 Fax: (213) 830-6394 2) Whippoorwill Distressed Opportunity Fund, L.P. c/o Whippoorwill Associates, Inc. Attn: Steven Gendal 11 Martine Avenue, 11th Floor White Plains, NY 10606 Tel: (914) 683-1002 Fax: (914) 683-1242 3) The Bank of New York Mellon Attn: Donna Parisi 6525 W. Campus Oval Road, Suite 200 New Albany, OH 43054 Tel: (614) 775-5279 Fax: (614) 775-5636 4) U.S. Bank National Association as Trustee Attn: Sandra Spivey Nevada Financial Center 2300 W. Sahara, Suite 200 Las Vegas, NV 89102 Tel: (702) 251-1656 Fax: (702) 251-1657 5) Ulma Form Works Inc. Attn: Eugenio Pedrao 58 5th Ave. Hawthorne, NJ 07506 Tel: (973) 636-2040 Fax: (973) 636-2045 6) Alsina Forms Co. Inc. Attn: Sergi Gelonch 8820 Northwest 77th Court Medley, FL 33166 Tel: (305) 398-9860 Fax: (305) 398-9859 7. Keystone Steel & Wire Co. Attn: Bert Downing 5430 LBJ Freeway, Suite 1740 Dallas, TX 75240, Tel: (972) 450-4293 Fax: (972) 448-1445 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtor's expense. They may investigate the Debtor's business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About Dayton Superior Headquartered in Dayton, Ohio, Dayton Superior Corporation -- http://www.daytonsuperior.com/-- makes and distributes construction products. Aztec Concrete Accessories Inc., Dayton Superior Specialty Chemical Corporation, Dur-O-Wa Inc., Southern Construction Products Inc., Symons Corporation and Trevecca Holdings Inc. were merged with the Company on December 31, 2004. The Company filed for Chapter 11 protection on April 19, 2009 (Bankr. D. Del. Case No. 09-11351). Andrew C. Irgens, Esq., John H. Knight, Esq., Paul N. Heath, Esq., and Paul Noble Heath, Esq., Richards, Layton & Finger, represent the Debtor in its restructuring effort. Latham & Watkins LLP also represents the Debtor. The Debtor posted $288,709,000 in total assets and $405,867,000 in total debt as of February 27, 2009. DAYTON SUPERIOR: Taps Edward Howard for Corporate Communications ---------------------------------------------------------------- Dayton Superior Corporation has hired Edward Howard to help with corporate communications related to the Company's debt restructuring efforts and subsequent Chapter 11 bankruptcy filing. Dayton Superior filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware in Wilmington on April 19, 2009. The filing is intended to enable the Company to restructure and reduce its debt and emerge with a sustainable financial structure. Dayton Superior reported record operating income of $45 million in 2008 on net sales of $476 million. As a result of the collapsed credit markets, the Company was unable to refinance its maturing debt, and efforts to negotiate an exchange offer with bond holders fell short. Edward Howard has served as public relations counsel to clients in more than two dozen bankruptcy reorganizations and out-of-court financial restructurings. Edward Howard -- http://edwardhoward.com/-- leverages the power of communication for its clients, helping them achieve their goals by telling their stories, protecting their reputations, selling their products and growing their value. The firm's specialty is solving complex communication challenges. Founded in 1925, Ohio- based Edward Howard (with offices in Cleveland, Columbus and Dayton) is the nation's longest-established independent public relations firm, serving clients throughout the United States. About Dayton Superior Headquartered in Dayton, Ohio, Dayton Superior Corporation -- http://www.daytonsuperior.com/-- makes and distributes construction products. Aztec Concrete Accessories Inc., Dayton Superior Specialty Chemical Corporation, Dur-O-Wa Inc., Southern Construction Products Inc., Symons Corporation and Trevecca Holdings Inc. were merged with the Company on December 31, 2004. The Company filed for Chapter 11 protection on April 19, 2009 (Bankr. D. Del. Case No. 09-11351). Keith A. Simon, Esq., Jude M. Gorman, Esq., and Joseph S. Fabiani, Esq., at Latham & Watkins LLP also represent the Debtor as counsel. Russell C. Silberglied, Esq., John H. Knight, Esq., Paul N. Heath, Esq., and Lee E. Kaufman, Esq., at Richards, Layton & Finger, P.A., represent the Debtor as Delaware counsel. The Debtor posted $288,709,000 in total assets and $405,867,000 in total debt as of February 27, 2009. DECODE GENETICS: Licenses Products to Celera Corp. -------------------------------------------------- deCODE genetics, Inc., and deCODE genetics, ehf, a wholly owned subsidiary of deCODE genetics, Inc., entered into two license agreements with Celera Corporation pursuant to which deCODE has granted to Celera non-exclusive licenses to manufacture, use, and sell products based on certain of deCODE's patents and patent applications related to genetic markers for increased risk of major cardiovascular and metabolic diseases, including heart attack, stroke, atrial fibrillation and type 2 diabetes, April 22. One of the agreements provides that Celera will pay deCODE an upfront payment; both agreements provide that Celera will pay deCODE royalties on sales of products incorporating the licensed patents and patent applications. The license agreements contain customary provisions regarding payments and audits, confidentiality, indemnification and termination under certain circumstances. Each agreement will remain in effect until the expiration of the last licensed patent covered by such agreement to expire unless terminated earlier by a party as permitted by the agreement. In its Annual Report on Form 10-K for the year ended December 31, 2008, filed on March 31, 2009, deCODE genetics, Inc. reported that it had sufficient liquid funds to continue operations only into the second quarter of 2009. With the proceeds from the upfront payment from Celera, anticipated receivables and cost-reduction measures, deCODE now anticipates that it will be able to continue operations through the second quarter of 2009 without obtaining additional financing. About deCODE Genetics deCODE genetics Inc. (Nasdaq: DCGN) -- http://www.decode.com/-- operates as a biopharmaceutical company that applies discoveries in human genetics to develop drugs and diagnostics for common diseases. The company serves pharmaceutical companies, biotechnology firms, pharmacogenomics companies, government institutions, universities, and other research institutions primarily in the United States, Europe, and internationally. The company was founded in 1996 and is headquartered in Reykjavik, Iceland. DELPHI CORP: Court Hearing on New Plan on May May 21 ---------------------------------------------------- David Shepardson at Detroit News Washington Bureau reports that the Hon. Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York has moved a hearing on Delphi Corp.'s restructuring plan to May 21. According to Detroit News, a May 7 hearing on Delphi's restructuring plan was postponed, after it again failed to reach agreement with the U.S. Treasury and former parent General Motors Corp. on a plan that would let it emerge from bankruptcy after 43 months under court protection. Delphi lawyer Jack Butler said that the Company is working with its lenders, GM, and the Treasury Department "to agree on a sensible and practical reconfiguration of the milestones relating to modifications" of its plan to emerge from bankruptcy, Detroit News states. Detroit News says that GM and the Obama administration blamed Delphi's creditors for stalling a deal that would let the Company emerge from bankruptcy. According to the report, the Treasury has objected on a deal to let GM to purchase Delphi's steering business for $150 million. Delphi must complete a term sheet by May 21, Detroit News relates. The report says that Delphi's loans would terminate on June 2, effectively forcing the Company into liquidation without another extension. Detroit News reports that GM said that it has set aside about $12.5 billion to pay for Delphi-related expenses, including assuming some of its pension obligations. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi technology is also found in computing, communications, consumer accessories, energy and medical applications. Delphi has approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. The Company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on December 20, 2007. The Court confirmed the Debtors' First Amended Plan on January 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DESIGNLINE CONSTRUCTION: Case Summ. & 20 Largest Unsec. Creditors ----------------------------------------------------------------- Debtor: Designline Construction Services, Inc. 442 Route 35 South Building A, Third Floor Eatontown, NJ 07724 Tel: (732) 935-1440 Bankruptcy Case No.: 09-21745 Chapter 11 Petition Date: May 7, 2009 Court: United States Bankruptcy Court District of New Jersey (Trenton) Judge: Kathryn C. Ferguson Debtor's Counsel: Bruce D. Buechler, Esq. Kenneth Rosen, Esq. Lowenstein Sandler PC 65 Livingston Avenue Roseland, NJ 07068 Tel: (973) 597-2308 Email: bbuechler@lowenstein.com Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Prestige Construction Trade Debt $394,362 Services 77 Milltown Road East Brunswick, NJ 08816 Robert T. Winzinger, Inc. Trade Debt $364,897 1704 Marne Highway Hainesport, NJ 08036 GMA Mechanical Corp. Trade Debt $312,897 360 Route 12 Port Jefferson Station, NY 11776 Ruitenberg Displays Inc. Trade Debt $248,560 Air Temp Company Trade Debt $252,351 Double E, LLC Trade Debt $248,560 Impressive Concrete & Trade Debt $241,194 Masonry Corp. Garden State Steel Trade Debt $224,727 Fabricators Janus International Corp. Trade Debt $195,000 JV Excavators & Contractors, Trade Debt $184,275 Inc. Compton & Sons Steel Trade Debt $167,835 Construction Telko Enterprises, Inc. Trade Debt $137,568 Fromm Electric Supply Co. Trade Debt $137,005 MD Retail Construction, Inc. Trade Debt $134,652 Tri-State Paving, LLC Trade Debt $127,000 B&B Inc. of New Jersey Trade Debt $124,465 ThyssenKrupp Elevator Corp. Trade Debt $122,470 Lakeville/Pac Mechanical, Inc. Trade Debt $119,305 Arco Construction Company Trade Debt $114,950 Apex Fire Protection Inc. Trade Debt $109,133 The petition was signed by J. David Slabon, CEO of the company. DOLLAR THRIFTY: Posts $8.9 Million Net Loss for Q1 2009 ------------------------------------------------------- Dollar Thrifty Automotive Group, Inc., on May 6, reported results for the first quarter ended March 31, 2009. According to the report, the net loss for the 2009 first quarter was $8.9 million, or $0.42 loss per diluted share, compared to a net loss of $297.9 million, or $14.07 loss per diluted share, for the comparable 2008 quarter. The report also said that the net loss for the first quarter of 2009 included income of $0.14 per diluted share related to an increase in fair value of derivatives, as compared to a loss of $0.78 per diluted share in last year's first quarter related to a decrease in fair value of derivatives. In addition, the first quarter loss for 2008 included non-cash charges of $12.52 per diluted share related to the impairment of goodwill and long-lived assets. The non-GAAP net loss for the 2009 first quarter was $11.8 million, or $0.55 loss per diluted share, compared to a net loss of $16.2 million, or $0.77 loss per diluted share for the 2008 first quarter. Non-GAAP net loss excludes the (increase) decrease in fair value of derivatives and the non-cash charges related to the impairment of goodwill and long-lived assets, net of related tax impact. A reconciliation of non-GAAP to GAAP results is included in Table 3. "Although the Company incurred a loss during this seasonally weak quarter, we are pleased to be ahead of plan. We are also pleased that the Company's overall performance came in ahead of last year, particularly in light of the much weaker economic environment during the first quarter of 2009," said Scott L. Thompson, President and Chief Executive Officer. For the quarter ended March 31, 2009, the Company's total revenue was $362.4 million, as compared to $396.5 million for the comparable 2008 period. Rental revenue for the quarter was $345.3 million, a decrease of 8.6 percent, as compared to the same period in 2008. The decline in rental revenue was driven by a 12.2 percent decrease in rental days, partially offset by a 4.1 percent improvement in revenue per day. The first quarter average fleet was down approximately 10 percent compared to last year's first quarter. First quarter rental revenue comparisons were negatively impacted because the Easter holiday fell in the second quarter of 2009 versus the first quarter of 2008, and because February 2009 had one less transaction day than February 2008 due to leap year. Compared to the fourth quarter of 2008, first quarter 2009 rental revenue increased 2.5 percent, with revenue per day increasing 10.5 percent, partially offset by a 7.2 percent decline in rental days. Per vehicle depreciation costs in the first quarter of 2009 decreased approximately 3.5 percent compared to the fourth quarter of 2008, although the cost per unit was approximately 7 percent higher compared to the first quarter of 2008, primarily due to the lower residual values resulting from challenging conditions in the used vehicle market. Vehicle utilization, a measure of fleet efficiency, was 82.1 percent, down 1.0 percentage point from last year's first quarter. Direct vehicle and operating costs were lower in the first quarter of 2009 driven by lower transactions coupled with lower costs per transaction. Liquidity and Capital Resources As of March 31, 2009, the Company had $193 million of cash and cash equivalents. Under the terms of the recent amendment to the Senior Secured Credit Facilities, the Company is required to maintain a minimum cash balance of $100 million at all times, with $60 million of the minimum cash balance pledged as security for the repayment of those facilities. As of March 31, 2009 the Company also had $574 million of restricted cash and investments primarily available for the purchase of vehicles or repayment of vehicle financing obligations. During the quarter, the Company repaid in full both the Conduit and Liquidity vehicle financing facilities, reducing its vehicle- related debt and restricted cash by $490 million. Additionally, in conjunction with the amendment of the Senior Secured Credit Facilities, the Company prepaid $20 million of its Term Loan during the first quarter of 2009. The Company's next scheduled debt maturity under its medium term note program will occur in the first quarter of 2010 when $400 million of outstanding notes begin amortizing over a six-month period. The Company's exposure to Chrysler LLC, its primary supplier, has been further reduced since March 31, 2009. At April 30, 2009, the Company had approximately $11 million of trade receivables due from Chrysler, and estimated exposure of $28 million related to residual value guarantees provided by Chrysler, primarily related to program vehicles scheduled to be returned in the second half of 2009, as well as a limited number of vehicles that have been returned to auction but not yet sold. The Company is in full compliance with all of the financial covenants under its various financing arrangements with lenders. Adjusted tangible net worth for purposes of these covenants was $207.9 million at March 31, 2009. At that date, reported tangible net worth was $178.9 million or $8.24 per outstanding share. 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 said April 6, 2009, that Standard & Poor's Ratings Services lowered its ratings on DTAG, including the long-term corporate credit rating to 'CCC' from 'CCC+'. All ratings were removed from CreditWatch, where they were initially placed with negative implications on Feb. 12, 2008, and subsequently lowered three times and maintained on CreditWatch. The outlook is now negative. DOMTAR CORP: DBRS Assigns Recovery Ratings, Upgrades Secured Debt ----------------------------------------------------------------- Dominion Bond Rating Service confirmed the Issuer Rating and unsecured debt ratings for Domtar Corporation and its subsidiary companies. The trends remain Stable. Concurrently, DBRS has upgraded Domtar's secured debt rating to BBB from BBB (low). Pursuant to DBRS's Leveraged Finance Rating Methodology, a recovery rating of RR1 (90% to 100% recovery) has been assigned to the Company's Senior Secured Credit Facility and a recovery rating of RR5 (10% to 30% recovery) has been assigned to its Senior Unsecured Notes and Unsecured Notes and Debentures, which correspond to the ratings of BBB and BB (low), respectively. The recovery ratings are based on determining the value of the Company as a going concern versus a liquidation value in which its assets are sold to the highest bidder. DBRS's secured rating was originally based on a liquidation approach in early 2007, when Domtar Inc. combined with Weyerhaeuser Company's Fine Paper business. Domtar's success in merging the two low-cost operations and achieving acquisition synergies has improved margins in the subsequent two years. In addition, the recent closure of one million tons of high-cost capacity has not only helped to stabilize paper prices but has also further reduced overall unit costs of production. The net effect has been to increase the Company's future capability to generate higher returns. As a result, Domtar's value as a going concern is now higher than DBRS's initial liquidation assessment in early 2007. The retention of a Stable trend reflects expectations that pulp and paper markets will trough in H1 2009, with a modest recovery commencing in H2 2009. Although the Company's financial profile and coverage ratios are forecast to weaken in 2009, they are expected to remain acceptable for the rating. The Company's favourable cost structure provides important protection against earnings and cash flow downside in 2009. A low Canadian dollar and reduced energy, chemical and transportation costs will further reduce operating expenses this year, providing additional support to profit margins in the near term. Although financial performance is expected to be weaker than reported in 2008, cash flow from operations and free cash flow is forecast to remain positive. Capex is expected to remain less than depreciation in 2009, a strategy that will benefit cash flow. Liquidity is not expected to be an issue over the near to medium term, given cash and unused A/R securitization and credit facilities of $757 million, as well as a lack of large debt maturities until 2011. In addition, the U.S. alternative fuels tax credit program could provide the Company with additional cash of up to $390 million in 2009. The Company is committed to stemming cash outflows by curtailing production when operating costs fall below breakeven levels, a strategy that will conserve cash until market conditions rebound. Furthermore, Domtar, as a low-cost producer, should generate favorable profitability once the paper market turns around. As prescribed under its methodology for leveraged finance, DBRS has simulated a default scenario for Domtar to analyze the potential recovery for the Company's debt in the event of default. In order to analyze potential recovery for various debt classes in the event of default, DBRS must first simulate a default scenario, regardless of how hypothetical it might appear, and the relatively unlikely default probability that this rating implies. The default scenario stresses the operating results to the point at which default would be considered likely to occur, in order to enable DBRS to project potential levels of recovery that would be available to various debt classes in such event. In the case of commodity-based companies, that scenario includes severe economic conditions, usually a deep, protracted recession or depression in which product demand and prices plummet. EBITDA quickly declines and usually turns negative, and companies with large debt maturities or insufficient short-term liquidity can quickly reach the point of default. In the case of Domtar, earnings and cash flows would rapidly deteriorate from 2008 levels, and the Company would exhaust its credit facilities in 2011. For the purposes of this analysis, DBRS assumes that the ongoing deterioration of corporate finances, and general pessimism about future economic conditions would require the Company to restructure. The Company's capability of generating large returns at cycle peaks, and the potential for substantial earnings gains in the next paper cycle, suggests creditors would gain the greatest recovery by reorganizing the Company's pulp and paper assets as a going concern. The most likely prospect is that a private equity investor would purchase Domtar's pulp and paper assets with a view to taking the Company public during the next North American economic recovery. DBRS considers that a 10-year EBITDA trend, omitting outlier years, represents a realistic assessment of the Company's prospects through the next business cycle. A conservative EBITDA multiple of 5.0 times has been used to value Domtar's operations at the time of restructuring. The relatively low multiple reflects expectations of pessimistic outlooks by forest products industry participants and the financial community at the time of reorganization. At the distressed valuation level, DBRS believes the secured debt holders would recover 100% of the principal and has therefore assigned a recovery rating of RR1. Conversely, the unsecured debt holders would only recover about 25% of the principal and DBRS has assigned a recovery rating of RR5. DR HORTON: Moody's Assigns 'Ba3' Rating on $450 Mil. Notes ---------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to the $450 million of convertible senior notes of D.R. Horton, Inc. At the same time, Moody's affirmed Horton's existing ratings, including its corporate family rating at Ba3, probability of default rating at Ba3, senior notes rating at Ba3, and subordinated debt rating at B2. The speculative grade liquidity rating was revised to SGL- 2 from SGL-3. The outlook was changed to stable from negative. The change to a stable outlook reflects the company's large cash position, positive cash flow generation, and absence of any covenant compliance pressures, which should enable it to navigate the next couple of potentially difficult years for the industry. Negative pressure would resume in the event that Horton releverages the balance sheet for acquisitions, large land purchases, or substantial share buy-backs. The Ba3 rating balances the company's large cash position, leading scale, and cash generation track record against Moody's expectation that Horton's future cash flow generation will decline from its currently robust levels, and its long land position will prolong the likelihood of its taking additional impairment charges. Although the modest $40 million of impairments taken in the quarter that ended March 31, 2009 was encouraging, quarterly operating losses before impairments will continue in fiscal 2009; and the $1 billion of scheduled debt coming due over the next four years may gradually erode the company's currently strong liquidity position. At the same time, the ratings acknowledge that Horton has the strongest cash flow generation in the industry and has been cash flow positive on a trailing 12 month basis for 10 consecutive quarters; that Moody's projects the company will have in excess of $2 billion in cash at the end of fiscal 2009, even after paying down $550 million of debt obligations that matured in its just ended fiscal second quarter; and that unlike most of the other companies in the industry, the company has minimal secured debt on balance sheet and virtually no off-balance sheet obligations. Going forward, the ratings could improve if the company were to continue generating strongly positive homebuilding cash flow and use the cash to build additional liquidity and pay down debt; reduce costs sufficiently to restore homebuilding profitability before charges; and make it through the coming year without substantial additional impairment charges, which could enable the company to stabilize its debt leverage. The outlook and/or ratings could be lowered if the company begins experiencing sharp reductions in its trailing twelve-month cash flow generation; continues to increase its gross homebuilding debt leverage; is expected to continue generating quarterly losses before impairments throughout fiscal 2010; or continues taking substantial asset impairment charges. The speculative grade liquidity rating assignment looks ahead 12- 18 months as contrasted with the longer term horizon used to derive the corporate family rating, and is much more volatile as a result. The SGL-2 rating reflects Moody's expectation that Horton's internal liquidity (defined as unrestricted cash plus cash flow) and lack of any further bank covenant requirements offset its lack of external liquidity (defined as committed revolver availability) and somewhat limited opportunities to monetize excess assets quickly. Ordinarily, the absence of a revolver would be viewed as a credit negative, with possible impact on the corporate family rating. In this case, Moody's notes that i) Horton would have been unlikely to use or need its revolver prior to its maturity in 2011, and ii) the company was severely circumscribed in its potential capital markets activities by the revolver's very narrow borrowing base availability. To the extent that housing snaps back and working capital financing again becomes important, Moody's believes that Horton will make the short list of homebuilders which the shrinking list of bank lenders to the industry will wish to finance. These rating actions were taken: -- Ba3 (LGD4, 53%) assigned to the new $450 million of convertible senior notes due May 15, 2014; -- Corporate family rating affirmed at Ba3; -- Probability of default rating affirmed at Ba3; -- Senior unsecured notes rating affirmed at Ba3 (LGD4, 53%); -- Senior subordinated notes rating affirmed B2 (LGD6, 97%); -- Speculative grade liquidity assessment raised to SGL-2 from SGL-3. Moody's last rating action for D.R. Horton occurred on November 26, 2008, at which time Moody's lowered the company's corporate family rating to Ba3 from Ba2. Headquartered in Ft. Worth, Texas, D.R. Horton, Inc. is the country's largest homebuilders, with homebuilding revenues and net income for the trailing twelve-month period ended March 31, 2009 of $4.9 billion and ($1.4) billion, respectively. FAIRPOINT COMMUNICATIONS: Fitch Downgrades Issuer Rating to 'B-' ---------------------------------------------------------------- Fitch Ratings has downgraded these ratings assigned to FairPoint Communications, Inc.: -- Issuer Default Rating to 'B-' from 'B+'; -- $551 million 13.125% senior unsecured notes due 2018 to 'B- /RR4' from 'B+/RR4'; -- $170 million senior secured revolving credit facility to 'BB- /RR1' from 'BB+/RR1'; -- $500 million senior secured term loan due 2014 to 'BB-/RR1' from 'BB+/RR1'; -- $1.13 billion senior secured term loan due 2015 to 'BB-/RR1' from 'BB+/RR1'; -- $200 million senior secured delayed draw term loan due 2015 to 'BB-/RR1' from 'BB+/RR1'. In addition, Fitch has placed the company on Rating Watch Negative. Fitch's downgrade and Negative Watch reflect the company's disclosure with the release of its first quarter 2009 earnings that the weak economy, difficulties related to its systems cutover, and incremental costs to operate the business following cutover may jeopardize its ability to execute on its business plan, and that it may be at risk of violating its interest coverage covenant in its bank facility (2.5 times [x]) as early as June 30, 2009. In addition, FairPoint is considering the engagement of a financial advisor to evaluate its current capital structure and explore options with regard to a potential restructuring. Fitch is concerned that a potential restructuring could lead to a bankruptcy filing or coercive debt exchange. The first quarter of 2009 demonstrated a slowing of the rate of erosion in the company's business, however, Fitch continues to believe the accumulation of the pressures on the business will make it difficult for FairPoint to stabilize its credit metrics until the latter half of 2009 at the earliest. A mitigating factor regarding the pressure on the company's cash flow is the suspension of the company's dividend, which will preserve approximately $93 million annually of financial flexibility. The Negative Watch could be resolved if the company successfully amends its interest coverage covenants and if the likelihood of a restructuring appears low. Under such a scenario, a Negative Outlook may be reassigned until the company demonstrates progress in stabilizing operating trends, as well as steps it may be able to take to improve its financial flexibility through a combination of cost controls and capital spending reductions. On March 31, 2009, FairPoint's cash balance amounted to approximately $92.5 million and its restricted cash balance was $55.2 million. The cash balance includes proceeds drawn on FairPoint's $170 million credit facility to preserve capital availability; $4.7 million remains available. FairPoint has no major maturities in 2009, although Fitch estimates approximately $33 million will be due under the amortization of its credit facility during the remainder of the year. The revolving credit facility and term loan A mature in March 2014. FAIRPOINT COMMUNICATIONS: Moody's Cuts Corp. Family Rating to 'B3' ------------------------------------------------------------------ Moody's Investors Service downgraded FairPoint Communications, Inc.'s corporate family rating to B3 from B1 and the probability of default rating to Caa3 from B1, and maintained the review for a possible further downgrade, reflecting the heightened risk of debt impairment within its capital structure. The CFR is based on Moody's expectation of a high default probability and an estimated above-average recovery across all debt instruments. As the company experienced problems in the order flow and billing systems in the transition of the acquired Verizon Communications' Maine, New Hampshire and Vermont (VZ-NE) wireline operations onto its systems, actual cash generation has trailed expectations in 2009, compounded by greater than expected expenses in 2008, which led to greater utilization of the company's revolver. Therefore, the company's lower run-rate EBITDA and added debt has put it on the verge of a breach of its interest coverage covenant in the bank credit agreement in 2Q 2009. These summarizes the rating actions taken by Moody's: Downgrades: Issuer: FairPoint Communications, Inc. -- Corporate Family Rating, Downgraded to B3 from B1, Remains on Review for Possible Downgrade -- Probability of Default Rating, Downgraded to Caa3 from B1, Remains on Review for Possible Downgrade -- Senior Secured Bank Credit Facility, Downgraded to B2 (LGD2 - 13) from B1 (LGD3 - 44%), Remains on Review for Possible Downgrade -- Senior Unsecured Regular Bond/Debenture, Downgraded to Caa3 (LGD4 - 53%) from B3 (LGD6 - 91%), Remains on Review for Possible Downgrade FairPoint indicated that it will seek to amend the covenant levels or lighten its debt load over the year, which may include hiring a financial advisor to help in its goal. Even as the company engages its lenders to give it more covenant headroom as it catches up to its business plan, the delays in implementing its full business strategy will further stress the company's forward EBITDA and free cash flow generation, leading to a deterioration of enterprise value in the near term. Therefore, the rating agency believes that the probability of debt reduction, potentially under distressed terms has increased, which could be deemed as a default by Moody's. Overall, FairPoint's leverage profile is currently favorably positioned relative to the company's B3 corporate family rating. However, ongoing issues with rectifying the systems transition concerns will further delay the company's revenue enhancement initiatives, which may increase the company's adjusted Debt/EBITDA leverage in the near term. Although the company has the capacity to generate over $200 million in free cash flow after 2009, near term free cash flow generation will be strained by the systems remediation efforts. 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 ongoing review will focus on FairPoint's a) ability to manage its short term liquidity, b) successfully right-sizing its balance sheet to give it operating flexibility, and c) Moody's comfort with the company's systems transition. Moody's most recent rating action for FairPoint was on March 17, 2009. At that time Moody's placed FairPoint's ratings on review for a possible downgrade, due to liquidity and operating issues arising from the complications in cutting over to its operting systems from Verizon's. 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. FANNIE MAE: Will Need $19BB From Gov't After Posting $23.2BB Loss ----------------------------------------------------------------- James R. Hagerty at The Wall Street Journal reports that Fannie Mae said that it will need an infusion of $19 billion from the U.S. Treasury after recording a loss of $23.2 billion for the first quarter 2009. Due to current trends in the housing and financial markets, Fannie Mae expects to have a net worth deficit in future periods, and therefore will be required to obtain additional funding from Treasury pursuant to the senior preferred stock purchase agreement. Under the Federal Housing Finance Regulatory Reform Act, Federal Housing Finance Agency must place Fannie Mae into receivership if the Director of FHFA makes a written determination that the Company's assets are, and during the preceding 60 days have been, less than the Company's obligations. FHFA has notified Fannie Mae that the measurement period for such a determination begins no earlier than the date of the SEC filing deadline for the Company's quarterly and annual financial statements and continues for a period of 60 days after that date. FHFA also has advised Fannie Mae that, if the Company receives funds from Treasury during that 60-day period to eliminate the Company's net worth deficit as of the prior period end in accordance with the senior preferred stock purchase agreement, the Director of FHFA will not make a mandatory receivership determination. On March 31, 2009, Fannie Mae received the Company's first investment from Treasury under the senior preferred stock purchase agreement of $15.2 billion, which eliminated the Company's net worth deficit as of December 31, 2008. The Director of FHFA submitted a request to Treasury on May 6, 2009, for $19.0 billion on the Company's behalf under the terms of the senior preferred stock purchase agreement to eliminate the Company's net worth deficit as of March 31, 2009, and requested receipt of those funds on or prior to June 30, 2009. When Treasury provides the additional funds that FHFA requested on Fannie Mae's behalf, the aggregate liquidation preference of the Company's senior preferred stock will total $35.2 billion and the annualized dividend on the senior preferred stock will be $3.5 billion, based on the 10% dividend rate. This dividend amount exceeds 50% of the Company's reported annual net income in six of the past seven years, in most cases by a significant margin. If Fannie Mae doesn't make cash payments on time, the dividend rate increases to 12% annually, and the unpaid dividend is added to the liquidation preference, further increasing the amount of the annual dividends. WSJ relates that the U.S. Treasury agreed to provide as much as $200 billion of capital to Fannie Mae and Freddie Mac by purchasing preferred stock paying 10% dividends. WSJ notes that the latest call for capital will bring the total provided to Fannie Mae to $34 billion. Fannnie Mae recorded a net loss of $23.2 billion and a diluted loss per share of $4.09 for the first quarter of 2009. In comparison, the Company recorded a net loss of $25.2 billion and a diluted loss per share of $4.47 for the fourth quarter of 2008, and a net loss of $2.2 billion and a diluted loss per share of $2.57 for the first quarter of 2008. Fannie Mae's results for the first quarter of 2009 were driven primarily by credit-related expenses of $20.9 billion, other-than-temporary impairment related to available-for-sale securities of $5.7 billion and fair value losses of $1.5 billion. The $2.1 billion decrease in Fannie Mae's net loss for the first quarter of 2009 from the fourth quarter of 2008 was driven principally by a $10.9 billion reduction in net fair value losses, which was partially offset by an $8.9 billion increase in credit- related expenses. The $21.0 billion increase in the Company's net loss for the first quarter of 2009 compared to the loss the Company incurred in the first quarter of 2008 was driven principally by the significant increase in credit-related expenses. Fannie Mae's credit-related expenses included a provision for credit losses of $20.3 billion, compared with a provision for credit losses of $11.0 billion in the fourth quarter of 2008. Fannie Mae's combined loss reserves, which reflect the Company's best estimate of credit losses incurred in the Company's guaranty book of business as of each balance sheet date, increased to $41.7 billion as of March 31, 2009, or 28.78% of the Company's nonperforming loans, from $24.8 billion as of December 31, 2008, or 20.76% of Fannie Mae's nonperforming loans. The substantial increase in Fannie Mae's loss reserves primarily reflected further deterioration in the credit quality of both the Company's single- family and multifamily guaranty book of business, evidenced by a significant increase in the Company's nonperforming loans (loans for which the Company believes collectability of interest or principal is not reasonably assured) and seriously delinquent loans (single-family loans three months or more past due or in the foreclosure process or multifamily loans 60 days or more past due), as market conditions such as the severe economic downturn and rising unemployment continued to adversely affect the performance of the Company's guaranty book of business. In addition, Fannie Mae's average loss severities increased as a result of the continued decline in home prices during the first quarter of 2009. Because of the existing stress in the housing and credit markets, and the speed and extent to which these markets have deteriorated, the Company's process for determining the adequacy of Fannie Mae's loss reserves has become more complex and involves a greater degree of management judgment. The current state of the housing and mortgage markets is unprecedented in many respects, greatly reducing the usefulness of relying on Fannie Mae's historical loan performance data in estimating the Company's loss reserves. To address the limitations in these historical data, Fannie Mae made refinements to its loss estimation process during the first quarter of 2009. The other-than-temporary impairment on available-for-sale securities of $5.7 billion that Fannie Mae recognized in the first quarter of 2009 related to additional impairment losses on some of the Company's Alt-A and subprime private-label securities that it had previously impaired, as well as impairment losses on other Alt-A and subprime securities, attributable to a continued deterioration in the credit quality of the loans underlying these securities and further declines in the expected cash flows. Fannie Mae's mortgage credit book of business remained relatively unchanged at $3.1 trillion as of March 31, 2009, roughly the same level as at December 31, 2008, as high levels of refinancing activity led to high volumes of acquisitions and liquidations. The Company's estimated market share of new single-family mortgage-related securities issuances was 44.2% for the first quarter of 2009, compared with 41.7% for the fourth quarter of 2008. Net Worth and Fair Value Deficit Amounts Under the senior preferred stock purchase agreement that was entered into between the Company and Treasury in September 2008 and amended in May 2009, Treasury committed to provide the Company funds of up to $200 billion, on a quarterly basis, in the amount, if any, by which the Company's total liabilities exceed the Company's total assets at the end of the applicable fiscal quarter. This net worth deficit equals the total deficit that the Company report in the Company's condensed consolidated balance sheets, and is calculated by subtracting the Company's total liabilities from the Company's total assets, each as shown on the Company's condensed consolidated balance sheets prepared in accordance with generally accepted accounting principles for that fiscal quarter. Fannie Mae's net worth as of March 31, 2009, was negative and is presented in the Company's condensed consolidated GAAP balance sheets as a total deficit of $18.9 billion as of March 31, 2009, which is an increase of $3.8 billion over the Company's total deficit of $15.2 billion as of December 31, 2008. The increase in the Company's net worth deficit was primarily attributable to the net loss the Company recorded during the first quarter of 2009, partially offset by the $15.2 billion the Company received from Treasury. Fannie Mae's fair value deficit as of March 31, 2009, which is reflected in the Company's supplemental non-GAAP fair value balance sheet, was $110.3 billion, an increase of $5.2 billion over the Company's fair value deficit of $105.2 billion as of December 31, 2008. Due to current trends in the housing and financial markets, the Company expects to have a net worth deficit in future periods, and therefore will be required to obtain additional funding from Treasury pursuant to the senior preferred stock purchase agreement. Amendment to Senior Preferred Stock Purchase Agreement Treasury and FHFA, acting on the Company's behalf in its capacity as the Company's conservator, entered into an amendment to the senior preferred stock purchase agreement between the Company and Treasury on May 6, 2009. Unless the context indicates otherwise, references in this report to the senior preferred stock purchase agreement refer to the agreement as amended on May 6, 2009. The May 6, 2009 amendment revised the terms of the senior preferred stock purchase agreement in these ways: -- Treasury's maximum funding commitment to the Company under the agreement was increased from $100 billion to $200 billion. -- The covenant limiting the amount of mortgage assets the Company can own on December 31, 2009, was increased from $850 billion to $900 billion. The Company continue to be required to reduce the Company's mortgage assets, beginning on December 31, 2010, and each year thereafter, to 90% of the amount of the Company's mortgage assets as of December 31 of the immediately preceding calendar year, until the amount of the Company's mortgage assets reaches $250 billion. -- The covenant limiting the amount of the Company's indebtedness was changed. Prior to the amendment, the Company's debt cap was equal to 110% of the Company's indebtedness as of June 30, 2008. As amended, the Company's debt cap through December 30, 2010, equals $1,080 billion. Beginning December 31, 2010, and on December 31 of each year thereafter, the Company's debt cap that will apply through December 31 of the following year will equal 120% of the amount of mortgage assets the Company are allowed to own on December 31 of the immediately preceding calendar year. Fannie Mae estimates that its indebtedness as of March 31, 2009, totaled $869.3 billion, which was approximately $22.7 billion below the Company's estimated debt limit of $892.0 billion in effect at that time and approximately $210.7 billion below the Company's revised debt limit. Fannie Mae's calculation of the Company's indebtedness for purposes of complying with the Company's debt cap, which has not been confirmed by Treasury, reflects the unpaid principal balance of the Company's debt outstanding or, in the case of long-term zero coupon bonds, the unpaid principal balance at maturity. The Company's calculation excludes debt basis adjustments and debt recorded from consolidations. -- The definition of indebtedness in the May 6, 2009, amendment was revised to clarify that it does not give effect to any change that may be made in respect of SFAS No. 140, Accounting for Transfer and Servicing of Financial Assets and Extinguishments of Liabilities (a replacement of FASB Statement No. 125) ("SFAS 140") or any similar accounting standard. The agreement continues to provide that, for purposes of evaluating the Company's compliance with the limitation on the amount of mortgage assets the Company may own, the effect of changes in generally accepted accounting principles that occur subsequent to the date of the agreement and that require the Company to recognize additional mortgage assets on the Company's balance sheet (for example, proposed amendments to SFAS 140), will not be considered. -- The limitation on entering into or changing compensation arrangements with the Company's named executive officers (as defined by SEC rules) was broadened to apply to all of the Company's executive officers (as defined by SEC rules). The agreement provides that the Company may not enter into any new compensation arrangements or increase amounts or benefits payable under existing compensation arrangements for these officers without the consent of the Director of FHFA, in consultation with the Secretary of the Treasury. As amended this requirement now applies to twelve of the Company's current officers, instead of the five to whom it applied prior to the amendment. Liquidity Fannie Mae funds the Company's purchases of mortgage loans primarily from the proceeds from sales of the Company's debt securities. In September 2008, Treasury made available to Fannie Mae two additional sources of funds: the Treasury credit facility and the senior preferred stock purchase agreement. The dynamics of the Company's funding program have improved significantly since late November 2008, including demand for the Company's long-term and callable debt. As a result of the Company's improved access to the long-term debt markets, the Company have decreased the portion of the Company's total outstanding debt represented by short-term debt to 32% as of March 31, 2009, from 38% as of December 31, 2008, and the aggregate weighted-average maturity of the Company's debt increased to 45 months as of March 31, 2009, from 42 months as of December 31, 2008. Fannie Mae believes that the improvement in the Company's debt funding is due to actions taken by the federal government to support the Company and the Company's debt securities, including the senior preferred stock purchase agreement entered into in September 2008, Treasury's program announced in September 2008 to purchase MBS of the GSEs, the Treasury credit facility made available to the Company in September 2008 and the Federal Reserve's program announced in November 2008 to purchase up to $100 billion in debt securities of Fannie Mae, Freddie Mac and the FHLBs and up to $500 billion in mortgage-backed securities of Fannie Mae, Freddie Mac and Ginnie Mae. On February 18, 2009, Treasury announced that it will continue to purchase Fannie Mae and Freddie Mac mortgage-backed securities to promote stability and liquidity in the marketplace. On March 18, 2009, the Federal Reserve announced that it intended to increase purchases of debt securities of Fannie Mae, Freddie Mac and the FHLBs and of Fannie Mae, Freddie Mac and Ginnie Mae mortgage-backed securities under its program to a total of up to $200 billion and $1.25 trillion, respectively. There can be no assurance that the improvements in the Company's access to the unsecured debt markets and in the Company's ability to issue long-term and callable debt will continue. The Company believe the improvements stem from federal government support, such as the support described above, and, as a result, changes or perceived changes in the government's support of the Company may have a material adverse affect on the Company's ability to fund the Company's operations. In particular, to the extent the market for the Company's debt securities has improved due to the availability to the Company of the Treasury credit facility, the Company believe that the actual and perceived risk that the Company will be unable to refinance the Company's debt as it becomes due is likely to increase substantially as the Company progress toward December 31, 2009, which is the date on which the Treasury credit facility terminates. Accordingly, the Company continue to have significant roll-over risk notwithstanding improved access to long-term funding, and this risk is likely to increase as the Company approach expiration of the Treasury credit facility. Consolidated Balance Sheet Analysis Total assets of $919.6 billion as of March 31, 2009 increased by $7.2 billion, or 0.8%, from December 31, 2008. Total liabilities of $938.6 billion increased by $11.0 billion, or 1.2%, from December 31, 2008. Fannie Mae's total deficit increased by about $3.8 billion during the first quarter of 2009, to a deficit of $18.9 billion as of March 31, 2009. The increase in Fannie Mae's total deficit was attributable to the Company's net loss of $23.2 billion for the first quarter of 2009, which was partially offset by the $15.2 billion in funds received from Treasury under the senior preferred stock purchase agreement and a decrease in unrealized losses on available-for-sale securities. About Fannie Mae The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) -- commonly known as Fannie Mae, is a shareholder-owned U.S. government-sponsored enterprise. Fannie Mae has a federal charter and operates in America's secondary mortgage market, providing mortgage bankers and other lenders funds to lend to home buyers at low rates. Fannie Mae was created in 1938, under President Franklin D. Roosevelt, at a time when millions of families could not become homeowners, or risked losing their homes, for lack of a consistent supply of mortgage funds across America. The government established Fannie Mae to expand the flow of mortgage funds in all communities, at all times, under all economic conditions, and to help lower the costs to buy a home. In 1968, Fannie Mae was re-chartered by the U.S. Congress as a shareholder-owned company, funded solely with private capital raised from investors on Wall Street and around the world. Fannie Mae is the U.S. largest mortgage buyer, according to The New York Times. Conservatorship As reported by the Troubled Company Reporter, the U.S. government took direct responsibility for Fannie Mae and Freddie Mac, placing the government sponsored enterprises under conservatorship on September 7, 2008. James B. Lockhart, director of Federal Housing Finance Agency, said that Fannie Mae and Freddie Mac share the critical mission of providing stability and liquidity to the housing market. Between them, the Enterprises have $5.4 trillion of guaranteed mortgage-backed securities (MBS) and debt outstanding, which is equal to the publicly held debt of the United States. Among the key components of the conservatorship, the FHFA, as conservator, assumed the power of the Board and management. FIFTH THIRD: Among 10 Banks Needing More Capital in Stress Test --------------------------------------------------------------- The results of a comprehensive, forward-looking assessment of the financial conditions of the nation's 19 largest bank holding companies (BHCs) by the federal bank supervisory agencies were officially released on Thursday, May 7. The exercise -- conducted by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation -- was conducted so that supervisors could determine the capital buffers sufficient for the 19 BHCs to withstand losses and sustain lending -- even if the economic downturn is more severe than is currently anticipated. In a detailed summary of the results of the Supervisory Capital Assessment Program (SCAP), the supervisors identified the potential losses, resources available to absorb losses, and resulting capital buffer needed for the 19 participating BHCs. The SCAP is a complement to the Treasury's Capital Assistance Program (CAP), which makes capital available to financial institutions as a bridge to private capital in the future. According to the stress test results, after taking account of losses, revenues and reserve build requirements, in the aggregate, the BHCs need to add $185 billion to capital buffers to reach the target SCAP capital buffer at the end of 2010 under the more adverse scenario. With respect to this estimate: -- the $185 billion accrues to 10 of the 19 firms, meaning 9 of the 19 firms already have capital buffers sufficient to get through the adverse scenario in excess of 6 percent Tier 1 capital and 4 percent Tier 1 Common capital. -- the vast majority of this $185 billion comes from a shortfall in Tier 1 Common capital in the more adverse scenario, with virtually no shortfall in overall Tier 1 capital. This result means that while nearly all the firms have sufficient Tier 1 capital to absorb the unusually high losses of the more adverse scenario and still end 2010 with a Tier 1 risk-based ratio in excess of 6%, 10 of these firms had capital structures that are too strongly tilted toward capital other than common equity. Thus, each of the 10 firms needing to augment their capital as a result of this exercise must do so by increasing their Tier 1 Common capital. Including the capital actions made by banks and their first quarter 2009 annual results, the 10 BHCs will only need to raise a combined $74.6 billion in capital. ($ in billions) Required Capital Buffer ------------------ After Capital Actions & 2009 & 2010 As of After Q1 Bank Loss Estimates 12/31/08 Results ---- -------------- -------- ------- Citigroup Inc. $104.7 $92.6 $5.5 Bank of America Corporation 136.6 46.5 33.9 Wells Fargo & Company 86.1 17.3 13.7 Morgan Stanley 19.7 8.3 1.8 GMAC LLC 9.2 6.7 11.5 SunTrust Banks Inc. 11.8 3.4 2.2 Regions Financial Corp 9.2 2.9 2.5 Fifth Third Bancorp 9.1 2.6 1.1 KeyCorp 6.7 2.5 1.8 PNC Financial Services Group Inc 18.8 2.3 0.6 American Express Company 11.2 0.0 0.0 BB&T Corporation 8.7 0.0 0.0 The Bank of New York Mellon 5.4 0.0 0.0 Capital One Financial Corp 13.4 0.0 0.0 The Goldman Sachs Group Inc 17.8 0.0 0.0 JPMorgan Chase & Co. 97.4 0.0 0.0 MetLife Inc. 9.6 0.0 0.0 State Street Corporation 8.2 0.0 0.0 U.S. Bancorp 15.7 0.0 0.0 ------ ------ ------ $599.2 $185.0 $74.6 A copy of the Stress Test results is available for free at: http://bankrupt.com/misc/May09-StressTest.pdf According to Federal Reserve Chairman Ben S. Bernanke, the 19 banks covered by the "stress tests" play a vital role in our economy, holding among them two-thirds of the assets and more than one-half of the loans in the U.S. banking system. Not Tests of Solvency With respect to the stress tests, Mr. Bernanke clarified, "These examinations were not tests of solvency; we knew already that all these institutions meet regulatory capital standards. Rather, the assessment program was a forward-looking, "what-if" exercise intended to help supervisors gauge the extent of the additional capital buffer necessary to keep these institutions strongly capitalized and lending, even if the economy performs worse than expected between now and the end of next year." "The results released [May 7] should provide considerable comfort to investors and the public," Mr. Bernanke said. He noted that the examiners found that nearly all the banks that were evaluated have enough Tier 1 capital to absorb the higher losses envisioned under the hypothetical adverse scenario. Roughly half the firms, though, need to enhance their capital structure to put greater emphasis on common equity, which provides institutions the best protection during periods of stress. Many of the institutions have already taken actions to bolster their capital buffers and are well-positioned to raise capital from private sources over the next six months. "However, our government, through the Treasury Department, stands ready to provide whatever additional capital may be necessary to ensure that our banking system is able to navigate a challenging economic downturn." The estimates reported by the Federal Reserve represent values for a hypothetical 'what-if' scenario and are not forecasts of expected losses or revenues for the firms, a joint press release by the Federal Reserve, the U.S. Treasury and the FDIC also clarified. Nov. 9 Deadline for Capital Plan According to the joint release, any U.S. bank holding company (BHC) needing to augment its capital buffer at the conclusion of the SCAP will have until June 8th, 2009 to develop a detailed capital plan, and until November 9th, 2009 to implement that capital plan Over the next 30 days, any BHC needing to augment its capital buffer will develop a detailed capital plan to be approved by its primary supervisor, in consultation with the FDIC, and will have six months to implement that plan. In light of the potential for new commitments under the Capital Assistance Program or exchanges of existing CPP preferred stock, supervisors will consult with Treasury on the development and evaluation of the plans. The capital plan will consist of three main elements: * A detailed description of the specific actions to be taken to increase the level of capital and/or to enhance the quality of capital consistent with establishing the SCAP buffer. BHCs are encouraged to design capital plans that, wherever possible, actively seek to raise new capital from private sources. These plans should include actions such as: -- Issuance of new private capital instruments; -- Restructuring current capital instruments; -- Sales of business lines, legal entities, assets or minority interests through private transactions and through sales to the PPIP; -- Use of joint ventures, spin-offs, or other capital enhancing transactions; and -- Conservation of internal capital generation, including continued restrictions on dividends and stock repurchases and dividend deferrals, waivers and suspensions on preferred securities including trust preferred securities, with the expectation that plans should not rely on near-term potential increases in revenues to meet the capital buffer it is expected to have. * A list of steps to address weaknesses, where appropriate, in the BHC's internal processes for assessing capital needs and engaging in effective capital planning. * An outline of the steps the firm will take over time to repay government provided capital taken under the Capital Purchase Program (CPP), Targeted Investment Program (TIP), or the CAP, and reduce reliance on guaranteed debt issued under the TLGP. In addition, as part of the 30-day planning process, firms will need to review their existing management and Board in order to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment and maintain balance sheet capacity sufficient to continue prudent lending to meet the credit needs of the economy A copy of the joint release is available for free at: http://www.federalreserve.gov/newsevents/press/bcreg/20090506a.htm Comments to Stress-Test Results According to NewsBlaze, Scott Talbott, vice president of the Financial Services Roundtable, a Washington-based association representing the biggest U.S. financial companies, the $75 billion is not a huge sum for the 10 banks to raise. He said, the report relates, that nine of the 10 can do so through private means such as stock conversions or selling assets. Only GMAC, the auto finance company linked to General Motors, faces the prospect of seeking further government relief funds, he said. Louise Story and Eric Dash at The New York Times said, "Broadly speaking, the test results suggested that the banking industry was in better shape than many had feared." The two noted that the $75 billion in equity capital needed by 10 banks is "far less than many had forecast." The hypothetical scenarios created by bank examiners assume the unemployment rate would hit 10.3% and house prices would fall more than 22%. That scenario is worse than the current state of the economy, in which the jobless rate is below 9%, NewsBlaze said. In addition, the examiners assume in a worst-case scenario that 9% of all loans might sour -- a figure that is even higher than it was during the Great Depression, NYT said. According to Reuters, citing the Wall Street Journal, the government made concessions to banks that pushed back against its conclusions in its stress tests. The $13.7 billion projected capital shortfall for Wells Fargo -- from $17.3 billion -- came about after two weeks of bargaining, The Journal said. In addition, beyond the concessions, Financial Times, according to Reuters, reported that the U.S. government has assured the banks that they will be allowed to raise less than the $74.6 billion in equity mandated if earnings over the next six months beat regulators' forecasts. According to MarketWatch, Ken Lewis, chief executive of Bank of America Corp., on Friday called the government's stress-test results "pretty aggressive" but said the financial-services giant will comply and raise the required $33.9 billion. Asked about the health of his firm, Mr. Lewis said mortgage-lending arm Countrywide is "on fire, in a positive sense," right now, and added that "business is good" at Merrill Lynch. The Washington Post said U.S. stocks rose last week, erasing the year-to-date loss in the Standard & Poor's 500-stock index, as results from the government's "stress tests" of major banks reassured investors and the Labor Department said the pace of job cuts slowed in April. Bank of America and Citigroup, the Post relates, helped drive financial stocks in the S&P 500 to a 23% percent gain as the government said only one of the 19 large banks that were reviewed was likely to need additional taxpayer aid. FIRST DATA: Moody's Downgrades Corporate Family Rating to 'B3' -------------------------------------------------------------- Moody's Investors Service has downgraded First Data Corporation's corporate family and probability-of-default ratings to B3 from B2, its $2 billion Senior Secured Revolving Facility rating to B1 from Ba3, its $12.7 billion Senior Secured Term Loan rating to B1 from Ba3, and its $3.75 billion Senior Unsecured Cash Pay Notes to Caa1 from B3. In addition, Moody's assigned a Caa1 rating to the $3 billion Senior Unsecured PIK Notes and Caa2 rating on the $2.5 billion Senior Subordinated Notes. The rating outlook is stable. The rating actions conclude the review for possible downgrade initiated on March 2, 2009. The downgrade of ratings reflects Moody's concern that the projected ramp in profits and free cash flow expected for 2009 and 2010 that had been factored into the B2 corporate family rating at the time of the leveraged buyout in September 2007 will not be achieved due to the global economic crisis and slowdown in consumer spending levels. Moody's expect slight revenue and EBITDA declines for 2009 with only modest recovery for 2010. As a result, Moody's believe the company will not be able to significantly de-leverage until 2011 at the earliest, at which time the company faces increasing cash interest payments as the company's 10.55% unsecured PIK notes convert to cash pay after September 2011. At the time of the LBO, Moody's had expected that the company's credit metrics, including free cash flow to debt, to remain weak for at least eighteen months following the transaction's close. While company has met Moody's expectations through the end of 2008 due largely to the $300 million of annualized cost savings achieved to date, Moody's believe the current recession will prevent the company from meaningfully reducing its leverage (about 9x on a Moody's adjusted basis) for several years. While the company continues to report transaction growth during the economic downturn, profitability has been hampered by the consumer spending shift towards large discount retailers, where fees per transaction are lower due to the pricing leverage exerted by the retailers, and the higher growth of PIN debit transactions versus higher- margin credit cards. Although the company faces no significant debt maturity until 2014 and has ample cushion with its financial covenants under the senior secured credit facility, Moody's believes the high ongoing debt burden is no longer consistent with a B2 rating. The B3 CFR reflects the company's large size and leading market positions in the electronic commerce and payment solutions for financial institutions, merchants, and other organizations worldwide, which benefits from the secular shift from cash/check payment to electronic payments. In addition, the company maintains a diversified business profile (e.g., breadth of service offerings and international expansion) and good near-term liquidity, which is supported by around $1.7 billion of availability on its revolver and a cash balance in excess of $400 million. The stable outlook is supported by Moody's expectation that First Data will be able to generate steady cash flows during the current economic downturn driven by non-discretionary consumer spending (nearly half of the merchant services processing transactions relate to grocery stores, quick-service restaurants, and petroleum) and the continued shift of payment method to electronic cards from cash and checks. Downward ratings pressure could occur if the recession remains prolonged such that the company's free cash flow were to be negative on a sustained twelve month basis or if the termination of the Chase Paymentech alliance were to result in a significant loss of market share. Given First Data's strong merchant processing industry position, the termination is not expected to have a significant immediate business impact, but would add a large player to the competitive landscape. Ratings downgraded and assessments revised: * Corporate Family Rating downgraded to B3 from B2 * Probability of Default Rating downgraded to B3 from B2 * $2 billion Senior Secured Revolving Facility due 2013 -- B1 (LGD 2, 26%) from Ba3 (LGD 2, 27%) * $13 billion Senior Secured Term Loan B due 2014 -- B1 (LGD 2, 26%) from Ba3 (LGD 2, 27%) * $3.75 billion Senior Unsecured Cash Pay Notes due 2015 -- Caa1 (LGD 5, 76%) from B3 (LGD 5, 76%) * (Approximately $73 million) Pre-LBO Untendered Senior Unsecured Stub Notes -- Caa2 from Caa1 Ratings and assessments assigned: * $2.75 billion Senior Unsecured PIK Notes (due 2015) - Caa1 (LGD 5, 76%) * $2.5 billion Senior Subordinated Notes (due 2015) -- Caa2 (LGD 6, 92%) The last rating action was on March 2, 2009 when Moody's placed First Data Corp's ratings under review for possible downgrade. Based in Greenwood Village, Colorado, First Data Corporation is a global leader in electronic commerce and payment solutions for financial institutions, merchants, and other organizations worldwide. FLEETWOOD ENTERPRISES: Krystal to Buy Mexicali Assets for $150,000 ------------------------------------------------------------------ Fleetwood Enterprises, Inc., and its affiliates ask the U.S. Bankruptcy Court for the Central District of California for authority to sell the stock of non-Debtor Fleetwood De Mexico S.A. de C.V. and other assets related to Fleetwood's non-operating travel trailer manufacturing facility in Mexico to Krystal Enterprises, LLC, and Edward P. Grech, free and clear of all liens, claims, interests and encumbrances. Krystal is a California corporation that manufactures stretch limousines, professional vehicles, and luxury mid-size buses. The Debtors tell the Court that in order to commence production for its summer 2009 sales season, Krystal needs to close on the proposed purchase of the Mexicali Assets by mid-May 2009. The Buyers have offered to pay $150,000 in cash for the Mexicali Assets. Fleetwood Enterprises is a guarantor of Fleetwood Mexico's obligations under the Mexicali Lease. Krystal has agreed to step in as the guarantor of the Mexicali lease or indemnify FEI against potential liability as guarantor of the Mexicali lease. Debtor Fleetwood International Inc owns 49,999 out of the 50,000 outstanding shares of Fleetwood Mexico. Debtor Fleetwood Travel Trailers of California, Inc., owns the remining one share in Fleetwood Mexico. Fleetwood Mexico in not a Chapter 11 debtor. As reported in the Troubled Company Reporter on April 30, 2009, Fleetwood Enterprises Inc. signed a deal for the sale of a plant in La Grande, Oregon for $1.8 million to Arbutus RV & Marine Sales Ltd., the largest recreational-vehicle dealer in British Columbia, citing Bloomberg's Bill Rochelle. The Debtor will further market test the plant through an auction. Mr. Rochelle reported that Arbutus insised on completing the purchase by May 15 to produce travel trailers for the summer season. Fleetwood has an $80 million in Debtor-in-Possession from lenders, led by Bank of America, N.A. as agent. Headquartered Riverside, California, Fleetwood Enterprises -- http://www.fleetwood.com/-- produces recreational vehicles and manufactured homes. The Company has 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., at Gibson, 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. FLEETWOOD ENTERPRISES: Wants Use of Cash Collateral Until Sept. 30 ------------------------------------------------------------------ Fleetwood Enterprises, Inc., et al., ask the U.S. Bankruptcy Court for the Central District of California for authority to use cash collateral of Bank of America, N.A., as agent for itself and the prepetition secured parties, until September 30, 2009, to fund payroll and payroll taxes and to pay normal operating expenses, in accordance with a budget. As adequate protection, and solely to secure any diminution in the cash collateral and the consumable prepetition collateral, the Debtors propose to grant BofA and the prepetition secured parties replacement liens on all of the Debtors' unencumbered assets including, without limitation, all unencumbered assets created or acquired after the petition date. As additional adequate protection, the prepetition lenders will be granted superpriority claims under Section 507(b) of the Bankruptcy Code with priority in payment over any and all administrative expense claims of any kind under the Bankrutpcy Code, except for the fees and expenses of the United States Trustee and the Clerk of the Bankruptcy Court. BofA and the prepetition secured parties assert claims against the Debtors in the aggregate amount, as of March 6, 2009, of $61,690,980 in unpaid reimbursement obligations, plus interest and additional sums for reasonable costs and reasonable attorneys' fees, secured by substantialy all of the personal property of each of the Debtors. The Debtors tell the Court that based on current business projections of both business operations as well as expected timing of major sales and other asset sales, the Debtors have no immediate need for post-petition secured borrowing as provided in the DIP Credit Facility. Consequently, it is withdrawing their request for the approval of a final order as to debtor-in- possession financing. Headquartered Riverside, California, Fleetwood Enterprises -- http://www.fleetwood.com/-- produces recreational vehicles and manufactured homes. The Company has 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., at Gibson, 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. FORTUNOFF HOLDINGS: Taps CONSOR for Sale of Assets -------------------------------------------------- CONSOR Intellectual Asset Management has been asked to undertake an intense marketing and sales initiative for the intellectual property and intangible assets of Fortunoff Holdings Inc. IP assets for sale include: * Worldwide Trademark Portfolio: -- Over 70 registered trademarks including: -- Fortunoff, -- The Source, -- Prime Time, -- Oxford Hall, -- FSS, -- Fortunoff, -- The Source, and -- Avignon. * Domain Names: -- Over 75 International domain names including: -- Fortunoff.com, -- fortunoffbrides.com, and -- fortunoffjewelry.com 1-800-Fortunoff Customer Database: Over 750,000 customer names, many with detailed purchase history in jewelry, home furnishings and bridal registries. IT Assets: * Fortunoff.com Web site, including copyrighted design layout and source code; * Customer Relationship Management (CRM) System; * Fortunoff Intranet -- complete training materials, style guides, and other critical marketing/training assets; * DCWizard Warehousing System -- using radio frequency technology, provides real-time inventory management and distribution Proprietary Jewelry Designs: * Petra collection (approximately 25 designs), * House 533 collection (approximately 1,000 designs), * House 511 collection (approximately 500 designs), * House 513 collection (approximately 2,000 designs), and * Avignon-Branded Swiss watches Fortunoff Branded Products: * The Source grills; * Window treatments; * Plates, cups, bowls; and * Towels While the economy has resulted in the failure of numerous high profile retailers, Fortunoff represents a unique opportunity to leverage upon the tremendous heritage and longevity of the Fortunoff brand and related intangible assets built over the last 85+ years. With historical sales exceeding $400 million annually, along with Web traffic statistics exceeding 6.7 million page views per month, the Fortunoff IP assets offer an immediate opportunity for re-launch via brick and mortar and ecommerce. The marketing of these valuable assets will be conducted over the coming weeks, commencing with a final auction in June 2009. CONSOR can be reached at (858) 454-9091 x-216. About Fortunoff Holdings New York-based Fortunoff Holdings LLC -- http://www.fortunoff.com/ -- started out as a family-owned business founded by Max and Clara Fortunoff in 1922, until it merged with M. Fortunoff of Westbury, L.L.C. and Source Financing Corporation in 2004. Fortunoff offers customers fine jewelry and watches, antique jewelry and silver, everything for the table, fine gifts, home furnishings including bedroom and bath, fireplace furnishings, housewares, and seasonal shops including outdoor furniture shop in summer and enchanting Christmas Store in the winter. It opened some 20 satellite stores in the New Jersey, Long Island, Connecticut and Pennsylvania markets featuring outdoor furniture and grills during the Spring/Summer season and indoor furniture (and in some locations Christmas trees and decor) in the Fall/Winter season. Fortunoff Holdings and its affiliate, Fortunoff Card Company LLC, filed for Chapter 11 protection on February 5, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-10497). Lee Stein Attanasio, Esq., at Sidley Austin LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Zolfo Cooper LLC as their special financial advisor and The Garden City Group Inc. as their claims agent. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million to $500 million each. This is the second bankruptcy filing by Fortunoff. In 2008, Fortunoff Fine Jewelry and Silverware LLC filed for Chapter 11. An entity owned by NRDC Equity Partners bought Fortunoff during its first Chapter 11 case. FREESCALE SEMICONDUCTOR: Draws Spending Plan Amid Phone Biz Exit ---------------------------------------------------------------- Freescale Semiconductor announced a plan to align the company's spending with its prior decision to exit the cellular handset business. The plan encompasses employment reductions and other exit activities. The plan was finalized and approved by the Board on April 17, 2009, and is expected to be completed by December 31, 2009. Implementation of this plan and any specific employment actions related to the plan are subject to satisfaction of legal requirements, including prior consultation on the plan with work councils in some of the countries in which Freescale operates. Restructuring charges for these actions are estimated to be approximately $70 million in cash severance. Freescale is also initiating a plan to eliminate its 150mm manufacturing capability. Freescale has experienced a migration from 150mm technologies to advanced technologies at its East Kilbride facility and is seeing this evolution occur in technologies and products served by its Sendai and Toulouse 150mm fabs. The long-term trend in declining overall demand for the bulk of the products served by these fabs has resulted in low factory utilization, which has been accelerated by the current global economic climate. This plan will result in the closure of Freescale's Sendai, Japan fabrication facility. Also under this plan, Freescale has initiated a formal consultation with employees at its Toulouse, France facility. The proposal to close the facility will be evaluated through Freescale's Toulouse Work Council. The Board approved the closure plan on April 17, 2009 and Freescale expects the plan to be completed by the end of 2011. Freescale estimates the costs of this plan to be approximately $200 million including approximately $190 million in cash severance costs and $10 million in other cash costs. About Freescale Semiconductor Freescale Semiconductor -- http://www.freescale.com/-- is a global leader in the design and manufacture of embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets. The privately held company is based in Austin, Texas, and has design, research and development, manufacturing or sales operations around the world. As reported by the Troubled Company Reporter on February 23, Moody's Investors Service affirmed the corporate family, long-term debt and speculative grade liquidity ratings of Freescale. Simultaneously, Moody's downgraded the probability of default rating to Ca from Caa1. The rating outlook remains negative. The downgrade of the PDR to Ca reflects Moody's view that Freescale's recent debt exchange offer is a distressed exchange. It also reflects the very high likelihood of the transaction closing. While no payment default has occurred and there are no debt maturities until 2012, in Moody's opinion the successful closing of the transaction, which is designed to reduce debt and interest expense, would represent the occurrence of a deemed default. The Troubled Company Reporter on April 1, 2009 reported that Standard & Poor's Ratings Services raised its corporate credit rating on Austin, Texas-based Freescale Semiconductor Inc. to 'B-' from 'SD'. The rating outlook is negative. At the same time, S&P raised its senior unsecured and subordinated debt ratings to 'CCC' from 'D'. GENCORP INC: Lenders Agree to Place French Unit in Bankruptcy ------------------------------------------------------------- GenCorp Inc. entered into the First Amendment and Consent to Credit Agreement to the Company's existing Amended and Restated Credit Agreement, originally entered into as of June 21, 2007, by and among the Company, as borrower, the subsidiaries of the Company from time to time party thereto, as guarantors, the lenders from time to time party thereto and Wachovia Bank, National Association, as administrative agent for the Lenders. Snappon SA, a French subsidiary of the Company, that is neither a Credit Party nor Significant Subsidiary under the Credit Agreement and has no operations, has had legal judgments rendered against it under French law, aggregating approximately $4.0 million related to wrongful discharge claims by certain former employees of Snappon. The Amendment provides for, among other things, the consent of the Required Lenders to allow Snappon to commence voluntary bankruptcy, insolvency or similar proceedings or to allow for an involuntary bankruptcy, insolvency or similar proceedings against Snappon. Under the Amendment, the Required Lenders agreed (i) that an event of default will not be triggered with respect to the legal judgments rendered against Snappon, unless the judgments equal or exceed $10.0 million and shall not have been paid and satisfied, vacated, discharged, stayed or bonded pending appeal within thirty (30) days from the entry thereof and (ii) to consent to the commencement of voluntary or involuntary bankruptcy, insolvency or similar proceedings with respect to Snappon and that any such proceeding would not constitute an Event of Default under the Credit Agreement. The full-text copy of the Amendment and Consent to Credit Agreement is available for free at: http://ResearchArchives.com/t/s?3c9d Additionally, the Company agreed to temporarily reduce its borrowing availability under the Revolving Loan from $80.0 million to $60.0 million commencing on the Effective Date and ending on the earlier of (i) the date on which an amendment that permits the renewal, refinancing or extension of the 4.00% Convertible Notes has been approved by the Required Lenders and (ii) the date on which the Company redeems the 4.00% Convertible Notes in accordance with the terms of the Credit Agreement. About GenCorp Headquartered in Rancho Cordova, Calif., GenCorp Inc. (NYSE: GY) -- http://www.GenCorp.com/-- is a leading technology-based manufacturer of aerospace and defense products and systems with a real estate segment that includes activities related to the entitlement, sale and leasing of the company's excess real estate assets. As reported in the Troubled Company Reporter on April 2, 2009, Standard & Poor's Ratings Services said it lowered its ratings on Sacramento-based GenCorp Inc., including lowering the corporate credit rating to 'CCC+' from 'B+'. The outlook is developing. "The downgrade reflects significant uncertainty about GenCorp's ability to pay off or refinance $125 million of convertible notes if put to the company in January 2010," said Standard & Poor's credit analyst Christopher DeNicolo. As of Feb. 28, 2009, the firm had $80 million of cash and an undrawn $80 million revolving credit facility. However, the revolver cannot be used to repay the notes and the credit facility will have to be amended, likely resulting in much higher interest costs. "In addition," added Mr. DeNicolo, "the current trading price of the notes-around 70 cents on the dollar as of the date of this report-increases the likelihood that the company could enter into a distressed exchange to address the refinancing." GENERAL GROWTH: DBRS Reviews CMBS Exposure Amid Bankruptcy ---------------------------------------------------------- Dominion Bond Rating Service reviewed its exposure to General Growth Properties' sponsored assets in the U.S. CMBS transactions it rates in light of GGP's recent filing for bankruptcy. DBRS has been monitoring the health of its GGP exposure since the REIT announced it was experiencing difficulty meeting its maturating debt obligations. In total, DBRS rates seven transactions with exposure to GGP, four of which have had GGP sponsored loans transfer to special servicing. Some of the loans have upcoming maturities within the next 18 months, which could present further extension risk. Despite the numerous challenges brought upon by a difficult economic environment, the majority of these malls have maintained stable occupancy rates and continue to meet debt service obligations. However, DBRS believes these assets will continue to operate under stress as declining sales volumes erode percentage rent and tenants vie for rental abatements. Of more immediate concern to DBRS is the important precedence this voluntary bankruptcy filing will ultimately establish. In January 2009, DBRS published The Four Planks in the Platform for Recovery: The Commercial Mortgage Market and Securitization, which underlined the fact that the CMBS industry is reliant upon the courts to uphold the rule of law going forward. CMBS transactions rated by DBRS are based upon the understanding of certain principles such as special purpose entities operating as bankruptcy remote entities and the validity of non-consolidation opinions. The voluntary bankruptcy filing from GGP threatens this base assumption on a number of levels. The establishment of a collective cash collateral facility by GGP to absorb excess cash flow would violate these fundamentals and is specifically intended to disrupt the timely payment of loan principal from these performing assets. Also of importance are the fees associated with the loans that have been transferred to special servicing, which will ultimately translate into losses if not recovered from the sponsor. The special servicer is entitled to receive a monthly fee in addition to a liquidated or corrected mortgage loan fee, depending on the outcome of the transfer. For loans with subordinate B-notes in place, these fees may be absorbed in a reverse sequential manner in accordance with the respective loan's intercreditor agreement. While the fees would be expected to be contained to the lowest unrated class in each of the DBRS rated transactions, it is possible that the interest shortfalls associated with the monthly special servicing in conjunction with other specially serviced loans could cause interest shortfalls to rise into rated classes as the loans secured by the GGP malls often represent a significant portion of the respective transactions. At this point, DBRS is hopeful that the courts will uphold the bankruptcy remote nature of the partnerships, minimizing the credit impacts to DBRS rated classes. DBRS will continue to monitor the performance of each property closely while the sponsorship remains in bankruptcy and update shadow ratings as needed to reflect the individual credit characteristics of the loans. A full-text copy of DBRS's news statement is available at no charge at http://bankrupt.com/misc/DBRSCMBSdeals.PDF GENERAL MOTORS: CEO Henderson to Host Restructuring Call Today -------------------------------------------------------------- Shawn Langlois at MarketWatch reports that General Motors Corp. CEO Fritz Henderson will hold a conference call today, May 11, 2009, to update the media on GM's progress in its restructuring efforts ahead of a June 1 deadline. Mr. Langlois says the call will mark the second update since Mr. Henderson replaced Richard Wagoner as CEO in March. GM has until month's end to reach concessions with bondholders and the United Auto Workers union to avoid a bankruptcy filing. As reported by the Troubled Company Reporter, GM reported net loss of $6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of $3.3 billion in the year-ago quarter. Excluding special items, the company reported an adjusted net loss of $5.9 billion in the first quarter of 2009 compared to an adjusted net loss of $381 million in the first quarter of 2008. As of March 31, 2009, GM had $82.2 billion in total assets and $$172.8 billion in total liabilities, resulting in $90.5 billion in stockholders' deficit. "Our first quarter results underscore the importance of executing GM's revised Viability Plan, which goes further and faster to lower our break-even point," Mr. Henderson had said. "Our Plan is designed to fix the fundamentals of our business by restructuring and deleveraging our balance sheet, enhancing our revenue capability and dramatically reducing costs. It's focused on taking care of customers every single day, winning with four core brands, and investing in new products and technology, while at the same time accelerating actions to lower our cost structure to return GM to profitability quickly." On April 27, General Motors Corp. presented the United States Department of Treasury with an updated plan as required by the loan agreement signed by GM and the U.S. Treasury on December 31, 2008. The plan addresses the key restructuring targets required by the loan agreement, including a number of the critical elements of the turnaround plan that was submitted to the U.S. government on December 2, 2008. Among these are: U.S. market competitiveness; fuel economy and emissions; competitive labor cost; and restructuring of the company's unsecured debt. It also includes a timeline for repayment of the Federal loans, and an analysis of the company's positive net present value. The plan details the future reduction of GM's vehicle brands and nameplates in the U.S., further consolidation in its workforce and dealer network, accelerated capacity actions and enhanced manufacturing competitiveness, while maintaining GM's strong commitment to high-quality, fuel-efficient vehicles and advanced propulsion technologies. GM also launched a bond exchange offer for roughly $27 billion of unsecured public debt. If successful, the bond exchange would result in the conversion of a large majority of this debt to equity. GM is also in talks with the UAW to modify the terms of the Voluntary Employee Benefit Association, and with the U.S. Treasury regarding possible conversion of its debt to equity. The current bond exchange offer is conditioned on the converting to equity of at least 50% of GM's outstanding U.S. Treasury debt at June 1, 2009, and at least 50% of GM's future financial obligations to the new VEBA. GM expects a debt reduction of at least $20 billion between the two actions. In total, the U.S. Treasury debt conversion, VEBA modification and bond exchange could result in at least $44 billion in debt reduction. A full-text copy of GM's February 2009 Viability Plan is available at http://researcharchives.com/t/s?39a4 GM filed with the Securities and Exchange Commission a registration statement related to its exchange offer. The filing incorporates the revised Viability Plan. A full-text copy of the filing is available at http://ResearchArchives.com/t/s?3c09 About General Motors Corp. Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. GM admitted in its viability plan submitted to the U.S. Treasury on February 17 that it considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. Going Concern Doubt Deloitte & Touche LLP, has said there is substantial doubt about GM's ability to continue as a going concern after reviewing GM's 2008 financial report. Deloitte cited the Company's recurring losses from operations, stockholders' deficit and failure to generate sufficient cash flow to meet the Company's obligations and sustain the its operations. It said GM's future is dependent on the Company's ability to execute the Company's Viability Plan successfully or otherwise address these matters. If the Company fails to do so for any reason, the Company would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. Bankruptcy Code. Standard & Poor's Ratings Services on April 10 lowered its issue- level rating on GM's $4.5 billion senior secured revolving credit facility to 'CCC-' (one notch above the 'CC' corporate credit rating on the company) from 'CCC'. It revised the recovery rating on this facility to '2' from '1', indicating its view that lenders can expect substantial (70% to 90%) recovery in the event of a payment default. The corporate credit rating remains unchanged, at 'CC', reflecting its view of the likelihood that GM will default -- through either a bankruptcy or a distressed debt exchange. Moody's Investors Service said February 18 that the risk of a bankruptcy filing by GM and Chrysler remains high. The last rating action on GM and Chrysler was a downgrade of their Corporate Family Ratings to Ca on December 3, 2008. GENERAL MOTORS: DBRS Comments on Fiat Alliance and GM Europe Talks ------------------------------------------------------------------ Fiat S.p.A. and Chrysler LLC announced on April 30, 2009, that they have signed agreements to establish a global alliance (the Alliance). Dominion Bond Rating Service notes that the announcement of the Alliance coincided with Chrysler's filing for bankruptcy protection in the United States. DBRS notes that the Alliance in isolation has no immediate impact on the ratings of Fiat amid highly uncertain global market conditions and many other factors affecting the ratings. The main objectives of the Alliance are to increase the geographic and product diversities of both Fiat and Chrysler. The Alliance is to be formed through Chrysler's submitting a motion under Section 363 of the Bankruptcy Code requesting approval of the Alliance as well as the sale of Chrysler's principal assets to the new company (NewCo) being formed with Fiat. Fiat is to obtain an initial 20% equity interest in NewCo. Additional equity participants in NewCo include the Voluntary Employee Benefit Association (VEBA), which will be issued an equity interest of approximately 55%, as well as the U.S. Treasury and the Canadian government, which will collectively hold a 10% equity interest. DBRS notes that Fiat will be able to receive an additional 15% equity interest that can be obtained in three tranches of 5%. Each of these additional tranches remains subject to the achievement of the following established targets: (1) approval to build the Fully Integrated Robotised Engine (FIRE) engines in the United States; (2) achievement of sales of Chrysler vehicles outside of North America; and (3) regulatory approval to build a Chrysler model based on Fiat technology. Furthermore, Fiat will have the option to acquire a further 16% shareholding in Chrysler from the beginning of 2013 through June 30, 2016. DBRS notes that Fiat's shareholding in Chrysler will, however, be capped at 49%, subject to the repayment in full of the loans made to Chrysler by the U.S. Treasury. While there is no immediate rating impact, DBRS considers the Alliance to be modestly positive to the business profile of Fiat. The Alliance would appear to present an opportunity for the Company to re-enter the North American market, which remains among the most significant automotive markets despite an alarming decline in 2008 that is expected to persist through this year and possibly into 2010. DBRS notes that the North American market is likely to be more receptive to Fiat's product portfolio than in the past in light of the apparent shift in segmentation toward smaller vehicles. DBRS further notes that there are no firm commitments from Fiat to invest cash into the Alliance; this is critical as automotive original equipment manufacturers worldwide seek to preserve their liquidity positions to help them survive the current severe industry downturn. DBRS also notes that Fiat has entered into discussions regarding a possible merger between Fiat Group Automobiles, Chrysler and the European operations of General Motors Corporation (GM Europe). DBRS notes that, in the event that such a merger is executed, the resulting automotive concern (New Fiat) would be among the world's largest OEMs as combined sales in the range of six to seven million units would rank only behind Toyota Motor Corporation and roughly on par with Volkswagen AG. This would provide New Fiat with the requisite scale to compete more effectively on a global basis. DBRS notes that many details of the proposed merger remain to be addressed, including antitrust approvals. With respect to required financing, European countries where Fiat and GM Europe have plants are likely to be requested to provide guarantees in support of the debt of New Fiat. Furthermore, it is possible that Fiat Group Automobiles would be spun off from Fiat. As such, New Fiat would likely be a purely automotive concern. Unlike the acquisition of Chrysler in isolation, DBRS notes that the transactions resulting in New Fiat, if completed, could lead to rating actions. Any rating action would depend on many factors, including but not limited to the resulting business profiles, capital structures and the financial profiles of both New Fiat and Fiat. DBRS will monitor the progress of Fiat's actions regarding the expansion of its automotive activities and will provide commentaries or new rating actions when appropriate. GENERAL MOTORS: Taps Spencer Stuart to Help in Board Member Search ------------------------------------------------------------------ General Motors Corp. Chairperson Kent Kresa has hired executive- search firm Spencer Stuart to help find replacements for at least half of its 12 directors, Joann S. Lublin and John D. Stoll at The Wall Street Journal report, citing people familiar with the matter. According to WSJ, the sources said that Mr. Kresa is seeking to line up new directors to join the board as early as this summer. Citing the sources, WSJ states that Mr. Kresa was hoping to conduct the board search on his own, without the assistance from an outside search firm. WSJ relates that Mr. Kresa had planned to rely on his professional network to conduct the search. He has a deep base of contacts after several years on GM's board, a tenure as CEO of Northrop Grumman Corp. that ended in 2003, and a stint as a director at Chrysler, WSJ notes. WSJ, citing a person familiar with the matter, reports that officials at the U.S. Treasury "strongly" suggested that Mr. Kresa choose Spencer Stuart for GM's board search, telling him that the search firm "can do it quickly." The source, according to WSJ, said that the Treasury told Mr. Kresa that he would be contacted by Spencer Stuart U.S. operations chief Tom Neff. The parties spoke and "the deal was done," WSJ states, citing the source. WSJ relates that the source said that in seeking new directors, Mr. Neff deals mainly with Mr. Kresa. "The client is the chairman of the board of GM," rather than Treasury, WSJ says, citing the source. WSJ notes that Mr. Kresa didn't feel he had much leeway in choosing Mr. Neff. "Kent had Tom foisted on him," WSJ quoted another person familiar with the matter as saying. According to WSJ, many of GM's directors have been on the board since before the Company started having financial troubles in 2005. WSJ states that under the government's plan for GM, at least six of the directors will be replaced. WSJ notes that the government could own a controlling stake in a restructured GM. WSJ relates that if GM avoids a Chapter 11 filing, the government could also appoint a small portion of the directors in addition to Mr. Kreasa's picks to represent the Treasury. Citing people familiar with the matter, WSJ says that the United Auto Workers union, which has been offered 39% of GM in exchange for health- care concessions, is also likely to get to pick at least one board member. WSJ notes that the new board's take over depends on whether GM files for Chapter 11 bankruptcy protection. According to the report, a person familiar with the matter said that the new board wouldn't take over until after GM emerges from bankruptcy protection. The report states that if GM avoids bankruptcy, the new directors will likely be voted on during an annual meeting slated for August 4. Spencer Stuart Founded in 1956 and privately owned, Spencer Stuart -- http://www.spencerstuart.com/-- is an executive search consulting firm. It advises companies seeking guidance and counsels on senior leadership needs. About General Motors Corp. Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported by the Troubled Company Reporter, GM reported net loss of $6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of $3.3 billion in the year-ago quarter. Excluding special items, the company reported an adjusted net loss of $5.9 billion in the first quarter of 2009 compared to an adjusted net loss of $381 million in the first quarter of 2008. As of March 31, 2009, GM had $82.2 billion in total assets and $$172.8 billion in total liabilities, resulting in $90.5 billion in stockholders' deficit. On April 27, General Motors Corp. presented the United States Department of Treasury with an updated plan as required by the loan agreement signed by GM and the U.S. Treasury on December 31, 2008. The plan addresses the key restructuring targets required by the loan agreement, including a number of the critical elements of the plan that was submitted to the U.S. government on December 2, 2008. Among these are: U.S. market competitiveness; fuel economy and emissions; competitive labor cost; and restructuring of the company's unsecured debt. It also includes a timeline for repayment of the Federal loans, and an analysis of the company's positive net present value. The plan details the future reduction of GM's vehicle brands and nameplates in the U.S., further consolidation in its workforce and dealer network, accelerated capacity actions and enhanced manufacturing competitiveness, while maintaining GM's strong commitment to high-quality, fuel-efficient vehicles and advanced propulsion technologies. GM also launched a bond exchange offer for roughly $27 billion of unsecured public debt. If successful, the bond exchange would result in the conversion of a large majority of this debt to equity. GM is also in talks with the UAW to modify the terms of the Voluntary Employee Benefit Association, and with the U.S. Treasury regarding possible conversion of its debt to equity. The current bond exchange offer is conditioned on the converting to equity of at least 50% of GM's outstanding U.S. Treasury debt at June 1, 2009, and at least 50% of GM's future financial obligations to the new VEBA. GM expects a debt reduction of at least $20 billion between the two actions. In total, the U.S. Treasury debt conversion, VEBA modification and bond exchange could result in at least $44 billion in debt reduction. GM filed with the Securities and Exchange Commission a registration statement related to its exchange offer. The filing incorporates the revised Viability Plan. A full-text copy of the filing is available at http://ResearchArchives.com/t/s?3c09 A full-text copy of GM's viability plan presented in February 2009 is available at http://researcharchives.com/t/s?39a4 Going Concern Doubt Deloitte & Touche LLP, has said there is substantial doubt about GM's ability to continue as a going concern after reviewing GM's 2008 financial report. Deloitte cited the Company's recurring losses from operations, stockholders' deficit and failure to generate sufficient cash flow to meet the Company's obligations and sustain the its operations. It said GM's future is dependent on the Company's ability to execute the Company's Viability Plan successfully or otherwise address these matters. If the Company fails to do so for any reason, the Company would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. Bankruptcy Code. Standard & Poor's Ratings Services on April 10 lowered its issue- level rating on GM's $4.5 billion senior secured revolving credit facility to 'CCC-' (one notch above the 'CC' corporate credit rating on the company) from 'CCC'. It revised the recovery rating on this facility to '2' from '1', indicating its view that lenders can expect substantial (70% to 90%) recovery in the event of a payment default. The corporate credit rating remains unchanged, at 'CC', reflecting its view of the likelihood that GM will default -- through either a bankruptcy or a distressed debt exchange. Moody's Investors Service said February 18 that the risk of a bankruptcy filing by GM and Chrysler remains high. The last rating action on GM and Chrysler was a downgrade of their Corporate Family Ratings to Ca on December 3, 2008. GENTEK INC: Moody's Affirms 'B1' Corporate Family Rating -------------------------------------------------------- Moody's Investors Service affirmed GenTek Inc.'s B1 Corporate Family Rating, raised its Probability of Default rating to B1 from B2, and lowered the company's Speculative Grade Liquidity Rating to SGL-3 from SGL-2. The SGL downgrade reflects Moody's concern with the company's maturing credit facility and approaching debt maturities. The outlook for GenTek's ratings has changed to stable from positive. Ratings Upgraded: * Probability of Default Rating -- B1 from B2 Ratings Affirmed: * Corporate Family Rating -- B1 Ratings Downgraded: * Speculative Grade Liquidity Rating -- SGL-3 from SGL-2 * $60mm Sr Sec Revolver due 2010 -- Ba3 (LGD3, 40%) from Ba3 (LGD2, 29%) * $269mm Sr Sec Term Loan B due 2011 - -- Ba3 (LGD3, 40%) from Ba3 (LGD2, 29%) The lower SGL rating reflects Moody's concern over the company's expiring revolving credit facility and upcoming debt maturities. GenTek maintains an undrawn $60 million revolving credit facility which matures in February 2010. The expiring facility negatively impacts the liquidity rating as Moody's does not consider a facility maturing within 12 months as a committed source of external financing. On June 30, 2010, the company's term loan is scheduled to begin quarterly amortization payments of 25% of the outstanding amounts until maturity ($50 million per quarter), which could negatively impact the company's cash flows over the next 12-24 months. The SGL could be raised if the company renews or extends the current credit facility, and if it refinances the term loan at rates sustainable for its rating category. The change to a stable outlook reflects Moody's concern with GenTek's upcoming debt maturity and Moody's expectations that the company will continue to produce consistent levels of EBITDA while generating moderate amounts of positive free cash flow in spite of the weak economic environment. The B1 CFR reflects the company's low leverage for its rating category and improvement in cash flow generation following the sale of the cash intensive Noma wire harness and cable business. In 2007, GenTek sold its Noma wire harness and cable business to Electrical Components International for $75 million and used the proceeds to repay its second lien term loan. In conjunction with the elimination of the second lien term loan, the company upsized its first lien term loan by $50 million to $269 million. The rating also takes into consideration management's focus on debt reduction, a business strategy less driven by market share growth and more on improving profitability, partially offset by decreased end market diversification following the Noma divestiture. Our last rating action concerning GenTek was on April 17, 2007. At the time the company's CFR was upgraded to B1 from B2, the SGL to SGL-2 from SGL-3 and the outlook was moved to positive. The ratings were upgraded to reflect the company's reduced debt balances and expected cash flow improvements as a result of the Noma divestiture. GenTek Inc., headquartered in Parsippany, New Jersey, is a manufacturer of specialty chemicals and engineered industrial components. Revenues from continuing operations for the year ending December 31, 2008 were $608 million. GEORGIA GULF: Extends Early Participation Deadline to May 14 ------------------------------------------------------------ Georgia Gulf Corporation extended the early participation deadline and the expiration date for its private exchange offers to exchange its outstanding 7.125% Senior Notes due 2013, 9.5% Senior Notes due 2014 and 10.75% Senior Subordinated Notes due 2016, until 12:00 midnight, New York City time May 14, 2009. The exchange offers provide for the exchange of old notes for $250,000,000 aggregate principal amount of 15% Senior Secured Second Lien Notes due 2014 and 6,922,255 shares of Georgia Gulf common stock. Each exchange offer will expire at 12:00 midnight, New York City time, on May 14, 2009, unless extended. As of May 6, 2009 approximately $18.2 million, $13.9 million and $150 thousand of the outstanding $100 million, $500 million and $200 million in principal amount outstanding of the 2013, 2014 and 2016 notes had been tendered in the exchange offers. Full details of the exchange offers and related consent solicitations are included in the offering memorandum for these exchange offers, copies of which are available to Eligible Holders from Global Bondholder Services Corporation, the information agent, by calling (212) 430-3774 or toll free at (866) 873-7700. Georgia Gulf previously extended the early participation deadline and expiration date for its private exchange offers until 12:00 midnight, New York City time on May 7, 2009. The exchange offers have been made, and the new notes and shares of common stock are being offered and will be issued, in a private transaction in reliance upon an exemption from the registration requirements of the Securities Act of 1933, only to holders of old notes (i) in the United States, that are "qualified institutional buyers," as that term is defined in Rule 144A under the Securities Act, or (ii) outside the United States, that are persons other than "U.S. persons," as that term is defined in Rule 902 under the Securities Act, in offshore transactions in reliance upon Regulation S under the Securities Act. Neither the new notes nor the shares of common stock have been registered under the Securities Act of 1933 or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. About Georgia Gulf Georgia Gulf Corporation is a manufacturer and international marketer of two integrated chemical product lines, chlorovinyls and aromatics. The Company's primary chlorovinyls products are chlorine, caustic soda, vinyl chloride monomer (VCM), vinyl resins and vinyl compounds. Its aromatics products are cumene, phenol and acetone. The Company has four business segments: chlorovinyls; window and door profiles, and moldings products; outdoor building products, and aromatics. As of December 31, 2008, the Company's balance sheet showed total assets of $1.61 billion and total liabilities of $1.75 billion resulting in total stockholders' deficit of $139.92 million. As of December 31, 2008, the Company had $90 million of cash on hand as well as $143 million of borrowing capacity available under its revolving credit facility. The Company reduced net debt by $83 million during 2008 and was in compliance with its debt covenants for the quarter ended December 31, 2008. * * * As reported by the Troubled Company Reporter on April 2, 2009, Fitch Ratings has downgraded Georgia Gulf's Issuer Default Rating to 'C' from 'CC' following its announcement of an exchange offer of $250 million in second lien notes for all of its senior unsecured and subordinated notes with a par amount of $794.6 million. A minimum threshold of the exchange offer is 95% of the aggregate outstanding senior unsecured and senior subordinated notes. Fitch has also downgraded Georgia Gulf's senior secured credit facility to 'B-/RR1' from 'B/RR1'. The downgrade reflects Fitch's view that the proposed transaction constitutes a Coercive Debt Exchange in accordance with Fitch's CDE Criteria published March 3, 2009, and that a CDE or other form of default is imminent. Should the exchange prevail in full, interest expense would be reduced by about $38 million annually and debt net of cash would be reduced by $530 million. The exchange incorporates payment of accrued interest on the notes in cash. Fitch notes that $38 million in interest is due April 15, 2009 on the 9.5% senior unsecured notes due October 15, 2014 and on the 10.75% senior subordinated notes due October 15, 2016. Early exchange by April 14, 2009, is encouraged by additional consideration in the form of a pro rata share of 6.9 million shares of common stock representing 19.9% of existing equity. GMAC LLC: To Get More Govt Aid After Gaining Biz. with Chrysler --------------------------------------------------------------- The U.S. government said that it would provide more financing to GMAC LLC after the Company assumed last week "the mantle" of lender for Chrysler LLC dealers and consumers, Aparajita Saha- Bubna at The Wall Street Journal reports. The government will provide "substantial support" to GMAC, WSJ says, citing Treasury Secretary Timothy Geithner. According to WSJ, a person familiar with the matter said that GMAC could get the federal funds as early as next Saturday. WSJ relates that GMAC provides much of the financing to General Motors Corp. dealers and starting in the middle of this month, it is slated to finance Chrysler dealers, pending the federal funds. The financial support GMAC gets from the government would strengthen the Company's capital position, as the lender currently has a $11.5 billion capital hole to fill under the stress-test results, WSJ states. About GMAC LLC GMAC Financial Services -- http://www.gmacfs.com/-- formerly General Motors Acceptance Corporation, is a bank holding company with operations in North America, South America, Europe and Asia- Pacific. GMAC specializes in automotive finance, real estate finance, insurance, commercial finance and online banking. As of Dec. 31, 2008, the company had $189 billion in assets and serviced 15 million customers around the world. GMAC is the biggest lender to GM's 6,500 dealers nationwide, most of which get the financing they need to operate and buy vehicle inventory from the automaker, CNNMoney.com notes. GMAC Financial Services is wholly owned by GMAC LLC. Cerberus Capital Management LP led a group of investors that bought a 51% stake in GMAC LLC from General Motors Corp. in December 2006 for $14 billion. On December 24, 2008, GMAC Financial Services' application to become a bank holding company under the Bank Holding Company Act of 1956, as amended, was approved by the Board of Governors of the Federal Reserve System. In addition, GMAC Bank received approval from the Utah Department of Financial Institutions to convert to a state bank. * * * As reported in the Troubled Company Reporter on May 5, 2009, Standard & Poor's Ratings Services maintains its CCC/Negative/C rating on GMAC LLC despite the Company's announcement that it entered into an agreement with Chrysler Financial Services Americas LLC to provide future automotive financing products and services to Chrysler dealers and customers. GMAC LLC: Among 10 Requiring Add'l Capital; May Need Taxpayer Aid ----------------------------------------------------------------- The results of a comprehensive, forward-looking assessment of the financial conditions of the nation's 19 largest bank holding companies (BHCs) by the federal bank supervisory agencies were officially released on Thursday, May 7. The exercise -- conducted by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation -- was conducted so that supervisors could determine the capital buffers sufficient for the 19 BHCs to withstand losses and sustain lending -- even if the economic downturn is more severe than is currently anticipated. In a detailed summary of the results of the Supervisory Capital Assessment Program (SCAP), the supervisors identified the potential losses, resources available to absorb losses, and resulting capital buffer needed for the 19 participating BHCs. The SCAP is a complement to the Treasury's Capital Assistance Program (CAP), which makes capital available to financial institutions as a bridge to private capital in the future. According to the stress test results, after taking account of losses, revenues and reserve build requirements, in the aggregate, the BHCs need to add $185 billion to capital buffers to reach the target SCAP capital buffer at the end of 2010 under the more adverse scenario. With respect to this estimate: -- the $185 billion accrues to 10 of the 19 firms, meaning 9 of the 19 firms already have capital buffers sufficient to get through the adverse scenario in excess of 6 percent Tier 1 capital and 4 percent Tier 1 Common capital. -- the vast majority of this $185 billion comes from a shortfall in Tier 1 Common capital in the more adverse scenario, with virtually no shortfall in overall Tier 1 capital. This result means that while nearly all the firms have sufficient Tier 1 capital to absorb the unusually high losses of the more adverse scenario and still end 2010 with a Tier 1 risk-based ratio in excess of 6%, 10 of these firms had capital structures that are too strongly tilted toward capital other than common equity. Thus, each of the 10 firms needing to augment their capital as a result of this exercise must do so by increasing their Tier 1 Common capital. Including the capital actions made by banks and their first quarter 2009 annual results, the 10 BHCs will only need to raise a combined $74.6 billion in capital. ($ in billions) Required Capital Buffer ------------------ After Capital Actions & 2009 & 2010 As of After Q1 Bank Loss Estimates 12/31/08 Results ---- -------------- -------- ------- Citigroup Inc. $104.7 $92.6 $5.5 Bank of America Corporation 136.6 46.5 33.9 Wells Fargo & Company 86.1 17.3 13.7 Morgan Stanley 19.7 8.3 1.8 GMAC LLC 9.2 6.7 11.5 SunTrust Banks Inc. 11.8 3.4 2.2 Regions Financial Corp 9.2 2.9 2.5 Fifth Third Bancorp 9.1 2.6 1.1 KeyCorp 6.7 2.5 1.8 PNC Financial Services Group Inc 18.8 2.3 0.6 American Express Company 11.2 0.0 0.0 BB&T Corporation 8.7 0.0 0.0 The Bank of New York Mellon 5.4 0.0 0.0 Capital One Financial Corp 13.4 0.0 0.0 The Goldman Sachs Group Inc 17.8 0.0 0.0 JPMorgan Chase & Co. 97.4 0.0 0.0 MetLife Inc. 9.6 0.0 0.0 State Street Corporation 8.2 0.0 0.0 U.S. Bancorp 15.7 0.0 0.0 ------ ------ ------ $599.2 $185.0 $74.6 A copy of the Stress Test results is available for free at: http://bankrupt.com/misc/May09-StressTest.pdf According to Federal Reserve Chairman Ben S. Bernanke, the 19 banks covered by the "stress tests" play a vital role in our economy, holding among them two-thirds of the assets and more than one-half of the loans in the U.S. banking system. Not Tests of Solvency With respect to the stress tests, Mr. Bernanke clarified, "These examinations were not tests of solvency; we knew already that all these institutions meet regulatory capital standards. Rather, the assessment program was a forward-looking, "what-if" exercise intended to help supervisors gauge the extent of the additional capital buffer necessary to keep these institutions strongly capitalized and lending, even if the economy performs worse than expected between now and the end of next year." "The results released [May 7] should provide considerable comfort to investors and the public," Mr. Bernanke said. He noted that the examiners found that nearly all the banks that were evaluated have enough Tier 1 capital to absorb the higher losses envisioned under the hypothetical adverse scenario. Roughly half the firms, though, need to enhance their capital structure to put greater emphasis on common equity, which provides institutions the best protection during periods of stress. Many of the institutions have already taken actions to bolster their capital buffers and are well-positioned to raise capital from private sources over the next six months. "However, our government, through the Treasury Department, stands ready to provide whatever additional capital may be necessary to ensure that our banking system is able to navigate a challenging economic downturn." The estimates reported by the Federal Reserve represent values for a hypothetical 'what-if' scenario and are not forecasts of expected losses or revenues for the firms, a joint press release by the Federal Reserve, the U.S. Treasury and the FDIC also clarified. Nov. 9 Deadline for Capital Plan According to the joint release, any U.S. bank holding company (BHC) needing to augment its capital buffer at the conclusion of the SCAP will have until June 8th, 2009 to develop a detailed capital plan, and until November 9th, 2009 to implement that capital plan Over the next 30 days, any BHC needing to augment its capital buffer will develop a detailed capital plan to be approved by its primary supervisor, in consultation with the FDIC, and will have six months to implement that plan. In light of the potential for new commitments under the Capital Assistance Program or exchanges of existing CPP preferred stock, supervisors will consult with Treasury on the development and evaluation of the plans. The capital plan will consist of three main elements: * A detailed description of the specific actions to be taken to increase the level of capital and/or to enhance the quality of capital consistent with establishing the SCAP buffer. BHCs are encouraged to design capital plans that, wherever possible, actively seek to raise new capital from private sources. These plans should include actions such as: -- Issuance of new private capital instruments; -- Restructuring current capital instruments; -- Sales of business lines, legal entities, assets or minority interests through private transactions and through sales to the PPIP; -- Use of joint ventures, spin-offs, or other capital enhancing transactions; and -- Conservation of internal capital generation, including continued restrictions on dividends and stock repurchases and dividend deferrals, waivers and suspensions on preferred securities including trust preferred securities, with the expectation that plans should not rely on near-term potential increases in revenues to meet the capital buffer it is expected to have. * A list of steps to address weaknesses, where appropriate, in the BHC's internal processes for assessing capital needs and engaging in effective capital planning. * An outline of the steps the firm will take over time to repay government provided capital taken under the Capital Purchase Program (CPP), Targeted Investment Program (TIP), or the CAP, and reduce reliance on guaranteed debt issued under the TLGP. In addition, as part of the 30-day planning process, firms will need to review their existing management and Board in order to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment and maintain balance sheet capacity sufficient to continue prudent lending to meet the credit needs of the economy A copy of the joint release is available for free at: http://www.federalreserve.gov/newsevents/press/bcreg/20090506a.htm Comments to Stress-Test Results According to NewsBlaze, Scott Talbott, vice president of the Financial Services Roundtable, a Washington-based association representing the biggest U.S. financial companies, the $75 billion is not a huge sum for the 10 banks to raise. He said, the report relates, that nine of the 10 can do so through private means such as stock conversions or selling assets. Only GMAC, the auto finance company linked to General Motors, faces the prospect of seeking further government relief funds, he said. Louise Story and Eric Dash at The New York Times said, "Broadly speaking, the test results suggested that the banking industry was in better shape than many had feared." The two noted that the $75 billion in equity capital needed by 10 banks is "far less than many had forecast." The hypothetical scenarios created by bank examiners assume the unemployment rate would hit 10.3% and house prices would fall more than 22%. That scenario is worse than the current state of the economy, in which the jobless rate is below 9%, NewsBlaze said. In addition, the examiners assume in a worst-case scenario that 9% of all loans might sour -- a figure that is even higher than it was during the Great Depression, NYT said. According to Reuters, citing the Wall Street Journal, the government made concessions to banks that pushed back against its conclusions in its stress tests. The $13.7 billion projected capital shortfall for Wells Fargo -- from $17.3 billion -- came about after two weeks of bargaining, The Journal said. In addition, beyond the concessions, Financial Times, according to Reuters, reported that the U.S. government has assured the banks that they will be allowed to raise less than the $74.6 billion in equity mandated if earnings over the next six months beat regulators' forecasts. According to MarketWatch, Ken Lewis, chief executive of Bank of America Corp., on Friday called the government's stress-test results "pretty aggressive" but said the financial-services giant will comply and raise the required $33.9 billion. Asked about the health of his firm, Mr. Lewis said mortgage-lending arm Countrywide is "on fire, in a positive sense," right now, and added that "business is good" at Merrill Lynch. The Washington Post said U.S. stocks rose last week, erasing the year-to-date loss in the Standard & Poor's 500-stock index, as results from the government's "stress tests" of major banks reassured investors and the Labor Department said the pace of job cuts slowed in April. Bank of America and Citigroup, the Post relates, helped drive financial stocks in the S&P 500 to a 23% percent gain as the government said only one of the 19 large banks that were reviewed was likely to need additional taxpayer aid. GMAC LLC: Unlikely to Raise $11.5BB in Public Markets, Says WSJ --------------------------------------------------------------- GMAC LLC will have to raise 11.5 billion of additional capital, Aparajita Saha-Bubna at The Wall Street Journal reports, citing the U.S. Treasury. According to WSJ, the capital needed for GMAC is roughly half of its $21.9 billion of total equity. WSJ relates that GMAC is unlikely to be able to raise that money in the public markets due to increasing losses from souring mortgages and auto loans, and the possibility that the federal government will control a big stake in the Company. WSJ quoted Moody's Investors Service analyst Mark Wasden as saying, "I think the government will be an extremely important source of capital for the firm." WSJ notes that it is unlikely that owner General Motors Corp. can help GMAC out. Cerberus Capital Management LP, it's other owner, is facing struggles of its own as it grapples with its stake in bankrupt Chrysler LLC, says WSJ. According to the report, GM and Cerberus will scale back their ownership in GMAC at the end of May as a condition of the Company becoming a bank-holding firm. Much of GM's existing ownership stake in GMAC will then be placed into a trust, overseen by a trustee appointed by the Treasury, to be gradually dispersed, the report states. The report says that Cerberus will distribute the majority of its stake in GMAC to its investors. GMAC could boost capital through "mandatory convertible preferred" shares if it can't tap private markets, according to WSJ. Banks, says WSJ, could apply for new funds from the government by agreeing to sell the preferred shares to the Treasury. WSJ relates that GMAC could exchange the government's existing preferred stake in the Company for this new type of security, which would convert into common equity if the Company posts losses in the future. GMAC said in a statement that it also could issue new common equity. WSJ quoted GMAC spokesperson Gina Proia as saying, "Raising the capital would strengthen GMAC and help ensure availability of credit to our customers." GMAC, WSJ reports, is in line to gain access to a federal program that has allowed an array of financial institutions to get financing when they could have been shut out from repaying or refinancing debt as a result of the credit crisis. WSJ states that GMAC is awaiting approval from the Federal Deposit Insurance Corp. to issue FDIC-insured debt under this program. GMAC estimates that if it is approved as a bank holding company, it could raise between $5 billion and $10 billion, WSJ says. WSJ relates that GMAC could also shore up capital through "rein in lending." GMAC, says WSJ, scaled back lending to consumers toward the end of last year amid a paucity of capital and quickened its lending pace after getting $5 billion under TARP. About GMAC LLC GMAC Financial Services -- http://www.gmacfs.com/-- formerly General Motors Acceptance Corporation, is a bank holding company with operations in North America, South America, Europe and Asia- Pacific. GMAC specializes in automotive finance, real estate finance, insurance, commercial finance and online banking. As of Dec. 31, 2008, the company had $189 billion in assets and serviced 15 million customers around the world. GMAC is the biggest lender to GM's 6,500 dealers nationwide, most of which get the financing they need to operate and buy vehicle inventory from the automaker, CNNMoney.com notes. GMAC Financial Services is wholly owned by GMAC LLC. Cerberus Capital Management LP led a group of investors that bought a 51% stake in GMAC LLC from General Motors Corp. in December 2006 for $14 billion. On December 24, 2008, GMAC Financial Services' application to become a bank holding company under the Bank Holding Company Act of 1956, as amended, was approved by the Board of Governors of the Federal Reserve System. In addition, GMAC Bank received approval from the Utah Department of Financial Institutions to convert to a state bank. GOODYEAR TIRE: Moody's Assigns 'B1' Rating on $500 Mil. Notes ------------------------------------------------------------- Moody's Investors Service has assigned a B1 rating to Goodyear Tire & Rubber Company's new $500 million offering of unsecured notes. In a related action, Moody's affirmed Goodyear's Corporate Family and Probability of Default ratings of Ba3, and affirmed the Speculative Grade Liquidity Rating at SGL-3. All other long-term ratings are unchanged. The outlook remains negative. The new unsecured notes will consist of a $0.5 billion fixed rate issue with a 2016 maturity. The issue will benefit from upstream guarantees from Goodyear's material domestic subsidiaries. Goodyear is expected to use the proceeds, along with cash on hand, to repay $500 million of floating rate notes due December 2009 and general corporate purposes. While the new financing will help preserve Goodyear's liquidity profile, the recessionary global economy will challenge free cash flow generation over the near term. The affirmation of Goodyear's Ba3 Corporate Family Rating continues to reflect the company's global scale, geographic diversification and significant market share, and adequate liquidity profile amid deteriorating operating conditions within the tire industry. The recessionary environment has globally depressed both replacement tire demand and automotive original equipment demand which has been reflected in the company's much weakened performance. Goodyear has also suffered from the impact of higher raw material prices in 2008. The company was able to offset this impact for the full year 2008 with improved product mix and pricing. However, raw material price escalation dramatically negatively affected the company's fourth quarter 2008 and first quarter 2009 results, as the high cost inventory moved through the income statement. While subsequent lower raw material costs should begin to favorably impact Goodyear's performance beginning in the second quarter of 2009, the company will generate weak operating results and weak credit metrics for the assigned rating over the near-term, as production volumes remain depressed. As such, the company's outlook remains negative. Goodyear's competitive position within the tire industry is expected to support future sales, as pent-up demand from the deferral or postponement of replacement tire purchases drives growth when economic conditions rebound. Original equipment tire demand for passenger cars and commercial vehicles represent about 27% of Goodyear's 2008 total unit volumes. However, according to the company, sales attributable to the Detroit 3 in 2008 were less than 7% of total global sales. The negative outlook considers the potential for continuing deterioration in passenger miles driven, even as gasoline prices have abated from higher levels in 2008, and the global recessionary environment's impact on demand. Goodyear is expected to continue to be affected by weak industry conditions and high raw material prices built into inventory through the first half of 2009. Any continued deterioration in the company's operating performance and credit metrics will likely hasten the consideration for a ratings downgrade. Further pressuring the current ratings is the financial market's impact of significantly increasing the company's unfunded pension obligations, thereby increasing Moody's leverage measures. The B1 (LGD4, 65%) rating assigned to the new notes recognizes their junior position relative to the company's first, and second lien credit facilities as well as the benefits of upstream guarantees from material North American subsidiaries. The Speculative Grade Liquidity Rating of SGL-3 reflects an adequate liquidity profile over the next twelve months. Moody's expects Goodyear's ability to generate free cash flow over the next twelve months to be challenged by general economic conditions and lower passenger miles driven. The company's new bond issuance will help preserve Goodyear's liquidity after the $500 million of debt maturities due in December 2009. However, the company will likely continue to be challenged by a weak global economic environment. As of March 31, 2009, Goodyear maintained $1.9 billion of cash and cash equivalents with availability under the $1.5 billion revolver of about $213MM, and the ?505MM revolver essentially fully drawn. Based on seasonal fluctuations, the ?450MM securitization facility was fully utilized, with ?283MM outstanding. As such, Moody's expects the company's reliance on these lines to remain high over the near-term. The coverage ratio covenant test under the $1.5 billion revolver comes into effect when availability under the revolver, plus cash balances, goes below $150MM. Goodyear has the capacity under the indentures for its unsecured obligations to pledge additional assets (subject to the terms, limitations and exclusions provided in the respective indentures). Should the permissible basket of liens exceed the prescribed amount, Goodyear would be required to ratably secure the unsecured notes and bonds issued under the indentures. Ratings assigned: Goodyear Tire & Rubber Company -- New senior unsecured guaranteed notes, B1 (LGD-4, 65%) Ratings affirmed: -- Goodyear Tire & Rubber Company -- Corporate Family Rating, Ba3 -- Probability of Default Rating, Ba3 -- Speculative Grade Liquidity rating, SGL-3 -- $1.5 billion first lien revolving credit facility due 2013, Baa3 (LGD-1, 8%) -- $1.2 billion second lien term loan due 2014, Ba1 (LGD-2, 22%) -- 9% senior unsecured notes due 2015, B1 (LGD-4, 65%); -- Floating rate unsecured note due 2009, B1 (LGD-4, 65%); -- 8 5/8 % senior unsecured notes due 2011, B1 (LGD-4, 65%): -- 7 6/7% senior notes due 2011, B2 (LGD-6, 95%): -- 7% senior notes due 2028, B2 (LGD-6, 95%) Goodyear Dunlop Tires Europe B.V. and certain subsidiaries -- ?505 million of first lien revolving credit facilities due 2012, Baa3 (LGD-1, 8%) The last rating action for Goodyear was on February 20, 2009 when the company's Speculative Grade Liquidity Rating was lowered to SGL-3, and the Ba3 Corporate Family Rating was affirmed. Goodyear Tire & Rubber Company, based in Akron, Ohio, is one of the world's largest tire companies with 61 manufacturing facilities in 25 countries around the world. Revenues in 2008 were approximately $19.5 billion. GOODYEAR TIRE: S&P Assigns 'B+' Rating on $500 Mil. Senior Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services said it has assigned its 'B+' issue-level rating to The Goodyear Tire & Rubber Co.'s proposed $500 million senior unsecured notes due 2016, and a recovery rating of '5', indicating S&P's expectation that lenders will receive modest recovery (10% to 30%) in the event of a default. All of Goodyear's senior unsecured notes, including this note, are pari passu with respect to right of payment. S&P expects proceeds from the notes to be held until the repayment at maturity of nearly $500 million in senior floating-rate notes due Dec. 1, 2009. Standard & Poor's corporate credit rating on Akron, Ohio-based Goodyear is BB-/Negative/--. The ratings reflect the company's high leverage and the ongoing global downturn in tire demand in both the replacement and original equipment markets. Ratings List Goodyear Tire & Rubber Co. (The) Corporate credit rating BB-/Negative/-- New Rating $500 mil. senior unsecured notes due 2016 B+ Recovery Rating 5 GREAT ATLANTIC: S&P Puts 'B' Rating on Negative CreditWatch ----------------------------------------------------------- Standard & Poor's Ratings Services said it placed the ratings on three rated supermarket companies on CreditWatch with negative implications. This action reflects the possibility that current ratings could be lowered or revised in the near term to incorporate Standard & Poor's review of multi-employer pension liability given market declines experienced in 2008. The three supermarkets are: Safeway Inc. (BBB/Watch Neg/A-2), Stater Bros. Holdings Inc. (B+/Watch Neg/--), and Great Atlantic & Pacific Tea Co. Inc. (The) (B/Watch Neg/--). "While stock market performance year to date has been relatively unchanged," explained Standard & Poor's credit analyst Stella Kapur, "S&P believes that there is a risk that the funded status for many multi-employer pension plans has deteriorated and could represent meaningful obligations for plan participants because of the severe decline in market performance in 2008." GREENBRIER HOTEL: Justice Family Buys Hotel, Seeks Case Dismissal ----------------------------------------------------------------- Greenbrier Hotel Corp. announced an abrupt departure from its plans for reorganizing in bankruptcy, Bloomberg's Bill Rochelle said. Bloomberg notes that Greenbrier entered Chapter 11 in March to carry out a sale to Marriott International Inc. However, with the sale of Greenbrier to West Virginia businessman Jim Justice, the hotel's Chapter 11 case is pointed towards dismissal. Jim Justice announced May 7 that his company has purchased The Greenbrier resort and 80% of The Greenbrier Sporting Club. The purchase by the Justice Family Group, LLC was made through the acquisition of the stock of The Greenbrier's holding company. "I am very excited to become part of one of America's finest traditions," said Justice. "The Greenbrier is uniquely `West Virginian,' and I look forward to working with the team to build on its legacy." Mr. Justice also plans to seek dismissal of the bankruptcy of The Greenbrier. "Our near-term goal is to give The Greenbrier a fresh start," said Justice. "Even though the current economy is taking its toll on the resort, we are going to take a long-term view by focusing on reclaiming our five-star status and making the right investments for future growth." Michael Ward, chairman, president and chief executive officer of CSX, commented, "While this is an entirely different kind of transaction than expected, this is a great result for The Greenbrier, its employees, the community, and CSX. Mr. Justice has made his passion and enthusiasm for The Greenbrier very clear." Based in White Sulphur Springs, West Virginia, Greenbrier Hotel Corporation -- http://www.greenbrier.com-- fka CSX Hotels, Inc., The White Sulphur Springs Co. is a wholly owned subsidiary of The Greenbrier Resort and Management Corporation, which is wholly owned by CSX Corporation. Greenbrier Hotel and its affiliates filed for Chapter 11 protection on March 19, 2009, (Bankr. E. D. Va. Lead Case No.: 09- 31703) Dion W. Hayes, Esq. and Patrick L. Hayden, Esq. at McGuireWoods LLP represent the Debtors in their restructuring efforts. The Debtors propose to employ Huddleston Bolen LLP as corporate counsel; Dinsmore & Shohl LLP as special labor counsel; Kurtzman Carson Consultants LLC as claims agent. The Debtors listed assets of $50 million to $100 million and debts of $100 million to $500 million. HANOVER INSURANCE: AM Best Hikes Capital Securities Rating to bb+ ----------------------------------------------------------------- A.M. Best Co. has upgraded the financial strength rating to A (Excellent) from A- (Excellent) and issuer credit ratings to "a" from "a-" of Hanover Insurance Group Property and Casualty Companies (Hanover) (Worcester, MA) and its members. Additionally, A.M. Best has upgraded the ICR to "bbb" from "bbb-" and debt ratings to "bbb" from "bbb-" for senior debt and to "bb+" from "bb" for capital securities of the publicly traded holding company, The Hanover Insurance Group, Inc. (THG) (Worcester, MA) [NYSE: THG]. The outlook for these ratings has been revised to stable from positive. (Please see below for a detailed listing of the companies and ratings.) The upgrades reflect Hanover's excellent risk-adjusted capitalization, stemming from improved operating earnings and the elimination of dividends paid to THG from 2003 through 2007. In recent years, Hanover has sustained profitability and retained surplus through improved underwriting performance and favorable reserve development. The ratings further reflect the improved financial leverage and financial flexibility at THG since 2003. Furthermore, A.M. Best recognizes the benefits from the sale of THG's life insurance business. Partially offsetting these positive rating factors is Hanover's comparatively high underwriting leverage, primarily attributable to significant dividends paid to THG prior to 2002, which considerably reduced surplus. However, leverage measures have trended lower in recent years. In addition, A.M. Best has upgraded the FSR to A (Excellent) from A- (Excellent), the ICR to "a" from "a-" and revised the outlook to stable from positive for Professionals Direct Insurance Company (Grand Rapids, MI), which was acquired by THG in 2007. Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and ICR of "a" of Verlan Fire Insurance Company (Bedford, NH), acquired by THG in 2008. The outlook for these ratings is stable. The FSR has been upgraded to A (Excellent) from A- (Excellent) and ICRs to "a" from "a-" for Hanover Insurance Group Property and Casualty Companies and its members: -- Allmerica Financial Alliance Insurance Company -- Allmerica Financial Benefit Insurance Company -- Citizens Insurance Company of America -- Citizens Insurance Company of Ohio -- Citizens Insurance Company of the Midwest -- Citizens Insurance Company of Illinois -- The Hanover American Insurance Company -- The Hanover Insurance Company -- Hanover Lloyd's Insurance Company -- The Hanover New Jersey Insurance Company -- Massachusetts Bay Insurance Company -- AIX Specialty Insurance Company -- Nova Casualty Company The ICR has been upgraded to "bbb" from "bbb-" for The Hanover Insurance Group, Inc. These debt ratings have been upgraded: The Hanover Insurance Group, Inc.- -- to "bbb" from "bbb-" on $200 million 7.625% senior unsecured debentures, due 2025 AFC Capital Trust- -- to "bb+" from "bb" on $309 million 8.207% trust preferred securities, due 2027 HARRINGTON HOLDINGS: Moody's Affirms 'B2' Corporate Family Ratings ------------------------------------------------------------------ Moody's Investors Service affirmed Harrington Holdings, Inc.'s B2 corporate family rating and revised its ratings outlook to positive from stable. The outlook revision reflects the company's favorable organic sales/earnings growth trends that has resulted in ongoing improvements in leverage and interest coverage metrics. The outlook revision also reflects the company's conservative posture with respect to acquisitions since its recapitalization in 2007 and Moody's expectation that this will continue. The outlook revision is also supported by the company's good liquidity profile with expectations for positive free cash flow, an undrawn revolving credit facility, and significant headroom under the financial covenants governing its credit facilities. However, the affirmation of the B2 rating continues to reflect the company's small scale, the highly fragmented nature of the medical distribution market, and concerns over longer-term acquisition risk. These ratings were affirmed: -- Corporate family rating at B2; -- Probability-of-default rating at B2; -- $45 million senior secured revolving credit facility due 2013 at B1 (LGD3, 43%). Point estimate revised from (LGD3, 42%); -- $174 million first lien senior secured term loan due 2014 at B1 (LGD3, 43%). Point estimate revised from (LGD3, 42%); -- $50 million second lien senior secured term loan due 2014 at Caa1 (LGD6, 90%). Moody's subscribers can find additional information in the Harrington Credit Opinion published on Moodys.com. The last rating action was on July 22, 2008, when Moody's affirmed Harrington's B2 corporate family rating and revised its ratings outlook to stable from negative. Harrington's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of Harrington's core industry and Harrington's ratings are believed to be comparable to those of other issuers of similar credit risk. Harrington Holdings, Inc., headquartered in Cleveland, Ohio, is a leading marketer and distributor of medical supplies and equipment in the US. HARTMARX CORP: Chicago Workers Take Stand Against Plant Closure --------------------------------------------------------------- About 500 workers at the Chicago-based apparel firm Hart Schaffner & Marx will hold a rally and historic "sit in" vote today, May 11, to fight for their jobs as major lender and TARP fund recipient Wells Fargo & Co. pushes for a bankruptcy closure of the facility. The Hartmarx Workers will be joined by SEIU President Andy Stern, Rep. Phil Hare, Illinois Treasurer Alexi Giannoulias and other state and national leaders. "Mirroring the struggle of 250 Republic Windows and Doors workers who succeeded at saving their jobs last December, Hartmarx workers, members of the union Workers United, an SEIU affiliate, are receiving growing support from state and national leaders who are slamming Wells Fargo -- a $25 billion taxpayer bailout recipient -- for shortsightedly refusing to invest in U.S. companies and workers," the workers' group said in a news statement. "Wells Fargo has received $25 billion in taxpayer assistance through TARP. In other words, the workers Wells Fargo may throw out on the street have been subsidizing its operations during these tough economic times. So much for returning the favor," Congressman Phil Hare says. Illinois Treasurer Giannoulias has vowed "Unless the company remains open, [Wells Fargo] will not be doing business with the state of Illinois any longer." The Hartmarx workers' struggle sounds the alarm on what could be a firestorm of job losses and company closures perpetuated by U.S. financial institutions, the group notes. Ruby Sims who has worked at Hartmarx for 31 years states "I can't believe that a bank that got some of this [TARP] money would turn around and do us like this." In an effort to hold banks that have received over $450 billion in taxpayer bailout funds accountable for mounting costs to U.S. workers, the Service Employees International Union will announce the formation of a toll-free hotline to gather stories of workers hurt by shortsighted banking practices at Wells Fargo and other financial institutions. Chicago-based Hartmarx, the largest menswear manufacturing company in the nation, filed for bankruptcy protection in January 2009 after U.S. banks curtailed its lines of credit. The clothing maker employs 3,500 across the nation, with about 1,000 of its employees located in Rock Island and suburban Des Plaines where suits for President Obama are made. WHEN: Monday, May 11th at 10:00 a.m.-Noon CDT; Press Conference at 11:00 a.m. CDT WHERE: Hart Schaffner & Marx factory, 1680 E. Touhy in Des Plaines. ** Reporters and camera crews will be allowed to observe an up or down vote on a "sit in" and interview workers afterwards. No one will be allowed inside the plant after 10:45 a.m. A rally will follow. WHO: 500+ Hartmarx suitmakers, SEIU President Andy Stern, Rep. Phil Hare, Illinois State Treasurer Alexi Giannoulias, other state and national leaders. Workers United, an SEIU affiliate, is a union representing more than 150,000 workers in the US and Canada who work in the laundry, food service, hospitality, gaming, apparel, textiles manufacturing and distribution industries. Workers United is a new incarnation of the former ILGWU, ACTWU, UNITE and UNITE HERE unions. The Service Employees International Union, with 2 million members in Canada, the United States and Puerto Rico, is the fastest- growing union in the Americas. The union's members are in the healthcare, public services and property services industries. Based in Chicago, Illinois, Hartmarx Corporation (HTMXQ) -- http://www.hartmarx.com/-- produces and markets business, casual and golf apparel under its own brands, including Hart Schaffner Marx, Hickey-Freeman, Palm Beach, Coppley, Monarchy, Manchester Escapes, Society Brand, Racquet Club, Naturalife, Pusser's of the West Indies, Brannoch, Sansabelt, Exclusively Misook, Barrie Pace, Eye, Christopher Blue, Worn, One Girl Who . . . and b.chyll. In addition, the company has certain exclusive rights under licensing agreements to market selected products under a number of premier brands such as Austin Reed, Burberry men's tailored clothing, Ted Baker, Bobby Jones, Jack Nicklaus, Claiborne, Pierre Cardin, Lyle & Scott, Golden Bear, Jag and Dr. Martens. The Company's broad range of distribution channels includes fine specialty and leading department stores, value-oriented retailers and direct mail catalogs. Hartmarx and certain affiliates filed for bankruptcy protection on January 23, 2009 (Bankr. N.D. Ill. Lead Case No. 09-02046). George N. Panagakis, Esq., Felicia Gerber Perlman, Esq., and Eric J. Howe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed $483,108,000 in total assets and $261,220,000 in total debts as of August 31, 2008. HAWKER BEECHCRAFT: Moody's Downgrades Default Rating to 'Ca' ------------------------------------------------------------ Moody's Investors Service lowered Hawker Beechcraft Acquisition Company, LLC's probability of default rating to Ca from Caa2. At the same time, the company's corporate family rating of Caa2, B3 rating on secured bank facilities, Ca on subordinated debt and speculative grade liquidity rating of SGL-3 were left unchanged. However, instrument ratings covering Hawker Beechcraft's unsecured fixed coupon notes were placed under review for possible downgrade, and the rating on the unsecured PIK-election notes was lowered to Ca. The actions follow announcement by the company of a tender offer to use $100 million of cash to purchase portions of its outstanding unsecured fixed coupon notes, unsecured PIK- election notes and subordinated notes at substantial discounts to par value. The tender would be financed from cash on hand which has been supplemented by borrowings under the company's revolving credit facility that is now fully drawn. The outlook is developing and is contingent upon the outcome of the tender offer and greater clarity on how the company resolves its "balance sheet management plans". On May 4, 2009 Hawker Beechcraft announced it would initiate a tender offer to acquire portions of its unsecured and subordinated notes at various prescribed prices (all at substantial discounts to par value) supplemented by early response premiums. The tender process follows open market purchases during the first quarter by Hawker Beechcraft of the same collection of notes. This was deemed by Moody's to be a distressed exchange. If the tender transaction proceeds as structured, Moody's would also deem it to be a distressed exchange, which constitutes an event of default under Moody's definition of default. Given recent trading prices of the securities and the consideration being offered, Moody's believes a significant amount of securities will be tendered. The designation of a distressed exchange along with the magnitude of the implied discount to par on the notes leads to a revision of the PDR to Ca. The tender involves a cascade of priorities for acceptance with the highest priority assigned to the senior unsecured PIK-election notes, followed by the subordinated notes, and thirdly to the senior unsecured fixed rate notes. Should the full amount of $100 million be utilized in the tender process, Hawker Beechcraft could reduce its junior debt between $238 million and $333 million depending upon the mix of securities tendered and accepted. On top of the roughly $222 million of debt reduction accomplished in the earlier open market purchases, the company could cumulatively have reduced its balance sheet debt up to $460 million - $555 million, or some 19%-23% of its starting indebtedness at the time of its acquisition in 2007 (amortization of the term loan, drawings under the revolver and utilization of a trade payable financing facility would also affect the final calculation). On their own, the reduction in indebtedness and related interest expense represent developments that could improve the company's debt service capabilities going forward. However, demand levels and prospects for future earnings and cash flows in its core operations are under stress. The resolution of these countervailing trends, the ultimate amount of gross debt reduction achieved from the tender and potential unwinding of a portion of the revolving credit borrowings or other application of proceeds flowing from the company's assessment of "balance sheet management plans" leads to a developing outlook on the CFR. The bank obligations are currently rated B3. The expected loss on these obligations will be affected by the amount and mix of junior securities accepted in the tender process. However, the range of potential outcomes is anticipated to still result in B3 ratings. Hence, ratings on these instruments have been affirmed. The aggregate consideration offered to each of the junior debt instruments is suggestive of expected loss rates associated with obligations rated Ca. However, the impact of the priority cascade for acceptance raises some question on the potential loss experience for the senior unsecured fixed coupon notes which will have the lowest priority for acceptance. Consequently the ratings on those notes were placed under review for possible downgrade based on uncertainty of the amounts and mix of tranches tendered and accepted. The rating on the senior unsecured PIK-election notes was lowered to Ca based upon the expected loss implied from the offered consideration and the likelihood that a portion of these notes would be accepted in the tender process. The rating on the senior subordinated notes is currently Ca and the implied expected loss from the tender process translates to the same rating. The SGL-3 rating, designating adequate liquidity, remains unchanged. During the first quarter, Hawker Beechcraft experienced negative free cash flow and lowered the aggregate amount of short-term notes payable. As a result, its cash position declined by some $305 million from year-end to roughly $72 million. Internal resources have been supplemented by the $365 million draw under its revolving credit agreement after the close of the quarter, but up to $100 million of cash would be dedicated towards the tender process and some $79 million of short-term notes remain outstanding. Cash from operations less capex is still expected to be modestly positive over the coming year and would be positively impacted by any reduction in interest expense flowing from the tender process. However, a fully drawn revolving credit facility adversely affects scores for external liquidity. Similarly, while the company was in compliance with its net secured debt/EBITDA covenant at the end of first quarter, deployment of cash in the tender process and other applications that could be involved in the "balance sheet management" assessment could tend to reduce the cushion under this covenant if the application is other than towards secured debt reduction. Alternate liquidity remains constrained from the extent of the bank liens over the company's domestic asset base. Ratings affirmed and updated loss-given-default assessments: -- Corporate Family Rating, Caa2 -- Secured bank credit facilities, B3, (LGD-2, 27%) -- Senior subordinated, Ca (LGD-4, 66%) -- Speculative Grade Liquidity, SGL-3 Ratings changed: -- Probability of Default to Ca from Caa2 -- Outlook to developing from stable -- Senior unsecured PIK-election notes to Ca (LGD-5, 70%) from Caa3 (LGD-5, 78%) Ratings under review for possible downgrade: -- Senior unsecured fixed coupon notes Caa3 (LGD-5, 78%) The last rating action was on April 2, 2009 at which time Hawker Beechcraft's CFR and PDR were lowered to Caa2 and Caa2/LD respectively. The LD designation was subsequently removed. Hawker Beechcraft Acquisition Company, LLC, headquartered in Wichita, Kansas, is a leading manufacturer of business jets, turboprops and piston aircraft for corporations, governments and individuals worldwide. HAYES LEMMERZ: S&P Downgrades Corporate Credit Rating to 'CC' ------------------------------------------------------------- Standard & Poor's Ratings Services said it has lowered its corporate credit rating on Hayes Lemmerz International Inc. to 'CC' from 'CCC+', reflecting what S&P believes are increased near- term prospects for either a distressed debt exchange or a bankruptcy filing. S&P also lowered the issue-level ratings on the company's senior secured and unsecured debt. The outlook is negative. The downgrades follow Hayes's disclosure that it is in detailed discussions with its senior secured creditors, unsecured noteholders, and other stakeholders regarding its strategic and financial planning processes. "Although the company did not provide specific details, S&P interpret this to mean that Hayes will offer to exchange some or all of its debt for equity or new debt at a steep discount to face value," said Standard & Poor's credit analyst Gregg Lemos Stein. "Given Hayes's weak liquidity and financial risk profile, S&P would consider such an offer to be a distressed exchange and, as such, tantamount to a default. In S&P's opinion, if the company were unable to complete an exchange offer, it could file for bankruptcy," he continued. Separately, Hayes said it expects its independent auditors to express doubt about the company's ability to continue as a going concern in its 10-K report, which has been delayed. The company said its secured lenders agreed to waive any default that would arise from the receipt of such a going concern qualification or the delay in releasing the 10-K. The outlook is negative. S&P expects to lower the corporate credit rating to 'SD' and the affected issue ratings to 'D' upon completion of any future distressed exchange offer. S&P would then, shortly thereafter, assign a new corporate credit rating to Hayes based on, among other things, S&P's assessment of the company's new capital structure and liquidity profile. S&P's preliminary expectation is that, even with substantial debt and interest cost reduction, the corporate credit rating would likely not rise out of the 'CCC' category immediately following the consummation of a debt exchange because of the various challenges the company faces in the near term, most notably its exposure to weak automotive production in Europe and North America. INTERMET CORP: Seek Until June 1 to File Chapter 11 Plan -------------------------------------------------------- Intermet Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to further extend their exclusive periods to: -- file a Chapter 11 plan until June 1, 2009, and -- solicit acceptances of that plan until July 31, 2009. The Debtors are seeking about a month extension of each of the exclusive periods. According to the motion, although the Debtors have made significant progress under Chapter 11, they have to comply with the extended transactions milestone contemplated in the global customer agreement -- mainly negotiating and consummating an exit from Chapter 11. In addition, the Debtors say that they have not yet finalized the terms of their exit strategy and needs more time to final their Chapter 11 plan. The terms of the exit strategy will pave the way for an exit from bankruptcy in the next several months, the Debtors expect. A hearing is set for May 27, 2009, at 11:00 a.m., to consider the Debtors' motion. Objections, if any, are due May 18, 2009, by 4:00 p.m. About Intermet Corp. Based in Fort Worth, Texas, Intermet Corp. designs and manufactures machine precision iron and aluminum castings for the automotive and industrial markets. The Company and its debtor- affiliates filed for Chapter 11 protection on August 12, 2008 (D. Del. Case Nos. 08-11859 to 08-11866 and 08-11868 to 08-11878). Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Michael E. Comerford, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as the Debtors' counsel. James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' co-counsel. Kurtzman Carson Consultants LLC serves as the Debtors' claims, notice and balloting agent. An Official Committee of Unsecured Creditors has been formed in this case. When the Debtors filed for protection from their creditors, they listed assets of between $50 million and $100 million and debts of between $100 million and $500 million. This is the Debtors' second bankruptcy filing. Intermet Corp., along with its debtor-affiliates, filed for Chapter 11 protection on September 29, 2004 (Bankr. E.D. Mich. Case Nos. 04-67597 through 04-67614). Salvatore A. Barbatano, Esq., at Foley & Lardner LLP, represents the Debtors. In their previous bankruptcy filing, they listed $735,821,000 in total assets and $592,816,000 in total debts. Intermet Corporation emerged from this first bankruptcy filing in November 2005. JERRY BENFIELD: Case Summary & 10 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Jeffery L. Benfield April E. Benfield aka Blue Ridge Wood Products, Inc. aka Woodlawn Transportation aka Jeff Benfield Nursery, Inc. aka Benfield Land and Timber 1105 Old Toe River Rd. Newland, NC 28657 Bankruptcy Case No.: 09-10539 Chapter 11 Petition Date: May 7, 2009 Court: United States Bankruptcy Court Western District of North Carolina (Asheville) Debtor's Counsel: David G. Gray, Esq. 81 Central Avenue Asheville, NC 28801 Tel: (828) 254-6315 Email: judyhj@bellsouth.net Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ RBC Bank $6,833,405 200 Providence Road Charlotte, NC 28207 RBC Bank $3,389,405 2000 Providence Road SECURED VALUE: $3,444,000 Charlotte, NC 28202 Branch Banking & Trust $1,959,648 PO Box 58003 Charlotte, NC 28258-0 Carolina Farm Credit $1,800,000 Lighthouse Financial $485,878 American Bank Leasing $371,000 Rexel $60,000 All Points Capital $45,000 Madison Capital $29,000 Carolina First Bank $17,089 JG WENTWORTH: Moody's Downgrades Corporate Family Rating to 'C' --------------------------------------------------------------- Moody's Investors Service downgraded J.G. Wentworth's Corporate Family Rating and Senior Secured Bank Credit Facility to C from Ca. The Outlook is stable. The rating action reflects Moody's view that there is a high probability of default given the increasing pressure on the Company's liquidity position, as well as very substantial loss given default for the rated debt. The last rating action on JGW was on February 25, 2009, when Moody's downgraded the company's ratings to Ca and kept the ratings under review. J.G. Wentworth is located in Bryn Mawr, Pennsylvania, and reported assets of approximately $236 million at December 31, 2008. JOHN J. D'AMATO: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: John J. D'Amato 99 Oak Ridge Circle Weymouth, MA 02188 Bankruptcy Case No.: 09-14169 Chapter 11 Petition Date: May 7, 2009 Court: United States Bankruptcy Court District of Massachusetts (Boston) Judge: Henry J. Boroff Debtor's Counsel: Richard A. Mestone, Esq. Mestone Hogan LLC 459 Broadway Suite 204 Everett, MA 02149 Tel: (617) 381-6700 Fax: (617) 381-6703 Email: richard.mestone@mestonehogan.com Total Assets: $1,756,395 Total Debts: $2,598,973 According to its schedules of assets and liabilities, $2,562,968 of the debt is owing to secured creditors and the remaining debt to creditors holding unsecured nonpriority claims. A full-text copy of Mr. D'Amato's petition, including his list of 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/mab09-14169.pdf The petition was signed by Mr. D'Amato. KEYCORP: Among Largest Banks Needing More Capital in Stress Test --------------------------------------------------------------- The results of a comprehensive, forward-looking assessment of the financial conditions of the nation's 19 largest bank holding companies (BHCs) by the federal bank supervisory agencies were officially released on Thursday, May 7. The exercise -- conducted by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation -- was conducted so that supervisors could determine the capital buffers sufficient for the 19 BHCs to withstand losses and sustain lending -- even if the economic downturn is more severe than is currently anticipated. In a detailed summary of the results of the Supervisory Capital Assessment Program (SCAP), the supervisors identified the potential losses, resources available to absorb losses, and resulting capital buffer needed for the 19 participating BHCs. The SCAP is a complement to the Treasury's Capital Assistance Program (CAP), which makes capital available to financial institutions as a bridge to private capital in the future. According to the stress test results, after taking account of losses, revenues and reserve build requirements, in the aggregate, the BHCs need to add $185 billion to capital buffers to reach the target SCAP capital buffer at the end of 2010 under the more adverse scenario. With respect to this estimate: -- the $185 billion accrues to 10 of the 19 firms, meaning 9 of the 19 firms already have capital buffers sufficient to get through the adverse scenario in excess of 6 percent Tier 1 capital and 4 percent Tier 1 Common capital. -- the vast majority of this $185 billion comes from a shortfall in Tier 1 Common capital in the more adverse scenario, with virtually no shortfall in overall Tier 1 capital. This result means that while nearly all the firms have sufficient Tier 1 capital to absorb the unusually high losses of the more adverse scenario and still end 2010 with a Tier 1 risk-based ratio in excess of 6%, 10 of these firms had capital structures that are too strongly tilted toward capital other than common equity. Thus, each of the 10 firms needing to augment their capital as a result of this exercise must do so by increasing their Tier 1 Common capital. Including the capital actions made by banks and their first quarter 2009 annual results, the 10 BHCs will only need to raise a combined $74.6 billion in capital. ($ in billions) Required Capital Buffer ------------------ After Capital Actions & 2009 & 2010 As of After Q1 Bank Loss Estimates 12/31/08 Results ---- -------------- -------- ------- Citigroup Inc. $104.7 $92.6 $5.5 Bank of America Corporation 136.6 46.5 33.9 Wells Fargo & Company 86.1 17.3 13.7 Morgan Stanley 19.7 8.3 1.8 GMAC LLC 9.2 6.7 11.5 SunTrust Banks Inc. 11.8 3.4 2.2 Regions Financial Corp 9.2 2.9 2.5 Fifth Third Bancorp 9.1 2.6 1.1 KeyCorp 6.7 2.5 1.8 PNC Financial Services Group Inc 18.8 2.3 0.6 American Express Company 11.2 0.0 0.0 BB&T Corporation 8.7 0.0 0.0 The Bank of New York Mellon 5.4 0.0 0.0 Capital One Financial Corp 13.4 0.0 0.0 The Goldman Sachs Group Inc 17.8 0.0 0.0 JPMorgan Chase & Co. 97.4 0.0 0.0 MetLife Inc. 9.6 0.0 0.0 State Street Corporation 8.2 0.0 0.0 U.S. Bancorp 15.7 0.0 0.0 ------ ------ ------ $599.2 $185.0 $74.6 A copy of the Stress Test results is available for free at: http://bankrupt.com/misc/May09-StressTest.pdf According to Federal Reserve Chairman Ben S. Bernanke, the 19 banks covered by the "stress tests" play a vital role in our economy, holding among them two-thirds of the assets and more than one-half of the loans in the U.S. banking system. Not Tests of Solvency With respect to the stress tests, Mr. Bernanke clarified, "These examinations were not tests of solvency; we knew already that all these institutions meet regulatory capital standards. Rather, the assessment program was a forward-looking, "what-if" exercise intended to help supervisors gauge the extent of the additional capital buffer necessary to keep these institutions strongly capitalized and lending, even if the economy performs worse than expected between now and the end of next year." "The results released [May 7] should provide considerable comfort to investors and the public," Mr. Bernanke said. He noted that the examiners found that nearly all the banks that were evaluated have enough Tier 1 capital to absorb the higher losses envisioned under the hypothetical adverse scenario. Roughly half the firms, though, need to enhance their capital structure to put greater emphasis on common equity, which provides institutions the best protection during periods of stress. Many of the institutions have already taken actions to bolster their capital buffers and are well-positioned to raise capital from private sources over the next six months. "However, our government, through the Treasury Department, stands ready to provide whatever additional capital may be necessary to ensure that our banking system is able to navigate a challenging economic downturn." The estimates reported by the Federal Reserve represent values for a hypothetical 'what-if' scenario and are not forecasts of expected losses or revenues for the firms, a joint press release by the Federal Reserve, the U.S. Treasury and the FDIC also clarified. Nov. 9 Deadline for Capital Plan According to the joint release, any U.S. bank holding company (BHC) needing to augment its capital buffer at the conclusion of the SCAP will have until June 8th, 2009 to develop a detailed capital plan, and until November 9th, 2009 to implement that capital plan Over the next 30 days, any BHC needing to augment its capital buffer will develop a detailed capital plan to be approved by its primary supervisor, in consultation with the FDIC, and will have six months to implement that plan. In light of the potential for new commitments under the Capital Assistance Program or exchanges of existing CPP preferred stock, supervisors will consult with Treasury on the development and evaluation of the plans. The capital plan will consist of three main elements: * A detailed description of the specific actions to be taken to increase the level of capital and/or to enhance the quality of capital consistent with establishing the SCAP buffer. BHCs are encouraged to design capital plans that, wherever possible, actively seek to raise new capital from private sources. These plans should include actions such as: -- Issuance of new private capital instruments; -- Restructuring current capital instruments; -- Sales of business lines, legal entities, assets or minority interests through private transactions and through sales to the PPIP; -- Use of joint ventures, spin-offs, or other capital enhancing transactions; and -- Conservation of internal capital generation, including continued restrictions on dividends and stock repurchases and dividend deferrals, waivers and suspensions on preferred securities including trust preferred securities, with the expectation that plans should not rely on near-term potential increases in revenues to meet the capital buffer it is expected to have. * A list of steps to address weaknesses, where appropriate, in the BHC's internal processes for assessing capital needs and engaging in effective capital planning. * An outline of the steps the firm will take over time to repay government provided capital taken under the Capital Purchase Program (CPP), Targeted Investment Program (TIP), or the CAP, and reduce reliance on guaranteed debt issued under the TLGP. In addition, as part of the 30-day planning process, firms will need to review their existing management and Board in order to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment and maintain balance sheet capacity sufficient to continue prudent lending to meet the credit needs of the economy A copy of the joint release is available for free at: http://www.federalreserve.gov/newsevents/press/bcreg/20090506a.htm Comments to Stress-Test Results According to NewsBlaze, Scott Talbott, vice president of the Financial Services Roundtable, a Washington-based association representing the biggest U.S. financial companies, the $75 billion is not a huge sum for the 10 banks to raise. He said, the report relates, that nine of the 10 can do so through private means such as stock conversions or selling assets. Only GMAC, the auto finance company linked to General Motors, faces the prospect of seeking further government relief funds, he said. Louise Story and Eric Dash at The New York Times said, "Broadly speaking, the test results suggested that the banking industry was in better shape than many had feared." The two noted that the $75 billion in equity capital needed by 10 banks is "far less than many had forecast." The hypothetical scenarios created by bank examiners assume the unemployment rate would hit 10.3% and house prices would fall more than 22%. That scenario is worse than the current state of the economy, in which the jobless rate is below 9%, NewsBlaze said. In addition, the examiners assume in a worst-case scenario that 9% of all loans might sour -- a figure that is even higher than it was during the Great Depression, NYT said. According to Reuters, citing the Wall Street Journal, the government made concessions to banks that pushed back against its conclusions in its stress tests. The $13.7 billion projected capital shortfall for Wells Fargo -- from $17.3 billion -- came about after two weeks of bargaining, The Journal said. In addition, beyond the concessions, Financial Times, according to Reuters, reported that the U.S. government has assured the banks that they will be allowed to raise less than the $74.6 billion in equity mandated if earnings over the next six months beat regulators' forecasts. According to MarketWatch, Ken Lewis, chief executive of Bank of America Corp., on Friday called the government's stress-test results "pretty aggressive" but said the financial-services giant will comply and raise the required $33.9 billion. Asked about the health of his firm, Mr. Lewis said mortgage-lending arm Countrywide is "on fire, in a positive sense," right now, and added that "business is good" at Merrill Lynch. The Washington Post said U.S. stocks rose last week, erasing the year-to-date loss in the Standard & Poor's 500-stock index, as results from the government's "stress tests" of major banks reassured investors and the Labor Department said the pace of job cuts slowed in April. Bank of America and Citigroup, the Post relates, helped drive financial stocks in the S&P 500 to a 23% percent gain as the government said only one of the 19 large banks that were reviewed was likely to need additional taxpayer aid. KNIGHT ENERGY: Taps Patton Boggs as Special Counsel, HD Objects --------------------------------------------------------------- Knight Energy Corp. and Charles Hill Drilling, Inc., ask the U.S. Bankruptcy Court for the Northern District of Texas for authority to employ Patton Boggs LLP as special counsel. Patton Boggs will render legal services with respect to general corporate, securities, and oil and gas issues to the extent requested by the Debtors. Patton Boggs assures the Debtors that it will work closely with McElree & Smith, P.C., the proposed general restructuring counsel, to avoid duplication of efforts. The hourly rates of Patton Boggs personnel are: Alan Talesnick $445 James Muchmore $475 Patton Boggs received $25,000 retainer. The Debtors owed $169,940 for legal services rendered before the petition date. To the best of the Debtors' knowledge, Patton Boggs is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Patton Boggs LLP 2001 Ross Ave., Suite 3000 Dallas, TX 75201 Tel: (214) 758-1500 HD Special-Situations Objects HD Special-Situations, LP., a prepetition secured creditor, objects to Debtors' application of Patton Boggs as special counsel. HD related that despite Debtors' allegations that undue time and expense will be incurred if alternate counsel is used, there is simply no reason for Debtors' to employ separate counsel. The size of this case does not justify the added expense to the estate of another law firm. HR adds that the Debtors do not identify or allege the existence of any legal issue requiring specialized legal expertise. HD does not consent to the use of its cash collateral for the payment of PBLLP's fees. About Knight Energy On April 6, 2009, Irving, Texas-based Knight Energy Corp. filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code (Bankr. N.D. Tex. Case No. 09- 32163). Charles Hill Drilling, Inc., the wholly owned subsidiary of Knight, also filed a voluntary petition (Case No. 09-32165). Each of Knight and CHD intend to continue to operate their businesses and manage their properties as debtors-in-possession under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court. David L. Campbell, Esq., at McElree Smith and H. Jefferson LeForce, Esq., at Patton Boggs LLP represent the Debtor in its restructuring efforts. In March 2009, Knight Energy received a letter from HD Special- Situations, L.P., notifying the Company that the Lender had commenced foreclosure proceedings with respect to the assets that secure the Company's obligations under the $4,250,000 15% Senior Secured Promissory Note that the Company issued to the Lender in October 2008. The March 12, 2009 letter effectively served as a triggering event accelerating the Company's obligations under the Note because the Lender previously had waived the default but preserved its right to give notice of foreclosure and to proceed to foreclose as described below. In February 2009, the Lender advised the Company of the occurrence of certain "Events of Default" under the Note, which the Lender subsequently waived shortly after the February 5, 2009 letter was delivered to the Company. Thereafter, on February 24, 2009, the Lender notified the Company that it intended to commence foreclosure proceedings regarding the Assets. However, after discussions between the Lender and the Company, on February 27, 2009, this notice also was withdrawn, and the Lender agreed to discontinue the foreclosure proceedings, while reserving the right to reinitiate those proceedings at its discretion. The Lender subsequently exercised its right to reinitiate these proceedings in its March 12, 2009 letter, and the Company's obligations under the Note were effectively accelerated. The current amount due on the Note is $4,250,000, plus accrued interest of approximately $135,000, as of March 1, 2009, and as a result of the initiation of the foreclosure proceedings, the Assets have been posted for a foreclosure sale to occur at the Stephens County Courthouse in Breckenridge, Texas no earlier than April 7, 2009. The Debtors filed for bankruptcy April 6. On March 5, 2009, Charles Hill received notice from the Internal Revenue Service that the IRS had filed a lien against CHD's current property, and any property that it acquires in the future, in the amount of $118,375.82. This lien represents withheld and accrued payroll taxes that have not been paid by CHD for the periods ended June 30, 2008, and September 30, 2008. KNIGHT ENERGY: Wants to Hire McElree & Smith as Bankruptcy Counsel ------------------------------------------------------------------ Knight Energy Corp. and Charles Hill Drilling, Inc., ask the U.S. Bankruptcy Court for the Northern District of Texas for authority to employ McElree & Smith, P.C., as general restructuring counsel. McElree & Smith will, among other things: a) advise the Debtors with respect to their powers and duties as debtor-in-possession in the continued management and operation of their businesses and property; b) assist the Debtors in the disposition of assets as maybe appropriate; and c) negotiate with creditors of the Debtors and other parties- in-interest in formulating a Plan of Reorganization, and to take necessary legal steps to confirm the Plan, including, if need be, negotiations for financing the Plan. David L. Campbell, Esq., a shareholder of MSPC, tells the Court that MSPC received a $15,000 prepetition retainer from an investor in KEC named Brian Cooney for the KEC representation. As of the petition date, $13,500 remains in the retainer. MSPC also received a $35,000 prepetition from an investor in KEC named Advice Capital Management AG for the CHD representation. As of the petition date, $33,500 remains in the retainer. The Debtors will likely receive a $25,000 additional retainer from an investor for the CHD representation. The hourly rates of the firm's personnel are: Lawyers: Raymond D. Smith $495 Mark C. McElree $425 David L. Campbell $400 David A. Heidereich $315 Paralegals: Jacqualine A. Edwards $215 Lily F. Bussey $175 Barbara L. Barnes $110 Mr. Campbell assures the Court that MSPC is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Campbell can be reached at: McElree & Smith, P.C. 600 N. Pearl Street, Suite 1600 Dallas, TX 75201 Tel: (214) 953-1321 Fax: (214) 953-0695 Secured Lender's Objections HD Special-Situations, LP., a prepetition secured creditor of the Debtors, objected to the Debtors' motion to employ McElree & Smith, P.C. as counsel. HD related that: -- The Debtors' application did not adequately describe the investors funding MSPC's retainer nor does it adequately describe the nature of the funds provided by the investors. This information is necessary to enable the Court to conduct the required review of payments to Debtors' counsel. -- The application stated that Brian Cooney paid $15,000 and Advice Capital Management AG paid $35,000. The application did not disclose whether or not these individuals are equity investors, or, if so, what percentage of Debtors' equity they own. Additionally, the application did not indicate whether these amounts are being provided as a loan to the Debtors or an equity contribution to the debtors. -- Also, the application stated that a third unnamed investor may provide an additional $25,000. -- Finally, the Debtors' application indicated $3,000 in withdrawals for prepetition services. About Knight Energy On April 6, 2009, Irving, Texas-based Knight Energy Corp. filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code (Bankr. N.D. Tex. Case No. 09- 32163). Charles Hill Drilling, Inc., the wholly owned subsidiary of Knight, also filed a voluntary petition (Case No. 09-32165). Each of Knight and CHD intend to continue to operate their businesses and manage their properties as debtors-in-possession under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court. David L. Campbell, Esq., at McElree Smith and H. Jefferson LeForce, Esq., at Patton Boggs LLP represent the Debtor in its restructuring efforts. In March 2009, Knight Energy received a letter from HD Special- Situations, L.P., notifying the Company that the Lender had commenced foreclosure proceedings with respect to the assets that secure the Company's obligations under the $4,250,000 15% Senior Secured Promissory Note that the Company issued to the Lender in October 2008. The March 12, 2009 letter effectively served as a triggering event accelerating the Company's obligations under the Note because the Lender previously had waived the default but preserved its right to give notice of foreclosure and to proceed to foreclose as described below. In February 2009, the Lender advised the Company of the occurrence of certain "Events of Default" under the Note, which the Lender subsequently waived shortly after the February 5, 2009 letter was delivered to the Company. Thereafter, on February 24, 2009, the Lender notified the Company that it intended to commence foreclosure proceedings regarding the Assets. However, after discussions between the Lender and the Company, on February 27, 2009 this notice also was withdrawn, and the Lender agreed to discontinue the foreclosure proceedings, while reserving the right to reinitiate those proceedings at its discretion. The Lender subsequently exercised its right to reinitiate these proceedings in its March 12, 2009 letter, and the Company's obligations under the Note were effectively accelerated. The current amount due on the Note is $4,250,000, plus accrued interest of approximately $135,000, as of March 1, 2009, and as a result of the initiation of the foreclosure proceedings, the Assets have been posted for a foreclosure sale to occur at the Stephens County Courthouse in Breckenridge, Texas no earlier than April 7, 2009. The Debtors filed for bankruptcy April 6. On March 5, 2009, Charles Hill received notice from the Internal Revenue Service that the IRS had filed a lien against CHD's current property, and any property that it acquires in the future, in the amount of $118,375.82. This lien represents withheld and accrued payroll taxes that have not been paid by CHD for the periods ended June 30, 2008, and September 30, 2008. KNIGHT ENERGY: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Knight Energy Corp. aka Integrated Technology Group, Inc. 909 Lake Carolyn Parkway, Suite 850 Irving, TX 75039 Bankruptcy Case No.: 09-32163 Debtor-affiliates filing subject to Chapter 11 petitions: Entity Case No. ------ -------- Charles Hill Drilling, Inc. 09-32165 Type of Business: The Debtors acquire and operate drilling rigs for natural gas and crude oil. See http://www.knightenergycorp.com/ Chapter 11 Petition Date: April 6, 2009 Court: Northern District of Texas (Dallas) Judge: Stacey G. Jernigan Debtor's Counsel: David L. Campbell, Esq. dcampbell@mspc.com H. Jefferson LeForce, Esq. jleforce@pattonboggs.com Patton Boggs LLP 2001 Ross Ave., Suite 3000 Dallas, TX 75201 Tel: (214) 758-1500 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 million to $10 million The petition was signed by Bruce Hall, chief financial officer. The Debtors filed with the U.S. Bankruptcy Court for the Northern District of Texas their list of unsecured creditors, disclosing: Entity Nature of Claim Claim Amount ------ --------------- ------------ American Growth Funding Loan $75,900 1507 Capital Ave., Suite 101 Plano, TX 75074 Whitley Penn Audit/Tax Services $26,965 1400 West 7th Street Suite 400 Forth Worth, TX 76102 CBRE Investors Office Rent $14,841 AFF SPIII 909 Lockbox No. 730024 Dallas, TX 75373-0024 Florida-Atlanta Stock Transfer, Inc. Transfer agent $2,905 Wall Street Resources, Inc. Consulting $2,500 AT&T Office Telephone $1,446 Omega Business Systems Technology Storage $1,170 Central Parking System of TX, Inc. Office Parking $876 Vintage Filings, LLC SEC EDGAR Filings $566 Walstreet international, Inc. Consulting $399 PR Newswire Press Release $395 McElree & Smith, P.C. T-Mobile Mobile Telephone $360 Georgia Department of Revenue State Employee Taxes $161 Broadridge Stockholder Mailing $154 KNIGHT INC: Moody's Affirms 'Ba3' Junior Subordinated Ratings ------------------------------------------------------------- Moody's Investors Service affirmed the long-term debt ratings of Knight, Inc., Kinder Morgan Energy Partners, L.P., and their associated entities (KN Capital Trust I, KN Capital Trust III, Kinder Morgan Finance Company, ULC, and Kinder Morgan G.P., Inc.), downgraded KMP's commercial paper rating to Prime-3 from Prime-2, and assigned a negative rating outlook to each of these entities. Affirmed ratings include Knight's Ba3 junior subordinated and Ba1 senior first secured ratings and KMP's Baa2 senior unsecured note rating. However, KMP's CP rating was downgraded to Prime-3 from Prime-2. The long-term and CP ratings for Rockies Express Pipeline LLC and the CP rating of Cortez Capital Corp. were not affected by this rating action. These actions reflect KMP's rising leverage, which is in part from heavy spending in excess of cash flow for major additions to perhaps the strongest portfolio already in the midstream MLP space. KMP's higher leverage this year also increases total family leverage which includes Knight's debt and third party cash flow. The negative outlook reflects that prior strategies and current factors have increased leverage and uncertainty beyond Moody's comfort zone for the ratings. Traditionally equity friendly strategies, the steady call on cash flow for large MLP distributions to limited unit holders and the general partner, the inherent risk of substantial up-cycle cost overruns and start-up delays, and the current down-cycle in oil and gas markets contributed to leverage as well. Factors that will affect whether the outlook evolves to further negative action include 2009 and expected 2010 cash flow trends; avoiding further material cost overruns and project completion delays; whether KMP funds a large majority of its planned approximately $700 million 2009 equity offering in the public markets or, instead, to the degree it issues that equity directly to Knight and Knight funds the purchase with revolver borrowings. The cash flow shortfall is higher than originally planned. This is partly due to the previously announced additional $300 million cost overrun at the Rockies Express Pipeline pipeline project and another $100 million overrun at MidContinent Express, in each case 50% of which is KMP's share. REX started 2008 with a $5.8 billion cost estimate (100%) and the number is now $6.6 billion. During the second half of 2008, KMP announced a large cost overrun for its Louisiana pipeline project which carried over into 2009. The cash flow shortfall also stems from weak realized oil and natural gas liquids prices at the oil and gas production/CO2 business and the impact of reduced U.S. domestic refined product consumption on pipeline and terminal throughput. These are partially offset by gains in the natural gas transmission business and cost reductions. For a second consecutive quarter, KMP's first quarter 2009 distributable cash flow (principally net income plus depreciation minus sustaining capital spending but before growth capex) was below MLP cash distributions. In Moody's view, given the weak oil and gas price outlook, Moody's would expect a four to five quarter stretch in which distributable cash flow is less than distributions, adding somewhat to the required external funding to for $2.8 billion in expected 2009 growth capital spending. While KMP has firm direct and back-up sources for funding that need, in Moody's view leverage would likely rise in each case. However, importantly, with the expected progressive start-ups of the final REX East and MidContinent project pipeline stages this year, KMP's cash flow generation capacity would rise as the year progresses. In addition, Moody's are adopting higher estimates for KMP's functional sustaining capital spending to reflect Moody's estimate of annual spending needed to sustain full oil and gas reserve replacement at the CO2 unit which is largely an oil and gas exploitation, development, and production company involved in enhanced oil and natural gas liquids production. This is complicated by the fact that KMP experienced a proportionately large negative price driven reserve revision (32 mmboe) at year- end 2008 and a positive price and performance driven revision (15 mmboe) at year-end 2007. The unit reports $1 billion of 2006-2008 capital spending, falling reserves over that time frame, and essentially flat 2008 production versus 2007, indicating very high capital intensity per unit of production. During the time oil prices were elevated, the unit achieved strong margins on that production. In first quarter 2009, the unit also reported a production increase. Under definitions within KMP's partnership agreement, it reports $7.5 million in annual sustaining capex for the oil and gas production/CO2 business. However, in Moody's view in functional terms this number appears to well exceed $225 million per year. Our higher functional sustaining capital spending number reduces Moody's calculation of distributable cash flow and increases the distribution coverage shortfall. The challenge of tailoring MLP distributions to expected distributable cash flow is complicated by the presence of a significant capital intensive oil and gas production/CO2 business in the mix. Moody's expects higher peak leverage for both KMP standalone and the consolidated Knight/KMP group, with eventual leverage reduction starting from higher levels in 2010 at a time of likely still muted demand for oil, refined products, and natural gas. Sustained economic weakness on cash flows, further project cost overruns and/or start-up delays, and/or equity market weakness could slow the deleveraging process. KMP standalone Debt / EBITDA at year-end 2008 was 4.35x, under its bank revolver definitions, and is likely to rise during 2009. KMP's bank leverage covenant is currently a 5x Debt/EBITDA test, and allows for pro forma adjustments for expansion projects and acquisitions. The margin of covenant clearance is likely to narrow during 2009. Consolidating KMP and Knight together, year-end 2008 Moody's adjusted Debt / EBITDA was 5.5x and appears to be heading to more than 5.6x by year-end 2009. To the degree KMP issues its planned $700 million in equity to Knight and Knight funds that with revolver borrowings, consolidated leverage could rise as high as roughly 6x. The consolidated leverage figures are quite high for this rating level. The last rating action was on April 14, 2008 when Moody's upgraded the debt of Knight and its supported subsidiaries to senior secured Ba1 from Ba2 and to junior subordinated Ba3 from B1 as well as upgrading Kinder Morgan G.P., Inc.'s preferred stock to Ba1 from Ba2. Kinder Morgan Energy Partners, L.P. and Knight, Inc. are headquartered in Houston, Texas. LEHMAN BROTHERS: To Pay PBGC $127.6 Million to Settle Pensions -------------------------------------------------------------- Lehman Brothers Holdings Inc. and its affiliated debtors seek approval from the U.S. Bankruptcy Court for the Southern District of New York of a settlement agreement with the Pension Benefit Guaranty Corporation regarding the termination of the Lehman Brothers Holdings Inc. Retirement Plan. The Settlement Agreement dated May 4, 2009, provides, interalia, for a payment of $127,600,000 plus certain interest to the PBGC in respect of its claims against the Debtors and the LBHI Controlled Group. The Debtors relate that the Settlement Agreement: -- will allow the Debtors to move forward unimpeded in the administration of their Chapter 11 cases, including, most importantly, their ability to dispose of "controlled group" assets to maximize value for their stakeholders; -- relieves the Debtors from the distractions posed by the complex and time-consuming district court action commenced by the PBGC to terminate the Plan and requires, upon consummation of the Settlement Agreement, that the PBGC release its claims regarding the Plan against the Debtors' estates and the members of the LBH' Controlled Group, including its claims for the unfunded benefit liabilities of the Plan and premiums payable to the PBGC. The Retirement Plan and Title IV of ERISA The Plan provides pension benefits to certain present and former employees of Lehman and to their beneficiaries. The Plan has approximately 22,000 participants. The Plan is sponsored by LBHI, and the Employee Benefit Plans Committee of LBHI is the Plan Administrator. As of January 1, 2008, the Plan had $1.2 billion in assets and approximately $1.040 billion in total benefit liabilities. Largely due to market events occurring after September 15, 2008, the value of the assets of the Plan declined significantly, which resulted in the Plan being underfunded relative to its total benefit liabilities. The plan sponsor and each member of its "controlled group" as of the termination date of the plan are jointly and severally liable to the PBGC for the amount of unfunded benefit liabilities of the pension plan. Title IV also provides for the payment by the plan sponsor and its controlled group of a termination premium. If the plan sponsor and its controlled group members fail to pay the liability upon demand, the PBGC may file statutory liens against any property of the plan sponsor or controlled group members in an amount not to exceed 30% of the aggregate positive net worth of the controlled group. The Settlement Agreement LBHI, the Benefits Committee, NBH and the PGBC entered into the Settlement Agreement that provides for termination of the Plan with a termination date of Dec. 12, 2008, and resolution of the PBGC's claims for unfunded benefit liabilities and additional premiums. The Settlement Agreement also requires, upon the satisfaction of certain conditions, that the PBGC not file any liens on the assets of the LBHI Controlled Group and cause any previously filed liens to be released. The Settlement Agreement includes these salient terms: -- Trusteeship Agreement. If the Settlement Agreement is approved by the Bankruptcy Court, the PBGC and the Benefits Committee will enter into a trusteeship agreement pursuant to which the PBGC will be appointed as the Plan's statutory trustee and Dec. 12, 2008, will be set as the date of termination of the Plan. -- Settlement Amount. An aggregate payment to the PBGC in cash totaling $127,600,000 plus interest as agreed, will be made in full settlement and release of all claims of the PBGC against the LBHI Controlled Group and all claims against the LBHI Controlled Group in the Chapter 11 cases arising from or relating to the Plan; provided, however, that claims for fiduciary breach against any non-debtor member of the LBHI Controlled Group will not be released. -- Adequate Protection. In accordance with the Adequate Protection Agreement, the Escrow Agreement was executed on April 29, 2009, establishing the Escrow Account to cover the Settlement Amount. In the event the Settlement Agreement is not approved, the parties have agreed, pursuant to a side letter agreement that (i) $12,400,000 will be released and returned to NBH, and (ii) the remaining $115,200,000 will remain in the Escrow Account according to the terms of the Escrow Agreement and the Adequate Protection Agreement. -- Payment. If there is a Final Judgment approving the Settlement Agreement, within three business days of the later of (i) the earlier of the Closing or June 30, 2009, and (ii) the date upon which the PBGC and the Benefits Committee will have entered into the Trusteeship Agreement, NBH will instruct, or LBHI will cause such other LBHI Controlled Group member with authority to instruct, the Escrow Agent to release the Settlement Amount to the PBGC. -- Liens. PBGC agrees to not file any liens on the assets of any member of the LBHI Controlled Group as of December 12, 2008, while the Escrow Agreement is in place. Upon payment of the Settlement Amount, PBGC will cause any previously filed liens to be forever released. -- Withdrawal of Claims. On the later of (i) the payment in full of the Settlement Amount and (ii) the Effective Date, the PBGC will withdraw all filed claims in the chapter 11 cases regarding the Plan and agrees not to file any claims in any of the chapter 11 cases or in a case that may be commenced in the future under the Bankruptcy Code or other similar proceeding by or against any member of the LBHI Controlled Group, other than claims for breach of fiduciary duty. -- District Court Action. The District Court Action will be stayed pending a Final Judgment regarding the Settlement Agreement. If there is a Final Judgment denying approval of the Settlement Agreement or if the Benefits Committee fails for any reason to execute the Trusteeship Agreement by the later of (i) June 30, 2009, or (ii) the third day after a Final Judgment approving the Settlement Agreement, the PBGC may, in its sole discretion, reactivate the District Court Action. If the Settlement Agreement is approved, then, on the later of (i) payment in full of the Settlement Amount and (ii) the Effective Date, the PBGC will dismiss the District Court Action. The Debtors are authorized to execute, deliver, implement and fully perform any and all obligations, instruments, documents and papers and to take any and all actions reasonably necessary or appropriate to consummate the Settlement Agreement and perform any and all obligations contemplated therein. 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 September 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 September 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 September 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 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 September 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) LOUISIANA HOSPITAL: Involuntary Chapter 11 Case Summary ------------------------------------------------------- Alleged Debtor: Louisiana Hospital Center, L.L.C. 127 Carondelet Street New Orleans, LA 70130 Case Number: 09-11346 Involuntary Petition Date: May 7, 2009 Court: Eastern District of Louisiana (New Orleans) Judge: Jerry A. Brown Petitioner's Counsel: Patrick S. Garrity, Esq. pgarrity@steffeslaw.com Steffes, Virgiello & McKenzie, LLC 13702 Coursey Blvd., Building 3 Baton Rouge, LA 70816 Tel: (225) 751-1751 Fax: (225) 751-1998 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Cardiovascular Hospitals of loan $1,500,000 America, LLC 9350 East 35th St. North Suite 104 Wichita, KS 67226 Tangi East, LLC loan $550,000 71172 Hickham Field Lane Covington, LA 70433 LUMINENT MORTGAGE: District Court OKs $8MM Class Action Settlement ------------------------------------------------------------------ Lowey Dannenberg Cohen and Hart, P.C., said that on April 29, 2009, Judge Phyllis J. Hamilton of the U.S. District Court for the Northern District of California gave final approval to the $8,000,000 settlement of a securities class action on behalf of a class of investors in Luminent Mortgage Capital, Inc., common stock and options during the period February 9, 2007, through August 6, 2007. Lead Counsel Lowey Dannenberg represented Lead Plaintiff Southern Investment Company on behalf of the Class. The settlement payment resolved claims that Luminent senior officers, which invested in mortgage-backed securities and mortgage loans, falsely represented Luminent's ample liquidity, exposure to subprime debt and the safety of its upcoming dividend payment. The bullish representations were alleged to have invited investors' confidence just weeks before the Company disclosed a credit crisis and suspended its dividend in early August 2007, which resulted in an immediate 85% decline in the value of its stock. Luminent subsequently filed for Chapter 11 protection. In approving the settlement Judge Hamilton praised the recovery as "excellent" particularly in light of the bankruptcy, observing that the Class response reflected that it was an "extraordinary" outcome. Barbara Hart, Esq., head of Lowey Dannenberg's Securities Litigation practice observed, "the Lowey team had to work effectively with industry experts to analyze the intricacies of the mortgage back securities at issue and to untether the Class' recovery from the bankruptcy process for the benefit of the shareholders. Partner David Harrison, Esq., the principal litigator on the matter observed, "the result is about 17% of damages, a tremendous result for the shareholders. Luminent class members should file claims now because I'm proud to say there is real money available to compensate for their losses." Lowey Dannenberg -- http://www.lowey.com/-- is a plaintiffs' class action law firm. About Luminent Mortgage Luminent Mortgage Capital, Inc. (OTCBB: LUMCE), is a real estate investment trust, or REIT, which, together with its subsidiaries, has historically invested in two core mortgage investment strategies. Under its Residential Mortgage Credit strategy, the company invests in mortgage loans purchased from selected high- quality providers within certain established criteria as well as subordinated mortgage-backed securities and other asset-backed securities that have credit ratings below AAA. Under its Spread strategy, the company invests primarily in U.S. agency and other highly-rated single-family, adjustable-rate and hybrid adjustable- rate mortgage-backed securities. Luminent and nine subsidiaries filed on Sept. 5, 2008, for relief under Chapter 11 of the U.S Bankruptcy Code in the United States Bankruptcy Court for the District of Maryland, Baltimore Division (Lead Case No. 08-21389). Immediately prior to the filing, the Debtor executed a Plan Support and Forbearance Agreement with secured creditor Arco Capital Corp., Ltd., WAMU Capital Corp. and convertible noteholders representing 100% of the outstanding principal amount of its convertible notes. Joel I. Sher, Esq., at Shapiro Sher Guinot & Sandler, represents the Debtors as counsel. The U.S. Trustee for Region 4 appointed creditors to serve on an Official Committee of Unsecured Creditors. Jeffrey Neil Rothleder, Esq., at Arent Fox LLP, represents the Creditors Committee as counsel. In its operating report for the month of September 2008, Luminent Mortgage Capital, Inc. reported $1,960,516 in total assets and $374,868,632 in total liabilities, resulting in a $372,908,116 stockholders' deficit. Full-text copies of the Debtors' operating report for September 2008 are available for free at: http://researcharchives.com/t/s?345b At March 31, 2008, Luminent Mortgage Capital, Inc.'s consolidated balance sheet showed $3,757,205,000 in total assets, $3,980,417,000 in total liabilities, and $223,212,000 in stockholders' deficit. Luminent and its debtor-subsidiaries continue to operate their business as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. LYONDELL CHEMICAL: 13 Non-Operating Entities Added to Chapter 11 ---------------------------------------------------------------- LyondellBasell Industries on May 8 added 13 non-operating entities to Lyondell Chemical Company's reorganization filing under Chapter 11 of the U.S. Bankruptcy Code. All of the entities are U.S. companies and were added to the original Chapter 11 filing for administrative purposes. The filings will have no impact on current business or operations as none of the entities manufactures or sells products. LyondellBasell also announced that the Claims Bar Date will be moved to June 30, 2009, to have only one claims deadline for all entities in Chapter 11. LyondellBasell continues to conduct business worldwide while the company develops its reorganization plan as part of the Chapter 11 process. No LyondellBasell manufacturing operation located outside of the United States has applied for or become involved in insolvency or bankruptcy proceedings in its respective home country. About Lyondell Chemical LyondellBasell Industries is one of the world's largest polymers, petrochemicals and fuels companies. It is the global leader in polyolefins technology, production and marketing; a pioneer in propylene oxide and derivatives; and a significant producer of fuels and refined products, including biofuels. Through research and development, LyondellBasell develops innovative materials and technologies that deliver exceptional customer value and products that improve quality of life for people around the world. Headquartered in The Netherlands, LyondellBasell -- http://www.lyondellbasell.com/-- is privately owned by Access Industries. Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries, the world's third largest independent chemical company. LyondellBasell became saddled with debt as part of the US$12.7 billion merger. About a year after completing the merger, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on January 6, 2009, to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc., filed for Chapter 11. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemical estimated that consolidated assets total US$27.12 billion and debts total US$19.34 billion as of the bankruptcy filing date. Lyondell has obtained approximately $8 billion in DIP financing to fund continuing operations. The DIP financing includes two credit agreements: a $6.5 billion term loan (comprising $3.25 billion in new loans and a $3.25 billion roll-up of existing loans) and a $1.57 billion asset-backed lending facility. Luxembourg-based LyondellBasell Industries AF S.C.A. and another affiliate were voluntarily added to Lyondell Chemical's reorganization filing under Chapter 11 on April 24 in order to seek protection against claims by certain financial and U.S. trade creditors. Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lyondell Chemical Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LYONDELL CHEMICAL: Updated Voluntary Chapter 11 Case Summary ------------------------------------------------------------ Debtor: Lyondell Chemical Company 1221 McKinney Street Houston, TX 77010 Bankruptcy Case No.: 09-10023 Debtor-affiliates filing separate Chapter 11 petitions on May 8, 2009: Entity Case No. ------ -------- Basell Capital Corporation 09-12940 Basell Impact Holding Company 09-12942 Equistar Bayport, LLC 09-12943 Equistar Polypropylene, LLC 09-12944 Lyondell General Methanol Company 09-12945 Lyondell Intermediate Holding Company 09-12947 Lyondell Bayport, LLC 09-12949 Lyondell Chemical Holding Company 09-12950 Quantum Pipeline Company 09-12951 Lyondell Chemical Wilmington, Inc. 09-12952 LPC Partners, Inc. 09-12953 SCM Chemicals Inc. 09-12955 Equistar Funding Corporation 09-12956 Debtor-affiliates filing separate Chapter 11 petitions on April 24, 2009: Entity Case No. ------ -------- LyondellBasell Industries AF S.C.A. 09-12518 LyondellBasell AFGP S.a.r.l. Gerber 09-12519 Debtor-affiliates filing separate Chapter 11 petitions on January 6, 2009: Entity Case No. ------ -------- Basell Finance USA Inc. 09-10021 HOISU Ltd. 09-10022 LBIH LLC 09-10025 Lyondell Europe Holdings Inc. 09-10026 LeMean Property Holdings Corporation 09-10027 Lyondell Houston Refinery Inc. 09-10028 Lyondell LP4 Inc. 09-10029 Lyondell Petrochemical L.P. Inc. 09-10030 Millennium America Inc. 09-10031 Circle Steel Corporation 09-10032 Basell USA Inc. 09-10033 Basell North American Inc. 09-10034 Duke City Lumber Company, Inc. 09-10035 Equistar Chemicals, LP 09-10036 Glidco Leasing, Inc. 09-10037 Houston Refining LP 09-10038 H.W. Loud Co. 09-10039 Glidden Latin America Holdings Inc. 09-10040 HPT 28 Inc. 09-10042 HPT 29 Inc. 09-10043 ISB Liquidating Company 09-10044 LBI Acquisition LLC 09-10045 IMWA Equities II, Co., L.P. 09-10047 Lyondell Asia Pacific Ltd. Lyondell Chemical Delaware Company Lyondell Chemical Espana Co. Lyondell Chemical Europe Inc. Lyondell Chemical International Co. Lyondell Chemical Nederland Ltd. Lyondell Chemical Products Europe LLC Lyondell Chemical Properties LP Lyondell Chemical Technology Management Inc. Lyondell Chemical Technology 1 Inc. Lyondell Chemical Technology LP Lyondell Chimie France LLC Lyondell-Equistar Holdings Partners Lyondell Greater China Ltd. Lyondell LP3 GP LLC Lyondell LP3 Partners LP Lyondell (Pelican) Petrochemical LP 1 Inc. Lyondell Refining Company LLC Lyondell Refining I LLC LyondellBasell Advanced Polyolefins USA inc. LyondellBasell Finance Company MHC Inc. Millennium America Holdings Inc. Millennium Chemicals Inc. Millennium Holdings LLC Millennium Petrochemicals GP LLC Millennium Petrochemicals Inc. Millennium Petrochemicals LP LLC Millennium Petrochemicals Partners LP Millennium Realty Inc. Millennium Specialty Chemicals Inc. Millennium US Op Co. LLC Millennium Worldwide Holdings I Inc. MWH South America LLC National Distillers & Chemical Corporation NDCC International II Inc. Nell Acquisition (US) LLC Penn Export Company Inc. Penn Navigation Company Penn Shipping Company Inc. PH Burbank Holdings Inc. Power Liquidating Company Inc. Quantum Acceptance Corporation SCM Plants Inc. Suburban Propane GP Inc. Tiona Ltd. UAR Liquidatiing Inc. USI Chemicals International Inc. USI Credit Corp. USI Puerto Rico Properties Inc. Walter Kidde & Company Inc. Wyatt Industries Inc. Type of Business: LyondellBassel; is is refiner of crude oil; a significant producer of gasoline blending components; a global manufacturer of chemicals and polymers, including polyolefins and advanced polyolefins; and the leading developer and licensor of technologies for the production of polymers. Following the acquisition of Lyondell in 2007, LyondellBasell became the world's largest independent producer of polypropylene and advanced polyolefins products, a leading supplier of polyethylene, and a global leader in the development and licensing of polypropylene and polyethylene processes and related catalyst sales. The group is estimated to generate 2007 revenues of USUS$44 billion and EBITDA of US$4.1 billion reflecting strong performance of Lyondell and Basell businesses at the top of the cycle. See http://www.lyondellbasell.com/ Court: United States Bankruptcy Court Southern District of New York (Manhattan) Judge: Robert E. Gerber Debtor's Counsel: Deryck A. Palmer, Esq. deryck.palmer@cwt.com Cadwalader, Wickersham & Taft LLP One World Financial Center LLP New York, NY 10281 Tel: (212)504-6000 Fax: (212)504-6666 Financial Advisor: Evercore Partners 55 East 52nd Street New York, NY 10055 http://www.evercore.com Tel: 212.857.3100 Fax: 212.857.3101 Restructuring Advisor: Alix Partners and its subsidiary AP Services LLC Chief Restructuring Officer: Kevin M. McShea AlixPartners, LLP 9 West 57th Street Suite 3420 New York, New York 10019 http://www.alixpartners.com Tel: 212.490.2500 Fax: 212.490.1344 Restructuring Advisor to European entities: Clifford Chance LLP Total Assets: US$27,117,000,000 as of Nov. 13, 2008 Total Debts: US$19,337,000,000 as of Nov. 13, 2008 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ The Bank of New York LyondellBasell US$615,000,000 as Indenture Trustee Industries AF SCA EUR500,000,000 One Canada Square 48th Floor London E14 5AL England Global Trust Services Tel: 44-207-570-1784 Fax: 44-207-964-6030 The Bank of New York Millennium US$241,395,000 as Indenture Trustee America Inc. Attn: Christopher Greene 7.625% Senior 101 Barclay Street, 8 West unsecured notes New York, NY 10286 due 2026 Tel: (212) 815-2923 Fax: (212) 815-2704 Petroles Der Venezuela SA trade debt US$233,631,019 Attn: Alexis Reyes Balza Edif Padvsa Torre Dests Caracas, Venezuela Tel: 58-212-708-1893 Fax: 58-212-708-3944 BASF Corp judgment US$206,407,918 Attn: Christopher Landau Kirkland & Ellis LLP 655 15th St., NW, Suite 1200 Washington, DC 20005 Tel: (202) 879-5087 Fax: (202) 879-5200 Sonatrach trade debt US$206,407,918 Attn: F. Benouzid Djenane El Malik Hydra Algiers, Algeria 16035 Tel: (213) 2154-8011 Fax: (213) 2154-7700 GIM Channelview Congeneration trade debt US$93,237,221 8580 Sheldon Road Houston, Texas 77049 Tel: (212) 325-2542 Fax: (212) 322-2882 Linde Gas LLC trade debt US$15,120,054 Attn: Ruth Ann Pruitt Enterprises Texas Pipeline 889760 Expedite Way Chicago, Il 60695 Tel: (713) 767-4136 Fax: (713) 767-4150 Calpine Corporation trade debt US$12,000,000 Attn: Shirley Matthews 12000 Lawndale Houston, TX 77017 Tel: (713) 456-1331 Fax: (713) 456-1335 Castor Americas Inc. trade debt US$10,909,397 360 Madison Avenue, 19th flr. New York, NY 10017 Enterprises Texas Pipeline trade debt US$10,543,050 LLC Attn: Mike Stevens 1100 Louisiana Houston, TX 77002 Tel: (713) 381-6900 Fax: (713) 381-6573 or (713) 381-788 Chevron Phillips Chemical trade debt US$10,276,934 Co. Attn: Erin Lane 10001 Six Pines Drive The Woodlands, TX 77381 Tel: (832) 813-4839 Fax: (832) 813-6051 Air Products LLC trade debt US$8,940,466 Attn: Ralph Alva Dept. CH10200 Palatine, IL 60055 Tel: (713) 964-4054 Fax: (800) 545-4548 Air Liquide America Corp. trade debt US$8,940,466 1091 PPG Drive Westlake, LA 70669 Tel: (713) 896-2173 Fax: (713) 642-8030 SAP America Inc. trade debt US$7,206,052 3999 W. Chester Pike New Square, PA 19073 Tel: (610) 661-1000 Fax: (610) 661-4013 Jacobs Filed Services North trade debt US$6,800,086 America Attn: Mike Wagner 1401 Elm Street Dallas, TX 75202 Tel: (713) 669-8400 Fax: (713) 321-6216 BASF Corporation trade debt US$6,673,978 Attn: Gerald Flood 100 Campus Drive Florham Park, NJ 07932 Tel: (713) 759-3092 Fax: (800) 634-9105 Wyatt Field Service Company trade debt US$6,535,171 2060 North Loop West Houston, TX 77018 Tel: (713) 684-4573 Fax: (713) 937-0931 Kirby Inland Marine trade debt US$6,177,481 PO Box 200788 Houston, TX 77216-0788 Tel: (713) 435-1000 Fax: (713) 435-1515 Morris Congeneration LLC trade debt US$5,033,947 Attn: Carolyn Gibson 33 South Grand Avenue Suite 1570 Los Angeles, CA 90071 Tel: (815) 941-0765 Fax: (815) 941-1375 Veolia Environment Services trade debt US$4,974,965 Attn: Vance Whatley PO Box 70610 Chicago, IL 60673 Tel: (713) 307-2113 Fax: (713) 321-6001 Arco Midcon LLC trade debt US$4,860,683 Attn: Janet Sabio 15600 JFK Blvd., Suite 300 Houston, TX 77032 Tel: (281) 366-4757 Fax: (713) 986-5426 Union Pacific Railroad trade debt US$4,508,100 12567 Collections Center Drive Chicago, IL 60693 Tel: (402) 544-0211 Fax: (402) 501-0027 BEELINE.COM Inc. trade debt US$3,941,868 12724 Gran Bay Pkwy. W. Suite 200 Jacksonville, FL 32258 Tel: (713) 309-3203 Fax: (904) 527-5827 Brock Services Ltd. trade debt US$3,915,346 Attn: Paul Brown 2022 Humble Place Drive Humble, TX 77338 Tel: (409) 838-2282 Fax: (713) 321-4582 Chemtrade Refinery Services trade debt US$3,765,034 Inc. Attn: Diana Piva PO Box 30 Beaumont, TX 77704 Tel: (416) 496-4148 Fax: (281) 446-1729 Norfolk Southern trade debt US$3,744,752 Attn: Bridget Baldwin PO Box 532729 Atlanta, GA 30353 Tel: (404) 529-2209 Fax: (404) 589-6740 Arcardis trade debt US$3,570,657 4815 Prospectus Drive Durham, NC 27713 Tel: (919) 544-4535 Fax: (281) 497-7258 Computer Services Corp. trade debt US$3,509,883 3179 Fairview Park Dr. Falls Church, VA 22042 Tel: (703) 876-1000 Fax: (703) 641-3990 Westlake Petrochemical trade debt US$3,500,314 Corporation Attn: Peter Kestner 2801 Post Oak Blvd. Houston, TX 77056 Tel: (713) 585-2921 Fax: (337) 583-4996 Kellog, Brown & Root trade debt US$3,410,715 Industrial PO Box 951009 Dallas, TX 75395 Tel: (214) 752-8300 Fax: (214) 752-8366 Chevron Products Company trade debt US$3,403,234 Attn: Valerie Booth Chevron Products 1400 Smith St. Houston, TX 77002 Tel: (713) 372-5286 Fax: (281) 582-5732 S&B Engineering & trade debt US$3,312,809 Contractors 7825 Park Place Blvd. Houston, TX 77087 Tel: (713) 845-4024 Fax: (713) 847-5327 Austin Industrial trade debt US$3,295,071 PO Box 87888 Houston, TX 77287 Tel: (713) 641-3400 Fax: (713) 641-2424 Catalyst Service Inc. trade debt US$3,206,830 Attn: Paul Chaskey PO Box 201143 Dallas, TX 75320 Tel: (281) 471-5522 Fax: (281) 478-2693 Stolt Tankers trade debt US$3,155,250 800 Connecticut Avenue 4th Floor East Norwalk, CT 06854 Tel: (203) 838-7100 Fax: (281) 860-5145 CIBO Specialty Chemicals trade debt US$3,152,745 Attn: Kendal Goodell PO Box 3475 Tulsa, OK 74101 Tel: (918) 615-7941 Fax: (918) 615-7023 JV Industrial Companies Ltd. trade debt US$3,119,377 2221 Sens Road La Porte, TX Tel: (281) 842-9353 Fax: (281) 471-9353 A. Schulman Inc. trade debt US$3,101,798 3550 W. Market Street Suite 300 Akron, OH 44333 Tel: (248) 643-6100 Fax: (248) 643-7839 BP Products North American trade debt US$3,089,011 Inc. PO Box 3092 Houston, TX 77253 Tel: (281) 366-4331 Fax: (281) 366-7546 Tauber Oil Inc. trade debt US$3,024,000 PO Box 4645 Houston, TX 77210 Tel: (713) 869-8700 Fax: (713) 879-8069 Burlington Northern Santa Fe trade debt US$2,966,815 Attn: Todd Whitmore 3115 Solutions Center Chicago, IL 60677 Tel: (785) 435-3637 Fax: (785) 436-6767 Basic Industries trade debt US$2,847,272 PO Box 1334 Houston, TX 77251 Tel: (225) 756-7660 Fax: (713) 675-8691 ExxonMobil Chemical Co. trade debt US$2,847,272 Attn: Deanna Foltyn 13501 Katy Freeway Houston, TX 77079 Tel: (281) 870-6848 Fax: (304) 747-2154 Sunoco Chemicals trade debt US$2,732,611 8811 Strang Road La Porte, TX 77571 Tel: (281) 476-0303 Fax: (281) 930-2070 CDI Engineering Group Inc. trade debt US$2,717,576 PO Box 88924 Chicago, IL 60695-1924 Tel: (713) 354-0602 Fax: (713) 309-2086 Marathon Petroleum Company trade debt US$2,705,279 LLC PO Box 3128 Houston, TX 77253 Tel: (713) 629-6600 Fax: (419) 421-4565 Methanex Methanol Company trade debt US$2,674,473 15301 Dallas Pkwy, Suite 1150 Addison, TX 75001 Tel: (972) 308-0412 Fax: (972) 960-7908 Centerpoint Energy Gas Rec. trade debt US$2,630,177 LLC-CGSI Attn: Mary Trevino PO Box 200905 Houston, TX 77216 Tel: (713) 207-3503 Fax: (713) 951-1689 The petition was signed by vice-president Alan S. Bigman. LYONDELL CHEMICAL: Parent Sees Mid-December Ch. 11 Emergence ------------------------------------------------------------ LyondellBasell Industries CEO Volker Trautz said that the Company would emerge from Chapter 11 bankruptcy in the middle of December 2009, Lisa Jucca at Reuters reports. Citing Mr. Trautz, Reuters relates that LyondellBasell is on track with its restructuring plan and its liquidity situation is stable. Reuters quoted Mr. Trautz as saying, "What makes me confident is the current performance of the company and the way we work together with the lenders. So far we are within our work plan." According to Reuters, Mr. Trautz said that he didn't expect LyondellBasell to arrange large sales of assets to raise cash. Small sales might be possible, the report says, citing Mr. Trautz. "Assets are valued at a very low level at the moment. It may happen that we sell some small assets. I doubt that with the current valuations our lenders will ask us to sell something bigger," the report quoted Mr. Trautz as saying. Mr. Trautz, Reuters relates, said that he expected the petrochemical industry to follow in the steps of the automotive industry and consolidate. LyondellBasell Industries is one of the world's largest polymers, petrochemicals and fuels companies. It is the global leader in polyolefins technology, production and marketing; a pioneer in propylene oxide and derivatives; and a significant producer of fuels and refined products, including biofuels. Through research and development, LyondellBasell develops innovative materials and technologies that deliver exceptional customer value and products that improve quality of life for people around the world. Headquartered in The Netherlands, LyondellBasell -- http://www.lyondellbasell.com/-- is privately owned by Access Industries. Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries, the world's third largest independent chemical company. LyondellBasell became saddled with debt as part of the US$12.7 billion merger. About a year after completing the merger, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on January 6, 2009, to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc., filed for Chapter 11. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemical estimated that consolidated assets total US$27.12 billion and debts total US$19.34 billion as of the bankruptcy filing date. Lyondell has obtained approximately $8 billion in DIP financing to fund continuing operations. The DIP financing includes two credit agreements: a $6.5 billion term loan (comprising $3.25 billion in new loans and a $3.25 billion roll-up of existing loans) and a $1.57 billion asset-backed lending facility. Luxembourg-based LyondellBasell Industries AF S.C.A. and another affiliate were voluntarily added to Lyondell Chemical's reorganization filing under Chapter 11 on April 24 in order to seek protection against claims by certain financial and U.S. trade creditors. Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lyondell Chemical Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MAGNA ENTERTAINMENT: Hearing on State's Appeal to Ruling Moved -------------------------------------------------------------- The Associated Press reports that the U.S. Bankruptcy Court for the District of Delaware has postponed the hearing on a challenge by Maryland officials to a ruling issued in the bankruptcy case of Magna Entertainment Corp. The AP relates that the court ruling being challenged prevents government entities from interfering with Magna Entertainment's properties or denying the Company any licenses simply because it is in bankruptcy. Maryland and Baltimore officials, The AP states, are seeking to ensure that Pimlico and the Preakness stay in Maryland. According to The AP, the Court was scheduled to hear on Thursday the arguments on requests by the attorneys for the state of Maryland and city of Baltimore to reconsider an order that they think grants Magna Entertainment too much protection. Court documents say that it has been moved to June 11. Based in Aurora, Ontario, Magna Entertainment Corp. is North America's largest owner and operator of horse racetracks, based on revenue. The Company develops, owns and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities. MEC also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. MEC owns and operates AmTote International, Inc., a provider of totalisator services to the pari-mutuel industry, XpressBet(R), a national Internet and telephone account wagering system, as well as MagnaBet(TM) internationally. Pursuant to joint ventures, MEC has a fifty percent interest in HorseRacing TV(R), a 24-hour horse racing television network, and TrackNet Media Group LLC, a content management company formed for distribution of the full breadth of MEC's horse racing content. As of December 31, 2008, the Company had total assets of $1,049,387,000 and total debts of $958,591,000. Following its failure to meet obligations to lenders led by PNC Bank, National Association, and Wells Fargo Bank, National Association, and controlling shareholder MI Developments Inc.'s decision not to provide further financial backing, Magna Entertainment Corp. and 24 affiliates filed for Chapter 11 on March 5, 2009 (Bankr. D. Del., Lead Case No. 09-10720). Marcia L. Goldstein, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, have been engaged as bankruptcy counsel. L. Katherine Good, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., are the Debtors' local counsel. Miller Buckfire & Co. LLC, has been tapped as financial advisor and Kurtzman Carson Consultants LLC, as claims agent. MARCOS DEVARIE DIAZ: Wants Additional 20 Days in Schedules Filing ----------------------------------------------------------------- Marcos Devarie Diaz asks the U.S. Bankruptcy Court for the District of Puerto Rico to extend by an additional 20 days its deadline to file its schedules of assets and liabilities and statement of financial affairs. The Debtor relates that it needs sufficient time to review and analyze its records and complete the task. The Debtor is in the process of completing the compilation of the documentation needed for the schedules and statement of financial affairs required in this case. Caguas, Puerto Rico-based Marcos Devarie Diaz, aka Marcos Devarie, dba Centro Cardiovascular Integral, and Aixa Morales Fontanez aka Aixa Morales filed for Chapter 11 on April 23, 2009 (Bankr. D. P.R. Case No. 09-03181). Juan Manuel Suarez Cobo, Esq., at Legal Partners PSC represents the Debtors in their restructuring efforts. The Debtors' assets range from $10 million to $50 million and their debts from $1 million to $10 million. MARK IV: Court Extends Schedules and SOFA Filing Until June 15 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended until June 15, 2009, Mark IV Industries, Inc., and its debtor-affiliates' time to file their schedules of assets and liabilities, schedules of executory contracts and unexpired leases and statements of financial affairs. Given the size and complexity of their businesses, the Debtors have a significant amount of information to prepare in order to file their schedules and statements. The Debtors must compile information from books, records and documents relating to transactions at numerous locations. The Debtors related that they have commenced the task of gathering the necessary information to prepare and finalize the schedules and statements. The Debtors add that the extension is in the best interests of their estates, their creditors, and other parties in interest. About Mark IV Industries Headquartered in Amherst, New York, Mark IV Industries, Inc., -- http://www.mark-iv.com/-- is a privately held leading global diversified manufacturer of highly engineered systems and components for vehicles, transportation infrastructure and equipment. The Company's systems and components are designed to promote a cleaner and safer environment and include power transmission, air admission and cooling, advanced radio frequency, and information display, technologies. The Company has a geographically diverse innovation, marketing and manufacturing footprint. Mark IV filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York on April 30. Mark IV's International and IVHS operations were not included in the filing and will continue their business operations without supervision from the U.S. courts. Additional information about the Company's Chapter 11 restructuring can also be found at http://www.MARKIVRESTRUCTURING.com/ MARK IV: Proposes to Hire Skadden Arps as Bankruptcy Counsel ------------------------------------------------------------ Mark IV Industries, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for permission to employ Skadden, Arps, Slate, Meagher & Flom LLP as counsel. Skadden will: 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) advise the Debtors with respect to corporate transactions and corporate governance, and in any negotiations and out- of-court agreements with creditors, equity holders, prospective acquirers, and investors; c) assist the Debtors with respect to employee matters; d) attend meetings and negotiate with representatives of creditors and other parties in interest and advise and consult on the conduct of the Chapter 11 cases, including all of the legal and administrative requirements of operating in Chapter 11; e) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on their behalf, the defense of any actions commenced against those estates, negotiations concerning all litigation in which the Debtors may be involved and objections to claims filed against the estates; f) review and prepare on behalf of the Debtors all documents and agreements as they become necessary and desirable; g) review and prepare on behalf of the Debtors all pleadings, motions, administrative and procedural applications, answers, orders, reports, papers, supporting schedules and statements necessary to the administration of the estates; h) negotiate and prepare on the Debtors' behalf Plan of Reorganization, disclosure statement and all related agreements and documents and take any necessary action on behalf of the Debtors to obtain confirmation of the Plan; i) review and object to claims; analyze, recommend, prepare, and bring any causes of action created under the Bankruptcy Code; j) advise the Debtors in connection with any sale of assets; k) appear before this Court, any appellate courts, and the U.S. Trustee, and protect the interests of the Debtors' estates before the courts and the U.S. Trustee; and l) perform all other necessary legal services and provide all other necessary legal advice to the Debtors in connection with these Chapter 11 cases. J. Eric Ivester, Esq., member of the firm of Skadden, tells the Court that the firm received $1,000,000 to be held as on-account cash for the advance payment of prepetition professional fees and expenses incurred and charged by Skadden in its representation of the Debtors, the balance of which would become an evergreen retainer for professional fees and expenses incurred and charged by Skadden in its representation of the Debtors upon the commencement of these Chapter 11 cases. The Debtors paid Skadden $1,360,046 to replenish the On-Account Cash. The hourly rates of Skadden personnel are: Associates and Counsel $360 to $835 Partners $730 to $1,050 Legal Assistants and Support Staff $175 to $295 Mr. Ivester assures the Court that Skadden is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Ivester can be reached at: Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036 Tel: 212.735.3000 Fax: 212.735.2000/1 About Mark IV Industries Headquartered in Amherst, New York, Mark IV Industries, Inc., -- http://www.mark-iv.com/-- is a privately held leading global diversified manufacturer of highly engineered systems and components for vehicles, transportation infrastructure and equipment. The Company's systems and components are designed to promote a cleaner and safer environment and include power transmission, air admission and cooling, advanced radio frequency, and information display, technologies. The Company has a geographically diverse innovation, marketing and manufacturing footprint. Mark IV filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York on April 30. Mark IV's International and IVHS operations were not included in the filing and will continue their business operations without supervision from the U.S. courts. Additional information about the Company's Chapter 11 restructuring can also be found at http://www.MARKIVRESTRUCTURING.com/ MICHEAL VICK: Court to Consider "Realistic" Plan on June 9 ---------------------------------------------------------- Judge Frank Santoro of the U.S. Bankruptcy Court for the Eastern District of Virginia (Newport News) will hold a hearing on June 9 to consider approval of a "realistic" plan for Michael Vick, a former player from the National Football League who is nearing the end of a prison sentence for holding dog fights. Judge Santoro earlier declined to approve Mr. Vick's Chapter 11 proposal that largely relied on his return to the NFL in order to repay creditors. According to The Associated Press, the judge noted that NFL commissioner Roger Goodell has not guaranteed whether he would list Mr. Vick's suspension after the former Atlanta Falcons star completes his 23-month prison sentence. The Chapter 11 plan that was denied by the Bankruptcy Court called for Mr. Vick to keep the first $750,000 a year that he earns, with a percentage of the exceeding amount going to creditors. The disclosure statement explaining the Plan said that unsecured creditors' claims against Mr. Vick range between $13.9 million and $31.3 million, Bloomberg reported. With respect to the terms of the new plan, Judge Santoro, according to AP, said Mr. Vick should liquidate some of his vehicles and one or both of the expensive homes the former football star wanted to keep in Virginia. Mr. Vick's lawyer, Paul Campsen said at the April 28 status conference that the new plan to be submitted by Mr. Vick by June 9 will incorporate changes suggested by the judge but will still be based largely on resuming his NFL career. The judge has already approved a settlement by Mr. Vick and the Falcons pursuant to which Mr. Vick will pay $6.5 million to settle their contract dispute. His former team earlier claimed it was owed $21.2 million. Vick Still a Debtor-in-Possession According to Bloomberg's Bill Rochelle, the Bankruptcy Court has deferred ruling on a request that a Chapter 11 trustee be appointed in Mr. Vick's bankruptcy case. This means that Mr. Vick would still be a debtor-in-possession and would continue to manage his bankrupt estates. Judge Santoro, according to Mr. Rochelle, previously ruled that there would be a Chapter 11 trustee without a confirmed plan or conversion of the case to liquidation in Chapter 7, in which a trustee is appointed automatically. About Michael Vick Michael Dwayne Vick, born June 26, 1980 in Newport News, Virginia, is a suspended National Football League quarterback under contract with the Atlanta Falcons team. In 2007, a U.S. federal district court convicted him and several co-defendants of criminal conspiracy resulting from felonious dog fighting and sentenced him to serve 23 months in prison. He is being held in the United States Penitentiary at Leavenworth, Kansas. Mr. Vick is also under indictment for two related Virginia state felony charges for his role in the dogfighting ring and related gambling activity. His state trial has been delayed until he is released from federal prison. He faces a maximum 10-year state prison term if convicted on both counts. Mr. Vick filed a chapter 11 petition on July 7, 2008 (Bankr. E.D. Va. Case No. 08-50775). Dennis T. Lewandowski, Esq., and Paul K. Campsen, Esq., at Kaufman & Canoles, P.C., represent the Debtor in his restructuring efforts. Mr. Vick listed assets of $10 million to $50 million and debts of $10 million to $50 million. MORGAN STANLEY: Among 10 Banks Needing More Capital in Stress Test ------------------------------------------------------------------ The results of a comprehensive, forward-looking assessment of the financial conditions of the nation's 19 largest bank holding companies (BHCs) by the federal bank supervisory agencies were officially released on Thursday, May 7. The exercise -- conducted by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation -- was conducted so that supervisors could determine the capital buffers sufficient for the 19 BHCs to withstand losses and sustain lending -- even if the economic downturn is more severe than is currently anticipated. In a detailed summary of the results of the Supervisory Capital Assessment Program (SCAP), the supervisors identified the potential losses, resources available to absorb losses, and resulting capital buffer needed for the 19 participating BHCs. The SCAP is a complement to the Treasury's Capital Assistance Program (CAP), which makes capital available to financial institutions as a bridge to private capital in the future. According to the stress test results, after taking account of losses, revenues and reserve build requirements, in the aggregate, the BHCs need to add $185 billion to capital buffers to reach the target SCAP capital buffer at the end of 2010 under the more adverse scenario. With respect to this estimate: -- the $185 billion accrues to 10 of the 19 firms, meaning 9 of the 19 firms already have capital buffers sufficient to get through the adverse scenario in excess of 6 percent Tier 1 capital and 4 percent Tier 1 Common capital. -- the vast majority of this $185 billion comes from a shortfall in Tier 1 Common capital in the more adverse scenario, with virtually no shortfall in overall Tier 1 capital. This result means that while nearly all the firms have sufficient Tier 1 capital to absorb the unusually high losses of the more adverse scenario and still end 2010 with a Tier 1 risk-based ratio in excess of 6%, 10 of these firms had capital structures that are too strongly tilted toward capital other than common equity. Thus, each of the 10 firms needing to augment their capital as a result of this exercise must do so by increasing their Tier 1 Common capital. Including the capital actions made by banks and their first quarter 2009 annual results, the 10 BHCs will only need to raise a combined $74.6 billion in capital. ($ in billions) Required Capital Buffer ------------------ After Capital Actions & 2009 & 2010 As of After Q1 Bank Loss Estimates 12/31/08 Results ---- -------------- -------- ------- Citigroup Inc. $104.7 $92.6 $5.5 Bank of America Corporation 136.6 46.5 33.9 Wells Fargo & Company 86.1 17.3 13.7 Morgan Stanley 19.7 8.3 1.8 GMAC LLC 9.2 6.7 11.5 SunTrust Banks Inc. 11.8 3.4 2.2 Regions Financial Corp 9.2 2.9 2.5 Fifth Third Bancorp 9.1 2.6 1.1 KeyCorp 6.7 2.5 1.8 PNC Financial Services Group Inc 18.8 2.3 0.6 American Express Company 11.2 0.0 0.0 BB&T Corporation 8.7 0.0 0.0 The Bank of New York Mellon 5.4 0.0 0.0 Capital One Financial Corp 13.4 0.0 0.0 The Goldman Sachs Group Inc 17.8 0.0 0.0 JPMorgan Chase & Co. 97.4 0.0 0.0 MetLife Inc. 9.6 0.0 0.0 State Street Corporation 8.2 0.0 0.0 U.S. Bancorp 15.7 0.0 0.0 ------ ------ ------ $599.2 $185.0 $74.6 A copy of the Stress Test results is available for free at: http://bankrupt.com/misc/May09-StressTest.pdf According to Federal Reserve Chairman Ben S. Bernanke, the 19 banks covered by the "stress tests" play a vital role in our economy, holding among them two-thirds of the assets and more than one-half of the loans in the U.S. banking system. Not Tests of Solvency With respect to the stress tests, Mr. Bernanke clarified, "These examinations were not tests of solvency; we knew already that all these institutions meet regulatory capital standards. Rather, the assessment program was a forward-looking, "what-if" exercise intended to help supervisors gauge the extent of the additional capital buffer necessary to keep these institutions strongly capitalized and lending, even if the economy performs worse than expected between now and the end of next year." "The results released [May 7] should provide considerable comfort to investors and the public," Mr. Bernanke said. He noted that the examiners found that nearly all the banks that were evaluated have enough Tier 1 capital to absorb the higher losses envisioned under the hypothetical adverse scenario. Roughly half the firms, though, need to enhance their capital structure to put greater emphasis on common equity, which provides institutions the best protection during periods of stress. Many of the institutions have already taken actions to bolster their capital buffers and are well-positioned to raise capital from private sources over the next six months. "However, our government, through the Treasury Department, stands ready to provide whatever additional capital may be necessary to ensure that our banking system is able to navigate a challenging economic downturn." The estimates reported by the Federal Reserve represent values for a hypothetical 'what-if' scenario and are not forecasts of expected losses or revenues for the firms, a joint press release by the Federal Reserve, the U.S. Treasury and the FDIC also clarified. Nov. 9 Deadline for Capital Plan According to the joint release, any U.S. bank holding company (BHC) needing to augment its capital buffer at the conclusion of the SCAP will have until June 8th, 2009 to develop a detailed capital plan, and until November 9th, 2009 to implement that capital plan Over the next 30 days, any BHC needing to augment its capital buffer will develop a detailed capital plan to be approved by its primary supervisor, in consultation with the FDIC, and will have six months to implement that plan. In light of the potential for new commitments under the Capital Assistance Program or exchanges of existing CPP preferred stock, supervisors will consult with Treasury on the development and evaluation of the plans. The capital plan will consist of three main elements: * A detailed description of the specific actions to be taken to increase the level of capital and/or to enhance the quality of capital consistent with establishing the SCAP buffer. BHCs are encouraged to design capital plans that, wherever possible, actively seek to raise new capital from private sources. These plans should include actions such as: -- Issuance of new private capital instruments; -- Restructuring current capital instruments; -- Sales of business lines, legal entities, assets or minority interests through private transactions and through sales to the PPIP; -- Use of joint ventures, spin-offs, or other capital enhancing transactions; and -- Conservation of internal capital generation, including continued restrictions on dividends and stock repurchases and dividend deferrals, waivers and suspensions on preferred securities including trust preferred securities, with the expectation that plans should not rely on near-term potential increases in revenues to meet the capital buffer it is expected to have. * A list of steps to address weaknesses, where appropriate, in the BHC's internal processes for assessing capital needs and engaging in effective capital planning. * An outline of the steps the firm will take over time to repay government provided capital taken under the Capital Purchase Program (CPP), Targeted Investment Program (TIP), or the CAP, and reduce reliance on guaranteed debt issued under the TLGP. In addition, as part of the 30-day planning process, firms will need to review their existing management and Board in order to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment and maintain balance sheet capacity sufficient to continue prudent lending to meet the credit needs of the economy A copy of the joint release is available for free at: http://www.federalreserve.gov/newsevents/press/bcreg/20090506a.htm Comments to Stress-Test Results According to NewsBlaze, Scott Talbott, vice president of the Financial Services Roundtable, a Washington-based association representing the biggest U.S. financial companies, the $75 billion is not a huge sum for the 10 banks to raise. He said, the report relates, that nine of the 10 can do so through private means such as stock conversions or selling assets. Only GMAC, the auto finance company linked to General Motors, faces the prospect of seeking further government relief funds, he said. Louise Story and Eric Dash at The New York Times said, "Broadly speaking, the test results suggested that the banking industry was in better shape than many had feared." The two noted that the $75 billion in equity capital needed by 10 banks is "far less than many had forecast." The hypothetical scenarios created by bank examiners assume the unemployment rate would hit 10.3% and house prices would fall more than 22%. That scenario is worse than the current state of the economy, in which the jobless rate is below 9%, NewsBlaze said. In addition, the examiners assume in a worst-case scenario that 9% of all loans might sour -- a figure that is even higher than it was during the Great Depression, NYT said. According to Reuters, citing the Wall Street Journal, the government made concessions to banks that pushed back against its conclusions in its stress tests. The $13.7 billion projected capital shortfall for Wells Fargo -- from $17.3 billion -- came about after two weeks of bargaining, The Journal said. In addition, beyond the concessions, Financial Times, according to Reuters, reported that the U.S. government has assured the banks that they will be allowed to raise less than the $74.6 billion in equity mandated if earnings over the next six months beat regulators' forecasts. According to MarketWatch, Ken Lewis, chief executive of Bank of America Corp., on Friday called the government's stress-test results "pretty aggressive" but said the financial-services giant will comply and raise the required $33.9 billion. Asked about the health of his firm, Mr. Lewis said mortgage-lending arm Countrywide is "on fire, in a positive sense," right now, and added that "business is good" at Merrill Lynch. The Washington Post said U.S. stocks rose last week, erasing the year-to-date loss in the Standard & Poor's 500-stock index, as results from the government's "stress tests" of major banks reassured investors and the Labor Department said the pace of job cuts slowed in April. Bank of America and Citigroup, the Post relates, helped drive financial stocks in the S&P 500 to a 23% percent gain as the government said only one of the 19 large banks that were reviewed was likely to need additional taxpayer aid. MPC CORPORATION: Gateway Wants Cases Converted to Chapter 7 ----------------------------------------------------------- Gateway Inc. asks the U.S. Bankruptcy Court for the District of Delaware to convert the Chapter 11 cases of MPC Corp. and its debtor-affiliates to a Chapter 7 liquidation proceedings. Gateway argues that the Debtors' cases have been pending for nearly six month. During the pendency of the Chapter 11 case, the Debtors ceased all operations and liquidated substantially all their assets, Gateway relates. Indeed, it appears that the Debtors are mere shell companies operating solely for the purpose of collecting outstanding receivables and investigating potential avoidance actions, according to Gateway. Gateway further argues that the Debtors' estates continue to incur needles administrative expenses to the detriment of the estates and their creditors. There is no hope of a successful reorganization; therefore, an immediate conversion of the Debtors' cases to a Chapter 7 is the most efficient and cost effective means to wind down their estates, Gateway points out. The Debtors have entered into a transition services agreement with Gateway, which performed certain accounting, manufacturing and marketing services. The Debtors owe about $15.4 million to Gateway under the agreement as of Dec. 1, 2008. A hearing is set for May 18, 2009, at 10:00 a.m., to consider the Gateway's motion. Objections, if any, are due May 12, 2009, at 4:00 p.m. Womble Carlyle Sandridge & Rice PLLC represents Gateway as its attorney. About MPC Corporation Headquartered in Nampa, Idaho, MPC Corporation -- http://www.mpccorp.com/-- sells personal computer and provides computer softwares and hardwares to mid-size businesses, government agencies and education organizations. The Debtors acquired Gateway Professional Divison from Gateway Inc. and Gateway Technologies Inc. in October 1, 2007. The company and eight of its affiliates filed for Chapter 11 protection on Nov. 6, 2008 (Bankr. D. Del. Lead Case No. 08-12673). Richard A. Robinson, Esq., at Reed Smith LLP, represents the Debtors in their restructuring efforts. The Debtor selected Focus Management Group USA, LLC, as its financial advisor. Roberta A. DeAngelis, the United States Trustee for Region 3, appointed seven creditors to serve on an Official Committee of Unsecured Creditors for the chapter 11 cases of MPC Corporation and its debtor-affiliates. Hahn & Hessen LLP has been named as Committee's lead counsel. As of June 30, 2008, the Debtors have $258.3 million in total assets and $277.8 million in total debts. MT DEVELOPMENT: Case Summary & 10 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Mt Development, L.L.C. fdba A&R Homes, LLC 3850 E. Huber, #3 Mesa, AZ 85205 Bankruptcy Case No.: 09-09770 Chapter 11 Petition Date: May 7, 2009 Court: United States Bankruptcy Court District of Arizona (Phoenix) Judge: James M. Marlar Debtor's Counsel: Bradley Jay Stevens, Esq. Jennings, Strouss & Salmon, P.L.C. The Collier Center, 11th Floor 201 East Washington Street Phoenix, AZ 85004-2385 Tel: (602) 262-5955 Fax: (602) 495-2729 Email: bstevens@jsslaw.com Total Assets: $672,888 Total Debts: $4,724,646 According to its schedules of assets and liabilities, $648,214 of the debt is owing to secured creditors, $160,000 for taxes owed to governmental units, and the remaining debt to creditors holding unsecured nonpriority claims. A full-text copy of the Debtor's petition, including its list of 10 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/azb09-09770.pdf The petition was signed by Ray Mehan, manager of the Company. MUELLER WATER: S&P Downgrades Corporate Credit Rating to 'B' ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on Mueller Water Products Inc., including the long-term corporate credit rating to 'B' from 'BB-', and placed the ratings on CreditWatch with negative implications. The company had total balance sheet debt of more than $1 billion at March 31, 2009. Mueller announced weak fiscal second-quarter results with sales down more than 20% and an operating loss for the quarter. "The downgrade reflects S&P's expectation that operating conditions will remain challenging and that credit measures will deteriorate beyond S&P's previous range of expectations," said Standard & Poor's credit analyst Dan Picciotto. In addition, the company will seek to relax financial covenants. In order to obtain covenant relief, the company is likely to experience higher interest costs, which will reduce free cash flow generation. Conditions in a number of key end markets have been difficult and appear unlikely to improve meaningfully in the near term. The ratings on Mueller reflect the company's highly leveraged financial risk profile and weak business risk profile. Mueller operates in the moderately cyclical niche markets of the North American water infrastructure market and maintains a good position. The company offers a full line of water infrastructure, flow control, and piping component system products, including ductile iron pipe, fire hydrants, and pipe fittings. New housing starts and replacement needs for aging water infrastructure are key drivers of the business. Nonresidential construction activity also fuels demand but Standard & Poor's expects this to soften over the next couple of years. Residential housing remains weak, while municipal demand has declined recently. Mueller's profitability has deteriorated, with the adjusted operating margin (before depreciation and amortization) declining from the high-teens percentage area to closer to 10%. The decline reflects lower volumes and higher raw material costs, which have been only partially offset by increased pricing. Mueller's financial profile is highly leveraged. The company's capital expenditures and working capital usage represents a moderate use of cash. As of March 31, 2009, total debt (including operating leases and postretirement benefit obligations) to EBITDA was more than 5x and funds from operations to total debt approached 10%. These credit measures are likely to deteriorate further given the challenging operating environment. In resolving the CreditWatch S&P will examine developments related to the company's plan to seek an amendment to financial covenants under its credit agreement. If Mueller is able to receive adequate relief from lenders in a timely fashion, S&P would expect to affirm the ratings. If the company is delayed in amending its covenants or if S&P consider relief to be inadequate, S&P could lower the ratings further. N AMERICAN SCIENTIFIC: Closes $2MM Sale of Brachytherapy Unit ------------------------------------------------------------- The North American Scientific, Inc., North American Scientific, Inc., a California corporation and wholly owned subsidiary of the Company, consummated the sale of assets of the Company's prostate brachytherapy business to Best Theratronics, Ltd., a Canadian federal corporation, pursuant to the terms of the Purchase and Sale Agreement entered into on March 11, 2009 and an order authorizing the sale of certain assets dated April 8, 2009 from the Bankruptcy Court. Pursuant to the terms and subject to the conditions set forth in the Purchase Agreement, Purchaser agreed to purchase substantially all of the assets of the Sub relating to the Sub's prostate brachytherapy business for $2,000,000 and the assumption of certain liabilities of the Sub. The Purchase Price will be paid: (i) $1,250,000 cash at the closing, (ii) $750,000 payable in seven monthly installments of $100,000 and one final payment of $50,000 following the closing of the Asset Sale pursuant to the provisions of the secured promissory note. The Purchase Price is subject to reduction in the event the gross sales of the Sub's prostate brachytherapy business measured over a certain period preceding the closing of the Asset Sale have decreased in excess of 25% of the gross sales generated during a comparable period. The Purchase Agreement provides that the Sub will indemnify Purchaser against losses or damages arising out of or relating to (i) any breach of any representation or warranty, nonfulfillment of any covenant by the Sub contained in the Purchase Agreement, (ii) any liabilities of the Sub retained by the Sub, and (iii) any and all actions, claims, judgments, costs and expenses incident to the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition of the same, or in enforcing the indemnity provisions of the Purchase Agreement. North American Scientific made customary representations, warranties and covenants in the Asset Purchase Agreement. About North American Scientific North American Scientific, Inc. -- http://www.nasmedical.com/-- operating under the name NAS Medical, is a leader in applying radiation therapy in the fight against cancer. Its innovative products provide physicians with tools for the treatment of various types of cancers. North American Scientific filed for bankruptcy on March 11, 2009 (Bank. C.D. Calif. Case No. 09-12675). Judge Maureen Tighe presides over the case. Marc J. Winthrop, Esq., at Winthrop Couchot Professional Corporation, in Newport Beach, California, serves as bankruptcy counsel. The Company had $7.2 million in total assets; $6.4 million in total current liabilities; $472,000 in long-term severance liability; and $334,000 in stockholders' deficit as of January 31, 2009. NATCO INC: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Natco, Inc. 1410 Hwy 11 West Bristol, TN 37620 Bankruptcy Case No.: 09-51245 Chapter 11 Petition Date: May 7, 2009 Court: United States Bankruptcy Court Eastern District of Tennessee (Greeneville) Judge: Marcia Phillips Debtor's Counsel: Fred M. Leonard, Esq. 27 Sixth Street Bristol, TN 37620 Tel: (423) 968-3151 Email: fredmleonard@earthlink.net Total Assets: $4,622,994 Total Debts: $5,666,017 According to its schedules of assets and liabilities, $2,140,597 of the debt is owing to secured creditors, $709,623 for taxes owed to governmental units, and the remaining debt to creditors holding unsecured nonpriority claims. A list of the Company's 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/tneb09-51245.pdf The petition was signed by David Cooper, president of the Company. NATIONAL PROCESSING: S&P Downgrades Corp. Credit Rating to 'B-' --------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its corporate credit rating on Louisville, Kentucky-based National Processing Co. Group Inc. to 'B-' from 'B'. The outlook is negative. At the same time, S&P lowered the issue-level ratings on NPC's senior secured term loan and revolver to 'B' (one notch above the corporate credit rating on the company) from 'B+'. The recovery rating on the debt remains unchanged at '2', indicating expectations for substantial (70%-90%) recovery in the event of payment default. S&P also lowered the issue-level rating on NPC's second-lien term loan one notch to 'CCC' (two notches below that corporate credit rating) from 'CCC+'. The recovery rating on the loan remains unchanged at '6', indicating expectations for negligible (0%-10%) recovery in the event of a payment default. "The downgrade reflects our concerns about limited headroom under covenants contained in NPC's bank credit facility," explained Standard & Poor's credit analyst Susan Madison. Headroom under total debt to adjusted EBITDA and first-lien debt to adjusted EBITDA covenants contained in NPC's first-lien bank credit facilities at year-end was less than 5%. "Despite NPC's intention to direct substantially all of its discretionary cash flow to debt reduction in 2009," said Ms. Madison, "establishing adequate protection under the covenants may be challenging given the current weak economic environment, coupled with additional step- downs in covenant measures at Dec. 31, 2009." NCI BUILDING: Moody's Downgrades Corporate Family Rating to 'B1' ---------------------------------------------------------------- Moody's Investors Service downgraded NCI Building Systems' CFR to B1 from Ba3, and downgraded the ratings of its senior secured credit facilities to Ba3 from Ba2. The rating outlook is negative. The downgrade is driven by expectations that slowing demand for the company's products will result in deterioration in a range of credit metrics over the next year. The downgrade also reflects deterioration in the company's liquidity profile, as its $125 million revolving credit facility is set to mature in June of 2009, and its $180 million 2.125% Convertible Senior Subordinated Notes due 2024 reach their first put date in November of 2009. Moody's anticipates that construction of mid-rise commercial properties will continue to slow through 2009, which will reduce demand for a range of the company's products, including its core metal roof and wall systems, and its engineered building systems for low rise structures. The negative outlook results from anticipated deterioration in industry fundamentals, and the company's need to secure sufficient replacement capital for its put-able bonds. The low coupon on its convertible bonds, and their high conversion price, make it likely that most, if not all, bondholders will exercise their put rights. Until replacement capital is raised, the company's substantial cash position, track record for cash generation, and generally modest trailing credit metrics, only partially mitigate this liquidity risk. The cost of replacement capital will likely be significantly higher, and will therefore weaken interest coverage metrics. The last rating action for NCI was on February 4, 2009, when the corporate family rating was downgraded to Ba3 and the outlook was revised to negative NCI Building Systems, Inc. is one of North America's largest integrated manufacturers of metal products for the nonresidential building industry. In its fiscal 2008 ending November 2, 2008, the company generated approximately $1.76 billion in revenues. NEW YORK TIMES: Boston Globe May Cut Pay, Lifetime Warranties ------------------------------------------------------------- The Boston Globe's tentative agreement with the Boston Newspaper Guild union includes a 8.4% pay reduction and the elimination of lifetime job guarantees held by 190 members, in exchange for a $33,000 payment plus severance for each of those guaranteed workers who gets laid off, Russell Adams at The Wall Street Journal reports, citing people familiar with the matter. As reported by the Troubled Company Reporter on May 8, 2009, The New York Times reached a tentative agreement with The Guild. The Globe is seeking to cut $20 million in costs and avert a possible closure. The newspaper presented unions on Sunday with copies of paperwork required under the Workers Adjustment and Retraining Notification Act that if filed, would result in the newspapers shutdown in two months. The Guild President Dan Totten said that the union submitted on Sunday a new proposal with more than the $10 million in cuts to The NY Times. WSJ relates that The NY Times and The Guild reached a new pact that would cut $10 million in expenses. The agreement, says WSJ, will expire at the end of 2010. According to WSJ, The Guild was responsible for half of the $20 million The NY Times was seeking to avoid closing The Globe. The report says that the other six unions involved in negotiations reached tentative agreements by Monday. According to WSJ, people familiar with the matter said that much of the savings will come from: -- a pay cut of 8.4% for many of the Globe's more than 600 members, which will save about $3.3 million; and -- a pension freeze, which will save some $3.2 million. WSJ states that if the agreement is approved, it will expand the workweek to 40 hours from 37.5 hours, saving an estimated $168,000 in overtime costs, and eliminate 401(k) contributions, which will save The Globe some $648,000. According to the report, the agreement includes: -- five days of unpaid furlough for a total savings of $720,000, -- the end of discounted subscriptions for retirees, and -- the Company's right to lay off any of employee in exchange for the lump-sum payment of $33,000 plus severance, after January 10, 2010. About The New York Times The New York Times Co., a leading media company with 2008 revenues of $2.9 billion, includes The New York Times, the International Herald Tribune, The Boston Globe, 16 other daily newspapers, WQXR- FM and more than 50 Web sites, including NYTimes.com, Boston.com and About.com. The Company was founded in 1896. * * * As reported in the Troubled Company Reporter on Dec. 4, 2008, the NY Times cut its quarterly dividend by 74%, as part of an effort to conserve cash. The NY Times said that it took steps to lower debt and increase liquidity, including reevaluating its assets. The NY Times has laid off employees, merged sections of the NY Times and Globe to reduce printing costs, and consolidated New York area printing plants this year. According to the TCR on April 28, 2009, Moody's Investors Service downgraded The New York Times Company's Corporate Family Rating and Probability of Default ratings to B1 from Ba3 and ratings on the senior unsecured notes to B1 from Ba3. The Company's speculative grade liquidity rating remains SGL-3 and the rating outlook is negative. The TCR reported on April 24, 2009, that Standard & Poor's Ratings Services lowered its corporate credit rating for The New York Times Co., as well as its issue-level rating on the Company's senior unsecured debt, to 'B+' from 'BB-', and placed them on CreditWatch with negative implications. NORBORD INC: DBRS Assigns 'BB' Issuer Ratings --------------------------------------------- Dominion Bond Rating Service has assigned an Issuer Rating to Norbord Inc. of BB with a Negative trend, meaning that our opinion on the default rating of Norbord has declined from BB (high) to BB. DBRS has also assigned a rating of BBB (low) to both the Secured Debentures of Norbord Inc. and the Senior Secured Notes of Norbord (Delaware) GP I. The rating differential between the Issuer Rating and the instrument rating is a reflection of the DBRS Rating Methodology for Leveraged Finance. Under this methodology, DBRS has assigned an RR2 recovery rating to Norbord's secured debt, which indicates an expected 70% to 90% recovery under a distress scenario and results in the secured debt being rated two notches higher than the Issuer Rating. The lower default rating reflects the negative impact of depressed oriented strandboard markets on Norbord's financial structure and a longer- than-expected time frame for the Company to significantly repair its financial profile. In addition, Norbord's financial profile is no longer appropriate for a higher rating, following weak Q1 2009 financial performance and continued high leverage. The Negative trend reflects the significant risk that industry demand- to-supply ratios, energy, raw material and transportation costs may not conform to expectations and that earnings and cash flows could worsen. In addition, Norbord's high leverage gives the Company less margin for error. A lack of progress to stabilize operating performance could lead to further negative rating actions. The rapid deterioration in U.S. residential housing market conditions is largely responsible for the sharp drop in demand for OSB and pricing, the key drivers of Norbord's earnings and cash flows. The North American building products sector is close to the bottom of the cycle, but a meaningful improvement is unlikely to occur until 2010. Although a seasonal upturn in the North American construction sector is expected to result in a temporary rise in OSB prices in mid-2009, average annual prices are forecast to remain at low levels. In the interim, ongoing weakness in the U.S. housing market and North American OSB curtailments are expected to keep earnings and cash flows at low levels. However, evidence of a recovery in 2010 is expected to have a positive influence on prices in H2 2009. The current rating is supported by the implied support of Brookfield Asset Management Inc. as evidenced by the successful execution of the standby purchase agreement in connection with the recent rights offering. Additionally, the Company is the lowest- cost producer of OSB in North America. Despite the weak outlook for OSB industry conditions in North America, the Company's favourable cost structure provides important earnings and cash flow downside protection and also underpins the current Issuer Rating. Higher-cost industry capacity has been and is expected to continue to be curtailed, keeping supply close to demand, supporting higher prices during seasonal increases in demand. Reduced energy, raw material and transportation costs will positively affect operating costs, enabling the Company to keep 2009 earnings close to 2008 levels. Capex is forecast to be substantially below depreciation in 2009, a strategy that will have a positive effect on cash generation. The Company is well positioned to weather an extended period of weak market conditions. There are no debt repayments before 2011, which provides the Company with the flexibility to focus on operating cash requirements. Norbord had cash and available credit facilities of approximately $185 million at March 31, 2009. Hence, short-term liquidity should not be a problem. The Company is committed to stemming cash outflows by curtailing production when operating costs fall below breakeven levels, a strategy that will conserve cash until market conditions rebound. Furthermore, Norbord, as a low-cost producer, should generate favorable profitability once the building products market turns around. As prescribed under the DBRS Rating Methodology for Leveraged Finance, DBRS has simulated a default scenario for Norbord in order to analyze the potential recovery of the Company's debt in the event of default. In order to analyze potential recovery for various debt classes in the event of default, DBRS must first simulate a default scenario, regardless of how hypothetical it might appear and despite the relatively unlikely default probability that the Company's rating implies. The default scenario stresses the operating results to the point at which default would be considered likely to occur in order to enable DBRS to project potential levels of recovery that would be available to various debt classes in such an event. In the case of commodity-based companies, that scenario includes severe economic conditions, usually a deep, protracted recession or depression in which product demand and prices plummet. EBITDA quickly declines and usually turns negative and companies with large debt maturities or insufficient short-term liquidity can quickly reach the point of default. In the case of Norbord, earnings and cash flows would rapidly deteriorate from 2008 levels and the Company would exhaust its credit facilities in 2010. For the purposes of this analysis, DBRS assumes that the ongoing deterioration of corporate finances and general pessimism about future economic conditions would require the Company to restructure. The Company's capability of generating large returns at cycle peaks and the potential for substantial earnings gains in the next building cycle suggest creditors would gain the greatest recovery by reorganizing the Company's building products assets as a going concern. The most likely prospect is that a private equity investor would purchase Norbord's building products assets with a view to taking the Company public during the next North American economic recovery. DBRS considers that a 10-year building products EBITDA trend (omitting outlier years and adjusting for lower future housing starts on a seasonally adjusted annual rate (SAAR)) represents a realistic assessment of the Company's prospects through the next business cycle. A conservative EBITDA multiple of 5.0 times has been used to value Norbord's operations at the time of restructuring. The relatively low multiple reflects expectations of pessimistic outlooks by forest products industry participants and the financial community at the time of reorganization. At the distressed valuation level, DBRS believes the secured debtholders would recover about 78% of the principal and has therefore assigned a recovery rating of RR2. DBRS has discontinued the unsecured ratings associated with Norbord Inc. and Norbord (Delaware) GP I. NTK HOLDINGS: Moody's Changes Default Rating to 'Caa2/LD' --------------------------------------------------------- Moody's Investors Service changed NTK Holdings' probability of default rating to Caa2/LD following the company's 10k disclosure that THL Advisors and certain executive officers of Nortek Inc. (the operating subsidiary of NTK Holdings) purchased $78.5 million face amount of senior unsecured bridge loan facility for $29.1 million in the fourth quarter of 2008. Moody's notes that the unsecured bridge facility is unrated. The open market transaction constitutes a distressed exchange and a limited default by Moody's definition. The LD designation signifies a limited default and also incorporates Moody's expectations for additional open market transactions at substantial discounts to par over the next twelve months. After approximately three business days, Moody's will remove the LD designation. These ratings/assessments have been affected: Issuer: NTK Holdings, Inc. -- Corporate family rating affirmed at Caa2; -- Probability of default changed to Caa2/LD from Caa2; -- $403 million senior discount notes due 2014, affirmed at Ca (LGD5, 89%) previously at (LGD6, 90%); Issuer: Nortek, Inc. -- $750 million Senior Secured Notes, due 2013, affirmed at B3 (LGD2, 28%); -- $625 million 8 1/2% Senior Subordinated Notes due 2014, affirmed Caa3 (LGD4, 69%). The ratings outlook is negative. Moody's last rating action for NTK Holdings occurred on April 1, 2009, at which time Moody's lowered the company's corporate family rating and probability of default rating to Caa2 from B3. Nortek, Inc., headquartered in Providence, Rhode Island, is a leading diversified manufacturer of innovative, branded, residential and commercial ventilation, HVAC, and home technology convenience and security products. Its products include range hoods and other ventilation products, heating and air conditioning systems, indoor air quality systems, and home technology products. Revenues for 2008 were approximately $2.3 billion. ON ASSIGNMENT: S&P Assigns Corporate Credit Rating at 'B+' ---------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'B+' corporate credit rating to Calabasas, California-based temporary staffing firm On Assignment Inc. The rating outlook is stable. At the same time, Standard & Poor's assigned its loan and recovery rating to On Assignment's $165 million senior secured first-lien credit facility (consisting of a $20 million revolver due 2012 and a $145 million term loan due January 2013). The facility was originally instituted in 2007, and the term loan balance is now approximately $100 million. The facility is rated 'B+' (the same as the corporate credit rating) with a recovery rating of '3', indicating a meaningful recovery of principal (50%-70%) in the event of a payment default. "The low speculative-grade rating reflects On Assignment's operating concentration in the highly competitive professional staffing industry, variable demand for outsourced labor from hospital clients, inconsistent supply of travel nurses and temporary doctors, and exposure to the highly cyclical technology and life sciences industries," said Standard & Poor's credit analyst Rivka Gertzulin. In addition, the company faces tightening covenants under its senior credit facility while S&P expects credit metrics to decline in the near term. OWENS ILLINOIS: Moody's Affirms 'Ba3' Corporate Family Rating ------------------------------------------------------------- Moody's Investors Service affirmed the Ba3 Corporate Family Rating of Owens Illinois, Inc. and assigned a Ba3 rating to the new $300 million senior unsecured notes due 2016. The notes are issued by Owens-Brockway Glass Container, Inc., an indirect wholly owned subsidiary of Owens-Illinois, Inc., and the proceeds will be used to repay O-I's $250 million of 7 1/2% senior debentures due May 15, 2010 and for general corporate purposes. Additional instrument ratings are detailed below. Moody's took these rating actions for Owens Illinois, Inc.: -- Affirmed Corporate Family Rating at Ba3 -- Affirmed Probability of Default Rating at Ba3 -- Affirmed $500 million senior unsecured notes and debentures due in 2010 and 2018 at B2 (LGD 6, 93% from LGD 6, 92%) ($250 million of the 2010 notes will be withdrawn when repaid) -- Affirmed Speculative Grade Liquidity Rating SGL-2 Moody's took these rating actions for Owens-Brockway Glass Container, Inc.: -- Assigned $300 million senior unsecured notes due in 2016 Ba3 (LGD 4, 59%) -- Affirmed $900 million senior secured first lien revolving credit facility maturing June 15, 2012 at Baa3 (LGD 2, 11%) -- Affirmed $200 million senior secured first lien term loan B due June 12, 2013 at Baa3 (LGD 2, 11%) -- Affirmed EUR225 million senior unsecured notes due December 1, 2014 at Ba3 (LGD 4, 59% from LGD 4, 57%) -- Affirmed $850.0 million senior unsecured notes due 2013-2014 at Ba3 (LGD 4, 59% from Ba3 LGD 4, 57%) Moody's took these rating actions for OI European Group BV (Netherlands): -- Affirmed EUR200 million senior secured first lien term loan D due June 12, 2013 at Baa3 (LGD 2 11%) -- Affirmed EUR300 million senior unsecured notes due March 31, 2017 at Ba3 (LGD 4, 59% from LGD 4, 57%) Moody's took these rating actions for ACI Operations Pty. Ltd. and O-I Canada Corp: -- Affirmed AUD 300 million senior secured first lien term loan A due June 12, 2013 at Baa3 (LGD 2, 11%) -- Affirmed CAD 138 million senior secured first lien term loan C due June 12, 2013 to Baa3 (LGD 2, 11%) The rating outlook is stable. The Ba3 Corporate Family Rating reflects O-I's leading position in the industry, focus on debt reduction, and strategic focus on pricing and cost cutting. The rating also reflects the company's wide geographic foot print and strong liquidity. The ratings are constrained by the decline in volumes resulting from the current economic climate, concentration of sales and the uncertainty surrounding the asbestos liabilities. The ratings are also constrained by the near term limits to debt reduction stemming from the cash charges for asbestos, restructuring and pensions and the mature state of the industry. The new senior unsecured notes are rated the same as the existing ?300 million senior unsecured notes due 2017 held at OI European Group BV (Netherlands) due to the strong asset coverage at OBGC, guarantee package, high overall enterprise value, and currently relatively limited debt at the foreign entities. All of the senior unsecured notes in the group have the same guarantee package regardless of the entity at which they are issued. However, O-I generates approximately 76% of sales and has approximately 77% its assets overseas. Therefore, the notes issued by OI European Group BV (Netherlands) are structurally closer to the majority of the company's sales and assets. Consequently, all of the senior unsecured notes at OBGC could ultimately be notched lower if the long term debt at OBGC increases or if foreign debt increases. The ratings are subject to receipt and review of the final documentation. Moody's last rating action on O-I occurred on May 5, 2009 when Moody's upgraded the company's corporate family rating to Ba3 and the ratings outlook to positive from stable. Headquartered in Perrysburg, Ohio, Owens-Illinois, Inc. is one of the leading global manufacturers of glass containers, operating 80 plants in 22 countries. The company services the beverage and food industry and counts major global beer and soft drink producers among its clients. For the twelve months ended December 31, 2008, O-I had revenues of approximately $7.9 billion. PALMETTO GREENS: Case Summary & 15 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Palmetto Greens Development Company, LLC fdba Matheny Development, LLC 109 Lake Cliff Court Cary, NC 27513 Bankruptcy Case No.: 09-03779 Chapter 11 Petition Date: May 7, 2009 Court: United States Bankruptcy Court Eastern District of North Carolina (Wilson) Debtor's Counsel: David J. Haidt, Esq. Ayers, Haidt & Trabucco, P.A. PO Box 1544 New Bern, NC 28563 Tel: (252) 638-2955 Fax: (252) 638-3293 Email: davidhaidt@embarqmail.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 15 largest unsecured creditors is available for free at: http://bankrupt.com/misc/nceb09-03779.pdf The petition was signed by James M. Matheny, manager of the Company. PANOLAM INDUSTRIES: Moody's Downgrades Default Rating to 'Ca/LD' ---------------------------------------------------------------- Moody's Investors Service has lowered the probability of default rating of Panolam Industries International, Inc. to Ca/LD from Ca. In addition, Moody's lowered the rating on the term loan and revolver to Caa3 from Caa2 and affirmed all other ratings. The rating outlook remains negative. The rating action reflects Panolam's failure to make the interest payment on the 10 _% senior subordinated notes within the 30 day grace period following the April 1, 2009 interest payment date. Moody's deems a default to have occurred when an interest payment is not made by the end of a grace period, regardless of whether an Event of Default has been declared by noteholders. As of May 5, 2009, the company has not received an acceleration notice from the holders of the notes or the indenture trustee. Receipt of an acceleration notice from the noteholders would be an event of default under the forbearance agreement currently governing the company's credit agreement. Should an event of default occur in the credit agreement, Moody's would likely change the PDR to Ca/D and withdraw the ratings approximately three days thereafter. These ratings were downgraded: -- Probability of default, downgraded to Ca/LD from Ca; -- $168 million Sr. Sec. 1st Lien Term Loan, due 2012, downgraded to Caa3 (LGD2, 27%) from Caa2 (LGD2, 24%); and -- $30 million Sr. Sec. 1st Lien Revolver, due 2010, downgraded to Caa3 (LGD2, 27%) from Caa2 (LGD2, 24%); These ratings were affirmed: -- Corporate Family Rating, affirmed at Ca; and -- $150 million 10.75% Sr. Sub. Notes, due 2013, affirmed at C (LGD5, 82% from LGD5, 79%); and -- Speculative grade liquidity rating at SGL-4 The previous rating action on Panolam was the April 2, 2009 downgrade of the corporate family rating to Ca from Caa1. Headquartered in Shelton, Connecticut, Panolam is an integrated manufacturer of thermally fused melamine panels and high pressure laminates. Revenues during 2008 were $366 million. PARK LANE: Dusseldorfer, et al., Wants Chapter 11 Case Dismissed ---------------------------------------------------------------- Dusseldorfer Hypothekenbank AG and Deutsche Hypothekenbank AG ask the Hon. Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York to dismiss the Chapter 11 cases of Park Lane I LLC and its debtor-affiliates or, in the alternative, authorize the existing receive appointed by the Circuit Court of Jefferson County, Alabama, to remain in possession of the Debtors' property. The banks argue that the commencement of these chapter 11 cases was an ill-conceived and misguided effort by equity holders having no real economic stake in the Debtors. The equity holders are structurally subordinated to more than $132 million of secured debt, the banks says. The Debtors' assets -- primarily real property -- were valued at well less than such amount in November 2008, the banks note. As the Debtors in their initial affidavit in support of the filing make clear, the filings were made with little to no thought as to how the operation of the Debtors' business would be affected thereby and with no planning as to how the properties would be run after the filing, according to the banks. The banks tell the Court that they have valid, perfected security interests in substantially all of the real property, which consist of six multi-family apartment complexes located in Alabama. On September 4, 2008, at the request of the banks, the Circuit Court appointed a receiver to take control of the property. The appointment of a receiver was necessary due to the Debtors' defaults under the relevant mortgage loan documents and due to their mismanagement of the property, the banks contend. The receiver has been managing and operating the apartment complexes and collecting rent on the property for the past eight months, the banks relate. The banks further tell the Court that the Debtors made no effort to seek necessary relief that would have the effect of preserving and maintaining the value of their property and other assets. George B. South, Esq., at King & Spalding LLP in New York, represents the banks. About Park Lane Headquartered in New York, Park Lane I LLC owns apartment complexes. The Debtor and its affiliates filed for Chapter 11 protection on April 28, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-12635). Howard Greenberg, Esq., at Ravin Greenberg, LLC, represents the Debtors in their restructuring efforts. The Debtors both listed assets and debts between $100 million and $500 million. PARK LANE: Files List of 20 Largest Unsecured Creditors ------------------------------------------------------- Park Lain I LLC and its debtor-affiliates filed with the U.S. Bankruptcy Court for the Southern District of New York a list of 20 largest unsecured creditors. The Debtor's Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Riverchase Flooring $108,428 Pelham Pkwy. Pelham, AL 35214 Cleanco Carpet $79,175 1005 8th Avenue Midfield, AL 35228 Landscape Associates $78,845 2450 Old Hwy. 150 Bessemer, AL 35022 Hemphill Services, Inc $64,015 Engel Realty Co $54,383 Sirote & Permutt $47,894 T&S Contracting $43,795 Carpet Care Enterprises $38,803 HD Supply $33,808 Armstrong Plumbing $25,649 Surface Care, LLC $24,980 TMC Carpet & Turnkey $21,000 Frigid Appliance $19,358 Pegasso Painting $19,030 Alabama Power $18,081 WRS $14,689 M&M Turnkey $13,170 Kevco Carpet & Vinyl $13,104 Johnstone Supply $12,395 Servpro of Birmingham $12,238 About Park Lane Headquartered in New York, Park Lane I LLC owns apartment complexes. The Debtor and its affiliates filed for Chapter 11 protection on April 28, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-12635). Howard Greenberg, Esq., at Ravin Greenberg, LLC, represents the Debtors in their restructuring efforts. The Debtors both listed assets and debts between $100 million and $500 million. PARVIZ SERVATJOO: Case Summary & 7 Largest Unsecured Creditors -------------------------------------------------------------- Joint Debtors: Parviz Servatjoo dba Paris Servatjoo Nahid Servatjoo dba Nina Servatjoo 3731 Wilshire Blvd. Suite 514 Los Angeles, CA 90010 Bankruptcy Case No.: 09-20926 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court Central District of California (Los Angeles) Judge: Alan M. Ahart Debtors' Counsel: Jerome S. Cohen, Esq. 3731 Wilshire Blvd Ste 514 Los Angeles, CA 90010 Tel: 213-388-8188 Fax: 213-388-6188 Email: jsc@jscbklaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtors' petition, including their list of 7 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-20926.pdf The petition was signed by the Joint Debtors. PGI COMPANIES: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: PGI Companies, Inc. dba PGI Direct 11354 K-Tel Drive Hopkins, MN 55343 Bankruptcy Case No.: 09-42883 Debtor-affiliates filing separate Chapter 11 petition: Entity Case No. ------ -------- PGI Fulfillment, Inc. 09-42884 Chapter 11 Petition Date: May 7, 2009 Court: United States Bankruptcy Court District of Minnesota (Minneapolis) Judge: Dennis D O'Brien Debtor's Counsel: Clinton E. Cutler, Esq. Fredrikson & Byron, P.A. 200 South Sixth Street Ste 4000 Minneapolis, MN 55402 Tel: (612) 492-7070 Fax: (612) 347-7077 Email: ccutler@fredlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $10,000,001 to $50,000,000 A full-text copy of the Debtors' petition, including their list of 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/mnb09-42883.pdf The petition was signed by Jeffory D. Brower, chief executive officer of the Company. PHILADELPHIA NEWSPAPERS: Gets 60-Day Stay of Pending Lawsuits ------------------------------------------------------------- The Associated Press reports that the U.S. Bankruptcy Court for the Eastern District of Pennsylvania is giving Philadelphia Newspapers LLC a 60-day stay of proceedings in pending defamation cases or other lawsuits. The AP relates that the pending suits include one filed by U.S. Rep. Robert Brady, whose lawyer claims that an Inquirer editorial alleged that his client steered a Capitol lighting contract to his district. The AP says that Mr. Brady and other complainants are unsecured creditors in the bankruptcy. According to The AP, Philadelphia Newspapers said that it needs time to focus on its Chapter 11 bankruptcy reorganization. The AP reports that attorneys will discuss pending litigation in a hearing on the Philadelphia Newspapers, LLC, bankruptcy case. According to The AP, litigation to be discussed includes outstanding libel and injury lawsuits involving the publisher of The Philadelphia Inquirer and Philadelphia Daily News. Philadelphia Newspapers, LLC -- http://www.philly.com/-- owns and operates numerous print and online publications in the Philadelphia market, including the Philadelphia Inquirer, the Philadelphia Daily News, several community newspapers, the region's number one local Web site -- http://philly.com/-- and a number of related online products. The Company's flagship publications are the Inquirer, the third oldest newspaper in the country and the winner of numerous Pulitzer Prizes and other journalistic recognitions, and the Daily News. Philadelphia Newspapers and its affiliates filed for Chapter 11 bankruptcy protection on February 22, 2008 (Bankr. E.D. Pa., Lead Case No. 09-11204). Proskauer Rose LLP is the Debtors' bankruptcy counsel while Lawrence G. McMichael, Esq., at Dilworth Paxson LLP is the local counsel. The Debtors' financial advisor is Jefferies & Company Inc. The Debtors listed assets and debts of $100 million to $500 million. PNC FINANCIAL: Among Banks Needing More Capital in Stress Test -------------------------------------------------------------- The results of a comprehensive, forward-looking assessment of the financial conditions of the nation's 19 largest bank holding companies (BHCs) by the federal bank supervisory agencies were officially released on Thursday, May 7. The exercise -- conducted by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation -- was conducted so that supervisors could determine the capital buffers sufficient for the 19 BHCs to withstand losses and sustain lending -- even if the economic downturn is more severe than is currently anticipated. In a detailed summary of the results of the Supervisory Capital Assessment Program (SCAP), the supervisors identified the potential losses, resources available to absorb losses, and resulting capital buffer needed for the 19 participating BHCs. The SCAP is a complement to the Treasury's Capital Assistance Program (CAP), which makes capital available to financial institutions as a bridge to private capital in the future. According to the stress test results, after taking account of losses, revenues and reserve build requirements, in the aggregate, the BHCs need to add $185 billion to capital buffers to reach the target SCAP capital buffer at the end of 2010 under the more adverse scenario. With respect to this estimate: -- the $185 billion accrues to 10 of the 19 firms, meaning 9 of the 19 firms already have capital buffers sufficient to get through the adverse scenario in excess of 6 percent Tier 1 capital and 4 percent Tier 1 Common capital. -- the vast majority of this $185 billion comes from a shortfall in Tier 1 Common capital in the more adverse scenario, with virtually no shortfall in overall Tier 1 capital. This result means that while nearly all the firms have sufficient Tier 1 capital to absorb the unusually high losses of the more adverse scenario and still end 2010 with a Tier 1 risk-based ratio in excess of 6%, 10 of these firms had capital structures that are too strongly tilted toward capital other than common equity. Thus, each of the 10 firms needing to augment their capital as a result of this exercise must do so by increasing their Tier 1 Common capital. Including the capital actions made by banks and their first quarter 2009 annual results, the 10 BHCs will only need to raise a combined $74.6 billion in capital. ($ in billions) Required Capital Buffer ------------------ After Capital Actions & 2009 & 2010 As of After Q1 Bank Loss Estimates 12/31/08 Results ---- -------------- -------- ------- Citigroup Inc. $104.7 $92.6 $5.5 Bank of America Corporation 136.6 46.5 33.9 Wells Fargo & Company 86.1 17.3 13.7 Morgan Stanley 19.7 8.3 1.8 GMAC LLC 9.2 6.7 11.5 SunTrust Banks Inc. 11.8 3.4 2.2 Regions Financial Corp 9.2 2.9 2.5 Fifth Third Bancorp 9.1 2.6 1.1 KeyCorp 6.7 2.5 1.8 PNC Financial Services Group Inc 18.8 2.3 0.6 American Express Company 11.2 0.0 0.0 BB&T Corporation 8.7 0.0 0.0 The Bank of New York Mellon 5.4 0.0 0.0 Capital One Financial Corp 13.4 0.0 0.0 The Goldman Sachs Group Inc 17.8 0.0 0.0 JPMorgan Chase & Co. 97.4 0.0 0.0 MetLife Inc. 9.6 0.0 0.0 State Street Corporation 8.2 0.0 0.0 U.S. Bancorp 15.7 0.0 0.0 ------ ------ ------ $599.2 $185.0 $74.6 A copy of the Stress Test results is available for free at: http://bankrupt.com/misc/May09-StressTest.pdf According to Federal Reserve Chairman Ben S. Bernanke, the 19 banks covered by the "stress tests" play a vital role in our economy, holding among them two-thirds of the assets and more than one-half of the loans in the U.S. banking system. Not Tests of Solvency With respect to the stress tests, Mr. Bernanke clarified, "These examinations were not tests of solvency; we knew already that all these institutions meet regulatory capital standards. Rather, the assessment program was a forward-looking, "what-if" exercise intended to help supervisors gauge the extent of the additional capital buffer necessary to keep these institutions strongly capitalized and lending, even if the economy performs worse than expected between now and the end of next year." "The results released [May 7] should provide considerable comfort to investors and the public," Mr. Bernanke said. He noted that the examiners found that nearly all the banks that were evaluated have enough Tier 1 capital to absorb the higher losses envisioned under the hypothetical adverse scenario. Roughly half the firms, though, need to enhance their capital structure to put greater emphasis on common equity, which provides institutions the best protection during periods of stress. Many of the institutions have already taken actions to bolster their capital buffers and are well-positioned to raise capital from private sources over the next six months. "However, our government, through the Treasury Department, stands ready to provide whatever additional capital may be necessary to ensure that our banking system is able to navigate a challenging economic downturn." The estimates reported by the Federal Reserve represent values for a hypothetical 'what-if' scenario and are not forecasts of expected losses or revenues for the firms, a joint press release by the Federal Reserve, the U.S. Treasury and the FDIC also clarified. Nov. 9 Deadline for Capital Plan According to the joint release, any U.S. bank holding company (BHC) needing to augment its capital buffer at the conclusion of the SCAP will have until June 8th, 2009 to develop a detailed capital plan, and until November 9th, 2009 to implement that capital plan Over the next 30 days, any BHC needing to augment its capital buffer will develop a detailed capital plan to be approved by its primary supervisor, in consultation with the FDIC, and will have six months to implement that plan. In light of the potential for new commitments under the Capital Assistance Program or exchanges of existing CPP preferred stock, supervisors will consult with Treasury on the development and evaluation of the plans. The capital plan will consist of three main elements: * A detailed description of the specific actions to be taken to increase the level of capital and/or to enhance the quality of capital consistent with establishing the SCAP buffer. BHCs are encouraged to design capital plans that, wherever possible, actively seek to raise new capital from private sources. These plans should include actions such as: -- Issuance of new private capital instruments; -- Restructuring current capital instruments; -- Sales of business lines, legal entities, assets or minority interests through private transactions and through sales to the PPIP; -- Use of joint ventures, spin-offs, or other capital enhancing transactions; and -- Conservation of internal capital generation, including continued restrictions on dividends and stock repurchases and dividend deferrals, waivers and suspensions on preferred securities including trust preferred securities, with the expectation that plans should not rely on near-term potential increases in revenues to meet the capital buffer it is expected to have. * A list of steps to address weaknesses, where appropriate, in the BHC's internal processes for assessing capital needs and engaging in effective capital planning. * An outline of the steps the firm will take over time to repay government provided capital taken under the Capital Purchase Program (CPP), Targeted Investment Program (TIP), or the CAP, and reduce reliance on guaranteed debt issued under the TLGP. In addition, as part of the 30-day planning process, firms will need to review their existing management and Board in order to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment and maintain balance sheet capacity sufficient to continue prudent lending to meet the credit needs of the economy A copy of the joint release is available for free at: http://www.federalreserve.gov/newsevents/press/bcreg/20090506a.htm Comments to Stress-Test Results According to NewsBlaze, Scott Talbott, vice president of the Financial Services Roundtable, a Washington-based association representing the biggest U.S. financial companies, the $75 billion is not a huge sum for the 10 banks to raise. He said, the report relates, that nine of the 10 can do so through private means such as stock conversions or selling assets. Only GMAC, the auto finance company linked to General Motors, faces the prospect of seeking further government relief funds, he said. Louise Story and Eric Dash at The New York Times said, "Broadly speaking, the test results suggested that the banking industry was in better shape than many had feared." The two noted that the $75 billion in equity capital needed by 10 banks is "far less than many had forecast." The hypothetical scenarios created by bank examiners assume the unemployment rate would hit 10.3% and house prices would fall more than 22%. That scenario is worse than the current state of the economy, in which the jobless rate is below 9%, NewsBlaze said. In addition, the examiners assume in a worst-case scenario that 9% of all loans might sour -- a figure that is even higher than it was during the Great Depression, NYT said. According to Reuters, citing the Wall Street Journal, the government made concessions to banks that pushed back against its conclusions in its stress tests. The $13.7 billion projected capital shortfall for Wells Fargo -- from $17.3 billion -- came about after two weeks of bargaining, The Journal said. In addition, beyond the concessions, Financial Times, according to Reuters, reported that the U.S. government has assured the banks that they will be allowed to raise less than the $74.6 billion in equity mandated if earnings over the next six months beat regulators' forecasts. According to MarketWatch, Ken Lewis, chief executive of Bank of America Corp., on Friday called the government's stress-test results "pretty aggressive" but said the financial-services giant will comply and raise the required $33.9 billion. Asked about the health of his firm, Mr. Lewis said mortgage-lending arm Countrywide is "on fire, in a positive sense," right now, and added that "business is good" at Merrill Lynch. The Washington Post said U.S. stocks rose last week, erasing the year-to-date loss in the Standard & Poor's 500-stock index, as results from the government's "stress tests" of major banks reassured investors and the Labor Department said the pace of job cuts slowed in April. Bank of America and Citigroup, the Post relates, helped drive financial stocks in the S&P 500 to a 23% percent gain as the government said only one of the 19 large banks that were reviewed was likely to need additional taxpayer aid. QIMONDA NA: Files Schedules of Assets and Liabilities ----------------------------------------------------- Qimonda North America Corp. filed with the U.S. Bankruptcy Court for the District of Delaware its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------------ ------------ A. Real Property B. Personal Property $480,216,761 C. Property Claimed as Exempt D. Creditors Holding Secured Claims E. Creditors Holding Unsecured Priority Claims $17,949,702 F. Creditors Holding Unsecured Non-priority Claims $151,154,551 ------------ ------------ TOTAL $480,216,761 $169,104,253 A copy of Qimonda North America's schedule of assets and liabilities is available at: http://bankrupt.com/misc/QimondaNA.Schedules.pdf About Qimonda North America Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- is a leading global memory supplier with a diversified DRAM product portfolio. The company generated net sales of EUR1.79 billion in financial year 2008 and had -- prior to its announcement of a repositioning of its business -- approximately 12,200 employees worldwide, of which 1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond (Virginia, USA). The company provides DRAM products with a focus on infrastructure and graphics applications, using its power saving technologies and designs. Qimonda is an active innovator and brings high performance, low power consumption and small chip sizes to the market based on its breakthrough Buried Wordline technology. Qimonda AG filed an application with the local court in Munich, Germany, on January 23, 2009, to open insolvency proceedings. QAG's U.S. units, Qimonda North America Corp. and Qimonda Richmond LLC, filed for Chapter 11 relief on Feb. 20, 2009 (Bankr. D. Del. Lead Case No. 09-10589). Mark Thompson, Esq., Morris J. Massel, Esq., and Terry Sanders, Esq., at Simpson Thacher & Bartlett LLP represent the Debtors as counsel. Mark D. Collins, Esq., Michael J. Merchant, Esq., and Maris J. Finnegan, Esq., at Richards Layton & Finger, PA, represent the Debtors as local counsel. Gregory M. Gordon, Esq., Craig F. Simon, Esq., and Daniel P. Winikka, Esq., at Jones Day represent the official committee of unsecured creditors as counsel. William P. Bowden, Esq., Amanda M. Winfree, Esq., and Peter J. Faben, Esq., at Ashby & Geddes, P.A. represents the Committee as Delaware counsel. Alvarez & Marsal serves as restructuring and financial advisor to the Debtors. Epiq Bankruptcy Solutions LLC serves as its claims agent. The Debtors listed assets and debts of more than $1 billion each. QIMONDA NA: Qimonda Richmond Files Schedules of Assets and Debts ---------------------------------------------------------------- Qimonda Richmond, LLC, filed with the U.S. Bankruptcy Court for the District of Delaware, its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- -------------- ------------ A. Real Property $275,235,800 B. Personal Property $774,325,276 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $2,719,126 E. Creditors Holding Unsecured Priority Claims $3,806,673 F. Creditors Holding $800,287,983 Unsecured Non-priority Claims -------------- ------------ TOTAL $1,049,561,077 $806,813,784 A copy of Qimonda Richmond's schedule of assets and liabilities is available at: http://bankrupt.com/misc/QimondaRichmond.Schedules.pdf About Qimonda North America Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- is a leading global memory supplier with a diversified DRAM product portfolio. The company generated net sales of EUR1.79 billion in financial year 2008 and had -- prior to its announcement of a repositioning of its business -- approximately 12,200 employees worldwide, of which 1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond (Virginia, USA). The company provides DRAM products with a focus on infrastructure and graphics applications, using its power saving technologies and designs. Qimonda is an active innovator and brings high performance, low power consumption and small chip sizes to the market based on its breakthrough Buried Wordline technology. Qimonda AG filed an application with the local court in Munich, Germany, on January 23, 2009, to open insolvency proceedings. QAG's U.S. units, Qimonda North America Corp. and Qimonda Richmond LLC, filed for Chapter 11 relief on Feb. 20, 2009 (Bankr. D. Del. Lead Case No. 09-10589). Mark Thompson, Esq., Morris J. Massel, Esq., and Terry Sanders, Esq., at Simpson Thacher & Bartlett LLP represent the Debtors as counsel. Mark D. Collins, Esq., Michael J. Merchant, Esq., and Maris J. Finnegan, Esq., at Richards Layton & Finger, PA, represent the Debtors as local counsel. Gregory M. Gordon, Esq., Craig F. Simon, Esq., and Daniel P. Winikka, Esq., at Jones Day represent the official committee of unsecured creditors as counsel. William P. Bowden, Esq., Amanda M. Winfree, Esq., and Peter J. Faben, Esq., at Ashby & Geddes, P.A. represents the Committee as Delaware counsel. Alvarez & Marsal serves as restructuring and financial advisor to the Debtors. Epiq Bankruptcy Solutions LLC serves as its claims agent. The Debtors listed assets and debts of more than $1 billion each. REGIONS FINANCIAL: Among Banks Needing More Capital in Stress Test ------------------------------------------------------------------ The results of a comprehensive, forward-looking assessment of the financial conditions of the nation's 19 largest bank holding companies (BHCs) by the federal bank supervisory agencies were officially released on Thursday, May 7. The exercise -- conducted by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation -- was conducted so that supervisors could determine the capital buffers sufficient for the 19 BHCs to withstand losses and sustain lending -- even if the economic downturn is more severe than is currently anticipated. In a detailed summary of the results of the Supervisory Capital Assessment Program (SCAP), the supervisors identified the potential losses, resources available to absorb losses, and resulting capital buffer needed for the 19 participating BHCs. The SCAP is a complement to the Treasury's Capital Assistance Program (CAP), which makes capital available to financial institutions as a bridge to private capital in the future. According to the stress test results, after taking account of losses, revenues and reserve build requirements, in the aggregate, the BHCs need to add $185 billion to capital buffers to reach the target SCAP capital buffer at the end of 2010 under the more adverse scenario. With respect to this estimate: -- the $185 billion accrues to 10 of the 19 firms, meaning 9 of the 19 firms already have capital buffers sufficient to get through the adverse scenario in excess of 6 percent Tier 1 capital and 4 percent Tier 1 Common capital. -- the vast majority of this $185 billion comes from a shortfall in Tier 1 Common capital in the more adverse scenario, with virtually no shortfall in overall Tier 1 capital. This result means that while nearly all the firms have sufficient Tier 1 capital to absorb the unusually high losses of the more adverse scenario and still end 2010 with a Tier 1 risk-based ratio in excess of 6%, 10 of these firms had capital structures that are too strongly tilted toward capital other than common equity. Thus, each of the 10 firms needing to augment their capital as a result of this exercise must do so by increasing their Tier 1 Common capital. Including the capital actions made by banks and their first quarter 2009 annual results, the 10 BHCs will only need to raise a combined $74.6 billion in capital. ($ in billions) Required Capital Buffer ------------------ After Capital Actions & 2009 & 2010 As of After Q1 Bank Loss Estimates 12/31/08 Results ---- -------------- -------- ------- Citigroup Inc. $104.7 $92.6 $5.5 Bank of America Corporation 136.6 46.5 33.9 Wells Fargo & Company 86.1 17.3 13.7 Morgan Stanley 19.7 8.3 1.8 GMAC LLC 9.2 6.7 11.5 SunTrust Banks Inc. 11.8 3.4 2.2 Regions Financial Corp 9.2 2.9 2.5 Fifth Third Bancorp 9.1 2.6 1.1 KeyCorp 6.7 2.5 1.8 PNC Financial Services Group Inc 18.8 2.3 0.6 American Express Company 11.2 0.0 0.0 BB&T Corporation 8.7 0.0 0.0 The Bank of New York Mellon 5.4 0.0 0.0 Capital One Financial Corp 13.4 0.0 0.0 The Goldman Sachs Group Inc 17.8 0.0 0.0 JPMorgan Chase & Co. 97.4 0.0 0.0 MetLife Inc. 9.6 0.0 0.0 State Street Corporation 8.2 0.0 0.0 U.S. Bancorp 15.7 0.0 0.0 ------ ------ ------ $599.2 $185.0 $74.6 A copy of the Stress Test results is available for free at: http://bankrupt.com/misc/May09-StressTest.pdf According to Federal Reserve Chairman Ben S. Bernanke, the 19 banks covered by the "stress tests" play a vital role in our economy, holding among them two-thirds of the assets and more than one-half of the loans in the U.S. banking system. Not Tests of Solvency With respect to the stress tests, Mr. Bernanke clarified, "These examinations were not tests of solvency; we knew already that all these institutions meet regulatory capital standards. Rather, the assessment program was a forward-looking, "what-if" exercise intended to help supervisors gauge the extent of the additional capital buffer necessary to keep these institutions strongly capitalized and lending, even if the economy performs worse than expected between now and the end of next year." "The results released [May 7] should provide considerable comfort to investors and the public," Mr. Bernanke said. He noted that the examiners found that nearly all the banks that were evaluated have enough Tier 1 capital to absorb the higher losses envisioned under the hypothetical adverse scenario. Roughly half the firms, though, need to enhance their capital structure to put greater emphasis on common equity, which provides institutions the best protection during periods of stress. Many of the institutions have already taken actions to bolster their capital buffers and are well-positioned to raise capital from private sources over the next six months. "However, our government, through the Treasury Department, stands ready to provide whatever additional capital may be necessary to ensure that our banking system is able to navigate a challenging economic downturn." The estimates reported by the Federal Reserve represent values for a hypothetical 'what-if' scenario and are not forecasts of expected losses or revenues for the firms, a joint press release by the Federal Reserve, the U.S. Treasury and the FDIC also clarified. Nov. 9 Deadline for Capital Plan According to the joint release, any U.S. bank holding company (BHC) needing to augment its capital buffer at the conclusion of the SCAP will have until June 8th, 2009 to develop a detailed capital plan, and until November 9th, 2009 to implement that capital plan Over the next 30 days, any BHC needing to augment its capital buffer will develop a detailed capital plan to be approved by its primary supervisor, in consultation with the FDIC, and will have six months to implement that plan. In light of the potential for new commitments under the Capital Assistance Program or exchanges of existing CPP preferred stock, supervisors will consult with Treasury on the development and evaluation of the plans. The capital plan will consist of three main elements: * A detailed description of the specific actions to be taken to increase the level of capital and/or to enhance the quality of capital consistent with establishing the SCAP buffer. BHCs are encouraged to design capital plans that, wherever possible, actively seek to raise new capital from private sources. These plans should include actions such as: -- Issuance of new private capital instruments; -- Restructuring current capital instruments; -- Sales of business lines, legal entities, assets or minority interests through private transactions and through sales to the PPIP; -- Use of joint ventures, spin-offs, or other capital enhancing transactions; and -- Conservation of internal capital generation, including continued restrictions on dividends and stock repurchases and dividend deferrals, waivers and suspensions on preferred securities including trust preferred securities, with the expectation that plans should not rely on near-term potential increases in revenues to meet the capital buffer it is expected to have. * A list of steps to address weaknesses, where appropriate, in the BHC's internal processes for assessing capital needs and engaging in effective capital planning. * An outline of the steps the firm will take over time to repay government provided capital taken under the Capital Purchase Program (CPP), Targeted Investment Program (TIP), or the CAP, and reduce reliance on guaranteed debt issued under the TLGP. In addition, as part of the 30-day planning process, firms will need to review their existing management and Board in order to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment and maintain balance sheet capacity sufficient to continue prudent lending to meet the credit needs of the economy A copy of the joint release is available for free at: http://www.federalreserve.gov/newsevents/press/bcreg/20090506a.htm Comments to Stress-Test Results According to NewsBlaze, Scott Talbott, vice president of the Financial Services Roundtable, a Washington-based association representing the biggest U.S. financial companies, the $75 billion is not a huge sum for the 10 banks to raise. He said, the report relates, that nine of the 10 can do so through private means such as stock conversions or selling assets. Only GMAC, the auto finance company linked to General Motors, faces the prospect of seeking further government relief funds, he said. Louise Story and Eric Dash at The New York Times said, "Broadly speaking, the test results suggested that the banking industry was in better shape than many had feared." The two noted that the $75 billion in equity capital needed by 10 banks is "far less than many had forecast." The hypothetical scenarios created by bank examiners assume the unemployment rate would hit 10.3% and house prices would fall more than 22%. That scenario is worse than the current state of the economy, in which the jobless rate is below 9%, NewsBlaze said. In addition, the examiners assume in a worst-case scenario that 9% of all loans might sour -- a figure that is even higher than it was during the Great Depression, NYT said. According to Reuters, citing the Wall Street Journal, the government made concessions to banks that pushed back against its conclusions in its stress tests. The $13.7 billion projected capital shortfall for Wells Fargo -- from $17.3 billion -- came about after two weeks of bargaining, The Journal said. In addition, beyond the concessions, Financial Times, according to Reuters, reported that the U.S. government has assured the banks that they will be allowed to raise less than the $74.6 billion in equity mandated if earnings over the next six months beat regulators' forecasts. According to MarketWatch, Ken Lewis, chief executive of Bank of America Corp., on Friday called the government's stress-test results "pretty aggressive" but said the financial-services giant will comply and raise the required $33.9 billion. Asked about the health of his firm, Mr. Lewis said mortgage-lending arm Countrywide is "on fire, in a positive sense," right now, and added that "business is good" at Merrill Lynch. The Washington Post said U.S. stocks rose last week, erasing the year-to-date loss in the Standard & Poor's 500-stock index, as results from the government's "stress tests" of major banks reassured investors and the Labor Department said the pace of job cuts slowed in April. Bank of America and Citigroup, the Post relates, helped drive financial stocks in the S&P 500 to a 23% percent gain as the government said only one of the 19 large banks that were reviewed was likely to need additional taxpayer aid. RH DONNELLEY: Net Loss Down to $401 Million in 1st Quarter 2009 --------------------------------------------------------------- R.H. Donnelley Corporation reported first quarter 2009 net revenue of $602 million, representing an 11% decline from first quarter 2008. Adjusted EBITDA in the quarter was $320 million, down $37 million or 10% from first quarter 2008. Adjusted free cash flow in the quarter was $66 million -- based on cash flow from operations of $56 million, capital expenditures of $4 million and $14 million of other adjustments that primarily relate to restructuring -- down from $92 million in first quarter 2008. First quarter advertising sales were $598 million, down 17% from advertising sales in the first quarter 2008. Net loss was $401 million in the quarter, compared to a net loss of $1.6 billion in first quarter 2008. Net debt during the quarter decreased by $61 million, resulting in quarter-end net debt outstanding of $9.3 billion, excluding the purchase accounting fair value adjustment. As of March 31, 2009, the cash balance was $533 million. The Company had $12.0 billion in total assets and $12.9 billion in total liabilities resulting in $890 million in stockholders' deficit as of March 31, 2009. "Results continue to be impacted by the recession and its effect on small- and medium-sized businesses and consumer spending," said David C. Swanson, chairman and CEO of R.H. Donnelley. "Our efforts to improve efficiency and eliminate non-mission critical costs helped to protect EBITDA and generated over $30 million of year-over-year cost savings." Mr. Swanson continued, "As we previously announced, we are working to better position R.H. Donnelley for the future by establishing a more sustainable capital structure. We continue to discuss options for amending, refinancing or restructuring our debt obligations with our creditors." During the first quarter, the Company underwent an ownership change as defined in Section 382 of the Internal Revenue Code. As a result, the Company believes it will be restricted in its ability to use some of its net operating losses and other corporate tax attributes in the future. The financials in the attached schedules contain the Company's best estimate of the impact related to the ownership change based on analysis performed to date; however, the analysis is not yet complete and there could be material changes in subsequent periods. As a result, deferred tax liability at quarter-end and deferred tax expense in the first quarter were each $375 million higher than they otherwise would have been. Such ownership change does not constitute a change in control under any of the Company's debt agreements. A full-text copy of R.H. Donnelley's first quarter 2009 report is available at no charge at http://ResearchArchives.com/t/s?3ca9 Going Concern Doubt KPMG LLP, the Company's independent auditor, in March 2009, raised substantial doubt on the Company's ability to continue as a going concern. "The Company has significant amounts of maturing debt which it may be unable to satisfy commencing March 31, 2010, significant negative impacts on operating results and cash flows from the overall downturn in the global economy and higher customer attrition, and possible debt covenant violations in 2009 that raise substantial doubt about its ability to continue as a going concern," KPMG said in its March 27 report. R.H. Donnelley reported a net loss of $2.29 billion for the year ended December 31, 2008, on net revenues of $2.61 billion. As of December 31, the Company had $11.8 billion in total assets and $12.3 billion in total liabilities, resulting in $493.3 million in shareholders' deficit. About R.H. Donnelley Headquartered in Cary, North Carolina, R.H. Donnelley Corp., fka The Dun & Bradstreet Corp., -- http://www.rhdonnelley.com/-- (NYSE: RHD) publishes and distributes print and online directories in the U.S. It offers print directory advertising products, such as yellow pages and white pages directories. R.H. Donnelley Inc., Dex Media, Inc. and Local Launch, Inc. are the company's only direct wholly owned subsidiaries. * * * As reported by the Troubled Company Reporter on April 20, 2009, Standard & Poor's Ratings Services lowered its corporate credit rating for R.H. Donnelley Corp. to 'D' from 'CCC+'. In addition, the issue-level rating on RHD's $1.23 billion 8.875% series A-4 senior notes was lowered to 'D' from 'CCC-'. All other issue- level ratings at RHD were lowered to 'C' from 'CCC-'. According to the TCR on February 11, 2009, Moody's Investors Service downgraded R.H. Donnelley's Corporate Family Rating to Caa1 and its Probability of Default Rating to Caa2, prompted by concerns that the company may determine that a complete debt restructuring represents the best alternative of addressing its currently challenged capital structure. RH DONNELLEY: Not Sure Whether to Pay $54.6MM Interest This Week ---------------------------------------------------------------- R.H. Donnelley Corporation on April 15, 2009, exercised a 30-day grace period on $54.6 million in interest payments due on its 8.875% Series A-4 Senior Notes due 2017, while continuing to work on its plan to restructure all long-term debt. Exercising the grace period does not constitute an event of default under the bond indenture or any of the Company's other debt agreements unless the Company fails to make the interest payments within 30 days of the due date, absent an extension. In its quarterly report filed last week with the Securities and Exchange Commission, R.H. Donnelley said that, at this time, the Company has not yet determined whether it will make these interest payments within 30 days of the due date. Going Concern Doubt KPMG LLP, the Company's independent auditor, in March 2009, raised substantial doubt on the Company's ability to continue as a going concern. "The Company has significant amounts of maturing debt which it may be unable to satisfy commencing March 31, 2010, significant negative impacts on operating results and cash flows from the overall downturn in the global economy and higher customer attrition, and possible debt covenant violations in 2009 that raise substantial doubt about its ability to continue as a going concern," KPMG said in its March 27 report. R.H. Donnelley reported a net loss of $2.29 billion for the year ended December 31, 2008, on net revenues of $2.61 billion. As of December 31, the Company had $11.8 billion in total assets and $12.3 billion in total liabilities, resulting in $493.3 million in shareholders' deficit. About R.H. Donnelley Headquartered in Cary, North Carolina, R.H. Donnelley Corp., fka The Dun & Bradstreet Corp., -- http://www.rhdonnelley.com/-- (NYSE: RHD) publishes and distributes print and online directories in the U.S. It offers print directory advertising products, such as yellow pages and white pages directories. R.H. Donnelley Inc., Dex Media, Inc. and Local Launch, Inc. are the company's only direct wholly owned subsidiaries. * * * As reported by the Troubled Company Reporter on April 20, 2009, Standard & Poor's Ratings Services lowered its corporate credit rating for R.H. Donnelley Corp. to 'D' from 'CCC+'. In addition, the issue-level rating on RHD's $1.23 billion 8.875% series A-4 senior notes was lowered to 'D' from 'CCC-'. All other issue- level ratings at RHD were lowered to 'C' from 'CCC-'. According to the TCR on February 11, 2009, Moody's Investors Service downgraded R.H. Donnelley's Corporate Family Rating to Caa1 and its Probability of Default Rating to Caa2, prompted by concerns that the company may determine that a complete debt restructuring represents the best alternative of addressing its currently challenged capital structure. ROBERT F RICKERL: Case Summary & 12 Largest Unsecured Creditors --------------------------------------------------------------- Joint Debtors: Robert F. Rickerl aka Woody Rickerl Jana Maria Rickerl aka Janice A Rickerl 19037 Cerro Villa Drive Villa Park, CA 92861 Bankruptcy Case No.: 09-14197 Chapter 11 Petition Date: May 6, 2009 Court: United States Bankruptcy Court Central District of California (Santa Ana) Judge: Erithe A. Smith Debtors' Counsel: Andrew K. Mauthe, Esq. 7700 Irvine Center Dr Ste 800 Irvine, CA 92619-1147 Tel: (949)788-2902 Fax: (949)788-2903 Email: mauthelaw@attglobal.net Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtors' petition, including their list of 12 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-14197.pdf The petition was signed by the Joint Debtors. SHINGLE SPRINGS: Weak Ramp-Up Cues Moody's to Junk Corp. Ratings ---------------------------------------------------------------- Moody's Investors Service lowered Shingle Springs Tribal Gaming Authority's corporate family, probability of default and senior notes ratings to Caa1 from B3. The outlook was also revised to negative from stable. The rating actions reflect the weaker than initially anticipated ramp-up for the recently opened casino due to severe economic challenges, Moody's expectation of high leverage at the end of the first year of operations and the risk of financial covenant violation under the Furniture, Furnishings and Equipment loan. In the first quarter of 2009, Moody's believe that the ramp-up of The Red Hawk Casino was negatively impacted by challenging economic conditions in the Sacramento area, where unemployment exceeded 11%. Additionally, the housing correction and the area's poor credit conditions have severely reduced the local consumers' propensity to spend. Assuming no significant near-term improvement in the earnings trend, Moody's believe that total debt/EBITDA could exceed 6 times at the end of 2009. The rating outlook is negative. Although Moody's believe that the Authority should meet its debt service obligations in the short term, assuming no quarter-over-quarter deterioration in EBITDA, the risk of financial covenant violation under the FF&E loan weighs on Shingle Springs' liquidity profile. In Moody's view, Shingle Springs could find it challenging to satisfy the fixed charge coverage test later this year. Please refer to Moody's credit opinion on www.moodys.com for further information. The last rating action was on June 13, 2007, when a B3 corporate family rating was assigned to Shingle Springs. Ratings downgraded: -- Corporate family rating to Caa1 from B3 -- Probability of default rating to Caa1 from B3 -- Senior notes rating to Caa1 (LGD 4; 50%) from B3 (LGD 4; 52%) Shingle Springs is an unincorporated governmental authority of the Shingle Springs Band of Miwok Indians. The Authority was formed to develop, own and operate the Red Hawk Casino, which opened on December 17, 2008 near Sacramento, California. SKILLED HEALTHCARE: Moody's Affirms 'B2' Corporate Family Rating ---------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Skilled Healthcare Group, Inc., including the B2 Corporate Family Rating and B2 Probability of Default Rating. At the same time Moody's changed the rating outlook to positive from stable. The change in the outlook reflects better than expected cash flow generation in 2008 and a reduction in adjusted leverage due to growth in EBITDA. Further, the recent extension of the maturity date of the revolving credit facility removes near-term refinancing risk. The B2 Corporate Family Rating is supported by the stability of demand for long-term care services and the company's ability to attract profitable Medicare patients, resulting in EBIT margins that are higher than rated peers. The ratings are constrained by the company's modest size and concentration of revenues in two states, as well as the risk of reimbursement cuts from Medicare and Medicaid. Further, the company's growth strategy, which includes acquisitions and de novo development, is expected to continue to constrain debt repayment. Moody's believes the company will have adequate liquidity over the next twelve months, with modestly positive free cash flow and ample cushion on financial covenants. Liquidity is constrained by substantial borrowings on the revolving credit facility, leaving roughly 30% of the revolver available as of March 31, 2009. Following is a summary of Moody's actions. Ratings affirmed/LGD assessments revised: -- Corporate Family Rating, B2 -- Probability of Default Rating, B2 -- $250 million senior secured first lien term loan due 2012, to B1 (LGD3, 38%) from B1 (LGD3, 36%) -- $130 million senior subordinated notes due 2014, to Caa1 (LGD6, 90%) from Caa1 (LGD5, 87%) -- Speculative Grade Liquidity Rating, SGL-3 Ratings withdrawn: -- $135 million senior secured revolving credit facility due 2010, B1 (LGD3, 36%) Ratings assigned: -- $135 million senior secured revolving credit facility due 2012, B1 (LGD3, 38%) The outlook is positive. The last rating action was April 1, 2008 when Moody's changed the outlook to stable from positive and changed the SGL rating to SGL- 3 from SGL-2. Skilled Healthcare's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record of tolerance for risk. These attributes were compared against other issuers both within and outside of Skilled Healthcare's core industry and Skilled Healthcare's ratings are believed to be comparable to those other issuers of similar credit risk. Headquartered in Foothill Ranch, CA, Skilled Healthcare operates long-term care facilities and provides a variety of post-acute care services, with a strategic emphasis on sub-acute specialty healthcare. The company operates skilled nursing facilities, assisted living facilities, and hospice locations. Further, the company provides ancillary services such as physical, occupational and speech therapy in its facilities and unaffiliated facilities and is a member of a joint venture providing institutional pharmacy services in Texas. Skilled Healthcare recognized revenue of approximately $742 million for the twelve months ended March 31, 2009. SOUTH DAKOTA MEDICAL: A.M. Best Lowers Issuer Credit Rating to bb ----------------------------------------------------------------- A.M. Best Co. has downgraded the issuer credit rating to "bb" from "bb+" and affirmed financial strength rating of B (Fair) of South Dakota State Medical Holding Co., Inc. (d/b/a DakotaCare) (Sioux Falls, SD). The outlook for both ratings has been revised to negative from stable. The ratings of DakotaCare reflect its decreased capitalization, which resulted from a significant financial loss in the Medicare Advantage Special Needs Plan. The offsetting rating factors include profitable operating results and enrollment growth in its commercial line of business, exit from the Medicare Advantage Special Needs Plan and the company's strong network throughout South Dakota. DakotaCare experienced a sizeable operating loss from the Medicare Advantage Special Needs Plan in 2007-2008. As a result, its capital and surplus has experienced a 12% decline since year-end 2006. In addition, due to the Medicare Advantage Specialty Needs Plan, the company's premium increased by 75% from 2006 to year-end 2008, leading to the risk-based capitalization (authorized control level) decline from 405% in 2006 to 209% at year-end 2008. A.M. Best views the level of risk-based capital as very low; however, it acknowledges that since DakotaCare exited the Medicare Advantage Special Needs Plan on December 31, 2008, the level of risk-based capitalization is likely to improve in 2009. If DakotaCare's 2009 operating results fall significantly below the projections provided to A.M. Best, the company reports an operating loss during the year and/or risk-based capitalization fails to improve, further rating downgrades may follow. DakotaCare has posted underwriting gains in its commercial lines of business for the last five years, and both group and individual products remained profitable in 2008, somewhat offsetting the losses in the Medicare Advantage Specialty Needs Plan. Furthermore, commercial membership increased during 2008, with individual enrollment growth of over 20%. In addition, the company significantly expanded the geographic reach of its third party administrator operations, leading to greater revenue diversification and growth. A.M. Best believes that following the exit from the Medicare Advantage Specialty Needs Plan, the company is well positioned for further growth and favorable operating performance; however, the impact of the economic recession could impact enrollment in the near term. SOUTHERN LANDFILL: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Southern Landfill Management, Inc. 4335 Highway 61 Fayette, MS 39069 Bankruptcy Case No.: 09-01620 Chapter 11 Petition Date: May 7, 2009 Court: United States Bankruptcy Court Southern District of Mississippi (Jackson Divisional Office) Debtor's Counsel: Jeffrey Kyle Tyree, Esq. Harris Jernigan & Geno, PPLC PO Box 3380 Ridgeland, MS 39158-3380 Tel: (601) 427-0048 Fax: (601)427-0050 Email: jktyree@harrisgeno.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of 20 largest unsecured creditors when it filed its petition. The petition was signed by Robert Hume, president of the Company. STANDARD MOTOR: Moody's Changes Default Rating to 'Caa3/LD' ----------------------------------------------------------- Moody's Investors Service revised Standard Motor Products' Probability of Default Rating to Caa3/LD, while affirming its subordinated debentures due 2009 at Caa3 and its Corporate Family Rating at Caa2. The outlook remained negative. The rating action follows the close of Standard Motor's exchange offer of a portion of the outstanding 6.75% debentures due in 2009 for a like principal amount of approximately $12.3 million of 15% new debentures due in 2011 (not rated by Moody's). Moody's considers the transaction a distressed exchange on the 2009 debentures, and has changed the PDR to Caa3/LD to reflect a "limited default". The PDR will revert to Caa3 in approximately three business days. Moody's views that the exchange offer does not materially alter the credit profile as reflected in the Caa2 CFR, since the total outstanding debt principal amount will remain unchanged and the expected incremental interest expense will be modest post- exchange. In addition, the exchange offer only moderately reduces the refinancing risk that remains for the debentures that will mature in July 2009. The maturity of the approximately $32.1 million remaining outstanding after the transaction will still need to be addressed by the redemption date. The company's existing credit agreement restricts it from borrowing under the revolving credit facility to repay the debentures upon maturity, the remaining borrowing capacity is currently at around $5 million. Therefore, Moody's considers the default risk, though improved after the exchange, still remains substantial and is reflected in the PDR revision to Caa3. The negative outlook encompasses the uncertainty on the company's ability to fund the rest of the maturing debentures. Moody's will continue to evaluate Standard Motor's revenues and cash flow performance during the 2009-2010 operating season to determine if positive rating actions are warranted should the refinancing risk abate. To date, the challenging operating environment in the auto industry in North America has adversely affected Standard Motor's aftermarket auto parts business. The rating of the 2009 Debentures at Caa3, one notches below the CFR, reflects the expected loss in the post-exchange capital structure based on the subordination to the material amount of contractually senior secured debt in the company's capital structure. ($275 million senior secured revolving credit facility and other senior debt) The rating action is: * Probability of default rating -- revised to Caa3/LD from Ca * $32 million convertible subordinated debentures due July 2009 -- affirmed at Caa3, LGD estimate was adjusted to LGD4, 59% from LGD3, 35% * Corporate family rating -- affirmed at Caa2 Rating outlook: negative * The last rating action was on March 25, 2009 when the PDR was downgraded to Ca. Standard Motor Products (NYSE:), headquartered in Long Island City, New York, is a manufacturer and distributor of replacement parts for the automotive aftermarket industry. The company is organized into two principal divisions: (i) Engine Management (ignition and emission parts; ignition wires; battery cables; and fuel system parts) and (ii) Temperature Control (air conditioning compressors; other air conditioning parts; and heater parts). Standard Motor's annualized revenues currently approximate $775 million. STATER BROS: S&P Puts 'B+' Rating on Negative CreditWatch --------------------------------------------------------- Standard & Poor's Ratings Services said it placed the ratings on three rated supermarket companies on CreditWatch with negative implications. This action reflects the possibility that current ratings could be lowered or revised in the near term to incorporate Standard & Poor's review of multi-employer pension liability given market declines experienced in 2008. The three supermarkets are: Safeway Inc. (BBB/Watch Neg/A-2), Stater Bros. Holdings Inc. (B+/Watch Neg/--), and Great Atlantic & Pacific Tea Co. Inc. (The) (B/Watch Neg/--). "While stock market performance year to date has been relatively unchanged," explained Standard & Poor's credit analyst Stella Kapur, "S&P believes that there is a risk that the funded status for many multi-employer pension plans has deteriorated and could represent meaningful obligations for plan participants because of the severe decline in market performance in 2008." SUNTRUST BANKS: Among 10 Banks Needing More Capital in Stress Test ----------------------------------------------------------------- The results of a comprehensive, forward-looking assessment of the financial conditions of the nation's 19 largest bank holding companies (BHCs) by the federal bank supervisory agencies were officially released on Thursday, May 7. The exercise -- conducted by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation -- was conducted so that supervisors could determine the capital buffers sufficient for the 19 BHCs to withstand losses and sustain lending -- even if the economic downturn is more severe than is currently anticipated. In a detailed summary of the results of the Supervisory Capital Assessment Program (SCAP), the supervisors identified the potential losses, resources available to absorb losses, and resulting capital buffer needed for the 19 participating BHCs. The SCAP is a complement to the Treasury's Capital Assistance Program (CAP), which makes capital available to financial institutions as a bridge to private capital in the future. According to the stress test results, after taking account of losses, revenues and reserve build requirements, in the aggregate, the BHCs need to add $185 billion to capital buffers to reach the target SCAP capital buffer at the end of 2010 under the more adverse scenario. With respect to this estimate: -- the $185 billion accrues to 10 of the 19 firms, meaning 9 of the 19 firms already have capital buffers sufficient to get through the adverse scenario in excess of 6 percent Tier 1 capital and 4 percent Tier 1 Common capital. -- the vast majority of this $185 billion comes from a shortfall in Tier 1 Common capital in the more adverse scenario, with virtually no shortfall in overall Tier 1 capital. This result means that while nearly all the firms have sufficient Tier 1 capital to absorb the unusually high losses of the more adverse scenario and still end 2010 with a Tier 1 risk-based ratio in excess of 6%, 10 of these firms had capital structures that are too strongly tilted toward capital other than common equity. Thus, each of the 10 firms needing to augment their capital as a result of this exercise must do so by increasing their Tier 1 Common capital. Including the capital actions made by banks and their first quarter 2009 annual results, the 10 BHCs will only need to raise a combined $74.6 billion in capital. ($ in billions) Required Capital Buffer ------------------ After Capital Actions & 2009 & 2010 As of After Q1 Bank Loss Estimates 12/31/08 Results ---- -------------- -------- ------- Citigroup Inc. $104.7 $92.6 $5.5 Bank of America Corporation 136.6 46.5 33.9 Wells Fargo & Company 86.1 17.3 13.7 Morgan Stanley 19.7 8.3 1.8 GMAC LLC 9.2 6.7 11.5 SunTrust Banks Inc. 11.8 3.4 2.2 Regions Financial Corp 9.2 2.9 2.5 Fifth Third Bancorp 9.1 2.6 1.1 KeyCorp 6.7 2.5 1.8 PNC Financial Services Group Inc 18.8 2.3 0.6 American Express Company 11.2 0.0 0.0 BB&T Corporation 8.7 0.0 0.0 The Bank of New York Mellon 5.4 0.0 0.0 Capital One Financial Corp 13.4 0.0 0.0 The Goldman Sachs Group Inc 17.8 0.0 0.0 JPMorgan Chase & Co. 97.4 0.0 0.0 MetLife Inc. 9.6 0.0 0.0 State Street Corporation 8.2 0.0 0.0 U.S. Bancorp 15.7 0.0 0.0 ------ ------ ------ $599.2 $185.0 $74.6 A copy of the Stress Test results is available for free at: http://bankrupt.com/misc/May09-StressTest.pdf According to Federal Reserve Chairman Ben S. Bernanke, the 19 banks covered by the "stress tests" play a vital role in our economy, holding among them two-thirds of the assets and more than one-half of the loans in the U.S. banking system. Not Tests of Solvency With respect to the stress tests, Mr. Bernanke clarified, "These examinations were not tests of solvency; we knew already that all these institutions meet regulatory capital standards. Rather, the assessment program was a forward-looking, "what-if" exercise intended to help supervisors gauge the extent of the additional capital buffer necessary to keep these institutions strongly capitalized and lending, even if the economy performs worse than expected between now and the end of next year." "The results released [May 7] should provide considerable comfort to investors and the public," Mr. Bernanke said. He noted that the examiners found that nearly all the banks that were evaluated have enough Tier 1 capital to absorb the higher losses envisioned under the hypothetical adverse scenario. Roughly half the firms, though, need to enhance their capital structure to put greater emphasis on common equity, which provides institutions the best protection during periods of stress. Many of the institutions have already taken actions to bolster their capital buffers and are well-positioned to raise capital from private sources over the next six months. "However, our government, through the Treasury Department, stands ready to provide whatever additional capital may be necessary to ensure that our banking system is able to navigate a challenging economic downturn." The estimates reported by the Federal Reserve represent values for a hypothetical 'what-if' scenario and are not forecasts of expected losses or revenues for the firms, a joint press release by the Federal Reserve, the U.S. Treasury and the FDIC also clarified. Nov. 9 Deadline for Capital Plan According to the joint release, any U.S. bank holding company (BHC) needing to augment its capital buffer at the conclusion of the SCAP will have until June 8th, 2009 to develop a detailed capital plan, and until November 9th, 2009 to implement that capital plan Over the next 30 days, any BHC needing to augment its capital buffer will develop a detailed capital plan to be approved by its primary supervisor, in consultation with the FDIC, and will have six months to implement that plan. In light of the potential for new commitments under the Capital Assistance Program or exchanges of existing CPP preferred stock, supervisors will consult with Treasury on the development and evaluation of the plans. The capital plan will consist of three main elements: * A detailed description of the specific actions to be taken to increase the level of capital and/or to enhance the quality of capital consistent with establishing the SCAP buffer. BHCs are encouraged to design capital plans that, wherever possible, actively seek to raise new capital from private sources. These plans should include actions such as: -- Issuance of new private capital instruments; -- Restructuring current capital instruments; -- Sales of business lines, legal entities, assets or minority interests through private transactions and through sales to the PPIP; -- Use of joint ventures, spin-offs, or other capital enhancing transactions; and -- Conservation of internal capital generation, including continued restrictions on dividends and stock repurchases and dividend deferrals, waivers and suspensions on preferred securities including trust preferred securities, with the expectation that plans should not rely on near-term potential increases in revenues to meet the capital buffer it is expected to have. * A list of steps to address weaknesses, where appropriate, in the BHC's internal processes for assessing capital needs and engaging in effective capital planning. * An outline of the steps the firm will take over time to repay government provided capital taken under the Capital Purchase Program (CPP), Targeted Investment Program (TIP), or the CAP, and reduce reliance on guaranteed debt issued under the TLGP. In addition, as part of the 30-day planning process, firms will need to review their existing management and Board in order to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment and maintain balance sheet capacity sufficient to continue prudent lending to meet the credit needs of the economy A copy of the joint release is available for free at: http://www.federalreserve.gov/newsevents/press/bcreg/20090506a.htm Comments to Stress-Test Results According to NewsBlaze, Scott Talbott, vice president of the Financial Services Roundtable, a Washington-based association representing the biggest U.S. financial companies, the $75 billion is not a huge sum for the 10 banks to raise. He said, the report relates, that nine of the 10 can do so through private means such as stock conversions or selling assets. Only GMAC, the auto finance company linked to General Motors, faces the prospect of seeking further government relief funds, he said. Louise Story and Eric Dash at The New York Times said, "Broadly speaking, the test results suggested that the banking industry was in better shape than many had feared." The two noted that the $75 billion in equity capital needed by 10 banks is "far less than many had forecast." The hypothetical scenarios created by bank examiners assume the unemployment rate would hit 10.3% and house prices would fall more than 22%. That scenario is worse than the current state of the economy, in which the jobless rate is below 9%, NewsBlaze said. In addition, the examiners assume in a worst-case scenario that 9% of all loans might sour -- a figure that is even higher than it was during the Great Depression, NYT said. According to Reuters, citing the Wall Street Journal, the government made concessions to banks that pushed back against its conclusions in its stress tests. The $13.7 billion projected capital shortfall for Wells Fargo -- from $17.3 billion -- came about after two weeks of bargaining, The Journal said. In addition, beyond the concessions, Financial Times, according to Reuters, reported that the U.S. government has assured the banks that they will be allowed to raise less than the $74.6 billion in equity mandated if earnings over the next six months beat regulators' forecasts. According to MarketWatch, Ken Lewis, chief executive of Bank of America Corp., on Friday called the government's stress-test results "pretty aggressive" but said the financial-services giant will comply and raise the required $33.9 billion. Asked about the health of his firm, Mr. Lewis said mortgage-lending arm Countrywide is "on fire, in a positive sense," right now, and added that "business is good" at Merrill Lynch. The Washington Post said U.S. stocks rose last week, erasing the year-to-date loss in the Standard & Poor's 500-stock index, as results from the government's "stress tests" of major banks reassured investors and the Labor Department said the pace of job cuts slowed in April. Bank of America and Citigroup, the Post relates, helped drive financial stocks in the S&P 500 to a 23% percent gain as the government said only one of the 19 large banks that were reviewed was likely to need additional taxpayer aid. PNC FINANCIAL: Among Banks Needing More Capital in Stress Test -------------------------------------------------------------- The results of a comprehensive, forward-looking assessment of the financial conditions of the nation's 19 largest bank holding companies (BHCs) by the federal bank supervisory agencies were officially released on Thursday, May 7. The exercise -- conducted by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation -- was conducted so that supervisors could determine the capital buffers sufficient for the 19 BHCs to withstand losses and sustain lending -- even if the economic downturn is more severe than is currently anticipated. In a detailed summary of the results of the Supervisory Capital Assessment Program (SCAP), the supervisors identified the potential losses, resources available to absorb losses, and resulting capital buffer needed for the 19 participating BHCs. The SCAP is a complement to the Treasury's Capital Assistance Program (CAP), which makes capital available to financial institutions as a bridge to private capital in the future. According to the stress test results, after taking account of losses, revenues and reserve build requirements, in the aggregate, the BHCs need to add $185 billion to capital buffers to reach the target SCAP capital buffer at the end of 2010 under the more adverse scenario. With respect to this estimate: -- the $185 billion accrues to 10 of the 19 firms, meaning 9 of the 19 firms already have capital buffers sufficient to get through the adverse scenario in excess of 6 percent Tier 1 capital and 4 percent Tier 1 Common capital. -- the vast majority of this $185 billion comes from a shortfall in Tier 1 Common capital in the more adverse scenario, with virtually no shortfall in overall Tier 1 capital. This result means that while nearly all the firms have sufficient Tier 1 capital to absorb the unusually high losses of the more adverse scenario and still end 2010 with a Tier 1 risk-based ratio in excess of 6%, 10 of these firms had capital structures that are too strongly tilted toward capital other than common equity. Thus, each of the 10 firms needing to augment their capital as a result of this exercise must do so by increasing their Tier 1 Common capital. Including the capital actions made by banks and their first quarter 2009 annual results, the 10 BHCs will only need to raise a combined $74.6 billion in capital. ($ in billions) Required Capital Buffer ------------------ After Capital Actions & 2009 & 2010 As of After Q1 Bank Loss Estimates 12/31/08 Results ---- -------------- -------- ------- Citigroup Inc. $104.7 $92.6 $5.5 Bank of America Corporation 136.6 46.5 33.9 Wells Fargo & Company 86.1 17.3 13.7 Morgan Stanley 19.7 8.3 1.8 GMAC LLC 9.2 6.7 11.5 SunTrust Banks Inc. 11.8 3.4 2.2 Regions Financial Corp 9.2 2.9 2.5 Fifth Third Bancorp 9.1 2.6 1.1 KeyCorp 6.7 2.5 1.8 PNC Financial Services Group Inc 18.8 2.3 0.6 American Express Company 11.2 0.0 0.0 BB&T Corporation 8.7 0.0 0.0 The Bank of New York Mellon 5.4 0.0 0.0 Capital One Financial Corp 13.4 0.0 0.0 The Goldman Sachs Group Inc 17.8 0.0 0.0 JPMorgan Chase & Co. 97.4 0.0 0.0 MetLife Inc. 9.6 0.0 0.0 State Street Corporation 8.2 0.0 0.0 U.S. Bancorp 15.7 0.0 0.0 ------ ------ ------ $599.2 $185.0 $74.6 A copy of the Stress Test results is available for free at: http://bankrupt.com/misc/May09-StressTest.pdf According to Federal Reserve Chairman Ben S. Bernanke, the 19 banks covered by the "stress tests" play a vital role in our economy, holding among them two-thirds of the assets and more than one-half of the loans in the U.S. banking system. Not Tests of Solvency With respect to the stress tests, Mr. Bernanke clarified, "These examinations were not tests of solvency; we knew already that all these institutions meet regulatory capital standards. Rather, the assessment program was a forward-looking, "what-if" exercise intended to help supervisors gauge the extent of the additional capital buffer necessary to keep these institutions strongly capitalized and lending, even if the economy performs worse than expected between now and the end of next year." "The results released [May 7] should provide considerable comfort to investors and the public," Mr. Bernanke said. He noted that the examiners found that nearly all the banks that were evaluated have enough Tier 1 capital to absorb the higher losses envisioned under the hypothetical adverse scenario. Roughly half the firms, though, need to enhance their capital structure to put greater emphasis on common equity, which provides institutions the best protection during periods of stress. Many of the institutions have already taken actions to bolster their capital buffers and are well-positioned to raise capital from private sources over the next six months. "However, our government, through the Treasury Department, stands ready to provide whatever additional capital may be necessary to ensure that our banking system is able to navigate a challenging economic downturn." The estimates reported by the Federal Reserve represent values for a hypothetical 'what-if' scenario and are not forecasts of expected losses or revenues for the firms, a joint press release by the Federal Reserve, the U.S. Treasury and the FDIC also clarified. Nov. 9 Deadline for Capital Plan According to the joint release, any U.S. bank holding company (BHC) needing to augment its capital buffer at the conclusion of the SCAP will have until June 8th, 2009 to develop a detailed capital plan, and until November 9th, 2009 to implement that capital plan Over the next 30 days, any BHC needing to augment its capital buffer will develop a detailed capital plan to be approved by its primary supervisor, in consultation with the FDIC, and will have six months to implement that plan. In light of the potential for new commitments under the Capital Assistance Program or exchanges of existing CPP preferred stock, supervisors will consult with Treasury on the development and evaluation of the plans. The capital plan will consist of three main elements: * A detailed description of the specific actions to be taken to increase the level of capital and/or to enhance the quality of capital consistent with establishing the SCAP buffer. BHCs are encouraged to design capital plans that, wherever possible, actively seek to raise new capital from private sources. These plans should include actions such as: -- Issuance of new private capital instruments; -- Restructuring current capital instruments; -- Sales of business lines, legal entities, assets or minority interests through private transactions and through sales to the PPIP; -- Use of joint ventures, spin-offs, or other capital enhancing transactions; and -- Conservation of internal capital generation, including continued restrictions on dividends and stock repurchases and dividend deferrals, waivers and suspensions on preferred securities including trust preferred securities, with the expectation that plans should not rely on near-term potential increases in revenues to meet the capital buffer it is expected to have. * A list of steps to address weaknesses, where appropriate, in the BHC's internal processes for assessing capital needs and engaging in effective capital planning. * An outline of the steps the firm will take over time to repay government provided capital taken under the Capital Purchase Program (CPP), Targeted Investment Program (TIP), or the CAP, and reduce reliance on guaranteed debt issued under the TLGP. In addition, as part of the 30-day planning process, firms will need to review their existing management and Board in order to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment and maintain balance sheet capacity sufficient to continue prudent lending to meet the credit needs of the economy A copy of the joint release is available for free at: http://www.federalreserve.gov/newsevents/press/bcreg/20090506a.htm Comments to Stress-Test Results According to NewsBlaze, Scott Talbott, vice president of the Financial Services Roundtable, a Washington-based association representing the biggest U.S. financial companies, the $75 billion is not a huge sum for the 10 banks to raise. He said, the report relates, that nine of the 10 can do so through private means such as stock conversions or selling assets. Only GMAC, the auto finance company linked to General Motors, faces the prospect of seeking further government relief funds, he said. Louise Story and Eric Dash at The New York Times said, "Broadly speaking, the test results suggested that the banking industry was in better shape than many had feared." The two noted that the $75 billion in equity capital needed by 10 banks is "far less than many had forecast." The hypothetical scenarios created by bank examiners assume the unemployment rate would hit 10.3% and house prices would fall more than 22%. That scenario is worse than the current state of the economy, in which the jobless rate is below 9%, NewsBlaze said. In addition, the examiners assume in a worst-case scenario that 9% of all loans might sour -- a figure that is even higher than it was during the Great Depression, NYT said. According to Reuters, citing the Wall Street Journal, the government made concessions to banks that pushed back against its conclusions in its stress tests. The $13.7 billion projected capital shortfall for Wells Fargo -- from $17.3 billion -- came about after two weeks of bargaining, The Journal said. In addition, beyond the concessions, Financial Times, according to Reuters, reported that the U.S. government has assured the banks that they will be allowed to raise less than the $74.6 billion in equity mandated if earnings over the next six months beat regulators' forecasts. According to MarketWatch, Ken Lewis, chief executive of Bank of America Corp., on Friday called the government's stress-test results "pretty aggressive" but said the financial-services giant will comply and raise the required $33.9 billion. Asked about the health of his firm, Mr. Lewis said mortgage-lending arm Countrywide is "on fire, in a positive sense," right now, and added that "business is good" at Merrill Lynch. The Washington Post said U.S. stocks rose last week, erasing the year-to-date loss in the Standard & Poor's 500-stock index, as results from the government's "stress tests" of major banks reassured investors and the Labor Department said the pace of job cuts slowed in April. Bank of America and Citigroup, the Post relates, helped drive financial stocks in the S&P 500 to a 23% percent gain as the government said only one of the 19 large banks that were reviewed was likely to need additional taxpayer aid. TERESITA PANGANIBAN FERRER: Voluntary Chapter 11 Case Summary ------------------------------------------------------------- Joint Debtors: Teresita Panganiban Ferrer Daniel Nobello Genove 455 Arguello Dr Benicia, CA 94510 Bankruptcy Case No.: 09-29089 Chapter 11 Petition Date: May 7, 2009 Court: United States Bankruptcy Court Eastern District of California (Sacramento) Judge: Robert S. Bardwil Debtors' Counsel: Kenneth R. Graham, Esq. 171 Mayhew Way #208 Pleasant Hill, CA 94523 Tel: (925) 932-0170 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of 20 largest unsecured creditors when it filed its petition. The petition was signed by the Joint Debtors. TH PROPERTIES: Court Okays 30-Day Delay of SALs and SOFAs Deadline ------------------------------------------------------------------ Philadelphia Inquirer reports that the Hon. Stephen Raslavich of the U.S. Bankruptcy Court for the Eastern District of Pennsylvania granted TH Properties, L.P., on Monday a 30-day extension to the middle of June, to file schedules including: -- lists of assets and liabilities, -- a statement of financial affairs, -- a schedule of current income, and -- a list of equity-security holders. TH Properties amended on Friday its filing to show debt levels between $100 million and $500 million, according to Philadelphia Inquirer. TH Properties, says Philadelphia Inquirer, initially reported its indebtedness at $10 million to $50 million, but building-industry sources had maintained that the amount was closer to $150 million, with $100 million owed to 18 lenders and $50 million to subcontractors and suppliers. Philadelphia Inquirer relates that Anthony E. Jeremias, a spokesperson for major TH Properties creditor Haines & Kibblehouse of Skippack, said that the company met with the Debtor several times about what it is owed, and "will continue to work directly with THP to find a creative means of working through their financial difficulties." Haines & Kibblehouse denied that it was interested in buying TH Properties, says the report. TH Properties said in court documents that it planned to fulfill its obligations to buyers and complete the units in its 12 projects, as well as restructure debt on other properties in the hope of developing them in the future. According to Philadelphia Inquirer, TH Properties admitted that it would focus only on current projects "due to limited resources and the overall economic climate." Philadelphia-based T.H. Properties, L.P., has 12 working developments in Pennsylvania and New Jersey. Timothy Hendricks and his brother Todd started the firm in 1992. T.H. Properties and its affiliates filed for Chapter 11 bankruptcy protection on April 30, 2009 (Bankr. E.D. Pa. Case No. 09-13201). Barry E. Bressler, Esq., at Schnader, Harrison, Segal & Lewis, LLP, and Natalie D. Ramsey, Esq., at Montgomery McCracken Walker and Rhoads LLP represent the Debtors in their restructuring efforts. T.H. Properties listed $100,000,001 to $500,000,000 in assets and $10,000,001 to $50,000,000 in debts. TH PROPERTIES: Wants to Let Lenders to Finance Projects' Insurance ------------------------------------------------------------------ Alan J. Heavens at Philadelphia Inquirer reports that TH Properties, L.P., has asked the Hon. Stephen Raslavich of the U.S. Bankruptcy Court for the Eastern District of Pennsylvania to let the Company's lenders finance the insurance coverage for its 12 projects in Pennsylvania and New Jersey. Lawyers for TH Properties co-owners Todd and Timothy Hendricks said in court documents that Westfield Insurance Co. of Columbus, Ohio, had notified them that coverage would end on May 7 for nonpayment of a $82,999 premium due March 31, 2009. According to court documents, TH Properties said that it had no other sources of funds to pay $111,528 needed to ensure insurance coverage through June 22 because it isn't currently operating. Philadelphia Inquirer notes that if the Court approves TH Properties' request, the Company would get about $154,836, or 150% of the premium needed, from the lenders as a lien on their own collateral. Philadelphia-based T.H. Properties, L.P., has 12 working developments in Pennsylvania and New Jersey. Timothy Hendricks and his brother Todd started the firm in 1992. T.H. Properties and its affiliates filed for Chapter 11 bankruptcy protection on April 30, 2009 (Bankr. E.D. Pa. Case No. 09-13201). Barry E. Bressler, Esq., at Schnader, Harrison, Segal & Lewis, LLP, and Natalie D. Ramsey, Esq., at Montgomery McCracken Walker and Rhoads LLP represent the Debtors in their restructuring efforts. T.H. Properties listed $100,000,001 to $500,000,000 in assets and $10,000,001 to $50,000,000 in debts. THORNBURG MORTGAGE: U.S. Trustee Forms 7-Member Creditors Panel --------------------------------------------------------------- W. Clarkson McDow, Jr., the United States Trustee for Region 4, appointed seven creditors to serve on the Official Committee of Unsecured Creditors of Thornburg Mortgage Inc. and its debtor- affiliates. The members of the Committee are: 1) Deutsche Bank Trust Company Americas as Indenture Trustee c/o Stanley Burg 60 Wall Street New York, New York 10008-2858 Tel: (212) 250-5280 Fax: (212) 797-0022 2) Wilmington Trust Company as Indenture Trustee c/o Joseph B. Feil Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Tel: (302) 636-6466 Fax: (302) 636-4145 3) Wells Fargo Bank, N.A. as Indenture Trustee c/o James R. Lewis 45 Broadway, 17th Floor New York, New York 10006 Tel: (212) 515-5258 Fax: (212) 524-4681 4) Equibond, Inc. c/o Jay H. Lustig 333 Castle Drive Belle Vernon, PA 15012 Tel: (724) 872-6711 Fax: (724) 872-7238 5) Davis Selected Advisors, L.P. c/o Keith J. Sobol 124 East Marcy Street Santa Fe, New Mexico 87501 Tel: (505) 820-3032 Fax: (505) 820-3008 6) V.R. Global Partners, L.P., c/o Richard Deitz 77 Aurora Business Park Sadounicheskeys Nab. Bldg. 1 Moscow 115035 Russia Tel: +74957878181 Fax: +74957878183 7) DuPont Pension Trust c/o Ming Shao One Righter Parkway, Suite 3200 Wilmington, Delaware 19803 Tel: (302) 477-6070 Fax: (302) 477-6370 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtor's expense. They may investigate the Debtor's business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About 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 adjustablerate 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. Thornburg Mortgage, Inc. and its four affiliates filed for Chapter 11 on May 1 (Bankr. D. Md. Lead Case No. 09-17787). Judge Duncan W. Keir is handling the case. David E. Rice, Esq., at Venable LLP, in Baltimore, Maryland, has been tapped as counsel. Orrick, Herrington & Sutcliffe LLP is employed as special counsel. Jim Murray, and David Hilty, at Houlihan Lokey Howard & Zukin Capital, Inc., have been tapped as investment banker and financial advisor. Protiviti Inc. has also been engaged for financial advisory services. KPMG LLP is the tax consultant. Epiq Systems, Inc. is claims and noticing agent. In its bankruptcy petition, Thornburg listed total assets of $24,400,000,000 and total debts of $24,700,000,000, as of January 31, 2009. THORNBURG MORTGAGE: Wilmington Trust Named to Creditors Committee ----------------------------------------------------------------- Wilmington Trust has been appointed by the United States Trustee to the unsecured creditors' committee in the bankruptcy of Thornburg Mortgage Inc., which filed for Chapter 11 protection on May 1, 2009 in the United States Bankruptcy Court for the District of Maryland. Wilmington Trust was appointed indenture trustee on behalf of creditors who hold approximately $1.3 billion in debt issued by Thornburg Mortgage entities. Wilmington Trust is not a direct holder of Thornburg Mortgage debt and has no credit exposure, unsecured or otherwise, to the company or its affiliates. Wilmington Trust is paid a fee for providing trust services such as those related to the Thornburg Mortgage case, which has no effect on Wilmington Trust's balance sheet, credit quality, or financial condition. Wilmington Trust's CCS business offers institutional trustee, agency, asset management, retirement plan, and administrative services for clients worldwide who use capital market financing structures, as well as those who seek to establish or maintain nexus, or legal residency, for special purpose entities. Because Wilmington Trust does not underwrite securities offerings or provide investment banking services, it is able to deliver corporate trust services that are conflict-free. About Wilmington Trust Wilmington Trust Corporation is a financial services holding company that provides Regional Banking services throughout the mid-Atlantic region, Wealth Advisory Services for high-net-worth clients in 36 countries, and Corporate Client Services for institutional clients in 88 countries. Its wholly owned bank subsidiary, Wilmington Trust Company, which was founded in 1903, is one of the largest personal trust providers in the United States and the leading retail and commercial bank in Delaware. Wilmington Trust Corporation and its affiliates have offices in Arizona, California, Connecticut, Delaware, Florida, Georgia, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, Pennsylvania, South Carolina, Vermont, the Cayman Islands, the Channel Islands, London, Dublin, Frankfurt, Luxembourg, and Amsterdam. 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 adjustablerate 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. Thornburg Mortgage, Inc. and its four affiliates filed for Chapter 11 on May 1 (Bankr. D. Md. Lead Case No. 09-17787). Judge Duncan W. Keir is handling the case. David E. Rice, Esq., at Venable LLP, in Baltimore, Maryland, has been tapped as counsel. Orrick, Herrington & Sutcliffe LLP is employed as special counsel. Jim Murray, and David Hilty, at Houlihan Lokey Howard & Zukin Capital, Inc., have been tapped as investment banker and financial advisor. Protiviti Inc. has also been engaged for financial advisory services. KPMG LLP is the tax consultant. Epiq Systems, Inc. is claims and noticing agent. In its bankruptcy petition, Thornburg listed total assets of $24,400,000,000 and total debts of $24,700,000,000, as of Jan. 31, 2009. TITLEMAX HOLDINGS: Section 341(a) Meeting Scheduled for June 1 -------------------------------------------------------------- The United States Trustee for Region 21 will convene a meeting of creditors of Titlemax Holdings LLC and its debtor-affiliates on June 1, 2009, at 2:00 p.m., in Office of the United States Trustee at 222 West Oglethorpe Avenue, Room 304 in Savannah, Georgia. 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 Titlemax Holdings Savannah, Georgia-based Titlemax Holdings LLC dba TitleMax, TitleBucks, US TitlePawn, American Title,and CheckMax is a closely held title-lending company with about 550 locations in seven states -- Georgia, South Carolina, Tennessee, Mississippi, Missouri, Virginia and Illinois. It holds customers' vehicle titles in exchange for cash. The Company was founded in 1998 and has 1,800 employees. The Company and its affiliates filed for Chapter 11 protection on April 20, 2009 (Bankr. S. D. Ga. Lead Case No. 09-40805). DLA Piper LLP represents the Debtors in its restructuring efforts. The U.S. Trustee for Region 21 appointed seven creditors to serve on the official committee of unsecured creditors. The Debtors have assets and debts both ranging from $100 million to $500 million. TOUSA INC: Hearing on Amended Disclosure Statement on Thursday -------------------------------------------------------------- TOUSA, Inc., and its debtor affiliates will appear before the U.S. Bankruptcy Court for the Southern District of Florida on May 14 to seek approval of the disclosure statement explaining the revised version of their First Amended Joint Chapter 11 Plan. The most recent version of the TOUSA Plan filed on April 17, 2009, embodies this revised operational plan. The April 17 Amended Plan thus contemplates the orderly monetization of TOUSA's assets in 24 to 36 months. TOUSA filed its original Joint Plan of Reorganization on Oct. 14, 2008, which called for the conversion of more than $300 million of second lien debt into equity. The Plan was amended on Oct. 24, 2008, to disclose more information on company valuation, financial projections, liquidation analysis and terms of new notes to be issued under the Plan. The Plan was further amended on Nov. 12, 2008, to include more disclosures on the March 2006 First Lien Revolver Agreement, directors and officers indemnification obligations, intercompany claims, amendment on certain class claim designation and treatment, book value clarifications, and litigation trust interests, among others. Since then, the Company has decided to concentrate more on finishing up ongoing projects, selling remaining inventory and cashing in on land assets. TOUSA has developed a comprehensive business plan designed to minimize costs and maximize the sale value of assets for the benefit of creditors, according to Paul Steven Singerman, Esq., at Berger Singerman, P.A., in Miami, Florida. The TOUSA revised business plan contemplates the suspension of the Company's efforts to generate new build-to-order sales and instead, provides for the diversion of primary focus on completing and closing homes currently under construction. In addition, TOUSA aims to sell its remaining inventory of "spec" homes, monetize land assets over time, and negotiate the sale of the financial services businesses operated by its non-Debtor indirect subsidiaries. The asset sale proceeds will be placed into escrow for distribution in accordance with the Plan, upon resolution of the action commenced by the Official Committee of Unsecured Creditors against certain of TOUSA's prepetition lenders. The Amended Plan also provides for these terms: * post-effective date status of TOUSA and its affiliates, * appointment of a Plan Administrator, * vesting of assets, * closing of TOUSA's Chapter 11 cases; * method of distribution under the Amended Plan; * monetization of assets; * creation of a Fee Funding Reserve; and * modification of certain claims treatment. Post-Effective Date Status The Amended Plan provides that each TOUSA Debtor will continue to exist after the Plan Effective Date as a separate corporate entity, limited partnership or limited liability company, with all the powers of a corporation, limited partnership or limited liability company pursuant to the applicable law in the jurisdiction in which each applicable Debtor is incorporated or formed and pursuant to the respective certificate of incorporation and bylaws in effect before the Effective Date. As of the Effective Date, the authority, power and incumbency of the persons acting as directors and officers of TOUSA will be terminated, and directors and officers will be deemed to have resigned or been removed without cause. Thereafter, a Plan Administrator will be appointed and will succeed authority as would have been applicable to TOUSA directors and officers. The share of new common stock of the Post-Effective TOUSA will be issued to a Proceeds Account, which share of common stock will be cancelled at the end of the implementation. TOUSA will be permitted, on or after the Effective Date, to change its corporate structure as necessary to become an LLC either by merger or by election. After the Effective Date, the Plan Administrator has the authority to decide to maintain the corporate existence of each Post-Effective Date TOUSA entity until such time as all aspects of the Amended Plan have been completed. The Plan Administrator will dissolve Post-Effective Date TOUSA and complete the winding up of its business. In connection with the liquidation of Post-Effective TOUSA, the Plan Administrator will act as liquidating agent for Post-Effective TOUSA. Each Post-Effective Date TOUSA entity will be dissolved and wound up in accordance with applicable law. Vesting of Assets Pursuant to Section 1141(b) and (c) of the Bankruptcy Code, all property of the TOUSA estate and any property acquired by any of the TOUSA Entities pursuant to the Plan will vest in each respective Post-Effective Date TOUSA Entity and will be monetized and distributed by the Plan Administrator under the Amended Plan and the Confirmation Order. Non-Core Asset Sale Procedures have facilitated bulk sales in the ordinary course of TOUSA's business and have enabled TOUSA to shed certain non-performing assets and increase its liquid cash assets throughout these Chapter 11 cases. As of March 31, 2009, TOUSA has generated $40.761 million in cash pursuant to the Non- Core Asset Sale Procedures and certain orders of the Bankruptcy Court authorizing bulk sales of property. Plan Administrator The Plan contemplates that appointment of a Plan Administrator as designated by TOUSA. The duties and powers of the Plan Administrator will include all powers necessary to implement the confirmed Plan with respect to TOUSA and administer and monetize the TOUSA assets. * The Plan Administrator may object to, seek to subordinate, compromise or settle any and all claims against TOUSA and causes of action of TOUSA, including operating causes of Action, that have not been allowed or provisionally allowed as of the Effective Date. . * The Plan Administrator is authorized to retain professionals to assist in performing its duties under the Plan. * The Plan Administrator is authorized to enter into any agreement or execute any document consistent with the Amended Plan and perform all of TOUSA's obligations under the Amended Plan. * The Plan Administrator may incur any reasonable and necessary expenses in connection with the performance of its duties under the Amended Plan. The Plan Administrator will be subject to an oversight committee, which will oversee: -- the monetization of the TOUSA assets and the incurrence of any expense of more than $500,000, outside the ordinary course; -- the prosecution of operational causes of action; and -- the prosecution of claims objections. The Bankruptcy Court is also contemplated to oversee these duties of the Plan Administrator: -- responding to discovery requests and taking other actions related to the Committee Action; and -- reviewing other issues and questions that may arise in connection with administration of the Amended Plan. The Plan Administrator will seek authority from the Bankruptcy Court to close the TOUSA Chapter 11 cases when all disputed claims have been allowed or disallowed by a final order and all appropriate distributions pursuant to the Plan have been executed. Claim of Distribution Mr. Singerman notes that the projected recovery under the Amended Plan for many of the claims asserted against TOUSA is dependent on the outcome of the Committee Action as well as the value of the net proceeds available for distribution by the Plan Administrator. The Amended Plan provides that distributions to holders of allowed claims and provisionally allowed claims against TOUSA will be made by the Plan Administrator in accordance with the terms of the Plan on the first Distribution Date after which funds have become available. Asset Monetization The Plan Administrator will be tasked to monetize and convert the TOUSA assets to cash and make timely distributions and not unduly prolong the duration of Post-Effective Date TOUSA. The Plan Administrator is permitted to exercise its reasonable business judgment in monetizing the assets of Post-Effective Date TOUSA to cash to maximize recoveries. The monetization of the TOUSA assets may be accomplished through a sale of all the assets. The Plan Administrator's actions, however, will be subject to oversight procedures. The Plan Administrator will have no liability to TOUSA, its estates, its creditors, the Creditors Committee, the Committee members or any other party for the outcome of its decisions in this regard. In line with the monetization of the TOUSA assets, the Plan Administrator will maintain individual ledgers for each TOUSA Entity, which will include a record of the purchase price for each sale of a TOUSA asset and any cost or expense associated with that sale. The Net Proceeds of those sales will be placed in the Proceeds Account. If, at the end of the Plan Implementation Term, any of the TOUSA assets remain unsold, the Plan Administrator will submit a certification to the Bankruptcy Court to, on notice to the U.S. Trustee, counsel to the First Lien Term Agent, counsel to the Second Lien Agent, the Oversight Committee and the Litigation Trustee, which certification will include information as to why the Plan Administrator believes that it would be inefficient or ineffective to sell the Unsold Assets at that time. If any Notice Party objects, the Bankruptcy Court will schedule a hearing with respect to the certification and may order that: (x) the Unsold Assets be valued and transferred to an entity, which will issue a note for the remaining secured First Lien debt, if any and which will issue equity to be distributed to or escrowed for the benefit of the holders of Second Lien Claims or Unsecured Claims; or (y) an auction at which the Unsold Assets will be sold for the highest Cash value available at the time, which Cash will be distributed to the Proceeds Account or to the holders of claims against the Debtors. The Plan Administrator will maintain a separate record of the Net Proceeds derived from each TOUSA Entity and any costs associated with the sale of that Entity's assets. After the Effective Date, the Plan Administrator will make available to a Litigation Trustee, on a reasonable basis and subject to appropriate confidentiality restrictions, the books and records of each Post- Effective Date TOUSA Entity. Moreover, the Plan Administrator will have the powers of administration with respect to TOUSA's tax obligations, including filing of returns and completing the final tax obligations upon liquidation and the representation of filing of returns. Creation of Fee Fund Reserve As of the Effective Date, Post-Effective Date TOUSA will establish a segregated account, funded in the aggregate amount of the Revolver Fee Reserve, the Term Fee Reserve and the Second Lien Fee Reserve, solely for the purpose of paying the actual out-of-pocket fees and expenses incurred in connection with the defense of the Committee Action and as provided for under the First Lien Revolving Credit Agreement, First Lien Term Loan Credit Agreement and Second Lien Term Credit Agreement in accordance with the Plan. Claim Designation & Treatment TOUSA also amended the aggregate claim amount of these classes of claim designations under the Amended Plan: Claim Claim Amended Class Designation Aggregate Amount ----- ----------- ---------------- NA Administrative Claims $4,900,000 NA Priority Claims 4,900,000 NA US Trustee Fees 300,000 1A First Lien Revolver Claims 214,091,452 1B First Lien Term Loan Claims 135,977,236 2 Second Lien Claims 367,415,973 3 Other Secured Claims 42,285,506 4 Other Priority Claims 1,890,599 Full recovery is projected for Administrative Claims, Priority Claims, US Trustee Fees, Class 3 Other Secured Claims and Class 4 Other Priority Claims. In general, Class 1A First Lien Revolver Claims, Class 1B First Lien Term Loan Claims, and Class 2 Second Lien Claims will receive Net Proceeds derived from sale of all encumbered TOUSA assets available for distribution, up to full payment of the amount of allowed First Lien Revolver Claims. Moreover, Class 1A, Class 1B and Class 2 will be entitled to separate reserve accounts for reimbursement of reasonable actual out-of-pocket expenses for the defense of the Committee Action. The projected recovery for the First Lien Revolver Claims, First Lien Term Loan Claims, and Second Lien Claims will be dependent on the outcome of the Committee Action and the value of the encumbered Net Proceeds available for distribution by the Plan Administrator. Projected recovery for Class 5A Senior Note Claims, Class 5B General Unsecured Claims, and Class 5C Subordinated Note Claims will also be dependent on the outcome of the Committee Action. Classes 5A, 5B, 5C and 5D Claims will be paid their pro rata share of a series of Litigation Trust Interests for the applicable Debtor. Any distributions will be subject to the subordination provisions of the Subordinated Notes Indenture and the PIK Notes Indenture. Class 5C and 5D Claims will be allowed against the Debtors, except Beacon Hill at Mountain's Edge, LLC. TOUSA also appended exhibits to its Disclosure Statement pertaining to intercompany loans and claims summary, copies of which are available for free at: http://bankrupt.com/misc/Tousa_IntercompanyLoans.pdf http://bankrupt.com/misc/Tousa_ClaimsSummary.pdf A full-text copy of TOUSA's First Amended Joint Plan dated April 17, 2009, is available for free at: http://bankrupt.com/misc/TOUSA_FirstAmendedJointPlan.pdf A full-text copy of the TOUSA Disclosure Statement dated April 17, 2009, is available for free at: http://bankrupt.com/misc/Tousa_Apr17DiscStat.pdf Liquidation Analysis TOUSA, with the assistance of restructuring consultants Zolfo Cooper, LLC, prepared an amended Liquidation Analysis and delivered it to the Court on April 22, 2009. The Liquidation Analysis determines the distribution that each holder of a claim or equity interests would receive if the TOUSA bankruptcy cases were converted into a proceeding under Chapter 7 of the Bankruptcy Code. TOUSA previously filed a Liquidation Analysis under the October 24, 2008 Amended Plan of Reorganization. The Liquidation Analysis estimates a high recovery of 66% and a low recovery of 44% with respect to the First Lien Secured Debt, if the TOUSA cases were converted to a proceeding under Chapter 7 of the Bankruptcy Code. Zolfo also forecasts zero recovery with respect to the Second Lien Secured Debt if the TOUSA cases were converted to a proceeding under Chapter 7. TOUSA, Inc. and Affiliates Consolidated Liquidation Analysis (in thousands) Low Midpoint High Recovery Recovery Recovery -------- -------- -------- Estimated Proceeds Unrestricted Cash $196,038 $196,038 $196,038 Land 44,048 33,220 22,393 WIP 55,128 30,451 5,773 Deposits & Land Banking - - --------- --------- --------- Recoveries from Working Capital Assets 295,214 259,709 224,204 Fixed Assets 1,284 790 295 Investment in joint ventures - - - Prepaid/Other Assets 537 269 - Financial Services 9,918 9,918 9,918 Litigation Recovery TBD TBD TBD --------- --------- --------- Aggregate Estimated Proceeds $306,953 $270,685 $234,417 ========= ========= ========= Less: Costs & Claims Costs of Wind Down 84,983 84,983 84,983 Chapter 7 Trustee Fees 6,659 5,571 4,483 Administrative Claims - - - --------- --------- --------- Total Wind Down Costs & Claims 91,642 90,554 89,466 --------- --------- --------- Net Proceeds $215,642 $180,131 $144,951 ========= ========= ========= Recoveries: First Lien Secured Debt 327,443 327,443 327,443 Estimated Recovery % 66% 55% 44% Amount Remaining after First Lien - - - Second Lien Secured Debt 367,416 367,416 367,416 Estimated Recovery % 0% 0% 0% Amount Available for Unsecured Creditors - - - ========= ========= ========= A full-text copy of the Liquidation Analysis is available for free at http://bankrupt.com/misc/Tousa_LiquidationAnalysis.pdf Plan Distribution Analysis TOUSA's management also developed a distribution analysis and prepared cash flow projections for the calendar year 2009 through the first quarter of 2011. The Projections are based on the forecasted consolidated results of the revised TOUSA business plan. TOUSA forecasts a total cash flow of $41.183 million by the end of the 2009 fiscal year and a total cash flow of $60.28 million by the end of the 2010 fiscal year. A negative total cash flow of $5.164 million is estimated by the first quarter of 2011. A copy of the Cash Flow Projections is available for free at: http://bankrupt.com/misc/TOUSA_CashFlowProjections.pdf Based on the revised business plan and related projections, TOUSA estimated potential proceeds that would be available to creditors if the Amended Plan is confirmed and effectuated. The estimates represent TOUSA management's assumptions regarding the costs that would be incurred to implement the Amended Plan and the funds that would be available for distribution to creditors. Aggregate Undiscounted Proceeds $529,026,000 Total costs (427,727) Cash on Hand as of March 31, 2009 199,281,000 ------------ Net Proceeds Available for Distribution $295,581,000 About TOUSA Inc. Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets: TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder in the United States, operating in various metropolitan markets in 10 states located in four major geographic regions: Florida, the Mid-Atlantic, Texas, and the West. TOUSA designs, builds, and markets high-quality detached single-family residences, town homes, and condominiums to a diverse group of homebuyers, such as "first-time" homebuyers, "move-up" homebuyers, homebuyers who are relocating to a new city or state, buyers of second or vacation homes, active-adult homebuyers, and homebuyers with grown children who want a smaller home. It also provides financial services to its homebuyers and to others through its subsidiaries, Preferred Home Mortgage Company and Universal Land Title Inc. The Debtor and its debtor-affiliates filed for separate Chapter 11 protection on Jan. 29, 2008 (Bankr. S.D. Fla. Case No. 08- 10928). The Debtors have selected M. Natasha Labovitz, Esq., Brian S. Lennon, Esq., Richard M. Cieri, Esq., and Paul M. Basta, Esq., at Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at Berger Singerman, to represent them in their restructuring efforts. Lazard Freres & Co. LLC is the Debtors' investment banker. Ernst & Young LLP is the Debtors' independent auditor and tax services provider. Kurtzman Carson Consultants LLC acts as the Debtors' Notice, Claims & Balloting Agent. TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba Eagle Homes, filed for Chapter 11 Protection on July 30, 2008, (Bankr. S.D. Fla. Case No.: 08-20746). It listed assets between $1 million and $10 million, and debts between $1 million and $10 million. The Official Committee of Unsecured Creditors hired Patricia A. Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff & Sitterson, P.A., as its local counsel. TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets of $1,734,422,756 and total liabilities of $2,300,053,979. Bankruptcy Creditors' Service, Inc., publishes TOUSA Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by TOUSA Inc. and its affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) WARDAL W HOUSTON: Case Summary & 16 Largest Unsecured Creditors --------------------------------------------------------------- Joint Debtors: Wardal W. Houston Carol L. Houston POB 22348 Seattle, WA 98122 Bankruptcy Case No.: 09-14441 Chapter 11 Petition Date: May 7, 2009 Court: United States Bankruptcy Court Western District of Washington (Seattle) Debtors' Counsel: J Todd Tracy, Esq. Resolve Legal PLLC 720 Olive Way Ste 1000 Seattle, WA 98101 Tel: (206) 624-0123 Fax: (206) 624-8598 Email: todd@resolvelegal.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtors' petition, including their list of 16 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/wawb09-14441.pdf The petition was signed by the Joint Debtors. WASHINGTON MUTUAL: Seeks July 23 Extension of Plan Filing Period ---------------------------------------------------------------- Washington Mutual, Inc., and WMI Investment Corp. ask Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware to further extend their exclusive periods to: (1) file a plan of reorganization through July 23, 2009; and (2) solicit and obtain acceptances of that plan through September 21, 2009. The current deadline for the Debtors' exclusive plan filing period is April 24, 2009, and for their exclusive solicitation period deadline is June 23, 2009. The Debtors seek a 90-day extension of their Exclusive Periods in order to continue making progress on resolving the legal status of certain of their assets, including those that relate to the Federal Deposit Insurance Corporation and JPMorgan Chase Bank, Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, says. Mr. Collins relates that in January 2009, the Federal Deposit Insurance Corporation, as receiver for Washington Mutual Bank, disallowed the Debtors' claim against it on account of WMB's Receivership estate. The Debtors challenged the disallowance and filed a complaint against the FDIC on March 20, 2009, in the U.S. District Court for the District of Columbia, seeking to recover $6.5 billion in capital contributions, $4 billion in preferred securities, and $3 billion in tax refunds. Separately, JPMorgan Chase Bank, the acquirer of WMB, sought to intervene in the FDIC Action. Notwithstanding concurrent negotiations between the Debtors and JPMorgan to resolve the outstanding issues, JPMorgan commenced an adversary action against the Debtors and FDIC. Under the Complaint, JPMorgan sought a declaratory judgment with respect to the ownership of the assets and interests purchased in good faith from the FDIC. While the FDIC Action was necessary to preserve the Debtors' Claims against the Receivership and the FDIC, the Action and the JPMorgan Adversary Proceeding have further complicated the Debtors' large and complex Chapter 11 cases, Mr. Collins points out. The Litigations require from the Debtors a significant portion of their time and energy, and "constitute substantial drain on the Debtors' resources," Mr. Collins tells the Court. Mr. Collins asserts that members of the Debtors' management have been forced to spend countless hours of their time to prepare for and respond to the FDIC and JPMorgan proceedings, including formulating strategies, collecting factual information, preparing legal documents and engaging in discussions with counterparties and the Official Committee of Unsecured Creditors as well as various creditor constituencies. He adds that the resolution of the legal and economic issues that are the subject of the Litigations is essential for the formulation of a Chapter 11 plan. In this light, it is thus impossible for the Debtors to propose a feasible plan at the present time unless they know the amount of assets available for distribution to their creditors, Mr. Collins contends. The Debtors point out that the Deposit Funds, aggregating more than $4 billion and the foundation of any Chapter 11 plan they will be proposing, is now the subject of JPMorgan's request for recharacterization as capital contributions rather than deposit liabilities. "Until the [Bankruptcy] Court determines the true nature of the Deposit Funds and whether JPMorgan possesses any right of setoff or other rights, the Debtors cannot proceed with [Chapter 11] plan preparations," Mr. Collins reasons out. Against this backdrop, the Debtors ask Judge Walrath to further extend their Exclusive Periods. The Debtors affirm that the Creditors' Committee has agreed to, and supports, their Excusive Period extension request. The Court will convene a hearing on May 20, 2009, to consider the Debtors' request. Pursuant to Del.Bankr.LR 9006-2 of the U.S. Bankruptcy Court for the District of Delaware, the Debtors' Exclusive Periods is automatically extended until the conclusion of that hearing. Objections, if any, must be filed by May 13. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over Sept. 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. (Washington Mutual Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WASHINGTON MUTUAL: Seeks Rule 2004 Discovery on JPMorgan -------------------------------------------------------- Washington Mutual, Inc., and WMI Investment Corp. ask Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware for permission to conduct a discovery pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure on JPMorgan Chase & Co. In February 2009, certain stakeholders of the Debtors filed with the District Court of Galveston County, Texas, a lawsuit captioned American Nat/I Ins. Co., et at. v. JPMorgan Chase & Co., et al. Case No. 3:09-cv-00044, seeking billions of dollars arising from the alleged misconduct of JPMorgan Chase Bank, National Association, which lead up to JPMorgan's purchase of Washington Mutual Bank's assets "for an amount far below the fair market value of those assets." The Texas Complaint alleges a "premeditated plan" by JPMorgan designed to damage two of WaMu's significant assets, WMB and WMB fsb, so that JPMorgan could purchase WMB's assets cheap to the severe detriment of WaMu as the Bank's largest stakeholder. Under the Complaint, the WaMu shareholders assert that JPMorgan engaged in "sham negotiations" designed to elicit confidential information from the Debtors, and misused and publicly leaked confidential information to gain an unfair advantage in obtaining WMB's long- coveted assets at "fire sale" prices. The Debtors seek to subject JPMorgan to an examination pursuant to Rule 2004 with respect to the Texas Action. The Examination is aimed to investigate potential claims against JPMorgan based on the Texas Action, allowing the Debtors, as estate fiduciaries, to determine the validity and ownership of the potentially significant claims, Neil R. Lapinski, Esq., at Elliott Greenleaf, in Wilmington, Delaware, says. To the extent the Examination demonstrates that the Debtors have viable claims against JPMorgan, the claims are assets of the Debtors' estates, through which any recovery resulting from the assertion of the Claims will inure to the benefit of the Debtors and their creditors, Mr. Lapinski contends. Mr. Lapinski adds that since December 2007, WaMu has made $6,500,000,000 in capital contributions to WMB, the value of which was transferred to JPMorgan pursuant to an agreement with the Federal Deposit Insurance Company to sell substantially all of WMB's assets to JPMorgan in exchange for $1.88 billion and the assumption of all of WMB's deposit liabilities. In this light, Mr. Lapinski maintains, discovery is necessary to determine if there exists any claim against JPMorgan for fraudulent transfer arising out of the Capital Contributions, and whether JPMorgan has any legitimate basis to assert that it was a good-faith transferee that took for value without knowledge of the avoidability of the Transfers. Mr. Lapinski further relates that WMB owed $177,000,000 to certain of WaMu's subsidiaries under certain promissory notes. The holders of the Non-Debtor Subsidiary Promissory Notes were H.S. Loan Corporation, H.S. Loan Partners, WMHF A Delaware Holdings LLC, and WMRP Delaware Holdings LLC, as predecessor-in- interest to PCA Asset Holdings LLC. There were also significant intercompany receivables, aggregating $22,500,000, owed to WMI by WMB. In this regard, discovery is appropriate to investigate whether the Intercompany Amounts Due have been assumed by JPMorgan, which call for a turnover to be pursued against JPMorgan, Mr. Lapinski asserts. To facilitate the proposed discovery, the Debtors ask the Court to require JPMorgan to produce documents relating to its "acts, conduct, or property" or "liabilities and financial condition" within 30 days after the Court's Order. A list of the Debtors' First Document Requests for JPMorgan is available for free at: http://bankrupt.com/misc/WaMu_TexasExamRequestedDocs.pdf About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over Sept. 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. (Washington Mutual Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WASHINGTON MUTUAL: Seeks July 23 Extension of Plan Filing Period ---------------------------------------------------------------- Washington Mutual, Inc., and WMI Investment Corp. ask Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware for permission to exercise its ownership of Pacific Life policies. On January 31, 2002, the Debtors and The Bank of New York Mellon, as trustee, entered into a Revocable Trust Agreement relating to company-owned life insurance policies issued by Pacific Life Insurance Company. Pursuant to the Trust Agreement, Washington Mutual Inc. transferred, assigned and conveyed certain assets, including 105 of the PacLife Policies, to BoNY Mellon to hold in trust, administer, and distribute. A full-text copy of the BoNY Mellon Trust Agreement is available for free at http://bankrupt.com/misc/WaMu&BNY_TrustAgreement.pdf A list of Policies under the WaMu Revocable Trust is available for free at http://bankrupt.com/misc/WaMu_PacLifePolicies.pdf The Debtors assert that the Trust is their sole and exclusive benefit and it includes: -- certain assets used to purchase the Policies; -- the Policies; -- the insurance proceeds payable upon the death of any insured party under the Policies; -- the Cash Surrender Value of the Policies; and -- any investment income resulting from the investments of cash held in the Trust made upon the direction of the Debtors. As of March 31, 2009, the aggregate Cash Surrender Value of the Policies total approximately $36.8 million. The Policies are solely an asset of WaMu and constitute property of WaMu's Chapter 11 estate, Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, asserts. Mr. Collins relates that upon written request while an Insured is living, WaMu may elect to surrender the Policies for their Cash Surrender Value and terminate the Policies. In the event an Insured passes away prior to the surrender of a Policy, the Debtors will no longer have any right to receive the Cash Surrender Value for any applicable Policy covering the Insured, but instead, will be entitled to the death benefit under the Policy. In either instance, PacLife is obligated to remit any applicable Policy proceeds to the Trust. The Debtors maintain that they are entitled to revoke the Trust at any time, during which all assets held by the Trustee, including all principal and undistributed income, will be distributed back to them. In this regard, the Debtors elected to surrender and terminate the Policies in exchange for their Cash Surrender Value, Mr. Collins tells the Court. Mr. Collins points out that in electing to surrender the Policies, the Debtors will receive a cash payment of approximately $36.8 million, thereby increasing their near-term liquidity and ensuring that the assets are available for distribution to creditors. Facilitating the ultimate termination of the Trust, in turn, he continues, will save the Debtors fees and expenses attributable to the administration of the Policies. "Hence, taking action to surrender, change ownership, or initiate cash withdrawals from the Policies falls squarely within the Debtors' rights under the Policies and constitutes an efficient and cost-effective means of realizing the value of the Policies," Mr. Collins notes. Mr. Collins assures the Court that the Debtors are not affecting the interests of any other party in pursuing their rights over the Policies. He further noted that PacLife has indicated that it is prepared to acknowledge the Debtors' rights with respect to the Policies, but has requested Court approval of any exercise of the rights. BoNY Mellon, as Trustee, also requested that the Court provide advance approval of any and all applicable distributions of Policy proceeds and the termination of the Trust. Against this backdrop, the Debtors ask the Court, pursuant to Sections 105(a) and 363 of the Bankruptcy Code, to allow: (a) them to exercise ownership rights, including rights to surrender, ownership change or withdrawal, over the Policies; (b) PacLife to remit any proceeds of the Policies to the Trustee, where applicable; (c) the Trustee to distribute any and all Policy proceeds to the Debtors, where applicable; and (d) the termination of the Trust. Judge Walrath will convene a hearing to consider the Debtors' request on May 20, 2009. JPMorgan Reacts JPMorgan Chase Bank, National Association, as purchaser of Washington Mutual Bank, argues that the Debtors' proposal does not appear to permit them to (i) assert ownership over the Policy Nos. 7675A and 7729A, or (ii) terminate the Trust until the ownership of those Disputed Policies have been resolved. In this regard, JPMorgan reserves its right to object to the Debtors' Motion to the extent the Debtors seek to enforce ownership over the Disputed Policies. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over Sept. 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. (Washington Mutual Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WASHINGTON MUTUAL: To Employ Elliott Greenleaf as Special Counsel ----------------------------------------------------------------- Washington Mutual, Inc., and WMI Investment Corp. seek permission from Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware to employ Elliott Greenleaf as their Delaware special litigation and conflicts counsel, nunc pro tunc to the Petition Date. According to Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, the Debtors believe that Elliott Greenleaf is well-qualified to render litigation and conflicts services in their cases, given the firm's experience with handling legal matters in the District of Delaware. Moreover, he notes, attorneys at Elliott Greenleaf have become familiar with the Debtors' business affairs and capital structure. Thus, the firm is equipped with the necessary background to deal effectively with many legal issues that may arise in the Debtors' cases. As Delaware special litigation and conflicts counsel to the Debtors, Elliott Greenleaf will: (1) assist and advise the Debtors in connection with the Adversary Proceeding commenced by JPMorgan Chase Bank, National Association, against the Debtors and the Federal Insurance Deposit Corporation, as receiver of Washington Mutual Bank; (2) commence, if necessary, and prosecute adversary proceedings against all necessary parties, particularly those parties related to present or former clients of Richards, Layton & Finger, P.A. and Weil, Gotshal & Manges LLP; (3) attend meetings and negotiate with any party related to the JPMorgan Adversary Proceeding or against which the Debtors may commence an adversary proceeding; (4) take all necessary action to protect and preserve the interests of the Debtors, including (i) the prosecution of actions on their behalf, and (ii) negotiations concerning litigation in which the Debtors are involved; (5) prepare, on behalf of the Debtors, all necessary adversary complaints and related motions, applications, answers, orders, reports and other papers in support of positions; (6) appear, as appropriate, before the Court, the appellate courts, state courts and the United States Trustee to protect the interests of the Debtors; and (7) perform other necessary legal services in the Debtors' Cases, as may be appropriate. The Debtors intend to pay the Elliott Greenleaf professionals for their services in accordance with these hourly rates: Professional Hourly Rate ------------ ----------- Rafael X. Zahralddin-Aravena $575 Henry F. Siedzikowski 565 Brian R. Elias 260 Neil R. Lapinski 375 William M. Kelleher 400 Shelley A. Kinsella 385 Jeffrey M. Rigby 225 Elizabeth A. Williams 210 Kristin A. McCloskey 200 Aron M. Pillard 200 Jessi A. Adkins 200 Philip Giordano 175 The Debtors also intend to reimburse Elliott Greenleaf for its necessary out-of-pocket expenses. The Debtors have also sought the Court's approval of their employment of Quinn Emanuel Urquhart Oliver & Hedges, LLP, as special litigation and conflicts for the Debtors in connection with litigations relating to JPMorgan Chase & Co., as the acquirer of Washington Mutual Bank. Elliott Greenleaf has discussed with Quinn Emanuel and the Debtors a division of responsibility in order to minimize duplication of efforts on behalf of the Debtors, Mr. Collins assures the Court. Rafael X. Zahralddin-Aravena, Esq., a managing director at Elliott Greenleaf, maintains that his firm does not represent, has not represented and will not represent any entity other than the Debtors in matters related to the Chapter 11 cases. He affirms that Elliott Greenleaf is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Judge Walrath will convene a hearing on May 20, 2009, to consider approval of the Debtors' Application. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over Sept. 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. (Washington Mutual Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WASHINGTON MUTUAL: San Buenaventura Alleges Fraud vs. Officers -------------------------------------------------------------- The city of Buenaventura in Ventura, California, filed with Superior Court of the State of California in San Francisco County, a complaint alleging fraud and deceit, negligent misrepresentation, breach of fiduciary duty and violation of Section 25400 of the California Corporations Code, against these officers and directors of Washington Mutual, Inc.: * Kerry Killinger * Thomas Casey * Stephen Rotella * Ronald Cathcart * David Schneider * Stephen Frank * Thomas Leppert * Phillip Matthews * Michael Murphy * William Reed, Jr. * Orin Smith * Deloitte & Touche, LLP Mark C. Molumphy, Esq., at Cotchett, Pitre & McCarthy, in Burlingame, California, relates that in 2006 and 2007, approximately 70% of WaMu's net interest income was generated by residential real estate loans and related products, majority of which are in California. He notes that WaMu and the Defendants, assisted by Deloitte as the Company's auditor, disclosed that they were taking risk management processes to minimize the credit risk involved in lending sums to borrowers. WaMu reassured unsuspecting investors through its financial results that it was taking appropriate allowances for loan losses while raising funds from them, including the City. Mr. Molumphy contends that to conceal the negative impact that the deteriorating credit quality of WaMu's home mortgage loans had on the Company's financial condition, the Defendants "improperly accounted for the impairment of WaMu' loan portfolio by materially understating WaMu's provisioning for loan and lease losses, thereby [overstating] WaMu's net income and earnings per share." Moreover, he continued, WaMu increasingly underwrote high-risk loans with loose underwriting standards and inflated appraisals, which it knew were impaired. In September 2007, in reliance on the Defendants' misrepresentations, the City purchased a substantial interest in a WaMu note, at a par amount of $5,000,000 and a 6.875% coupon, with a maturity date of June 15, 2011. California held the Note in its custodial account at all times. In 2008, however, WaMu revealed the full extent of its losses, acknowledging that its portfolio of supposedly high-quality home loans was tainted with substantially impaired assets. WaMu estimated "$17 to $23 billion of embedded losses in its current book of business" as of April 2008. As a result, WaMu is in default on coupon payments due to the City. In this light, Mr. Murphy argues, the Defendants made false and misleading material representations and omissions to the City, as exhibited in press releases, public statements, financial statements, unqualified audit reports, filings with the Securities and Exchange Commission and other disclosures. He contends that each of the Defendants intentionally concealed adverse, non-public information from the City with respect to the Note. The Defendants acted, he asserts, pursuant to a scheme and conspiracy, to induce the City's purchase and retention of the Note by circulating or disseminating, in or from California, information that falsely described WaMu's financial condition and exposure. Accordingly, the City asked the Court to grant it compensatory and general damages, special damages, restitution, prejudgment interest at the maximum rate, punitive and exemplary damages, the costs of proceedings, and attorney's fees. The City demands a trial by jury. A full-text copy of the City's Complaint is available for free at http://bankrupt.com/misc/WaMu_BuenaventuraComplaint.pdf About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over Sept. 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. (Washington Mutual Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WELLCARE HEALTH: Resolution Won't Affect S&P's 'B-' Rating ---------------------------------------------------------- Standard & Poor's Ratings Services said that WellCare Health Plans Inc.'s (B-/Negative/--) announcement that it has reached a resolution to the government investigation does not affect S&P's ratings or outlook on the company. WellCare announced on May 5 that it will pay $80 million as part of a deferred prosecution agreement with the U.S. Attorney's Office for the Middle District of Florida and the Florida Attorney General's Office to resolve allegations that it tried to defraud Florida's Medicaid and Healthy Kids programs under certain contracts (2004-2007). WellCare will pay $25 million immediately and the remaining approximately $19.8 million no later than Dec. 31, 2009. In August 2008, the company paid $35.2 million of the $80 million now owed per the resolution. WellCare's debt structure consists of a $152.8 million (current balance) bank term loan due May 13, 2009. Based on year-end 2008 financials and discussions with management, S&P believes that WellCare maintains the capacity to meet this very near-term debt repayment obligation as well as the $25 million payment required per the DPA. S&P plans to review its rating outlook on the company shortly, following discussion with management, the release of first-quarter 2009 financials, and the repayment of the debt upon maturity. WELLS FARGO: Among 10 Needing More Capital in Stress Test --------------------------------------------------------- The results of a comprehensive, forward-looking assessment of the financial conditions of the nation's 19 largest bank holding companies (BHCs) by the federal bank supervisory agencies were officially released on Thursday, May 7. The exercise -- conducted by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation -- was conducted so that supervisors could determine the capital buffers sufficient for the 19 BHCs to withstand losses and sustain lending -- even if the economic downturn is more severe than is currently anticipated. In a detailed summary of the results of the Supervisory Capital Assessment Program (SCAP), the supervisors identified the potential losses, resources available to absorb losses, and resulting capital buffer needed for the 19 participating BHCs. The SCAP is a complement to the Treasury's Capital Assistance Program (CAP), which makes capital available to financial institutions as a bridge to private capital in the future. According to the stress test results, after taking account of losses, revenues and reserve build requirements, in the aggregate, the BHCs need to add $185 billion to capital buffers to reach the target SCAP capital buffer at the end of 2010 under the more adverse scenario. With respect to this estimate: -- the $185 billion accrues to 10 of the 19 firms, meaning 9 of the 19 firms already have capital buffers sufficient to get through the adverse scenario in excess of 6 percent Tier 1 capital and 4 percent Tier 1 Common capital. -- the vast majority of this $185 billion comes from a shortfall in Tier 1 Common capital in the more adverse scenario, with virtually no shortfall in overall Tier 1 capital. This result means that while nearly all the firms have sufficient Tier 1 capital to absorb the unusually high losses of the more adverse scenario and still end 2010 with a Tier 1 risk-based ratio in excess of 6%, 10 of these firms had capital structures that are too strongly tilted toward capital other than common equity. Thus, each of the 10 firms needing to augment their capital as a result of this exercise must do so by increasing their Tier 1 Common capital. Including the capital actions made by banks and their first quarter 2009 annual results, the 10 BHCs will only need to raise a combined $74.6 billion in capital. ($ in billions) Required Capital Buffer ------------------ After Capital Actions & 2009 & 2010 As of After Q1 Bank Loss Estimates 12/31/08 Results ---- -------------- -------- ------- Citigroup Inc. $104.7 $92.6 $5.5 Bank of America Corporation 136.6 46.5 33.9 Wells Fargo & Company 86.1 17.3 13.7 Morgan Stanley 19.7 8.3 1.8 GMAC LLC 9.2 6.7 11.5 SunTrust Banks Inc. 11.8 3.4 2.2 Regions Financial Corp 9.2 2.9 2.5 Fifth Third Bancorp 9.1 2.6 1.1 KeyCorp 6.7 2.5 1.8 PNC Financial Services Group Inc 18.8 2.3 0.6 American Express Company 11.2 0.0 0.0 BB&T Corporation 8.7 0.0 0.0 The Bank of New York Mellon 5.4 0.0 0.0 Capital One Financial Corp 13.4 0.0 0.0 The Goldman Sachs Group Inc 17.8 0.0 0.0 JPMorgan Chase & Co. 97.4 0.0 0.0 MetLife Inc. 9.6 0.0 0.0 State Street Corporation 8.2 0.0 0.0 U.S. Bancorp 15.7 0.0 0.0 ------ ------ ------ $599.2 $185.0 $74.6 A copy of the Stress Test results is available for free at: http://bankrupt.com/misc/May09-StressTest.pdf According to Federal Reserve Chairman Ben S. Bernanke, the 19 banks covered by the "stress tests" play a vital role in our economy, holding among them two-thirds of the assets and more than one-half of the loans in the U.S. banking system. Not Tests of Solvency With respect to the stress tests, Mr. Bernanke clarified, "These examinations were not tests of solvency; we knew already that all these institutions meet regulatory capital standards. Rather, the assessment program was a forward-looking, "what-if" exercise intended to help supervisors gauge the extent of the additional capital buffer necessary to keep these institutions strongly capitalized and lending, even if the economy performs worse than expected between now and the end of next year." "The results released [May 7] should provide considerable comfort to investors and the public," Mr. Bernanke said. He noted that the examiners found that nearly all the banks that were evaluated have enough Tier 1 capital to absorb the higher losses envisioned under the hypothetical adverse scenario. Roughly half the firms, though, need to enhance their capital structure to put greater emphasis on common equity, which provides institutions the best protection during periods of stress. Many of the institutions have already taken actions to bolster their capital buffers and are well-positioned to raise capital from private sources over the next six months. "However, our government, through the Treasury Department, stands ready to provide whatever additional capital may be necessary to ensure that our banking system is able to navigate a challenging economic downturn." The estimates reported by the Federal Reserve represent values for a hypothetical 'what-if' scenario and are not forecasts of expected losses or revenues for the firms, a joint press release by the Federal Reserve, the U.S. Treasury and the FDIC also clarified. Nov. 9 Deadline for Capital Plan According to the joint release, any U.S. bank holding company (BHC) needing to augment its capital buffer at the conclusion of the SCAP will have until June 8th, 2009 to develop a detailed capital plan, and until November 9th, 2009 to implement that capital plan Over the next 30 days, any BHC needing to augment its capital buffer will develop a detailed capital plan to be approved by its primary supervisor, in consultation with the FDIC, and will have six months to implement that plan. In light of the potential for new commitments under the Capital Assistance Program or exchanges of existing CPP preferred stock, supervisors will consult with Treasury on the development and evaluation of the plans. The capital plan will consist of three main elements: * A detailed description of the specific actions to be taken to increase the level of capital and/or to enhance the quality of capital consistent with establishing the SCAP buffer. BHCs are encouraged to design capital plans that, wherever possible, actively seek to raise new capital from private sources. These plans should include actions such as: -- Issuance of new private capital instruments; -- Restructuring current capital instruments; -- Sales of business lines, legal entities, assets or minority interests through private transactions and through sales to the PPIP; -- Use of joint ventures, spin-offs, or other capital enhancing transactions; and -- Conservation of internal capital generation, including continued restrictions on dividends and stock repurchases and dividend deferrals, waivers and suspensions on preferred securities including trust preferred securities, with the expectation that plans should not rely on near-term potential increases in revenues to meet the capital buffer it is expected to have. * A list of steps to address weaknesses, where appropriate, in the BHC's internal processes for assessing capital needs and engaging in effective capital planning. * An outline of the steps the firm will take over time to repay government provided capital taken under the Capital Purchase Program (CPP), Targeted Investment Program (TIP), or the CAP, and reduce reliance on guaranteed debt issued under the TLGP. In addition, as part of the 30-day planning process, firms will need to review their existing management and Board in order to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment and maintain balance sheet capacity sufficient to continue prudent lending to meet the credit needs of the economy A copy of the joint release is available for free at: http://www.federalreserve.gov/newsevents/press/bcreg/20090506a.htm Comments to Stress-Test Results According to NewsBlaze, Scott Talbott, vice president of the Financial Services Roundtable, a Washington-based association representing the biggest U.S. financial companies, the $75 billion is not a huge sum for the 10 banks to raise. He said, the report relates, that nine of the 10 can do so through private means such as stock conversions or selling assets. Only GMAC, the auto finance company linked to General Motors, faces the prospect of seeking further government relief funds, he said. Louise Story and Eric Dash at The New York Times said, "Broadly speaking, the test results suggested that the banking industry was in better shape than many had feared." The two noted that the $75 billion in equity capital needed by 10 banks is "far less than many had forecast." The hypothetical scenarios created by bank examiners assume the unemployment rate would hit 10.3% and house prices would fall more than 22%. That scenario is worse than the current state of the economy, in which the jobless rate is below 9%, NewsBlaze said. In addition, the examiners assume in a worst-case scenario that 9% of all loans might sour -- a figure that is even higher than it was during the Great Depression, NYT said. According to Reuters, citing the Wall Street Journal, the government made concessions to banks that pushed back against its conclusions in its stress tests. The $13.7 billion projected capital shortfall for Wells Fargo -- from $17.3 billion -- came about after two weeks of bargaining, The Journal said. In addition, beyond the concessions, Financial Times, according to Reuters, reported that the U.S. government has assured the banks that they will be allowed to raise less than the $74.6 billion in equity mandated if earnings over the next six months beat regulators' forecasts. According to MarketWatch, Ken Lewis, chief executive of Bank of America Corp., on Friday called the government's stress-test results "pretty aggressive" but said the financial-services giant will comply and raise the required $33.9 billion. Asked about the health of his firm, Mr. Lewis said mortgage-lending arm Countrywide is "on fire, in a positive sense," right now, and added that "business is good" at Merrill Lynch. The Washington Post said U.S. stocks rose last week, erasing the year-to-date loss in the Standard & Poor's 500-stock index, as results from the government's "stress tests" of major banks reassured investors and the Labor Department said the pace of job cuts slowed in April. Bank of America and Citigroup, the Post relates, helped drive financial stocks in the S&P 500 to a 23% percent gain as the government said only one of the 19 large banks that were reviewed was likely to need additional taxpayer aid. WESTSOUND BANK: Closed May 8; Kitsap Bank Assumes All Deposits -------------------------------------------------------------- Westsound Bank, Bremerton, Washington, was closed May 8, 2009, by the Washington Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Kitsap Bank, Port Orchard, Washington, to assume all of the deposits, except those from brokers, of Westsound Bank. Westsound Bank's nine offices will reopen today, May 11, as branches of Kitsap Bank. Depositors of the failed bank will automatically become depositors of Kitsap Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. As of March 31, 2009, Westsound Bank had total assets of $334.6 million and total deposits of $304.5 million. Kitsap will not assume the approximately $9.4 million in brokered deposits. The FDIC will pay the brokers directly. Customers who placed money with brokers should contact them directly for more information about the status of their deposits. Customers who would like more information on the May 8 transaction should visit the FDIC's Web site at: http://www.fdic.gov/bank/individual/failed/westsound.html. In addition to assuming the failed bank's deposits, Kitsap Bank will purchase $49.3 million of assets comprised of cash, cash equivalents, marketable securities and loans secured by deposits. The FDIC will retain the remaining assets for later disposition. The transaction is the least costly resolution option, and the FDIC estimates the cost to its Deposit Insurance Fund will be $108 million. Westsound Bank is the 33rd FDIC-insured institution to be closed this year and the second in Washington. The last bank to be closed in the state was the Bank of Clark County on January 16, 2009. WL HOMES: Committee Wants Case Converted to Chapter 7 Liquidation ----------------------------------------------------------------- The Official Committee of Unsecured Creditors of WL Homes LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to convert the Debtors' Chapter 11 cases to Chapter 7 liquidation proceedings. The Committee argues that the Debtors' reorganization efforts appear to exist solely at the behest and for the benefit of their insider prepetition lender and corporate parent, Emaar American Corporation, and indirect subsidiary of Emaar Properties PJSC. In its objection, Emaar American is: -- the indirect holder of 100% of the equity in each of the Debtors'; -- an unsecured creditors asserting claims for loans of about $400 million; -- a secured creditor asserting claims for prepetition loans or secured guaranties of approximately $8 million; and -- the proposed debtor-in-possession lender with respect a $30.8 million DIP facility. The Committee reminds the Court that it also objected to the Debtors' request to obtain postpetition secured financing protesting that Emaar American's effort to manipulate the DIP facility terms to (i) gain release from the Debtors and their creditors; (ii) eviscerate creditors' rights to meaningfully participate in the Chapter 11 cases; and (iii) hamstring the Committee's role to act as the only independent fiduciary in the Debtors' cases to review their operations and monitor the actions of Emaar American. On the background, confirmation of a plan is not possible because the only impaired consenting class of creditors that could confirm a plan is the class of non-insider unsecured creditors, the Committee points out. The Debtors have shut down operations and plan to liquidate their assets to Emaar American rather than restructure, the Committee relates. The conversion of the Debtors' cases is necessary to allow an independent fiduciary to administer these cases and liquidate these assets in a fair and impartial manner, the Committee contends. The conversion will preserve unencumbered assets of the Debtor, the Committee adds. Hearing to consider approval of the Committee's request has yet to be determined. 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 and $1 billion. WR GRACE: Montana Court Acquits Grace & Execs. From Libby Case -------------------------------------------------------------- Judge Donald W. Molloy of the U.S. District Court for the District of Montana acquits and discharges W.R. Grace & Company, and three of the company's former executives -- Robert Bettachi, former senior vice president; Jack Wolter, former vice president and general manager of the Libby, Montana, vermiculite mine's Construction Products Division; and Henry Eschenbach, former director of health and safety, from the criminal case filed by the U.S. Government after the jury found the defendants not guilty of the conspiracy and fraud charges asserted by the Government. Judge Donald, in early May 2009, dismissed the criminal case against William McCraig, former manager of operations at Libby, and Robert Walsh, former vice president of Grace. The Government filed the criminal case accusing Grace and the former executives of conspiracy and fraud related to the emissions of hazardous chemicals at Grace's vermiculite mine in Libby. Specifically, the Government charged Grace and the former executives of: (1) conspiring knowingly to release asbestos, a hazardous air pollutant, into the ambient air, thereby knowingly placing persons in imminent danger of death or serious bodily injury in violation of Section 7413(c)(5)(A) of the Public Health and Welfare Code; and (2) conspiring to defraud the United States in violation of Section 371 of the Crimes and Criminal Procedures Code. In addition to the dual-object conspiracy, the indictment charges Grace and its executives with three counts of knowing endangerment under the Clean Air Act and four counts of obstruction of justice in violation of Sections 1505 and 1515(b) of the Crimes and Criminal Procedures Code. The Government accuses that: * Grace and its executives acted corruptly, meaning that it acted with an improper purpose, personally or by influencing another, including making a false or misleading statement, or withholding, concealing, altering, or destroying a document or other information; * Grace and its executives obstructed, impeded or endeavored to influence, obstruct, or impede the due and proper administration of the law; and * there was a pending proceeding before a department or agency of the United States. Grace, from 1963 to 1992, operated the Libby mine. Vermiculite ore, which is contaminated with a form of asbestos, has spread around Libby and has brought asbestos-related diseases, including mesothelioma, a form of cancer caused by asbestos, to Libby residents. Though vermiculite was processed and sold commercially as attic insulation through the product called Zonolite Attic Insulation, in Libby, where people have easy access to the ore, vermiculite is used in many things, including plasters in walls, on driveways, and as soil amendments. Trial on the criminal case started on February 19, 2009. The verdict, a full-text copy of which is available for free at http://bankrupt.com/misc/Verdict_LibbyCase1.pdfwas signed May 8, 2008. W.R. Grace's Statement "We at Grace are gratified by [the] verdict and thank the men and women of the jury who were open to hearing the facts. We always believed that Grace and its former executives had acted properly and that a jury would come to the same conclusion when confronted with the evidence," Fred Festa, Chairman, President and CEO of W. R. Grace & Co. "During the time that Grace owned and operated the mine in Libby, Montana, the Company worked hard to keep the operations in compliance with the laws and standards of the day. Grace is committed to continually improving its Environment, Health and Safety performance. We comply with all applicable laws, rules and regulations wherever we operate in the world. We are fortunate to have a group of dedicated employees who take their responsibilities seriously and care about the safety of our customers, their co-workers, their families and the communities in which they live." About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. As reported by the Troubled Company Reporter on March 11, 2009, the Bankruptcy Court approved the disclosure statement explaining the First Amended Chapter 11 Joint Plan of Reorganization filed by W.R. Grace and its debtor affiliates, the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative and the Official Committee of Equity Security Holders, and authorized Grace to begin soliciting plan votes. The Court scheduled a two-phase confirmation hearing: -- Hearings on June 22 to 25 to deal with objections by insurance companies; and -- Hearings on Sept. 8 to 11 for objections related to claims from the facility in Libby, Montana. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Parties entitled to vote on the Plan must file objections to Plan confirmation, if any, no later than 4:00 p.m. Eastern time on May 20, 2009. Supplements to the Plan may be filed until May 10. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) * A.M. Best's U.S. Banking First Quarter Interest Rate Review ------------------------------------------------------------- With the total U.S. deficit in 2009 projected to exceed $1.85 trillion, or 13.1% of the estimated gross domestic product, the U.S. Treasury estimates its funding needs over the next two years will be the largest in at least half a century, A.M. Best Co. notes in a special report. The record amount of Treasury debt to be auctioned in 2009 raises questions as to whether demand can keep pace with the increase in supply. -- The Treasury hopes foreign and domestic investors seeking safe and liquid assets will continue to embrace the ramped- up issuance. -- As consumer confidence has plunged and unemployment has increased, individuals have been saving more out of fear they may lose their jobs. -- In fourth quarter 2008, personal savings jumped to 3.2% of disposable personal income from 0.4% a year earlier, and household investments moved strongly into the Treasury market. -- As confidence in banks gradually recovered, fourth quarter 2008 data suggest households sought banking deposits as another secure alternative to equities. -- The resulting flow of capital is expected to depress near- term deposit rates, allowing healthy banks to raise capital more easily. -- As the U.S. government finances massive stimulus bills and an enormous deficit, the Treasury has boosted its bond issuance, but the escalating activity still may not meet the government's needs. -- Given the U.S.' heavy dependence on other countries' demand to fill Treasury issuances, any change in foreign sentiment toward the U.S economy will make filling the Treasury auctions extremely difficult. Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. * A.M. Best Special Report: U.S. Health-2008 GAAP Financial Review ------------------------------------------------------------------ The health care industry had a difficult 2008. Trends remained stable, but it was the first year in many that several companies had revised their yearly earnings projections, A.M. Best Co. notes in a special report. Previously, underwriting income declines could be offset by positive investment returns. However, 2008's challenging investment environment, resulting in lower investment income and write-downs from investments in formerly highly rated companies, could not make up for the shortfall in underwriting. -- Overall, the managed care industry's net income fell by 36.5%, year over year, due to a 22.5% decline in underwriting income and an almost 60% decline in investment income. -- In the first seven months of 2008, eight companies lowered their earnings targets, with two of the companies reporting additional earnings revisions in the fourth quarter. -- The earnings revisions were the result of several issues, including increasing outpatient utilization, lower fully insured enrollment and higher-than-expected benefit buydowns, as well as those specific to 2008, including the more severe flu season and adverse selection resulting from pricing and benefit plan design on specific products. -- As a result of lower earnings, the earnings before interest taxes depreciation and amortization (EBITDA) margin declined to 6.1%, on average, at year-end 2008 compared with 9.6% at year-end 2007. -- In September 2008, A.M. Best Co. revised its outlook to negative for the health insurance industry, partly due to the potential for investment write-downs, higher financial leverage and the impact of the economic downturn on commercial enrollment. Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the finan * Implications for DBRS U.S. Bank Ratings of SCAP Results --------------------------------------------------------- Following the release of the results of the Supervisory Capital Assessment Program by the U.S. federal banking supervisors, Dominion Bond Rating Service comments that it is evaluating the implications of this additional SCAP disclosure for its ratings of the 19 covered banks, as well as its ratings for U.S. banks generally. DBRS is already factoring into its ratings the credit deterioration resulting from the severe economic downturn and the ongoing disruptions in the financial markets. DBRS views the SCAP results as an additional insight into the stress that banks may face in the coming quarters. The results provide further perspective on the regulators' views of the ongoing market disruption, as well as their opinion on the appropriate quantity and quality of capital that is required by each of the nineteen banks to weather the current storm. Importantly, DBRS sees longer-run benefits for issuer ratings resulting from the supervisors' increased concern with the composition of capital, which should lead to the near-term bolstering of the individual bank's capital strength. DBRS continues to evaluate the position of individual banks while, considering the impact of the deteriorating economic environment and resulting trends in credit quality. DBRS continues to take advantage of quarterly earnings reports to consider the position of each bank that it rates and take ratings action where appropriate. Quarterly earnings provide additional information, not only on credit trends, but also on the state of a bank's franchise. These quarterly reports also provide detail on a bank's ongoing ability to generate income before provisions and taxes and its ability to cope with the challenging environment. Given the deteriorating trends in credit quality and DBRS's economic outlook, ratings actions have generally been negative. As a result, DBRS does not anticipate any extensive ratings actions based on the SCAP results, but notes that this does not preclude further ratings actions based upon these results and the plans that individual banks propose. * Westsound Bank Closing Hikes 2009 Failed Banks to 33 ------------------------------------------------------ Another bank was closed in Washington on May 8, raising the total of FDIC-insured institutions closed this year to 33. The number could rise further this year as there were 252 financial institutions in the Federal Deposit Insurance Company's "Problem List" as of the end of 2008, compared with only 76 in the prior year. According to Bloomberg News, tumbling home prices and surging unemployment caused more borrowers to fall behind on loan payments to banks. The banks closed this year by regulators are: Bank Closing Date ---- ------------ Westsound Bank, Bremerton, WA 05/08/09 America West Bank, Layton, UT 05/01/09 Citizens Community Bank, Ridgewood, NJ 05/01/09 Silverton Bank, N.A., Atlanta, GA 05/01/09 First Bank of Idaho, Ketchum, ID 04/24/09 First Bank of Beverly Hills, Calabasas, CA 04/24/09 Heritage Bank, Farmington Hills, MI 04/24/09 American Southern Bank, Kennesaw, GA 04/24/09 Great Basin Bank of Nevada, Elko, NV 04/17/09 American Sterling Bank, Sugar Creek, MO 04/17/09 New Frontier Bank, Greeley, CO 04/10/09 Cape Fear Bank, Wilmington, NC 04/10/09 Omni National Bank, Atlanta, GA 03/27/09 TeamBank, National Association, Paola, KS 03/20/09 Colorado National Bank, Colorado Springs, CO 03/20/09 FirstCity Bank, Stockbridge, Georgia 03/20/09 Freedom Bank of Georgia, Commerce, GA 03/06/09 Security Savings Bank, based in Henderson, Nevada 02/27/09 Heritage Community Bank, Glenwood, Ill. 02/27/09 Silver Falls Bank, Silverton, OR 02/20/09 Pinnacle Bank of Oregon, Beaverton, OR 02/13/09 Corn Belt Bank and Trust Company, Pittsfield, IL 02/13/09 Riverside Bank of the Gulf Coast, Cape Coral, FL 02/13/09 Sherman County Bank, Loup City, NE 02/13/09 County Bank, Merced, CA 02/06/09 Alliance Bank, Culver City, CA 02/06/09 FirstBank Financial Services, McDonough, GA 02/06/09 Ocala National Bank, Ocala, FL 01/30/09 Suburban Federal Savings Bank, Crofton, MD 01/30/09 MagnetBank, Salt Lake City, UT 01/30/09 1st Centennial Bank, Redlands, CA 01/23/09 Bank of Clark County, Vancouver, WA 01/16/09 National Bank of Commerce, Berkeley, IL 01/16/09 The FDIC was appointed as receiver for the closed banks. To protect the depositors, the FDIC entered into a purchase and assumption agreement with various banks that agreed to assume the deposits of the closed banks: Buyer's FDIC Cost Assumed to Insurance Deposits Fund Closed Bank Buyer (millions) (millions) ----------- ---- -------- ----- Westsound Bank Kitsap Bank $295.1 $108.0 America West Cache Valley Bank $284.1 $119.4 Citizens Community N.J. Community Bank $43.7 $18.1 Silverton Bank -- No Buyer -- - $1,300.0 First Bank of Id US Bank, Minneapolis $261.2 $191.2 First Bank of BH -- No Buyer -- - $394.0 Heritage Bank Level One Bank $101.7 $71.3 American Southern Bank of North Georgia $55.6 $41.9 Great Basin Bank Nevada State Bank $221.4 $42.0 American Sterling Metcalf Bank, Lee Summit $171.9 $42.0 New Frontier Bank -- No Buyer -- - $670.0 Cape Fear Bank First Federal, Charleston $403.0 $131.0 Omni National -- No Buyer -- - $290.0 TeamBank, N.A. Great Southern Bank $474.0 $98.0 Colorado National Herring Bank, Amarillo, TX $82.7 $9.0 FirstCity Bank -- No Buyer -- - $100.0 Freedom Bank Nat'l Georgia Bank, Lavonia $161.0 $36.2 Security Savings Bank of Nevada, L.V. $175.2 $59.1 Heritage Community MB Financial Bank, N.A. $218.6 $41.6 Silver Falls Citizens Bank $116.3 $50.0 Pinnacle Bank Washington Trust Bank $64.0 $12.1 Corn Belt Bank Carlinville Nat'l Bank $142.4 $100.0 Riverside Bank TIB Bank $281.4 $201.5 Sherman County Heritage Bank $85.1 $28.0 County Bank Westamerica Bank $1,300.0 $135.0 Alliance Bank California Bank & Trust $951.0 $206.0 FirstBank Regions Bank $279.0 $111.0 Ocala National CenterState Bank $205.2 $99.6 Suburban Federal Bank of Essex $302.0 $126.0 MagnetBank -- No Buyer -- - $119.4 1st Centennial First California Bank $302.1 $227.0 Bank of Clark Umpqua Bank $523.6 $120-145 Nat'l Commerce Republic Bank of Chicago $402.1 $97.1 A complete list of banks that failed since 2000 is available at: http://www.fdic.gov/bank/individual/failed/banklist.html Satellite Office for Failed Banks The FDIC has said it will open a temporary satellite office in Jacksonville, Florida, to manage receiverships and to liquidate assets from failed financial institutions primarily located in the eastern states. After conducting a competitive leasing acquisition process, the FDIC entered into a short-term agreement to lease space at 7777 Baymeadows Way in Jacksonville. The decision was based on mission needs and workload. The new office will provide facilities for up to 500 nonpermanent staff and contractors. Staffing will be based on the workload needs of this office, based on the number of closings in the eastern states, the resulting number of receiverships, and the post-closing workload. Throughout its history, the FDIC has used these offices to keep temporary asset resolution staff closer to the concentration of failed bank assets they oversee. As the work diminishes, the temporary satellite offices are closed. The FDIC expects to gradually move into the space starting in mid- September 2009. 252 Banks in Problem List No advance notice is given to the public when a financial institution is closed. The FDIC has a "problem list" of banks, although the list is not divulged to the public. As previously reported by the TCR, the number of FDIC-insured commercial banks and savings institutions reporting financial results fell to 8,305 at the end of 2008, down from 8,384 at the end of the third quarter. The net decline of 79 institutions was the largest since the first quarter of 2002. Fifteen new institutions were chartered in the fourth quarter, the smallest number in any quarter since the third quarter of 1994. Seventy- eight insured institutions were absorbed into other institutions through mergers, and 12 institutions failed during the quarter (five other institutions received FDIC assistance in the quarter). For all of 2008, there were 98 new charters, 292 mergers, 25 failures and 5 assistance transactions. Five institutions with total assets of $1.3 trillion were assisted by the FDIC in 2008. This is the largest number of failed and assisted institutions in a year since 1993, when there were 50. At year-end, 252 insured institutions with combined assets of $159 billion were on the FDIC's "Problem List." These totals are up from 171 institutions with $116 billion in assets at the end of the third quarter, and 76 institutions with $22 billion in assets at the end of 2007. The Problem List's 252 institutions at the end of the fourth quarter of 2008 is the largest number since the middle of 1995. "Problem" institutions are those institutions with financial, operational, or managerial weaknesses that threaten their continued financial viability. They are rated by the FDIC or Office of the Thrift Supervision as either a "4" or "5", based on a scale of 1 to 5 in ascending order of supervisory concern. A copy of FDIC's Quarterly Banking Profile is available at: http://researcharchives.com/t/s?3aa5 * Stress Test Results of 19 Largest U.S. Banks ---------------------------------------------- The results of a comprehensive, forward-looking assessment of the financial conditions of the nation's 19 largest bank holding companies (BHCs) by the federal bank supervisory agencies were officially released on Thursday, May 7. The exercise -- conducted by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation -- was conducted so that supervisors could determine the capital buffers sufficient for the 19 BHCs to withstand losses and sustain lending -- even if the economic downturn is more severe than is currently anticipated. In a detailed summary of the results of the Supervisory Capital Assessment Program (SCAP), the supervisors identified the potential losses, resources available to absorb losses, and resulting capital buffer needed for the 19 participating BHCs. The SCAP is a complement to the Treasury's Capital Assistance Program (CAP), which makes capital available to financial institutions as a bridge to private capital in the future. According to the stress test results, after taking account of losses, revenues and reserve build requirements, in the aggregate, the BHCs need to add $185 billion to capital buffers to reach the target SCAP capital buffer at the end of 2010 under the more adverse scenario. With respect to this estimate: -- the $185 billion accrues to 10 of the 19 firms, meaning 9 of the 19 firms already have capital buffers sufficient to get through the adverse scenario in excess of 6 percent Tier 1 capital and 4 percent Tier 1 Common capital. -- the vast majority of this $185 billion comes from a shortfall in Tier 1 Common capital in the more adverse scenario, with virtually no shortfall in overall Tier 1 capital. This result means that while nearly all the firms have sufficient Tier 1 capital to absorb the unusually high losses of the more adverse scenario and still end 2010 with a Tier 1 risk-based ratio in excess of 6%, 10 of these firms had capital structures that are too strongly tilted toward capital other than common equity. Thus, each of the 10 firms needing to augment their capital as a result of this exercise must do so by increasing their Tier 1 Common capital. Including the capital actions made by banks and their first quarter 2009 annual results, the 10 BHCs will only need to raise a combined $74.6 billion in capital. ($ in billions) Required Capital Buffer ------------------ After Capital Actions & 2009 & 2010 As of After Q1 Bank Loss Estimates 12/31/08 Results ---- -------------- -------- ------- Citigroup Inc. $104.7 $92.6 $5.5 Bank of America Corporation 136.6 46.5 33.9 Wells Fargo & Company 86.1 17.3 13.7 Morgan Stanley 19.7 8.3 1.8 GMAC LLC 9.2 6.7 11.5 SunTrust Banks Inc. 11.8 3.4 2.2 Regions Financial Corp 9.2 2.9 2.5 Fifth Third Bancorp 9.1 2.6 1.1 KeyCorp 6.7 2.5 1.8 PNC Financial Services Group Inc 18.8 2.3 0.6 American Express Company 11.2 0.0 0.0 BB&T Corporation 8.7 0.0 0.0 The Bank of New York Mellon 5.4 0.0 0.0 Capital One Financial Corp 13.4 0.0 0.0 The Goldman Sachs Group Inc 17.8 0.0 0.0 JPMorgan Chase & Co. 97.4 0.0 0.0 MetLife Inc. 9.6 0.0 0.0 State Street Corporation 8.2 0.0 0.0 U.S. Bancorp 15.7 0.0 0.0 ------ ------ ------ $599.2 $185.0 $74.6 A copy of the Stress Test results is available for free at: http://bankrupt.com/misc/May09-StressTest.pdf According to Federal Reserve Chairman Ben S. Bernanke, the 19 banks covered by the "stress tests" play a vital role in our economy, holding among them two-thirds of the assets and more than one-half of the loans in the U.S. banking system. Not Tests of Solvency With respect to the stress tests, Mr. Bernanke clarified, "These examinations were not tests of solvency; we knew already that all these institutions meet regulatory capital standards. Rather, the assessment program was a forward-looking, "what-if" exercise intended to help supervisors gauge the extent of the additional capital buffer necessary to keep these institutions strongly capitalized and lending, even if the economy performs worse than expected between now and the end of next year." "The results released [May 7] should provide considerable comfort to investors and the public," Mr. Bernanke said. He noted that the examiners found that nearly all the banks that were evaluated have enough Tier 1 capital to absorb the higher losses envisioned under the hypothetical adverse scenario. Roughly half the firms, though, need to enhance their capital structure to put greater emphasis on common equity, which provides institutions the best protection during periods of stress. Many of the institutions have already taken actions to bolster their capital buffers and are well-positioned to raise capital from private sources over the next six months. "However, our government, through the Treasury Department, stands ready to provide whatever additional capital may be necessary to ensure that our banking system is able to navigate a challenging economic downturn." The estimates reported by the Federal Reserve represent values for a hypothetical 'what-if' scenario and are not forecasts of expected losses or revenues for the firms, a joint press release by the Federal Reserve, the U.S. Treasury and the FDIC also clarified. Nov. 9 Deadline for Capital Plan According to the joint release, any U.S. bank holding company (BHC) needing to augment its capital buffer at the conclusion of the SCAP will have until June 8th, 2009 to develop a detailed capital plan, and until November 9th, 2009 to implement that capital plan Over the next 30 days, any BHC needing to augment its capital buffer will develop a detailed capital plan to be approved by its primary supervisor, in consultation with the FDIC, and will have six months to implement that plan. In light of the potential for new commitments under the Capital Assistance Program or exchanges of existing CPP preferred stock, supervisors will consult with Treasury on the development and evaluation of the plans. The capital plan will consist of three main elements: * A detailed description of the specific actions to be taken to increase the level of capital and/or to enhance the quality of capital consistent with establishing the SCAP buffer. BHCs are encouraged to design capital plans that, wherever possible, actively seek to raise new capital from private sources. These plans should include actions such as: -- Issuance of new private capital instruments; -- Restructuring current capital instruments; -- Sales of business lines, legal entities, assets or minority interests through private transactions and through sales to the PPIP; -- Use of joint ventures, spin-offs, or other capital enhancing transactions; and -- Conservation of internal capital generation, including continued restrictions on dividends and stock repurchases and dividend deferrals, waivers and suspensions on preferred securities including trust preferred securities, with the expectation that plans should not rely on near-term potential increases in revenues to meet the capital buffer it is expected to have. * A list of steps to address weaknesses, where appropriate, in the BHC's internal processes for assessing capital needs and engaging in effective capital planning. * An outline of the steps the firm will take over time to repay government provided capital taken under the Capital Purchase Program (CPP), Targeted Investment Program (TIP), or the CAP, and reduce reliance on guaranteed debt issued under the TLGP. In addition, as part of the 30-day planning process, firms will need to review their existing management and Board in order to assure that the leadership of the firm has sufficient expertise and ability to manage the risks presented by the current economic environment and maintain balance sheet capacity sufficient to continue prudent lending to meet the credit needs of the economy A copy of the joint release is available for free at: http://www.federalreserve.gov/newsevents/press/bcreg/20090506a.htm Comments to Stress-Test Results According to NewsBlaze, Scott Talbott, vice president of the Financial Services Roundtable, a Washington-based association representing the biggest U.S. financial companies, the $75 billion is not a huge sum for the 10 banks to raise. He said, the report relates, that nine of the 10 can do so through private means such as stock conversions or selling assets. Only GMAC, the auto finance company linked to General Motors, faces the prospect of seeking further government relief funds, he said. Louise Story and Eric Dash at The New York Times said, "Broadly speaking, the test results suggested that the banking industry was in better shape than many had feared." The two noted that the $75 billion in equity capital needed by 10 banks is "far less than many had forecast." The hypothetical scenarios created by bank examiners assume the unemployment rate would hit 10.3% and house prices would fall more than 22%. That scenario is worse than the current state of the economy, in which the jobless rate is below 9%, NewsBlaze said. In addition, the examiners assume in a worst-case scenario that 9% of all loans might sour -- a figure that is even higher than it was during the Great Depression, NYT said. According to Reuters, citing the Wall Street Journal, the government made concessions to banks that pushed back against its conclusions in its stress tests. The $13.7 billion projected capital shortfall for Wells Fargo -- from $17.3 billion -- came about after two weeks of bargaining, The Journal said. In addition, beyond the concessions, Financial Times, according to Reuters, reported that the U.S. government has assured the banks that they will be allowed to raise less than the $74.6 billion in equity mandated if earnings over the next six months beat regulators' forecasts. According to MarketWatch, Ken Lewis, chief executive of Bank of America Corp., on Friday called the government's stress-test results "pretty aggressive" but said the financial-services giant will comply and raise the required $33.9 billion. Asked about the health of his firm, Mr. Lewis said mortgage-lending arm Countrywide is "on fire, in a positive sense," right now, and added that "business is good" at Merrill Lynch. The Washington Post said U.S. stocks rose last week, erasing the year-to-date loss in the Standard & Poor's 500-stock index, as results from the government's "stress tests" of major banks reassured investors and the Labor Department said the pace of job cuts slowed in April. Bank of America and Citigroup, the Post relates, helped drive financial stocks in the S&P 500 to a 23% percent gain as the government said only one of the 19 large banks that were reviewed was likely to need additional taxpayer aid. * BOND PRICING -- For the Week From May 4 to 8, 2009 ---------------------------------------------------- Company Coupon Maturity Bid Price ------- ------ -------- --------- ACE CASH EXPRESS 10.25% 10/1/2014 36.50 BOWATER INC 9.50% 10/15/2012 13.13 BOWATER INC 6.50% 6/15/2013 14.50 BOWATER INC 9.38% 12/15/2021 12.00 AMER CAP STRATEG 8.60% 8/1/2012 46.00 ADVANTA CAP TR 8.99% 12/17/2026 9.50 ANTIGENICS 5.25% 2/1/2025 25.50 ATHEROGENICS INC 1.50% 2/1/2012 11.00 AHERN RENTALS 9.25% 8/15/2013 33.00 ANTHRACITE CAP 11.75% 9/1/2027 9.50 INTL LEASE FIN 4.35% 5/15/2009 95.00 INTL LEASE FIN 4.50% 5/15/2009 99.60 INTL LEASE FIN 4.38% 8/15/2009 91.75 INTL LEASE FIN 4.50% 8/15/2009 79.96 INTL LEASE FIN 5.15% 8/15/2009 60.00 AMER GENL FIN 3.88% 10/1/2009 91.75 INTL LEASE FIN 4.00% 10/15/2009 75.25 INTL LEASE FIN 4.00% 12/15/2009 74.50 INTL LEASE FIN 3.25% 2/15/2010 65.00 INTL LEASE FIN 3.88% 2/15/2010 75.38 INTL LEASE FIN 7.25% 2/15/2010 65.88 INTL LEASE FIN 5.00% 3/15/2010 65.00 INTL LEASE FIN 5.00% 3/15/2010 65.00 INTL LEASE FIN 4.80% 6/15/2010 66.05 INTL LEASE FIN 4.90% 6/15/2010 60.00 INTL LEASE FIN 4.95% 6/15/2010 7.76 INTL LEASE FIN 5.40% 6/15/2010 65.06 AMER GENL FIN 5.35% 7/15/2010 50.00 INTL LEASE FIN 4.30% 8/15/2010 51.20 INTL LEASE FIN 5.00% 8/15/2010 65.00 INTL LEASE FIN 7.45% 8/15/2010 65.10 INTL LEASE FIN 7.90% 8/15/2010 65.90 AMER INTL GROUP 4.70% 10/1/2010 72.81 INTL LEASE FIN 4.25% 10/15/2010 60.50 INTL LEASE FIN 5.00% 10/15/2010 60.00 AMER GENL FIN 5.00% 10/15/2010 35.00 INTL LEASE FIN 5.10% 10/15/2010 57.00 AMER GENL FIN 5.00% 12/15/2010 36.00 AMER GENL FIN 5.00% 1/15/2011 40.00 AMER GENL FIN 5.00% 3/15/2011 25.60 AMER INTL GROUP 5.38% 10/18/2011 65.05 INTL LEASE FIN 4.75% 11/15/2011 34.00 INTL LEASE FIN 5.50% 4/15/2012 33.25 INTL LEASE FIN 5.00% 6/15/2012 42.00 INTL LEASE FIN 5.30% 6/15/2012 35.00 AMER GENL FIN 5.38% 10/1/2012 56.00 INTL LEASE FIN 4.10% 2/15/2013 30.00 AGFC CAP TRUST I 6.00% 1/15/2067 7.48 AMER INTL GROUP 4.88% 3/15/2067 9.99 ALLIED CAP CORP 6.63% 7/15/2011 43.00 ALLIED CAP CORP 6.00% 4/1/2012 35.00 ALION SCIENCE 10.25% 2/1/2015 22.00 AMBASSADORS INTL 3.75% 4/15/2027 31.63 AMR CORP 10.40% 3/15/2011 46.00 AMR CORP 10.42% 3/15/2011 46.00 AMR CORP 9.20% 1/30/2012 53.00 AMER MEDIA OPER 8.88% 1/15/2011 36.00 APPLETON PAPERS 9.75% 6/15/2014 38.00 ARVINMERITOR 8.75% 3/1/2012 47.50 ARVINMERITOR 8.13% 9/15/2015 35.00 ALERIS INTL INC 10.00% 12/15/2016 2.75 METALDYNE CORP 11.00% 6/15/2012 10.00 SPACEHAB INC 5.50% 10/15/2010 58.10 AT HOME CORP 0.52% 12/28/2018 0.06 ACCURIDE CORP 8.50% 2/1/2015 29.50 AVENTINE RENEW 10.00% 4/1/2017 12.00 AMER AXLE & MFG 5.25% 2/11/2014 24.21 BANK NEW ENGLAND 8.75% 4/1/1999 9.63 BANK NEW ENGLAND 9.88% 9/15/1999 1.00 BARRINGTON BROAD 10.50% 8/15/2014 20.00 BELL MICROPRODUC 3.75% 3/5/2024 11.25 BALLY TOTAL FITN 14.00% 10/1/2013 1.00 BANKUNITED CAP 3.13% 3/1/2034 5.00 BON-TON DEPT STR 10.25% 3/15/2014 42.88 BRODER BROS CO 11.25% 10/15/2010 20.25 BROOKSTONE CO 12.00% 10/15/2012 38.00 BEAZER HOMES USA 8.63% 5/15/2011 60.50 BEAZER HOMES USA 4.63% 6/15/2024 50.75 CAPMARK FINL GRP 7.88% 5/10/2012 27.50 CAPMARK FINL GRP 8.30% 5/10/2017 24.25 COMPUCREDIT 3.63% 5/30/2025 35.88 CLEAR CHANNEL 4.50% 1/15/2010 45.22 CLEAR CHANNEL 7.65% 9/15/2010 35.00 CLEAR CHANNEL 6.25% 3/15/2011 24.50 CLEAR CHANNEL 4.40% 5/15/2011 20.75 CLEAR CHANNEL 5.00% 3/15/2012 10.75 CLEAR CHANNEL 5.75% 1/15/2013 18.00 CLEAR CHANNEL 5.50% 9/15/2014 16.19 CLEAR CHANNEL 4.90% 5/15/2015 16.00 CLEAR CHANNEL 10.75% 8/1/2016 21.63 CLEAR CHANNEL 5.50% 12/15/2016 16.00 CLEAR CHANNEL 6.88% 6/15/2018 16.00 CLEAR CHANNEL 7.25% 10/15/2027 15.30 CHAMPION ENTERPR 7.63% 5/15/2009 99.63 CHAMPION ENTERPR 2.75% 11/1/2037 24.25 COMPREHENS CARE 7.50% 4/15/2010 75.13 CHARTER COMM HLD 11.13% 1/15/2011 1.50 CHARTER COMM HLD 13.50% 1/15/2011 1.50 CHARTER COMM HLD 9.92% 4/1/2011 0.56 CHARTER COMM HLD 10.00% 5/15/2011 1.50 CHARTER COMM HLD 11.75% 5/15/2011 1.50 CHARTER COMM HLD 12.13% 1/15/2012 1.50 CCH I LLC 11.13% 1/15/2014 1.00 CCH I LLC 13.50% 1/15/2014 1.30 CCH I LLC 9.92% 4/1/2014 1.00 CCH I LLC 10.00% 5/15/2014 1.38 CCH I LLC 11.75% 5/15/2014 2.00 CCH I LLC 12.13% 1/15/2015 1.06 CCH I/CCH I CP 11.00% 10/1/2015 10.50 CCH I/CCH I CP 11.00% 10/1/2015 9.00 CHARTER COMM INC 6.50% 10/1/2027 12.75 CIT GROUP INC 4.05% 5/15/2009 99.00 CIT GROUP INC 4.35% 5/15/2009 96.51 CIT GROUP INC 5.25% 5/15/2009 99.75 CIT GROUP INC 5.25% 6/15/2009 96.51 CIT GROUP INC 4.50% 7/15/2009 91.00 CIT GROUP INC 5.00% 9/15/2009 88.10 CIT GROUP INC 6.25% 9/15/2009 89.50 CIT GROUP INC 4.30% 6/15/2010 65.63 CIT GROUP INC 5.05% 11/15/2010 55.00 CIT GROUP INC 6.50% 1/15/2011 60.88 CIT GROUP INC 6.60% 2/15/2011 60.00 CIT GROUP INC 6.50% 3/15/2011 45.39 CIT GROUP INC 4.85% 12/15/2011 40.00 CIT GROUP INC 7.25% 2/15/2012 44.00 CIT GROUP INC 7.25% 12/15/2012 40.50 CIT GROUP INC 5.40% 9/15/2013 30.00 CIT GROUP INC 7.85% 2/15/2014 34.55 CIT GROUP INC 5.30% 7/15/2014 26.50 CIT GROUP INC 5.38% 8/15/2015 18.40 CMP SUSQUEHANNA 9.88% 5/15/2014 4.50 NEW PLAN EXCEL 7.40% 9/15/2009 85.50 NEW PLAN EXCEL 4.50% 2/1/2011 55.25 NEW PLAN REALTY 7.97% 8/14/2026 16.00 NEW PLAN REALTY 7.65% 11/2/2026 16.00 NEW PLAN REALTY 7.68% 11/2/2026 11.00 NEW PLAN REALTY 6.90% 2/15/2028 12.50 NEW PLAN EXCEL 7.50% 7/30/2029 12.00 CONSTAR INTL 11.00% 12/1/2012 4.06 CONEXANT SYSTEMS 4.00% 3/1/2026 27.75 COOPER-STANDARD 7.00% 12/15/2012 19.00 COOPER-STANDARD 8.38% 12/15/2014 11.50 CALLON PETROLEUM 9.75% 12/8/2010 32.50 CITADEL BROADCAS 4.00% 2/15/2011 30.00 COMMERCIAL VEHIC 8.00% 7/1/2013 32.10 DAE AVIATION 11.25% 8/1/2015 33.88 DELTA AIR LINES 8.00% 12/1/2015 25.00 DECODE GENETICS 3.50% 4/15/2011 5.50 DUNE ENERGY INC 10.50% 6/1/2012 34.00 DELPHI CORP 6.50% 8/15/2013 1.50 DELTA PETROLEUM 3.75% 5/1/2037 30.50 DOWNEY FINANCIAL 6.50% 7/1/2014 0.50 DAYTON SUPERIOR 13.00% 6/15/2009 64.50 EDDIE BAUER HLDG 5.25% 4/1/2014 7.63 EPIX MEDICAL INC 3.00% 6/15/2024 19.13 ENERGY PARTNERS 8.75% 8/1/2010 25.00 EVERGREEN SOLAR 4.00% 7/15/2013 31.25 ENCOMPASS SERVIC 10.50% 5/1/2009 5.00 E*TRADE FINL 8.00% 6/15/2011 68.75 FORD MOTOR CRED 4.90% 5/20/2009 97.00 FORD MOTOR CRED 5.35% 5/20/2009 86.00 FORD MOTOR CRED 5.50% 6/22/2009 94.00 FORD MOTOR CRED 4.80% 7/20/2009 91.09 FORD MOTOR CRED 5.00% 8/20/2009 90.00 FORD MOTOR CRED 4.90% 9/21/2009 85.18 FORD MOTOR CRED 6.00% 2/22/2010 72.50 FORD MOTOR CRED 5.70% 3/22/2010 72.50 FORD MOTOR CRED 5.75% 3/22/2010 73.50 FORD MOTOR CRED 6.30% 3/22/2010 76.00 FORD MOTOR CRED 7.72% 5/17/2010 70.53 FORD MOTOR CRED 5.95% 5/20/2010 73.57 FORD MOTOR CRED 7.00% 7/1/2010 71.50 FORD MOTOR CRED 6.55% 8/20/2010 63.28 FORD MOTOR CRED 7.15% 8/20/2010 57.52 FORD MOTOR CRED 7.50% 8/20/2010 67.00 FORD MOTOR CRED 6.15% 9/20/2010 67.00 FORD MOTOR CRED 7.50% 9/20/2010 52.00 FORD MOTOR CRED 8.00% 12/20/2010 62.00 FORD MOTOR CRED 5.25% 2/22/2011 53.00 FORD MOTOR CRED 5.55% 8/22/2011 49.68 FORD MOTOR CRED 5.70% 1/20/2012 34.50 FORD MOTOR CRED 5.75% 2/21/2012 44.50 FORD MOTOR CRED 6.05% 3/20/2012 24.35 FONTAINEBLEAU LA 11.00% 6/15/2015 3.63 FRANKLIN BANK 4.00% 5/1/2027 0.01 FIRST DATA CORP 4.50% 6/15/2010 72.00 FIRST DATA CORP 5.63% 11/1/2011 46.02 FINLAY FINE JWLY 8.38% 6/1/2012 3.09 FINISAR CORP 2.50% 10/15/2010 50.00 FRONTIER AIRLINE 5.00% 12/15/2025 8.00 FAIRPOINT COMMUN 13.13% 4/1/2018 35.38 FREESCALE SEMICO 10.13% 12/15/2016 27.50 FLOTEK INDS 5.25% 2/15/2028 32.00 FIBERTOWER CORP 9.00% 11/15/2012 36.00 GEORGIA GULF CRP 7.13% 12/15/2013 23.00 GGP LP 3.98% 4/15/2027 23.50 GENERAL MOTORS 7.20% 1/15/2011 10.33 GENERAL MOTORS 9.45% 11/1/2011 10.02 GENERAL MOTORS 7.13% 7/15/2013 5.50 GENERAL MOTORS 7.70% 4/15/2016 7.00 GENERAL MOTORS 8.80% 3/1/2021 5.50 GENERAL MOTORS 9.40% 7/15/2021 7.38 GENERAL MOTORS 8.25% 7/15/2023 8.00 GENERAL MOTORS 8.10% 6/15/2024 6.00 GENERAL MOTORS 7.40% 9/1/2025 6.44 GENERAL MOTORS 6.75% 5/1/2028 7.43 GENERAL MOTORS 8.38% 7/15/2033 7.00 GENERAL MOTORS 7.38% 5/23/2048 6.44 GMAC LLC 4.70% 5/15/2009 99.50 GMAC LLC 4.85% 5/15/2009 99.50 GMAC LLC 5.25% 5/15/2009 98.26 GMAC LLC 5.40% 5/15/2009 98.50 GMAC LLC 5.63% 5/15/2009 99.75 GMAC LLC 6.10% 5/15/2009 97.40 GMAC LLC 6.25% 5/15/2009 98.50 GMAC LLC 6.25% 5/15/2009 99.50 GMAC LLC 5.25% 6/15/2009 97.00 GMAC LLC 6.25% 6/15/2009 86.50 GMAC LLC 6.30% 6/15/2009 91.00 GMAC LLC 5.05% 7/15/2009 92.50 GMAC LLC 5.10% 7/15/2009 92.71 GMAC LLC 5.25% 7/15/2009 94.50 GMAC LLC 5.25% 7/15/2009 94.00 GMAC LLC 6.30% 7/15/2009 84.50 GMAC LLC 6.50% 7/15/2009 92.50 GMAC LLC 6.60% 7/15/2009 77.00 GMAC LLC 6.65% 7/15/2009 85.58 GMAC LLC 6.70% 7/15/2009 91.44 GMAC LLC 6.80% 7/15/2009 90.00 GMAC LLC 6.85% 7/15/2009 87.74 GMAC LLC 5.10% 8/15/2009 90.88 GMAC LLC 5.25% 8/15/2009 88.00 GMAC LLC 6.95% 8/15/2009 92.00 GMAC LLC 7.15% 8/15/2009 90.25 GMAC LLC 5.10% 9/15/2009 89.00 GMAC LLC 7.00% 9/15/2009 88.50 GMAC LLC 7.00% 9/15/2009 89.00 GMAC LLC 4.90% 10/15/2009 68.25 GMAC LLC 6.85% 10/15/2009 73.25 GMAC LLC 7.00% 10/15/2009 86.00 GMAC LLC 7.05% 10/15/2009 86.50 GMAC LLC 5.35% 11/15/2009 85.71 GMAC LLC 6.75% 11/15/2009 75.50 GMAC LLC 6.80% 11/15/2009 68.02 GMAC LLC 7.00% 11/15/2009 68.00 GMAC LLC 7.00% 11/15/2009 85.00 GMAC LLC 7.25% 11/15/2009 83.75 GMAC LLC 5.35% 12/15/2009 83.00 GMAC LLC 5.40% 12/15/2009 83.50 GMAC LLC 6.80% 12/15/2009 80.10 GMAC LLC 6.90% 12/15/2009 79.90 GMAC LLC 5.75% 1/15/2010 81.50 GMAC LLC 7.00% 1/15/2010 68.00 GMAC LLC 7.25% 1/15/2010 66.00 GMAC LLC 6.00% 2/15/2010 75.25 GMAC LLC 6.00% 2/15/2010 78.00 GMAC LLC 6.05% 3/15/2010 76.12 GMAC LLC 6.15% 3/15/2010 77.00 GMAC LLC 8.40% 4/15/2010 74.00 GMAC LLC 7.15% 8/15/2010 59.41 GMAC LLC 7.70% 8/15/2010 70.00 GMAC LLC 7.85% 8/15/2010 59.14 GMAC LLC 7.50% 9/15/2010 57.00 GMAC LLC 8.00% 9/15/2010 69.90 GMAC LLC 6.00% 4/1/2011 71.01 GMAC LLC 8.25% 9/15/2012 34.00 GMAC LLC 7.63% 11/15/2012 34.50 GMAC LLC 6.50% 2/15/2013 32.00 GMAC LLC 6.65% 2/15/2013 33.12 GMAC LLC 6.40% 3/15/2013 38.50 GMAC LLC 6.50% 3/15/2013 32.80 GMAC LLC 5.70% 6/15/2013 30.00 GMAC LLC 6.25% 7/15/2013 31.00 GMAC LLC 6.50% 8/15/2013 18.89 GMAC LLC 6.00% 12/15/2013 22.80 GMAC LLC 5.35% 1/15/2014 28.00 GMAC LLC 6.70% 5/15/2014 23.39 GMAC LLC 8.50% 8/15/2015 28.00 GMAC LLC 8.65% 8/15/2015 30.09 GENWORTH GLOBAL 6.10% 4/15/2033 15.25 OUTBOARD MARINE 9.13% 4/15/2017 3.50 GENCORP INC 4.00% 1/16/2024 71.25 GENCORP INC 2.25% 11/15/2024 39.00 REALOGY CORP 12.38% 4/15/2015 33.88 REALOGY CORP 12.38% 4/15/2015 36.50 HAIGHTS CROSS OP 11.75% 8/15/2011 40.88 HAWKER BEECHCRAF 9.75% 4/1/2017 28.75 PARK PLACE ENT 7.50% 9/1/2009 71.31 PARK PLACE ENT 7.88% 3/15/2010 74.25 HARRAHS OPER CO 5.50% 7/1/2010 72.00 HARRAHS OPER CO 8.00% 2/1/2011 41.00 HILTON HOTELS 7.20% 12/15/2009 83.50 HARRY & DAVID OP 9.00% 3/1/2013 35.63 HINES NURSERIES 10.25% 10/1/2011 14.00 K HOVNANIAN ENTR 8.88% 4/1/2012 47.00 K HOVNANIAN ENTR 7.75% 5/15/2013 35.00 HUTCHINSON TECH 3.25% 1/15/2026 27.00 HERTZ CORP 7.40% 3/1/2011 75.00 HEADWATERS INC 2.50% 2/1/2014 22.75 HEADWATERS INC 2.88% 6/1/2016 24.25 HAWAIIAN TELCOM 9.75% 5/1/2013 6.00 BORDEN INC 8.38% 4/15/2016 23.02 BORDEN INC 9.20% 3/15/2021 24.00 IDEARC INC 8.00% 11/15/2016 1.25 INCYTE CORP 3.50% 2/15/2011 56.50 INCYTE CORP LTD 3.50% 2/15/2011 56.50 INN OF THE MOUNT 12.00% 11/15/2010 12.50 INTCOMEX INC 11.75% 1/15/2011 35.25 KEYSTONE AUTO OP 9.75% 11/1/2013 35.59 KEMET CORP 2.25% 11/15/2026 34.75 KEMET CORP 2.25% 11/15/2026 33.75 KKR FINANCIAL 7.00% 7/15/2012 41.25 KAISER ALUMINUM 12.75% 2/1/2003 8.10 KV PHARMA 2.50% 5/16/2033 28.50 KELLWOOD CO 7.63% 10/15/2017 5.00 MAGMA DESIGN 2.00% 5/15/2010 62.50 LAZYDAYS RV 11.75% 5/15/2012 4.90 LIFETIME BRANDS 4.75% 7/15/2011 43.00 LEAR CORP 8.50% 12/1/2013 27.00 LEAR CORP 5.75% 8/1/2014 16.00 LEAR CORP 8.75% 12/1/2016 24.00 LEHMAN BROS HLDG 4.25% 1/27/2010 15.25 LEHMAN BROS HLDG 4.50% 7/26/2010 15.00 LEHMAN BROS HLDG 7.88% 8/15/2010 10.25 LEHMAN BROS HLDG 4.38% 11/30/2010 15.00 LEHMAN BROS HLDG 5.00% 1/14/2011 13.56 LEHMAN BROS HLDG 5.75% 4/25/2011 12.56 LEHMAN BROS HLDG 5.75% 7/18/2011 14.25 LEHMAN BROS HLDG 4.50% 8/3/2011 8.75 LEHMAN BROS HLDG 6.63% 1/18/2012 15.00 LEHMAN BROS HLDG 5.25% 2/6/2012 15.25 LEHMAN BROS HLDG 1.50% 3/23/2012 12.50 LEHMAN BROS HLDG 6.00% 7/19/2012 12.50 LEHMAN BROS HLDG 5.00% 1/22/2013 6.25 LEHMAN BROS HLDG 5.63% 1/24/2013 15.56 LEHMAN BROS HLDG 5.10% 1/28/2013 8.50 LEHMAN BROS HLDG 5.00% 2/11/2013 10.50 LEHMAN BROS HLDG 4.80% 2/27/2013 7.00 LEHMAN BROS HLDG 4.70% 3/6/2013 8.80 LEHMAN BROS HLDG 5.00% 3/27/2013 7.00 LEHMAN BROS HLDG 5.75% 5/17/2013 13.25 LEHMAN BROS HLDG 4.80% 3/13/2014 7.50 LEHMAN BROS HLDG 5.00% 8/3/2014 7.25 LEHMAN BROS HLDG 6.20% 9/26/2014 15.00 LEHMAN BROS HLDG 5.15% 2/4/2015 9.00 LEHMAN BROS HLDG 5.25% 2/11/2015 7.18 LEHMAN BROS HLDG 8.80% 3/1/2015 14.00 LEHMAN BROS HLDG 8.50% 8/1/2015 10.00 LEHMAN BROS HLDG 5.00% 8/5/2015 6.00 LEHMAN BROS HLDG 5.00% 12/18/2015 9.00 LEHMAN BROS HLDG 5.50% 4/4/2016 13.75 LEHMAN BROS HLDG 11.00% 10/25/2017 9.00 LEHMAN BROS HLDG 5.88% 11/15/2017 10.00 LEHMAN BROS HLDG 5.60% 1/22/2018 8.75 LEHMAN BROS HLDG 5.70% 1/28/2018 7.50 LEHMAN BROS HLDG 5.50% 2/4/2018 8.50 LEHMAN BROS HLDG 5.55% 2/11/2018 7.00 LEHMAN BROS HLDG 5.50% 2/19/2018 9.25 LEHMAN BROS HLDG 5.35% 2/25/2018 7.00 LEHMAN BROS HLDG 6.88% 5/2/2018 16.75 LEHMAN BROS HLDG 5.50% 11/4/2018 7.25 LEHMAN BROS HLDG 8.05% 1/15/2019 5.06 LEHMAN BROS HLDG 7.00% 4/16/2019 9.00 LEHMAN BROS HLDG 6.00% 1/22/2020 9.00 LEHMAN BROS HLDG 6.00% 2/12/2020 6.00 LEHMAN BROS HLDG 5.10% 2/15/2020 7.00 LEHMAN BROS HLDG 5.50% 2/27/2020 7.70 LEHMAN BROS HLDG 5.40% 3/6/2020 6.06 LEHMAN BROS HLDG 5.25% 3/8/2020 7.25 LEHMAN BROS HLDG 5.35% 3/13/2020 7.90 LEHMAN BROS HLDG 5.40% 3/20/2020 9.25 LEHMAN BROS HLDG 5.20% 5/13/2020 7.18 LEHMAN BROS HLDG 5.80% 9/3/2020 4.33 LEHMAN BROS HLDG 6.00% 1/29/2021 9.25 LEHMAN BROS HLDG 6.25% 2/5/2021 7.25 LEHMAN BROS HLDG 8.50% 6/15/2022 8.09 LEHMAN BROS HLDG 11.00% 6/22/2022 7.50 LEHMAN BROS HLDG 6.75% 7/1/2022 8.00 LEHMAN BROS HLDG 6.60% 10/3/2022 7.75 LEHMAN BROS HLDG 6.40% 10/11/2022 5.67 LEHMAN BROS HLDG 9.50% 12/28/2022 6.20 LEHMAN BROS HLDG 9.50% 1/30/2023 4.13 LEHMAN BROS HLDG 6.25% 2/22/2023 9.25 LEHMAN BROS HLDG 9.50% 2/27/2023 9.00 LEHMAN BROS HLDG 6.50% 2/28/2023 7.61 LEHMAN BROS HLDG 6.50% 3/6/2023 8.25 LEHMAN BROS HLDG 10.00% 3/13/2023 6.00 LEHMAN BROS HLDG 5.50% 3/14/2023 9.00 LEHMAN BROS HLDG 5.75% 3/27/2023 8.50 LEHMAN BROS HLDG 5.50% 4/8/2023 7.00 LEHMAN BROS HLDG 5.50% 4/15/2023 8.00 LEHMAN BROS HLDG 5.50% 4/23/2023 9.25 LEHMAN BROS HLDG 5.38% 5/6/2023 9.25 LEHMAN BROS HLDG 5.25% 5/20/2023 7.38 LEHMAN BROS HLDG 5.00% 5/28/2023 8.25 LEHMAN BROS HLDG 5.00% 5/30/2023 9.25 LEHMAN BROS HLDG 5.00% 6/10/2023 10.10 LEHMAN BROS HLDG 5.00% 6/17/2023 7.25 LEHMAN BROS HLDG 4.80% 6/24/2023 7.25 LEHMAN BROS HLDG 5.50% 8/5/2023 4.95 LEHMAN BROS HLDG 6.10% 8/12/2023 8.76 LEHMAN BROS HLDG 5.75% 9/16/2023 9.00 LEHMAN BROS HLDG 5.50% 10/7/2023 7.25 LEHMAN BROS HLDG 5.75% 10/15/2023 7.18 LEHMAN BROS HLDG 7.73% 10/15/2023 5.83 LEHMAN BROS HLDG 5.75% 10/21/2023 7.00 LEHMAN BROS HLDG 5.75% 11/12/2023 7.00 LEHMAN BROS HLDG 5.75% 11/25/2023 7.70 LEHMAN BROS HLDG 10.38% 5/24/2024 7.80 LEHMAN BROS HLDG 5.45% 3/15/2025 7.00 LEHMAN BROS HLDG 6.20% 6/15/2027 8.55 LEHMAN BROS HLDG 7.00% 9/27/2027 15.00 LEHMAN BROS HLDG 6.50% 10/18/2027 5.93 LEHMAN BROS HLDG 6.50% 10/25/2027 8.55 LEHMAN BROS HLDG 6.75% 11/22/2027 9.00 LEHMAN BROS HLDG 6.00% 10/23/2028 6.93 LEHMAN BROS HLDG 6.00% 11/18/2028 8.55 LEHMAN BROS HLDG 5.75% 12/16/2028 6.52 LEHMAN BROS HLDG 5.75% 12/23/2028 6.00 LEHMAN BROS HLDG 5.50% 1/27/2029 7.25 LEHMAN BROS HLDG 5.50% 2/3/2029 7.00 LEHMAN BROS HLDG 5.70% 2/10/2029 7.00 LEHMAN BROS HLDG 5.60% 2/17/2029 7.50 LEHMAN BROS HLDG 5.60% 2/24/2029 7.00 LEHMAN BROS HLDG 5.60% 3/2/2029 7.00 LEHMAN BROS HLDG 5.55% 3/9/2029 7.25 LEHMAN BROS HLDG 5.40% 3/30/2029 7.25 LEHMAN BROS HLDG 5.45% 4/6/2029 7.00 LEHMAN BROS HLDG 5.70% 4/13/2029 9.25 LEHMAN BROS HLDG 5.90% 5/4/2029 7.00 LEHMAN BROS HLDG 6.00% 5/11/2029 7.00 LEHMAN BROS HLDG 6.20% 5/25/2029 7.25 LEHMAN BROS HLDG 6.05% 6/29/2029 1.12 LEHMAN BROS HLDG 6.00% 7/20/2029 7.00 LEHMAN BROS HLDG 5.75% 8/24/2029 7.00 LEHMAN BROS HLDG 5.70% 9/7/2029 8.00 LEHMAN BROS HLDG 5.75% 9/14/2029 5.66 LEHMAN BROS HLDG 5.75% 10/12/2029 7.00 LEHMAN BROS HLDG 5.65% 11/23/2029 7.63 LEHMAN BROS HLDG 5.70% 12/14/2029 8.55 LEHMAN BROS HLDG 5.55% 1/25/2030 7.25 LEHMAN BROS HLDG 5.45% 2/22/2030 8.00 LEHMAN BROS HLDG 5.60% 2/25/2030 7.25 LEHMAN BROS HLDG 5.63% 3/15/2030 8.55 LEHMAN BROS HLDG 5.75% 3/29/2030 9.25 LEHMAN BROS HLDG 5.60% 5/3/2030 5.00 LEHMAN BROS HLDG 5.35% 6/14/2030 4.10 LEHMAN BROS HLDG 5.40% 6/21/2030 7.63 LEHMAN BROS HLDG 5.45% 7/19/2030 8.00 LEHMAN BROS HLDG 5.50% 8/2/2030 7.50 LEHMAN BROS HLDG 5.65% 8/16/2030 7.00 LEHMAN BROS HLDG 5.45% 9/20/2030 7.30 LEHMAN BROS HLDG 5.55% 9/27/2030 7.00 LEHMAN BROS HLDG 5.80% 10/25/2030 6.50 LEHMAN BROS HLDG 5.85% 11/8/2030 3.96 LEHMAN BROS HLDG 5.95% 12/20/2030 7.50 LEHMAN BROS HLDG 5.90% 2/7/2031 7.00 LEHMAN BROS HLDG 6.15% 4/11/2031 6.75 LEHMAN BROS HLDG 6.85% 8/16/2032 7.63 LEHMAN BROS HLDG 6.90% 9/1/2032 8.75 LEHMAN BROS HLDG 6.80% 9/7/2032 9.25 LEHMAN BROS HLDG 7.00% 10/4/2032 5.00 LEHMAN BROS HLDG 6.50% 1/17/2033 3.09 LEHMAN BROS HLDG 6.75% 3/11/2033 7.63 LEHMAN BROS HLDG 6.00% 4/30/2034 10.00 LEHMAN BROS HLDG 6.00% 7/30/2034 5.02 LEHMAN BROS HLDG 5.55% 12/31/2034 9.25 LEHMAN BROS HLDG 5.65% 12/31/2034 7.00 LEHMAN BROS HLDG 6.00% 2/21/2036 7.00 LEHMAN BROS HLDG 6.00% 2/24/2036 7.00 LEHMAN BROS HLDG 6.40% 12/19/2036 12.50 LEHMAN BROS HLDG 6.50% 12/22/2036 8.50 LEHMAN BROS HLDG 6.00% 2/12/2037 7.50 LEHMAN BROS HLDG 6.50% 2/13/2037 8.50 LEHMAN BROS HLDG 6.30% 3/27/2037 8.25 LEHMAN BROS HLDG 6.50% 6/21/2037 7.00 LEHMAN BROS HLDG 6.50% 7/13/2037 7.00 LEHMAN BROS HLDG 6.88% 7/17/2037 0.01 LEHMAN BROS HLDG 7.00% 7/27/2037 9.25 LEHMAN BROS HLDG 7.00% 9/28/2037 8.75 LEHMAN BROS HLDG 6.75% 10/26/2037 9.00 LEHMAN BROS HLDG 7.00% 11/16/2037 8.25 LEHMAN BROS HLDG 7.00% 12/28/2037 6.90 LEHMAN BROS HLDG 7.00% 2/7/2038 10.13 LEHMAN BROS HLDG 7.00% 2/8/2038 6.00 LEHMAN BROS HLDG 7.25% 2/27/2038 6.00 LEHMAN BROS HLDG 7.10% 3/25/2038 7.25 LEHMAN BROS HLDG 7.00% 4/22/2038 7.00 LEHMAN BROS HLDG 7.25% 4/29/2038 8.75 LEHMAN BROS HLDG 7.35% 5/6/2038 7.27 LANDAMERICA 3.13% 11/15/2033 11.52 LANDAMERICA 3.25% 5/15/2034 12.25 LOCAL INSIGHT 11.00% 12/1/2017 20.25 CREDENCE SYSTEM 3.50% 5/15/2010 30.00 ARCO CHEMICAL CO 10.25% 11/1/2010 32.00 MILLENNIUM AMER 7.63% 11/15/2026 6.00 MAJESTIC STAR 9.50% 10/15/2010 55.50 MAJESTIC STAR 9.75% 1/15/2011 9.00 MASHANTUCKET PEQ 8.50% 11/15/2015 21.63 MAGNA ENTERTAINM 8.55% 6/15/2010 14.05 MERCER INTL INC 9.25% 2/15/2013 30.00 MERISANT CO 9.50% 7/15/2013 2.25 MFCCN-CALL05/09 6.00% 5/15/2029 99.10 MANDALAY RESORTS 9.38% 2/15/2010 79.00 MGM MIRAGE 8.38% 2/1/2011 63.50 CIRCUS CIRCUS 7.63% 7/15/2013 44.00 MASONITE CORP 11.00% 4/6/2015 2.50 KNIGHT RIDDER 7.13% 6/1/2011 20.80 KNIGHT RIDDER 4.63% 11/1/2014 13.00 KNIGHT RIDDER 5.75% 9/1/2017 14.00 KNIGHT RIDDER 7.15% 11/1/2027 10.75 KNIGHT RIDDER 6.88% 3/15/2029 13.00 MTR GAMING GROUP 9.00% 6/1/2012 46.25 MOMENTIVE PERFOR 11.50% 12/1/2016 24.50 MORRIS PUBLISH 7.00% 8/1/2013 5.00 MILACRON ESCROW 11.50% 5/15/2011 20.50 NORTH ATL TRADNG 9.25% 3/1/2012 19.96 NEFF CORP 10.00% 6/1/2015 22.00 NETWORK COMMUNIC 10.75% 12/1/2013 20.50 NEWPAGE CORP 12.00% 5/1/2013 37.00 NATL FINANCIAL 0.75% 2/1/2012 38.00 NTK HOLDINGS INC 0.00% 3/1/2014 12.25 NORTEK INC 8.50% 9/1/2014 24.75 PANOLAM INDUSTRI 10.75% 10/1/2013 5.00 PENHALL INTL 12.00% 8/1/2014 36.13 PERKINS & MARIE 14.00% 5/31/2013 47.25 PHH CORP 6.45% 4/15/2010 70.00 PALM HARBOR 3.25% 5/15/2024 29.50 PACKAGING DYNAMI 10.00% 5/1/2016 32.50 PLY GEM INDS 9.00% 2/15/2012 21.00 HANNA (MA) CO 6.52% 2/23/2010 70.06 GEON COMPANY 7.50% 12/15/2015 35.10 PILGRIMS PRIDE 9.25% 11/15/2013 39.00 PRIMUS TELECOM 3.75% 9/15/2010 2.63 PRIMUS TELECOMM 14.25% 5/20/2011 38.69 PRIMUS TELECOM 8.00% 1/15/2014 4.65 CARDINAL HEALTH 9.50% 4/15/2015 27.00 POWERWAVE TECH 1.88% 11/15/2024 42.50 QUALITY DISTRIBU 9.00% 11/15/2010 31.04 RAFAELLA APPAREL 11.25% 6/15/2011 16.75 RAIT FINANCIAL 6.88% 4/15/2027 28.87 RATHGIBSON INC 11.25% 2/15/2014 23.25 READER'S DIGEST 9.00% 2/15/2017 10.13 RADIAN GROUP 7.75% 6/1/2011 54.00 REAL MEX RESTAUR 10.00% 4/1/2010 78.00 RESIDENTIAL CAP 8.38% 6/30/2010 72.50 RESIDENTIAL CAP 8.00% 2/22/2011 36.50 DEX MEDIA WEST 8.50% 8/15/2010 67.00 RH DONNELLEY 6.88% 1/15/2013 5.50 RH DONNELLEY 6.88% 1/15/2013 6.00 RH DONNELLEY 6.88% 1/15/2013 5.25 DEX MEDIA WEST 9.88% 8/15/2013 27.50 DEX MEDIA INC 8.00% 11/15/2013 13.50 RH DONNELLEY INC 11.75% 5/15/2015 19.38 RH DONNELLEY 8.88% 1/15/2016 5.25 RH DONNELLEY 8.88% 10/15/2017 5.75 ROTECH HEALTHCA 9.50% 4/1/2012 15.75 RADIO ONE INC 8.88% 7/1/2011 26.00 RADIO ONE INC 6.38% 2/15/2013 18.00 RENTECH INC 4.00% 4/15/2013 26.13 SALEM COMM HLDG 7.75% 12/15/2010 30.50 SINCLAIR BROAD 6.00% 9/15/2012 37.50 SINCLAIR BROAD 3.00% 5/15/2027 64.38 ISTAR FINANCIAL 6.00% 12/15/2010 64.00 ISTAR FINANCIAL 5.80% 3/15/2011 59.80 ISTAR FINANCIAL 5.13% 4/1/2011 45.63 ISTAR FINANCIAL 5.13% 4/1/2011 46.13 ISTAR FINANCIAL 5.65% 9/15/2011 46.00 ISTAR FINANCIAL 5.15% 3/1/2012 41.00 ISTAR FINANCIAL 5.50% 6/15/2012 42.50 STONE ENERGY 8.25% 12/15/2011 57.00 SPHERIS INC 11.00% 12/15/2012 38.25 SIMMONS BEDDING 7.88% 1/15/2014 15.75 XM SATELLITE 13.00% 8/1/2013 39.38 SIX FLAGS INC 8.88% 2/1/2010 20.50 SIX FLAGS INC 9.75% 4/15/2013 17.00 SIX FLAGS INC 9.63% 6/1/2014 17.00 SIX FLAGS INC 4.50% 5/15/2015 15.50 STANDARD MTR 6.75% 7/15/2009 95.25 RAYOVAC CORP 8.50% 10/1/2013 11.11 SEQUA CORP 11.75% 12/1/2015 20.00 STONE CONTAINER 8.38% 7/1/2012 24.06 JEFFERSON SMURFI 8.25% 10/1/2012 24.38 JEFFERSON SMURFI 7.50% 6/1/2013 22.56 STALLION OILFIEL 9.75% 2/1/2015 19.63 STATION CASINOS 6.00% 4/1/2012 37.00 STATION CASINOS 6.50% 2/1/2014 7.00 STATION CASINOS 6.88% 3/1/2016 3.97 STATION CASINOS 6.63% 3/15/2018 5.00 SWIFT TRANS CO 12.50% 5/15/2017 33.13 TEKNI-PLEX INC 12.75% 6/15/2010 75.00 THORNBURG MTG 8.00% 5/15/2013 1.00 TOUSA INC 10.38% 7/1/2012 1.00 TRIBUNE CO 5.67% 12/8/2008 2.50 TRIBUNE CO 4.88% 8/15/2010 5.38 TIMES MIRROR CO 7.25% 3/1/2013 4.00 TRIBUNE CO 5.25% 8/15/2015 6.50 TIMES MIRROR CO 7.50% 7/1/2023 2.99 TIMES MIRROR CO 6.61% 9/15/2027 2.60 TIMES MIRROR CO 7.25% 11/15/2096 3.50 TRICO MARINE SER 6.50% 5/15/2028 30.75 TRUMP ENTERTNMNT 8.50% 6/1/2015 8.00 TRONOX WORLDWIDE 9.50% 12/1/2012 19.50 JAZZ TECHNOLOGIE 8.00% 12/31/2011 24.50 RJ TOWER CORP 12.00% 6/1/2013 1.50 UAL CORP 5.00% 2/1/2021 47.50 UAL CORP 4.50% 6/30/2021 42.88 VION PHARM INC 7.75% 2/15/2012 22.50 VOUGHT AIRCRAFT 8.00% 7/15/2011 41.00 VERENIUM CORP 5.50% 4/1/2027 15.00 VERASUN ENERGY 9.38% 6/1/2017 0.99 VISTEON CORP 7.00% 3/10/2014 10.00 VISTEON CORP 12.25% 12/31/2016 5.50 WCI COMMUNITIES 9.13% 5/1/2012 0.50 WCI COMMUNITIES 7.88% 10/1/2013 1.00 WCI COMMUNITIES 6.63% 3/15/2015 2.00 WCI COMMUNITIES 4.00% 8/5/2023 0.39 WII COMPONENTS 10.00% 2/15/2012 45.00 WILLIAM LYONS 7.63% 12/15/2012 20.00 WILLIAM LYONS 10.75% 4/1/2013 21.10 WILLIAM LYONS 7.50% 2/15/2014 14.00 WASH MUTUAL INC 4.20% 1/15/2010 81.00 WASH MUTUAL INC 8.25% 4/1/2010 48.75 WASH MUT BANK NV 5.55% 6/16/2010 23.00 USFREIGHTWAYS 8.50% 4/15/2010 37.00 ********* 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. Ma. Theresa Amor J. Tan Singco, 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 ***