/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090514.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, May 14, 2009, Vol. 13, No. 132 Headlines 1300 NORTH WOOD: Case Summary & 19 Largest Unsecured Creditors ACCENTIA BIOPHARMA: May Employ SLS ss Special IP Law Counsel ADVANTA BANK: S&P Junks Counterparty Credit Rating ADVANTA CAPITAL: S&P Affirms 'C' Rating on Preferred Stock ADVANTA CORP: S&P Downgrades Counterparty Credit Rating to 'CC' ALPHA NATURAL: S&P Puts 'BB-' Rating on Positive CreditWatch ALPHA NATURAL: Moody's Reviews 'B1' Corporate Family Rating AMERICAN AXLE: Moody's Downgrades Corporate Family Rating to 'Ca' AMERICAN INT'L: Congress Lashes at Company, CEO, & Trustees AMF BOWLING: Default Due to Pact Amendments Cue S&P's Junk Rating AMF BOWLING: Moody's Junks Probability of Default Rating ARVINMERITOR INC: Sent Feelers for Loan Amendments, Waivers ASIA GLOBAL: Readiness Not a Prerequisite to Restitution Claim ATP OIL & GAS: Bank Debt Trades at 34% Off in Secondary Market AVIS BUDGET: Bank Debt Sells at 46% Off in Secondary Market BANK OF AMERICA: Raises $7.3BB From Sale of 5.7% Stake in CCB BEVERAGES & MORE!: S&P Affirms Corporate Credit Rating at 'B-' BRUNO'S SUPERMARKETS: Owes Glenwood Autism Some $103,000 CHARTER COMMS: Files Lawsuit Against DirecTV Group Over Ads CHEMTURA CORP: Default Swaps Valued at 15% at April 14 Auction CHEMTURA CORP: Gets Go-Signal to Engage Kirkland & Ellis CHEMTURA CORP: Gets Interim OK to Hire Lazard as Investment Banker CHEMTURA CORP: Has Green Light to Hire Alvarez & Marsal CHEMTURA CORP: Heartland, Fidelity Disclose Equity Stake CHEMTURA CORP: Moody's Puts 'Ba1' Rating on $250 Mil. DIP Loan CHRYSLER LLC: Union Pac Seeks to Be Excused from Unassumed Lease CHRYSLER LLC: Reclamation Claimant Says Suit Shouldn't Be Required CHRYSLER LLC: CSX Wants Common Carrier Lien Protected CHRYSLER LLC: Court to Consider Retiree Committee Request Today CHRYSLER LLC: Vehicles Resale Values Fall 6% After Filing CINRAM INTERNATIONAL: Moody's Cuts Corporate Family Rating to 'B3' CITIGROUP INC: Smith Barney Hires Merrill, Wells Fargo Brokers CITIGROUP INC: MUFJ May Cancel $259MM Acquisition of NikkoCiti CLAIRE'S STORES: Bank Debt Sells at 43% Off in Secondary Market CLEAR CHANNEL: Bank Debt Sells at 49% Off in Secondary Market COMDISCO HOLDING: Reports Fiscal 2009 2nd Quarter Results CONSECO INC: Posts $24.5 Million First Quarter 2009 Net Income COMPUTER WORLD: Court to Hear Fraud Allegations Against Kevin Gore CONSECO INC: Unveils Preliminary Results of Shareholder Vote CONTINENTAL ALLOYS: S&P Puts 'B-' Rating on Negative CreditWatch COYOTES HOCKEY: Court May Rule Against Team's Transfer to Ontario DAMON D HOLIWELL: Case Summary & 20 Largest Unsecured Creditors DANA CORP: Bank Debt Sells at 64% Off in Secondary Market DANA CORP: Sees Up to $30MM Exposure to Chrysler, GM Collapse DANIEL F FLYNN: Proposes Maureen P. Steady as Bankruptcy Counsel DAYSTAR TECHNOLOGIES: May Have to File for Bankruptcy Protection DIRECTV GROUP: Sued by Charter Communications Sues Over Ads FAIRPOINT COMMUNICATIONS: Bank Debt Sells at 38% Discount FORD MOTOR: Equity Offering Won't Affect S&P's 'CCC+' Rating FRONTIER AIRLINES: Hearing on Exclusivity Extension on May 27 GASTAR EXPLORATION: Moody's Confirms 'Caa3' Senior Secured Rating GENERAL GROWTH: Court Approves $400MM DIP Loan From Farallon GENERAL GROWTH: BofA Seeks to Enforce Lien on $721MM Claim GENERAL GROWTH: Court Bars Utility Cos. From Altering Service GENERAL GROWTH: NYSE Delists Common Stock From Trading GENERAL GROWTH: Parties Balk at Bid to Use Cash Collateral GENERAL GROWTH: Wells Fargo Seeks to Enforce Lien on $67MM Claim GENERAL MOTORS: Will Warn 1,000 Underperforming Dealers GENTA INC: Says Funds Won't Last After June, Warns of Bankruptcy GEORGIA GULF: Inks Forbearances With Noteholders Through June 15 GLOBE MANUFACTURING: 11th Cir. Examines Ordinary Course Defense GREENBRIER HOTEL: Court to Consider Case Dismissal May 19 GREGORY DAILY: Files for Bankruptcy After $300MM Verdict HARTMARX CORP: Workers Threaten to Occupy Plant HARTFORD FINANCIAL: Fitch Cuts Ratings on Junior Bonds to 'BB+' HAYES LEMMERZ: Chapter 11 Filing Cues S&P's Rating Cut to 'D' HAYES LEMMERZ: Chapter 11 Filing Cues Fitch's Rating Cut to 'D' HEXCEL CORPORATION: Moody's Affirms 'Ba3' Corporate Family Rating HIGH PLAINS: Owes $5.5 Million to Secured Creditors HLI OPERATING: Chapter 11 Filing Cues Fitch's Rating Cut to 'D' HLI OPERATING: Moody's Downgrades Corporate Family Rating to 'Ca' IDLEAIRE TECHNOLOGIES: Court Converts Case to Ch. 7 Liquidation INMOBILIARIA FUMISA: Moody's Downgrades Bond Ratings to 'Ba2' INTROGEN THERAPEUTICS: Sells Some Assets, Virus Assets Remain JOLAN, INC.: Trustee Sells Assets Despite Jr. Lien Protest JOSEPH VILLA: Involuntary Chapter 11 Case Summary KB TOYS: Selects Streambank to Lead IP Asset Sale KIRK CORPORATION: Files for Chapter 11 to Reorganize Debt LANDSOURCE COMMUNITIES: Barclays Files Second Amended Plan LANDSOURCE COMMUNITIES: Barclays Seeks OK of $140MM Backstop Deal LANDSOURCE COMMUNITIES: Disclosure Statement Hearing on May 20 LANDSOURCE COMMUNITIES: Buyer Balks at Washington Square Resale LANDSOURCE COMMUNITIES: Unit Sues Dolce for Breach of Sale Pact LAS VEGAS SANDS: Bank Debt Sells at 30% Off in Secondary Market LEAR CORP: Bank Debt Sells at 55% Off in Secondary Market LEAR CORP: Lenders Extend Default Waiver Through June 30 LIFEPOINT HOSPITALS: Fitch Affirms Issuer Default Rating at 'BB-' LINN ENERGY: Moody's Assigns 'B3' Rating on $200 Mil. Notes LINN ENERGY: S&P Assigns 'B-' Rating on $200 Mil. Senior Notes LUCKY CHASE: AmTrust Bank Wants Trustee Appointed to Get Payments MACROVISION SOLUTION: Moody's Upgrades Senior Loan Rating to 'Ba1' MARATHON HEALTHCARE: Court Okays Paradigm as Preferred Bidder MARILYN J FOX: Case Summary & 3 Largest Unsecured Creditors MARLENE SIEGEL: Case Summary & 18 Largest Unsecured Creditors MASONITE INT'L: Files Asset Report as of December 31, 2008 MASONITE INT'L: Files Schedules of Assets and Debts MASONITE INT'L: Florida Made Door Files Schedules and Statement MASONITE INT'L: Masonite Primeboard Files Schedules and Statement MAXXAM INC: Posts $12.5 Million Net Loss for Q1 2009 MERCURY COMPANIES: Wants Plan Filing Period Extended to June 8 MERUELO MADDUX: May Continue to Use Cash Collateral Until May 27 MGM MIRAGE: Commences Tender Offer for 2009 Senior Notes MGM MIRAGE: Senior Lenders Agree to Covenant Relief MGM MIRAGE: To Raise $1 Billion Through Common Stock Offering MGM MIRAGE: To Raise $1.5BB Through Private Placement of Sr. Notes MICHAEL CRIBBIN: Case Summary & 20 Largest Unsecured Creditors MICHAELS STORES: Bank Debt Sells at 25% Off in Secondary Market MIDWAY GAMES: Creditors Sue Sumner Redstone, Owner & Board MIDWAY GAMES: Has Modified Bonus Program for Employees MIDWEST FAMILY: S&P Puts 'BB+' Rating on Negative CreditWatch MILLENIUM NEW: Moody's Downgrades Corp. Family Rating to 'Caa3' MIV LEASEHOLDS: Files for Chapter 11 Bankruptcy Protection MOMENTIVE PERFORMANCE: Bank Debt Sells at 30% Discount MTI GLOBAL: In Talks with Lenders on Covenant Waivers NATIONAL DRY CLEANERS: Hearing on Ch. 11 Plan, Conversion May 29 NEIMAN MARCUS: Bank Debt Sells at 25% Off in Secondary Market NES RENTALS: Moody's Changes Default Rating to 'Caa1/LD' NORTEL NETWORKS: Has Q1 Loss; Keeps Move to Standalone Businesses OFFICE DEPOT: Moody's Downgrades Corporate Family Rating to 'B2' OILEXCO NORTH: Hearing on Chapter 15 Petition Set on May 20 ORIENTAL TRADING: Moody's Confirms 'Caa3' Corporate Family Rating ORIENTAL TRADING: S&P Downgrades Corporate Credit Rating to 'CCC' OSI RESTAURANT: Bank Debt Sells at 24% Off in Secondary Market PACIFIC ETHANOL: May File Chapter 11, Expects $23.9MM Q1 Loss PMI GROUP: Fitch Downgrades Issuer Default Rating to 'CC/RR5' POWERMATE CORP: Court Okays Settlement Agreement With Home Depot PROPEX INC: BNP, Black Diamond Appeal DIP Loan Payment Order PROPEX INC: Court OKs Stipulation Resolving BNP Paribas Dispute QUEBECOR WORLD: RR Donnelley Offers $1.35BB Cash, Stock for Assets RANDA LUGGAGE: Files Ch. 11 in Delaware, Seeks Asset Sale RECORDANT INC: Former Exec. May Restart Operations Under New Name RETAIL PRO: Sale of All Assets to Secured Lenders Approved RH DONNELLEY: Continues Talks With Bondholders and Agent Banks RICARDO M SANCHEZ: Case Summary & 20 Largest Unsecured Creditors RIVER WOODS: Files Chapter 11 Petition in Boise ROSIE T.: Voluntary Chapter 11 Case Summary S&K FAMOUS: Court Okays Sale Process, Hilco as Lead Bidder SHEARIN FAMILY: Litigating With Unit Purchasers Over Status SMURFIT-STONE: Reports $214MM Loss, to Reduce Headcount in 2009 SMURFIT-STONE: Court Extends Lease Decision, Removal Deadlines SMURFIT-STONE: PwC Bills $1.6MM for 5-Week's Work SMURFIT-STONE: Seeks 4-Month Extension of Exclusive Periods SMURFIT-STONE: Seeks to Employ Grubb & Ellis as Real Estate Broker SMURFIT-STONE: Seeks to Enter Into Zurich Insurance Agreement SMURFIT-STONE: Sets 2009 Incentive Program; Union Hits Bonuses SPANSION INC: Directors Report Acquisition of Common Stock SPANSION INC: Final Cash Collateral Hearing on May 15 SPANSION INC: Japanese Unit Seeks Injunctive Relief SPANSION INC: Seeks to Employ T. Gray as Tax Consultant STANFORD FINANCIAL: CIO Charged With Obstruction of Justice STRATOS GLOBAL: S&P Assigns Ratings on Positive CreditWatch SUBURBAN PROPANE: S&P Affirms 'BB-' Corporate Credit Rating SWIFT TRANSPORTATION: Bank Debt Sells at 31% Discount TALLAHASSEE CENTER: Case Summary & Largest Unsecured Creditor TARRAGON CORP: Plan Filing Period Extended to August 10 TEXAS MIDWEST: S&P Assigns 'BB' Rating on 2009 Revenue Bonds TRIBUNE CO: June 12 Bar Date Filing for Proofs of Claim Set TURNKEY E&P: Posts $1,745 First Quarter Net Loss, $15,181 Deficit UNI-MARTS, LLC: Debtor's President Not Covered by Automatic Stay UNITED AIR LINES: Bank Debt Sells at 45% Off in Secondary Market UNITED AIR LINES: 7th Cir. Says Airport Space Valuation was Flawed VENETIAN MACAU: Bank Debt Sells at 24% Off in Secondary Market VICTOR BARCELLONA: Case Summary & 17 Largest Unsecured Creditors VISTEON CORP: Posts Lower Revenues, Considering Restructuring WASHINGTON MUTUAL: Shareholders See New Hope to Recoup Losses WINDSOR QUALITY: S&P Changes Outlook to Stable; Holds 'B+' Rating WP EVENFLO: Weak December 2008 Quarter Cues Moody's Junk Rating WYOMING VALLEY: PBGC Negotiates Pact to Preserve Pension Plan * AlixPartners Opens Office in Washington, DC * Houlihan Lokey Announces Officer-Level Promotions * SSG Capital Acquires Special Situations Group From NatCity * 2009 on Pace to Reach Record-High Number Of Defaults, Says S&P * Parts Suppliers to Congress: Help Is Needed Now to Save Sector * Sales Price for Existing Homes Drops Record 14% in Quarter * Watson Wyatt Study Shows CEO Financial Fortunes Drop Sharply * Chapter 11 Cases With Assets and Liabilities Below $1,000,000 ********* 1300 NORTH WOOD: Case Summary & 19 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: 1300 North Wood LLC 811 W. Superior St Chicago, IL 60642 Bankruptcy Case No.: 09-17206 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Debtor's Counsel: Abraham Brustein, Esq. Dimonte & Lizak, LLC 216 W. Higgins Road Park Ridge, IL 60068 Tel: (847) 698-9600 Ext. 221 Fax: (847) 698-9623 Email: abrustein@dimonteandlizak.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including its list of 19 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/ilnb09-17206.pdf The petition was signed by Joseph Zivkovic, member-manager of the Company. ACCENTIA BIOPHARMA: May Employ SLS ss Special IP Law Counsel ------------------------------------------------------------ The U.S. Bankruptcy Court for the Middle District of Florida has granted Accentia Biopharmaceuticals, Inc., et al., permission to employ Saliwanchik, Lloyd & Saliwanchik as special intellectual property law counsel, nunc pro tunc to the petition date. As special intellectual property law counsel, SLS will represent the Debtors in connection with matters involving the Debtors' intellectual property, including but not limited to filing and prosecuting patent and trademark applications, handling United States and foreign filing requirements for the Debtors' patents and trademarks, and generally advising the Debtors as to all intellectual property matters. Charles A Postler, Esq., an attorney at SLS, assured the Court that the firm does not hold any interest adverse to the Debtors or their estates, and that the firm is a "disinterested person" as that term is defined in Sec. 101(14) of the Bankruptcy Code. Accentia will pay the sum of $20,035 to SLS, which represents 100% of the costs incurred by SLS on Accentia matters through and including Feb. 28, 2009. On each of May 1, June 1, and July 1, Accentia will pay the sum of $7,525 to SLS, whih amount, in the aggregate, represents 100% of the fees incurred by SLS on Accentia matters through and including February 28. Any fees and costs due from Accentia for the month of March 2009 will be incorporated in the next 6-week budget for Accentia to be presented to the Court at the May 13, 2009 hearing, and will be subject to the approval of the Court. Biovest International Inc. will pay the sum of $8,839 to SLS, which amount represents 100% of the costs inurred by SLS on Biovest matters through and including February 28, 2009, and one- third of the fees incurred by SLS on Biovest matters through and including February 28, 2009. On each of May 1, 2009, and June 1, 2009, Biovest will pay the sum of $3,816 to SLS, which amount,in the aggregate, represents the remaining balance of the fees incurred by SLS on Biovest matters through and including February 28, 2009. Any fees and costs due from Biovest to SLS for the month of March 2009 will be incorporated in the next 6-week budget for Biovest to be presented to the Court at the May 13, 2009 hearing, and will be subject to approval of the Court. Prior to performing any serviCes in these cases for the month of April 2009 and thereafter, SLS will provide a written summary to the Debtors of the anticipated services to be performed for each month together wih an estimate of the fees and costs for said services. Headquartered in Tampa, Florida, Accentia BioPharmaceuticals Inc. (Nasdaq: ABPI) -- http://www.accentia.net/-- is a vertically integrated biopharmaceutical company focused on the development and commercialization of drug candidates that are in late-stage clinical development and typically are based on active pharmaceutical ingredients that have been previously approved by the FDA for other indications. The company's lead product candidate is SinuNase(TM), a novel application and formulation of a known therapeutic to treat chronic rhinosinusitis. Additionally, the Company has acquired the majority ownership interest in Biovest International Inc. and a royalty interest in Biovest's lead drug candidate, BiovaxID(TM) and any other biologic products developed by Biovest. The company also has a specialty pharmaceutical business, which markets products focused on respiratory disease and an analytical consulting business that serves customers in the biopharmaceutical industry. Accentia Biopharmaceuticals and nine affiliates filed for Chapter 11 protection on November 10, 2008 (Bankr. M.D. Florida, Lead Case No. 08-17795). Charles A. Postler, Esq., and Elena P. Ketchum, Esq., at Stichter, Riedel, Blain & Prosser, in Tampa, Florida; Jonathan B. Sbar, Esq., at Rocke, McLean & Sbar, P.A., represent the Debtors as counsel. Adam H. Friedman, Esq., at Olshan Grundman Frome Rosenzweig, and Paul J. Battista, Esq., at Genovese Joblove & Battista PA, represent the Official Committee of Unsecured Creditors as counsel. Based in Tampa, Florida, Biovest International Inc. (OTC BB: BVTI) -- http://www.biovest.com/-- is a pioneer in the development of advanced individualized immunotherapies for life-threatening cancers of the blood system. Biovest is a majority-owned subsidiary of Accentia Biopharmaceuticals Inc., with its remaining shares publicly traded. Biovest International Inc.'s consolidated balance sheet at June 30, 2008, showed $5.9 million in total assets, $36.8 million in total liabilities, and $4.6 million in non-controlling interests in variable interest entities, resulting in a $35.5 million total stockholders' deficit. ADVANTA BANK: S&P Junks Counterparty Credit Rating -------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its ratings on Advanta Corp., including lowering the long-term counterparty credit rating to 'CC' from 'CCC'. At the same time, S&P lowered the counterparty credit rating on Advanta's primary operating subsidiary, Advanta Bank Corp., to 'CC' from 'B-'. The rating on the preferred stock of Advanta Capital Trust I remains at 'C'. The outlook is negative. The rating action follows Advanta's announcement that the company's securitization trust, its primary funding vehicle, will go into early amortization on June 10, 2009. Also, the company does not plan to fund any activity for the accounts in the trust on its balance sheet; therefore, it will shut these accounts down. It will continue to be a servicer of receivables in the trust but does not intend to originate any new business. "Although the company has stated that new business activities may be considered at some future date, the early amortization along with the cessation at this point of new business constitutes in S&P's view a wind down of the business," said Standard & Poor's credit analyst Rian Pressman. "We also believe this increases the likelihood that the regulators may limit the support that ABC could potentially provide to other parts of the company if needed." Advanta has deferred payment on its trust-preferred securities. S&P's preferred stock rating remains at 'C', reflecting S&P's criteria for such deferrals. The negative outlook reflects S&P's opinion of the winding down of the business and the increased likelihood of regulatory action at ABC. ADVANTA CAPITAL: S&P Affirms 'C' Rating on Preferred Stock ---------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its ratings on Advanta Corp., including lowering the long-term counterparty credit rating to 'CC' from 'CCC'. At the same time, S&P lowered the counterparty credit rating on Advanta's primary operating subsidiary, Advanta Bank Corp., to 'CC' from 'B-'. The rating on the preferred stock of Advanta Capital Trust I remains at 'C'. The outlook is negative. The rating action follows Advanta's announcement that the company's securitization trust, its primary funding vehicle, will go into early amortization on June 10, 2009. Also, the company does not plan to fund any activity for the accounts in the trust on its balance sheet; therefore, it will shut these accounts down. It will continue to be a servicer of receivables in the trust but does not intend to originate any new business. "Although the company has stated that new business activities may be considered at some future date, the early amortization along with the cessation at this point of new business constitutes in S&P's view a wind down of the business," said Standard & Poor's credit analyst Rian Pressman. "We also believe this increases the likelihood that the regulators may limit the support that ABC could potentially provide to other parts of the company if needed." Advanta has deferred payment on its trust-preferred securities. S&P's preferred stock rating remains at 'C', reflecting S&P's criteria for such deferrals. The negative outlook reflects S&P's opinion of the winding down of the business and the increased likelihood of regulatory action at ABC. ADVANTA CORP: S&P Downgrades Counterparty Credit Rating to 'CC' --------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its ratings on Advanta Corp., including lowering the long-term counterparty credit rating to 'CC' from 'CCC'. At the same time, S&P lowered the counterparty credit rating on Advanta's primary operating subsidiary, Advanta Bank Corp., to 'CC' from 'B-'. The rating on the preferred stock of Advanta Capital Trust I remains at 'C'. The outlook is negative. The rating action follows Advanta's announcement that the company's securitization trust, its primary funding vehicle, will go into early amortization on June 10, 2009. Also, the company does not plan to fund any activity for the accounts in the trust on its balance sheet; therefore, it will shut these accounts down. It will continue to be a servicer of receivables in the trust but does not intend to originate any new business. "Although the company has stated that new business activities may be considered at some future date, the early amortization along with the cessation at this point of new business constitutes in S&P's view a wind down of the business," said Standard & Poor's credit analyst Rian Pressman. "We also believe this increases the likelihood that the regulators may limit the support that ABC could potentially provide to other parts of the company if needed." Advanta has deferred payment on its trust-preferred securities. S&P's preferred stock rating remains at 'C', reflecting S&P's criteria for such deferrals. The negative outlook reflects S&P's opinion of the winding down of the business and the increased likelihood of regulatory action at ABC. ALPHA NATURAL: S&P Puts 'BB-' Rating on Positive CreditWatch ------------------------------------------------------------ Standard & Poor's Ratings Services said that it placed its 'BB-' corporate credit ratings and other ratings on Alpha Natural Resources Inc. and Foundation Coal Corp. on CreditWatch with positive implications. The CreditWatch listing follows the announcement that Alpha and Foundation have signed a definitive agreement under which they will merge in an all-stock transaction valued at approximately $2 billion. "The combination of the two companies would create an entity with improved operating diversity and the fourth largest reserve base in the U.S.," said Standard & Poor's credit analyst Maurice Austin. The combined company's reserves would be concentrated in three major operating basins, Central Appalachia, the Powder River Basin, and Northern Appalachia. Under the terms of the transaction, Foundation shareholders will receive 1.084 shares of the new company, which will retain the Alpha name, for each share of Foundation, and each share of Alpha will automatically become one share of the combined company. Based on the closing price of Alpha's shares on May 8, 2009, consideration received by Foundation shareholders was valued at about $32.73 per share. The companies expect to complete the merger by the end of 2009, subject to customary closing conditions, including shareholder and regulatory approvals. On closing, Alpha shareholders will own about 59% of the combined entity and Foundation about 41%. In addition, Alpha will assume Foundation's outstanding net debt of approximately $530 million. Standard & Poor's expects that Alpha will refinance its existing bank facility upon closing of the transaction, at which time we'll withdraw the rating. It is also S&P's expectation that the 2.375% convertible senior notes outstanding at Alpha will remain outstanding upon closing. Standard & Poor's will review the pro forma capital structure in greater detail after resolving the CreditWatch listing. In resolving S&P's CreditWatch listing, S&P will meet with management of the combined entity and review its growth objectives, integration plans, outlook for the coal industry, and overall financial policy. If the outcome of S&P's analysis resulted in an upgrade, it would likely be limited to one notch. ALPHA NATURAL: Moody's Reviews 'B1' Corporate Family Rating ----------------------------------------------------------- Moody's Investors Service placed Alpha Natural Resources, Inc.'s B1 Corporate Family Rating on review for possible upgrade, and placed Foundation Coal Holdings, Inc.'s Ba2 CFR on review for possible downgrade following their announced merger. At the same time, the rated debt of each entity was also placed under review. Alpha and Foundation have agreed to merge in an all-stock deal valued at approximately $2 billion, which has been approved by both company's boards of directors. If the transaction is completed substantially on the terms outlined by the two companies, Alpha will repay its existing $233 million senior secured term loan facility and cancel its existing $375 million revolving facility while the combined company retains Foundation's $500 million revolving facility. The transaction is expected to close later this year pending customary closing conditions and regulatory approvals. The combined entity will be a much larger and more diversified entity with significant presence in the primary coal producing regions in the United States. This should position the new company to withstand further deterioration in coal market fundamentals given that the overall macro-economic environment is expected to remain weak over a protracted period. While solid contracted positions should protect credit metrics over the near term, beyond the next 12 to 18 months, earnings and cash flows could be pressured as higher price contracts roll off. Earnings and cash flow will also continue to suffer if met coal prices and volumes remain soft due to ongoing weakness in the steel manufacturing sector. The review of Alpha's and Foundation's ratings will focus on i) the capital structure and the relative ranking of the various components of debt of the combined company, ii) the liquidity position following the merger, iii) the strategic direction with regards to the development and capital expenditures associated with the combined entities' coal assets, and iv) the magnitude of cost savings and operational synergies that may be realized from the combination. Moody's last rating action on Alpha was to affirm its B1 CFR following an acquisition bid from Cliff's Natural Resources Inc. on July 16, 2008. Moody's last rating action on Foundation was to change its outlook to negative on December 18, 2007. On Review for Possible Downgrade: Issuer: Foundation Coal Corporation -- Probability of Default Rating, Placed on Review for Possible Downgrade, currently Ba2 -- Corporate Family Rating, Placed on Review for Possible Downgrade, currently Ba2 Issuer: Foundation PA Coal Company -- Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Ba3 83 - LGD5 On Review for Possible Upgrade: Issuer: Alpha Natural Resources Inc. -- Probability of Default Rating, Placed on Review for Possible Upgrade, currently B1 -- Corporate Family Rating, Placed on Review for Possible Upgrade, currently B1 -- Senior Secured Bank Credit Facility, Placed on Review for Possible Upgrade, currently Ba3 39 - LGD3 Outlook Actions: Issuer: Alpha Natural Resources Inc. -- Outlook, Changed To Rating Under Review From Stable Issuer: Foundation Coal Corporation -- Outlook, Changed To Rating Under Review From Negative Issuer: Foundation PA Coal Company -- Outlook, Changed To Rating Under Review From Negative Based in Abingdon, Virginia, Alpha Natural Resources, LLC is engaged in the mining and marketing of thermal and metallurgical coal. Foundation Coal Holdings, Inc. is principally a thermal coal producer based in Linthicum Heights, Maryland. AMERICAN AXLE: Moody's Downgrades Corporate Family Rating to 'Ca' ----------------------------------------------------------------- Moody's Investors Service lowered American Axle & Manufacturing Holdings, Inc.'s Probability of Default Rating to Caa3 from Caa1, and its Corporate Family Rating to Ca from Caa1. In a related action Moody's also lowered the rating on the company's secured bank credit facilities to Caa2 from B2, lowered the rating on the unsecured guaranteed notes to Ca from Caa2, and lowered the rating on the unsecured convertible notes to Ca from Caa2. The Speculative Grade Liquidity Rating was affirmed at SGL-4. The outlook is negative. The lowering of American Axle's Probability of Default Rating to Caa3 considers the impact of the extended summer shutdowns announced by GM and Chrysler, which represented approximately 74% and 10% of total sales, respectively in 2008. The company estimates that the extended shut downs will lower sales by approximately $250 million and lower operating results by $80-$85 million in the second and third quarters of 2009. Moody's believes this reduction in operating profits will likely trigger a breach of the company's financial covenants under the senior secured credit facilities. The negative outlook considers the considerable uncertainties in American Axle's ability to stabilize its operations given the restructuring actions needed to be taken (in or outside of bankruptcy) by its principal customers GM and Chrysler. As weak automotive demand in North America drives the closing of auto manufacturing plants and cancellation of models and entire brands, American Axle's business profile will be subject to further operating and financial risks. American Axle is expected to continue cost reductions actions to adjust to new production levels. Announced actions include continued downsizing of the company's Detroit manufacturing operations, salaried workforce reductions of 25% in 2009, and additional cuts in salaried wages and benefits and bonuses. Yet, with an already weakened liquidity profile, American Axle may lack the financial flexibility to rapidly respond the challenging business environment. American Axle's Speculative Grade Liquidity Rating of SGL-4 continues to reflect the expectation that the company's ability to generate positive free cash flow over the next twelve months will be pressured by the announcement of GM and Chrysler's extended summer shut downs. As of March 31, 2009 the company reported $137 million of cash. An additional $18 million of cash is classified as short-term investments in the Reserve Funds. The company maintained availability of $174 million under the $477 million revolving credit facility. Principal financial covenants under the amended facilities include a secured debt/EBITDA test and an EBITDA/interest expense test. Covenants exclude special and non- recurring items such as the costs related to restructuring under the new labor agreement. Moody's believes the extended summer shut downs recently announced by GM and Chrysler are likely to cause a breach of the financial covenants under the secured credit facilities. The security provided to the lenders as part of the bank credit facility amendment limit the company's alternate sources of liquidity, subject to lien baskets and sale/leaseback limitations in the respective indentures. Ratings lowered: American Axle & Manufacturing Holdings, Inc. -- Corporate Family Rating, to Ca from Caa1 -- Probability of Default Rating, to Caa3 from Caa1 -- Unsecured guaranteed convertible note, to Ca (LGD5 84%) from Caa2 (LGD5, 78%) American Axle & Manufacturing, Inc. -- Secured guaranteed term loan, Caa2 (LGD3, 36%) from B2 (LGD2, 26%) -- Unsecured guaranteed notes, to Ca (LGD5 84%) from Caa2 (LGD5, 78%); Ratings affirmed: -- SGL-4, Speculative Grade Liquidity Rating The outlook is negative Holdings' obligations are guaranteed by American Axle and vice versa. The last rating action was on December 16, 2008 when American Axle's ratings lowered. American Axle & Manufacturing, Inc., headquartered in Detroit, Michigan, is a world leader in the manufacture, design, engineering and validation of driveline systems and related components and modules, chassis systems, and metal formed products for light truck, SUV's and passenger cars. The company has manufacturing locations in the USA, Mexico, the United Kingdom, Brazil, China, Poland, and India. The company reported revenues of $2.1 billion in 2008. AMERICAN INT'L: Congress Lashes at Company, CEO, & Trustees ----------------------------------------------------------- The Wall Street Journal reports that the Congress is still cynical about American International Group, CEO Edward Liddy, and the AIG Trust, the three-member board overseeing the government's 80% ownership stake in the Company. Liam Pleven at WSJ states that the government has so far committed up to $173.3 billion in aid to AIG. WSJ relates that Hogan & Hartson, a law firm for American International Group, said in a letter sent to Rep. Gary Peters on May 4 that many risk managers who remain at the Company received performance bonuses, retention payments or both since the Company got federal bailout funds in September 2008. "A substantial number" of employees at AIG and its financial products unit with "risk management responsibilities" remain at AIG, and "most of these employees received 2008 performance awards and/or retention awards pursuant to AIG and FP retention programs implemented in 2008," WSJ states, citing Hogan & Hartson. WSJ quoted Mr. Peters as saying, "People who failed very miserably should not be receiving bonuses. We definitely have to dig into this issue more." WSJ relates that AIG has some programs in place that could result in workers getting more than $1 billion in incentive and retention pay. Mr. Liddy, according to WSJ, said that he will try to reduce the sums in some instances, and senior managers aren't getting 2008 performance bonuses. Michael R. Crittenden and Brody Mullins at WSJ relate that lawmakers criticized AIG and the AIG Trust. Rep. Edolphus Towns, chairperson of the House Oversight and Government Reform Committee, said that it wasn't clear what the trustees -- Jill Considine, Chester Feldberg and Douglas Foshee -- were actually doing in their role as holders of the government's ownership stake, says WSJ. Other lawmakers, according to WSJ, questioned whether the three could operate independently, suggesting they were acting on the whim of the U.S. Treasury and Federal Reserve Bank of New York, which appointed the trustees in January. The report says that the trustees are in close consultation with the Treasury. WSJ states that the three trustees said they were operating independently and were focused on AIG's long-term business plan and in finding a slate of nominees for the Company's board of directors. According to WSJ, lawmakers also pressed Mr. Liddy for the details of AIG's business plan, "Project Destiny." WSJ notes that details on the project are already provided to the New York Fed and the Treasury. Monica Langley, Joann S. Lublin, and Liam Pleven at WSJ report that trustees overseeing taxpayers' controlling stake in AIG are laying the groundwork for a permanent CEO eventually to replace Mr. Liddy. Citing people familiar with the matter, WSJ relates that the AIG trustees are looking for new board members, and the new board would search for the next CEO. Mr. Liddy said that he wants to step down when he feels he has made "enough progress," and "not longer than a year" from now, according to WSJ. Mr. Liddy told U.S. lawmakers on Wednesday that he is concerned about potential problems with the commercial real-estate market and AIG's CRE portfolio, Michael R. Crittenden at Dow Jones Newswires states. Citing Mr. Liddy, Dow Jones says that AIG has a substantial real- estate portfolio, but losses in the commercial real-estate market helped cause the Company's large fourth-quarter loss. Mr. Liddy said that further economic disruption is reason to worry, Dow Jones reports. About American International Based in New York, American International Group, Inc. (AIG), is the leading international insurance organization with operation in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo. During the third quarter of 2008, requirements to post collateral in connection with AIG Financial Products Corp.'s credit default swap portfolio and other AIGFP transactions and to fund returns of securities lending collateral placed stress on AIG's liquidity. AIG's stock price declined from $22.76 on September 8, 2008, to $4.76 on September 15, 2008. On that date, AIG's long-term debt ratings were downgraded by Standard & Poor's, a division of The McGraw-Hill Companies, Inc., Moody's Investors Service and Fitch Ratings, which triggered additional requirements for liquidity. These and other events severely limited AIG's access to debt and equity markets. On September 22, 2008, AIG entered into an $85 billion revolving credit agreement with the Federal Reserve Bank of New York and, pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000 shares of Series C Perpetual, Convertible, Participating Preferred Stock to a trust for the benefit of the United States Treasury. At September 30, 2008, amounts owed under the facility created pursuant to the Fed Credit Agreement totaled $63 billion, including accrued fees and interest. Since September 30, AIG has borrowed additional amounts under the Fed Facility and has announced plans to sell assets and businesses to repay amounts owed in connection with the Fed Credit Agreement. In addition, subsequent to September 30, 2008, certain of AIG's domestic life insurance subsidiaries entered into an agreement with the NY Fed pursuant to which the NY Fed has borrowed, in return for cash collateral, investment grade fixed maturity securities from the insurance subsidiaries. On November 10, 2008, the U.S. Treasury agreed to purchase, through its Troubled Asset Relief Program, $40 billion of newly issued AIG perpetual preferred shares and warrants to purchase a number of shares of common stock of AIG equal to 2% of the issued and outstanding shares as of the purchase date. All of the proceeds will be used to pay down a portion of the Federal Reserve Bank of New York credit facility. The perpetual preferred shares will carry a 10% coupon with cumulative dividends. AIG and the Fed also agreed to revise the existing FRBNY credit facility. The loan terms were extended from two to five years to give AIG time to complete its planned asset sales in an orderly manner. The equity interest that taxpayers will hold in AIG, coupled with the warrants, will total 79.9%. At September 30, 2008, AIG had $1.022 trillion in total consolidated assets and $950.9 billion in total debts. Shareholders' equity was $71.18 billion, including the addition of $23 billion of consideration received for preferred stock not yet issued. The Troubled Company Reporter reported on March 4, 2009, that Moody's Investors Service confirmed the A3 senior unsecured debt and Prime-1 short-term debt ratings of American International Group, Inc. AIG's subordinated debt rating has been downgraded to Ba2 from Baa1. The rating outlook for AIG is negative. This rating action follows AIG's announcement of net losses of $62 billion for the fourth quarter and $99 billion for the full year of 2008, along with a revised restructuring plan supported by the U.S. Treasury and the Federal Reserve. This concludes a review for possible downgrade that was initiated on September 15, 2008. AMF BOWLING: Default Due to Pact Amendments Cue S&P's Junk Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its corporate credit rating on AMF Bowling Worldwide Inc. to 'CC' from 'B-'. In addition, S&P lowered the issue-level rating on the company's first- and second-lien secured credit facilities. At the same time, S&P placed the corporate credit and all issue-level ratings on AMF Bowling on CreditWatch with negative implications. Mechanicsville, Virginia-based AMF Bowling, the largest operator of bowling centers in the U.S., had total debt of $326 million as of March 29, 2009. "The rating actions reflect our view that the company's recent amendment to its credit agreements which permit AMF to repurchase an unlimited amount of its term loans with new equity from its owners is tantamount to a default under Standard & Poor's criteria," said Standard & Poor's credit analyst Hal F. Diamond. The term loans are trading at a significant discount to the par amount, and buybacks would be done by means of a Dutch tender offer expiring June 20. "We have taken this view in light of the company's highly leveraged financial profile, negative discretionary cash flow, limited liquidity, and weak operating outlook," said Mr. Diamond. The bowling center business faces declining league participation and increasing competition from other forms of entertainment. AMF BOWLING: Moody's Junks Probability of Default Rating -------------------------------------------------------- Moody's Investors Service lowered the probability-of-default rating for AMF Bowling Worldwide, Inc. to Caa3 from B3 based on the lender approval of a bank amendment that permits the company to prepay first and second lien debt in the open market, via a Dutch auction process, at a discount. Moody's would likely consider this transaction a distressed exchange due to expectations of significant loss to lenders relative to the original obligation. AMF plans to raise an undetermined level of new equity to support these prepayments. A distressed exchange constitutes a default for ratings purposes (though not for legal purposes), and the downgrade of the PDR reflects elevated default risk. The ratings outlook was revised to negative from stable. Notwithstanding the potential for improvement in AMF's credit profile over the medium-term from the debt repurchase, Moody's affirmed the B3 corporate family rating. The B3 rating continues to reflect the company's high leverage and Moody's concern that a weak economy may continue to pressure constant center revenue, and thus, profitability. As mentioned, AMF expects to raise equity to support the debt buyback as the amendment limits the amount of its own cash that can be used for debt repurchases to $5 million (which the company must apply to the first lien term loan). As per the amendment, the prepayment period expires on June 20, 2009. The negative outlook primarily reflects Moody's opinion, that should the transaction take place and lenders realize a loss, there is downward pressure on the probability-of-default rating and credit facility ratings to reflect this realized loss. The negative outlook also reflects concerns over the impact of weak consumer spending on the company's sales and profitability levels. This rating was downgraded: -- Probability-of-Default Rating to Caa3 from B3. These ratings were affirmed: -- Corporate Family Rating at B3; -- $40 million first lien revolver due 2012 at B1 (LGD3, 31%); -- $245 million first lien term loan due 2013 at B1 (LGD3, 31%); -- $80 million second lien term loan due 2013 at Caa2 (LGD5, 80%). Moody's subscribers can find additional information in the AMF Credit Opinion published on Moodys.com. The last rating action was on February 24, 2009 when Moody's downgraded AMF's corporate family rating to B3 from B2 and the second lien term loan rating to Caa2 from Caa1. Moody's also affirmed the B1 rating on the first lien senior secured credit facilities. Headquartered in Richmond, Virginia, AMF Bowling Worldwide, Inc. is the largest operator of bowling centers in the world with approximately 322 centers in operation, including nine centers outside the US. AMF had revenues of $452 million for the twelve months ended March 29, 2009. ARVINMERITOR INC: Sent Feelers for Loan Amendments, Waivers ----------------------------------------------------------- ArvinMeritor Inc. said in a regulatory filing with the Securities and Exchange Commission that it is possible the company may be required to obtain an amendment to the senior secured credit facility and its U.S. securitization facility by the end of its third fiscal quarter to allow additional flexibility under the senior secured debt to EBITDA covenant contained therein and, in the absence of a waiver, to prevent a default under such facilities. If amendments or waivers are not necessary before the end of the third quarter, it is increasingly likely that the company will require them prior to the end of the fiscal year. If such amendments or waivers are needed and are not obtained, the lenders under these facilities could accelerate the company's obligations, which, through cross defaults, could allow acceleration of obligations under certain of its other debt arrangements, including its outstanding convertible notes. If amendments or waivers are needed, the company would negotiate with the lenders under these facilities to obtain an amendment or waiver which would allow the required additional financial flexibility. "We have had initial communications with the agent bank regarding a possible amendment or waiver consistent with others accomplished in the industry. However, there can be no assurances as to whether any such amendment or waiver may be obtained or, if obtained, whether the terms and restrictions of such amendment or waiver will be as favorable as current arrangements," ArvinMeritor said. As reported by the Troubled Company Reporter, ArvinMeritor posted a net loss of $47 million for the three months ended March 31, 2009, on sales of $1.11 billion. The Company had $2.87 billion in total assets; $1.29 billion in current liabilities, $1.37 billion in long-term debt, $654 million in retirement benefit obligations, $272 million in other liabilities, and $50 million in minority interests, resulting in $769 million in shareowners' equity. ArvinMeritor noted that commercial and light vehicle production and sales volumes have declined significantly in most markets. Management believes volumes will continue to be at severely depressed levels and that the impact of these lower volumes will continue to impact the company's profitability and cash flow for the remainder of fiscal year 2009 and possibly longer. The company's cash and liquidity needs have been impacted by the level, variability and timing of its customers' worldwide vehicle production and other factors outside of its control. In addition, although the company is pursuing a long term strategy to become primarily a commercial vehicle systems business, the financial and economic environment has made this difficult to accomplish in the short term and has left it with servicing the cash outflows of certain of its light vehicle businesses, which have been substantial. Cash flow in the first half of fiscal year 2009 was negatively affected by decreased earnings due to lower sales and will continue to be negatively impacted during the remainder of fiscal year 2009 due to expected production declines, the resulting restructurings and the current volatility in the financial markets, which could affect certain of the company's customers or vendors. The company saw its usage of the revolving credit facility under its senior secured credit facility throughout the first half of the fiscal year increase significantly to meet working capital and other operational needs. At March 29, 2009, the company had $165 million in cash and cash equivalents and an undrawn amount of $311 million under the revolving credit facility. Availability under the revolving credit facility is subject to a senior secured debt to EBITDA ratio covenant, as defined in the agreement, which may limit borrowings under the agreement as of each quarter end. In the second quarter, the company's credit rating was downgraded by credit rating agencies and there were significant declines in its stock price. A full-text copy of ArvinMeritor's quarterly report is available at no charge at http://ResearchArchives.com/t/s?3cd1 About ArvinMeritor ArvinMeritor, Inc. -- http://www.arvinmeritor.com/-- is a premier global supplier of a broad range of integrated systems, modules and components to the motor vehicle industry. The company marks its centennial anniversary in 2009. ArvinMeritor serves commercial truck, trailer and specialty original equipment manufacturers and certain aftermarkets, and light vehicle manufacturers. ArvinMeritor common stock is traded on the New York Stock Exchange under the ticker symbol ARM. * * * In February 2009, Standard & Poor's Ratings Services lowered its corporate credit rating on ArvinMeritor to 'CCC+' from 'B' and lowered its issue-level ratings on the company's debt. All ratings were removed from CreditWatch, where they had been placed on November 13, 2008. The outlook is negative. The downgrade reflects S&P's view that both the commercial vehicle and light- vehicle segments will face severe problems in 2009. Moody's Investors Service and Fitch Ratings followed in March. Moody's lowered the Corporate Family and Probability of Default ratings of ArvinMeritor to Caa1 from B2. In a related action, the rating of the senior secured revolving credit facility was lowered to B1 from Ba2, and the rating of the senior unsecured notes was lowered to Caa2 from B3. ArvinMeritor's Speculative Grade Liquidity Rating also was lowered to SGL-4 from SGL-3. The outlook is negative. Fitch Ratings downgraded ArvinMeritor's Issuer Default Rating and outstanding debt ratings: -- IDR to 'CCC' from 'B-'; -- Senior secured bank facility to 'B/RR1' from 'BB-/RR1'; -- Senior unsecured notes to 'CC/RR5' from 'B-/RR4'. The ratings remain on Rating Watch Negative pending resolution of potential federal government aid to General Motors and the associated impact on industry production. The Watch Negative is also based on ARM's eroding margins, persistent negative cash flows, the potential need for covenant relief in mid-2009 and related liquidity concerns. The downgrades affect approximately $1.7 billion of debt. ASIA GLOBAL: Readiness Not a Prerequisite to Restitution Claim -------------------------------------------------------------- WestLaw reports that under New York law, in order to obtain restitution of the downpayment that it had made in entering into a contract, as opposed to expectation damages based on what it would have realized had the Chapter 7 debtor not repudiated the contract and performed as promised, the nonbreaching party did not have to show that it was ready, willing and able to perform by taking down the bandwidth on the debtor's fiber optic network for which it had contracted. The lack of evidence of its ability to perform was no bar to damages measured by its restitutionary interest. In re Asia Global Crossing, Ltd., --- B.R. ----, 2009 WL 1163977 (S.D.N.Y.). About Asia Global Asia Global Crossing Ltd., through its direct and indirect subsidiaries, as well as through a number of in-country joint ventures and commercial arrangements with Asian partners, provided the Asia Pacific region with a broad range of integrated telecommunications and IP services. The Company filed for chapter 11 protection on November 17, 2002 (Bankr. S.D.N.Y. Case No. 02-15749). When the Debtor filed for protection from its creditors, it listed $2,279,771,000 in total assets and $2,616,316,000 in total debts. David M. Friedman, Esq., at Kasowitz, Benson, Torres & Friedman LLP, represented the Debtor in its restructuring efforts. The Court converted the Debtor's Chapter 11 case to a Chapter 7 proceeding on June 11, 2003. The Court appointed Robert L. Geltzer as the Debtor's Chapter 7 trustee. Attorneys at Golenbock Eiseman Assor Bell & Peskoe LLP represent Mr. Geltzer. ATP OIL & GAS: Bank Debt Trades at 34% Off in Secondary Market -------------------------------------------------------------- Participations in a syndicated loan under which ATP Oil & Gas Corp. is a borrower traded in the secondary market at 65.85 cents- on-the-dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 5.47 percentage points from the previous week, the Journal relates. The loan matures December 30, 2013. The Company pays 475 basis points above LIBOR to borrow under the facility. The bank debt is not rated by Moody's and and S&P. As reported by the Troubled Company Reporter on May 6, 2009, participations in a syndicated loan under which ATP Oil & Gas is a borrower traded in the secondary market at 60.38 cents-on-the- dollar during the week ended May 1, 2009, an increase of 7.88 percentage points from the previous week. Participations in a syndicated loan under which ATP Oil & Gas is a borrower traded in the secondary market at 54.50 cents-on-the- dollar during the week ended March 6, 2009. ATP Oil & Gas Corp. -- http://www.atpog.com/-- is an international offshore oil and gas development and production company with operations in the Gulf of Mexico and the North Sea. The company trades publicly as "ATPG" on the NASDAQ Global Select Market. AVIS BUDGET: Bank Debt Sells at 46% Off in Secondary Market ----------------------------------------------------------- Participations in a syndicated loan under which Avis Budget Car Rental LLC is a borrower traded in the secondary market at 54.00 cents- on-the-dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 8.53 percentage points from the previous week, the Journal relates. The loan matures April 1, 2012. The Company pays 125 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Ba3 rating and S&P's CCC+ rating. Meanwhile, participations in a syndicated loan under which Dana Corp. is a borrower traded in the secondary market at 35.29 cents- on-the-dollar during the week ended May 8, 2009, an increase of 5.79 percentage points from the previous week. The loan matures January 31, 2015. The Company pays 375 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's B+ rating. Participations in a syndicated loan under which Lear Corp. is a borrower traded in the secondary market at 44.78 cents-on-the- dollar during the week ended May 8, 2009, an increase of 5.38 percentage points from the previous week. The loan matures March 29, 2012. The Company pays 250 basis points above LIBOR to borrow under the facility. The bank debt is not rated by Moody's and S&P. As reported in yesterday's Troubled Company Reporter, participations in a syndicated loan under which Visteon Corp. is a borrower traded in the secondary market at 24.19 cents- on-the- dollar during the week ended May 8, 2009, an increase of 3.19 percentage points from the previous week. The loan matures May 30, 2013. The Company pays 300 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Caa2 rating and S&P's B- rating. Participations in a syndicated loan under which General Motors Corp. is a borrower traded in the secondary market at 59.15 cents- on-the-dollar during the week ended May 8, 2009, a drop of 5.50 percentage points from the previous week. The loan matures November 27, 2013. The Company pays 275 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Caa2 rating and S&P's CCC rating. About Avis Budget Based in Parsippany, New Jersey, Avis Budget Group, Inc., provides car and truck rentals and ancillary services to businesses and consumers in the United States and internationally. * * * As reported by the Troubled Company Reporter on April 30, 2009, Standard & Poor's Ratings Services assigned a '6' recovery rating to Avis Budget Car Rental LLC's (CCC+/Developing/--) unsecured notes, indicating expectations of negligible (0%-10%) recovery of principal in the event of a payment default. Avis Budget Car Rental LLC is a subsidiary of Avis Budget Group Inc. (CCC+/Developing/--). BANK OF AMERICA: Raises $7.3BB From Sale of 5.7% Stake in CCB ------------------------------------------------------------- Bank of America Corp. raised $7.3 billion from the sale of a 5.7% stake in China Construction Bank Corp., Rick Carew and Costas Paris at The Wall Street Journal report, citing people familiar with the matter. According to WSJ, BofA is seeking to boost its financial standing because of new U.S. government requirements. WSJ states that BofA must raise $34 billion in capital to meet the requirements of a U.S. government stress test for lenders. Citing people familiar with the matter, WSJ relates that BofA sold 13.5 billion shares, or one-third of its 16.7% stake, in CCB for HK$4.20 per share. The report says that China Life Insurance (Group) Co., Temasek Holdings Pte. Ltd., and Hopu Investment Management Co. bought the block of shares together. A BofA spokesperson, according to WSJ, said that the Company is still "a major shareholder and strategic partner of CCB." WSJ states that BofA will raise $17 billion through a new common stock offering and conversion of private preferred shares into common stock. Tim Huval Named Delaware Market President BofA has named Tim Huval as Delaware market president. Mr. Huval will assume the market president role from Ric Struthers, who will focus on his role as President for Global Card Services. Mr. Struthers will continue his local community activities including chairing the Delaware State Chamber and will also maintain his involvement on behalf of the bank as Board member of Bank of America's Charitable Foundation. As president, Mr. Huval will be the senior executive for local business, civic and philanthropic leadership for BofA in Delaware. He will work to strengthen communication and integration among the Company's local business lines, continuously improve the customer experience, grow revenue and represent BofA in the community. "Delaware is a critical market for Bank of America and we are fortunate to have a strong, proven leader like Tim to head our team locally," Mr. Struthers said. "Although I will continue to be very active in the local community, Tim will take on the day- to-day leadership of the local market leadership team. His experience with the bank and his strong civic ties will enable him to be an effective champion for business growth, community investment and neighborhood vitality on behalf of Bank of America." In addition to his new responsibilities, Mr. Huval also serves as the Card Operations executive for the Bank of America Card Services organization, reporting to Struthers. In this role, he is responsible for Global Consumer Fraud Prevention, Customer Experience, Customer Service, Production Operations, Business Operations and Process Excellence, Consumer Claims, and Customer Marketing. Mr. Huval has a diverse professional background, including his previous roles within BofA as the Senior Human Resources executive, as well as Chief Information Officer for Global Wealth & Investment Management. He has held various other senior executive leadership roles in the bank. Mr. Huval has earned a master's degree in public administration from Brigham Young University, a bachelor's degree in marketing from Weber State University, and an associate's degree in business management from Salt Lake Community College. In March 2007, Mr. Huval was awarded an honorary Doctorate in Humane Letters from Salt Lake Community College. He has received many other honors throughout his career. In Delaware, Mr. Huval is a strong advocate of giving back to our communities. He is an active board member of the United Way of Delaware, the Delaware Children's Museum and the Delaware Business Roundtable. 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 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. BEVERAGES & MORE!: S&P Affirms Corporate Credit Rating at 'B-' -------------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed the corporate credit rating on Concord, California-based Beverages & More! Inc. at 'B-' and removed the company from CreditWatch, where they were placed with negative implications on Feb. 25, 2009. The outlook is negative. On February 25, 2009, S&P placed its ratings on BevMo on CreditWatch with negative implications, reflecting weak same-store sales growth, expectations for ongoing challenges in the retail environment over at least the near term, regional concentration in areas where the recession has had a dramatic impact, and the deterioration of the company's credit protection profile. "As S&P reviewed the rating," said Standard & Poor's credit analyst David Kuntz, "we anticipate that performance is likely to remain weak over the near term, but that the company's liquidity position will remain adequate due to its ability to moderate its growth and manage its working capital." "Recent operations have been below expectations," continued Mr. Kuntz, "and S&P anticipates that performance could be significantly challenged over the near term due to a decline in consumer spending on alcoholic beverages and regional exposure to California and Arizona." Furthermore, S&P believes the company's related products and specialty foods could be particularly susceptible to recessionary pressures. "Operating margins are likely to be hurt in the near term by negative operating leverage, increased promotional activity and markdowns, and consumers trading down to lower margin items," added Mr. Kuntz. BRUNO'S SUPERMARKETS: Owes Glenwood Autism Some $103,000 -------------------------------------------------------- Dawn Kent at The Birmingham News reports that Glenwood Autism and Behavioral Health Center said that it is owed about $103,000 by Bruno's Supermarkets LLC. According to Birmingham News, Glenwood Autism said that the grocery stores collected about $103,000 during the Glenwood Holiday Pecan fundraising sale in 2008. Birmingham News relates that the money wasn't paid to Glenwood Autism. Citing Glenwood Autism, Birmingham News states that the loss has created a "financial hole" for programs for people affected by autism and almost eliminates the total funds raised. Bruno's Supermarkets, LLC, is a privately held company headquartered in Birmingham, Alabama. Bruno's is the parent company of the Bruno's, Food World, and FoodMax grocery store chains, which includes 23 Bruno's, 41 Food World, and 2 FoodMax locations in Alabama and the Florida panhandle. Founded in 1933, Bruno's has operated as an independent company since 2007 after undergoing several transitions and changes in ownership starting in 1995. Bruno's filed for Chapter 11 relief on February 5, 2009 (Bankr. N.D. Ala. Case No. 09-00634). Burr & Forman LLP is the Debtor's lead counsel. Najjar Denaburg, P.C., is the Debtor's conflicts counsel. Greenberg Traurig, LLP, is the official committee of unsecured creditors' counsel. Alvarez & Marsal is the Debtor's restructuring advisor. When Bruno's filed for Chapter 11 protection from its creditors, it listed assets and debts of between $100 million and $500 million each. CHARTER COMMS: Files Lawsuit Against DirecTV Group Over Ads ----------------------------------------------------------- The Associated Press reports that Charter Communications Inc. is suing DirecTV Group Inc. over advertisements that tell subscribers to switch TV service. According to The AP, the ads are touting Charter Communications' bankruptcy filing. The AP relates that Charter Communications alleged that DirecTV used "false and misleading" ads claiming that Charter couldn't provide the latest technology, add high-definition channels or offer new exclusive programming given its financial troubles. The ads have been running in print, radio, billboards, and direct mailings to consumers in Connecticut, Illinois, Louisiana, Michigan, Missouri, Nevada, South Carolina, and Wisconsin, The AP states, citing Charter Communications. According to The AP, DirecTV spokesperson Robert Mercer said that the Company stands "by the accuracy of our advertising." Based in St. Louis, Missouri, Charter Communications, Inc. (Pink OTC: CHTRQ) -- http://www.charter.com/-- is a broadband communications company and the fourth-largest cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. On March 16, 2009, Charter Communications filed its annual report on Form 10-K, which contained a going concern modification to the audit opinion from its independent registered public accounting firm. Charter Communications and more than a hundred affiliates filed voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D. N.Y. Case No. 09-11435). Pacific Microwave filed for bankruptcy protection on April 20, 2009, disclosing assets of not more than $50,000 and debts of more than $1 billion. The Hon. James M. Peck presides over the cases. Richard M. Cieri, Esq., Paul M. Basta, Esq., and Stephen E. Hessler, Esq., at Kirkland & Ellis LLP, in New York, serve as counsel to the Debtors, excluding Charter Investment Inc. Albert Togut, Esq., at Togut, Segal & Segal LLP in New York, serves as Charter Investment, Inc.'s bankruptcy counsel. Curtis, Mallet-Prevost, Colt & Mosel LLP, in New York, is the Debtors' conflicts counsel. Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the Debtors' independent auditors. The Debtors' valuation consultants are Duff & Phelps LLC; the Debtors' financial advisors are Lazard Freres & Co. LLC; and the Debtors' restructuring consultants are AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims agent is Kurtzman Carson Consultants LLC. As of Dec. 31, 2008, the Debtors had total assets of $13,881,617,723, and total liabilities of $24,185,668,550. Bankruptcy Creditors' Service, Inc., publishes Charter Communications Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Charter Communications and more than 100 of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Default Swaps Valued at 15% at April 14 Auction -------------------------------------------------------------- Credit default swaps insuring the debt of Chemtura Corporation were valued 15% of the amount of debt they insure in an auction held on April 14, 2009, auction administrators Creditex and Markit said in report by Reuters. This means that sellers of protection on Chemtura's debt will need to pay out 85% of the amount of bonds they insured, according to Reuters. Also, CDS insuring the legacy debt of Great Lakes Corporation, an affiliate of Chemtura, was determined to be worth about 18.25% in the auction, Reuter addedthe report disclosed. Payments on the contracts were reportedly triggered after Chemtura's U.S. operations filed for Chapter 11 bankruptcy protection. About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D. N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Gets Go-Signal to Engage Kirkland & Ellis -------------------------------------------------------- Judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York authorized Chemtura Corp. and its affiliates to employ Kirkland & Ellis, LLP, as their attorneys, nunc pro tunc to the Petition Date. The Debtors chose Kirkland & Ellis because the firm has become familiar with their businesses and many of the potential legal issues that are likely to arise in their Chapter 11 cases. As attorneys to the Debtors, Kirkland & Ellis will: (a) advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their business and properties; (b) advise and consult on the conduct of the Chapter 11 cases, including all of the legal and administrative requirements of operating in Chapter 11; (c) attend meetings and negotiate with representatives of the creditors and other parties-in-interest; (d) take all necessary action to protect and preserve the Debtors' estates, including prosecuting actions on the Debtors' behalf, defending any action commenced against the Debtors and representing the Debtors' interests in negotiations concerning all litigation in which the Debtors are involved, including objections to claims filed against the Debtors' estates; (e) prepare all pleadings, including motions, applications, answers, orders, reports and papers necessary or otherwise beneficial to the administration of the Debtors' estates; (f) represent the Debtors in connection with obtaining postpetition financing; (g) advise the Debtors in connection with any potential sale of assets; (h) appear before the Court and any appellate courts to represent the interests of the Debtors' estates before those courts; (i) consult with the Debtors regarding tax matters; (j) take any necessary action on behalf of the Debtors to negotiate, prepare on behalf of the Debtors and obtain approval of a Chapter 11 plan and all documents related to the Plan; and (k) perform all other necessary or otherwise beneficial legal services for the Debtors in connection with the prosecution of their Chapter 11 cases, including (i) analyzing the Debtors' leases and contracts and the assumptions, rejections or assignments, (ii) analyzing the validity of liens against the Debtors, and (iii) advising the Debtors on corporate and litigation matters. The Debtors have proposed to pay Kirkland & Ellis for its services based on the firm's current hourly rates: Professional Hourly Rate ------------ ----------- Partners $550 to $965 Of Counsel $390 to $965 Associates $320 to $660 Paraprofessionals $110 to $280 Richard M. Cieri, Natasha M. Labovitz and Michael A. Cohen will have primary responsibility for providing services for them in relation to the Kirkland & Ellis engagement. The Debtors also proposed to reimburse Kirkland & Ellis for actual and necessary expenses it incurred or will incur, including postage, overnight mail, courier delivery, transportation, overtime expenses, computer assisted legal research, photocopying and meals. According to the Debtors, they have paid approximately $2,400,000 as classic retainers to Kirkland & Ellis on these dates: Payment Date Classic Retainer ------------ ---------------- 12/30/2008 $100,000 02/18/2009 1,000,000 03/11/2009 400,000 03/13/2009 500,000 03/16/2009 400,000 Natasha M. Labovitz, Esq., a partner at Kirkland & Ellis LLP, in New York, attested that her firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code and as required by Section 327(a) of the Bankruptcy Code. She maintained that her firm does not hold or represent an interest adverse to the Debtors' estates, and has no connection to the Debtors, their creditors or their related parties. In response to the concerns raised by U.S. Trustee Diana G. Adams on the firm's disinterestedness, Ms. Labovitz made these disclosures in a supplemental declaration: (a) Dana Yankowitz, an associate of Kirkland & Ellis, was an employee of the U.S. Bankruptcy Court for the District of New York from September 2007 to September 2008. (b) An affiliate of a potential financing party to the Debtors and an affiliate of Bank of New York Mellon Trust Company, the successor trustee to the Debtors' $370 million indenture, are clients of Kirkland & Ellis in matters unrelated to the Debtors' cases. (c) Richard M. Cieri, a limited partner of PCM Activist Feeder Fund LP, which owns an investment in Tria Partners, which in turn owns stocks of Chemtura Corp., has taken steps to sell his interest in the PCM fund. Ms. Labovitz also provided disclosure pertaining to her firm's representation of J.P. Morgan Trust Company, Citigroup, Inc., and Citibank N.A., Canada, in response to the U.S. Trustee's request for additional disclosure. A full-text copy of Ms. Labovitz's declaration is available for free at http://bankrupt.com/misc/chemtura_LabovitzDeclaration.pdf About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D. N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Gets Interim OK to Hire Lazard as Investment Banker ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York authorized Chemtura Corp. to employ Lazard Freres & Co. LLC as their investment banker nunc pro tunc to the Petition Date, on an interim basis. Lazard will: (a) review and analyze the Debtors' business, operations and financial projections; (b) evaluate the Debtors' potential debt capacity in light of its projected cash flows; (c) assist in determining a capital structure for the Debtors; (d) assist in determining a range of values for the Debtors on a going concern basis; (e) advise the Debtors on tactics and strategies for negotiating with the stakeholders; (f) render financial advice to the Debtors and participate in meetings or negotiations with stakeholders and rating agencies or other appropriate parties in connection with the restructuring; (g) advise the Debtors on the timing, nature and terms of new securities, other consideration or other inducements to be offered pursuant to the restructuring; (h) advise and assist the Debtors in evaluating potential financing transactions by the Debtors; (i) assist the Debtors in preparing documentation within Lazard's area of expertise that is required in connection with the restructuring; (j) attend meetings of the Debtors' Board of Directors and its committees with respect to matters on which Lazard has been engaged to advise the Debtors; (k) provide testimony, as necessary, with respect to matters in which Lazard has been engaged to advise the Debtors in any proceeding before the Court; and (l) provide the Debtors with other financial restructuring advice. The Debtors have proposed to entitle Lazard to monthly fees, restructuring fee and financing fees: 1. A monthly fee of $250,000 will be payable to Lazard on the first day of each month until the earlier of the consummation of the Debtors' Restructuring or the termination of Lazard's engagement. One-half of each Monthly Fee paid relating to any month after August of 2009 will be credited against the Restructuring Fee. Lazard will also be entitled to a minimum of $1,000,000 in monthly fees without regard to the outcome of any restructuring or any termination by the Debtors. 2. A fee of $7,000,000 will be payable to Lazard upon consummation of any Restructuring of the Debtors in their bankruptcy proceedings. 3. A fee equal to the amount set forth in the Engagement Letter will be payable to Lazard upon consummation of any financing. One-half of any Financing Fee paid will be credited against any Restructuring Fee subsequently payable. More than one Financing Fee may be payable. The Debtors said the fee structure has been agreed upon by the parties in anticipation that a substantial commitment of professional time and effort will be required of Lazard and its professionals. Regardless of whether any transaction occurs, the Debtors will reimburse Lazard for all reasonable expenses the firm incurred and will incur in connection with its engagement. A full-text copy of the Lazard engagement letter is available for free at: http://bankrupt.com/misc/chemtura_enggmntletterLazard.pdf The Debtors have agreed to indemnify, hold harmless and defend Lazard and its affiliates and their officers and members. Prior to the Petition Date, the Debtors paid Lazard $1,500,000. As of the Petition Date, the Debtors aver that they do not owe any prepetition amounts to Lazard. Daniel M. Aronson, a managing director of Lazard Freres & Co. LLC, in New York, maintained that his firm is a disinterested person as that term is defined under Section 101(14) of the Bankruptcy Code, as required by section 327(a) of the Bankruptcy Code. In response to the request of the U.S. Trustee, Mr. Aronson confirmed that only one professional of the firm's UK affiliate, Lazard & Co. Limited, has been assisting Lazard Freres with its engagement by the Debtors. About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D. N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Has Green Light to Hire Alvarez & Marsal ------------------------------------------------------- Judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York allowed Chemtura Corporation and its affiliates to employ Alvarez & Marsal North America, LLC, and its subsidiaries, agents, independent contractors and employees, as crisis managers nunc pro tunc to the Petition Date, pursuant to the terms of their second engagement letter. The Debtors appointed Ray Dombrowski, a managing director of A&M, as their chief restructuring officer. Before the Petition Date, the Debtors engaged A&M as their restructuring consultant to assist them with certain financial issues. The Debtors had said the agent for the DIP lenders require them to employ the services of a restructuring advisory firm and a chief restructuring officer as a condition to the postpetition financing commitment. Accordingly, on the Petition Date, the Debtors and A&M entered into a second engagement letter, a copy of which is available for free at: http://bankrupt.com/misc/chemtura_2ndEnggmtnLtr_Alvarez.pdf Pursuant to the Second Engagement Letter, Mr. Dombrowski will serve as the Debtors' CRO after the Petition Date. A&M will also provide other A&M employees to support Mr. Dombrowski and the Debtors' management team in their restructuring efforts during these Chapter 11 cases. The Second Engagement Letter provides that the CRO, together with any Additional Personnel: (a) in cooperation with the Debtors' chief executive officer and chief financial officer, will perform a financial review of the Debtors, including a review and assessment of financial information that has been, and that will be, provided by the Debtors to their creditors, including its short and long-term projected cash flows; (b) will assist in identifying cost reduction and operations improvement opportunities, develop and report on cash management activities and compliance with the covenants under the DIP Financing; (c) will assist the CEO in developing for the Board's review possible restructuring plans or strategic alternatives for maximizing the enterprise value of the Debtors' various business lines, including assisting with any asset sales; (d) will serve as the principal contact with the Debtors' creditors regarding the Debtors' financial and operational matters, and will act as contact for the Debtors and Prepetition lenders, as well as the unsecured creditors committee and any other statutory or ad hoc committee that may be formed; (e) will assist in developing and preparing a Chapter 11 plan of reorganization, will assist in preparing schedules of assets and liabilities and statements of financial affairs, and will assist in the claims management process; and (f) will perform other services as requested or directed by the Board and CEO and agreed to by that officer. The Debtors will pay the CRO a $150,000 monthly fee for his services. They will also pay for the services of the A&M professionals according to this hourly rate: Professional Hourly Rate ------------ ------------ Managing Directors $700 to $800 Directors $500 to $700 Associates $350 to $500 Analysts $250 to $350 The Debtors also propose to entitle A&M to a $3,000,000 incentive compensation payable on the earlier of: (i) the consummation of a chapter 11 reorganization plan, or (ii) the sale, transfer or other disposition of all or a substantial portion of the assets or equity of the Debtors in one or more transactions. The Debtors will also reimburse A&M for reasonable out-of-pocket expenses incurred in connection with the firm's representation of the Debtors. They will also reimburse A&M and its counsel for fees and expenses incurred in negotiating and preparing the Second Engagement Letter. A&M will not take a retainer except as to any amounts remaining after crediting time against the $300,000 retainer under its First Engagement Letter with the Debtors. Moreover, the Debtors will indemnify and hold harmless A&M, its affiliates and their respective shareholders, members, managers, employees, agents, representatives, and subcontractors under certain circumstances, pursuant to an Indemnification Agreement, a full-text copy of which is available for free at: http://bankrupt.com/misc/chemtura_indemnification.pdf Before the Petition Date, the Debtors have paid A&M about $246,000. As of the Petition Date, the Debtors do not owe the firm any prepetition amounts. Because A&M is not being employed as a professional under Section 327 of the Bankruptcy Code, it will not be submitting quarterly fee applications pursuant to Sections 330 and 331 of the Bankruptcy Code, the Debtors inform the Court. A&M, however, will submit quarterly reports of compensation paid. The parties agree to resolve their disputes based on a set of uniform procedures, a full-text copy of which is available for free at http://bankrupt.com/misc/chemtura_disputeresoltnpcdrs.pdf Ray Dombrowski, in an affidavit filed in Court, disclosed these information: 1. The father-in-law of one of the junior members of the Additional Personnel owns a business whom the Debtors owe about $57,000. Out of an abundance of caution, A&M will institute procedures to screen this member of the Additional Personnel from any matters that could create a possible conflict of interest. 2. A&M has provided and could reasonably be expected to provide services unrelated to the Debtors' cases for certain entities that are potential parties-in-interest to the Debtors. Mr. Dombrowski maintained that A&M is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The Court ruled that A&M will waive its rights under the engagement letter with respect to reimbursement for reasonable fees and expense incurred by its outside counsel in connection with the preparation, negotiation, enforcement and approval of the engagement letter. About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D. N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Heartland, Fidelity Disclose Equity Stake -------------------------------------------------------- Heartland Advisors, Inc., and William J. Nasgovitz disclosed in Form 13G filing with the U.S. Securities and Exchange Commission that they are deemed beneficially own 9,286,600 shares of Chemtura Corporation common stock. Mr. Nasgovitz is president and principal shareholder of Heartland Advisors. The Heartland Advisors shares constitute 3.8% of the 242,979,186 Chemtura common stock shares outstanding as of March 31, 2009. FMR LLC disclosed in a Form 13G filing with the Securities and Exchange Commission that it is deemed to beneficially own 7,386,728 shares of Chemtura Corporation common stock. The FMR LLC shares constitute 3.044% of the 242,979,186 Chemtura common stock shares outstanding as of March 31, 2009. Fidelity Management & Research Company, as a wholly owned subsidiary of FMR LLC and an investment adviser, is also the beneficial owner of 7,386,728 shares Chemtura stock as a result of acting as investment adviser to various investment companies. Edward C. Johnson 3d and FMR LLC, through its control of Fidelity Management, and the Funds each has sole power to dispose of the 7,386,728 shares owned by the Funds. Members of the family of Mr. Johnson, as chairman of FMR LLC, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of the company. The Johnson family group and all other Series B shareholders have entered into a shareholders' voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders' voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Mr. Johnson has the sole power to vote or direct the voting of the shares owned directly by the Fidelity Funds, which power resides with the Funds' Boards of Trustees. Fidelity Management carries out the voting of the shares under written guidelines established by the Funds' Boards of Trustees. About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D. N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Moody's Puts 'Ba1' Rating on $250 Mil. DIP Loan -------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to the $250 million super priority senior secured new money term loan; a rating of Ba1 to the $63.5 million super priority senior secured new money revolver and a Ba1 to a $86.5 million roll-over revolver of Chemtura Corporation as Debtor-in-Possession. The equal ratings on the three instruments reflect their parri passu senior position in regards to priority of claim. The ratings reflect to a large degree the size of the aggregate DIP facility versus an estimated recovery value under either a going concern or liquidation scenario. Other key considerations in order of importance include: the structural features of the DIP facility, the nature of the bankruptcy and reorganization and the DIP size as a percentage of pre-petition debt. This rating outcome is also in the context of the uncertainty of creditor support for a restructuring plan that provides more than adequate liquidity to address the challenges of ongoing economic weakness in certain businesses, historically high operating and raw material costs, intense competitive pressures and capital market uncertainties. The ratings are being assigned on a point-in-time basis and will not be monitored going forward and therefore no outlook was assigned. Ratings assigned to the instruments of Chemtura Corporation as Debtor-in-Possession are: -- $63.5 million super priority senior secured new money revolver, rated Ba1 -- $250 million super priority senior secured new money term loan, rated Ba1 -- $86.5 million super priority senior secured roll-over term revolver, rated Ba1 Chemtura is a globally diversified manufacturer and marketer of specialty chemicals, crop protection, and pool, spa and home care products. The company operates in every region of the world, with facilities in over 40 countries across six continents. Specifically, the company's business operations consist of four reporting segments: (i) industrial engineered products, (ii) industrial performance products, (iii) consumer performance products, and (iv) crop engineered products. For the year ending December 31, 2008, the company's consolidated net sales were $3.5 billion and generated a gross profit of $736 million. Chemtura operates in a highly competitive industry that is in the midst of a sustained global recession that has caused business fundamentals to deteriorate. Among the deteriorating indicators are sharp declines in demand for products, high raw material costs and restricted access to credit. The restricted access to credit made it impossible to refinance a $370 million debt maturity that was coming due in July of 2009. In addition, for much of 2008 the industry experienced rapid inflation in the costs of its raw material, energy and freight. With the inflation in input costs abating, , the company started to see the benefit of declining input costs in the first quarter of 2009, although the benefit was limited due to the sharp reductions in demand. These macroeconomic factors have harmed the company's business operations -- and those of its competitors -- by significantly decreasing demand, resulting in lower manufacturing output and higher manufacturing variances, all of which have contributed to an unprecedented decline in the company's operating profitability and access to liquidity. Although the company has not yet formulated a definitive restructuring plan, the bankruptcy process should enable the company to reduce some costs, improve liquidity and move to a more manageable capital structure. Over the life of the facilities, Moody's expect Chemtura to generate EBITDA that is reduced from historic levels. As a result, an important source of liquidity during the bankruptcy process will be cash balances provided by borrowings under the NMTL which is fully drawn. Moody's remain concerned that the economic and industry challenges previously outlined will remain over the intermediate term while some factors, such as the financially stressed global economy, will likely deteriorate further. In coming to Moody's ratings decision considerable weight, some 75%, was given to two of the four factors in the methodology: collateral coverage at 50% and structural features of the DIP facility at 25%. The remaining 25% is divided between two factors; Nature of Bankruptcy Filing and Reorganization at 15% and the DIP as a Percent of Pre-Petition Debt at 10%. With regard to the value of collateral coverage available to the DIP lenders, Chemtura's business model results in a relatively reasonable level of tangible asset value overall. As a result, Moody's would estimate a conservative valuation (assuming discounts from reported valuations) of Chemtura's domestic tangible current assets and property plant and equipment as of March 31, 2009, of approximately $700 million. Although this valuation would be more than sufficient to cover the NMTL and Revolver it results in 1.75X collateral value for the DIP which is a Ba metric under Moody's DIP methodology that carries a 50% weighting. Moody's also evaluated the possible coverage of the DIP instruments using a relatively conservative earnings multiple of about 4.0 times, which when using Moody's estimate of 2009 EBITDA of about $210 million equals an enterprise value of $840 million. This estimate results in collateral coverage to the $400 million DIP of about 2.1 times ($884 million divided by $400 million = 2.1 times). Although Moody's believe this level of EBITDA is possible it may be difficult to achieve in the depressed global markets. This level of EBITDA would place the collateral coverage in the low end of the Baa category under Moody's DIP methodology. The structure of Chemtura's DIP facility affects the level of protection afforded to lenders and the extent to which they can control their exposure to the company. Under this factor Moody's assess some of the most common and important features of DIP loan structures: priority of claim, nature of collateral, whether the facility is controlled by a borrowing base formula, and the quality of the covenant package. In Chemtura's case there are three features of the DIP loan structure that help to enhance its protective qualities. First, all the collateral protection is achieved through first liens on domestic assets. Second, collateral coverage is largely provided by more liquid assets such as cash, marketable securities, accounts receivable and inventories, but there is some reliance on fixed assets. And third, the covenant package is deemed strong with a covenant package that includes weekly variance of cash flows of the Debtors to a thirteen-week cash flow forecast, an operating performance test (minimum monthly cumulative EBITDA), a minimum liquidity test at all times (minimum cash availability of $25 million until June 30, 2009 and then $30 million thereafter) and some limitation on quarterly disbursements (maximum CAPEX no more than $75 million annually). The structural-features factor accounts for a 25% weighting among the four rating factors considered under the methodology and in the case of Chemtura's DIP this factor maps to a weak Baa rating. The nature of Chemtura's bankruptcy filing and reorganization mapped to Ba level categories. In the case of the bankruptcy filing, this Ba level reflected that the filing was precipitated by a high debt load that could no longer be serviced due to longer term trends that are undermining the business. Of particular concern was the decline in the operation profitability of the industrial engineered products business which was offset by positive growth in crop protection and relative stability in the performance specialties business. A specific issue was related to a $370 million debt maturity coming due in July of 2009 that management was unable to service. Moody's viewed business reinvestment as being adequate prior to filing. Moody's also expect that correction of Chemtura's difficulties in terms of weak demand and the high raw material prices that are affecting the business model as being reasonable to achieve over time. Non-debt liabilities, such as the pension are also a factor (the pension adjustment increased from $227 million to $337 million in 2008), but are not a primary consideration in the bankruptcy. The nature of the reorganization effort was also mapped to the Ba category. Specifically, Moody's feel that Chemtura's plan of reorganization will require business restructuring as well as rightsizing of the debt load. Moody's also note that Chemtura's liabilities subject to compromise include debt under multiple facilities (with various priorities of claim), vendor claims, and a reasonably large pension claim of $337 million. A final factor considered is the DIP as a Percent of Pre-Petition Debt. This factor accounts for a 10% weighting. Chemtura's pre- petition funded debt is $1,345 million and the DIP totals $400 million. Thus the DIP equals 29.7% of the total Pre-Petition Debt and this maps to the Ba category as well. Moody's most recent announcement concerning the ratings Chemtura was on March 18, 2009. The CFR ratings were lowered to Ca following the announcement of a filing for bankruptcy. Moody's withdrew all historic ratings for Chemtura on March 30, 2009. CHRYSLER LLC: Union Pac Seeks to Be Excused from Unassumed Lease ---------------------------------------------------------------- Union Pacific Railway Company asks the U.S. Bankruptcy Court for the Southern District of New York to revise its prior order enforcing the automatic stay in Chrysler LLC's Chapter 11 cases. Union Pacific wants the Court to remove a provision in its order, which requires parties that have an executory contract or lease with the Debtors to continue to perform until it is assumed or rejected and expires by its own terms. Counsel for Union Pacific, Susan Power Johnston, Esq., at Covington & Burling LLP, in New York, says that the provision would require a counterparty to perform, even if Chrysler materially breached an executory contract before and after its bankruptcy filing. "Amendment of the order is appropriate because the order purports to and should do no more than confirm that which Sections 362 and 365 specifically provide. Neither Section 362 nor Section 365 categorically requires a party to continue performing under an executory contract or lease pending assumption or rejection," Ms. Johnston says. Norfolk Southern Corporation and Norfolk Southern Railway expressed support for the proposed revision of the court order. 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: Reclamation Claimant Says Suit Shouldn't Be Required ------------------------------------------------------------------ Heidtman Steel Products Inc. requests that any creditor holding a reclamation claim against the Debtors should not be required to file a lawsuit in case it wants to prosecute its claim. The Debtors have proposed procedures for the settlement of reclamation claims, which require the creditors to file an adversary case or a motion to prosecute their claims if they fail to timely file a notice of reclamation. "The Debtors seek to require actions by the creditors under the reclamation procedures motion, which are more burdensome than those required by the Bankruptcy Code or applicable non- bankruptcy law," Heidtman Steel says in court papers. The Debtors allegedly owe $833,922 to Heidtman Steel on account of goods that it purchased from the company prior to their bankruptcy filing. The Court will convene a hearing on May 20, 2009, at 11:00 a.m., to consider final approval of the proposed procedures. Creditors and other concerned parties have until May 15, 2009, at 12:00 noon, to file their objections. 2 Reclamation Claimants Demand Return of Goods Meanwhile, pursuant to Sections 503(b)(9) and 546(c) of the Bankruptcy Code, BRC Rubber & Plastics, Inc. seek the return of an unspecified amount of goods that were delivered to the Debtors within the 45-day period before the Petition Date. In a separate filing, Kongsberg Automotive, Inc. seeks the return of all goods aggregating $1,856,922 delivered to the Debtors within the 45-day period. 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: CSX Wants Common Carrier Lien Protected ----------------------------------------------------- CSX Transportation, Inc., and Chrysler LLC executed Rail Carrier Transportation Contract No. CSXT 84315 on September 28, 2008, with an effective date of July 1, 2007, pursuant to which CSX agreed to provide rail transportation services to the Debtors involving the shipment of certain of the Debtors' manufactured automobiles from specified origins to various specified destinations at certain rates. John H. Maddock III, Esq., at McGuire Woods LLP, in Richmond, Virginia, counsel for CSX, relates that pursuant to applicable non-bankruptcy law, CSX possesses common carrier liens on certain of the Debtors' property to secure various shipping and freight charges owing to it. These liens, Mr. Maddock says, are perfected by CSX's continued possession of the Debtors' property. On the Petition Date, CSX was in the process of shipping or otherwise had in its possession, approximately 4,597 of the Debtors' automobiles and a small number of parts or the "Collateral", a list of which is available for free at: http://bankrupt.com/misc/Chrysler_CSXCollateral.pdf According to Mr. Maddock, immediately following the filing of the Debtors' bankruptcy petitions, CSX contacted the Debtors to inform them of its common carrier lien but the Debtors have not satisfied or provided adequate protection. Thus, CSX asks the Court to require the Debtors to provide it with adequate protection of its interest in the Collateral in a form of cash payment of $1,174,974 as a condition of the Debtors' right to use, sell, or lease the Collateral. In a separate filing, CSX asked the Court to shorten notice and to expedite the hearing of its motion so that it will be heard on May 14, 2009, at 10:00 a.m. However, Judge Gonzalez denied CSX' request and scheduled the hearing on May 20, 2009, at 11:00 a.m. 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: Court to Consider Retiree Committee Request Today --------------------------------------------------------------- At the behest of the National Chrysler Retirement Organization, Judge Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York will hold a hearing on May 14, 2009, to consider the approval of the appointment of an Official Retiree Committee. Parties have until May 11 to file objections to NCRO's Request. The NCRO, an organization representing the interests of non-union retirees of Chrysler LLC and its affiliated Debtor entities, is asking the Court to authorize and instruct the United States Trustee for Region 2 to appoint an Official Non-Union Retiree Committee. The NCRO was established in 2008 with an express purpose of protecting pension and retiree benefits for Chrysler's non-union retirees. Trent P. Cornell, Esq., at Stahl Cowen Crowley Addis LLC, in Chicago, Illinois, counsel for the NCRO, relates there are more than 16,000 non-union retirees and surviving spouses receiving health insurance benefits from the Debtors that are slated for elimination. Mr. Cornell notes that the aggregate present value of the Debtors' obligation is suspected to total several hundred million dollars. "While the Debtors have evaded communication, their pleadings and the exhibits thereto speak volumes about their intentions," Mr. Cornell tells the Court. "These documents evidence a clear and immediate plan to eliminate non-union retiree benefits, while at the same time heralding the continuation of retiree healthcare benefits for the Debtors' unionized retirees," Mr. Cornell adds. According to Mr. Cornell, it is paramount for the U.S. Trustee to appoint a Retiree Committee consisting of individuals that can quickly and comprehensively represent the Affected Retiree population. The NCRO proffers the following individuals for consideration: Name of Retiree Designation --------------- ----------- Richard Brown Former Human Resources Director Christopher Dyrda Manager of Vehicle Programs/Program Management Lynn Feldhouse Former Vice President & Secretary, Daimler Chrysler Fund John Glotzbach Former Director of Benefits Finance Richard Golpe Former Manager and early retiree John (Jay) Kuhne Former Director, Jeep Marketing Mark Newton Former Director of Financial Analysis Joseph Phillips Former Corporate Senior Financial Analyst Anthony Richards Roy Sjoberg, Jr. Executive Engineer Viper Team Kevin Tourneur Former Senior Manager Jeep Global Product Marketing 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: Vehicles Resale Values Fall 6% After Filing --------------------------------------------------------- Resale values of Chrysler, Jeep and Dodge vehicles fell by 6% in the week after Chrysler LLC filed for bankruptcy protection, www.freep.com reported, citing Automotive Leasing Guide. Before the bankruptcy filing, Jeep and Dodge had 36-month resale values of 38.4% and 37.3% of their vehicles' original sales price, which was slightly better than Chevrolet and General Motors Corporation, but below Toyota's 45.5% and Hyundai's 40.9%, the report said. In the last week, Jeep dropped to 32.4%, Dodge slipped to 31.2% and Chrysler fell from 34.8% to 28.8%. Resale, or residual, values are said to be important in determining the monthly payment on auto leases. Because Chrysler Financial stopped underwriting leases last August, the Automotive Leasing Guide's findings likely will delay any increase in leasing by GMAC, which soon will become the main source of lending for Chrysler dealers and consumers, according to the report. 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) CINRAM INTERNATIONAL: Moody's Cuts Corporate Family Rating to 'B3' ------------------------------------------------------------------ Moody's Investors Service downgraded Cinram International Inc.'s corporate family rating to B3 while also downgrading Cinram's probability of default rating to Caa1. The company's speculative grade liquidity rating remains unchanged at SGL-3 (indicating adequate liquidity) and the ratings outlook remains negative. The rating actions anticipate that financial results will continue to deteriorate over time as the company's core DVD and CD replication business continues to decline, and that business erosion will be exacerbated by the ongoing recession. The rating actions also acknowledge a lack of visibility of future business activity levels and Cinram's need to reinvent itself given the over-maturity of its core activities. Note that owing to the company's waterfall of liabilities having been modified by way of a recent $21 million debt repurchase and reduction in the size of the company's revolving credit facility (and reasonably likely expectations of future such activities), the proportion of senior secured debt has decreased. Consequently, despite the CFR and PDR downgrades, the resulting decrease in claims relative to the security package allowed the senior secured credit facilities to retain their prevailing B2 ratings. Ratings Actions: Issuer: Cinram International Inc. -- Probability of Default Rating, Downgraded to Caa1 from B3 -- Corporate Family Rating, Downgraded to B3 from B2 -- Speculative Grade Liquidity Rating, Unchanged at SGL-3 -- Senior Secured Bank Credit Facility, Unchanged at B2, with the Loss Given Default Assessment Revised to to LGD2, 29% from LGD3, 30% Outlook Actions: -- Unchanged at Negative The above discussion highlights refinancing risk as the company's 2011 credit facility maturity advances. With that in mind, in March/April, Cinram initiated actions to repurchase up to $150 million of its outstanding term loan facility, hoping to take advantage of prevailing conditions to repurchase debt at a discount so as to achieve "levered" debt reduction. As part of an agreement with its lenders to allow the initiative, Cinram was required to make a $35 million term loan prepayment at par and the credit agreement was amended to require $10 million per quarter of amortization payments. In addition, the amendment precludes distributions to equity holders and the lenders reduced their exposure by requiring that the company's revolving credit facility be reduced to $50 million (the facility was last drawn in early 2008; usage is very rare). In the event that Cinram repurchases a sizeable aggregate amount of debt, say $70 million, at a sizeable discount, Moody's is likely to conclude that Cinram's term loan has been effectively restructured, with lenders exchanging their aggregate position for a smaller position with enhanced repayment prospects. This so- called "distressed exchange" will be interpreted -- for rating purposes only -- as constituting an effective although limited default of Cinram's repayment obligations. In the interim, periodic repurchases such as the $33.8 million that has been repurchased to date (a relatively minor 5% of initial total debt commitments), are viewed as being opportunistic. In the event of (and to clearly delineate) the above-noted limited default, Moody's will reposition Cinram's PDR to a level incorporating an "/LD" suffix. This will prevail for three days, after which the /LD suffix will be withdrawn. While subsequent repurchase activity will continue the limited default, since they will be deemed to be part of the same over-all transaction, the PDR modification will be made only once. To date, Cinram has repurchased some $33.8 million of its outstanding term loan at cost of $20.1 million. Moody's most recent rating action related to Cinram was taken on 13 January 2009 at which time Moody's downgraded the company's CFR to B2 from B1 while repositioning the outlook to 'negative' from 'stable' in light of concerns articulated above. With headquarters in Toronto, Ontario, Canada, Cinram International Inc. is one of the world's largest independent manufacturers, replicators and distributors of DVDs and audio CDs. CITIGROUP INC: Smith Barney Hires Merrill, Wells Fargo Brokers -------------------------------------------------------------- Brett Philbin at Dow Jones Newswires reports that Citigroup Inc.'s Smith Barney retail brokerage has hired five financial advisers from Merrill Lynch Global Wealth Management and three from Wells Fargo Advisors. According to Dow Jones, Mark Loftus, William O'Brien and Jeffrey Preusser joined Smith Barney Smith Barney's Oakbrook office from Wells Fargo Advisors. Dow Jones relates that they had $3.8 million in combined trailing 12-month production and managed $247 million in client assets. Dow Jones states that they report to Marsha Werner, a Wells Fargo branch manager. Financial Industry Regulatory Authority records show that Messrs. Loftus, O'Brien, and Preusser each worked at Wachovia, First Union Securities, and Evern Securities for more than 10 years. Dow Jones says that Howard Grace, David Christensen, and Sallie Behnke joined Smith Barney's New York office. They report to Regional Director Jimmy Tighe, according to Dow Jones. The report states that they had more than $2.6 million in combined production and $304 million in assets under management. According to Finra records, Messrs. Grace and Christensen worked at Merrill Lynch for more than 11 years. Smith Barney, Dow Jones reports, recruited The Kassewitz Group, which consist of Phillip Kassewitz, Linda Holmberg, and Lois Frueh, from Merrill Lynch. Dow Jones relates that the team had $1.1 million in combined production and managed more than $169 million in prior assets. Dow Jones says that they report to Bill Arnold, branch manager. Regulatory records show that Mr. Kassewitz and Ms. Holmberg each worked at Merrill Lynch for about 19 years, while Ms. Frueh spent more than 14 years there. About Citigroup Based in New York, Citigroup Inc. (NYSE: C) -- http://www.citigroup.com/-- is organized into four major segments -- Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management. Citi had $2.0 trillion in total assets on $1.9 trillion in total liabilities as of Sept. 30, 2008. As reported in the Troubled Company Reporter on Nov. 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. As part of the agreement, the U.S. Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup issued preferred shares to the Treasury and FDIC. The Federal Reserve agreed to backstop residual risk in the asset pool through a non-recourse loan. Citigroup is one of the banks that, according to results of the government's stress test, need more capital. CITIGROUP INC: MUFJ May Cancel $259MM Acquisition of NikkoCiti -------------------------------------------------------------- Mitsubishi UFJ Trust & Banking Corp. will likely call off its planned $259 million purchase of NikkoCiti Trust & Banking Corp. from Citigroup Inc., Atsuko Fukase at The Wall Street Journal reports, citing a person familiar with the matter. According to WSJ, Sumitomo Mitsui Financial Group Inc. beat Mitsubishi UFJ Financial Group in an auction to acquire Citigroup's Japanese brokerage operations. SMFG plans to acquire those operations on October 1, says WSJ. WSJ notes that this could cause MUFJ Trust to back off from the NikkoCiti deal. Without Citigroup's other Japan operations, the planned NikkoCiti Trust purchase lacked synergy, the report states, citing a person familiar with the matter. WSJ relates that MUFJ Trust agreed in December 2008 to acquire Citigroup Japan's trust banking unit for $259.4 million. The trust bank, according to WSJ, had planned to complete the deal by April 1, 2009. The deadline was postponed until the end of this year, because the trust bank still had to look into NikkoCiti Trust's situation after it was discovered that it had some exposure to SFCG Co., which filed for bankruptcy in March 2009, says WSJ. WSJ notes that MUFG appears to be shifting its focus away from Citigroup assets. MUFG, WSJ reports, plans to strengthen its wholesale brokerage business by merging its brokerage unit with Morgan Stanley's Japan brokerage business in 2010. Based in New York, Citigroup Inc. (NYSE: C) -- http://www.citigroup.com-- is organized into four major segments -- Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management. Citi had $2.0 trillion in total assets on $1.9 trillion in total liabilities as of Sept. 30, 2008. As reported in the Troubled Company Reporter on Nov. 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. As part of the agreement, the U.S. Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup issued preferred shares to the Treasury and FDIC. The Federal Reserve agreed to backstop residual risk in the asset pool through a non-recourse loan. CLAIRE'S STORES: Bank Debt Sells at 43% Off in Secondary Market --------------------------------------------------------------- Participations in a syndicated loan under which Claire's Stores is a borrower traded in the secondary market at 56.63 cents-on-the- dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 4.74 percentage points from the previous week, the Journal relates. The loan matures May 29, 2014. The Company pays 275 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Caa2 rating and S&P's B rating. Meanwhile, participations in a syndicated loan under which Michaels Stores Inc. is a borrower traded in the secondary market at 74.29 cents-on-the-dollar during the week ended May 8, 2009, an increase of 5.71 percentage points from the previous week. The loan matures October 31, 2013. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's B rating. Participations in a syndicated loan under which Neiman Marcus Group Inc. is a borrower traded in the secondary market at 75.75 cents-on-the-dollar during the week ended May 8, 2009, an increase of 5.75 percentage points from the previous week. The loan matures April 6, 2013. The Company pays 175 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's BB- rating. Participations in a syndicated loan under which OSI Restaurant Partners, Inc., is a borrower traded in the secondary market at 75.08 cents-on-the-dollar during the week ended May 8, 2009, an increase of 5.33 percentage points from the previous week. The loan matures May 9, 2014. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's B+ rating. About Claire's Stores Based in Pembroke Pines, Florida, Claire's Stores, Inc., is a specialty retailer of value-priced jewelry and accessories for girls and young women through its two store concepts: Claire's(R) and Icing(R). Icing operates only in North America; Claire's operates worldwide. As of January 31, 2009, Claire's Stores, Inc. operated 2,969 stores in North America and Europe. Claire's Stores, Inc., also operates through its subsidiary, Claire's Nippon, Co., Ltd., 214 stores in Japan as a 50:50 joint venture with AEON, Co., Ltd. The Company also franchises 196 stores in the Middle East, Turkey, Russia, South Africa, Poland and Guatemala. * * * As reported by the Troubled Company Reporter on September 29, 2008, Moody's Investors Service confirmed Claire's Stores, Inc., long term ratings, including its probability of default rating, at Caa1. In addition, Moody's affirmed Claire's speculative grade liquidity rating at SGL-4. The rating outlook is negative. The confirmation reflects Moody's view that the Caa1 appropriately reflects higher-than-average probability of default over the near to medium term, given what Moody's views as an overleveraged and unsustainable capital structure. It also reflects the view that the company will be able to fund its free cash flow deficits with excess cash over the next twelve months, providing it some time in order to improve operating performance. CLEAR CHANNEL: Bank Debt Sells at 49% Off in Secondary Market ------------------------------------------------------------- Participations in a syndicated loan under which Clear Channel Communications is a borrower traded in the secondary market at 50.40 cents- on-the-dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 5.97 percentage points from the previous week, the Journal relates. The loan matures January 30, 2016. The Company pays 365 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Caa2 rating and S&P's B- rating. Clear Channel Communications is the operating subsidiary of San Antonio, Texas-based CC Media Holdings Inc. As reported by the Troubled Company Reporter on January 19, 2009, Clear Channel planned to lay off about 1,500 workers, or 7% of its staff in the U.S. Clear Channel has 20,000 workers in the U.S. The layoffs will mostly affect employees in ad sales. Clear Channel will implement other cuts to save almost $400 million. * * * As reported by the Troubled Company Reporter on March 11, 2009, Moody's Investors Service downgraded Clear Channel Communications, Inc.'s Corporate Family Rating and Probability-of-Default Rating to Caa3 from B2. Moody's also downgraded the Company's senior secured credit facilities to Caa2 from B1 and all senior unsecured notes to Ca from Caa1. In addition, Moody's downgraded Clear Channel's speculative grade liquidity rating to SGL-4 from SGL-2. The ratings downgrade reflects Moody's belief that there is a high probability that the company will violate its secured 9.5x leverage covenant this year, and that when this occurs, a debt restructuring will be likely. The outlook has been revised to negative. This rating action concludes the review initiated on February 6, 2009. COMDISCO HOLDING: Reports Fiscal 2009 2nd Quarter Results --------------------------------------------------------- Comdisco Holding Company, Inc. reported financial results for its fiscal second quarter ended March 31, 2009. Comdisco Holding Company emerged from Chapter 11 bankruptcy proceedings August 12, 2002 and, under its Plan of Reorganization, its business purpose is limited to the orderly sale or run-off of all its remaining assets. For the quarter ended March 31, 2009, Comdisco Holding Company, Inc. reported net earnings of approximately $37,000, or $0.01 per common share (basic and diluted). The per share results for Comdisco Holding Company, Inc. are based on 4,029,055 shares of common stock outstanding on average during the quarter ended March 31, 2009. For the quarter ended March 31, 2009, total revenue decreased by 88 percent to $282,000. The decrease is primarily the result of lower gains on the sale of equity securities and lower interest income in the current quarter. Gains were approximately $126,000 for the current quarter compared to gains of approximately $1,803,000 for the quarter ended March 31, 2008. Net cash provided by operating activities was approximately $5,861,000 for the six months ended March 31, 2009 compared to net cash provided by operating activities of approximately $5,862,000 for the six months ended March 31, 2008. The net cash provided by operating activities in the six months ended March 31, 2009 included cash receipts of approximately $5,328,000 from income tax refunds for Comdisco Holding Company, Inc.'s Canadian subsidiary. However, such receipts are anticipated to be used to satisfy Canadian taxes payable. Total assets are $72,808,000 as of March 31, 2009 which included $62,831,000 of unrestricted cash, compared to total assets of $75,464,000 as of September 30, 2008 which included $57,554,000 of unrestricted cash. As a result of bankruptcy restructuring transactions, adoption of fresh-start reporting and multiple asset sales, Comdisco Holding Company's financial results are not comparable to those of its predecessor company, Comdisco, Inc. About Comdisco Comdisco emerged from chapter 11 bankruptcy proceedings August 12, 2002. The purpose of reorganized Comdisco is to sell, collect or otherwise reduce to money in an orderly manner the remaining assets of the corporation. Pursuant to Comdisco's plan of reorganization and restrictions contained in its certificate of incorporation, Comdisco is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. Accordingly, within the next few years, it is anticipated that Comdisco will have reduced all of its assets to cash and made distributions of all available cash to holders of its common stock and contingent distribution rights in the manner and priorities set forth in the Plan. At that point, the company will cease operations. The company filed on August 12, 2004 a Certificate of Dissolution with the Secretary of State of the State of Delaware to formally extinguish Comdisco Holding Company, Inc.'s corporate existence with the State of Delaware except for the purpose of completing the wind-down contemplated by the Plan. CONSECO INC: Posts $24.5 Million First Quarter 2009 Net Income -------------------------------------------------------------- Conseco Inc. reported a first quarter 2009 net income of $24.5 million compared to a net loss of $7.2 million in the year- earlier quarter. Conseco had $28.5 billion in total assets, $26.9 billion in total liabilities, and $1.59 billion in stockholders' equity as of March 31, 2009. Conseco said it has significant indebtedness which will require over $165 million in cash to service in the next 12 months (including the additional interest expense required after the modification to its Second Amended Credit Facility. Pursuant to Conseco's Second Amended Credit Facility, Conseco must maintain certain financial ratios. The levels of margin between the financial covenant requirements and the Company's financial status, both at March 31, 2009, and the projected levels for the next 12 months, are relatively small and a failure to satisfy any of the financial covenants at the end of a fiscal quarter would trigger a default under the Second Amended Credit Facility. Achievement of the Company's operating plans is a critical factor in having sufficient income and liquidity to meet debt service requirements for the next 12 months and other holding company obligations and failure to do so would have material adverse consequences for the Company. Conseco completed an amendment to its Second Amended Credit Facility, which provides for, among other things: (i) additional margins between the Company's current financial status and certain financial covenant requirements through June 30, 2010; (ii) higher interest rates and the payment of a fee; (iii) new restrictions on the ability of the Company to incur additional indebtedness; and (iv) the ability of the lender to appoint a financial advisor at the Company's expense. At March 31, 2009, Conseco Inc. -- CNO -- and CDOC Inc., a wholly owned subsidiary and a guarantor under the Second Amended Credit Facility, and other non-insurance subsidiaries held unrestricted cash of $104.3 million. Subsequent to March 31, 2009, Conseco repaid $55 million borrowed under the revolving credit facility maturing on June 22, 2009. CNO and CDOC are holding companies with no business operations of their own; they depend on their operating subsidiaries for cash to make principal and interest payments on debt, and to pay administrative expenses and income taxes. CNO and CDOC receive cash from insurance subsidiaries, consisting of dividends and distributions, interest payments on surplus debentures and tax- sharing payments, as well as cash from non-insurance subsidiaries consisting of dividends, distributions, loans and advances. The principal non-insurance subsidiaries that provide cash to CNO and CDOC are 40|86 Advisors, Inc., which receives fees from the insurance subsidiaries for investment services, and Conseco Services, LLC which receives fees from the insurance subsidiaries for providing administrative services. The agreements between the insurance subsidiaries and Conseco Services, LLC and 40|86 Advisors, respectively, were previously approved by the domestic insurance regulator for each insurance company, and any payments thereunder do not require further regulatory approval. According to Conseco, a deterioration in the financial condition, earnings or cash flow of the material subsidiaries of CNO or CDOC for any reason could hinder the subsidiaries' ability to pay cash dividends or other disbursements to CNO or CDOC, which, in turn, would limit Conseco's ability to meet debt service requirements and satisfy other financial obligations. In addition, Conseco may choose to retain capital in the insurance subsidiaries or to contribute additional capital to the insurance subsidiaries to strengthen their surplus, and these decisions could limit the amount available at the Company's top tier insurance subsidiaries to pay dividends to the holding companies. "In the past, we have made capital contributions to our insurance subsidiaries to meet debt covenants and minimum capital levels required by certain regulators and it is possible we will be required to do so in the future. We currently do not expect that contributions to our insurance subsidiaries will be required in 2009. If contributions were required, our holding companies would have limited available capital for such contributions," Conseco said. A full-text copy of Conseco's quarterly report is available at no charge at http://ResearchArchives.com/t/s?3cd0 About Conseco Inc. Headquartered in Carmel, Indiana, Conseco Inc. (NYSE: CNO) -- http://www.conseco.com/-- is the holding company for a group of insurance companies operating throughout the United States that develop, market and administer supplemental health insurance, annuity, individual life insurance and other insurance products. The company became the successor to Conseco Inc. (Old Conseco), in connection with its bankruptcy reorganization. CNO focuses on serving the senior and middle-income markets. The company sells its products through three distribution channels: career agents, professional independent producers and direct marketing. CNO operates through its segments, which includes Bankers Life, Conseco Insurance Group, Colonial Penn, other business in run-off and corporate operations. * * * As reported in the Troubled Company Reporter on January 6, 2009, Fitch Ratings has downgraded the ratings assigned to Conseco Inc. The rating outlook on Conseco Inc. and its subsidiaries remains negative. Fitch downgraded these ratings: (i) issuer default rating to 'BB-' from 'BB'; (ii) senior secured bank credit facility to 'BB-' from 'BB+'; and (iii) senior unsecured debt to 'B' from 'BB-'. COMPUTER WORLD: Court to Hear Fraud Allegations Against Kevin Gore ------------------------------------------------------------------ Daily Herald reports that authorities said that the Hon. Joan Gottschall of the U.S. District Court for the Northern District of Illinois will hold a hearing on fraud allegations against former Computer World Solution chief operating officer Kevin M. Gore. Citing authorities, Daily Herald states that Mr. Gore is allegedly involved in a $17 million bank fraud scheme. According to Daily Herald, authorities said that the line of credit was secured by Computer World's accounts receivable. Citing authorities, the report states that Mr. Gore created certificates with falsely inflated figures and, after Mr. Yuan signed them, submitted them to Fifth Third. Mr. Gore was arrested in the Philippines in February 2009 and has been returned to Chicago, says Daily Herald. Mr. Gore had left U.S. just before Computer World went bankrupt, states the report. According to Daily Herald, Mr. Gore and co-defendant Noel Yuan, Computer World's founder and president, allegedly swindled Fifth Third Bank out of more than $17 million by fraudulently obtaining money through a revolving line of credit. The report says that Mr. Yuan pleaded guilty to two counts of bank fraud in December 2008 and is awaiting sentencing. Mr. Gore, Daily Herald states, was first charged in a criminal complaint in 2008 and was indicted in March 2009 on three counts of bank fraud. According to the report, the indictment alleges that Messrs. Gore and Yuan committed the fraud between March 2005 and September 2007. Computer World Solution, Inc., manufactures consumer electronics. Its products include LCD monitors and televisions, and digital audio/video devices, including MP3/MP4, DVD players, and portable DVD players. The Company has operations in North America, South America, Europe, Australia, and Africa. The Company was founded in 2001 and is based in Wheeling, Illinois. On November 9, 2007, an involuntary petition for reorganization under Chapter 11 was filed against Computer World in the U.S. Bankruptcy Court for the Northern District of Illinois, Chicago. On November 28, 2007, the involuntary petition was approved by the Court. CONSECO INC: Unveils Preliminary Results of Shareholder Vote ------------------------------------------------------------ Conseco, Inc., announced preliminary results of voting at the Company's annual meeting of shareholders: * Eight directors have been re-elected and new director R. Keith Long has been elected -- all to serve terms expiring at next year's annual meeting; * Adoption of a Section 382 Stockholders Rights Plan has been approved; * The company's Amended and Restated Long-Term Incentive Plan has been approved; and * The appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for 2009 has been ratified. Because of the proxy contest at this year's meeting, results of the vote will not be final and officially reported until approximately one week from May 12, when Corporate Election Services (the election inspector) has certified results. Based on preliminary results, the directors who have been elected are: * R. Glenn Hilliard, 66, Conseco's chairman; former chairman, Chief executive officer and member of the executive committee for ING Americas; and a director since September 2003. * Donna A. James, 51, president and managing director of Lardon & Associates; a former executive with Nationwide Mutual Insurance Company and its public company subsidiary, Nationwide Financial Services, Inc.; and a director since May 2007. * R. Keith Long, 61, president and chief executive officer of Otter Creek Management. * Debra J. Perry, 58, managing member of Perry Consulting LLC; Former senior managing director of Moody's Investors Service; and a director since June 2004. * C. James Prieur, 58, Conseco's chief executive officer; and a Director since September 2006. * Neal C. Schneider, 64, chairman of PMA Capital Corp., former Partner of Smart and Associates, LLP (business advisory and accounting firm) and independent consultant; former partner in charge of the Worldwide Insurance Industry Practice and the North American Financial Service Practice at Arthur Andersen & Co.; and a director since September 2003. * Michael T. Tokarz, 59, chairman of investment company MVC Capital, Inc.; managing member of Tokarz Group (venture capital investments); former general partner with Kohlberg Kravis Roberts & Co.; and a director since September 2003. * John G. Turner, 69, chairman of Hillcrest Capital Partners (private equity investment firm); former vice chairman and member of the executive committee for ING Americas; former chairman and CEO of ReliaStar Financial Corp.; and a director since September 2003. * Doreen A. Wright, 52, retired senior vice president and chief information officer of Campbell Soup Company; a former executive with Nabisco, Inc., Prudential Insurance Company and Bankers Trust Company; and a director since May 2007. About Conseco Inc. Headquartered in Carmel, Indiana, Conseco Inc. (NYSE: CNO) -- http://www.conseco.com/-- is the holding company for a group of insurance companies operating throughout the United States that develop, market and administer supplemental health insurance, annuity, individual life insurance and other insurance products. The company became the successor to Conseco Inc. (Old Conseco), in connection with its bankruptcy reorganization. CNO focuses on serving the senior and middle-income markets. The company sells its products through three distribution channels: career agents, professional independent producers and direct marketing. CNO operates through its segments, which includes Bankers Life, Conseco Insurance Group, Colonial Penn, other business in run-off and corporate operations. * * * As reported in the Troubled Company Reporter on January 6, 2009, Fitch Ratings has downgraded the ratings assigned to Conseco Inc. The rating outlook on Conseco Inc. and its subsidiaries remains negative. Fitch downgraded these ratings: (i) issuer default rating to 'BB-' from 'BB'; (ii) senior secured bank credit facility to 'BB-' from 'BB+'; and (iii) senior unsecured debt to 'B' from 'BB-'. CONTINENTAL ALLOYS: S&P Puts 'B-' Rating on Negative CreditWatch ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it placed its ratings on Continental Alloys & Services Inc., including its 'B-' corporate credit rating, on CreditWatch with negative implications. "The CreditWatch listing reflects our assessment that operating results and credit measures are likely to weaken materially in the near term because of weak end-market demand for the company's products," said Standard & Poor's credit analyst Sherwin Brandford. Reduced drilling activity in North America is the primary reason for the decline in demand. S&P expects the debt to EBITDA ratio for Continental to increase to around 5x. As a result, S&P does not believe the company will be able to remain in compliance with the leverage covenant governing its existing bank credit facility. A covenant waiver and/or amendment from lenders will likely be required. In resolving the CreditWatch listing, S&P will monitor the company's progress toward executing a potential waiver and/or amendment to its bank facility, if needed. S&P will also revisit its assumptions regarding Continental's operating performance as part of the review. COYOTES HOCKEY: Court May Rule Against Team's Transfer to Ontario ----------------------------------------------------------------- Paul Waldie and David Naylor at Theglobeandmail.com report that legal experts said that the U.S. Bankruptcy Court for the District of Arizona could rule against Canadian billionaire Jim Balsillie in his bid to overturn the National Hockey League's rules governing relocation of the Phoenix Coyotes. As reported by the Troubled Company Reporter on May 12, 2009, the NHL has submitted papers before the Court, alleging that team owner Jerry Moyes, the chief executive officer of Swift Transportation Co., didn't have the right to file the petition and can't control the team's management. The Coyotes responded by filing an antitrust suit before the Court against the NHL, claiming that the league's "unreasonable restrictions" on relocating teams is an illegal restraint of trade. Mr. Moyes filed bankruptcy to carry out a sale of the team to Mr. Balsille, who intends to move the team to southern Ontario. According to Theglobeandmail.com, Mr. Balsillie wants to purchase the Phoenix Coyotes out of bankruptcy protection for about $212.5 million and move the club to Hamilton. The NHL, says Theglobeandmail.com, opposes the offer, as league rules prevent a team from moving within 80 kilometers of another team without permission. Theglobeandmail.com quoted Rodney Fort, a professor of sport management at the University of Michigan, as saying, "Usually when [the issue] has to do with actions by the ... owners, about the location of [the league's] own teams, the courts side with the owners." About Coyotes Hockey Glendale, Arizona-based Dewey Ranch Hockey LLC and its affiliates own the Phoenix Coyotes team and franchise in the National Hockey League. Dewey Ranch, together with affiliates Arena Management Group, LLC, Coyotes Holdings, LLC, and Coyotes Hockey, LLC, filed for Chapter 11 bankruptcy protection on May 5, 2009 (Bankr. D. Ariz. Case No. 09-09488), to implement a court-approved sale of Phoenix Coyotes under the Bankruptcy Code. The filing included a proposed sale of the franchise to PSE Sports & Entertainment, LP, which would move the franchise to southern Ontario, Canada. Thomas J. Salerno, Esq., at Squire, Sanders & Dempsey, LLP, assists the Debtors in their restructuring efforts. Dewey Ranch listed $100 million to $500 million in assets and $100 million to $500 million in debts. DAMON D HOLIWELL: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Joint Debtors: Damon D. Holiwell dba Hyheals Place of Care Clara L. Holiwell 9112 Versailles Dr Bakersfield, CA 93311 Bankruptcy Case No.: 09-14339 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court Eastern District of California (Fresno) Judge: Whitney Rimel Debtors' Counsel: T. Scott Belden, Esq. 4550 California Ave 2nd Fl Bakersfield, CA 93309-1172 Tel: (661) 395-1000 Total Assets: $1,080,618 Total Debts: $1,606,236 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/caeb09-14339.pdf The petition was signed by the Joint Debtors. DANA CORP: Bank Debt Sells at 64% Off in Secondary Market --------------------------------------------------------- Participations in a syndicated loan under which Dana Corp. is a borrower traded in the secondary market at 35.29 cents- on-the- dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 5.79 percentage points from the previous week, the Journal relates. The loan matures January 31, 2015. The Company pays 375 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's B+ rating. Participations in a syndicated loan under which Lear Corp. is a borrower traded in the secondary market at 44.78 cents-on-the- dollar during the week ended May 8, 2009, an increase of 5.38 percentage points from the previous week. The loan matures on March 29, 2012. The Company pays 250 basis points above LIBOR to borrow under the facility. The bank debt is not rated by Moody's and S&P. Participations in a syndicated loan under which Avis Budget Car Rental LLC is a borrower traded in the secondary market at 54.00 cents- on-the-dollar during the week ended May 8, 2009, an increase of 8.53 percentage points from the previous week. The loan matures April 1, 2012. The Company pays 125 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Ba3 rating and S&P's CCC+ rating. As reported in yesterday's Troubled Company Reporter, participations in a syndicated loan under which Visteon Corp. is a borrower traded in the secondary market at 24.19 cents- on-the- dollar during the week ended May 8, 2009, an increase of 3.19 percentage points from the previous week. The loan matures May 30, 2013. The Company pays 300 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Caa2 rating and S&P's B- rating. Participations in a syndicated loan under which General Motors Corp. is a borrower traded in the secondary market at 59.15 cents- on-the-dollar during the week ended May 8, 2009, a drop of 5.50 percentage points from the previous week. The loan matures November 27, 2013. The Company pays 275 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Caa2 rating and S&P's CCC rating. About Dana Corp. Based in Toledo, Ohio, Dana Corporation -- http://www.dana.com/ -- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Dana has facilities in China in the Asia-Pacific, Argentina in the Latin-American regions and Italy in Europe. The Company and its affiliates filed for chapter 11 protection on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of November 30, 2007, the Debtors listed $7,131,000,000 in total assets and $7,665,000,000 in total debts resulting in a shareholders' deficit of $534,000,000. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represented the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, served as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners served as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represented the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP, served as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC, served as counsel to the Official Committee of Non-Union Retirees. The Debtors filed their Joint Plan of Reorganization on Aug. 31, 2007. On October 23, 2007, the Court approved the adequacy of the Disclosure Statement explaining their Plan. Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York entered an order confirming the Third Amended Joint Plan of Reorganization of the Debtors on December 26, 2007. The Debtors' Third Amended Joint Plan of Reorganization was deemed effective as of January 31, 2008. Dana Corp., starting on the Plan Effective Date, operated as Dana Holding Corporation. (Dana Corporation Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on Jan. 15, 2009, Standard & Poor's Ratings Services lowered its ratings on Dana Holding Corp., including the corporate credit rating, which was lowered to 'B' from 'B+'. The ratings were also removed from CreditWatch, where they had been placed with negative implications on Nov. 13, 2008. The outlook is negative. "The downgrade reflects our view that very weak market conditions in most of its business segments in 2009 will hinder the company's post-bankruptcy restructuring efforts," said Standard & Poor's credit analyst Nancy Messer. "We expect revenues to be reduced by weak auto sales and production in North America, weak auto sales in Europe, and the U.S. recession, which has stalled the recovery of commercial truck sales. Lacking an expanding revenue base, S&P believes the benefit from Dana's ongoing initiative to optimize its manufacturing footprint will fall short of S&P's previous near-term expectations," she continued. For example, for the last three months of 2008, the seasonally adjusted annual rate of light-vehicle sales in the U.S. was below 11 million units, and S&P expects sales in 2009 to be 10 million units, 24% below 2008 actual sales. DANA CORP: Sees Up to $30MM Exposure to Chrysler, GM Collapse ------------------------------------------------------------- "We do not believe that there is substantial doubt about our ability to continue as a going concern for the next twelve months," Dana Holding Corporation declared in a recent regulatory filing with the Securities and Exchange Commission. Dana said it considered the bankruptcy filing by Chrysler LLC and a potential bankruptcy filing by General Motors Corp. Sales to GM and Chrysler approximated 6% and 3% of Dana's consolidated sales in 2008 and 5% and 4% in the first quarter of 2009. With a bankruptcy filing by these customers, Dana believes it is likely that most of its programs would be continued following bankruptcy, or, if not, the programs would be discontinued over time allowing Dana sufficient opportunity to offset many of the adverse effects. "As such, we expect the adverse effects of these bankruptcies would be limited principally to recovering less than the full amount of the outstanding receivable from these customers at the time of filing. We currently expect our exposure to be in the range of $5 million to $30 million depending on a number of factors, including the age and level of receivables at the time of their bankruptcy filings and whether we are treated as a critical supplier," Dana explained. "We expect to mitigate some of the GM exposure by participating in the GM Automotive Supplier Support Program. The United States Department of the Treasury has allocated $2,100 to the GM program to ensure timely payment on certain receivables due to eligible suppliers, including Dana." Under the program, eligible receivables approved by GM are sold to a special purpose entity that is a subsidiary of GM with the seller receiving payment immediately for a 3% fee or under "normal" terms for a 2% fee. Dana has elected the latter option. All obligations of the GM special purpose entity are fully guaranteed by Department of the Treasury. Dana received permission from lenders to participate in this GM program, as well as in a similar program that was being developed to support Chrysler suppliers. Dana said non-compliance with its loan covenants would provide lenders with the ability to demand immediate repayment of all outstanding borrowings under the amended Term Facility and the Revolving Facility. Dana said it does not have sufficient cash on hand to satisfy this demand. Dana was in compliance with debt covenants at December 31, 2008, and March 31, 2009 and, based on current forecast, it expects to remain in compliance for the next 12 months. While its ability to borrow the full amount of availability under its revolving credit facilities may at times be limited by the financial covenants, Dana believes that its overall liquidity and operating cash flow will be sufficient to meet anticipated cash requirements for capital expenditures, working capital, debt obligations and other commitments during this period. "The inability to comply with covenants, obtain waivers for non- compliance, or obtain alternative financing would have a material adverse effect on our financial position, results of operations and cash flows. In the event we were unable to meet our debt covenant requirements, we believe we would be able to obtain a waiver or amend the covenants. Obtaining such waivers or amendments would likely result in a significant incremental cost. Although we cannot provide assurance that we would be successful in obtaining the necessary waivers or in amending the covenants, we were able to do so in 2008 and we believe that we would be able to do so in 2009, if necessary," according to Dana. As of March 31, 2009, Dana had gross borrowings of $1.26 billion and $84 million of unamortized original issue discount under the amended Term Facility, no borrowings under the Revolving Facility and Dana had utilized $191 million for letters of credit. Based on borrowing base collateral of $382 million at March 31, there was potential availability at that date under the Revolving Facility of $191 million after deducting the outstanding letters of credit and assuming no reduction in availability for the defaulting lender. On May 7, 2009, Dana commenced a Dutch auction tender program to buy back up to 10% of the borrowings outstanding under the amended Term Facility. Dana anticipates that the repurchase activity under this program will be completed in May. Dana posted a net loss of $160 million on net sales of $1.21 billion for the three months ended March 31, 2009. Dana had $5.14 billion in total assets, $3.25 billion in total liabilities and $1.89 billion in equity as of March 31. A full-text copy of Dana's quarterly report is available at no charge at http://ResearchArchives.com/t/s?3cce A full-text copy of Dana's conference call presentation is available at no charge at http://ResearchArchives.com/t/s?3ccf About Dana Corp. Based in Toledo, Ohio, Dana Corporation -- http://www.dana.com/ -- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Dana has facilities in China in the Asia-Pacific, Argentina in the Latin-American regions and Italy in Europe. The Company and its affiliates filed for chapter 11 protection on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of November 30, 2007, the Debtors listed $7,131,000,000 in total assets and $7,665,000,000 in total debts resulting in a shareholders' deficit of $534,000,000. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represented the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, served as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners served as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represented the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC served as counsel to the Official Committee of Non-Union Retirees. The Debtors filed their Joint Plan of Reorganization on August 31, 2007. On October 23, 2007, the Court approved the adequacy of the Disclosure Statement explaining their Plan. Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York entered an order confirming the Third Amended Joint Plan of Reorganization of the Debtors on December 26, 2007. The Debtors' Third Amended Joint Plan of Reorganization was deemed effective as of January 31, 2008. Dana Corp., starting on the Plan Effective Date, operated as Dana Holding Corporation. (Dana Corporation Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on January 15, 2009, Standard & Poor's Ratings Services lowered its ratings on Dana Holding Corp., including the corporate credit rating, which was lowered to 'B' from 'B+'. The ratings were also removed from CreditWatch, where they had been placed with negative implications on November 13, 2008. The outlook is negative. "The downgrade reflects our view that very weak market conditions in most of its business segments in 2009 will hinder the company's post-bankruptcy restructuring efforts," said Standard & Poor's credit analyst Nancy Messer. "We expect revenues to be reduced by weak auto sales and production in North America, weak auto sales in Europe, and the U.S. recession, which has stalled the recovery of commercial truck sales. Lacking an expanding revenue base, S&P believes the benefit from Dana's ongoing initiative to optimize its manufacturing footprint will fall short of S&P's previous near-term expectations," she continued. For example, for the last three months of 2008, the seasonally adjusted annual rate of light-vehicle sales in the U.S. was below 11 million units, and S&P expects sales in 2009 to be 10 million units, 24% below 2008 actual sales. DANIEL F FLYNN: Proposes Maureen P. Steady as Bankruptcy Counsel ---------------------------------------------------------------- Daniel F. Flynn asks the U.S. Bankruptcy Court for the District of New Jersey for permission to employ Maureen P. Steady, Esq., as counsel. Ms. Steady will, among other things: -- render general legal representation of the Debtor regarding all phases of the proper administration of the estate, including advising the Debtor with respect to its powers and duties as debtor-in-possession; -- prepare applications, motions, pleadings, briefs, memoranda and other documents and reports as may be required; and -- represent the Debtor in its dealings with creditors. Ms. Steady tells the Court that she received $3,000 for prepetition services, $1,039 for filing fee and $7,000 for a retainer. Ms. Steady adds that the Debtor will provide $10,000 to supplement the retainer. Ms. Steady relates that her hourly rate is $300, while the paralegal service range from $85 - $100. Ms. Steady assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Ms. Steady can be reached at: 12000 Lincoln Drive West, Suite 208 Marlton, NJ 08053 Tel: (856) 396-0540 Fax: (609) 482-8011 About Daniel F. Flynn Ocean City, New Jersey-based Daniel F. Flynn filed for Chapter 11 on April 26, 2009 (Bankr. D. N.J. Case No. 09-20417). The Debtor listed $10 million to $50 million in assets and $1 million to $10 million in debts. DAYSTAR TECHNOLOGIES: May Have to File for Bankruptcy Protection ---------------------------------------------------------------- DayStar Technologies, Inc., said in a regulatory filing that in light of its current cash position, it may in the near term be forced to substantially curtail operations, file a voluntary petition for reorganization under the United States Bankruptcy Code, liquidate assets, and pursue other actions that could adversely affect future operations. In its Form 10-Q for the quarter ended March 31, 2009, the Company said commercialization efforts, including the completion and ramp- up of its initial module production line, require significant additional capital expenditures as well as associated continued development and administrative costs. In order to continue operations, including its development efforts utilizing its pre- production line, fully build-out its initial manufacturing line and commence commercial shipments of its product, the Company requires immediate and substantial additional capital beyond its current cash on hand. In order to address its financing needs, the Company has engaged a financial advisor to assist in securing a relationship with appropriate strategic investors or partners that can provide the funding necessary to continue the Company's operations. To date, the Company has been unable to raise additional capital or complete an agreement with an investor or strategic partner. The Company continues to seek strategic investors or partners. Given current market conditions and available opportunities, there is substantial doubt as to the Company's ability to complete a financing in the time frame required to remain in operation. A wide variety of factors relating to the Company and external conditions could adversely affect its ability to secure additional funding and the terms of any funding that it secures. The Company will require immediate and substantial additional funds beyond its current cash on hand in order to continue operations and to build-out its first production line, to commence and support commercial production as currently planned, and to expand its capacity beyond its first production line. In November 2008, the Company engaged a financial advisor to assist us in exploring select strategic transactions that can provide the funding necessary to continue its operations. Although the Company continues to seek strategic investors or partners, in light of its current cash position, the Company will in the near term be forced to curtail operations in order to conserve its remaining capital resources. A wide variety of factors relating to the Company and external conditions could adversely affect its ability to secure additional funding necessary to continue operations and the terms of any funding that the Company secures. Liquidity and Capital Resources At March 31, 2009, its cash and cash equivalents totaled $6.5 million compared to $17.1 million at December 31, 2008. The decrease in cash was primarily due to the payment of its quarterly operating expenses, payment for certain equipment on order for its initial production line and continued development, as well as leasehold improvements completed in its initial manufacturing facility in Newark, California during the first quarter of 2009. The Company is in the development stage, and as such, has historically reported net losses, including net losses of $7.7 million and $4.5 million for the three months ended March 31, 2009, and 2008, respectively. The Company anticipates incurring losses in the future, as the Company completes the build-out of its initial module manufacturing line and enters commercialization of its products, invest in research and development, and incur associated administrative and operating costs. The Company has historically financed its operations primarily from proceeds of the sale of equity securities. The Company presently does not have any bank lines of credit that provide us with an additional source of debt financing. In order to fund the costs associated with its continued development and commercialization efforts, the Company completed a registered public offering during the fourth quarter of 2007 in which the Company sold 17,250,000 shares of its common stock at $4.25 per share and generated net proceeds of approximately $68 million after deducting underwriting discounts and the fees and expenses of the offering. Upon receipt of the proceeds from the offering, the Company re-paid in full $9.2 million of existing indebtedness. The Company has used these proceeds to develop its proprietary deposition process, to build its prototype and commercial scale deposition tools, and to begin installation of its first production line. Commercialization efforts, including the completion and ramp-up of its initial module production line will require significant additional capital expenditures as well as associated continued development and administrative costs. At March 31, 2009, the Company had outstanding $10.0 million of purchase orders for equipment and improvements. Other material commitments include rental payments under operating leases for manufacturing and office space and equipment, and commitments under employment contracts with its executive officers. The Company's independent auditor's report expresses doubt about its ability to continue as a going concern, which may make it more difficult and expensive for the Company to raise additional capital. The report of its independent registered public accounting firm relating to its financial statements as of December 31, 2008, and for the year then ended, stated that there is substantial doubt about its ability to continue as a going concern. Its ability to continue as a going concern is dependent upon its ability to take advantage of raising capital through securities offerings, debt financing, or partnerships. Management is focusing on raising capital through any one or more of these options. Such opinion from its outside auditors may make it more difficult and expensive to for us to raise additional capital. If the Company are unable to obtain such financing the Company may not be able to continue its operations, which would have an adverse effect on its stock price and significantly impair its prospects. There can be no assurance that any of management's plans will be successfully implemented. Since its inception, the Company has incurred net losses, including net losses of $26.3 million and $36.1 million for the years ended December 31, 2008, and 2007, respectively, and $7.7 million for the first quarter ended March 31, 2009, and have incurred negative cash flows from operations. As a result of ongoing losses, the Company had an accumulated deficit of approximately $104.6 million as of March 31, 2009. The Company expects to continue to incur significant losses as the Company enter commercialization and expand its manufacturing capacity and may never achieve or maintain profitability. The Company expects to continue to make significant capital expenditures and anticipate that its expenses will increase to the extent the Company continues to develop its manufacturing technologies, build manufacturing lines, establish its sales and distribution network, implement internal systems and infrastructure and hire additional personnel. As the Company does not expect to become profitable until after the Company expand capacity beyond its initial manufacturing line, if ever, the Company will be unable to satisfy its obligations solely from cash generated from operations. If, for any reason, the Company is unable to make required payments under its obligations, one or more of its creditors may take action to collect their debts. If the Company continues to incur substantial losses and is unable to secure additional financing, the Company could be forced to discontinue or curtail its business operations; sell assets at unfavorable prices; refinance existing debt obligations on terms unfavorable to the Company; or merge, consolidate or combine with a company with greater financial resources in a transaction that may be unfavorable to the Company. As of March 31, 2009, the Company listed $53,014,256 in assets, $16,017,557 in debts, and $36,996,699 in total stockholders' equity. DayStar Technologies, Inc. -- http://www.daystartech.com/-- is a developer of solar photovoltaic products based on CIGS thin-film deposition technology. DIRECTV GROUP: Sued by Charter Communications Sues Over Ads ----------------------------------------------------------- The Associated Press reports that Charter Communications Inc. is suing DirecTV Group Inc. over advertisements that tell subscribers to switch TV service. According to The AP, the ads are touting Charter Communications' bankruptcy filing. The AP relates that Charter Communications alleged that DirecTV used "false and misleading" ads claiming that Charter Communications couldn't provide the latest technology, add high- definition channels or offer new exclusive programming given its financial troubles. The ads have been running in print, radio, billboards, and direct mailings to consumers in Connecticut, Illinois, Louisiana, Michigan, Missouri, Nevada, South Carolina, and Wisconsin, The AP states, citing Charter Communications. According to The AP, DirecTV spokesperson Robert Mercer said that the Company stands "by the accuracy of our advertising." Headquartered in El Segundo, California, The DirecTV Group Inc. (NASDAQ:DTV) -- http://www.DirecTV.com/-- provides digital television entertainment in the United States and Latin America. The company's two business segments, DirecTV U.S. and DirecTV Latin America, are engaged in acquiring, promoting, selling and/or distributing digital entertainment programming via satellite to residential and commercial subscribers. DirecTV Holdings LLC and its subsidiaries are a provider of direct-to- home digital television services and a provider in the multi- channel video programming distribution industry in the United States. DTVLA is a provider of DTH digital television services throughout Latin America. In January 2007, the company acquired Darlene Investments LLC's 14.1% equity interest in DirecTV Latin America, LLC. DirecTV Latin America LLC is a multinational company, which, as a result of this transaction, became a wholly owned subsidiary of the company. The DIRECTV Latin America segment provides digital direct-to-home digital television services to approximately 1.6 million subscribers in 27 countries, including Brazil, Argentina, Venezuela, and Puerto Rico. * * * As reported by the Troubled Company Reporter on May 6, 2009, Standard & Poor's Ratings Services said that its ratings on El Segundo, California-based satellite TV provider The DIRECTV Group Inc. (BB/Stable/--) were not immediately affected by the Company's announcement that it had entered into a definitive agreement with Liberty Media Corp. to combine DIRECTV Group with Liberty Entertainment Inc. According to the TCR on May 6, 2009, Fitch Ratings said that the proposed merger between DIRECTV Group and Liberty Entertainment, Inc. will not affect the ratings assigned to DIRECTV Holdings, LLC. DTVH is a wholly owned subsidiary of DTV. DTVH's Issuer Default Rating and senior unsecured debt are rated 'BB' by Fitch. Fitch currently rates DTVH's senior secured debt 'BB+'. The Rating Outlook for DTVH is Stable. DTVH had $5.8 billion of debt outstanding as of Dec. 31, 2009. FAIRPOINT COMMUNICATIONS: Bank Debt Sells at 38% Discount --------------------------------------------------------- Participations in a syndicated loan under which Fairpoint Communications is a borrower traded in the secondary market at 61.83 cents- on-the-dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 12.28 percentage points from the previous week, the Journal relates. The loan matures March 31, 2015. The Company pays 275 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B2 rating and S&P's B rating. Headquartered in Charlotte, North Carolina, FairPoint Communications, Inc., provides a full range of communications services to residential and business customers including local and long distance voice, data, Internet, television and broadband. FairPoint Communications is traded on the New York Stock Exchange under the symbol FRP. FairPoint operates 32 local exchange companies in 18 states. With roughly 1.9 million access line equivalents, FairPoint is the eighth largest telecommunications company in the United States. * * * The Troubled Company Reporter said May 11, 2009, that 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. Fitch Ratings also 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'; and $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. FORD MOTOR: Equity Offering Won't Affect S&P's 'CCC+' Rating ------------------------------------------------------------ Standard & Poor's Ratings Services said that its ratings on Ford Motor Co. (CCC+/Negative/--) and related entities are not currently affected by Ford's announcement that it plans to offer 300 million shares of common equity, which S&P estimates could result in proceeds of about $1.8 billion based upon the company's recent stock price. Ford plans to use some of the cash proceeds to fund a portion of its contributions to the postretirement health-care trust established with the United Auto Workers, instead of contributing stock. In S&P's view, the sale of common stock is mildly positive because, depending upon how much cash is retained by Ford following the contribution to the trust, the offering will somewhat reduce the danger of Ford's cash balances falling to dangerously low levels. S&P believes that, in light of very weak global auto sales, cash outflows during 2009 could eventually test the company's ability to maintain sufficient liquidity toward the latter part of 2009 or into 2010. S&P expects continued heavy cash losses in Ford's automotive operations for at least the next year. The outflows are being caused by weak auto sales in almost every market, but especially in the U.S. and Europe. S&P's ratings also reflect concerns that General Motors Corp. (CC/Negative/--) could file for bankruptcy in the coming weeks and that low production levels by many automakers broadly are risks to Ford's liquidity, given the interwoven auto sector supply base. S&P believes such events could require Ford to use some of its liquidity. S&P expects U.S. light-vehicle sales of about 9.7 million units this year, the lowest in 42 years and down 26% from 13.1 million units in 2008. S&P currently expect sales to rise to 11.2 million units in 2010, but even with an improvement, sales would still be 15% below the weak levels of 2008. The outlook for other major auto markets, including Europe, will also remain bleak, in S&P's view, until economic stabilization becomes apparent. As of the end of March 2009, Ford had $21.3 billion in cash and equivalents. Ford used $3.5 billion in cash from automotive operations in the first quarter, including personnel separation costs but excluding certain payments to its credit company. Of this amount, $1 billion was related to working capital changes. S&P expects some moderation of this negative working capital effect in 2009, although S&P does not expect a substantial benefit from working capital because S&P believes this would require significant improvement in industry demand. FRONTIER AIRLINES: Hearing on Exclusivity Extension on May 27 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York will convene a hearing on May 27, 2009, to consider approval of Frontier Airlines Holdings, Inc. and its debtor-affiliates request to further extend their exclusive periods to: (1) file a plan of reorganization through October 9, 2009; and (2) solicit and obtain acceptances of that plan through December 9, 2009. The Court previously set the deadline for the Debtors' exclusive plan filing period to June 4, 2009, and their exclusive solicitation period to August 4, 2009. Objections, if any, must be filed on or before May 18. Pursuant to Section 1121(d)(1) of the Bankruptcy Code, the Debtors have demonstrated "cause" for their request to extend the Exclusive Periods by 127 days, Damian S. Schaible, Esq., at Davis Polk & Wardwell, in New York, tells Judge Robert D. Drain. In particular, he says, the Debtors seek the Extensions to avoid the necessity of having to formulate a Chapter 11 plan prematurely and to ensure that the plan best addresses the interests of the Debtors, their employees, creditors and estates. Mr. Schaible relates that since the Petition Date, the Debtors have made excellent progress towards reorganization on a wide array of critical projects, including: (a) securing, negotiating and entering into debtor-in- possession financing sufficient for the Debtors' operations in Chapter 11; (b) amending, expanding and extending the DIP financing agreement and settling the amount of the prepetition claim of Republic Airways Holdings Inc., which is the largest prepetition claim filed against the Debtors; (c) rationalizing the Debtors' fleet and reducing their debt obligations; (d) successfully negotiating critical long-term concessionary agreements with the Frontier Airline Pilots Association, the Transport Workers Union, and the Appearance Agents and Maintenance Cleaners represented by the International Brotherhood of Teamsters; (e) successfully pursuing relief against the IBT under Section 1113 of the Bankruptcy Code and making progress on employee-related issues; (f) finalizing and filing the Debtors' schedules of assets and liabilities, income and expenditures and executory contracts and unexpired leases, as well as their statements of financial affairs; (g) establishing November 17, 2008, as the deadline for creditors to file proofs of claim, appointing a claims reconciliation agent and commencing the claims review and reconciliation process; (h) establishing a claims reconciliation process, including procedures for the classification of, and objection to, thousands of claims; (i) objecting to 477 claims, resulting in the expungement of 142 claims alleging $124,426,606 in prepetition liabilities; (j) continuing the process of analyzing hundreds of leases and executory contracts to identify those that are beneficial to the Debtors' estates and seeking to reject those that are not; (k) finding, securing, negotiating and entering into new and amended business relationships with various vendors, service providers and utilities; and (l) addressing a large number of creditor, supplier and customer inquiries. Mr. Schaible adds that as of March 2009, the Debtors achieved an operating profit for the fifth consecutive month and are continuing to make progress on their competitive cost structure. Furthermore, they have successfully implemented their branded fare structure and introduced ancillary fees that have helped offset the impact of the global recession. Mr. Schaible attributes the Debtors' progress in their Chapter 11 cases to their "good relations" with the Official Committee of Unsecured Creditors, which has been given access to the Debtors' substantial information, in order to evaluate the Debtors' businesses and plans. Based on the progress in their bankruptcy cases and the constructive tone of their negotiations with key constituencies, the Debtors believe that their prospects for ultimately proposing and filing a viable and consensual plan of reorganization are strong. However, the number and scope of issues in the Debtors' large and complex Chapter 11 cases have arisen -- including operational, financial and external market contingencies -- that must be resolved in order for the Debtors to construct, negotiate and propose a successful plan, Mr. Schaible says. "The existence of unresolved contingencies, the resolution of which will affect the Debtors' ability to propose a confirmable plan of reorganization, supports an extension of [their] Exclusive Periods," Mr. Schaible tells the Court, citing In re McLean Indus., Inc., 87 B.R. 830, 834 (Bankr. S.D.N.Y. 1987). Specifically, the Extensions are required to enable the Debtors to: (1) continue to refine and implement their business model to deliver both a more efficient cost structure and future revenue growth, so that the Debtors can compete effectively within the commercial passenger aviation industry; (2) finish the implementation of the Debtors' successful Restructuring initiatives; (3) finish the process of analyzing, rationalizing and, where appropriate, renegotiating with parties to the Debtors' executory contracts and related obligations; (4) continue the evaluation and reconciliation of the more than 1,400 proofs of claim that have been filed against the Debtors; (5) structure, secure and negotiate exit financing sufficient to permit emergence from Chapter 11 and a successful and sustained operations post-emergence; and (6) develop a plan of reorganization reflecting and effectuating the Debtors' initiatives and providing value to their stakeholders. "The fact that the Debtors have sufficient liquidity to pay their postpetition debts as they come due suggests that the Exclusive Periods Extension will not jeopardize the rights of postpetition creditors," Mr. Schaible assures Judge Drain. Rather than requesting for the Extensions as a negotiation tactic or as a means of exerting leverage over any group of creditors, the Extensions will give the Debtors sufficient time to develop a Chapter 11 plan that maximizes creditor recoveries and seek to build consensus around that plan, Mr. Schaible clarifies. About Frontier Airlines Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provides air transportation for passengers and freight. It operates jet service carriers linking Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, as well as provide service from other non-hub cities, including service from 10 non-hub cities to Mexico. Frontier Airlines and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008, (Bankr. S.D. N.Y. Case No. 08-11297 thru 08-11299.) Benjamin S. Kaminetzky, Esq., and Hugh R. McCullough, Esq., at Davis Polk & Wardwell, represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. Bankruptcy Creditors' Service, Inc., publishes Frontier Airlines Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Frontier Airlines Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GASTAR EXPLORATION: Moody's Confirms 'Caa3' Senior Secured Rating ----------------------------------------------------------------- Moody's Investors Service confirmed Gastar Exploration USA, Inc.'s senior secured note rating at Caa3 (LGD 4, 53% from LGD 3, 43%). In addition, Moody's also confirmed Gastar's Caa3 Corporate Family Rating and Probability of Default rating. The Speculative Grade Rating remains SGL-4 and the outlook is negative. This concludes Moody's review for possible downgrade, which was initiated on November 18, 2008 due to Moody's concern regarding an impending covenant violation per its bank facility and external funding needs. Moody's has concluded its review as Gastar successfully obtained a waiver from its bank group for its current ratio financial covenant through 2009, removing the immediate constraint on its liquidity profile. Further alleviating the near term pressure and demonstrating an ability to obtain financing, the company successfully obtained a $25 million first lien term loan to help fund its operating and capital expenditure program in February of 2009. The negative outlook reflects the near term refinancing risk of Gastar's $30 million convertible subordinated debentures which are due in November 2009. If the company fails to arrange a refinancing or payoff of the convertible subordinated debentures, instead of automatically extending to 2010, its revolving credit facility is scheduled to mature October 15, 2009. The credit facility had $16.9 million outstanding at March 31, 2009 and is amortizing $1 million a month. The outlook also reflects Gastar's reliance on additional external financing to fund the remaining $50 million of capex during 2009 and working capital needs. Moody's last rating action on Gastar dates from November 18, 2008, at which time Moody's downgraded Gastar's notes to Caa3 from Caa2. Gastar Exploration USA, Inc. is an independent E&P company headquartered in Houston, Texas. GENERAL GROWTH: Court Approves $400MM DIP Loan From Farallon ------------------------------------------------------------ General Growth Properties Inc. won court approval of a $400 million bankruptcy loan from a group led by Farallon Capital Management LLC. General Growth also obtained permission to use cash on hand to fund its operations, Bloomberg's Cristopher Scinta reported. General Growth said in a news release that it expects the DIP Financing to close tomorrow, May 15, 2009. The DIP Financing will be used to refinance certain pre-petition secured indebtedness and provide additional liquidity to the Debtors during the Chapter 11 process. At the May 8 hearing, General Growth presented a proposal to obtain $400 million of DIP financing from a group of holders of unsecured obligations, led by Farallon. The Farallon loan replaces the $375 million committed by Pershing Square Capital Management, L.P., which owned 24% of General Growth's equity before the company filed for bankruptcy. According to Bloomberg's Bill Rochelle, Judge Gropper was unable to decide on the competing proposals of Pershing Square and Farallon at the conclusion of the May 8 hearing. Judge Gropper, according to Reuters, delayed his ruling to give him and creditors more time to consider the competing DIP loan offers. Bloomberg's Daniel Taub said May 12 that Farrallon, et al., will be providing the DIP loan to General Growth. William Ackman, head of Pershing, said he is satisfied with the outcome regardless if his group didn't win the bidding to provide the DIP loan. He said he's pleased with the Farrallon loan because it provided the mall owner the best terms. According to General Growth, the new DIP Loan Lenders and their loan commitments are: Lender Committed Amount ------ ---------------- Farallon Capital Management, L.L.C. $210,000,000 Luxor Capital Group 110,000,000 Canpartners Investments IV, LLC 25,000,000 Perry Principals Investments LLC 25,000,000 Whitebox Combined Partners LP 11,000,000 Whitebox Hedged High Yield Partners LP 6,000,000 Whitebox Convertible Arbitrage Partners LP 5,000,000 Pandora Select Partners LP 2,000,000 Whitebox Special Opportunities Fund Series B 1,000,000 Delaware Street Capital Master Fund, L.P. 5,000,000 ---------------- Total DIP Commitments $400,000,000 Prior to the May 8 hearing, the Debtors' proposed counsel, Marcia L. Goldstein, Esq., at Weil, Gotshal & Manges, LLP, in New York, said that Farallon, et al., offered improved terms, including: * Eliminating the proposed warrant to acquire up to 4.9% of the equity in the Debtors pursuant to any plan of reorganization; * $25 million in additional borrowing capacity; * Increasing the term of the loan by six months, from 18 months to 24 months; * Adding to Debtors' option to convert the Revised DIP Loan into equity at emergence another option to convert the Revised DIP Loan to post-emergence debt; and * Lower interest rate and lower overall cost of borrowing. Pershing Square Capital Management, L.P., howeve,r submitted with the Court on May 8, a revised senior secured debtor-in-possession credit, security and guaranty agreement, which, among others, increases the finance firm's DIP commitments from $375 million to $400 million. Under the revised agreement, Pershing Square's affiliates will commit to extend to the Debtors these amounts: PS Green Holdings, LLC $142,995,000 PS Green Inc. 257,005,000 The Debtors' proposed counsel, Gary T. Holtzer, Esq., at Weil, Gotshal & Manges LLP, in New York, pointed out that the salient differences between the DIP Agreement dated May 6, 2009, entered into with the group of bondholders and Pershing's Revised DIP Agreement are: -- the Second Revised DIP Agreement contains delayed draw provisions; -- the Second Revised DIP Agreement provides for no LIBOR floor; -- the Second Revised DIP Agreement provides for a 4.0% exit fee, as opposed to 5.75% for the Revised DIP Agreement; -- the Second Revised DIP Agreement affords the Debtors the option to put equity to the lenders up to any amount of the DIP loan that the Debtors have repaid; -- the Second Revised DIP Agreement provides for a rights offering in connection with a plan of reorganization that causes the DIP to automatically convert to equity on same terms as rights offering; and -- the Second Revised DIP Agreement provides for a warrant, exercisable, as reorganized, for up to 4.9% of the outstanding capital stock of General Growth Properties, Inc. for a period of 3-1/2 years. The Revised Pershing Agreements still contemplates the issuance of each Grantor to PS Green Holdings warrants to acquire, upon exercise (i) with respect to the General Growth Properties, Inc., 4.9% of each class or series of Equity Securities of the General Partner, and (ii) with respect to any Grantor other than GGPI, 4.9% of any class of Equity Securities of that Grantor. The Warrants issued to PS Green Holdings will not be required to be issued in respect of Equity Securities issued under any employee benefit plan approved by a majority of the Board of Directors of GGPI. A full-text copy of the revised agreement is available for free at http://bankrupt.com/misc/GenGrowth_2ndRevDIPAgr.pdf A blacklined copy of the Revised Pershing DIP Agreement versus the Bondholder DIP Agreement is available for free at: http://bankrupt.com/misc/GenGrowth_Blacklined2ndDIPAgr.pdf About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. (NYSE:GGP) -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self-administered and self-managed real estate investment trust. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D. N.Y., Case No. 09- 11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of Dec. 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL GROWTH: BofA Seeks to Enforce Lien on $721MM Claim ---------------------------------------------------------- Bank of America, National Association, as trustee for the registered certificate holders of Bear Stearns Commercial Mortgage Securities, Inc., Commercial Mortgage Pass-through certifications, notified the Court that the Trust has secured claims, plus interest and legal costs and expenses, secured by a valid, perfected, first priority lien in these properties owned and operated by the Debtors: Secured Claim Property ------------- -------- $33,109,815 El Paso County, Colorado known as Austin Bluffs Plaza $56,601,774 San Joaquin County, California, known as West Valley Mall $196,000,000 Boone County, Missouri, known as Columbia Mall $240,164,438 Cuyahoga County, Ohio, known as Beachwood Place Mall $196,000,000 Champaign County, Illinois, known as Market Place Shopping Center BofA says it served the Notices in lieu of seizure of the property or other action, in the event that applicable law requires the Trust to seize the Debtors' rents, issues, profits and revenues, to commence an action, or to take other steps to perfect its security interest in or lien upon said rents, issues, profits and revenues. BofA adds that the rents, issues, profits and revenues derived from the Properties constitute the Trust's cash collateral pursuant to Section 363 of the Bankruptcy Code. About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. (NYSE:GGP) -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self-administered and self-managed real estate investment trust. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D. N.Y., Case No. 09- 11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of Dec. 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL GROWTH: Court Bars Utility Cos. From Altering Service ------------------------------------------------------------- Judge Allan Gropper of the U.S. Bankruptcy Court for the Southern District of New York granted the request of General Growth Properties and its affiliates to: (i) prohibit the Utility Companies from altering, refusing, or discontinuing service to, or discriminating against, the Debtors, solely on the basis of the Chapter 11 cases, a debt that is owed by the Debtors for services rendered prepetition, or an account of any perceived adequacy of the Debtors' proposed adequate assurance; (ii) approve their proposed adequate assurance for postpetition utility services; and (ii) establish procedures for resolving any objections by the Utility Companies. Fourteen groups of companies providing utility services to the Debtors objected to the Motion. Except as to the Objecting Utility Companies, Judge Gropper held that the Debtors' proposed Adequate Assurance satisfies the requirements under Section 366. The Objecting Utility Companies are: * Jacksonville Electric Authority * Central Maine Power Company * PacifiCorp * Alabama Power Company and Nevada Power Company * AT&T, and AT&T Mobility LLC * Direct Energy Business, LLC * The Electric Power Board of Chattanooga * Idaho Power Company * Trigen-Boston Energy Corp., Trigen-Baltimore Energy Corp. and Trigen-Las Vegas Energy Company, LLC * Constellation NewEnergy, Inc. and Constellation NewEnergy - Gas Division, LLC, * Constellation Energy Projects & Services Group, Inc. formerly known as Constellation Energy Source, Inc. * Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy New Orleans, Inc., Energy Texas, Inc. and Entergy Arkansas, Inc. * American Electric Power, Arizona Public Service, Baltimore Gas & Electric Company, Florida Power Corporation doing business as Progress Energy Florida, Salt River Project, New York State Electric and Gas Corporation, Southern California Edison Company, Consolidated Edison Company of New York, Inc., Duke Energy Carolinas, LLC, Virginia Electric and Power Company doing business as Dominion Virginia Power, The East Ohio Gas Company doing business as Dominion East Ohio, The Cleveland Electric Illuminating Company, Toledo Edison Company, Southwest Gas Corporation, Georgia Power Company, The Connecticut Light and Power Company, Commonwealth Edison Company, PECO Energy Company, Exelon Energy, Public Service Electric and Gas Company and DTE Energy Company * Public Service Company of New Mexico and New Mexico Gas Company Most of the Objecting Utilities argued that the proposed adequate assurance payment is inadequate. Thirty-five of the Objecting Utilities asked the Court for these cash deposits as adequate assurance of payment: Utility Cash Deposit ------- ------------ Trigen Boston $49,707 Trigen Baltimore 25,190 Trigen-LV 489,652 JEA 478,000 Central Maine Power 116,787 PacifiCorp 152,000 Alabama Power 97,035 Nevada Power 123,210 AT&T and AT&T Mobility 1,452,700 Direct Energy Business 1,280,048 American Electric 265,779 Baltimore Gas 852,331 Consolidated Edison 1,398,385 Commonwealth Edison 259,677 PECO Energy 242,640 Dominion Virginia 571,237 Dominion East 112 Duke Energy 199,590 Georgia Power 162,930 Toledo Edison 42,288 Cleveland Electric 118,978 New York State Electric 11,520 Progress Energy 422,740 Salt River Project 18,673 Southern California Edison 261,500 Southwest Gas 101,545 Public Service Energy 510,420 DTE Energy 855,994 Chattanooga Electric Power Board 53,863 Entergy Entities 1,120,250 Idaho Power 92,741 Constellation Energy Projects 211,774 Public Service 291,225 New Mexico Gas 26,764 JEA and Entergy Entities asserted that, contrary to the Motion, security deposits are not returned to the utility customer until service is terminated. Central Maine and American Electric Power said the Motion seeks to levy upon them responsibilities not imposed by bankruptcy statutes and which, if not properly and timely undertaken, would result in a waiver of a utility's rights under Section 336 of the Bankruptcy Code. The Entergy Entities notified the Court that, pursuant to Rules 30(b)(6) and 7030 of the Federal Rules of Civil Procedure, they have taken the oral deposition of the Rule 30(b)(6) designee of the Debtors on May 7, 2009. The Entergy Entities ask the Debtors to produce certain documents, a list of which is available for free at http://bankrupt.com/misc/GenGrowth_DocumentRequest.pdf PacifiCorp said the Debtors provided inadequate notice given the number of service accounts of PacifiCorp. Alabama Power and Nevada Power pointed out that the Motion is flawed because the Debtors propose to furnish the proposed deposit only to those utilities that ask for it. The AT&T Entities assured the Court that the Debtors' liquidity would not be adversely affected if the Debtors were required to post a deposit or prepay monthly services. If the Debtors do contest, the AT&T Entities ask the Court to implement a procedure by which disputes are resolved in an expedited manner. Direct Energy said the Motion excluded it as utility provider for Debtor Spring Hill Mall LLC. To the extent that the same Spring Hill is identified in the Motion, Direct Energy demands adequate assurance of payment with respect to. The Constellation NewEnergy Entities asked the Court to enter an order determining that they are not "utilities" within the meaning of Section 366. The Constellation Entities also asked the Court to direct the Debtors to continue performing their prepetition obligations prior to termination of their agreements. Moreover, the Constellation NewEnergy Entities asked the Court for adequate assurance of payment. Pursuant to a consent order, the Court authorized Constellation Entities to file under seal certain agreements with Constellation Entities' objections. Public Service asked the Court to direct the Debtors to correct the Utility List to (i) add New Mexico Gas as a utility company and (ii) state the utility services provided by Public Service and New Mexico Gas. Pursuant to Section 366(c)(2) of the Bankruptcy Code, a utility may alter, refuse or discontinue a debtor's utility service if the utility does not receive from the debtor or the trustee within 30 days of the Petition Date adequate assurance of payment for postpetition utility services. Section 366(c)(1) provides that assurance of payment of postpetition charges may consist of (i) cash deposit; (ii) letter of credit; (iii) a certificate of deposit; (iv) a surety bond; (v) a prepayment of utility consumption; or (v) another form of security that is mutually agreed on between the utility and the debtor The Debtors' proposed counsel, Marcia L. Goldstein, Esq., at Weil, Gotshal & Manges LLP, in New York, said uninterrupted Utility Services is critical to the Debtors' business operations. Any interruption in Utility Services to the Debtors' shopping centers and other properties would have a material adverse impact on the Debtors' business operations, she stresses. Moreover, the Debtors believe that there are few, if any, defaults or arrearages to their undisputed invoices for prepetition Utility Services, other than payment interruptions that may be caused by their bankruptcy. The Debtors intend to pay all postpetition obligations owed to the Utility Companies in a timely manner and have $140 million of cash on hand. In addition, the Debtors told the Court that given their postpetition secured financing, they will have sufficient funds to make postpetition payments to Utility Companies. For the last 12 months, the Debtors have, on average, paid $7.1 million per two week period on account of Utility Services. Debtors Address Objections The Debtors' proposed counsel, Gary T. Holtzer, Esq., at Weil, Gotshal & Manges LLP, in New York, argued that none of the Objections are supported by the case law or the facts of the Debtors' Chapter 11 cases. He said despite the Debtors' efforts, many of the Objecting Utility Parties assert that they should have the unfettered right based upon their reading of Section 366 to determine what constitutes adequate assurance and that the Motion's proposed procedures violate those rights. Given the size and complexity of the Debtors' Chapter 11 cases, requiring the Debtors to reach agreements with each and every Utility Company within the first 30 days of their Chapter 11 cases, or else face the risk that the Utility Companies may arbitrarily decide to terminate services, is patently unreasonable and unworkable, Mr. Holtzer asserted. To avoid this scenario, the U.S. Congress, he said, provided that the courts may order the modification of amounts demanded by utility provides. Mr. Holtzer argued that nothing in Section 366(c) prevents a debtor from proposing an amount of adequate assurance or from asking the court to determine the amount of adequate assurance. He added that well-established precedent makes clear that "adequate assurance" is not the same as "complete assurance" or "a guaranty of payment" and only refers to the assurance as is reasonable under the facts and in light of the risks presented. Nowhere in the revised statutory language is there a suggestion that utilities are entitled to complete assurance, he pointed out. Mr. Holtzer assured the Court that the Objecting Utility Companies are not facing an unreasonable risk of nonpayment when the Debtors have positive cash flow and are continuing to operate as a going concern. Pursuant to the Debtors' Cash Collateral and DIP Financing Motions, Mr. Holtzer said there will be sufficient funds available to permit the Debtors to pay the Utility Companies for postpetition services in a timely manner. For the reasons stated, the Debtors asked the Court to overrule the Objections in their entirety, and grant the Motion. Court Rules on Motion With respect to the Objecting Utility Companies, Judge Gropper said the Motion and the objections are resolved pursuant to a separate agreement between the Debtors and each Objecting Utility Company, except the Trigen Entities and the Constellation NewEnergy Entities, for provision of adequate assurance, which agreement is approved by the Utility Order. Judge Gropper ruled that the Utility Order will not apply to the Trigen Entities as their joint objection has been continued by agreement of the Trigen Entities and the Debtors until a later date. In the interim, the Trigen Entities will continue to provide Utility Services to the Debtors in the ordinary course of the Debtors' business pending settlement of the objection. Judge Gropper added that the Motion is withdrawn as to the Constellation NewEnergy Entities as they are not "utilities" as the term is defined under Section 366. Nothing in the Utility Order will alter or affect the agreements or relationships between the Debtors and the Constellation NewEnergy Entities. An updated list of the Debtors' Utility Companies as of May 11, 2009, is available for free at: http://bankrupt.com/misc/GenGrowth_UpdatedUtilityServiceList.pdf About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. (NYSE:GGP) -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self-administered and self-managed real estate investment trust. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D. N.Y., Case No. 09- 11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of Dec. 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL GROWTH: NYSE Delists Common Stock From Trading ------------------------------------------------------ New York Stock Exchange Inc. filed a Form 25 notifying the U.S. Securities and Exchange Commission of the removal from listing or registration under Section 12(b) of the Securities and Exchange Act of 1934 of General Growth Properties, Inc.'s common stock on May 11, 2009. Paras Madho, director of the NYSE, relates that NYSE has complied with its rule to strike General Growth's common stock from listing or registration on the NYSE. NYSE Regulation, Inc., said on April 16, 2009, that it determined that the common stock of General Growth should be suspended immediately. About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. (NYSE:GGP) -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self-administered and self-managed real estate investment trust. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D. N.Y., Case No. 09- 11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of Dec. 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL GROWTH: Parties Balk at Bid to Use Cash Collateral ---------------------------------------------------------- Several parties object to General Growth Properties' bid to use their mortgage lenders' cash collateral. As reported by the Troubled Company Reporter on April 21, 2009, the Debtors obtained interim authority from Judge Allan Gropper of the U.S. Bankruptcy Court for the Southern District of New York to utilize from the Petition Date until May 8, 2009, the cash collateral securing numerous mortgage lenders. Most of the Debtors' cash needs are met by collection of rents from tenants at their shopping centers and other properties. Without use of cash collateral, the Debtors will be unable to manage and pay the expenses of continued operation of their properties, Marcia Goldstein, Esq., at Weil, Gotshal & Manges LLP, in New York, had said. The Debtors seek to use Cash Collateral in an amount that is to be consistent with the expenditures described in their 13-Week Projection, a full-text copy of which is available for free at http://bankrupt.com/misc/gengrowth13weekbudget.pdf Approximately $209 million of Cash Collateral is expected to be used during the period from the Petition Date through May 8, 2009, and the Debtors expect to have receipts in the amount of approximately $211 million during that period, Ms. Goldstein said. (a) Ivanhoe Capital LP Ivanhoe Capital complains that the Debtors' motion appear to propose using Ivanhoe's cash collateral without providing any adequate protection. While Ivanhoe Capital believes the Debtors' intent is to carve out its cash collateral from the cash collateral that the Debtors seek permission to use, the Debtors' proposed Revised Final DIP Order does not reflect this intention, Ivanhoe points out. Ivanhoe Capital relates that during the cash collateral interim hearing, the Debtors explained that the inclusion of Ivanhoe's cash collateral was in error and have now removed Ivanhoe from the Property Lenders and adequate protection lenders, which resulted to Ivanhoe's removal from the parties entitled to adequate protection while leaving its cash collateral in the cash collateral the Debtors seek to use and encumber. Ivanhoe asks the Court to deny the Motion unless it is ordered that (i) the cash collateral that the Debtors are authorized to use, or authorized to pledge as collateral for DIP financing or as adequate protection, does not include GGPLP shares or GGPLP Share Distributions, and (ii) to the extent that GGP Ivanhoe JV makes any distributions on its common stock, Ivanhoe Equities will receive its 49% share of those distributions, and GGPLP's 51% share will be paid to Ivanhoe Capital as adequate protection and applied to the interest and principal on Ivanhoe Capital's loan. (b) Deutsche Bank Trust Company Americas In a surreply, Deutsche Bank, as administrative agent for lenders to Debtors Fashion Show Mall, LLC, and Shoppes at Palazzo, points out that disrupting the existing cash management system would jeopardize the future successful reorganization of the Fashion Show and Palazzo Debtors, and unduly prejudice their creditors, including the Agents -- by stripping away cash currently being applied for the sole benefit of those estates, and making it available to support the entirely unrelated business activities, working capital needs, and credit obligations of affiliates that provide no tangible services or benefits to the estate. Deutsche Bank insists that the lien package offered by the Debtors fails to provide the Fashion Show and Palazzo lenders with adequate protection against diminution in the value of their cash collateral. Deutsche Bank stresses that the proposed lien on cash concentrated in a centralized account maintained under the Debtors' Centralized Cash Management System does not constitute the "indubitable equivalent" of the Fashion Show and Palazzo Lenders' interest in the cash collateral at the Fashion Show property level. As to the second lien on Goldman Properties, Deutsche Bank complains that the Debtors have offered no evidence of the value of these assets, either in themselves or net of the first lien to secure the DIP Loan, and so there is no basis for the Court to conclude that a "silent second lien" is an appropriate substitute for sequestered cash and principal amortization. Accordingly, Deutsche Bank asks the Court to deny the Motion. James Rolison filed a supplemental declaration in support of Deutsche Bank's Surreply, a full-text copy of which is available for free at http://ResearchArchives.com/t/s?3caf (c) ING Clarion Capital Loan Services, LLC In furtherance of ING's previous objection, Stephen Baines filed a declaration, a full-text copy of which is accessible for free at http://ResearchArchives.com/t/s?3cb0 (d) Bank of America Job Warshaw amended his previous declaration in support of Bank of America, National Association's Objection. The Amended Declaration is accessible for free at: http://ResearchArchives.com/t/s?3cb1 (e) Northwestern Mutual The Northwestern Mutual Life Insurance Company, a secured lender to Debtors Rouse SI Shopping Center, LLC, and Lansing Mall Limited Partnership, does not object to the Debtors' use of cash collateral provided that: (i) rents and other funds generated from Northwestern Real Property Collateral should be used to pay all taxes, insurance and other charges associated with Northwestern Real Property Collateral on a timely basis; and (ii) the Court will confirm that Northwestern is an "adequate protection party" and is receiving the protections accorded to the Adequate Protection Parties in connection with the use of its cash collateral. Northwestern Mutual reserves all rights to oppose the Debtors' continuing use of cash collateral if it determines that its interests in the Staten Island Collateral or the Lansing Collateral are not adequately protected. About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. (NYSE:GGP) -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self-administered and self-managed real estate investment trust. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D. N.Y., Case No. 09- 11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of Dec. 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL GROWTH: Wells Fargo Seeks to Enforce Lien on $67MM Claim ---------------------------------------------------------------- Wells Fargo Bank, N.A., as trustee for registered holders of J.P. Morgan Chase Commercial Mortgage Securities Corp., Mortgage Pass- through Certificates notifies the Court that the Trust has a secured claim for $67,086,807 secured by a valid, perfected, first priority lien on and security interest in Debtor Collin Creek Mall L.P.'s real property and improvements located in Collin County, Texas, known as Collin Creek Mall. Wells Fargo files the notice in lieu of seizure of property or other action, in the event that applicable law requires the Trust to seize the Debtors' rents, issues, profits and revenues, to commence an action, or to take other steps to perfect its security interest in or lien upon the rents, issues, profits and revenues. Wells Fargo says the rents, profits and revenues derived from the Property constitutes the Trust's cash collateral pursuant to Section 363 of the Bankruptcy Code. About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. (NYSE:GGP) -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self-administered and self-managed real estate investment trust. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D. N.Y., Case No. 09- 11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of Dec. 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL MOTORS: Will Warn 1,000 Underperforming Dealers ------------------------------------------------------- Sharon Terlep at Dow Jones Newswires reports that General Motors Corp. will inform at least 1,000 auto dealers by Friday that their businesses are considered underperforming. Dow Jones relates that GM is trying to cut about 2,600 dealerships by 2010 as part of a downsizing ordered by the U.S. government. According to Dow Jones, GM spokesperson Susan Garontakos said that the Company has completed an evaluation of its dealer network that determined which dealerships it should let go and which should remain. GM to Start Importing Vehicles From China Josh Mitchell at The Associated Press reports that GM will begin importing 17,335 Chinese-built vehicles into the U.S. in 2011 to save on manufacturing costs, and could increase that number to more than 38,000 in 2012 and more than 53,000 in 2013. GM, says The AP, makes vehicles in its Shanghai General Motors factory for sale in Asia. The AP states that imports from other countries, including South Korea, Japan, and Mexico, would also increase. GM, says The AP, is planning to eliminate about 21,000 manufacturing jobs in the U.S. 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. GENTA INC: Says Funds Won't Last After June, Warns of Bankruptcy ---------------------------------------------------------------- Genta Incorporated said it currently projects that it will run out of funds in June 2009 absent additional funding. Moreover, the Company does not have any additional financing in place. If the Company is unable to raise additional funds, it could be required to reduce its spending plans, reduce its workforce, license or sell assets or products it would otherwise seek to commercialize on its own, or file for bankruptcy. There can be no assurance that the Company can obtain financing, if at all, on acceptable terms. Genta said its recurring losses and negative cash flows from operation raise substantial doubt about its ability to continue as a going concern. Early this week, Genta reported a net loss of $11.1 million, or $0.01 per share, for the first quarter of 2009, compared with a net loss of $9.7 million, or $0.29 per share, for the first quarter of 2008. Research and development expenses were $2.3 million for the three months ended March 31, 2009, compared with $6.4 million for the three months ended March 31, 2008. Part of this decline is due to the Company's recognition of $2.5 million in license payments for tesetaxel in March 2008. In addition, the company had lower research and development expenses in 2009, primarily due to lower payroll costs as a result of reductions in headcount in April and May 2008. Selling, general and administrative expenses were $2.2 million for the three months ended March 31, 2009, compared with $3.6 million for the three months ended March 31, 2008. This decrease was primarily due to lower payroll costs, resulting from the two reductions in workforce and lower office rent, resulting from the termination of a lease for one floor of office space in May 2008. In June 2008, the Company issued $20 million of senior secured convertible notes, issued its private placement agent a warrant to purchase 40,000,000 shares of Genta common stock and incurred a financing fee of $1.2 million. The deferred financing costs, including the financing fee and the issuance of the warrant, are being amortized over the two-year term of the convertible notes. At the time the notes were issued, the Company recorded a debt discount (beneficial conversion) relating to the conversion feature in the amount of $20.0 million. The resultant debt discount is being amortized over the term of the notes through their maturity date. The amortization of deferred financing costs and debt discount was $6.3 million for the three months ended March 31, 2009. During the first three months of 2009, cash used in operating activities was $4.3 million compared with $6.2 million for the same period in 2008, reflecting the reduced size of the Company. At March 31, 2009, the Company had cash and cash equivalents totaling $598,000, compared with $4.9 million at December 31, 2008. At March 31, 2009, Genta had $7.13 million in total assets, $11.0 million in total current assets, $6.6 million in total long- term liabilities, $9.51 million in working capital deficiency, and $10.5 million in stockholders' deficit. On April 2, 2009, the Company entered into a securities purchase agreement with certain accredited institutional investors to place up to $12 million of senior secured convertible notes -- 2009 Notes -- and corresponding warrants to purchase common stock. The Company closed on approximately $6 million of such notes and warrants on April 2, 2009. The 2009 Notes bear interest at an annual rate of 8% payable semi- annually in other senior secured convertible promissory notes to the holder, and will be convertible into shares of the Company's common stock at a conversion rate of 500,000 shares of common stock for every $1,000.00 of principal amount outstanding. In addition, the 2009 Notes include certain events of default, including a requirement that the Company effect a reverse stock split of its Common Stock within 105 days of April 2, 2009. The notes and warrants are convertible into approximately 3.9 billion shares. There are currently not enough shares of Common Stock authorized under the Company's certificate of incorporation to cover the shares underlying the 2009 Notes and warrants and the 2008 Notes. At present, the Company has approximately 3.4 billion shares outstanding. A special meeting of the Company's stockholders will be held on May 27, 2009. The Company has recommended to its stockholders that they provide authorization to the Company's Board of Directors to effect a reverse split in any ratio from 1:2 to 1:100. The terms of the 2009 Notes enable noteholders, at their option, to purchase additional notes with similar terms. A full-text copy of Genta's quarterly report is available at no charge at http://ResearchArchives.com/t/s?3cd2 About Genta Genta Incorporated -- http://www.genta.com/-- is a biopharmaceutical company with a diversified product portfolio that is focused on delivering innovative products for the treatment of patients with cancer. Two major programs anchor the Company's research platform: DNA/RNA-based Medicines and Small Molecules. Genasense(R) (oblimersen sodium) Injection is the Company's lead compound from its DNA/RNA Medicines program. The leading drug in Genta's Small Molecule program is Ganite(R) (gallium nitrate injection), which the Company is exclusively marketing in the U.S. for treatment of symptomatic patients with cancer related hypercalcemia that is resistant to hydration. The Company has developed G4544, an oral formulation of the active ingredient in Ganite, which has recently entered clinical trials as a potential treatment for diseases associated with accelerated bone loss. The Company is also developing tesetaxel, a novel, orally absorbed, semi-synthetic taxane that is in the same class of drugs as paclitaxel and docetaxel. Ganite and Genasense are available on a "named-patient" basis in countries outside the United States. GEORGIA GULF: Inks Forbearances With Noteholders Through June 15 ---------------------------------------------------------------- Georgia Gulf Corporation has entered into agreements with the holders of its 9.5% Senior Notes due 2014 and 10.75% Senior Subordinated Notes due 2016 comprising the requisite percentages thereof to ensure that such indebtedness may not be accelerated under the indentures for such notes prior to June 15, 2009 due to $34.5 million of interest payments due April 15, 2009 under such notes being withheld by the Company. The requisite holders of the Company's 7.125% Senior Notes due 2013 have provided a similar agreement. These forbearance agreements were entered into with over 84 percent, 79 percent and 53 percent of the holders of the Company's 2014 senior notes, 2016 senior subordinated notes and 2013 senior notes, respectively. All three of the notes issuances are the subject of previously announced private exchange offers. Upon expiration of these forbearances on June 15, 2009, an acceleration of indebtedness under any issue of the notes would constitute cross defaults under the Company's other note issues and its senior secured credit facility, permitting the holders of such debt to accelerate. In the event of any such acceleration, the Company would be required to immediately explore alternatives which could include a potential reorganization or restructuring under the bankruptcy laws. The Company also has extended the early participation deadline and the expiration date for the exchange offers until 12:00 midnight, New York City time June 1, 2009. The exchange offers provide for the exchange of the three issues of outstanding 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 June 1, 2009, unless extended. As of May 13, 2009 approximately $18.8 million, $17.9 million and $150 thousand of the $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 (as defined below) from Global Bondholder Services Corporation, the information agent, by calling (212) 430-3774 or toll free at (866) 873-7700. 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 the 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. As reported by the Troubled Company Reporter, Georgia Gulf extended the early participation deadline and the expiration date for its private exchange offers 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. 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. GLOBE MANUFACTURING: 11th Cir. Examines Ordinary Course Defense --------------------------------------------------------------- WestLaw reports that payments that a Chapter 11 debtor made, during the 90-day preference period, to a contractor that had installed a commercial climate control system in the debtor's plant were not shown to be ordinary between the parties. The parties had no prior course of dealing with each other sufficient to establish the ordinariness of payments, and the payments were made roughly one month after the due dates specified in the parties' contract. Accordingly, the contractor could not successfully assert an "ordinary course of business" defense to the trustee's preference claims. In re Globe Manufacturing Corp., --- F.3d ----, 2009 WL 1272416 (11th Cir.). Established in 1945, Globe Manufacturing Corp. produces Glospan(R) and Cleerspan(R) Spandex Performance Fibers and is a premier worldwide spandex fiber supplier. As previously reported, an involuntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code was filed on December 20, 2000, in Boston, Massachusetts, by a group of holders of Globe's Senior Subordinated Notes due 2008. On January 12, 2001, the Massachusetts Bankruptcy Court dismissed the bankruptcy case. On January 13, 2001, the Company filed a voluntary petition under Chapter 11 in Alabama and Globe entered voluntary bankruptcy as a debtor-in-possession. Todd Snyder at Rothschild Inc. helped Globe orchestrate a sale of its assets to RadiciSpandex Corp., a subsidiary of the Radici Group based in Italy in early 2001 under bankruptcy court supervision. GREENBRIER HOTEL: Court to Consider Case Dismissal May 19 --------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Virginia (Richmond) will convene a hearing on May 19 to consider a bid to dismiss Greenbrier Hotel Corp's Chapter 11 case, Bloomberg's Bill Rochelle said. Greenbrier Hotel said last week that its non-bankrupt holding company was purchased by West Virginia businessman James C. Justice II. Mr. Justice purchased the Greenbrier resort and 80% of The Greenbrier Sporting Club for $20 million. According to Mr. Rochelle, since all third-party debt will be paid in full, the hotel says that remaining in Chapter 11 only adds expense and drives away customers while providing no practical benefit. Greenbrier entered Chapter 11 in March to carry out a sale to Marriott International Inc. Mr. Justice agreed to return Marriott's deposit and pay the breakup fee owed to Marriott, Bloomberg stated. The dismissal motion says the breakup fee is the only damages that Marriott may seek as a consequence of not being able to complete the purchase. Mr. Justice agreed to maintain operations for at least two years. He also acquired the $91 million unsecured debt the hotel owes to its previous owner, CSX Corp. For its part, CSX assumed the hotel's pension obligations. Greenbrier has no secured debt. 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. GREGORY DAILY: Files for Bankruptcy After $300MM Verdict -------------------------------------------------------- Gregory S. Daily, Chairman and Chief Executive Officer of iPayment, Inc., filed for personal bankruptcy protection under Chapter 11 of the United States Bankruptcy Code in Nashville, Tennessee, on May 11, 2009, after losing a court battle. On Monday, a jury in the Superior Court of the State of California for the County of Los Angeles handed down a verdict for $300 million, plus potential punitive damages, against Mr. Daily. The Tennessean reports that the jury verdict followed trial of a 6-1/2-year-old complaint in which Douglas Shooker, a venture capitalist based in California, accused Mr. Daily of thwarting his attempts to invest in iPayment through an earlier agreement. Mr. Shooker, The Tennessean says, also accused Mr. Daily of stealing his research into a Web-based credit card processing system. According to The Tennessean, James N. Penrod, Esq., Mr. Daily's counsel in San Francisco, said he disagreed with the verdict and would likely appeal. iPayment clarified that the lawsuit was brought against Mr. Daily individually and not in his capacity as the Chairman and Chief Executive Officer or Director of the Company. Neither the Company, nor any other shareholders, officers, employees or directors were a party to the action. The Company has no indemnification, reimbursement or any other contractual obligation to Mr. Daily in connection with this legal matter. Based in Nashville, Tennessee, Gregory Scott Daily is the chairman and chief executive officer of iPayment, Inc. He filed for bankruptcy on May 11, 2009 (Bankr. M.D. Tenn. Case No. 09-05337). Judge Marian F. Harrison presides over the case. William L. Norton, Esq., at Bradley Arant Boult Cummings LLP, in Nashville, serves as Mr. Daily's counsel. Mr. Daily disclosed $10,000,001 to $50,000,000 in assets and $100,000,001 to $500,000,000 in debts. He did not file a list of 20 largest unsecured creditors together with his petition. iPayment provides card-based payment processing services to small business merchants located across the United States. The Company enables merchants to accept credit and debit cards as payment for their products and services by providing card authorization, data capture, settlement, risk management, fraud detection and chargeback services. Its services also include data organization and retrieval, ongoing merchant assistance and resolution support in connection with disputes with cardholders. iPayment is not a party to the bankruptcy proceedings. HARTMARX CORP: Workers Threaten to Occupy Plant ----------------------------------------------- Socialistworker.org reports that Hartmarx Corporation workers have threatened to occupy the Company's plant if Wells Fargo bank tries to liquidate the Company. Socialistworker.org relates that the workers, members of the Workers United union, are demanding that Wells Fargo agree to finance efforts to maintain production and 3,600 jobs, either with current management or a new owner. Wells Fargo, which received $25 billion in government funds as part of the financial bailout in 2008, should be obligated to support workers whose taxes are being used to fund the rescue, the report states, citing workers. According to Socialistworker.org, politicians in Illinois are supporting the workers. Socialistworker.org says that State Treasurer Alexi Giannoulias threatened to withdraw $8 billion in state funds from Wells Fargo. 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. HARTFORD FINANCIAL: Fitch Cuts Ratings on Junior Bonds to 'BB+' --------------------------------------------------------------- Fitch Ratings has downgraded these Hartford Financial Services Group, Inc. ratings: -- Issuer Default Rating to 'BBB' from 'BBB+'; -- Senior debt to 'BBB-' from 'BBB'. Fitch has also downgraded the Insurer Financial Strength ratings of HFSG's primary life insurance subsidiaries to 'A-' from 'A'. In addition, Fitch has affirmed the 'A+' IFS ratings of HFSG's property/casualty insurance subsidiaries. The Rating Outlook is Negative. The downgrade reflects Fitch's updated view of Hartford's primary life insurance subsidiaries in light of continued challenges in the first quarter and public statements by management concerning the suspension of its annuity sales in various international operations and the exploration of options concerning its institutional markets division. The current rating reflects a more modest degree of potential support from HFSG's property/casualty operations than previously incorporated into the ratings and is a step closer to a stand alone rating for the life insurance subsidiaries. Relative to the property/casualty operation, Fitch believes that the life operation holds the majority of risky assets and has greater earnings volatility due to variable annuity benefit guarantees, while the property/casualty operation has continued to produce favorable underwriting results. Consequently, the primary life insurance subsidiaries now maintain IFS ratings two notches below the property/casualty operating subsidiaries. Additional factors include reduced estimates of GAAP profitability in its life operations going forward and continued declines in capitalization in the first quarter of 2009 that have increased financial leverage. Fitch's Negative Outlook reflects HFSG's exposure to the currently volatile credit and equity market conditions, which continue to negatively affect the organization's capital position and earnings outlook, particularly in its variable annuity business. If the company suffers additional significant losses, or experiences further declines in capital, the ratings could be lowered. HFSG posted a first quarter 2009 GAAP net loss of $1.2 billion, driven by an after-tax charge of $1.5 billion related to its DAC unlock or reduced estimates of the profitability of its variable annuity business. As a result, shareholders' equity declined $1.4 billion, or 15% in the first three months of 2009 to $7.9 billion at March 31, 2009. This increased HFSG's equity credit adjusted debt-to-total capital ratio (including accumulated other comprehensive income) to 34.9% at March 31, 2009, up from 31.9% at Dec. 31, 2008. HFSG maintains financial flexibility with approximately $1 billion available in holding company cash following the company's repayment of $375 million borrowed under the Federal Reserve's Commercial Paper Funding Facility. The source of this remaining cash is primarily the $1 billion from Allianz SE that was not contributed to the life insurance operations followings Allianz's $2.5 billion investment in Hartford in the fourth quarter of 2008. Additional financial flexibility is provided through a $1.9 billion revolving credit facility and a $500 million contingent capital facility. HFSG's life insurance capital position has weakened somewhat thus far in 2009 with statutory capital and surplus down $445 million to $5.6 billion at March 31, 2009. Fitch notes that this statutory surplus amount includes a benefit of approximately $1 billion for permitted practices currently granted by the Connecticut Department of Insurance that Fitch excludes from its analysis of the life insurance company's capital position. The company estimated that risk-based capital at March 31, 2009 is in the range of 420% to 430% compared to 462% at year-end 2008. Excluding the permitted practices benefit, Fitch estimates an RBC range of 345% to 355% at March 31, 2009, compared to 387% at Dec. 31, 2008. Isolating the impact of equity markets only, the company also expects that, given existing enterprise capital resources, it should be able to maintain a 325% RBC at year-end 2009, with an S&P 500 Index value of 700. Fitch believes that HFSG's hedging strategy has aided in reducing the effect of the unprecedented market declines to manageable levels. However, the impact of hedging relative to capital is material, and shows an increasing reliance on the performance of counterparties, although properly collateralized. Fitch has downgraded these ratings with a Negative Rating Outlook: Hartford Financial Services Group, Inc. -- Long-Term IDR to 'BBB' from 'BBB+'; -- $275 million 7.90% notes due 2010 to 'BBB-' from 'BBB'; -- $400 million 5.25% notes due 2011 to 'BBB-' from 'BBB'; -- $319 million 4.625% notes due 2013 to 'BBB-' from 'BBB'; -- $199 million 4.75% notes due 2014 to 'BBB-' from 'BBB'; -- $200 million 7.3% notes due 2015 to 'BBB-' from 'BBB'; -- $300 million 5.5% notes due 2016 to 'BBB-' from 'BBB'; -- $499 million 5.375% notes due 2017 to 'BBB-' from 'BBB'; -- $500 million 6.3% notes due 2018 to 'BBB-' from 'BBB'; -- $499 million 6% notes due 2019 to 'BBB-' from 'BBB'; -- $298 million 5.95% notes due 2036 to 'BBB-' from 'BBB'; -- $323 million 6.1% notes due 2041 to 'BBB-' from 'BBB'; -- $500 million 8.125% junior subordinated debentures due 2068 to 'BB+' from 'BBB-'; -- $1.75 billion 10% junior subordinated debentures due 2068 to 'BB+' from 'BBB-'. Hartford Life, Inc. -- Long-term IDR to 'BBB' from 'BBB+'; -- $147 million 7.65% notes due 2027 to 'BBB-' from 'BBB'; -- $92 million 7.375% notes due 2031 to 'BBB-' from 'BBB'. Hartford Life Global Funding -- Secured notes program to 'A-' from 'A'. Hartford Life Institutional Funding -- Secured notes program to 'A-' from 'A'. Hartford Life and Accident Insurance Company -- IFS to 'A-' from 'A'. Hartford Life Insurance Company -- IFS to 'A-' from 'A'; -- Medium-term note program to 'BBB+' from 'A-'. Hartford Life and Annuity Insurance Company -- IFS to 'A-' from 'A'. Fitch has affirmed the IFS rating of these members of the Hartford Fire Insurance Intercompany Pool at 'A+' with a Negative Rating Outlook: -- Hartford Fire Insurance Company; -- Nutmeg Insurance Company; -- Hartford Accident & Indemnity Company; -- Hartford Casualty Insurance Company; -- Twin City Fire Insurance Company; -- Pacific Insurance Company, Limited; -- Property and Casualty Insurance Company of Hartford; -- Sentinel Insurance Company, Ltd.; -- Hartford Insurance Company of Illinois; -- Hartford Insurance Company of the Midwest; -- Hartford Underwriters Insurance Company; -- Hartford Insurance Company of the Southeast; -- Hartford Lloyd's Insurance Company; -- Trumbull Insurance Company. Fitch has affirmed these ratings with a Negative Rating Outlook: Hartford Financial Services Group, Inc. -- Short-term IDR at 'F2'; -- Commercial paper at 'F2'. Hartford Life, Inc. -- Short-term IDR at 'F2'. HAYES LEMMERZ: Chapter 11 Filing Cues S&P's Rating Cut to 'D' ------------------------------------------------------------- Standard & Poor's Ratings Services said it has lowered its corporate credit and issue-level ratings on Northville, Michigan- based Hayes Lemmerz International Inc. and its subsidiaries to 'D'. The rating actions were prompted by Hayes and certain of its U.S. and European subsidiaries filing for Chapter 11 bankruptcy protection on May 11, 2009. Included in the Chapter 11 filings was Hayes Lemmerz Finance LLC-Luxembourg S.C.A., a borrower under Hayes's secured credit facility and issuer of its senior notes. "We believe the filings were prompted by the company's heavy debt and a sharp decline in liquidity caused by severe automotive production declines in Europe and the U.S.," said Standard & Poor's credit analyst Gregg Lemos Stein. Pending further information from the bankruptcy proceedings, the recovery ratings remain unchanged. The automotive wheel manufacturer said it had approximately $731.5 million of total debt, including letters of credit and bank guarantees, at Jan. 31, 2009. HAYES LEMMERZ: Chapter 11 Filing Cues Fitch's Rating Cut to 'D' --------------------------------------------------------------- Fitch Ratings has downgraded Hayes Lemmerz International Inc. and its subsidiaries' Issuer Default Ratings and debt ratings as follows based on the company's filing for Chapter 11 bankruptcy: HAYZ -- IDR to 'D' from 'C'. HLI Operating Company, Inc. -- IDR to 'D' from 'C'; -- Senior secured revolving credit facility to 'C/RR4' from 'CC/RR3'. Hayes Lemmerz Finance - Luxembourg SCA (European Holdco) -- IDR to 'D' from 'C'; -- Senior secured revolving credit facility to 'C/RR4' from 'CC/RR3'; -- Senior secured Euro synthetic LOC facility to 'C/RR4' from 'CC/RR3'; -- Senior secured Euro term loan to 'C/RR4' from 'CC/RR3'. In addition, Fitch has affirmed HAYZ's subsidiary European Holdco unsecured debt: -- Senior unsecured Euro notes affirmed at 'C/RR6'. The Chapter 11 filing includes HAYZ, HLI Opco and European Holdco. With the exception of European Holdco, none of HAYZ's non-U.S. subsidiaries are included in the filing. Recovery Ratings on the secured debt have been downgraded to 'RR4', indicating expected recoveries in the range of 31-50% as a result of a lower assessment of the company's valuation. Fitch's analysis remains based on a going-concern scenario rather than liquidation scenario, with primary values derived from the value of HAYZ's operations outside North America. HLI Opco secured credit facility is backed by non securitized U.S. Accounts Receivables, inventory, and property, plant and equipment. Additional security includes stock of U.S. subsidiaries, pledge of residual U.S. securitization, substantially all U.S. intercompany notes, and two-thirds stock pledge of European stock. European Holdco secured credit facility is backed by European A/R, inventory and PP&E where available. Additional security includes stock on European subsidiaries and shared pledges of residual U.S. securitization and substantially all intercompany notes with HLI Opco. The ratings of RR6 on European Holdco's unsecured debt indicates minimal recoveries of 0-10%, with actual recovery expected to be zero. HEXCEL CORPORATION: Moody's Affirms 'Ba3' Corporate Family Rating ----------------------------------------------------------------- Moody's Investors Service has affirmed Hexcel Corporation's Corporate Family and Probability of Default ratings of Ba3. At the same time, the rating agency assigned a Ba1 rating to the company's proposed $100 million secured revolving credit facility and $200 million term loan. The B1 rating on the company's existing $225 million subordinated notes was also affirmed. The rating outlook remains stable. Hexcel's proposed 4-year $100 million revolver and 5-year $200 million term loan will replace the current revolving credit and term loans. The refinancing of the existing facilities, albeit at higher interest rates, is viewed as a positive to the Ba3 rating, as the company's current $125 million revolver is set to mature on 3/01/2010 and the term loan maturity is extended by two years. The company's Ba3 rating is supported by strong credit metrics and significant niche market positions. The rating also recognizes near term top line pressures due to the softening commercial aerospace business despite expected growth in the company's other business segments, most notably the wind energy segment. Moreover, Hexcel is expected to generate modest free cash flow in 2009 and 2010 despite continued high capital expenditures on carbon fiber production capacity, which limits otherwise more substantial free cash flow generation in the intermediate term. The stable rating outlook reflects Moody's expectations for continued healthy operating margins, while incorporating near term revenue pressures. The stable outlook also anticipates the successful refinancing of the company's revolver and term loan, which would strengthen the company's liquidity profile. Ratings Assigned: -- $100 million secured revolving credit facility, Ba1 (LGD2, 19%); -- $200 million secured term loan, Ba1 (LGD2, 19%). Ratings Affirmed: -- Corporate Family, Ba3 -- Probability of Default, Ba3 -- $225 million senior subordinated notes, B1 (LGD5, 74%) from B1 (LGD5, 72%). These ratings will be withdrawn upon the successful close of the proposed transaction: -- $125 million secured revolving credit facility, Ba1 (LGD2, 17%); -- $168 million secured term loan, Ba1 (LGD2, 17%). The last rating action was on May 29, 2008 at which time the corporate family rating was affirmed at Ba3, the outlook affirmed at stable, and ratings on the bank debt were lowered. Hexcel Corporation, headquartered in Stamford, Connecticut, is a leading advanced structural materials company. It develops, manufactures and markets lightweight, high-performance structural materials, including carbon fibers, reinforcements, prepregs, honeycomb, matrix systems, adhesives and composite structures, used in commercial aerospace, space and defense, and certain industries. Revenues in 2008 were approximately $1.3 billion. HIGH PLAINS: Owes $5.5 Million to Secured Creditors --------------------------------------------------- High Plains Real Estate Group LLC of Salt Lake City filed a Chapter 11 petition, listing secured creditors with claims totaling $5.5 million, Bloomberg's Bill Rochelle said. In its bankruptcy petition, the Company said assets are less than $50,000 while debts are between $100,000,001 and $500,000,000. High Plains filed for Chapter 11 on May 9 (Bankr D. Utah Case No. 09-24765). Judge Judith A. Boulden handles the case. The Company is represented by Tyler J. Jensen, Esq., at LeBaron & Jensen, P.C. HLI OPERATING: Chapter 11 Filing Cues Fitch's Rating Cut to 'D' --------------------------------------------------------------- Fitch Ratings has downgraded Hayes Lemmerz International Inc. and its subsidiaries' Issuer Default Ratings and debt ratings as follows based on the company's filing for Chapter 11 bankruptcy: HAYZ -- IDR to 'D' from 'C'. HLI Operating Company, Inc. -- IDR to 'D' from 'C'; -- Senior secured revolving credit facility to 'C/RR4' from 'CC/RR3'. Hayes Lemmerz Finance - Luxembourg SCA (European Holdco) -- IDR to 'D' from 'C'; -- Senior secured revolving credit facility to 'C/RR4' from 'CC/RR3'; -- Senior secured Euro synthetic LOC facility to 'C/RR4' from 'CC/RR3'; -- Senior secured Euro term loan to 'C/RR4' from 'CC/RR3'. In addition, Fitch has affirmed HAYZ's subsidiary European Holdco unsecured debt: -- Senior unsecured Euro notes affirmed at 'C/RR6'. The Chapter 11 filing includes HAYZ, HLI Opco and European Holdco. With the exception of European Holdco, none of HAYZ's non-U.S. subsidiaries are included in the filing. Recovery Ratings on the secured debt have been downgraded to 'RR4', indicating expected recoveries in the range of 31-50% as a result of a lower assessment of the company's valuation. Fitch's analysis remains based on a going-concern scenario rather than liquidation scenario, with primary values derived from the value of HAYZ's operations outside North America. HLI Opco secured credit facility is backed by non securitized U.S. Accounts Receivables, inventory, and property, plant and equipment. Additional security includes stock of U.S. subsidiaries, pledge of residual U.S. securitization, substantially all U.S. intercompany notes, and two-thirds stock pledge of European stock. European Holdco secured credit facility is backed by European A/R, inventory and PP&E where available. Additional security includes stock on European subsidiaries and shared pledges of residual U.S. securitization and substantially all intercompany notes with HLI Opco. The ratings of RR6 on European Holdco's unsecured debt indicates minimal recoveries of 0-10%, with actual recovery expected to be zero. HLI OPERATING: Moody's Downgrades Corporate Family Rating to 'Ca' ----------------------------------------------------------------- Moody's Investors Service lowered HLI Operating Company, Inc.'s Corporate Family Rating to Ca from Caa3 and Probability of Default rating to D from Caa3 following the Chapter 11 filing of HLI, its parent company Hayes Lemmerz International, Inc., and certain of Hayes Lemmerz's U.S. subsidiaries. In a related action, Moody's lowered these instrument ratings: HLI Operating Company's senior secured bank facilities to Caa3 from Caa2; Hayes Lemmerz Finance's (Luxembourg S.a.r.l.) secured term loan and synthetic letter of credit facility to Caa3 from Caa2, and the senior unsecured notes to C from Ca. The lowered ratings reflect the filing for Chapter 11 protection by Hayes Lemmerz International, Inc. and Hayes Lemmerz Finance LLC -- Luxembourg S.C.A., a borrower under the company's secured credit facility and the issuer of its senior notes. The company also announced that it has reached an agreement regarding the restructuring of the company's debt and that it has obtained debtor-in-possession financing. Consistent with Moody's Withdrawal Policy, Moody's will withdraw the ratings of Hayes Lemmerz. Ratings affected by this action: HLI Operating Company -- Corporate Family Rating, to Ca from Caa3 -- Probability of Default Rating, to D from Caa3 -- Senior secured revolving credit facility, downgraded to Caa3 (LGD3, 30%), previously Caa2 (LGD3, 33%); Hayes Lemmerz Finance (Luxembourg S.a.r.l.) -- Senior secured term loan facility, downgraded to Caa3 (LGD3, 30%), previously Caa2 (LGD3, 33%); -- Senior secured synthetic letter of credit facility, downgraded to Caa3 (LGD3, 30%), previously Caa2 (LGD3, 33%); -- Senior unsecured notes, downgraded to C (LGD5, 84%) from Ca (LGD5, 87%). The rating outlook is stable. The last rating action on Hayes Lemmerz was on April 20, 2009 when the Corporate Family Rating was lowered to Caa3 and the ratings placed under review for further downgrade. Hayes Lemmerz International, headquartered in Northville, Michigan, is a global supplier of steel and aluminum automotive and commercial vehicle highway wheels, as well as powertrain components. Worldwide revenues for the fiscal year ending January, 31 2009 were approximately $1.9 billion. IDLEAIRE TECHNOLOGIES: Court Converts Case to Ch. 7 Liquidation --------------------------------------------------------------- Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware has entered an order converting the bankruptcy case of IdleAire Technologies Corp. to one under Chapter 7, effective May 6, 2009. Idleaire sought for the conversion of its Chapter 11 case, citing that it has (i) consummated a going-concern sale and ceased operating, and (ii) no resources to propose and confirm a plan. Although there are some assets available for distribution to creditors, the Chapter 7 trustee can most efficiently administer those assets on behalf of the estate, the Debtor asserts. As reported in the Troubled Company Reporter on July 17, 2008, the Court approved the sale of substantially all of the Debtor's assets to noteholder group IdleAire Acquisition Company LLC for about $26 million. The Deal relates that during a July 9, 2008 auction, the sole competing bidder, Zohar Motorcycles Inc., lost to the noteholder group as designated stalking horse bidder. Zohar Motorcycles is an affiliate of Patriarch Partners LLC, The Deal says. The noteholder group is composed of, among others, Airlie Opportunity Master Fund Ltd., Kenmont Special Opportunities Master Fund LP, Miesque Fund Limited, SV Special Situations Master Fund Ltd., Pierce Diversified Trading Strategy Fund LLC, Whitebox Hedged High Yield Partners LP, Wilfrid Aubrey Growth Fund LP and Wilfrid Aubrey International Limited. About IdleAire Technologies Headquartered in Knoxville, Tennessee, IdleAire Technologies Corp. -- http://www.idleaire.com/-- was a privately held corporation founded in June 2000 and has not been profitable since inception. It manufactures and services an advanced travel center electrification system providing heating, ventilation & air conditioning, Internet and other services to truck drivers parked at rest stops. IdleAire had 131 locations in 34 states and employs about 1,200 people. The Company filed a Chapter 11 petition on May 12, 2008 (Bankr. D. Del. Case No. 08-10960). Judge Kevin Gross presides over the case. Elihu Ezekiel Allinson, III, Esq., William A. Hazeltine, Esq., and William David Sullivan, Esq., at Sullivan Hazeltine Allinson, LLC, represent the Debtor in its restructuring efforts. John Monaghan, Esq., at Holland & Knight LLP is co-counsel to the Debtor. The Debtor selected Kurtzman Carson Consultants LLC as claim, noticing and balloting agent. The U.S. Trustee for Region 3 appointed three creditors as members of the Official Committee of Unsecured Creditors. Saul Ewing LLP represents the Creditors' Committee. The Troubled Company Reporter disclosed on June 30, 2008, that the Debtor's summary of schedules showed total assets of $152,398,370 and total debts of $373,220,369. INMOBILIARIA FUMISA: Moody's Downgrades Bond Ratings to 'Ba2' ------------------------------------------------------------- Moody's Investors Service has downgraded the ratings on the Inmobiliaria Fumisa, S.A. DE C.V.'s Mexico City Airport Trust (Airport) US$121 million and 119 million UDI lease receivable bonds from Baa3 to Ba2. The rating is on review for possible further downgrade. The downgrade to Ba2 reflects the pressures faced by the financing brought about by the loss of traffic in Terminal 1and the corresponding decrease in debt service coverage. The period of review will focus on the financial and operational performance of the terminal and the related lease revenue, in light of the outcomes of solutions that have been proposed by Fumisa to bondholders. In 2008, the Project breached two triggers. The quarterly passenger traffic deficiency trigger was breached in May 2008. The quarterly passenger traffic trigger requires that the number of international passengers in Terminal 1 per quarter at least be equal to a threshold defined in the transaction documents and upon breach, cash is required to be trap in a reserve. The project has been below the threshold since May of last year. The drop in international passengers at Terminal 1 was driven by the opening of Terminal 2 in 2008, earlier than was originally anticipated, and the move of more airlines to Terminal 2 than was initially expected. Most of the airlines that moved were members of the SkyTeam, an alliance whose members benefit from shared offices, staff, and operations and maintenance facilities. Although the majority of the revenues available to pay debt service are generated from contractual sublease payments of tenants located in Terminal 1, a potential drop in revenue for the tenants due to fewer passengers could have negative implications for the financial performance of the tenants in the medium-to- long-term and the ability of Fumisa to sublease tenant space as contracts expire. In November 2008, the project breached a debt service coverage trigger. The debt service coverage trigger requires that the debt service coverage ratio exceed 1.25 times (x) debt service. As of the last reporting period ending in February, the DSCR remains below the threshold and as a result, the project has been trapping cash into a reserve. Fumisa and bondholders have been negotiating various solutions to remedy both triggers. Moody's will continue to monitor the financial and operational performance in light of any solutions should they be implemented. Inmobiliaria Fumisa S.A. de C.V. was established in 1988 to undertake the concession granted by the government of Mexico for the subleasing of commercial space and the provision of certain airport services at Terminal 1 in the Mexico City International Airport (Aeropuerto Internacional de la Ciudad de M�xico or AICM). In 1991, Fumisa entered into a Master Lease Agreement with Aeropuertos y Servicios Auxiliares, an entity established by the Mexican federal government (rated Baa1, stable outlook) to administer the national airport system. Pursuant to the Master Lease, Fumisa obtained the exclusive right to collect revenues from subleases of certain designated retail and commercial space and revenues from parking and other services at AICM. The lease receivable bond ratings were assigned by evaluating factors believed to be relevant to the credit profile of the Project such as i) the business risk and competitive position of the project versus others within its industry or sector, ii) the capital structure and financial risk of the project, iii) the projected performance of the project over the near to intermediate term, and iv) the project's history of achieving consistent operating performance and meeting budget or financial plan goals. These attributes were compared against other projects both within and outside of the Airport's core peer group and the lease receivable bond ratings are believed to be comparable to ratings assigned to other projects of similar credit risk. The last rating action was on December 15, 2005 when a Baa3 rating was assigned to the lease receivable bonds. INTROGEN THERAPEUTICS: Sells Some Assets, Virus Assets Remain ------------------------------------------------------------- Bloomberg's Bill Rochelle reports that Introgen Therapeutics Inc. was authorized by the U.S. Bankruptcy Court for the Western District of Texas (Austin) to sell its operating assets to Western General Holding Co. for 3 percent of gross revenue generated from the property, up to $5 million. Crucell Holland BV, according to the report, bought the intellectual property related to Introgen's process for making viruses to deliver medication to tumor sites. Crucell will pay $425,000 plus a perpetual 35% royalty. According to Bloomberg, Patricia Tomasco, an attorney for Introgen, said she expects the royalties from Crucell will be "quite lucrative." Ms. Tomasco said Introgen is still in the process of locating the best offer for the sale of its primary asset, a virus being developed to deliver medication to cancers in the head and neck. She hopes to have a buyer signed up within a "few weeks." Introgen Therapeutics Inc. is a cancer-drug developer. Introgen Therapeutics filed for Chapter 11 on December 3, 2008 (Bankr. W.D. Texas, Case No. 08-12442). Patricia Baron Tomasco, Esq., at Brown McCarroll, L.L.P., is the Company's bankruptcy lawyer. In its petition, the Company listed assets of $9,107,868 and debts of $12,932,950. JOLAN, INC.: Trustee Sells Assets Despite Jr. Lien Protest ---------------------------------------------------------- WestLaw reports that evidence of the existence of legal and equitable proceedings under Washington law by which junior lienholders could be compelled to accept a money satisfaction of their lien interests, including a receivership commenced by parties having interests in less than all of the debtor's property, was sufficient to permit the court to grant a Chapter 7 trustee's motion to sell a corporate debtor's personal property and trade name free and clear of any liens thereon, with the liens attaching to the sales proceeds. It did not matter that the sales proceeds might be insufficient to pay all of those liens. In re Jolan, Inc., --- B.R. ----, 2009 WL 1163928 (Bankr. W.D. Wash.). JOSEPH VILLA: Involuntary Chapter 11 Case Summary ------------------------------------------------- Alleged Debtor: Joseph Villa aka J Bond V aka Margarita Villa 10550 Wilshire Blvd # 1203 Los Angeles, CA 90024 Involuntary Chapter 11 Petition Date: May 6, 2009 Involuntary Chapter 11 Case Number: 09-20910 Court: United States Bankruptcy Court Central District Of California (Los Angeles) Bankruptcy Judge: Samuel L. Bufford Debtor-affiliate that filed Chapter 11 petition on August 4, 2008: Entity Case Number ------ ----------- Eban Multimedia 08-26637 Petitioning Creditors Nature of Claim Claim Amount --------------------- --------------- ------------ Takashi Bufford Secured Loan $225,000 7636 Balasiano Ave W Hills, CA 91304 Juanita Bufford Secured Loan $225,000 7636 Balasiano Ave W Hills, CA 91304 Brian Speaks Secured Loan $225,000 7636 Balasiano Ave W Jills, CA 91304 KB TOYS: Selects Streambank to Lead IP Asset Sale ------------------------------------------------- Streambank, LLC, has been retained to undertake the marketing and sales efforts for the intellectual asset portfolio of KB Toys, Inc. Once one of the nation's largest and oldest toy retailers, KB Toys filed voluntary chapter 11 bankruptcy petitions in December 2008. Approval of Streambank's retention is the subject of an application currently pending before the United States Bankruptcy Court for the District of Delaware. "We welcome this engagement with KB Toys," said Gabe Fried, Managing Member and Founder, Streambank, LLC. "The wide recognition of the KB Toys name makes it ideal for a variety of applications, including a private-label toy brand, a franchise retail business, a seasonal store, or a pure Internet play." Previously known as Kay-Bee Toys, the Pittsfield, Massachusetts- based company was founded in 1922, and was the longest-operating toy retailer in North America. In 2003, the mall retailer operated nearly 1300 stores in all 50 states, Puerto Rico and Guam. KB Toys previously entered bankruptcy in 2004, emerging in 2005. The company cited tightening credit markets and a sudden and steep decline in consumer sales as necessitating the December 2008 bankruptcy filing. In connection with the filing, KB Toys announced it would close all of its approximately 460 remaining stores, and attempt to locate a buyer for its wholesale distribution unit. "In addition to the storied KB Toys name, the intellectual property portfolio includes 14 other KB Toys-related trademarks, some of which are registered internationally, and a number of house brands developed by the company," said Margaret Birlem, Partner, Streambank, LLC. "We anticipate significant interest in these assets." KB Toys focused on high-margin "Super Value" products, current "hot" and branded products, and classic toys. This product offering, and a reputation as a value retailer, differentiated KB Toys from mass merchants. The company operated in three distinct store formats: KB Toys (mall-based), KB Toy Works (strip center), and KB Toys Outlet (outlet center). Complementing these retail operations, KB Toys' wholesale operation, known as Creative Innovations & Souring (or CIS), provided custom toy and specialty merchandise solutions, offering a one-stop outsourcing solution for toy departments of large national retail chains. The Internet business -- operating at http://www.kbtoys.com/-- was an award- winning e-commerce pioneer that was lauded for selection, competitive pricing and superior customer service. "For the consumer, the KB Toys brand resonates as a neighborhood toy store that offered great value and selection," said Scott Hochfelder, Vice President, General Counsel & Secretary, KB Toys, Inc. "The buyer of these assets will be uniquely positioned to capitalize on the rich equity and goodwill built around the time- tested KB Toys brand." The marketing of KB Toys' assets is underway. An auction date will be determined in the near future. Streambank has significant experience serving stakeholders in distressed situations. The engagement with KB Toys is the latest of several high-profile liquidations in which the firm has been retained. Most recently, Streambank was selected by Circuit City to assist in the marketing and sale of the company's IP assets. In March, Streambank was hired in this same role for Goody's Family Clothing, which announced earlier this year it would liquidate all remaining stores. In December, Streambank was chosen to lead the marketing and sales efforts for the broad intellectual asset portfolio of apparel retailer Mervyns, which filed for bankruptcy and ceased operations in 2008. In addition, Streambank has consulted for Collins and Aikman on the disposal of a large patent portfolio, and Tower Records, which sold its trademark portfolio and e-commerce operations in March 2007. About Streambank Streambank -- http://www.streambankllc.com/-- is an intellectual property consulting firm, specializing the valuation, sales and marketing of intangible assets. Serving healthy and distressed businesses, Streambank identifies, preserves, and extracts value for clients through the application of experience, diligence and creativity. The firm's experience spans a broad range of industries including apparel, automotive, consumer products, food, manufacturing, medical technologies, retail and textiles. Through partnerships with brand consultancies, turnaround-management firms, attorneys, and finance professionals, Streambank provides sound advice on value maximization strategies and liquidity options. Streambank is headquartered in Needham, MA. About KB Toys Headquartered in Pittsfield, Massachusetts, KB Toys, Inc. -- http://www.kbtoys.com/-- operates a chain of retail toy stores. On Jan. 14, 2004, the Debtor and 69 of its affiliates filed for protection under Chapter 11 of the Bankruptcy Code, which were administratively consolidated under Case No. 04-10120. Two of the 200 bankruptcy cases remain open, KB Toys Inc. and KB Toy of Massachusetts Inc. In connection with the emergence of KB Toys from bankruptcy in August 2005, and the subsequent organizational restructuring, the assets and operations of may of these prior debtors were transferred among then existing debtor entities and consolidated with KB Toys Group. Furthermore, most of the entities involved were either dissolved or were merged into surviving entities, and several of them changed their names. As a result, nine Debtors and four inactive special purpose units which are not debtors. The company, together with eight of its affiliates, again filed for Chapter 11 on December 11, 2008 (Bankr. D. Del. Lead Case No. 08-13269). Joel A. Waite, Esq., and Matthew Barry Lunn, Esq., at Young, Conaway, Stargatt & Taylor LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Wilmer Cutler Pickering Hale and Dorr LLP as their co-counsel, FTI Consulting Inc. as financial and restructuring advisor, and Epiq Bankruptcy Solutions LLC as claims and noticing agent. According to Bloomberg, KB listed assets of $241 million against debt totaling $362 million in its Chapter 11 petition filed on December 11. The debts include $143 million in unsecured claims; and $200 million in secured claims, including $95.1 million owed to first-lien creditors where General Electric Capital Corp. serves as agent; and $95 million owed to second-lien creditors. As reported by the Troubled Company Reporter on December 22, 2008, the Hon. Kevin Carey of the U.S. Bankruptcy Court for the District of Delaware allowed KB Toys Inc. to start going-out-of-business sales. KIRK CORPORATION: Files for Chapter 11 to Reorganize Debt --------------------------------------------------------- The Kirk Corporation has voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the Northern District of Illinois. Day-to-day operations of Kirk Homes will not be affected by the filing, said John Carroll, president and CEO of The Kirk Corporation. Founded in 1978, The Kirk Corporation, one of the only major builders in the U.S. which is entirely owned by its employees [ESOP], has built more than 50 neighborhoods throughout the Chicagoland area. "We are confident that the reorganization process gives us more opportunity to work with our lenders JP Morgan Chase, Bank of America and others, and to secure additional financing, which will allow us to continue building high quality homes for Chicago area homeowners for many years to come," Carroll said. "We enter this process with strong fundamentals, robust sales at many of our communities and the continued commitment of our employee owners to work through this temporary situation and emerge as an even stronger organization." To ensure the quality of service that has become synonymous with Kirk Homes, while in the reorganization process the company plans to continue to provide warranty service and otherwise operate in the ordinary course of business and to sell homes free and clear of all liens. Carroll said that Kirk Homes' standing inventory is significantly less than the industry average, and that while under the protection provided by the filing, the company will complete homes currently under construction, begin new construction on recently sold homes and continue new home sales and marketing. Construction is expected to start on any sold homes that have not already begun construction within the first 60 days of reorganization. Kirk Homes also will seek to sell its non-residential properties at a variety of sites in Northern Illinois. Kirk Homes, an industry leader in sustainable development initiatives and preservation of open space, is currently building communities in Bolingbrook, Hoffman Estates, Lakemoor and Woodstock. Kirk Corporation is based in Streamwood, Illinois. LANDSOURCE COMMUNITIES: Barclays Files Second Amended Plan ---------------------------------------------------------- Barclays Bank PLC, as administrative agent for itself and various lenders under a Superpriority DIP First Lien Credit Agreement, delivered to the U.S. Bankruptcy Court for the District of Delaware its Second Amended Joint Plan of Reorganization for LandSource Communities Development LLC and its 20 debtor affiliates and an accompanying Disclosure Statement on May 6, 2009. Joseph M. Barry, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, attorneys for the Plan Proponent, relates that among the provisions modified or added in the Second Amended Plan and Disclosure Statement are: (a) The creation of a new entity, Holdco, to hold all of the equity interest of Reorganized LandSource Communities; (b) The management of the Reorganized LandSource by "Management Co.," an entity to be formed by a Lennar Investor and Emile Haddad; (c) The provision of capital for Reorganized LandSource through a combination of cash on hand and cash investments by Lennar Corporation and pursuant to a Rights Offering; (d) The designation of eight classes of claims and their corresponding claims treatment. The proponent will seek acceptance of the Plan by holders of claims in Classes 3, 4, 5 and 6. Holders of claims in Classes 1 and 2 are unimpaired. Holders of claims or interests in Classes 7 and 8 will not be receiving distributions. The First Amended Plan designated seven classes of claims; (e) A provision on Reorganized LandSource's continued indirect ownership of Valencia Water Company; (f) An anticipated Plan Effective Date to occur on July 31, 2009; (g) No substantive consolidation for voting and distribution purposes. The voting and distribution provisions of the Plan will be determined with respect to each LandSource Debtor; and (h) The creation of a creditor trust, instead of a litigation trust. As of the Effective Date, the Creditor Trust will be entitled to pursue avoidance actions and tort actions. Holdco Entity As of the Plan Effective Date, Holdco will be owned (i) 15% by Lennar Corporation, (ii) 56% by Rights Offering Participants, (iii) 29% by the Holders of First Lien Secured Claims, Allowed Second Lien Claims, and Allowed Unsecured Claims, in each case subject to dilution due to equity issued to Management Co. and Emile Haddad. Mr. Haddad is the Chief Investment Officer of Lennar. Diagrams reflecting the LandSource Communities organizational chart before and after the Plan Effective Date are available for free at: http://bankrupt.com/misc/LANDSOURCEStructure_Comparison.pdf On the Effective Date, Holdco will have no indebtedness for borrowed money and carry at least $90 million Cash on its balance sheet after taking into account distributions under the Plan, the Rights Offering and the Lennar Equity Investment. In the event one or both of Washington Square or Southern California Properties have not been sold before or as of the Effective Date, then the Balance Sheet Cash (i) will be credited for $30 million if neither property has been sold and (ii) will be credited with the difference of $30 million minus any sale proceeds if a portion of one, one or one plus a portion of the other have been sold but not all of the properties have been sold. On the Effective Date, Holdco will enter into a limited liability company agreement, which will provide for the governance of Holdco, distributions to, and information rights of, its members, transfer restrictions with respect to its Units and all other matters set forth. Plan Funding On the Plan Effective Date, Lennar Corporation or a designated wholly owned subsidiary will make a $140 million cash investment into Holdco or Reorganized LandSource Communities. In exchange for the Lennar Investment, the Lennar Investor will receive (i) 15% of the Units of Holdco, subject to dilution due to the Units issued to Management Co. and certain units issued to Emile Haddad, (iii) the LNR Excess G&A Claims up to $13.5 million, (iii) a release of certain claims by the Debtors against Lennar, and (v) certain other benefits. The Lennar Acquired Assets will include: * 100% equity interests in Lennar Mare Island, LLC, * 100% equity interests in Friendswood Development Co LLC, * 100% of the equity interests in LLPH HCC Holdings, LLC * 50% equity interests in Lennar Winncrest LLC held by LLP II Holdings, LLC, and * 75% of the net proceeds of the DLA Piper Litigation Proceeds. In addition, the Lennar Investor will pay all cure costs and transfer taxes, if any, applicable to the Lennar Acquired Assets. Lennar Corporation and Holdco will also enter into a Bond Maintenance and Indemnity Agreement on the Effective Date, whereby the Lennar Investor will maintain certain existing bonds with respect to various projects owned by the Reorganized Debtors and issue new bonds with respect various projects after the Effective Date. In exchange, Reorganized LandSource will indemnify the Lennar Investor with respect to certain costs and liabilities relating to those bonds. The Lennar Investor will also pledge 30% of its Units in Holdco or Reorganized LandSource, as applicable, to secure its obligations under the Bond Agreement. Management Co., an entity majority owned and controlled collectively by the Lennar Investor and Emile Haddad, will manage the assets of Reorganized LandSource as of the Effective Date pursuant to a Management Agreement. In exchange, Management Co. will be issued incentive Units in Holdco (equal to 2.5% of its outstanding Units as of the Effective Date) and also be paid a yearly management fee by Reorganized LandSource. In addition, Mr. Haddad will invest $1 million into Holdco in exchange for Units of Holdco immediately after the Effective Date and he will also be granted additional incentive Units in Holdco. In addition to the Lennar Investment, a Rights Offering is being initiated in order to raise $140 million for the Reorganized Debtors. If the proceeds of the Rights Offering fail to equal the Rights Offering Amount of $140 million, certain members of the Steering Committee have agreed to fund the balance of the Rights Offering Amount in exchange for additional Units of Holdco in accordance with the terms of a Backstop Agreement. The Backstop Parties will be entitled to a downward adjustment to the aggregate amount paid by each of them for Rights Offering Units in accordance with the Backstop Agreement, which downward adjustment will equal 5% of the Rights Offering Amount in the aggregate. Designation & Treatment of Claims The Second Amended Plan also provides for the designations of four non-classified claims and eight classes of claims: Class Description Claim Treatment ----- ----------- --------------- N/A Administrative Paid in full, cash. Expense Claim N/A Fee Claims Paid in accordance with Court's order. N/A Priority Tax Paid in full, cash or paid in full, Claims plus interest accrued at the Mid-Term APR Rate Holder. N/A DIP Revolver Paid in full, cash. Loan Claim 1(a-u) Priority Non- Paid in full. Tax Claims 2(a-u) Senior Unimpaired. Paid in full, if the Permitted Lien Proponent elects to satisfy an Allowed Claims Senior Permitted Lien Claim. As to a Class 2 claim not allowed as of the Effective Date, an amount equal to satisfy the claim will be reserved in a separate account. If the Reorganized Debtors do not commence an adversary proceeding against a disputed Class 2 Claim within 180 days of the Effective Date, that claim will be considered a valid claim and will be paid in full. 3(a-u) First Lien Each Holder of a First Lien Claim Claims will: (a) receive its Pro Rata Share of the First Lien Claim Distribution; (b) any special distribution allocable to the Units issued to the Holders of First Lien Claims pursuant to the Holdco Agreement, and (c) the right to participate in the Rights Offering. 4(a-u) Second Lien Each Holder of a Second Lien Claim Claims receive (i) its Pro Rate Share of the Second Lien Distribution, and (ii) the right to participate in the Rights Offering. 5(a-t) Non-Newhall A Class 5 (a-t) Allowed Claim will Debtors receive its pro rata share of Non- Unsecured Newhall Debtors Unsecured Claim Claims Distribution and the right to Participate in the Rights Offering. 5(u) Newhall Each Class 5(u) Allowed Claim will Unsecured receive its pro rata share of the Claims Newhall Unsecured Claim Distribution and the right to participate in the Rights Offering. 6(a-u) Convenience Each Holder of a Class 6 Claim will be Class Claims paid 50% of the Allowed Amount of that Claim, in cash. 7(a-u) Intercompany Each Intercompany Claim in Classes 7a Claims 7c-h and 7i-u will be disallowed, cancelled or reinstated at the option of the Reorganized Debtors. Class 7b is designated an Intercompany Claim against Friendswood Development Company LLC while Class 7i is designated an Intercompany Claims against Lennar Mare Island LLC. Classes 7b and 7i Claims will be disallowed, cancelled and extinguished on the Effective Date. 8(a-u) Interests Class 8a consists of Interests in LandSource Communities. Class 8b consists of Interests in Friendswood Development Company LLC. Class 8i consists of Interests in Lennar Mare Island LLC. All the other Class 8 sub-classes are interests in the other Debtors. Class 8 Claims will not be entitled to distribution under the Plan. Other Disclosures The Plan Proponent also supplemented the Disclosure Statement with more disclosures and information on the Company's corporate history, the description of certain LandSource properties, the provision on the cancellation of the Debtors' equity in Mare Island and the issuance of new equity designated by Lennar, a discussion of certain pending litigation against LandSource and certain agreements entered into prepetition by LandSource. The Plan Proponent also noted that LandSource and its debtor affiliates have made payments, aggregating $143.8 million, within the 90-day and one-year period before the Petition Date. These amounts may be subject to avoidance. Business Plan The Plan Proponent also prepared a business plan for Reorganized LandSource for the period from August 1, 2009, through December 21, 2004. Under the Business Plan, the two most significant assets to be owned by Reorganized LandSource will be the two master plan communities of Valencia and Newhall Ranch, located 35 miles north of downtown Los Angeles. The Business Plan: -- assumes $158 million in total revenue through the first phase of the Plan covering the period from June 1, 2009, to May 31, 2012; -- assumes that Reorganized LandSource will spend about $99 million on master improvements, which comprise of entitlements costs, land development, infrastructure and construction of the West Creek Elementary School; and -- projects that sales, general and administrative expenditures for Reorganized LandSource will total $56 million for the period covered under the Business Plan. Valuation Analysis LandSource estimates the range of the enterprise value of Reorganized LandSource to be range from $160 million to $260 million, with a midpoint of about $210 million. Reorganized LandSource estimate that they will have $123 million of available Cash and no debt on the Effective Date, which when added to the enterprise value implies an equity value for Reorganized LandSource to be from approximately $283 million to approximately $383 million, with a midpoint of approximately $333 million. LandSource estimated the Reorganization Values as of May 2009, under the assumption that the underlying assumptions and conditions used to derive the Reorganization Values will not change materially from that date through the assumed Effective Date. Liquidation Analysis LandSource prepared a hypothetical liquidation analysis, which reflects estimated cash proceeds that would be available to LandSource if it were to be liquidated pursuant to Chapter 7 of the Bankruptcy Code as an alternative to the continued operation of LandSource under the Chapter 11 Plan. The liquidation analysis reflects that under Chapter 7, a 100% recovery is estimated for the Senior Permitted Lien Claims and the Superpriority DIP Revolver Loan Claims; a 0.6% recovery is estimated for First Lien Secured Claims and 64.5% recovery is estimated for Administrative and Priority Claims. In this light, LandSource determines that the proposed Lender Plan will provide creditors with a recovery that not less than creditors would receive pursuant to a liquidation of the Debtors' assets under Chapter 7. A full-text copy of the blacklined versions of the Second Amended Plan and Disclosure Statement dated May 6, 2009 is available for free at http://ResearchArchives.com/t/s?3cc6 Clean copies of the Second Amended Plan and Disclosure Statement dated May 6, 2009, with the accompanying exhibits is available for free at http://ResearchArchives.com/t/s?3cc5 The attached Exhibits include copies of the Backstop Agreement, the Lennar Investment Agreement, the Holdco LLC Company Agreement, the Management Services Agreement, financial projections under the prepared Business Plan, the Valuation Analysis, and the Liquidation Analysis. About LandSource Communities LandSource Communities Development LLC, which operates in Arizona, California, Florida, New Jersey, Nevada and Texas, is involved in the planning and development of master planned communities and transforming undeveloped land into ready-to-build home sites and commercial properties. With the exception of one development project in Marina del Rey, California, LandSource does not build homes or commercial properties. LandSource and 20 of its affiliates filed for Chapter 11 bankruptcy protection before the U.S. Bankruptcy Court for the District of Delaware on June 8, 2008 (Lead Case No. 08-11111). The Debtors are represented by Marcia Goldstein, Esq., at Weil Gotshal & Manges in New York, and Mark D. Collins, Esq., at Richards Layton & Finger in Wilmington, Delaware. Lazard Freres & Co. acts as the Debtors' financial advisors, and Kurtzmann Carson Consultants serves as the Debtors' notice and claims agent. According to the Troubled Company Reporter on May 22, 2008, LandSource sought help from its lender consortium to restructure $1.24 billion of its debt. LandSource engaged a 100-bank lender group led by Barclays Capital Inc., which syndicates LandSource's debt. LandSource had received a default notice on that debt from the lender group after it was not able to timely meet its payments during mid-April. However, LandSource failed to reach an agreement with its lenders on a plan to modify and restructure its debt, forcing it to seek protection from creditors. (LandSource Bankruptcy News, Issue No. 21; http://bankrupt.com/newsstand/or 215/945-7000). LANDSOURCE COMMUNITIES: Barclays Seeks OK of $140MM Backstop Deal ----------------------------------------------------------------- Barclays Bank PLC, as Plan Proponent and First Lien Administrative Agent, asks the U.S. Bankruptcy Court for the District of Delaware to approve a backstop rights purchase agreement it entered into with certain investment entities, LandSource Communities Development LLC, and Newhall Holding Company, LLC, and the related Rights Offering Premium and Expense Reimbursement. Barclays also seeks approval of the marketing of the "Backstop Commitment Amounts" and payment of the Rights Offering Premium in cash in the event the Debtors either consummate an Alternative Transaction or a Termination Payment Event occurs. Edwin J. Harron, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, relates that in connection with the Second Amended Chapter 11 Plan dated May 6, 2009, Barclays proposes to initiate a rights offering backstopped by certain investment entities or the "backstop parties" in order to raise up to $140,000,000 for the Reorganized Debtors, subject to adjustment. Accredited Holders of First Lien Claims, Second Lien Claims and Allowed Unsecured Claims as of the Voting Record Date will be offered an opportunity to subscribe for the Units in Holdco LLC, which are issued in connection with the Rights Offering. The price of the Rights Offering Units will be equal to the final Rights Offering Amount divided by the Rights Offering Units. After significant arm's-length negotiations, the Plan Proponent and the Backstop Parties agreed on the form of the Backstop Agreement, which will provide assurance that the full amount of the Rights Offering contemplated by the Second Amended Plan will be funded. The Backstop Parties have agreed to purchase, on the Effective Date, the Rights Offering Units that have not been subscribed for by the Rights Offering Participants with the same price as the Rights Offering Units issued to the Rights Offering Participants; provided that the Backstop Parties will be entitled to a downward adjustment to the aggregate amount paid by each of them for Rights Offering Units in accordance with the Backstop Agreement. The downward adjustment is being granted to the Backstop Parties in exchange for their commitment under the Backstop Agreement and the downward adjustment will equal 5% of the Rights Offering Amount in the aggregate. Under the Backstop Agreement, each of the Backstop Parties is also entitled to be reimbursed for all reasonable and documented out-of-pocket fees and expenses that have been subsequently incurred in connection with the Rights Offering. The salient terms of the Backstop Agreement are: Backstop Parties: The Backstop Parties are comprised of these entities: 1. Anchorage Capital Master Offshore, Ltd., has committed to undertake a $50,000,000 Backstop Commitment. 2. Marathon Special Opportunity Master Fund, Ltd., has committed to undertake a $22,500,000 Backstop Commitment. 3. OZ Master Fund, Ltd. has committed to undertake a $20,000,000 Backstop Commitment. 4. Third Avenue Real Estate Value Fund and Third Avenue Opportunity Management LLC have collectively committed to undertake a $27,500,000 Backstop Commitment. 5. TPG Credit Strategies Fund, L.P., TPG Credit Opportunities Investors, L.P., and TPG Credit Opportunities Fund, L.P., have collectively committed to undertake a $20,000,000 Backstop Commitment. Participation in Holders of First Lien Claims, Second Lien Rights Offering: Claims and Allowed Unsecured Claims may, in exchange for cash payments to Holdco, subscribe for certain Rights Offering Units. Rights Offering $140,000,000, subject to adjustment by Amount: the Plan Proponent. Commitment Upon In the event one or more of the Backstop Default: Parties fails to fund any portion of its Backstop Commitment Amount, the Plan Proponent will first reoffer the Backstop Commitment Amount to the other Backstop Parties and may thereafter offer any remaining Backstop Commitment Amount to the other Backstop Parties or to other persons. Conditions to The obligation of each Backstop Party, Fund: severally, to fund the Parties' aggregate subscription amounts and backstop commitment amounts will be subject to these conditions on the Effective Date: * Confirmation Order: The Final Order or Orders of the Court confirming the Second Amended Plan that is reasonably acceptable to the Backstop Parties will have been entered by the Court, and no order staying the Confirmation Order will be in effect. * Hart-Scott-Rondino Act: The waiting period applicable to the Second Amended Plan and the purchase of the Rights Offering Units, if any, under the HSR Act will have been terminated or will have expired. * Expense Reimbursement: The Debtors will have paid all Expense Reimbursements on the Effective Date; provided that in the event the Company in good faith disputes whether the amount of the Expense Reimbursements is "reasonable," the Debtors will separate the disputed amount and pay the remainder. * Rights Offering: The Rights Offering will have been consummated pursuant to and in accordance with the Second Amended Plan. * Backstop Funding: The Backstop Parties will have funded the aggregate Total Commitments on substantially similar terms in the Backstop Agreement. * Holdco and Company Execution: Each of the Company and Holdco will have executed the Backstop Agreement. The obligations of Holdco and LandSource Communities are also subject to the satisfaction of these conditions as of the Effective Date: * The consummation of the Rights Offering; * The confirmation of the Chapter 11 Plan; * The waiting period under the HSR Act applicable to the Second Amended Plan and the purchase of the Rights Offering Units under the HSR Act will have been terminated or will have expired; and * Each of the Backstop Parties will have delivered a joinder to the Holdco LLC Agreement. Expiration Date: July 31, 2009 Termination: Termination by Backstop Parties: * The Backstop Parties will have the right to terminate the Backstop Agreement by notice to the Plan Proponent and LandSource Communities, (1) if LandSource or Holdco materially breaches the Backstop Agreement and the breach is not cured after a five-day notice period, or (2) if the "Conditions To Fund" have not been satisfied by July 31, 2009 * A Backstop Party may also terminate its individual Total Commitment Amount following an amendment of the Second Amended Plan, or any form of agreement which is not reasonably acceptable to the Backstop Party. Termination by the Plan Proponent: * The Plan Proponent will have the right to terminate the Backstop Agreement by notice to the Backstop Parties, (1) if any Backstop Party materially breaches the Backstop Agreement and the breach is not cured after a five-day notice period, or (2) if conditions to Holdco or LandSource's obligations have not been satisfied by the Expiration Date. Termination due to an Alternative Transaction: * The Backstop Agreement will automatically terminate upon (l) Court approval of a sale or sales of all or a material portion of the Debtors' assets to a third party other than the First Lien Secured Claimholders, (2) the filing of a plan of reorganization that does not contemplate the consummation of the Rights Offering and reorganization of the Debtors on substantially similar terms as set forth in the Second Amended Plan, or (3) the acceptance of the Plan Proponent of parties, other than the noted Backstop Parties, as backstop parties for the Rights Offering. Rights Offering On the Effective Date, the Backstop Parties Premium: will be entitled to an amount, which is equal in the aggregate to 5% of the Rights Offering Amount. The portion of the Rights Offering Premium to which each of the Backstop Parties is entitled is set forth in a schedule attached to the Backstop Agreement. Lazard Freres & Co. LLC, the Debtors' investment banker, will market the Backstop Commitment Amounts to determine whether another party will take on the obligations of the Backstop Parties in a manner more economically beneficial to the Debtors' estates. The marketing effort will be limited to the Backstop Commitment Amounts and will not include the Individual Subscription Rights of each of the Backstop Parties. To the extent Lazard receives any offers that may be more economically beneficial to the Debtors' estates, the Plan Proponent, in consultation with Lazard, will determine whether to proceed with the Backstop Parties or the competing offer, which would constitute an "Alternative Transaction" under the Backstop Agreement. Mr. Harron asserts that the Backstop Agreement provides for the necessary assurance that the Rights Offering will generate sufficient proceeds to effectuate the proposed Second Amended Plan. A full-text copy of the Backstop Rights Purchase Agreement including the list of the Backstop Party, is available for free at http://bankrupt.com/misc/LandS_BarclaysBackstopDeal.pdf At the Plan Proponent's behest, the Court is set to consider the Backstop Motion on May 20, 2009, at 1:00 p.m. (ET). Objections to the Motion are due no later than May 18, at 4:00 p.m. (ET). About LandSource Communities LandSource Communities Development LLC, which operates in Arizona, California, Florida, New Jersey, Nevada and Texas, is involved in the planning and development of master planned communities and transforming undeveloped land into ready-to-build home sites and commercial properties. With the exception of one development project in Marina del Rey, California, LandSource does not build homes or commercial properties. LandSource and 20 of its affiliates filed for Chapter 11 bankruptcy protection before the U.S. Bankruptcy Court for the District of Delaware on June 8, 2008 (Lead Case No. 08-11111). The Debtors are represented by Marcia Goldstein, Esq., at Weil Gotshal & Manges in New York, and Mark D. Collins, Esq., at Richards Layton & Finger in Wilmington, Delaware. Lazard Freres & Co. acts as the Debtors' financial advisors, and Kurtzmann Carson Consultants serves as the Debtors' notice and claims agent. According to the Troubled Company Reporter on May 22, 2008, LandSource sought help from its lender consortium to restructure $1.24 billion of its debt. LandSource engaged a 100-bank lender group led by Barclays Capital Inc., which syndicates LandSource's debt. LandSource had received a default notice on that debt from the lender group after it was not able to timely meet its payments during mid-April. However, LandSource failed to reach an agreement with its lenders on a plan to modify and restructure its debt, forcing it to seek protection from creditors. (LandSource Bankruptcy News, Issue No. 21; http://bankrupt.com/newsstand/or 215/945-7000). LANDSOURCE COMMUNITIES: Disclosure Statement Hearing on May 20 -------------------------------------------------------------- LandSource Communities Development LLC and its 20 debtor affiliates, Barclays Bank PLC, as administrative agent for itself and various lenders under a Superpriority DIP First Lien Credit Agreement, The Bank of New York Mellon as the Second Lien Administrative Agent, and the Official Committee of Unsecured Creditors, entered into a stipulation adjourning the hearing to consider the adequacy of the amended Disclosure Statement explaining the First Amended Chapter 11 Plan to May 20, 2009, at 1:00 p.m. (ET). Barclays delivered to the U.S. Bankruptcy Court for the District of Delaware its Second Amended Joint Plan of Reorganization for LandSource Communities and its debtor affiliates and an accompanying Disclosure Statement on May 6, 2009. The Court has approved the Stipulation. Parties who dispute the Disclosure Statement must file their written objections no later than May 15, 2009, at 4:30 p.m. (ET). The Disclosure Statement Objection Deadline only applies to parties who have appeared at the telephonic hearing on the Emergency Motion sought by the Creditors Committee to adjourn the Disclosure Statement hearing. Any amended disclosure statement, plan or supplemental documents the Plan Proponent intends to seek approval of must be filed with the Court filed no later than May 6, 2009, at 4:30 p.m. Any brief with respect to the Disclosure Statement may be filed with the Court on or before May 19, 2009, at 12:00 p.m. (ET). The Court is also set to consider the Plan Proponent's proposed solicitation and voting procedures on May 20. The Creditors Committee and the U.S. Trustee have until May 15, at 4:30 p.m. to file objections to the Solicitation Procedures Motion. The Disclosure Statement Hearing was originally scheduled for April 17, 2009. Before the parties came to a final stipulated date on the Disclosure Statement hearing, each of the Creditors Committee and the Plan Proponent sought adjournment of the April 17 original hearing date: -- The Creditors Committee previously sought and obtained an order to continue the Disclosure Statement Hearing to May 1, 2009. The Committee argued that the Plan Proponent basically filed a draft disclosure statement as a placeholder that lacked any meaningful financial information and critical implementation documents. The Committee asserted that it cannot complete a thorough analysis of the Disclosure Statement as it is. -- The Plan Proponent proposed to adjourn the Disclosure Statement Hearing for one more week or the first date when the Court may be available. The Plan Proponent said it intends to supplement the Disclosure Statement with information as it may deem necessary. The Plan Proponent though asserted that the Committee's demand to require the Plan Proponent to file any supplement to the Disclosure Statement at least 25 days before the Disclosure Statement Hearing is neither customary nor appropriate. The Parties now agree to have the Court conduct the Disclosure Statement Hearing on May 20, 2009. The Plan Proponent has also recently presented to the Court a Second Amended Plan of Reorganization and Disclosure Statement dated May 6, 2009. It also filed exhibits as attachments to the Plan and Disclosure Statement, including a liquidation analysis and valuation analysis. Disclosure Statement Objections Several parties made known to the Court their objection to the Disclosure Statement explaining the First Amended Plan of Reorganization filed by Barclays Bank. They are: * The Office of the Attorney General, on behalf of the California Regional Water Quality Control Board, San Francisco Bay Region, and the California State Water Resources Control Board * California Department of Toxic Substances Control * The Pension Benefit Guaranty Corporation * Maricopa County Treasurer * Lakes by the Bay South Community Development District * Independent Construction Company * Southern Sun Construction Company * Pacific Advanced Civil Engineering, Inc. * Oakridge Landscape Inc. * Nature-Gro Corporation * Briarwood Capital, LLC * The County of Riverside and the County of Yuba * Altfillisch Contractors, Inc. Sam Hill & Sons Inc. and CH2M HILL Constructors Inc. oppose approval of the Disclosure Statement explaining the Second Amended Chapter 11 Plan filed by Barclays. The Pension Benefit Guaranty Corporation asserts that the proposed Disclosure Statement fails to disclose adequately the Pension Plan's future, the Pension Plan-related claims, and the Pension Plan's impact on the Debtors, the Reorganized Debtors, and the proposed plan of reorganization. The PBGC says required information has not been timely provided for creditors' and the Court's review. The Plan, the PBGC adds, proposes both excessive discharges and a sub rosa substantive consolidation that are not supportable under the Bankruptcy Code. California Department of Toxic Substances Control and The Office of the Attorney General, on behalf of the California Regional Water Quality Control Board, San Francisco Bay Region, and the California State Water Resources Control assert that the information provided in the Disclosure Statement is inadequate because it fails to disclose to creditors the Debtors' environmental obligations and liabilities related to the Mare Island property. The Department adds that the Disclosure Statement of the First Amended Plan does not provide a liquidation analysis and financial projections. The Objectors assert one or more of these concerns: -- The Disclosure Statement is vague as to the treatment of mechanics liens encompassed within the term "Permitted Liens" as used in the Final DIP Order. It also fails to explain that the holders of Permitted Liens are being denied the opportunity to vote on the Plan, while in fact the claims may very well be impaired, as a result of the indefinite time for the Proponent to complete its review of the claims. -- The Disclosure Statement fails to set forth a class which specifically deals with secured real property tax claims. -- The Disclosure Statement fails to provide any meaningful information on the estimated recovery for general unsecured claims. -- Certain classes of claims do not provide for the accrual of interest on claims. It is also clearly noted in the Disclosure Statement how certain claims will be treated and classified. Briarwood Capital, LL, a member in HCC Investors, LLC, and the owner and developer of the 540-acre golf course development in Rancho Santa Fe, California, specifically complains that the Disclosure Statement does not describe the history or status of HCC or the development; does not disclosure the prepetition and unauthorized transfer of the HCC membership interest; and does not disclose Briarwood's objection to the assignments. Sam Hill argues that upon review of the Disclosure Statement, it is impossible for mechanic's lien claimants in general, and Sam Hill in particular, to determine whether its or their Mechanic's lien claims will be treated as Class 2 Senior Permitted Lien Claims and if not, there is also no provision on how their liens will be treated. Sam Hill's counsel says the language in the Amended Disclosure Statement is still confusing, despite his communication with the Debtors' and the Plan Proponent's counsel for clarification of the language. CH2M HILL, for its part, contends that the Amended Disclosure Statement does not adequately disclose the Mare Island Contracts between CH2M and Lennar Mare Island, LLC. These Contracts are integrally related to the Mare Island Property, which is to be sold to the Lennar Entities pursuant to the Amended Plan. CH2M says creditors cannot make an informed judgment regarding the Amended Plan without disclosure of the Mare Island Contracts, of their importance to the sale of the Mare Island Property, and of the risk that, if the Contracts are sought to be assumed by LMI and assigned to the Lennar Entities. CH2M adds that the current deadlines in the Second Amended Disclosure Statement and Plan do not provide sufficient time for it to assert cure, damages and adequate assurance of future performance claims in the event the Debtors seek to assume the Mare Island Contracts. It also does not provide a meaningful opportunity to engage in discussions with the Debtors regarding those claims before the Confirmation Hearing, CH2M adds. About LandSource Communities LandSource Communities Development LLC, which operates in Arizona, California, Florida, New Jersey, Nevada and Texas, is involved in the planning and development of master planned communities and transforming undeveloped land into ready-to-build home sites and commercial properties. With the exception of one development project in Marina del Rey, California, LandSource does not build homes or commercial properties. LandSource and 20 of its affiliates filed for Chapter 11 bankruptcy protection before the U.S. Bankruptcy Court for the District of Delaware on June 8, 2008 (Lead Case No. 08-11111). The Debtors are represented by Marcia Goldstein, Esq., at Weil Gotshal & Manges in New York, and Mark D. Collins, Esq., at Richards Layton & Finger in Wilmington, Delaware. Lazard Freres & Co. acts as the Debtors' financial advisors, and Kurtzmann Carson Consultants serves as the Debtors' notice and claims agent. According to the Troubled Company Reporter on May 22, 2008, LandSource sought help from its lender consortium to restructure $1.24 billion of its debt. LandSource engaged a 100-bank lender group led by Barclays Capital Inc., which syndicates LandSource's debt. LandSource had received a default notice on that debt from the lender group after it was not able to timely meet its payments during mid-April. However, LandSource failed to reach an agreement with its lenders on a plan to modify and restructure its debt, forcing it to seek protection from creditors. (LandSource Bankruptcy News, Issue No. 21; http://bankrupt.com/newsstand/or 215/945-7000). LANDSOURCE COMMUNITIES: Buyer Balks at Washington Square Resale --------------------------------------------------------------- Dulce View (Los Angeles) LLC, now known as Dolce View (Los Angeles) LLC, objects to LNR-Lennar Washington Square's bid to resell its property located in the State of California, commonly known as Washington Square. By the New Auction Notice, LNR-Lennar Washington Square is improperly seeking bids for the very property it is already obligated to convey to Dolce View, Domenic E. Pacitti, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, in Wilmington, Delaware, tells the U.S. Bankruptcy Court for the District of Delaware. He adds that the New Auction Notice is silent to the fact that the Court, after notice and hearing, has already approved a sale of the Property to Dulce View in accordance with the Bidding Procedures Order entered by the Court on December 9, 2008. Dolce View says it is ready, willing and able to close on the purchase of the Property, and has in fact delivered all necessary deliveries, documents and instructions to the title company to allow closing to occur. However, Mr. Pacitti notes, after execution of the Purchase Agreement, LNR Washington Square improperly executed two covenants and recorded them against the Property and thus, to date: (a) the title company has been unable to issue an irrevocable commitment to issue a title policy in the form required by the Purchase Agreement; and (b) LNR Washington Square has been unable to deliver to Dolce View the title required by the Purchase Agreement. Debtor LNR-Lennar Washington Square had informed the Court that it is reselling Washington Square, after previous buyer Dulce View, failed to meet requirements for the sale closing of the Property. The Debtor has not selected a stalking horse bidder for the proposed sale and auction. The salient details of the proposed sale include: Assets to be sold: Property, commonly known as Washington Square, is Lot 1 of Tract No. 28031, in Los Angeles, California Minimum Bid: $30,000,000 Minimum Deposit 5% of the purchase price of the Required Upon Bid Submission: Deposit Required by 20% of the purchase price of Successful Bidder: the Successful Bid. Interested parties had until May 11, 2009, at 5:00 p.m. (New York Time), to submit a bid for the proposed sale of the Washington Square Property. If two or more bids are received before the Bid Deadline or an Agent seeks an auction, Washington Square will conduct an Auction at the offices of Paul, Hastings, Janofsky & Walker LLP, at 515 South Flower Street, 25th, in Los Angeles, California, on May 15, 2009, at 9:00 a.m. All requests for information concerning the sale of the Washington Square Property should be directed by written request to: Lazard Freres & Co. LLC 30 Rockefeller Plaza, New York, New York 10020 Attention: Brandon Aebersold Brandon.Aebersold@lazard.com with a copy to: Weil, Gotshal & Manges LLP 767 Fifth Avenue, New York, New York 10153 Attention: Debra A. Dandeneau, Esq. debra.dandeneau@weil.com The Debtor seeks a June 2, 2009 hearing for the final sale of the Washington Square Property. Dolce View asserts that LNR Washington Square instead violated the Purchase Agreement by the filing Violative Covenants. Dolce View thus objects to the New Sale Notice. Mr. Pacitti argues that nothing in the Bidding Procedures Order or the Sale Order allows the Debtors to re-auction the Property, where Dolce View stands ready willing and able to close the Sale when LNR Washington Square delivers the property title. Mr. Pacitti notes that in the event the Court determines to approve the sale of the Property to a party other than Dolce View, the order (i) should provide that the effectiveness of the order is stayed for 10 days as provided for under Rule 6004(h) of the Federal Rules of Bankruptcy Procedure, and (ii) should not make any findings under Section 363(m) as to the good faith of the entity purchasing the Property. Debtors Seeks Amendment of Bidding Procedures LNR Washington Square has asked the Court, on an expedited basis, to amend the Bidding Procedures Order to authorize it to offer the successful bidder at the auction reimbursement for reasonable out- of-pocket expenses of up to $50,000 in the event the sale to the bidder is not approved by the Court solely as a result of the pending dispute with Dolce View and CIM. LNR Washington Square says it is concerned that potential bidders may be dissuaded from bidding because even if a bidder is determined to be the successful bidder, the Court may enter an order enjoining the sale to the successful bidder or otherwise directing that the Property be sold to Dolce View. In that case, a bidder may believe it is not worth spending the resources to conduct due diligence, negotiate a purchase and sale agreement, and participate in the auction if uncertainty exists regarding whether they will be permitted to consummate the acquisition of the Property if they are the successful bidder, LNR Washington Square points out. LNR Washington Square believes that bidding will be encouraged by offering to reimburse up to $50,000 in expenses incurred by the party that is selected by the Debtors as the successful bidder at the auction in the event the sale to that bidder is not approved by the Court solely as a result of the pending dispute with Dolce View and CIM. In a separate filing, LNR Washington Square states that Dolce View "refus[ed] to close" on the sale of the Property and it is for that reason that LNR Washington Square filed the New Auction Notice. However, Dolce View and CIM object to and deny the allegation. Court OKs Reimbursement Judge Kevin Carey authorizes, but does not direct, LNR Washington Square, in its sole discretion, to offer the successful bidder at the auction reimbursement for reasonable out-of-pocket expenses up to $50,000 in the event the sale to the bidder is not approved by the Court solely as a result of the pending dispute with Dolce View and CIM. The Bidding Procedures Order will remain in effect, except as modified by the new Order. About LandSource Communities LandSource Communities Development LLC, which operates in Arizona, California, Florida, New Jersey, Nevada and Texas, is involved in the planning and development of master planned communities and transforming undeveloped land into ready-to-build home sites and commercial properties. With the exception of one development project in Marina del Rey, California, LandSource does not build homes or commercial properties. LandSource and 20 of its affiliates filed for Chapter 11 bankruptcy protection before the U.S. Bankruptcy Court for the District of Delaware on June 8, 2008 (Lead Case No. 08-11111). The Debtors are represented by Marcia Goldstein, Esq., at Weil Gotshal & Manges in New York, and Mark D. Collins, Esq., at Richards Layton & Finger in Wilmington, Delaware. Lazard Freres & Co. acts as the Debtors' financial advisors, and Kurtzmann Carson Consultants serves as the Debtors' notice and claims agent. According to the Troubled Company Reporter on May 22, 2008, LandSource sought help from its lender consortium to restructure $1.24 billion of its debt. LandSource engaged a 100-bank lender group led by Barclays Capital Inc., which syndicates LandSource's debt. LandSource had received a default notice on that debt from the lender group after it was not able to timely meet its payments during mid-April. However, LandSource failed to reach an agreement with its lenders on a plan to modify and restructure its debt, forcing it to seek protection from creditors. (LandSource Bankruptcy News, Issue No. 21; http://bankrupt.com/newsstand/or 215/945-7000). LANDSOURCE COMMUNITIES: Unit Sues Dolce for Breach of Sale Pact --------------------------------------------------------------- Debtor LNR-Lennar Washington Square, LLC, initiated an adversary complaint against Dolce View (Los Angeles), LLC, formerly known as Dulce View (Los Angeles), LLC, and CIM Fund III, L.P., for breach of contract of a Purchase and Sale Agreement dated January 14, 2009. The Debtor specifically seeks to recover damages: -- arising from Dolce View's breach of the PSA; and -- against CIM Fund, which under the terms of the Purchase Agreement, "irrevocably and unconditionally" guaranteed the payment of all damages stemming from Dolce View's breach of the PSA. The U.S. Bankruptcy Court for the District of Delaware had approved the sale of a property commonly known as Washington Square - Lot 1 of Tract No. 28031, in Los Angeles, California, to Dolce View in accordance with a Purchase Agreement in which Dolce View agreed to act as a stalking horse bidder. LNR Washington Square avers that it satisfied all conditions to the closing of Sale, however, Dolce View raised a number of issues regarding a punch list, certain insurance policies, and closing documents that it claimed were open and that the parties had to finalize before Closing could occur. The Debtor notes that although none of the issues Dolce View raised were legitimate, it made substantial concessions in order to close the sale and extended the original Closing date to March 25, 2009. Despite all this, Dolce View refused to close the sale, the Debtor tells Judge Kevin Carey. Contrary to its obligations under the Purchase Agreement, Dolce View did not pay the purchase price nor timely performed its obligations under the Purchase Agreement on the Closing Date, according to the Debtor. The Debtor says it then served a notice to Dolce View that the buyer's conduct constituted a breach under the Purchase Agreement. Dolce View, however, did not cure its breach within one business day as required by the Purchase Agreement, the Debtor relates. The Debtor adds that as of April 3, Dolce View has not cured its breach and neither Dolce View nor CIM Fund has satisfied its obligations under the Purchase Agreement. Accordingly, LNR Washington Square asks the Court to render a judgment in its favor and against Dolce View and CIM Fund for damages in an amount to be determined, plus attorneys' fees and costs. The Debtor employed Richards, Layton & Finger, P.A., as its attorneys in connection with the Adversary Complaint and has obligated itself to pay the firms' market fee for its services and to reimburse counsel for expenses incurred in connection the matter. Dolce View Responds Dolce View argues that LNR Washington Square never satisfied the conditions precedent to the closing of the sale or that the Debtor ever properly scheduled closing. Instead, Dolce View says, the Debtor breached its express and implied covenants under the Purchase Agreement by improperly entering into two written covenants with the City of Los Angeles and allowing those covenants to be recorded against the Property, which in turn has made it impossible for the Debtor to deliver to Dolce View title to the Property as required under the Purchase Agreement. Dolce View insists that while it did raise certain questions about a punch list, insurance policies and other closing matters, those questions were all properly raised under the terms of the Purchase Agreement and were not the cause of any delay in closing. Moreover, Dolce View denies the allegation that it refused to close the Sale. To the contrary, Dolce View maintains that it is ready, willing and able to close on the purchase of the Property, and has in fact has delivered all necessary documents and instructions to the title company to allow closing to occur. Dolce View says it has delivered to First American Title Insurance Company, which serves as both the Title Company and Escrow Agent under the Purchase Agreement, deposits totaling $3,650,000 and is prepared to pay the balance of the Purchase Price upon receipt of an irrevocable commitment to issue a title policy. On the other hand, Dolce View tells Judge Carey that despite its demand, the Debtor has failed and refused to remove the violative covenants, proceed to closing, and deliver the Property title required by the Purchase Agreement. Accordingly, Dolce View and CIM ask the Court to: (a) order the Debtor to return the $3,650,000 initial deposit to Dolce View; (b) award them damages, including lost profits, in an amount to be determined; (c) declare that Dolce View and CIM have no further obligations to the Debtor under the Purchase Agreement; and (d) award them lawsuit costs and attorneys' fees. About LandSource Communities LandSource Communities Development LLC, which operates in Arizona, California, Florida, New Jersey, Nevada and Texas, is involved in the planning and development of master planned communities and transforming undeveloped land into ready-to-build home sites and commercial properties. With the exception of one development project in Marina del Rey, California, LandSource does not build homes or commercial properties. LandSource and 20 of its affiliates filed for Chapter 11 bankruptcy protection before the U.S. Bankruptcy Court for the District of Delaware on June 8, 2008 (Lead Case No. 08-11111). The Debtors are represented by Marcia Goldstein, Esq., at Weil Gotshal & Manges in New York, and Mark D. Collins, Esq., at Richards Layton & Finger in Wilmington, Delaware. Lazard Freres & Co. acts as the Debtors' financial advisors, and Kurtzmann Carson Consultants serves as the Debtors' notice and claims agent. According to the Troubled Company Reporter on May 22, 2008, LandSource sought help from its lender consortium to restructure $1.24 billion of its debt. LandSource engaged a 100-bank lender group led by Barclays Capital Inc., which syndicates LandSource's debt. LandSource had received a default notice on that debt from the lender group after it was not able to timely meet its payments during mid-April. However, LandSource failed to reach an agreement with its lenders on a plan to modify and restructure its debt, forcing it to seek protection from creditors. (LandSource Bankruptcy News, Issue No. 21; http://bankrupt.com/newsstand/or 215/945-7000). LAS VEGAS SANDS: Bank Debt Sells at 30% Off in Secondary Market --------------------------------------------------------------- Participations in a syndicated loan under which Las Vegas Sands is a borrower traded in the secondary market at 69.06 cents-on-the- dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 9.08 percentage points from the previous week, the Journal relates. The loan matures May 1, 2014. The Company pays 175 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's B- rating. Participations in a syndicated loan under which affiliate Venetian Macau US Finance Co., LLC, is a borrower traded in the secondary market at 75.79 cents-on-the-dollar during the week ended May 8, 2009, an increase of 3.42 percentage points from the previous week. The loan matures May 25, 2013. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's B- rating. Based in Las Vegas, Nevada, Las Vegas Sands Corp. (NYSE: LVS) -- http://www.lasvegassands.com/-- owns and operates The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and an expo and convention center. The company also owns and operates the Sands Macao, the first Las Vegas-style casino in Macao, China. On March 10, 2009, Moody's Investors Service lowered the Company's Corporate Family Rating to B3 from B2 and assigned a negative rating outlook. LEAR CORP: Bank Debt Sells at 55% Off in Secondary Market --------------------------------------------------------- Participations in a syndicated loan under which Lear Corp. is a borrower traded in the secondary market at 44.78 cents-on-the- dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 5.38 percentage points from the previous week, the Journal relates. The loan matures March 29, 2012. The Company pays 250 basis points above LIBOR to borrow under the facility. The bank debt is not rated by Moody's and S&P. Meanwhile, participations in a syndicated loan under which Dana Corp. is a borrower traded in the secondary market at 35.29 cents- on-the-dollar during the week ended May 8, 2009, an increase of 5.79 percentage points from the previous week. The loan matures January 31, 2015. The Company pays 375 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's B+ rating. Participations in a syndicated loan under which Avis Budget Car Rental LLC is a borrower traded in the secondary market at 54.00 cents- on-the-dollar during the week ended May 8, 2009, an increase of 8.53 percentage points from the previous week. The loan matures April 1, 2012. The Company pays 125 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Ba3 rating and S&P's CCC+ rating. As reported in yesterday's Troubled Company Reporter, participations in a syndicated loan under which Visteon Corp. is a borrower traded in the secondary market at 24.19 cents- on-the- dollar during the week ended May 8, 2009, an increase of 3.19 percentage points from the previous week. The loan matures May 30, 2013. The Company pays 300 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Caa2 rating and S&P's B- rating. Participations in a syndicated loan under which General Motors Corp. is a borrower traded in the secondary market at 59.15 cents- on-the-dollar during the week ended May 8, 2009, a drop of 5.50 percentage points from the previous week. The loan matures November 27, 2013. The Company pays 275 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Caa2 rating and S&P's CCC rating. About Lear Corp. Based in Southfield, Michigan, Lear Corp. is a global automotive supplier, conducting business in two product operating segments: seating and electrical and electronic. The seating segment includes seat systems and the components. The electrical and electronic segment includes electrical distribution systems and electronic products, primarily wire harnesses, junction boxes, terminals and connectors, various electronic control modules, as well as audio sound systems and in-vehicle television and video entertainment systems. The assembly process with respect to the electrical and electronic segment is performed in low-cost labor sites in Mexico, Honduras, the Philippines, Eastern Europe and Northern Africa. Lear has divested substantially all of the assets of its interior segment, which included instrument panels and cockpit systems, headliners and overhead systems, door panels, flooring and acoustic systems and other interior products. * * * As reported by the Troubled Company Reporter on January 30, 2009, Lear Corp. had approximately $1.6 billion in cash and cash equivalents as of December 31, 2008, providing more than adequate resources to satisfy ordinary course business obligations, according to the Company. Lear had $6.8 billion in total assets, and $3.5 billion in reported debt as of December 31, 2008. In January, Moody's Investors Service lowered the Corporate Family and Probability of Default ratings of Lear, to Caa2 from B3. In a related action, the rating of the senior secured term loan was lowered to Caa1 from B2, and the rating on the senior unsecured notes was lowered to Caa2 from B3. The ratings remain on review for further possible downgrade. Standard & Poor's Ratings Services also lowered its corporate credit rating on Lear to 'B-' from 'B'. At the same time, S&P also lowered its issue-level ratings on the company's debt. The ratings remain on CreditWatch, where they had been placed with negative implications on Nov. 13, 2008. LEAR CORP: Lenders Extend Default Waiver Through June 30 -------------------------------------------------------- Lear Corporation has reached an agreement with its lenders to extend the waiver under its primary credit facility. The agreement extends, through June 30, 2009, a waiver of Lear's existing defaults under its primary credit facility and an amendment of the financial covenants and certain other provisions of the primary credit facility. The agreement also expands Lear's ability to participate in the United States Department of Treasury's automotive supplier support programs. The Company and its lenders remain in active discussions regarding further modifications to its primary credit facility in light of existing and projected industry conditions. "Despite the challenging conditions we are facing, we have a strong liquidity position and we are continuing to seek alternatives to address our capital structure," said Bob Rossiter, Lear's chairman, chief executive officer and president. "We appreciate the support and cooperation we have received from our supplier partners, our customers and our lenders as we work together through the industry downturn." Ernst & Young LLP in Detroit, Michigan, in its March 2009 audit report, raised substantial doubt about the Company's ability to continue as a going concern. During the fourth quarter of 2008, Lear elected to borrow $1.2 billion under its primary credit facility to protect against possible disruptions in the capital markets and uncertain industry conditions, as well as to further bolster its liquidity position. As of December 31, 2008, Lear had approximately $1.6 billion in cash and cash equivalents on hand, providing adequate resources to satisfy ordinary course business obligations. Lear, however, elected not to repay the amounts borrowed at year end in light of continued market and industry uncertainty. As a result, as of December 31, 2008, Lear was no longer in compliance with the leverage ratio covenant contained in the primary credit facility. Lear has been engaged in active discussions with a steering committee consisting of several significant lenders to address issues under the primary credit facility. On March 17, 2009, Lear entered into an amendment and waiver with the lenders under the primary credit facility which provides, through May 15, 2009, for (1) a waiver of the existing defaults under the primary credit facility and (2) an amendment of the financial covenants and certain other provisions contained in the primary credit facility. In its Annual Report on Form 10-K for the year ended December 31, 2008, Lear said it was reviewing strategic and financing alternatives available to the Company and has retained legal and financial advisors to assist it. The Company has been engaged in continuing discussions with the lenders and others regarding a restructuring of its capital structure. Lear has said a restructuring would likely affect the terms of its primary credit facility, other debt obligations, including its senior notes, and common stock and may be effected through negotiated modifications to the agreements related to its debt obligations or through other forms of restructurings, which Lear may be required to effect under court supervision pursuant to a voluntary bankruptcy filing under Chapter 11 of the U.S. Bankruptcy Code. A default under Lear's primary credit facility could result in a cross-default or the acceleration of Lear's payment obligations under other financing agreements. As of December 31, 2008, the scheduled maturities of Lear's long- term debt, excluding obligations under the primary credit facility, for the five succeeding years are: Year Maturities ---- ---------- 2009 $4,300,000 2010 $7,500,000 2011 $1,800,000 2012 $1,300,000 2013 $301,700,000 Lear said, although its immediate focus "is on reducing operating costs and efficiently managing our business through challenging industry conditions and the overall economic downturn, we believe that there is significant longer-term opportunity for continued growth in our seating and electrical and electronic businesses and are pursuing a strategy focused around our global product capabilities. This strategy includes investing in new products and technologies, as well as selective vertical integration. We believe our commitment to superior customer service and quality, together with a cost competitive manufacturing footprint, will result in a global leadership position in each of our product segments and improved operating margins." Lear will hold its Annual Meeting of Stockholders on May 21, 2009, at 10:00 a.m. EDT. The meeting will take place at the Company's headquarters in Southfield, Michigan. About Lear Corp. Based in Southfield, Michigan, Lear Corporation -- http://www.lear.com/-- is one of the world's leading suppliers of automotive seating systems, electrical distribution systems and electronic products. The Company's products are designed, engineered and manufactured by a diverse team of 80,000 employees at 210 facilities in 36 countries. Lear is traded on the New York Stock Exchange under the symbol [LEA]. * * * Lear Corp. had approximately $1.6 billion in cash and cash equivalents as of December 31, 2008, providing more than adequate resources to satisfy ordinary course business obligations, according to the Company. Lear had $6.8 billion in total assets, $4.6 billion in total current liabilities, $2.0 billion in long term liabilities, and $198.9 million in stockholders' equity as of December 31, 2008. In January, Moody's Investors Service lowered the Corporate Family and Probability of Default ratings of Lear, to Caa2 from B3. In a related action, the rating of the senior secured term loan was lowered to Caa1 from B2, and the rating on the senior unsecured notes was lowered to Caa2 from B3. The ratings remain on review for further possible downgrade. Standard & Poor's Ratings Services also lowered its corporate credit rating on Lear to 'B-' from 'B'. At the same time, S&P also lowered its issue-level ratings on the company's debt. The ratings remain on CreditWatch, where they had been placed with negative implications on Nov. 13, 2008. LIFEPOINT HOSPITALS: Fitch Affirms Issuer Default Rating at 'BB-' ----------------------------------------------------------------- Fitch Ratings has affirmed these ratings for LifePoint Hospitals, Inc.: -- Issuer Default Rating at 'BB-'; -- Secured bank credit facility at 'BB-'; -- Senior subordinated convertible notes at 'B'. The Rating Outlook is Stable. Total rated debt at March 31, 2009 was approximately $1.4 billion. LifePoint's ratings reflect the company's improving credit profile offset by continued operational challenges and a difficult industry environment. LifePoint's leverage (total debt/EBITDA) declined for the third consecutive year to 3.2 times (x) in 2008 from 3.3x in 2007. The decline was primarily due to EBITDA growth since total debt outstanding remained relatively constant at $1.5 billion. During the first quarter, leverage declined further to 2.9x largely as a result of a change in accounting for convertible debt securities that resulted in a $118 million discount being applied to the company's outstanding convertible debt securities. In 2009 and beyond, Fitch expects leverage to remain relatively consistent with current levels although occasional increases to fund acquisitions are possible. Fitch believes that LifePoint will resume actively acquiring hospitals in 2009 after taking a hiatus from significant acquisitions in 2007 and 2008. Fitch expects that improved market conditions and relatively low valuations will stimulate activity this year, particularly since many non-profit hospitals are struggling and may put themselves up for sale. LifePoint has already begun acquiring, with the February acquisition of 138-bed Rockdale Medical Center for approximately $80 million in cash on hand plus a $30 million capital commitment over the next six years. The company completed the acquisition with cash to avoid increasing leverage. However, Fitch believes the company would be willing to increase leverage for a more sizable opportunity, as it has done in the past. For example, LifePoint acquired Province Healthcare Company in 2005 for approximately $1.8 billion, but Fitch notes LifePoint was able to reduce leverage to below 4x within a year after reaching approximately 5.8x at June 30, 2005. However, given the company's focus on improving operations, significant acquisition activity could present meaningful integration risk to the credit. Over the past few years, LifePoint has contended with several operating challenges related to physician recruitment, integrating acquisitions and increasing operating expenses. As a result, the company has reported the worst organic volume growth in the industry since Jan. 1, 2007 as well as a more than 400 basis point decline in EBITDA margins over the past four years. LifePoint has taken several steps to address these issues, including adding centralized resources for physician recruitment and quality, as well as conducting deep-dive analyses at key facilities. There have been some preliminary signs of progress from these efforts, including improved quality scores, higher levels of physician recruiting (LifePoint met its physician recruiting target in 2008 and is 30% ahead of the prior year during the first quarter of 2009) and volume increases in targeted service lines (such as a 15%-17% increase in CT volumes and a 12% increase in gross outpatient revenues during the first quarter of 2009). However, Fitch notes that LifePoint's organic admissions growth continues to lag the industry average. Furthermore, LifePoint faces an increasingly difficult industry environment in 2009, which could lead to further declines in operating performance. LifePoint's ratings are supported by the company's adequate liquidity and strong cash flows. LifePoint's free cash flow margin, at 6.5% for 2008, is the highest in the for-profit hospital industry. Liquidity is also provided by the company's undrawn $350 million secured revolver and cash on hand of approximately $45 million at March 31, 2009. Fitch notes that the revolving credit facility matures in 2010, but the company has no other significant debt maturities until 2011 when the $706 million term loan begins to be repaid in four equal installments from June 2011 until maturity in April 2012. Free cash flow for the latest 12 months ended March 31, 2009 was approximately $156 million and Fitch expects free cash flow to remain relatively consistent with this level going forward. LINN ENERGY: Moody's Assigns 'B3' Rating on $200 Mil. Notes ----------------------------------------------------------- Moody's Investors Service assigned a B3 (LGD 6; 91%) rating to Linn Energy, LLC's proposed $200 million eight-year senior unsecured notes and affirmed its existing B1 Corporate Family Rating, B1 Probability of Default Rating, and existing B3 (LGD 6; though the point estimate is changing from 92% to 91%) senior unsecured note ratings. The note ratings are assigned under Moody's Loss Given Default notching methodology. The SGL-3 Speculative Grade Liquidity Rating was also affirmed. The outlook is stable. Note proceeds from the pending offering along with the pending $75 million equity offering will repay a like amount of outstandings under Linn's first secured borrowing base revolver. Under Moody's Loss Given Default methodology, the rating for the proposed senior notes offering is two notches lower than the B1 CFR. This is the result of the company's estimated $1.2 billion outstanding balance under the revised $1.7 billion borrowing base revolver, constituting nearly 72% of the capital structure as determined by the LGD methodology pro-forma for the $200 million notes offering and $75 million equity offering. The affirmation of the B1 CFR reflects the company's overall sizeable and durable asset base comparable to similarly rated E&P companies. Although Linn's property base has undergone significant change over the past two years, it consists of long- lived durable assets needing relatively low levels of capital spending to sustain production and contains prospects for near- term growth. The ratings are further supported by seasoned management; sound liquidity due to effectively 100% of production being hedged through 2011 with significant proportion extending further into 2014; and sound production and productivity trends. The B1 CFR is tempered by the company's LLC corporate structure which contains the burden of not only sustaining, but also growing its regular cash distributions to unit holders, and the need to supplement organic growth with acquisitions. This distribution obligation amplifies the relatively high reinvestment risk for the company but is compounded by having a depleting capital base underpinning a depleting asset base. The B1 CFR also incorporates the company's relatively high leverage on the proven developed reserve base approximately $8.86/boe pro-forma for the equity offering which is on the higher end of the B1 rated exploration and production peers group. Moody's expects that leverage will likely remain on the higher end for the rating as the LLC model does not lend itself to much debt reduction given that cash flow after maintenance capex will be paid to unitholders instead of debt reduction. In addition potential acquisitions may also result in sustained higher levels of debt within the company. However, given the company's scale and diversification, the B1 rating can handle some incremental leverage. The stable outlook assumes that the company will be able to continue to demonstrate stable production trends, while maintaining a manageable cost structure. The stable outlook also reflects the expectation that leverage on the PD reserves remains within the $9.00/boe range and future major acquisitions will be adequately funded with equity, The speculative grade liquidity rating of SGL-3 primarily reflects Moody's expectation that Linn will have adequate liquidity to cover its planned capital spending needs, interest expense, and working capital requirements over the next twelve months. Given its LLC structure, Moody's does not expect Linn to have much free cash flow after unit distributions, but will have adequate availability under its senior secured revolving credit facility to cover any funding needs. Moody's last rating action for Linn Energy, LLC dates from June 17, 2008, at which time Moody's assigned a first time B1 corporate family rating, a B3 (LGD 6; 92%) rating to its senior unsecured notes, a B1 probability of default rating, and an SGL-3 speculative grade liquidity rating. Linn Energy is a Houston, Texas based independent energy company engaged in the development, production, acquisition, and exploitation of long life crude oil and natural gas properties in the United States. The company's reserves and production are located in California and Mid- Continent regions. LINN ENERGY: S&P Assigns 'B-' Rating on $200 Mil. Senior Notes -------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'B-' rating and '6' recovery rating (indicating S&P's expectation of 0%-10% recovery in the event of a payment default) to oil and gas exploration and production company Linn Energy LLC's proposed $200 million senior unsecured note issuance. Linn Energy Finance Corp. is a co-issuer. The corporate credit rating on Linn is 'B+' and the outlook is stable. As of March 31, 2009, Houston, Texas- based Linn had $1.7 billion of debt. "The ratings reflect Linn's midsize reserve base, aggressive financial leverage, and substantial quarterly distributions paid to unit holders," said Standard & Poor's credit analyst David Lundberg. "The low geological risk inherent in the company's reserve base, balanced production mix between natural gas and liquids, and substantial commodity price hedges partially offset these weaknesses." Linn is a limited liability company. However, it resembles a master limited partnership in several ways, and Standard & Poor's generally refers to the company as an E&P MLP. Most notably, Linn pays out substantially all available cash flow to unit holders quarterly, and equity investors tend to value the company on a yield basis. Unlike an MLP, there is neither a general partnership interest nor incentive distribution rights. The outlook is stable. In 2009, S&P expects Linn's core operations to drive acceptable credit ratios, with debt to EBITDA in the low 3x area and FFO to total debt of about 25%. To the extent Linn purchases additional put contracts, credit ratios could be somewhat worse (e.g., $100 million of purchased put contracts will cause FFO to total debt to decline to 20%). S&P also expect distribution coverage to be at least 1.1x, per the company's definition. If measures worsen beyond these levels because Linn funds a future acquisition or its underlying operations underperform, S&P would consider a negative rating action. Excluding purchased put contracts, S&P would consider a negative action if debt to EBITDA exceeds 3.5x or FFO to total debt falls to less than 20%. S&P would also consider a downgrade if liquidity weakens markedly. A near-term positive ratings action is unlikely, but S&P could consider an upgrade over the longer term as the company lengthens its operating track record while maintaining acceptable credit metrics. LUCKY CHASE: AmTrust Bank Wants Trustee Appointed to Get Payments ----------------------------------------------------------------- AmTrust Bank, creditor in Lucky Chase II, LLC's Chapter 11 case, asks the U.S. Bankruptcy Court for the Southern District of Florida for an appointment of Trustee. AmTrust tells the Court that its is urgent that a Trustee be appointed in the Chapter 11 case to ensure that the property is secure and to collect rental payments pledged to AmTrust. The Debtor executed and delivered to Ohio Savings Bank, the predecessor in interest to AmTrust Bank, a $44.4 million promissory noted date August 10, 2006. To secure payment and performance of the note, the Debtor also executed and delivered to AmTrust a certain Renewal Mortgage and Security Agreement dated August 10, 2006. In August 2008, the Debtor and the guarantors: Scott Deaktor, Marsha Deaktor and Marcia Deaktor, have defaulted under the note and mortgage. The Debtor and guarantors owe the lender $28,209,824 that is due as outstanding principal on the note, together with accrued interest thereon. A hearing on AmTrust's motion is set for May 14, 2009. About Lucky Chase II, LLC Headquartered in Pittsburgh, Pennsylvania, Lucky Chase II, LLC operates a single-asset, real estate company. The Company filed for Chapter 11 on April 29, 2009 (Bankr. S. D. Fla. Case No. 09-18087). Arthur J. Spector, Esq., represents the Debtor in its restructuring effort. The Debtor's assets and debts both range from $10 million to $50 million. MACROVISION SOLUTION: Moody's Upgrades Senior Loan Rating to 'Ba1' ------------------------------------------------------------------ Moody's Investors Service upgraded Macrovision Solution Corporation's senior secured term loan rating to Ba1 from Ba2 and senior unsecured note rating to Ba3 from B1. The change in ratings primarily reflects the reduced size of Macrovision's senior secured borrowings following the repayment of approximately $240 million of the company's senior secured term loan. The revised ratings reflect the debt balances as of the March 31, 2009 fiscal quarter end. The company's Ba3 corporate family rating, Ba3 probability of default rating, SGL-2 speculative-grade liquidity rating, and stable outlook remain unchanged. These ratings have been upgraded: -- $307 million ($550 million originally) senior secured term loan due 2013 to Ba1 (LGD2, 20%) from Ba2 (LGD2, 28%) -- $100 million senior unsecured notes due 2013 to Ba3 (LGD4, 58%) from B1 (LGD5, 72%) These ratings are unchanged: -- Corporate family rating: Ba3 -- Probability of default rating: Ba3 -- Speculative grade liquidity rating: SGL-2 -- Outlook, stable Moody's most recent rating action was April 25, 2008 when Moody's revised Macrovision's senior secured term loan rating to Ba2 from Ba1. Macrovision's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within the industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of Macrovision's core industry and Macrovision's ratings are believed to be comparable to those of other issuers of similar credit risk. Macrovision Solutions Corporation formed through the $2.8 billion acquisition of Gemstar-TV Guide International Inc. by Macrovision Corporation has a leading patent portfolio of copy protection technology and interactive program guides. Pro Forma 2008 revenues from continuing operations were approximately $423 million (as if Gemstar was acquired prior to beginning of 2008 calendar year and excludes revenues from divested assets). The company is headquartered in Santa Clara, California. MARATHON HEALTHCARE: Court Okays Paradigm as Preferred Bidder ------------------------------------------------------------- Michael C. Juliano at The Advocate reports that State Superior Court Judge Jerry Wagner has approved Paradigm Healthcare Development as the preferred bidder for Marathon Healthcare Group. The Advocate quoted State Attorney General Richard Blumenthal as saying, "We're hopeful the sale will be completed." Marathon Healthcare, says The Advocate, has been in state receivership since December 2008, after going bankrupt in April 2008. The report says that the state appointed licensed nursing home administrator Phyllis Belmonte to supervise Marathon Healthcare. According to The Advocate, Mr. Blumenthal said that Paradigm Healthcare has made a deposit of $300,000 toward the purchase of Marathon Healthcare, and has offered $350,000 for the Company's operations, which excludes the Company's buildings. Citing Mr. Blumenthal, The Advocate says that Ms. Belmonte and Paradigm Healthcare have been in talks over the sale, which must be finalized by May 28, 2009. Mr. Blumenthal said that Paradigm Healthcare has until June 2, 2009, to secure financing for Marathon Healthcare's six Connecticut homes in Norwalk, New Haven, Prospect, Torrington, Waterbury, and West Haven, The Advocate states. East Hartford, Connecticut-based Marathon Healthcare Group, LLC -- http://www.marathonhealthcare.com/-- provides nursing and long term care. Together with seven affiliates, the healthcare provider filed for Chapter 11 protection on April 3, 2008 (Bankr. D. Conn. Lead Case No. 08-20591). Barry S. Feigenbaum, Esq., at Rogin Nassau, LLC, represents the Debtors in their restructuring efforts. Zeisler & Zeisler PC serves as counsel to the Official Committee of Unsecured Creditors. When the Debtors filed for Chapter 11, they listed assets between $100,000 and $1 million and debts between $1 million and $10 million. MARILYN J FOX: Case Summary & 3 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Marilyn J. Fox 980 Via Morada Monterey, CA 93940 Bankruptcy Case No.: 09-14361 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court Central District of California (Santa Ana) Judge: Erithe A. Smith Debtor's Counsel: Philip D. Dapeer, Esq. Philip D. Dapeer a law corp 699 Hampshire Rd Ste 105 Westlake Village, CA 91361 Tel: (323) 954-9144 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of Ms. Fox's petition, including her list of 3 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-14361.pdf The petition was signed by Ms. Fox. MARLENE SIEGEL: Case Summary & 18 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Marlene Siegel 4575 Pet Lane Lutz, FL 33559 Bankruptcy Case No.: 09-09730 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court Middle District of Florida (Tampa) Judge: Caryl E. Delano Debtor's Counsel: Sheila D. Norman, Esq. Norman and Bullington, P.A. 1905 West Kennedy Blvd Tampa, FL 33606 Tel: (813) 251-6666 Fax: (813) 254-0800 Email: sheila@normanandbullington.com Total Assets: $2,172,958 Total Debts: $2,486,762 A full-text copy of the Ms. Siegel's petition, including her list of 18 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/flmb09-09730.pdf The petition was signed by Ms. Siegel. MASONITE INT'L: Files Asset Report as of December 31, 2008 ---------------------------------------------------------- As required by Rule 2015.3 of the Federal Rules of Bankruptcy Procedure, Masonite Corporation delivered to the U.S. Bankruptcy Court for the District of Delaware a periodic report, as of December 31, 2008, on the value, operations and profitability of those entities in which the Debtor's estate holds a substantial or controlling interest. Masonite discloses that it holds a substantial or controlling interest in these entities: Name of Entity Estate Interest Value -------------- --------------- ----- Masonite Magyarorszag Kft. 100% $8,467,000 Inversiones Premdor SA 100% $2,295,000 Masonite Mexico SA de CV 100% $14,246,000 Kronospan Door Holding SARL 100% $35,129,000 Premdor Ltd. 100% $7,263,000 Masonite Europe Shared Services Limited 100% $1,836,000 Premdor UK Holdings Limited 100% $61,484,000 Masonite (Shanghai) Trading Company Limited 100% $1,330,000 Masonite (Hungary) Szolgatato Reszvenytarsasag 100% $268,237,000 Premdor International Inc. 100% $4,000 Europa Door Ltd. 100% $5,342,000 Liora Enterprises Limited 100% $3,327,000 Sacopan Inc. 75% $39,006,000 Premdor (Jersey) Limited 100% $0 Masonite Chile Holdings SA 100% $55,957,000 Castlegate Entry Systems Inc. 100% $16,496,000 Premdor S.A.S. 100% $51,887,000 Masonite (Africa) Limited 80% $22,242,000 Crown Door Corp. 100% $0 Rochman Universal Door Inc. 100% $326,000 Masonite Ireland 100% $218,866,000 Magna Foremost SON BHD 50% $39,663,000 Foremost Crest SON BHD 50% ($232,000) Dominance Industries, Inc. 45% $29,347,000 Echelon Laser Systems LP 50% ($5,000) A full-text copy of the Periodic Report is available for free at http://bankrupt.com/misc/Masonite_PeriodicReport123108.pdf About Masonite International Based in Ontario, Canada, Masonite International Corporation -- http://www.masonite.com/-- (TSE:MHM) is a vertically integrated producer, manufacturing key components of doors, including composite molded and veneer door facings, glass door lites and cut stock. The Company provides these products to its customers in more than 70 countries around the world. The Company is a wholly owned subsidiary of Masonite International Inc. It offers a range of interior and exterior doors. Masonite Canada operates Masonite International's Canadian subsidiaries, well as certain other non- United States subsidiaries. Masonite International, Inc., and six affiliates filed petitions on March 16, 2009, before the Ontario Superior Court of Justice (Commercial List) under the Companies' Creditors Arrangement Act. The Honorable Justice Campbell presides over the CCAA proceedings. Derrick Tay and Orestes Pasparakis at Ernst & Young, Inc. serve as monitor. Jay A. Carfagnini, Esq., and Brian F. Emprey, Esq., at Goodmans LLP in Toronto, serve as the Applicants' counsel. Masonite Corporation, based in Tampa, Florida, and several U.S. affiliates filed for Chapter 11 bankruptcy protection on the same day (Bankr. D. Del. Case No. 09-10844). Judge Peter J. Walsh handles the cases. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP; and Daniel J. DeFranceschi, Esq., Jason M. Madron, Esq., and Katisha D. Fortune, Esq., at Richards, Layton & Finger, P.A., serve as bankruptcy counsel. The Debtors' Investment Banker and Financial Advisor is Perella Wenberg Partners LLP; the Debtors' Restructuring Advisors is Alvarez & Marsal North American LLC; and the Debtors' Claims Agent is Kurtzman Carson Consultants LLC. As of January 31, 2009, the Debtors had total assets of $1,527,495,443 and total debts of $2,641,590,842. The Debtors filed with the Bankruptcy Court a pre-negotiated reorganization plan together with their petitions. The Plan provides that Masonite's existing senior secured obligations will be converted on a pro rata basis subject to the election of each existing holder of Senior Secured Obligations into: (i) a new first-priority senior secured term loan; (ii) a new second- priority senior secured PIK loan; and (iii) 97.5% of the common equity of the reorganized Masonite. Holders of Masonite's existing senior subordinated notes will be allocated 2.5% of the common equity in the reorganized Masonite plus warrants for 17.5% of the common stock of the reorganized Company, subject to dilution under certain conditions. Holders of Class 5 General Unsecured Claims under the Plan will be unimpaired and is expected to recover 100% under the Plan. Bankruptcy Creditors' Service, Inc., publishes Masonite Bankruptcy News. The newsletter tracks the CCAA proceedings in Canada and parallel chapter 11 proceedings in Delaware undertaken by company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MASONITE INT'L: Files Schedules of Assets and Debts --------------------------------------------------- Masonite International filed with the U.S. Bankruptcy Court for the District of Delaware its schedules of assets and liabilities, disclosing: A. Real Property Berthierville Facility $1,881,258 Lac-Megantic Facilities 8,841,425 St. Romuald Facility 393,611 Yarrow Facility 3,935,990 B. Personal Property B.1 Cash on hand 0100 Petty 40,716 B.2 Bank Accounts Bank of Montreal - 9751 21,163,332 Bank of Montreal - 3133 33,331 Bank of Montreal - 0266 663,798 Bank of Montreal - 1170 43,570 Bank of Montreal - 8529 122 Bank of Montreal - 8754 993 Bank of Montreal - 8789 171 Bank of Montreal - 5892 122 Bank of Montreal - 8762 202 Wachovia - 1166 1,270 Wachovia - 1167 1,263 Wachovia - 1036 128,768 Wachovia - 4252 0 Wachovia - 7981 177,880 Wachovia - 7981 Invested 6,531,000 Wachovia - 8319 1,546,776 Wachovia - 8322 0 Evergreen Management Company, LLC - 2028 27,683,786 Bank of Montreal - 5733 124,286 Bank of Montreal - 9218 465,870 Bank of Montreal - 0345 8,705 Bank of Montreal - 1865 700 Bank of Montreal - 3485 7,589 Others 12 B.3 Security Deposits Lift Capital 2,786 Hydro Quebec 33,504 Deposit on 1008 Cliveden - VF Warehouse 56,580 Deposit on Calgary 2 - Bldg 6,400 Samuel & Son - Material cash in advance 3,107 Scotia Bank - Deposit for Pcard 312,320 Bell & Hydro from cc51 2,135 B.13 Business Interests and stocks Inversiones Premoor S.A. Undetermined Masonite Costa Rica S.A. Undetermined Tecnoforest Del Norte S.A. Undetermined Masonite Mexico S.A. de C.V. Undetermined Masonite (Shanghai) Trading Company Ltd. Undetermined Premdor Finance LLC (Delaware) Undetermined Masonite Szolgaltato Reszvenytarsasag Undetermined Premdor International Inc. (Barbados) Undetermined Kronospan Door Holding Sarl (Luxembourg) Undetermined Masonite CZ spol S.R.o. (Czech Republic) Undetermined Masonite PL Sp.Z.o.o. (Poland) Undetermined Europa Door Ltd (Switzerland) Undetermined Premdor Karmiel Holdings B.V. Undetermined Premdor Kapi Sanayive Ticaret, A.S. Undetermined Sc Premdor Marketing s.a.r.l. (Romania) Undetermined Premdor Ltd (Israel) Undetermined Mif'Alay Etzcarmiel Ltd. (Israel) Undetermined Open Gallery 1999 Ltd. (Israel) Undetermined Liora Enterprises Limited (Cyprus) Undetermined Dp Premdor Ukraine (Ukraine) Undetermined Masonite Europe Shared Services Limited Undetermined Premdor U.K. Holdings Limited (U.K.) Undetermined Premdor Crosby Limited (U.K.) Undetermined Bonlea Limited (U.K.) Undetermined Premdor (Jersey) Limited Undetermined Crown Door Corp. (Ontario) Undetermined Masonite Chile Holdings S.A. (Chile) Undetermined Premdor S.A.S. (France) Undetermined Ekem S.A.S. (France) Undetermined Fonmarty & Fils Techni-Bois S.A.S. Undetermined Magri S.A.S. (France) Undetermined Societe Monnerie S.A.S. Undetermined Batimetal S.A.S. (France) Undetermined Establissements Rabillion Et CIE S.A. Undetermined Reseau Bois S.A.R.L. (France) Undetermined Castlegate Entry Systems Inc. (Canada) Undetermined 3061275 Nova Scotia Company (Nova Scotia) Undetermined Masonite Ireland (Ireland) Undetermined Masonite Europe (Ireland) Undetermined Masonite Components (Ireland) Undetermined B.14 Interests in partnerships Magna Foremost SDN BHD (Malaysia) Undetermined Foremost Crest SDN BHD (Malaysia) Undetermined Sacopan Inc. (Quebec) Undetermined Masonite (Africa) Limited (South Africa) Undetermined B.16 Accounts Receivable Aggregated 3rd Party Accounts Receivable 28,696,373 Allowance for Doubtful Accounts 111,568 Debtor Intercompany Accounts Receivable 3,476,701 Non-Debtor Intercompany Accounts Receivable 391,728 B.18 Other Liquidated Debts Tax Refund - Ontario 444,284 Tax Refund - GST - Pre 888,760 Tax Refund - GST - Post 71,599 Tax Refund - QST - Pre 220,258 Tax Refund - QST - Post 44,589 Tax Refund - Capital Tax - Pre 697,674 B.21 Other Contingent & Unliquidated Claims Tax Refund - Ontario 408 B.22 Patents 101,690,750 See http://ResearchArchives.com/t/s?3bc0 B.23 General Intangibles Jerry G. Crittenden Undetermined Rivdal Enterprises, Ltd Undetermined B.25 Vehicles 0926 Automobiles 17,819 B.28 Office equipment, furnishings and supplies 0930 Office equipment 65,562 0933 Computer equipment 158,991 B.29 Machinery 0914 Tooling 786,717 0915 Mach & equip 7,275,872 0918 Fixtures & fittings 0 0919 Distribution equipment 49,328 0923 Delivery equipment 19,853 0949 Current year, additions 4,055,200 0916 Mach & equip 50,609 B.30 Inventory 38,433,750 See http://ResearchArchives.com/t/s?3bc1 B.35 Other Personal Property 0500 Insurance 1,159,865 0505 Rent 166,966 0510 Business taxes 154,254 0520 Sundry 926,441 0525 License 2,258 0535 Supplies 261,953 0540 Fuel 0 0595 Acquisition costs 2,115,670 0902 Leasehold improvements, plant 147,621 0903 Leasehold improvements, office 485,811 0952 A/D leasehold improvements, plant (129,871) 0953 A/D leasehold improvements, office 0 LTIC Pittsburg, KS 568 LTIC Masonite International Inc 9,130,480 LTIC Charlotte, NC 19,527 LTIC San Jose, CR 1,366,461 LTIC Premdor International Inc. 803,736 LTIC Barnsley Corporate 20,245,157 LTIC Castlegate Entry Systems 1,314,648 LTIC Zug, Switzerland 50,000 LTIC Istanbul, TRK 250,000 LTIC Nicosia, Cyprus 13,647,199 LTIC Amsterdam, NET 10,115,000 LTIC Berdychiv, UKR 2,950,000 LTIC Brasov, Romania 2,023,240 1060 Other deferred costs (179,289) Others 26 TOTAL SCHEDULED ASSETS $328,769,500 ===================================================== C. Property Claimed as Exempt None D. Secured Claim CIT Financial Ltd Undetermined Citicapital Commercial Corporation Undetermined Expeditors Canada Inc Undetermined GE Canada Equipment Financing G.P. Undetermined General Electric Canada Equipment Finance GP Undetermined Irwin Commercial Finance Canada Corporation Undetermined Liftcapital Corporation Undetermined Pitney Bowes of Canada Ltee Undetermined Ricoh Canada Inc Undetermined Samuel & Son Company $3,330 The Bank of Nova Scotia 823,895,619 E. Unsecured Priority Claims Ministere du Revenue - Quebec Undetermined F. Unsecured Non-priority Claims 751,293,681 See http://ResearchArchives.com/t/s?3bc2 TOTAL SCHEDULED LIABILITIES $1,575,192,630 ======================================================= Masonite International also filed its statement of financial affairs. Anthony DiLucente, executive vice-president and chief accounting officer of Masonite International Corporation says that the company incurred losses from its business operations during the two years before the Petition Date: Period Amount ------ ----------- January 2009 to March 2009 ($29,346,147) Fiscal Year 2008 (361,827,960) Fiscal Year 2007 (50,820,983) MIC also earned an aggregate of $9,371,869, from sources other than the operation of its business during the two years before the Petition Date: Source Amount ------ ---------- Sale of St. Hyacinth Plant $1,771,869 Sale of Mississauga Plant 7,600,000 MIC made payments or transfers totaling $304,428,004 to creditors within 90 days immediately before the Petition Date, a list of which is available for free at: http://bankrupt.com/misc/MasoniteIntlCorp_SOFAs_3b.pdf MIC also made payments totaling $583,328 to "insiders" as defined in Section 101(31) of the Bankruptcy Code within one year immediately preceding the Petition Date for the benefit of creditors who are insiders. MIC is a party to several lawsuits and administrative proceedings within one year immediately preceding the Petition Date: Suit Caption Nature Status ------------ ------ ------ G&K Services Canada, Inc. Breach of Contract Pending and Masonite International Corporation/La Corporation Internationale Masonite CV-08-356210 Diane Marie Allison Problem with Masonite Pending vs. Home Depo Installation door purchased from Services Inc 08SL-SC01364 Home Depot In the Matter of the Arbitration between: Masonite Holding Corporation - Claimant Breach of Contract - Pending and Shmuel Shterenshus - Covenant Not to Respondent Compete Gerald Lentini and April Asbestos Litigation Pending Lentini vs. 3M Company, et al 1391027 Larry Shofner vs. Ace Asbestos Litigation Pending Hardware Corporation, et al 1454579 Peter Wolosuk and Alice Asbestos Litigation Pending Wolosuk vs. 3M Company, et al 1390661 Design Build Concepts, Civil - Breach of Pending Inc. vs. Masonite Contract, Fraud, International Corporation Negligence and Breach and Masonite Corporation of Implied Warranty CV2007-40 James B. Zuluag against Personal Pending Masonite U.S. Holdings, Injury/Negligence Inc., Masonite Woodbury Door Fabrication d/b/a Door Fabrication Services, Masonite International Corporation, Premdor DoorFab and "John Doe" Index #: 13303/2006 Docket No.: 410819 File No.: 202733 Dan Q Robertson vs Sexual Harassment Pending Masonite International and discrimination 450-2007-04858 because of sex(Male) Paul Ragany - Plaintiff Statement of Claim - Pending and Masonite Wrongful Termination International Inc - and Breach of Defendants Contract CV-08-00363561-000 Arthur Rudko and Masonite Statement of Claim - Pending International Inc Wrongful Termination 07-CV-331362-PD3 and Breach of Contract Masonite Corporation, as Complaint for Pending assignee of Premdor, Inc. Declaratory Relief vs. Blue Crab Holdings, LLC., Blue Crab Door, Inc., David E. Ford, and Kevin Rudolph File No. 07-CA-010906 MIC gave $8,575 as gifts and charitable contributions to individuals and organizations within one year immediately preceding the Petition Date: Organization Date Value ------------ ---- ----- Quebec Cystic Fibrosis August-08 $3,675 Assoc Kids with Cancer Society December-08 4,900 Within one year before the Petition Date, MIC also paid made payments to law firms and other professionals involved in the preparation of the Debtor's Chapter 11 petition. A list of the professional fee payments is available for free at Masonite Corp. has been a member of a consolidated group for tax purposes within six years immediately the Petition Date: Parent Corporation Taxpayer I.D. Number -------------- -------------------- Masonite International 98-0377314 Corporation Masonite International Inc. owns 100% of Masonite International Corp.'s common stocks. About Masonite International Based in Ontario, Canada, Masonite International Corporation -- http://www.masonite.com/-- (TSE:MHM) is a vertically integrated producer, manufacturing key components of doors, including composite molded and veneer door facings, glass door lites and cut stock. The Company provides these products to its customers in more than 70 countries around the world. The Company is a wholly owned subsidiary of Masonite International Inc. It offers a range of interior and exterior doors. Masonite Canada operates Masonite International's Canadian subsidiaries, well as certain other non- United States subsidiaries. Masonite International, Inc., and six affiliates filed petitions on March 16, 2009, before the Ontario Superior Court of Justice (Commercial List) under the Companies' Creditors Arrangement Act. The Honorable Justice Campbell presides over the CCAA proceedings. Derrick Tay and Orestes Pasparakis at Ernst & Young, Inc. serve as monitor. Jay A. Carfagnini, Esq., and Brian F. Emprey, Esq., at Goodmans LLP in Toronto, serve as the Applicants' counsel. Masonite Corporation, based in Tampa, Florida, and several U.S. affiliates filed for Chapter 11 bankruptcy protection on the same day (Bankr. D. Del. Case No. 09-10844). Judge Peter J. Walsh handles the cases. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP; and Daniel J. DeFranceschi, Esq., Jason M. Madron, Esq., and Katisha D. Fortune, Esq., at Richards, Layton & Finger, P.A., serve as bankruptcy counsel. The Debtors' Investment Banker and Financial Advisor is Perella Wenberg Partners LLP; the Debtors' Restructuring Advisors is Alvarez & Marsal North American LLC; and the Debtors' Claims Agent is Kurtzman Carson Consultants LLC. As of January 31, 2009, the Debtors had total assets of $1,527,495,443 and total debts of $2,641,590,842. The Debtors filed with the Bankruptcy Court a pre-negotiated reorganization plan together with their petitions. The Plan provides that Masonite's existing senior secured obligations will be converted on a pro rata basis subject to the election of each existing holder of Senior Secured Obligations into: (i) a new first-priority senior secured term loan; (ii) a new second- priority senior secured PIK loan; and (iii) 97.5% of the common equity of the reorganized Masonite. Holders of Masonite's existing senior subordinated notes will be allocated 2.5% of the common equity in the reorganized Masonite plus warrants for 17.5% of the common stock of the reorganized Company, subject to dilution under certain conditions. Holders of Class 5 General Unsecured Claims under the Plan will be unimpaired and is expected to recover 100% under the Plan. Bankruptcy Creditors' Service, Inc., publishes Masonite Bankruptcy News. The newsletter tracks the CCAA proceedings in Canada and parallel chapter 11 proceedings in Delaware undertaken by company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MASONITE INT'L: Florida Made Door Files Schedules and Statement --------------------------------------------------------------- Florida Made Door Co. filed with the U.S. Bankruptcy Court for the District of Delaware its schedules of assets and liabilities, disclosing: A. Real Property Astatula Facility $1,115,662 B. Personal Property B.1 Cash on hand 0100 Petty 500 B.2 Bank Accounts Wachovia - 5052 0 B.13 Business Interests and stocks Cutting Edge Tooling, Inc. (Florida) Undetermined B.16 Accounts Receivable Aggregated 3rd Party Accounts Receivable 443,927 Allowance for Doubtful Accounts 0 Debtor Intercompany Accounts Receivable 1,821,877 Non-Debtor Intercompany Accounts Receivable 0 B.28 Office equipment, furnishings and supplies 0930 Office equipment 1,113 0933 Computer equipment 47,003 B.29 Machinery 0914 Tooling 0 0915 Mach & equip 3,113,561 0918 Fixtures & fittings 0 0919 Distribution equipment 12,750 0923 Delivery equipment 20 0949 Current year, additions 250,867 0916 Mach & equip 0 B.30 Inventory See: http://ResearchArchives.com/t/s?3bca 1,439,000 B.35 Other Personal Property 0500 Insurance 0 0505 Rent 0 0510 Business taxes 0 0502 Insurance reserve 0 0520 Sundry 60,773 0525 License 0 0535 Supplies 32,305 0540 Fuel 0 0595 Acquisition costs 0 0902 Leasehold improvements, plant 649,520 0903 Leasehold improvements, office 0 Plant (520,051) Office 0 LTIC PUSH Head Office 40,737,956 LTIC Tavares, FL 83,358 1060 Other deferred costs 0 Others 5 TOTAL SCHEDULED ASSETS $49,290,146 ======================================================= C. Property Claimed as Exempt None D. Secured Claim The Bank of Nova Scotia Undetermined E. Unsecured Priority Claims None F. Unsecured Non-priority Claims Aceco Precision Tools $1,170 Acme Saw and Industrial Supply 5,187 Advanced Geoenvironmental, Incorporated 2,038 Associated Packaging, LLC 9,845 City of Stockton Fire 1,152 Crst, Incorporated 3,886 Dahlstrom Lumber Company, Inc. 24,172 Expeditors International 5,224 Exxact Express, Incorporated 6,513 Henkel Adhesives 5,430 J.B. Hunt Transport, Inc. 18,063 Masonite Ireland CC91 1,109 Motion Industries, Incorporate 4,740 MSC Industrial Supply Co Inc 9,023 Newman Machine Company, Incorporated 2,039 Normandin Transit, Incorporated 3,013 Oregon-Canadian Forest Products Incorporated 8,309 Scientific Certification Systems 3,550 Sierra Forest Products 20,206 Sierra Pacific Industries 81,942 Viking Lumber Company, Incorporated 32,385 Western Cascade Lumber Sales, Incorporated 16,381 Ziegelmeyer Machine & Manufacturing, Inc. 1,004 Others 9,234 TOTAL SCHEDULED LIABILITIES $275,615 ======================================================= Florida Made Door also filed its statement of financial affairs. Anthony DiLucente, executive vice-president and chief accounting officer of Florida Made Door Co., reports that the company earned $13,808,602 from its business operations during the two years before the Petition Date: Period Amount ------ ----------- January 2009 to March 16, 2009 $169,048 Fiscal Year 2008 5,685,721 Fiscal Year 2007 7,953,833 Florida Made Door made payments or transfers totaling $1,653,751, to creditors within 90 days immediately before the Petition Date, a list of which is available for free at: http://bankrupt.com/misc/FLMadeDoor_SOFAs_3B.pdf Mr. DiLucente adds that Florida Made Door has received notices in writing by several governmental units that the Debtor may be liable or in violation of an environmental law: Site Name Governmental Unit Environmental Law --------- ----------------- ----------------- Stockton Cut San Joaquin County California Health and Stock Plant Environmental Health Safety Code Department Florida Made Door has been a member of a consolidated group for tax purposes within six years immediately the Petition Date: Parent Corporation Taxpayer I.D. Number -------------- -------------------- Masonite Corporation 64-0198020 Masonite Corporation owns 100% of Florida Made Door's common stocks. About Masonite International Based in Ontario, Canada, Masonite International Corporation -- http://www.masonite.com/-- (TSE:MHM) is a vertically integrated producer, manufacturing key components of doors, including composite molded and veneer door facings, glass door lites and cut stock. The Company provides these products to its customers in more than 70 countries around the world. The Company is a wholly owned subsidiary of Masonite International Inc. It offers a range of interior and exterior doors. Masonite Canada operates Masonite International's Canadian subsidiaries, well as certain other non- United States subsidiaries. Masonite International, Inc., and six affiliates filed petitions on March 16, 2009, before the Ontario Superior Court of Justice (Commercial List) under the Companies' Creditors Arrangement Act. The Honorable Justice Campbell presides over the CCAA proceedings. Derrick Tay and Orestes Pasparakis at Ernst & Young, Inc. serve as monitor. Jay A. Carfagnini, Esq., and Brian F. Emprey, Esq., at Goodmans LLP in Toronto, serve as the Applicants' counsel. Masonite Corporation, based in Tampa, Florida, and several U.S. affiliates filed for Chapter 11 bankruptcy protection on the same day (Bankr. D. Del. Case No. 09-10844). Judge Peter J. Walsh handles the cases. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP; and Daniel J. DeFranceschi, Esq., Jason M. Madron, Esq., and Katisha D. Fortune, Esq., at Richards, Layton & Finger, P.A., serve as bankruptcy counsel. The Debtors' Investment Banker and Financial Advisor is Perella Wenberg Partners LLP; the Debtors' Restructuring Advisors is Alvarez & Marsal North American LLC; and the Debtors' Claims Agent is Kurtzman Carson Consultants LLC. As of January 31, 2009, the Debtors had total assets of $1,527,495,443 and total debts of $2,641,590,842. The Debtors filed with the Bankruptcy Court a pre-negotiated reorganization plan together with their petitions. The Plan provides that Masonite's existing senior secured obligations will be converted on a pro rata basis subject to the election of each existing holder of Senior Secured Obligations into: (i) a new first-priority senior secured term loan; (ii) a new second- priority senior secured PIK loan; and (iii) 97.5% of the common equity of the reorganized Masonite. Holders of Masonite's existing senior subordinated notes will be allocated 2.5% of the common equity in the reorganized Masonite plus warrants for 17.5% of the common stock of the reorganized Company, subject to dilution under certain conditions. Holders of Class 5 General Unsecured Claims under the Plan will be unimpaired and is expected to recover 100% under the Plan. Bankruptcy Creditors' Service, Inc., publishes Masonite Bankruptcy News. The newsletter tracks the CCAA proceedings in Canada and parallel chapter 11 proceedings in Delaware undertaken by company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MASONITE INT'L: Masonite Primeboard Files Schedules and Statement ----------------------------------------------------------------- Masonite Primeboard, Inc., filed with the U.S. Bankruptcy Court for the District of Delaware its schedules of assets and liabilities, disclosing: A. Real Property None B. Personal Property B.1 Cash on hand 0100 Petty $600 B.2 Bank Accounts Bremer Bank - 8138 6,336 B.16 Accounts Receivable Aggregated 3rd Party Accounts Receivable 433 Allowance for Doubtful Accounts 0 Debtor Intercompany Accounts Receivable 359,709 Non-Debtor Intercompany Accounts Receivable 0 B.25 Vehicles 0926 Automobiles 12,968 B.28 Office equipment, furnishings and supplies 0930 Office equipment 14,913 0933 Computer equipment 0 B.29 Machinery 0914 Tooling 0 0915 Mach & equip 4,740,403 0918 Fixtures & fittings 11,194 0919 Distribution equipment 0 0923 Delivery equipment 0 0949 Current year, additions 4,205 0916 Mach & equip 0 B.30 Inventory See: http://ResearchArchives.com/t/s?3bcd 1,924,000 B.35 Other Personal Property 0500 Insurance 0 0505 Rent 9,649 0510 Business taxes 0 0502 Insurance reserve 0 0520 Sundry 0 0525 License 0 0535 Supplies 224,512 0540 Fuel 0 0595 Acquisition costs 0 0902 Leasehold improvements, plant 182,264 0903 Leasehold improvements, office 0 0952 A/D Leasehold improvements, plant (35,474) 0952 A/D Leasehold improvements, office 0 1060 Other deferred costs 0 Others 4 TOTAL SCHEDULED ASSETS $7,455,716 =================================================== C. Property Claimed as Exempt None D. Secured Claim The Bank of Nova Scotia Undetermined E. Unsecured Priority Claims None F. Unsecured Non-priority Claims Agri-Resources, Inc. 1,590 Bayer Material Science 118,319 Border States Electric 18,872 Chem-Trend 7,362 Conzemius Oil Company 6,208 Dakota Heating & Plumbing Inc 1,912 Daniel Miller Farm Partnership 4,938 De Lage Landen Financial Svc 1,417 Deal Brothers 46,208 Dod Technologies, Inc. 1,052 Dough Hannestad 50,005 Fastenal Company 2,428 Ferrellgas 13,176 Forklifts of Minnesota Inc 2,030 Fraedrich Transport, Inc 4,999 G&K Services 4,552 Great Plains Natural Gas 1,145 H B Fuller - Chicago 2,413 J & W Instruments, Inc. 1,629 Jeff Nelson 1,500 Karm Company 53,426 Ktm Farm 40,480 Kubela Farms 80,165 Machine Design Inc 5,583 Midwest Air Parts 3,706 Mill Farms 34,926 Motion Industries 23,426 MSC Industrial Supply Co 6,288 North Dakota State College Of Science 3,675 Northland Financial - Bismarck 5,889 Ottertail Power Company 48,200 Productive Alternatives Inc 3,100 Progressive Systems, Inc. 2,055 Seacole CRC 18,335 Skills & Technology Training Center 1,311 Standard Industries Inc 7,085 State Bank of Hawley 3,687 The Pierce Company 1,454 The Work Connection 2,634 Tyler And Troy Solem Farms 6,270 U.S. Bank 6,057 Ver-Tech, Inc. 4,205 Wahpeton Public Utilities 1,416 Wanzek Construction 15,855 Waste Management Of Nd 1,093 Workforce Safety And Insurance 2,500 Ziegler Inc 4,190 Total 17,856 TOTAL SCHEDULED LIABILITIES $696,622 ===================================================== Masonite Primeboard also filed its statement of financial affairs. Anthony DiLucente, executive vice-president and chief accounting officer of Masonite Primeboard, Inc., reports that the company has lost $1,608,440 from its business operations during the two years before the Petition Date: Period Amount ------ ----------- January 2009 to March 16 2009 ($195,584) Fiscal Year 2008 (785,070) Fiscal Year 2007 (627,786) Masonite Primeboard paid or transferred to creditors within 90 days immediately before the Petition Date, a list of which is available for free at: http://bankrupt.com/misc/MasonitePrimeboardInc_SOFAs_3b.pdf Masonite Primeboard is a party to several lawsuits and administrative proceedings within one year immediately preceding the Petition Date: Suit Caption Nature Status ------------ ------ ------ North Dakota Department Discrimination due Pending of Labor Thomas Peschel v. to disability Primeboard Masonite 444-2008-01516 Masonite Primeboard has been a member of a consolidated group for tax purposes within six years immediately the Petition Date: Parent Corporation Taxpayer I.D. Number -------------- -------------------- Masonite Corporation 64-0198020 Masonite Corporation owns 100% of Masonite Primeboard's common stocks. About Masonite International Based in Ontario, Canada, Masonite International Corporation -- http://www.masonite.com/-- (TSE:MHM) is a vertically integrated producer, manufacturing key components of doors, including composite molded and veneer door facings, glass door lites and cut stock. The Company provides these products to its customers in more than 70 countries around the world. The Company is a wholly owned subsidiary of Masonite International Inc. It offers a range of interior and exterior doors. Masonite Canada operates Masonite International's Canadian subsidiaries, well as certain other non- United States subsidiaries. Masonite International, Inc., and six affiliates filed petitions on March 16, 2009, before the Ontario Superior Court of Justice (Commercial List) under the Companies' Creditors Arrangement Act. The Honorable Justice Campbell presides over the CCAA proceedings. Derrick Tay and Orestes Pasparakis at Ernst & Young, Inc. serve as monitor. Jay A. Carfagnini, Esq., and Brian F. Emprey, Esq., at Goodmans LLP in Toronto, serve as the Applicants' counsel. Masonite Corporation, based in Tampa, Florida, and several U.S. affiliates filed for Chapter 11 bankruptcy protection on the same day (Bankr. D. Del. Case No. 09-10844). Judge Peter J. Walsh handles the cases. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP; and Daniel J. DeFranceschi, Esq., Jason M. Madron, Esq., and Katisha D. Fortune, Esq., at Richards, Layton & Finger, P.A., serve as bankruptcy counsel. The Debtors' Investment Banker and Financial Advisor is Perella Wenberg Partners LLP; the Debtors' Restructuring Advisors is Alvarez & Marsal North American LLC; and the Debtors' Claims Agent is Kurtzman Carson Consultants LLC. As of January 31, 2009, the Debtors had total assets of $1,527,495,443 and total debts of $2,641,590,842. The Debtors filed with the Bankruptcy Court a pre-negotiated reorganization plan together with their petitions. The Plan provides that Masonite's existing senior secured obligations will be converted on a pro rata basis subject to the election of each existing holder of Senior Secured Obligations into: (i) a new first-priority senior secured term loan; (ii) a new second- priority senior secured PIK loan; and (iii) 97.5% of the common equity of the reorganized Masonite. Holders of Masonite's existing senior subordinated notes will be allocated 2.5% of the common equity in the reorganized Masonite plus warrants for 17.5% of the common stock of the reorganized Company, subject to dilution under certain conditions. Holders of Class 5 General Unsecured Claims under the Plan will be unimpaired and is expected to recover 100% under the Plan. Bankruptcy Creditors' Service, Inc., publishes Masonite Bankruptcy News. The newsletter tracks the CCAA proceedings in Canada and parallel chapter 11 proceedings in Delaware undertaken by company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MAXXAM INC: Posts $12.5 Million Net Loss for Q1 2009 ---------------------------------------------------- MAXXAM Inc. reported a net loss of $12.5 million, or $2.74 per share loss for the first quarter of 2009, compared to a net loss of $13.9 million, or $2.72 per share loss, for the same period of 2008. Net sales for the first quarter of 2009 were $15.7 million, compared to $21.7 million in the first quarter of 2008. The $6.0 million reduction in sales primarily reflects the continued effects of Hurricane Ike, which resulted in the cancellation of live racing that was scheduled for the first quarter of 2009 at Sam Houston Race Park. MAXXAM said operating losses were $8.2 million in the first quarter of 2009, as compared to $7.1 million for the same period of 2008, reflecting a $6.4 million charge for additional defense and settlement costs related to the Wilson actions. The losses were partially offset by an approximate $800,000 benefit due to changes in stock-based compensation expense resulting from a decrease in the market price for the Company's Common Stock and net insurance recoveries of approximately $1.4 million related to business interruption losses at Sam Houston Race Park resulting from damage caused by Hurricane Ike. The Wilson Actions On April 28, 2009, the Company and Charles E. Hurwitz, its Chairman of the Board and Chief Executive Officer, reached a settlement of two December 2006 lawsuits filed against them and certain former forest products subsidiaries of the Company. The first suit, the Wilson state action, was filed in the Superior Court of San Francisco, California. On the same day, a second suit, the Wilson federal action, was filed in the U.S. District Court for the Northern District of California. The Wilson actions alleged violations of the California False Claims Act and the Federal False Claims Act, respectively, and were qui tam actions (actions ostensibly brought by the government, but on the information and at the instigation of a private individual, who would receive a portion of any amount recovered). The private individuals proceeded with the suits when the State of California declined to participate in the Wilson state action and the United States declined to participate in the Wilson federal action. Both suits alleged that the defendants made false claims by submitting to a California agency a sustained yield plan misrepresenting as sustainable the projected harvest yields of timberlands owned by the former forest products subsidiaries. The remedies being sought were actual damages -- essentially based on over $300.0 million of cash and 7,700 acres of timberlands transferred by the United States and California in exchange for various timberlands purchased from the forest products subsidiaries -- as well as treble damages and civil penalties. Under the terms of the settlement, the Company agreed to pay a total of $4.0 million to settle these matters. This amount compares to the legal fees the Company estimates it would have incurred in continuing to defend the litigation. There was no admission of liability by either the Company or Mr. Hurwitz. This settlement brings an end to these actions against the Company and Mr. Hurwitz. The Company paid the settlement amount in May 2009. Palco Bankruptcy MAXXAM previously conducted forest products operations through its wholly owned subsidiary, The Pacific Lumber Company, and Palco's wholly owned subsidiaries, Britt Lumber Co., Inc., Salmon Creek LLC, Scotia Development LCC, Scotia Inn Inc., and Scotia Pacific Company LLC. In January 2007, Palco and its affiliates filed separate Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division. The bankruptcy filing was precipitated by liquidity shortfalls at Palco and Scopac and their resultant inability to make January 2007 interest payments on their debt obligations. As of the Petition Date, Scopac's indebtedness consisted of its 6.55% Class A-1, 7.11% Class A-2 and 7.71% Class A-3 Timber Collateralized Notes due 2028 -- $713.8 million principal outstanding as of December 31, 2006 -- and a line of credit with a group of banks -- $36.2 million principal outstanding as of December 31, 2006. The obligations were each secured by Scopac's timber, timberlands and timber rights and various related assets. As of the Petition Date, Palco's principal indebtedness consisted of a five-year $85.0 million secured term loan -- $84.3 million principal outstanding as of December 31, 2006 -- and a five-year $60.0 million secured asset-based revolving credit facility -- $24.1 million of borrowings outstanding and $13.7 million of letters of credit issued as of December 31, 2006. Marathon Structured Finance Fund L.P. provided both facilities, which were secured by the stock of Palco owned by its parent, MAXXAM Group Inc., and substantially all of the assets of the Palco Debtors other than Palco's equity interest in Scopac. In December 2007, the Bankruptcy Court approved an agreement allowing the Debtors and certain others to file plans of reorganization. The Debtors subsequently filed a joint plan of reorganization. As the Debtors did not believe the Joint Plan was eligible to be "crammed down" (forced) on creditors who voted against it, the Palco Debtors as a group and Scopac filed separate and alternative stand-alone plans of reorganization. Two other plans of reorganization were filed. The first was filed by Mendocino Redwood Company, LLC and Marathon Structured Finance Fund L.P., Palco's secured lender. The second plan was filed by the Indenture Trustee for the Scopac Timber Notes on behalf of the holders of the Scopac Timber Notes. The MRC/Marathon Plan provided for the Debtors to be reorganized and continued under two new companies, one -- Newco -- to be owned jointly by MRC and Marathon, and the other to be owned by Marathon, with substantial cash payments to be made to all of the creditor classes other than Marathon. The Noteholder Plan, which did not address the Palco Debtors, would have effectively resulted in an auction of Scopac's timberlands to the highest bidder. The MRC/Marathon Plan provided for the loss entirely of the Company's indirect equity interests in the Palco Debtors and Scopac; the Noteholder Plan also provided for the loss of the Company's indirect equity interest in Scopac. May 2008 Settlement Agreement On May 1, 2008, MRC, Marathon, the MAXXAM Entities and the Palco Debtors entered into a settlement of various matters in respect of the Debtors' bankruptcy proceedings. Scopac was not a party to the Settlement Agreement. The Palco Debtors withdrew the Joint Plan and the Palco Debtors' Alternative Plan and the MAXXAM Entities withdrew as co-proponents of the Joint Plan and the two Alternative Plans. The Settlement Agreement required MRC and Marathon to amend the terms of the MRC/Marathon Plan, among other things, to provide for (i) a cash payment of not less than $520.0 million to the Timber Noteholders in satisfaction of their bankruptcy claims, and (ii) assumption of Palco's pension plan by Newco upon consummation of the MRC/Marathon Plan. MAXXAM received consideration of $2.25 million at the time the MRC/Marathon Plan was consummated. An indirect wholly-owned subsidiary of the Company in June 2008 required MRC to re-purchase lumber that the subsidiary had previously purchased from Palco. The subsidiary received $3.9 million at the time of closing and an additional $1.2 million of contingent consideration at the time the MRC/Marathon Plan was consummated. MAXXAM Parent, MAXXAM Group Holdings Inc., the parent of MGI, and MGI granted a release in favor of MRC, Marathon and various related parties. MRC and Marathon granted a release in favor of the MAXXAM Entities and various related parties. MRC and Marathon released the Palco Debtors and various related parties against any and all claims (a) that the MAXXAM Entities, MRC and Marathon had against any of the released parties -- including roughly $40.0 million of intercompany indebtedness owed by the Palco Debtors to the MAXXAM Entities -- and (b) relating to any of the Debtors or their bankruptcy cases that might thereafter arise. The Palco Debtors released each other, MRC, Marathon, the MAXXAM Entities and various related parties against any and all claims. The Settlement Agreement also obligates MAXXAM to indemnify MRC, Marathon, Newco and certain affiliates against certain tax liabilities assessed on the parties subsequent to the reorganization. 5th Cir. Appeal of Confirmation Order On July 8, 2008, the Bankruptcy Court confirmed the MRC/Marathon Plan and denied confirmation of the Noteholder Plan, among other things. On July 11, 2008, the Bankruptcy Court approved the May 2008 Settlement Agreement. The Indenture Trustee and other parties appealed the Confirmation Order to the Fifth Circuit Court of Appeals and requested the Fifth Circuit to stay the Confirmation Order pending appeal. Following the Fifth Circuit's denial of the request for a stay of the Confirmation Order, the MRC/Marathon Plan closed on July 30, 2008 and the Debtors emerged from bankruptcy. Oral arguments on the appeal by the Indenture Trustee and others of the Confirmation Order were heard in October 2008, but the Fifth Circuit has not yet ruled. There can be no assurance that the MRC/Marathon Plan will not be overturned by the Fifth Circuit. The outcome of the appeal is impossible to predict and, an adverse decision would likely have a material adverse effect on the business of the Debtors, on the interests of creditors and the Company and certain of its affiliates. Consummation of the MRC/Marathon Plan resulted in the loss entirely of the Company's indirect equity interests in Palco and its subsidiaries, including Scotia Pacific LLC; however, various parties have appealed approval of the MRC/Marathon Plan to the Fifth Circuit. As a result of uncertainties surrounding the appeal, the Company has not reversed any portion of its investment in the Debtors. If the MRC/Marathon Plan is upheld by the Fifth Circuit, the Company expects it will reverse all or a significant portion of its investment in the Debtors during the period in which the Fifth Circuit renders its decision. The reversal of the Company's losses in excess of its investment in the Debtors would have a material impact on stockholders' deficit -- (i.e. would result in a $484.2 million increase to stockholders' equity. If the Fifth Circuit overturns the MRC/Marathon Plan or renders an inconclusive decision, the Company will re-evaluate its position based on the facts and circumstances at that time. The Company cannot predict when the Fifth Circuit will rule or what its decision will be. The ultimate resolution of the Debtors' bankruptcy cases could result in claims against and could have adverse impacts on MAXXAM Parent and its affiliates, including MAXXAM Group Inc, Palco's parent. It is possible that the MRC/Marathon Plan could be overturned and unwound as a result of the appeal pending before the Fifth Circuit. If that occurs, the Company would be required to return the $2.25 million of cash consideration it received when the MRC/Marathon Plan was consummated, MGI would be obligated for certain tax liabilities and the assumption of Palco's pension plan by a third party would no longer be effective, among other things. The estimated unfunded termination obligation attributable to Palco's pension plan as of December 31, 2008, was approximately $35.0 million based upon annuity placement interest rate assumptions as of such date. The consummation of the MRC/Marathon Plan (or an alternate plan of reorganization filed by Scopac's principal creditor group, in the event the MRC/Marathon Plan is overturned upon appeal) is expected to result in the utilization of a substantial portion of the Company's net operating losses and other tax attributes for federal income tax purposes. Moreover, the MRC/Marathon Plan (and the alternate plan) provides for litigation trusts, which could bring claims against the Company and certain of its affiliates. Going Concern Doubt As reported by the Troubled Company Reporter on April 7, 2009, Grant Thornton LLP said the uncertainty surrounding the real estate industry and the ultimate outcome of proceedings involving MAXXAM Inc.'s former unit, Pacific Lumber Company, and their effect on the Company, as well as the Company's operating losses raise substantial doubt about the ability of the Company to continue as a going concern. A full-text copy of MAXXAM's quarterly report is available at no charge at http://ResearchArchives.com/t/s?3cd4 About MAXXAM Inc. Headquartered in Houston, MAXXAM Inc. is a publicly-traded company, with business interests in forest products, real estate investment and development and racing operations. MERCURY COMPANIES: Wants Plan Filing Period Extended to June 8 -------------------------------------------------------------- Mercury Companies Inc., et al., ask the U.S. Bankruptcy Court for the District of Colorado to extend to June 8, 2009, its exclusive period to propose a plan, and to August 7, the attendant exclusive solicitation period. This is the third request for an extension of the Debtors' exclusive periods. As reported previously, the Court extended Mercury's exclusive period to file a plan of reorganization to April 24, and its exclusive period to solicit acceptances of a plan to June 23 Mercury informs the Court that they are in the concluding stages of their asset liquidations. Mercury adds that the proposed extension will ensure that an appropriate plan of reorganization is filed in their bankruptcy cases. Denver, Colorado-based Mercury Companies Inc. is a holding company primarily for subsidiaries that until recently were involved in the settlement services industry, including title services, escrow services, real estate services, mortgage services, mortgage document preparation, and settlement services software development. Mercury has since wound down or sold its operations. Mercury Companies filed for Chapter 11 protection on August 28, 2008. Two months later, six subsidiaries, namely Arizona Title Agency, Inc., Financial Title Company, Lenders Choice Title Company, Lenders First Choice Agency, Inc., Texas United Title, Inc., dba United Title of Texas and Title Guaranty Agency of Arizona, Inc., also filed voluntary Chapter 11 petitions. Mercury The units' cases are jointly administered with Mercury's (Bankr. D. Colo. Lead Case No. 08-23125). Daniel J. Garfield, Esq., and Michael J. Pankow, Esq., at Brownstein Hyatt Farber Schreck, and Vikki L. Vander Woude, Esq., at Manatt Phelps & Phillips, represent the Debtors as counsel. Lars H. Fuller, Esq., at Baker Hostetler, represent the official committee of unsecured creditors appointed in the case. MERUELO MADDUX: May Continue to Use Cash Collateral Until May 27 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California has authorized Meruelo Maddux Properties, Inc., et al., to use cash collateral of the cash collateral creditors to and including May 27, 2009, to pay necessary operating expenses, in accordance with a budget. After the payment of the expenses of preserving, maintaining and operating the cash collateral properties, any excess income may be utilized by any other Debtor to pay its ordinary costs and expenses of preserving, maintaining and operating its property and business. As adequate protection, each cash collateral creditor is granted a lien against the unencumbered real properties, to the extent of the diminution in the value of their separate interests in their collateral arising from the use of cash collateral. As additional protection, each cash collateral creditor is granted a replacement lien upon its respective collateral with the same extent as the pre-petition liens held by each cash collateral creditor. The final hearing on the cash collateral motion is continued to May 27, 2009. As reported in the Troubled Company Reporter on April 3, 2009, creditors of the Debtors that may be holding or claiming an interest in the Debtors' real properties that generate cash collateral are: a) Bank of America b) California Bank & Trust c) Capmark Finance, Inc. d) Cathay Bank e) Chinatrust Bank f) East West Bankruptcy g) Imperial Capital Bankruptcy h) Pacific Commerce Bank i) The Stafford Group j) United Commercial Bank k) V & A chamilian l) Western Mixers m) Y & F Murakami About Meruelo Maddux Based in Los Angeles, California, Meruelo Maddux Properties, Inc., -- http://www.meruelomaddux.com/-- together with its affiliates, engage in residential, commercial and industrial development. Meruelo Maddux and its affiliates filed for Chapter 11 protection on March 26, 2009 (Bankr. C. D. Calif. Lead Case No. 09-13356). Aaron De Leest, Esq., John J. Bingham, Jr., Esq., and John N. Tedford, Esq., at Danning Gill Diamond & Kollitz, represent the Debtors in their restructuring efforts. Asa S. Hami, Esq., Tamar Kouyoumjian, Esq., and Victor A. Sahn, Esq., at SulmeyerKupetz, A Prof Corp, represent the official committee of unsecured creditors as counsel. The Debtors' financial condition as of December 31, 2008, showed estimated assets of $681,769,000 and estimated debts of $342,022,000. MGM MIRAGE: Commences Tender Offer for 2009 Senior Notes -------------------------------------------------------- MGM MIRAGE commenced a cash tender offer to purchase any and all of the 6.50% Senior Notes due July 31, 2009 ($226.3 million aggregate principal amount; CUSIP No. 562567 AM9) of Mandalay Resort Group, and its 6.00% senior notes due October 1, 2009 ($820.0 million aggregate principal amount; CUSIP No. 552953 AF8). The tender offer is being made pursuant to an Offer to Purchase and a related Letter of Transmittal, dated as of May 13, 2009. The Offer will expire at 11:59 p.m., New York City time, June 10, 2009, unless extended or earlier terminated. Holders who validly tender their Notes prior to 5:00 pm, New York City time, on May 27, 2009, unless extended, will receive the total consideration equal to $1,000.00 per $1,000 principal amount of the Notes, which includes an early tender premium of $30.00 per $1,000 principal amount of the Notes, plus any accrued and unpaid interest on the Notes up to, but not including, the payment date. Holders who validly tender their Notes after the Early Participation Date but on or prior to the Expiration Date shall receive the tender offer consideration equal to $970.00 per $1,000 principal amount of the Notes, plus any accrued and unpaid interest on the Notes up to, but not including, the payment date for such Notes. Holders of Notes tendered after the Early Participation Date will not receive an early tender premium. The Offer is subject to customary conditions, including, among other things, a financing condition. About MGM MIRAGE Headquartered in Las Vegas, Nevada, MGM MIRAGE (NYSE: MGM) -- http://www.mgmmirage.com/-- is a hotel and gaming company. It owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. The report of Deloitte & Touche, LLP, MGM MIRAGE's independent registered public accounting firm on the Company's consolidated financial statements for the year ended December 31, 2008, contains an explanatory paragraph with respect to the Company's ability to continue as a going concern. * * * As reported by the Troubled Company Reporter on March 23, 2009, Moody's Investors Service downgraded MGM MIRAGE's Probability of Default Rating to Caa3 from Caa2 and its Corporate Family Rating to Caa2 from Caa1. According to the TCR on March 23, 2009, Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on Las Vegas-based MGM MIRAGE and its subsidiaries by two notches; the corporate credit rating was lowered to 'CCC' from 'B-'. These ratings were removed from CreditWatch, where they were initially placed with negative implications on January 30, 2009. S&P said that the rating outlook is negative. The TCR reported on March 25, 2009, that Fitch Ratings took these rating actions for MGM MIRAGE following the lawsuit filed against MGM by City Center JV partner Dubai World, and the two-month covenant waiver obtained from its bank lenders: -- Issuer Default Rating downgraded to 'C' from 'CCC'; -- Senior secured notes downgraded to 'CCC/RR2' from 'B/RR2'; -- Senior unsecured credit facility downgraded to 'CC/RR3' from 'B-/RR3'; -- Senior unsecured notes downgraded to 'CC/RR3' from 'B-/RR3'; -- Senior subordinated notes affirmed at 'C/RR6'. MGM MIRAGE: Senior Lenders Agree to Covenant Relief --------------------------------------------------- MGM MIRAGE entered into amendment no. 6 and waiver to its senior credit facility, the effectiveness of which is conditioned upon: (i) the closing of concurrent offerings of the common stock and new senior secured notes offering, with the gross proceeds of the offerings not to be less than $2.5 billion, (ii) permanent repayment of $750 million of the credit facility borrowings, allocated between the term loan and the revolving loan on a pro rata basis, (iii) to the extent that the gross proceeds of the offerings are in excess of $2.5 billion, permanent repayment of the credit facility borrowings allocated between the term loan and the revolving loan on a pro rata basis, equal to 50% of such excess, and (iv) treatment of the $400 million in aggregate repayment of the credit facility borrowings made as a condition to amendment no. 2 and amendment no. 5 to the senior credit facility as a permanent prepayment of the credit facility borrowings. The amendment provides for: -- Amend certain financial and non financial covenants to a) require a quarterly minimum EBITDA test, based on rolling 12-month EBITDA; b) provide for a covenant limiting annual capital expenditures; c) eliminate the total leverage ratio and interest charge coverage ratio tests and permanently waive any prior non-compliance with such ratio tests for the quarter ended March 31, 2009; and d) permanently waive any potential default from the inclusion of a "going concern" explanatory paragraph in the report of the Company's independent registered public accountants for the years ended December 31, 2008 and 2009; -- Amend existing restrictions to allow, in connection with the offerings, for the issuance of equity and debt securities of up to $3.0 billion, and in connection therewith amend existing restrictions to allow for the granting of liens to secure indebtedness of up to $1.5 billion; -- Amend existing restrictions to allow the prepayment, redemption, or purchase of indebtedness, including payment of any premium, pursuant to certain tender offers; -- Amend existing restrictions to allow (i) the redemption, prepayment, repurchase, or defeasance of the 7.25% senior debentures due 2017 of Mirage Resorts, Incorporated; (ii) repayment of any registered debt securities currently outstanding and maturing through February 28, 2011; (iii) utilization of up to $300 million in cash to prepay, repurchase or redeem indebtedness with a maturity date following February 28, 2011, at a discount to par; and (iv) the exchange of indebtedness for up to $500 million in equity interests as long as a change of control does not occur as a result of such exchange; -- Allow the Company to incur additional indebtedness up to $500 million; provided, however, that, such indebtedness must be unsecured indebtedness with a maturity after the maturity of the senior credit facility with covenants no more restrictive than those contained in the indentures governing the Company's existing senior unsecured indebtedness. Without duplication of the requirements, 50% of the net proceeds of such indebtedness must be used to permanently reduce the term loan and revolving portions of the senior credit facility on a pro rata basis; -- Provide that 50% of the net proceeds from any future asset sales will be used to permanently reduce the term loan and revolving portions of the senior credit facility on a pro rata basis, subject to any similar requirements in other debt instruments; and -- Fix the LIBOR margin at 4.00% and the base rate margin at 3.00%, which margins reflect an increase of 1.00% from the highest corresponding margin previously applicable. About MGM MIRAGE Headquartered in Las Vegas, Nevada, MGM MIRAGE (NYSE: MGM) -- http://www.mgmmirage.com/-- is a hotel and gaming company. It owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. The report of Deloitte & Touche, LLP, MGM MIRAGE's independent registered public accounting firm on the Company's consolidated financial statements for the year ended December 31, 2008, contains an explanatory paragraph with respect to the Company's ability to continue as a going concern. * * * As reported by the Troubled Company Reporter on March 23, 2009, Moody's Investors Service downgraded MGM MIRAGE's Probability of Default Rating to Caa3 from Caa2 and its Corporate Family Rating to Caa2 from Caa1. According to the TCR on March 23, 2009, Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on Las Vegas-based MGM MIRAGE and its subsidiaries by two notches; the corporate credit rating was lowered to 'CCC' from 'B-'. These ratings were removed from CreditWatch, where they were initially placed with negative implications on January 30, 2009. S&P said that the rating outlook is negative. The TCR reported on March 25, 2009, that Fitch Ratings took these rating actions for MGM MIRAGE following the lawsuit filed against MGM by City Center JV partner Dubai World, and the two-month covenant waiver obtained from its bank lenders: -- Issuer Default Rating downgraded to 'C' from 'CCC'; -- Senior secured notes downgraded to 'CCC/RR2' from 'B/RR2'; -- Senior unsecured credit facility downgraded to 'CC/RR3' from 'B-/RR3'; -- Senior unsecured notes downgraded to 'CC/RR3' from 'B-/RR3'; -- Senior subordinated notes affirmed at 'C/RR6'. MGM MIRAGE: To Raise $1 Billion Through Common Stock Offering ------------------------------------------------------------- MGM MIRAGE commenced an underwritten public offering of 81.0 million shares of its common stock. It is expected that the offering will have gross proceeds of approximately $1 billion. Merrill Lynch & Co., Deutsche Bank Securities, J.P. Morgan, Morgan Stanley and UBS Investment Bank are acting as joint book-running managers for the offering. The underwriters for the offering will have a 30-day option to purchase up to an additional 12.15 million shares of common stock from the Company to cover over-allotments, if any. Tracinda Corporation, the holder of approximately 53.8% of the Company's common stock has indicated that it intends to purchase from the underwriter approximately 8.1 million of the shares sold in the offering. The Company plans to use the net proceeds from the offering, together with the net proceeds of a concurrent offering of senior secured notes, to (i) repay not less than $750 million of the outstanding amount under its senior credit facility, (ii) redeem all of the 7.25% senior debentures due 2017 of Mirage Resorts, Incorporated, (iii) purchase all of the Company's 6.0% senior notes due 2009 and all of the 6.50% senior notes due 2009 of Mandalay Resort Group tendered in pending tender offers, and (iv) for general corporate purposes. A written prospectus and prospectus supplement relating to the common stock being offered may be obtained from Merrill Lynch & Co., 4 World Financial Center, New York, NY Attn: Prospectus Department (phone 212-449-1000), Deutsche Bank Securities, Attention: Prospectus Department, 100 Plaza One, Jersey City, New Jersey 07311, Telephone: (800) 503-4611, J.P. Morgan, 4 Chase Metrotech Center, CS Level, Brooklyn, NY 11245, Attention: Prospectus Department, 718-242-8002, Morgan Stanley, Attention Prospectus Department, 180 Varick Street, New York, NY 10014, email: prospectus@morganstanley.com or UBS Investment Bank, Attention: Prospectus Department, 299 Park Avenue, New York, NY 10171, telephone +1 (888) 827-7275. About MGM MIRAGE Headquartered in Las Vegas, Nevada, MGM MIRAGE (NYSE: MGM) -- http://www.mgmmirage.com/-- is a hotel and gaming company. It owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. The report of Deloitte & Touche, LLP, MGM MIRAGE's independent registered public accounting firm on the Company's consolidated financial statements for the year ended December 31, 2008, contains an explanatory paragraph with respect to the Company's ability to continue as a going concern. * * * As reported by the Troubled Company Reporter on March 23, 2009, Moody's Investors Service downgraded MGM MIRAGE's Probability of Default Rating to Caa3 from Caa2 and its Corporate Family Rating to Caa2 from Caa1. According to the TCR on March 23, 2009, Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on Las Vegas-based MGM MIRAGE and its subsidiaries by two notches; the corporate credit rating was lowered to 'CCC' from 'B-'. These ratings were removed from CreditWatch, where they were initially placed with negative implications on January 30, 2009. S&P said that the rating outlook is negative. The TCR reported on March 25, 2009, that Fitch Ratings took these rating actions for MGM MIRAGE following the lawsuit filed against MGM by City Center JV partner Dubai World, and the two-month covenant waiver obtained from its bank lenders: -- Issuer Default Rating downgraded to 'C' from 'CCC'; -- Senior secured notes downgraded to 'CCC/RR2' from 'B/RR2'; -- Senior unsecured credit facility downgraded to 'CC/RR3' from 'B-/RR3'; -- Senior unsecured notes downgraded to 'CC/RR3' from 'B-/RR3'; -- Senior subordinated notes affirmed at 'C/RR6'. MGM MIRAGE: To Raise $1.5BB Through Private Placement of Sr. Notes ------------------------------------------------------------------ MGM MIRAGE proposes to make a private placement of $1.5 billion in aggregate principal amount of senior secured notes in two tranches due 2014 and 2017, respectively. The Company plans to use the net proceeds from the offering, together with other proceeds, to: (i) repay not less than $750 million of the outstanding amount under its senior credit facility, (ii) redeem all of the 7.25% senior debentures due 2017 of Mirage Resorts, Incorporated, (iii) purchase or repay all of the Company's 6.0% senior notes due 2009 and all of the 6.50% senior notes due 2009 of Mandalay Resort Group, tendered in pending tender offers, And (iv) for general corporate purposes. The senior secured notes will be secured by a first priority lien on substantially all of the assets of Bellagio Hotel and Casino and The Mirage, each located in Las Vegas, Nevada, and, upon receipt of the necessary gaming approvals, a first priority pledge of the equity interests in Bellagio, LLC and The Mirage Casino- Hotel. The holders of the Company's 13% senior secured notes due 2013 will have an equal and ratable lien in such collateral. The notes will be general senior obligations of the Company, guaranteed by substantially all of the Company's subsidiaries, which also guarantee the Company's other senior indebtedness, and equal in right of payment with, or senior to, all existing or future indebtedness of the Company and each guarantor. The notes proposed to be offered have not been registered under the Securities Act and may not be offered or sold in the United States absent registration under, or an applicable exemption from the registration requirements of, the Securities Act and applicable state securities laws. About MGM MIRAGE Headquartered in Las Vegas, Nevada, MGM MIRAGE (NYSE: MGM) -- http://www.mgmmirage.com/-- is a hotel and gaming company. It owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. The report of Deloitte & Touche, LLP, MGM MIRAGE's independent registered public accounting firm on the Company's consolidated financial statements for the year ended December 31, 2008, contains an explanatory paragraph with respect to the Company's ability to continue as a going concern. * * * As reported by the Troubled Company Reporter on March 23, 2009, Moody's Investors Service downgraded MGM MIRAGE's Probability of Default Rating to Caa3 from Caa2 and its Corporate Family Rating to Caa2 from Caa1. According to the TCR on March 23, 2009, Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on Las Vegas-based MGM MIRAGE and its subsidiaries by two notches; the corporate credit rating was lowered to 'CCC' from 'B-'. These ratings were removed from CreditWatch, where they were initially placed with negative implications on January 30, 2009. S&P said that the rating outlook is negative. The TCR reported on March 25, 2009, that Fitch Ratings took these rating actions for MGM MIRAGE following the lawsuit filed against MGM by City Center JV partner Dubai World, and the two-month covenant waiver obtained from its bank lenders: -- Issuer Default Rating downgraded to 'C' from 'CCC'; -- Senior secured notes downgraded to 'CCC/RR2' from 'B/RR2'; -- Senior unsecured credit facility downgraded to 'CC/RR3' from 'B-/RR3'; -- Senior unsecured notes downgraded to 'CC/RR3' from 'B-/RR3'; -- Senior subordinated notes affirmed at 'C/RR6'. MICHAEL CRIBBIN: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Michael Cribbin 12605 Kinvarra Drive Palos Park, IL 60464 Bankruptcy Case No.: 09-17207 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Carol A. Doyle Debtor's Counsel: Jeffrey C. Dan, Esq. David K. Welch, Esq. Crane Heyman Simon Welch & Clar 135 S Lasalle St Ste 3705 Chicago, IL 60603 Tel: (312) 641-6777 Fax: (312) 641-7114 Email: jdan@craneheyman.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of Mr. Cribbin's petition, including his list of 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/ilnb09-17207.pdf The petition was signed by Mr. Cribbin. MICHAELS STORES: Bank Debt Sells at 25% Off in Secondary Market --------------------------------------------------------------- Participations in a syndicated loan under which Michaels Stores Inc. is a borrower traded in the secondary market at 74.29 cents- on-the-dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 5.71 percentage points from the previous week, the Journal relates. The loan matures October 31, 2013. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's B rating. Meanwhile, participations in a syndicated loan under which Claire's Stores is a borrower traded in the secondary market at 56.63 cents-on-the-dollar during the week ended May 8, 2009, an increase of 4.74 percentage points from the previous week. The loan matures May 29, 2014. The Company pays 275 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Caa2 rating and S&P's B rating. Participations in a syndicated loan under which Neiman Marcus Group Inc. is a borrower traded in the secondary market at 75.75 cents-on-the-dollar during the week ended May 8, 2009, an increase of 5.75 percentage points from the previous week. The loan matures April 6, 2013. The Company pays 175 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's BB- rating. Participations in a syndicated loan under which OSI Restaurant Partners, Inc., is a borrower traded in the secondary market at 75.08 cents-on-the-dollar during the week ended May 8, 2009, an increase of 5.33 percentage points from the previous week. The loan matures May 9, 2014. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's B+ rating. About Michaels Stores Headquartered in Irving, Texas, Michaels Stores, Inc., is the largest arts and crafts specialty retailer in North America. As of March 9, 2009, the company operated 1,105 "Michaels" retail stores in the United States and Canada and 161 Aaron Brothers Stores. As of January 31, 2009, Michaels Stores had $1.62 billion in total assets and $4.51 billion in total liabilities resulting in $2.88 billion in stockholders' deficit. For fiscal year 2008 -- ended January 31, 2009 -- the Company posted a $5 million net loss on $3.81 billion in net sales. MIDWAY GAMES: Creditors Sue Sumner Redstone, Owner & Board ---------------------------------------------------------- Wailin Wong at Chicago Tribune reports that the official committee of unsecured creditors of Midway Games Inc. has sued the Company's former majority shareholder, Sumner Redstone, as well as current owner Mark Thomas and members of its board. The Committee, according to court documents, formalized a number of grievances that have been raised during the Chapter 11 proceedings. The Tribune states that among other issues, the creditors want the U.S. Bankruptcy Court for the District of Delaware to look into whether Mr. Redstone, Mr. Thomas, their affiliated companies, and members of Midway Games' board violated their fiduciary duties in a series of transactions involving the Company. The Court gave the creditors permission to pursue litigation against Mr. Redstone, Mr. Thomas, and the other parties in April 2009, says The Tribune. Mr. Thomas, according to The Tribune, paid $100,000 for Mr. Redstone's 87% stake in Midway Games in November 2008. The Tribune states that Mr. Thomas took over about $70 million in debt that Midway Games owed National Amusements. The report says that $70 million consisted of a $40 million unsecured claim and a secured claim of $30 million. The Tribune relates that Mr. Thomas' secured claim put him ahead of all other unsecured creditors in the bankruptcy. The committee said in court documents, "Midway and its creditors were denied the ability to secure a bona fide strategic partner in restructuring the company's business." According to The Tribune, the committee is also doubting the $90 million in financing that Midway Games received from National Amusements in early 2008. Midway Games, court documents say, was in perilous financial shape, and directors at that time asked Mr. Redstone for help without analyzing the Company's solvency or considering alternatives. The Tribune states that the committee claimed that Mr. Redstone failed to conduct his own analysis before providing the $90 million. National Amusements said in a statement that the creditors' "suit is completely without merit." Headquartered in Chicago, Illinois, Midway Games Inc. -- http://www.midway.com/-- develops video games and sell them primarily in North America, Europe, Asia and Australia. The company and nine of its affiliates filed for Chapter 11 protection on February 12, 2009 (Bankr. D. Del. Lead Case No. 09-10465). David W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard as their investment banker, Dewey & LeBoeuf LLP as special counsel, and Epiq Bankruptcy Solutions LLC as claims agent. The Debtors' financial condition as of September 30, 2008, showed $167,523,000 in total assets and $281,033,000 in total debt. MIDWAY GAMES: Has Modified Bonus Program for Employees ------------------------------------------------------ Midway Games Inc. is currently implementing a bonus program for employees, after it obtained approval from the U.S. Bankruptcy Court for the District of Delaware. According to Bloomberg's Bill Rochelle, the terms of the program were twice modified before being approved. The Company, which received objections from the unsecured creditors committee and the U.S. Trustee, modified the program to raise the threshold performance standards and reduce the payments. Time Warner Inc.'s Warner Bros. is preparing a bid for Midway Games, Bloomberg News reported in late April, citing people familiar with the matter. Bloomberg said Time Warner would add Midway Games' "Mortal Kombat" franchise, which has inspired two movies from Time Warner. Headquartered in Chicago, Illinois, Midway Games Inc. -- http://www.midway.com/-- develops video games and sell them primarily in North America, Europe, Asia and Australia. The company and nine of its affiliates filed for Chapter 11 protection on February 12, 2009 (Bankr. D. Del. Lead Case No. 09-10465). David W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard as their investment banker, Dewey & LeBoeuf LLP as special counsel, and Epiq Bankruptcy Solutions LLC as claims agent. The Debtors' financial condition as of September 30, 2008, showed $167,523,000 in total assets and $281,033,000 in total debts. MIDWEST FAMILY: S&P Puts 'BB+' Rating on Negative CreditWatch ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'AA' underlying rating on Midwest Family Housing LLC, Illinois's military housing revenue bonds 2006 series A class I bonds on CreditWatch with negative implications. Standard & Poor's also placed its 'BBB-' SPUR on Midwest Family Housing LLC's class II on CreditWatch with negative implications, and its 'BB+' SPUR on the class III bonds on CreditWatch with negative implications. These actions reflect the current rating of CIFG Assurance North America Inc. (BB/Developing). All of the affected issues receive enhancement in the form of debt service reserve fund surety policies with CIFG Assurance North America Inc. According to its current criteria for military housing privatizations, Standard & Poor's considers whether monies deposited in the DSRF, which is generally sized in the amount of at least six months debt service, is invested in investment grade securities rated 'BBB-' or higher, and will be available to pay debt service in the event of a shortfall. Because CIFG is currently rated below investment grade, its rating is no longer consistent with S&P's minimum rating level for DSRF surety policies. Standard & Poor's examined all housing bond issues with credit support from the above-mentioned surety provider, taking several factors into consideration. For military housing issues, which represent the majority of the affected ratings, S&P considered each issue's reliance on the DSRF surety policies to meet potential shortfalls for bond payment obligations. Should the issuers act to replace or cash fund the DSRF in investment grade securities, S&P will review the ratings upon the issuer's request. MILLENIUM NEW: Moody's Downgrades Corp. Family Rating to 'Caa3' --------------------------------------------------------------- Moody's Investors Service downgraded the corporate family and probability of default ratings for Millennium New Jersey Holdco, LLC to Caa3 from Caa2, concluding the review for downgrade commenced January 16, 2009. As Moody's expected, the company violated the maximum leverage covenant of its first and second lien credit agreements for the fourth quarter 2008. Millennium lacks sufficient liquidity to fund repayment of the approximately $150 million of loans should lenders exercise their legal rights to accelerate payment of their full outstanding balance. The downgrade of the PDR reflects intensifying default risk, and the downgrade of the CFR reflects continued deterioration of radio advertising revenue, with many radio operators reporting advertising revenue declines in excess of 20% for the first quarter of 2009. In Moody's view, perceived erosion of asset value in the broadcast sector could negatively impact lender recovery in a restructuring scenario, an outcome Moody's now considers more likely than an amendment given ongoing challenges in the credit markets and that the company has not yet achieved an amendment. Moody's changed the outlook to negative, and a summary of the actions follows. Millennium New Jersey Holdco, LLC -- Probability of Default Rating, Downgraded to Caa3 from Caa2 -- Corporate Family Rating, Downgraded to Caa3 from Caa2 -- Senior Secured First Lien Bank Credit Facility, Downgraded to Caa2, LGD3, 37%, from Caa1, LGD3, 37% -- Senior Secured Second Lien Bank Credit Facility, Confirmed Ca, LGD5, 89% -- Outlook, Changed To Negative From Rating Under Review In Moody's opinion, Millennium lacks the necessary liquidity to manage through the economic downturn absent an amendment to its credit agreement or some form of debt restructuring. The Caa3 probability of default and Caa3 corporate family ratings reflect this high default risk, the possibility of a change in the capital structure, and the potential for less than full recovery based on high leverage (approximately 8 times) and declining asset values. Millennium derives the majority of its revenue from cyclical advertising spending, and the Caa3 corporate family rating reflects the resultant pressure on cash flow from the current weak economic conditions, which have contributed to a capital structure Moody's consider unsustainable. The Caa3 corporate family rating also incorporates risk related to the company's geographic concentration and lack of scale. Strong EBITDA margins (in the mid 40% range) and leading positions in its targeted markets support the ratings. Moody's most recent rating action concerning Millennium occurred January 16, 2009. At that time Moody's lowered the corporate family rating to Caa2 from B3 and placed ratings under review for further downgrade. Millennium Radio Group, LLC, the parent company of Millennium New Jersey Holdco LLC, operates twelve radio stations throughout New Jersey. It maintains its headquarters in Ocean, New Jersey, and its annual gross revenue is approximately $50 million. MIV LEASEHOLDS: Files for Chapter 11 Bankruptcy Protection ---------------------------------------------------------- Jason Laday at The News of Cumberland County reports that MIV Leaseholds, Inc., has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of New Jersey. Court documents say that MIV Leasholds listed $200,000 in assets and $699,000 in liabilities. Delaware River and Bay Authority spokesperson Jim Salmon said in a statement, "The Delaware River and Bay Authority is currently reviewing the MIV Leaseholds, Inc., bankruptcy filing. With the advice of counsel, the DRBA will assess the available options and take the necessary precautions to protect the interests of the bi- state agency." Millville attorney Nathan Van Embden represents MIV Leaseholds in its restructuring effots, The News of Cumberland relates. MIV Leaseholds, Inc., fka Air Castle International, Inc., operates Millville Jet Center at Millville Airport. The Company filed for Chapter 11 bankruptcy protection on May 1, 2009 (Bankr. D. N.J. Case No. 09-21212). MOMENTIVE PERFORMANCE: Bank Debt Sells at 30% Discount ------------------------------------------------------ Participations in a syndicated loan under which Momentive Performance Materials is a borrower traded in the secondary market at 69.44 cents- on-the-dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 3.19 percentage points from the previous week, the Journal relates. The loan matures December 5, 2013. The Company pays 250 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B1 rating and S&P's B- rating. Momentive Performance Materials Inc., formerly GE Advanced Materials, headquartered in Albany, New York, is the second largest producer of silicones and silicone derivatives worldwide. The company has two divisions: silicones (which accounted for 90% of revenues in 2008) and quartz. Revenues were $2.6 billion for fiscal year ended December 31, 2008. An affiliate of Apollo Management is the company's majority owner. Momentive Performance Materials had $3.58 billion in total assets and $4.12 billion in total liabilities, resulting in $544.9 million in stockholders' deficit as of December 31, 2008. Net loss in the fiscal year ended December 31, 2008 was $997.1 million, compared to net loss of $254.3 million for the same period in 2007. Net sales in the fiscal year ended December 31, 2008, were $2.63 billion, compared to $2.53 billion for the same period in 2007, an increase of 4.0%. The increase was primarily due to an increase in selling prices and exchange rate fluctuations of 9.5%, partially offset by a decrease in sales volume of 5.0%. * * * As reported by the Troubled Company Reporter on March 26, 2009, Moody's Investors Service lowered Momentive Performance Materials Inc.'s Corporate Family Rating and Probability of Default Rating to Caa1 from B3, and lowered the company's outstanding debt ratings. These actions follow the company's weak fourth quarter results and management's forecast for further weakness in the company's first quarter financial performance. The outlook for the Company's ratings is negative. MTI GLOBAL: In Talks with Lenders on Covenant Waivers ----------------------------------------------------- MTI Global Inc. is in breach of financial and general covenants under the credit facilities with its principal Canadian bank and it mezzanine lender. In particular, the Company did not achieve its December 31, 2008 earnings before interest, taxes and depreciation, fixed charge coverage and funded debt to earnings before interest, taxes and depreciation covenants or its March 31, 2009 fixed charge coverage covenant. Furthermore, the Company is in breach of certain general covenants it was obligated to satisfy pursuant to waiver agreements entered into by the Company with its Bank and Lender based on its June 30, 2008 and subsequent interim monthly results. The covenant violation provides the Bank and Lender with the right to demand repayment of its indebtedness. Subsequent to March 31, 2009, the Company is in continuing discussions with the Bank and the Lender to obtain a waiver of the breaches including amended covenants. MTI Global posted a net loss for the quarter of C$4.8 million or C$0.17 per share compared to a loss in prior year of C$900,000 or C$0.03 per share. Sales for the three months ended March 31, 2009, were C$13.5 million, approximately 4.2% ahead of last year's sales of C$13.0 million. This includes an increase of approximately C$2.3 million, due to the impact of currency fluctuations. At March 31, 2009, MTI Global had C$52.1 million in total assets, including cash and cash equivalents of C$2.5 million; C$29.4 million in total liabilities; and C$22.6 million in shareholders' equity. Based on the sale of the majority of its Leewood and Richmond, Virginia silicone assets, operational changes completed to date, and preliminary indications in the aerospace market, the Company remains cautiously optimistic that it will report improving results through the balance of 2009. In view of the Canadian dollar value against the U.S. dollar, the Company is increasingly confident about achieving improved results with most of its aerospace programs relocated to Mexico and the sale of the majority of the assets of Leewood and N.A. Silicone's Richmond, Virginia plant. In addition, the Company is making satisfactory progress on the disposition of the remaining silicone assets, although the current economic climate is slowing the process. The Company has engaged an investment bank to assist in these transactions. The results for the first quarter of 2009 were better than prior year but below expectations. Revenues and gross margin improved primarily through increased volume in Aerospace at Polyfab divisions and favorable exchange rates compared to prior year. However, the Company continued to incur lower than expected revenues at N.A. Silicone due to the continued decline in the North American automotive market. About MTI Global MTI Global Inc. -- http://www.mtiglobalinc.com/-- designs, develops and manufactures custom-engineered products using silicone and other cellular materials. The Company serves a variety of specialty markets focused on two main areas: Silicone and MTI Polyfab, comprising, Aerospace and Fabricated Products. The Company designs and fabricates energy management systems from a variety of flexible, cellular materials. MTI Global also produces and distributes specialty silicone elastomer products. MTI Global's primary markets are aerospace and mass transit. Secondary markets include sporting goods, automotive, industrial, institutional, electronics, and the medical market through a 51% interest in MTI Sterne SARL of Cavaillon, France. MTI Global's head office and Canadian manufacturing operations are located in Mississauga, Ontario, with international manufacturing operations located in Milton, Florida and a contract manufacturer venture in Ensenada, Mexico. The Company also maintains engineering support centers in Brazil and Toulouse, France. NATIONAL DRY CLEANERS: Hearing on Ch. 11 Plan, Conversion May 29 ---------------------------------------------------------------- According to Bloomberg's Bill Rochelle, the U.S. Bankruptcy Court for the District of Delaware will hold a hearing May 29 on the Chapter 11 cases of National Dry Cleaners Inc., and its affiliates to consider: -- confirmation of a liquidating Chapter 11 plan for Pride Cleaners Inc. and DCI Management Group Inc., co-proposed by the official committee of unsecured creditors. -- conversion of the Chapter 11 cases of 10 affiliated companies to Chapter 7 liquidation. Mr. Rochelle relates that the Plan was made possible by a settlement with the secured lender that gives 6.25% of sale proceeds to unsecured creditors. Unsecured creditors of Pride Cleaners and DCI are expected to receive less than 10% on their claims totaling about $5 million. Assets sales for the two companies generated more than $6.2 million. According to Mr. Rochelle, even with the settlement, the 10 the affiliated companies decided it would be impossible for them to confirm even a liquidating plan and therefore sought the Chapter 7 conversion of their cases. About Nat'l Dry Cleaners Headquartered in Phoenix, Arizona, National Dry Cleaners Inc. -- http://www.alphillips.com/and http://www.pridecleaners.com/-- aka Delia's Cleaners Inc. operates more than 300 dry cleaning stores across the nation. The enterprise employs more than 1,500 people. As of June 30, 2008, NDCI operated 231 dry cleaning stores and 6 central dry cleaning and laundry plants in nine states. Of the dry cleaning stores, 164 are drop stores, meaning that the stores do not have dry cleaning or laundry equipment on site, and 67 dry cleaning stores have the necessary equipment to perform dry cleaning and laundry services on-site. National operates under the names Tuchman Cleaners, DryClean USA, Pride Cleaners, and Al Phillips the Cleaner. The Debtor and its debtor-affiliates filed for separate Chapter 11 protection on July 7, 2008, (Bankr. D. Del. Case No.: 08-11382 to 08-11393). The Debtors selected Epiq Bankruptcy Solutions LLC as their claims, notice and balloting agent. The Debtors listed assets of $10 million to $50 million and debts of $10 million to $50 million at its bankruptcy filing. NEIMAN MARCUS: Bank Debt Sells at 25% Off in Secondary Market ------------------------------------------------------------- Participations in a syndicated loan under which Neiman Marcus Group Inc. is a borrower traded in the secondary market at 75.75 cents-on-the-dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 5.75 percentage points from the previous week, the Journal relates. The loan matures April 6, 2013. The Company pays 175 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's BB- rating. Meanwhile, participations in a syndicated loan under which Michaels Stores Inc. is a borrower traded in the secondary market at 74.29 cents-on-the-dollar during the week ended May 8, 2009, an increase of 5.71 percentage points from the previous week. The loan matures October 31, 2013. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's B rating. Participations in a syndicated loan under which Claire's Stores is a borrower traded in the secondary market at 56.63 cents-on-the- dollar during the week ended May 8, 2009, an increase of 4.74 percentage points from the previous week. The loan matures May 29, 2014. The Company pays 275 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Caa2 rating and S&P's B rating. Participations in a syndicated loan under which OSI Restaurant Partners, Inc., is a borrower traded in the secondary market at 75.08 cents-on-the-dollar during the week ended May 8, 2009, an increase of 5.33 percentage points from the previous week. The loan matures May 9, 2014. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's B+ rating. About Neiman Marcus Headquartered in Dallas, Texas, Neiman Marcus Inc.'s -- http://www.neimanmarcusgroup.com/-- operations include the Specialty Retail Stores segment and the Direct Marketing segment. The Specialty Retail Stores segment consists primarily of Neiman Marcus and Bergdorf Goodman stores. The Direct Marketing segment conducts both online and print catalog operations under the Neiman Marcus, Horchow and Bergdorf Goodman brand names. * * * As reported by the Troubled Company Reporter on March 19, 2009, Moody's Investors Service downgraded Neiman Marcus Group Inc.'s long term ratings including its Probability of Default Rating to Caa1 from B1, its Corporate Family Rating to Caa1 from B1, and its Speculative Grade Liquidity Rating to SGL-3 from SGL-2. The rating outlook is negative. On March 5, 2009, Fitch Ratings affirmed the Issuer Default Rating on Neiman Marcus, Inc. and its subsidiary, The Neiman Marcus Group, Inc., at 'B' and revised the Rating Outlook to Negative from Stable. NMG had $3 billion of debt outstanding as of January 31, 2009. The TCR said February 9, 2009, that Standard & Poor's Ratings Services placed its ratings on six department store companies, including Neiman Marcus ("B+"), on CreditWatch with negative implications. NES RENTALS: Moody's Changes Default Rating to 'Caa1/LD' -------------------------------------------------------- Moody's Investors Service has changed the probability of default rating of NES Rentals Holdings, Inc. to Caa1/LD following the company's repurchase of $14.1 million of its second lien term loan due 2013 ($280 million outstanding prior to buyback) at a significant discount to original principal amount. It should be noted that the limited default designation assigned captures the $14.1 million repurchase and any subsequent distressed debt repurchases pursuant to NES' second lien credit agreement amendment-- which permits up to $100 million of second lien term loan to be prepaid at a discount through early 2010, as specified in the amendment. The Caa1 corporate family rating reflects weak return and interest coverage metrics that should face pressure from poor construction markets over the ratings horizon. As construction markets remain soft the potential for declining used equipment prices to diminish the collateral supporting NES' debts poses additional concern. The negative outlook reflects concern that non-residential construction activity levels could decline through 2010 with used equipment price pressure being sustained for some time. Continued used equipment price pressure could weaken NES' adequate liquidity profile in 2010 and cause financial ratio tests to activate while equipment utilization rates remain low, raising the potential for a covenant breach. The LD designation on the PDR will be removed in approximately three days. Moody's also upgraded the second lien note rating to Caa2 from Ca based on NES' capital structure following the $14.1 million repurchase. If further second lien debt repurchases approach the $100 million face amount permitted under the amendment, the second lien term loan rating could be exposed to downgrade per Moody's Loss Given Default Methodology. A summary of the actions follows: -- Probability of default rating, changed to Caa1/LD from Caa3 -- Corporate Family Rating affirmed at Caa1 -- $266 million Second Lien Term Loan due 2013 to Caa2 LGD 5, 79% from Ca LGD 4, 58% -- Outlook, Negative Moody's last rating action occurred April 1, 2009 when NES' probability of default rating was downgraded to Caa3 from Caa1. NES Rentals Holdings, Inc., based in Chicago, Illinois, is one of the largest equipment rental companies in the U.S. NORTEL NETWORKS: Has Q1 Loss; Keeps Move to Standalone Businesses ----------------------------------------------------------------- Nortel Networks Corp. reported a $507 million first-quarter net loss on revenue of $1.73 billion. Nortel President and Chief Executive Officer Mike Zafirovski said, "First quarter results showed a decline in revenue and margins as expected due to the severe economic downturn and our filings for creditor protection. However, despite the declines we saw this quarter, revenue has stabilized and our cash balance is stable from year-end 2008." "We accomplished our initial objectives of maintaining our customer commitments and strengthening our operational performance. Network performance and customer service levels are at multi-year highs and customers are expressing their support of Nortel. Our employees have done a tremendous job under challenging conditions." Nortel filed for creditor protection in multiple jurisdictions on January 14, 2009 after the Company's capital structure and historic financial obligations were exacerbated by the rapid and significant downturn in the global economy and credit markets. Commenting on Nortel's creditor protection process, Mr. Zafirovski said, "We are focused on maximizing value for stakeholders, including creditors, customers and employees. Nortel has rich resources, leading-edge know-how and a deep talent base, and it is our responsibility to preserve this value." "These are the key considerations in our decision-making process, and work is well underway to evaluate the ultimate path forward for our businesses. Discussions are taking place with various external parties, however, decisions have not been taken and we continue to evaluate our restructuring alternatives. To provide maximum flexibility we are also taking the appropriate steps to complete the move to standalone businesses." "We have made the necessary structural decisions to give Nortel the ability to optimize value, and preserve innovation platforms and employment to the greatest extent possible. Our businesses will have the opportunity to more effectively serve the discrete needs of their respective customers and market segments, while maintaining high customer service and network performance levels." 2009 Financial Highlights Nortel's overall financial performance in the first quarter of 2009 was impacted by the continued downturn in the economy, which resulted in a decrease in customers' spending levels, as well as the ongoing impacts of the Company's Creditor Protection Proceedings. * Revenues in the first quarter of $1.73 billion, down by 37 percent year over year, with declines in all segments and regions. Excluding the negative impact of foreign exchange fluctuations of approximately $225 million, the decrease would have been 29 percent. * Gross margin of 36.1 percent in the quarter includes charges related to the cancellation of certain equity- based compensation plans and workforce and other cost reduction activities that historically would have been recorded in special charges. Excluding these charges, gross margin would have been 38.1 percent. * Although costs have been significantly reduced across the Company, the revenue declines and gross margin pressure resulted in Management Operating Margin (a) in the first quarter of negative $244 million or negative 14.1 percent. Includes a non-cash charge of $91 million related to the cancellation of certain equity-based compensation plans and charges for workforce and other cost reduction activities of $59 million that historically would have been recorded in special charges. * Cash balance on March 31, 2009, of $2.48 billion, compared to $2.4 billion at year-end 2008. Completing the Move to standalone businesses The evaluation of Nortel's businesses -- Carrier Networks (which includes Wireless Networks as well as Carrier VoIP and Application Solutions or CVAS), Metro Ethernet Networks, Enterprise Solutions and the LG-Nortel joint-venture -- is ongoing. As noted, the Company is taking appropriate steps to complete the move to standalone businesses initiated in late 2008. This will provide Nortel with maximum flexibility to choose the ultimate path forward for each of the businesses. To achieve vertically integrated and fully independent business units, Nortel will decentralize its Carrier Sales and Global Operations functions over the coming weeks. This will enhance the business units' overall responsiveness to changing customer and market requirements and provide the opportunity to better serve customers. It is imperative that the independent business unit structure benefit from a streamlined shared-services organization to drive maximum efficiency. Therefore, the Company will expand the Nortel Business Services organization to include operational and other functions from Global Operations, Corporate Operations and Finance. The Company will also continue the necessary work to reduce costs across all of its business units. Business Highlights * Commencing with the first quarter of 2009, Nortel began to report financial results under a new operating model with four reportable segments; Carrier Networks (CN), Enterprise Solutions (ES), Metro Ethernet (MEN) and LG- Nortel (LGN). Each of these segments now includes the associated financial results formerly reported in the Global Services group. The Company will also begin to report Carrier VoIP and Application Solutions as a separate reportable segment commencing with the third quarter of 2009. * Prior to the first quarter of 2009, ES segment revenues were reported across two categories: circuit and packet voice solutions revenues and data networking and security solutions revenues. Commencing with the first quarter of 2009, revenues from both of these previous categories are collectively reported as communications solutions revenues. Enterprise Solutions * Delivered industry-leading innovation with the introduction of the new Ethernet Routing Switch 5600 series of data products. * The Business Communication Manager 450, introduced in October of 2008, reached 1,000 units sold in February - this is the fastest-selling Nortel product ever. It also won Internet Telephony Magazine's Product of the Year award. * Las Vegas' New M Resort Spa Casino selected Unified Communications from Nortel and Microsoft to help enhance its guest experience. * Nortel completed the sale of certain portions of its Application Delivery portfolio to Radware Ltd. for a purchase price of approximately $18 million. Carrier Networks * Algerian Railways selected Nortel for GSM-R communications system expansion, Nortel continues to be the world leader in GSM-R. * Pocket Communications launched a new network to serve markets in the U.S. Northeast and is expanding the capacity of its South Texas wireless network with 3G CDMA technology from Nortel. * Introduced Smart Power Management to allow GSM customers to reduce energy consumption and save money, this solution was demonstrated in a trial conducted in February 2009 with the world's largest mobile operator, China Mobile Communications Corporation (CMCC). * Telekom Austria selected Nortel and Kapsch CarrierCom for nationwide VoIP Solution; Mobilkom Austria also selected Nortel and Kapsch CarrierCom to help them deliver new mobile broadband services, including TV and satellite navigation system services. * Total number of Communication Server (CS) 1500 customers rose to more than 135 globally. * Introduced a new Revenue Assurance Voice Configuration Audit Service to help service providers achieve significant revenue retrieval and cost savings from their TDM and VoIP networks. * Announced worldwide availability of the Adaptive Application Engine that includes a wide-range of revenue- generating voice and multimedia applications like Federated IM, presence, collaboration, conferencing and video. Metro Ethernet Networks (MEN) * Continued strong demand for industry-leading 40G optical solution with 46 customer wins to date, a record quarter in 40G shipments with over 500 40G line ports shipped in the first quarter. * Nortel 40G optical solution became the first in the industry to achieve approved product listing status from the U.S. Department of Defense Joint Interoperability Testing Command (JITC), a status that opens the door for deployment in the U.S. Department of Defense network and other U.S. government agency networks. * Continued customer interest in Nortel 100G solution, with Neos Networks and Banverket successfully completing 100G field trials, along with previously announced trials with Comcast and Verizon. LG-Nortel * LG-Nortel introduced a new complete line of desktop IP phones (IP8800 series) empowering employees at enterprises of all sizes to work smarter and more effectively, with high-quality audio and extensive value-added features. * VoIP technology from LG-Nortel has helped propel LG Dacom into the market leader position for VoIP service in Korea with LG Dacom attracting more then 1.3 million customers in only 15 months. Revenues Revenues were $1.73 billion for the first quarter of 2009 compared to $2.76 billion for the first quarter of 2008, reflecting a reduction of 37 percent comprising declines across all business segments. The reduction was primarily a result of the continuing economic downturn and the uncertainty created by the Creditor Protection Proceedings, and the unfavourable impact of foreign exchange fluctuations. Foreign exchange fluctuations adversely impacted revenues by approximately $225 million, representing 8 percent of the decline. Revenues B/(W) Q1 2009 YoY QoQ ------- ----- ----- Carrier Networks $737 (32%) (48%) Enterprise Solutions 395 (41%) (34%) Metro Ethernet Networks 360 (10%) (21%) LG-Nortel 188 (66%) (7%) Other 53 0% 6% ------- ----- ----- Total $1,733 (37%) (36%) CN revenues in the first quarter of 2009 were $737 million, a decrease of 32 percent compared with the year ago quarter with impacts across all businesses. A majority of the decline was in the wireless segments, and in addition to the factors above, included a reduction in spending by certain customers as a result of their change in technology migration plans. ES revenues in the first quarter of 2009 were $395 million, a decrease of 41 percent compared with the year ago quarter as a result of the factors noted above, namely decreased customer spending and decision-making deferral due to the economic conditions and the uncertainties created from our Creditor Protection Proceedings. MEN revenues in the first quarter of 2009 were $360 million, a decrease of 10 percent compared with the year ago quarter with impacts across all businesses. Excluding the negative impact of foreign exchange fluctuations, revenues for MEN would have declined 6 percent year-over-year. In addition to the factors above, revenues from certain customers in the first quarter of 2008 that did not repeat to the same extent in the first quarter of 2009 also impacted year-over-year comparison. LG-Nortel revenues in the first quarter of 2009 were $188 million, a decrease of 66 percent compared with the year ago quarter. In addition to the factors described above, a majority of the decline was in LGN Carrier, primarily due to the completion of a certain customer contract obligation that resulted in the recognition of previously deferred revenues in the first quarter of 2008 not repeated in the first quarter of 2009 and high sales volumes related to our 3G wireless products in the first quarter of 2008 not repeated to the same extent in the first quarter of 2009, as well as a significant foreign exchange impact due to the devaluation of the Korean WON against the US dollar. The decrease was partially offset by the completion of a certain customer contract obligation resulting in the recognition of previously deferred revenues in the first quarter of 2009. Deferred Revenues Deferred revenues balances decreased by $142 million during the first quarter of 2009 compared to a decrease of $266 million in the first quarter of 2008. Gross Margin Gross margin was 36.1 percent of revenues in the first quarter of 2009. Excluding charges related to the cancellation of certain equity-based compensation plans and workforce and other cost reduction activities that historically would have been recorded in special charges, gross margin would have been 38.1 percent (b) of revenues. This compared to gross margin of 41.6 percent for the first quarter of 2008. Compared to the first quarter of 2008, in addition to the items already noted, gross margin declined primarily as a result of the unfavorable impact of foreign exchange fluctuations, and the unfavorable impacts of product mix and price erosion partially offset by a decrease in inventory provisions. Operating Expenses Operating Expenses B/(W) Q1 2009 YoY QoQ ------- ----- ----- SG&A $528 12% (13%) R&D 341 19% (2%) ------- ----- ----- Total $869 15% (8%) A focus on costs resulted in lower operating expenses compared to the year ago quarter. Operating expenses were $869 million in the first quarter of 2009. This compares to operating expenses of $1,017 million for the first quarter of 2008. SG&A expenses were $528 million in the first quarter of 2009, compared to $597 million for the first quarter of 2008. Excluding charges related to the cancellation of certain equity-based compensation plans and workforce and other cost reduction activities that historically would have been recorded in special charges, SG&A expenses would have been $445 million (b). Compared to the first quarter of 2008, in addition to the items already noted, SG&A was favorably impacted primarily by headcount reductions and lower spending levels across all categories including a reduction in sales and marketing investment in maturing technologies. R&D expenses were $341 million in the first quarter of 2009, compared to $420 million for the first quarter of 2008. Excluding charges related to the cancellation of certain equity-based compensation plans and workforce and other cost reduction activities that historically would have been recorded in special charges, R&D expenses would have been $309 million (b). Compared to the first quarter of 2008, in addition to the items already noted, R&D was favorably impacted primarily by headcount reductions, the cancellation of certain R&D programs, and Nortel's exit from the WiMAX business, as well as lower discretionary costs relative to the first quarter of 2008. Management Operating Margin Management operating margin was negative 14.1 percent of revenues in the first quarter of 2009 compared to positive 4.7 percent for the first quarter of 2008. Excluding a non-cash charge of $91 million related to the cancellation of certain equity-based compensation plans and $59 million related to workforce and other cost reduction activities that historically would have been recorded in special charges, management operating margin would have been negative 5.4 percent (b) of revenues. The first quarter of 2009 management operating margin decreased by 1,880 basis points compared to the year ago quarter. The decline was due to lower gross margin and a decline in revenues that outpaced reductions in operating expenses. Net Loss The Company reported a net loss in the first quarter of 2009 of $507 million, or $1.02 per common share on a basic and diluted basis, compared to net loss of $138 million, or $0.28 per common share on a basic and diluted basis, in the first quarter of 2008. Other expense - net was $70 million for the first quarter of 2009, compared to $1 million in the first quarter of 2008. Other expense - net included a currency exchange loss of $57 million, a loss of $5 million related to hedging activity and costs associated with divestiture-related activities of $3 million. Earnings attributable to non-controlling interests (formerly minority interests) was an expense of $26 million in the first quarter of 2009, compared to an expense of $78 million for the first quarter of 2008. Interest expense was $77 million in the first quarter of 2009, compared to $80 million for the first quarter of 2008. Income tax expense was $7 million in the first quarter of 2009, compared to an expense of $36 million for the first quarter of 2008 The net loss in the first quarter of 2009 of $507 million also included reorganization costs of $52 million related to the Creditor Protection Proceedings and the application of SOP 90-7and a non-cash write-down of goodwill of $48 million. The net loss in the first quarter of 2008 of $138 million included special charges of $88 million for restructurings, a loss of $19 million due to changes in foreign exchange rates, a charge of $12 million related to a patent lawsuit settlement, and a gain of $16 million primarily from mark-to-market gains on interest rate swaps. Cash Cash balance at the end of the first quarter of 2009 was $2.48 billion, up from $2.40 billion at the end of the fourth quarter of 2008. The increase in cash was primarily due to cash from operating activities of $202 million, partially offset by the net unfavorable foreign exchange impacts of $54 million, cash used in financing activities of $48 million and cash used in investing activities of $18 million. NORTEL NETWORKS CORPORATION Unaudited Consolidated Balance Sheets As of March 31, 2009 ASSETS Current assets Cash and cash equivalents US$2,479,000,000 Short-term investments 23,000,000 Restricted cash and cash equivalents 92,000,000 Accounts receivable, net 1,692,000,000 Inventories,net 1,419,000,000 Deferred income taxes,net 27,000,000 Other current assets 489,000,000 --------------- Total current assets 6,221,000,000 Investments 133,000,000 Plant and equipment,net 1,172,000,000 Goodwill 131,000,000 Intangible assets,net 129,000,000 Deferred income taxes, net 14,000,000 Other assets 303,000,000 --------------- Total assets $8,103,000,000 =============== LIABILITIES & SHAREHOLDERS' EQUITY (Deficit) Current liabilities Trade and other accounts payable 420,000,000 Payroll and benefit-related liabilities 401,000,000 Contractual liabilities 177,000,000 Restructuring liabilities 22,000,000 Other accrued liabilities 2,190,000,000 Long-term debt due within one year 3,000,000 --------------- Total current liabilities 3,213,000,000 Long-term debt 91,000,000 Deferred income taxes, net 11,000,000 Other liabilities 732,000,000 --------------- Total long-term liabilities 834,000,000 Liabilities subject to compromise 7,691,000,000 --------------- Total liabilities 11,738,000,000 SHAREHOLDERS' EQUITY (Deficit) Common shares, without par value - Authorized shares: unlimited; Issued and outstanding shares: 498,020,147 as of March 31, 2009 35,596,000,000 Additional paid-in capital 3,645,000,000 Accumulated deficit (42,872,000,000) Accumulated other comprehensive loss (829,000,000) --------------- Total NNC shareholders' deficit (4,460,000,000) Non-controlling interests 825,000,000 --------------- Total shareholders' deficit (3,635,000,000) Total liabilities and shareholders' deficit $8,103,000,000 =============== NORTEL NETWORKS CORPORATION Unaudited Consolidated Statements of Operations For the Year Ended March 31, 2009 REVENUES Products $1,470,000,000 Services 263,000,000 --------------- Total revenues 1,733,000,000 Cost of revenues: Products 966,000,000 Services 142,000,000 --------------- Total cost of revenues 1,108,000,000 Gross profit 625,000,000 Selling, general & admin expense 528,000,000 Research & development expense 341,000,000 Amortization of intangible assets 10,000,000 Special charges - Gain on sales of businesses and assets (15,000,000) Goodwill impairment 48,000,000 Other operating expense (income) - net (12,000,000) --------------- Operating earnings (loss) (275,000,000) Other expense-net (70,000,000) Interest and dividend income - Interest expense: Long-term debt (76,000,000) Other (1,000,000) --------------- Loss from operations before reorganization items, income taxes and equity in net earnings (loss) of associated companies (422,000,000) Reorganization items-net (52,000,000) --------------- Loss from operations before income taxes and equity in net earnings of associated companies (474,000,000) Income tax expense (7,000,000) --------------- Loss from operations before equity in net earnings of associated companies (481,000,000) Equity in net earnings of associated companies-net of tax - --------------- Net loss $(481,000,000) =============== NORTEL NETWORKS CORPORATION Unaudited Consolidated Statement of Cash Flows For the Year Ended March 31, 2009 Cash flows from (used in) operating activities: Net loss attributable to NNC $(507,000,000) Adjustments to reconcile net loss to net cash from (used in) operating activities: Amortization and depreciation 82,000,000 Goodwill impairment 48,000,000 Non-cash portion of cost reduction activities 5,000,000 Equity in net loss (earnings) of associated companies-net of tax - Share-based compensation expense 101,000,000 Deferred income taxes 4,000,000 Pension and other accruals 46,000,000 Loss (gain) on sales and write downs of investments, businesses & assets-net (14,000,000) Income attributable to non-controlling interests-net of tax 26,000,000 Reorganization items-non cash 42,000,000 Other-net 22,000,000 Change in operating assets and liabilities 347,000,000 --------------- Net cash from (used in) operating activities 202,000,000 Cash flows from (used in) investing activities: Expenditures for plant & equipment (12,000,000) Proceeds on disposals of plant & equipment 1,000,000 Change in restricted cash & cash equivalents (55,000,000) Decrease in short & long-term investments 24,000,000 Acquisitions of investments & businesses-net of cash acquired - Proceeds from the sales of investments & businesses & assets-net 24,000,000 --------------- Net cash used in investing activities (18,000,000) Cash flows from (used in) financing activities: Dividends paid by subsidiaries to non-controlling interests - Increase in notes payable 11,000,000 Decrease in notes payable (55,000,000) Repayments of capital leases obligations (4,000,000) --------------- Net cash used in financing activities (48,000,000) Effect of foreign exchange rate changes on cash and cash equivalents (54,000,000) Net increase (decrease) in cash & cash equivalents 82,000,000 Cash & cash equivalents, beginning 2,397,000,000 --------------- Cash & cash equivalents, end $2,479,000,000 =============== A full-text copy of Nortel's 2009 First Quarter Financial Results filed on Form 10-Q with the Securities and Exchange Commission is available at no charge at http://researcharchives.com/t/s?3cc3 About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate today's barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc. and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) OFFICE DEPOT: Moody's Downgrades Corporate Family Rating to 'B2' ---------------------------------------------------------------- Moody's Investors Service downgraded Office Depot, Inc.'s corporate family and probability of default ratings to B2 from B1, and the company's senior unsecured notes to Caa1 from B3. Office Depot's speculative grade liquidity rating was upgraded to an SGL- 2 from an SGL-3. The outlook is negative. These rating actions conclude the review for possible downgrade initiated on February 26, 2009. The downgrades of the corporate family and probability of default ratings result from Office Depot's continuing difficulty in navigating the weak operating environment, culminating in a credit profile that is not reflective of a B1 rating. "While the first quarter outperformed the company's expectations, results were still significantly below the comparable prior year period. The end result was debt/EBITDA increasing to 6.7 times for the latest 12-month period ended March 31, 2009 from 6.3 times at December 31, 2008," stated Moody's Senior Analyst Charlie O'Shea. Positive rating consideration is given to the company's number two position in the office supplies segment and good liquidity. The negative outlook reflects Moody's concern that further deterioration in Office Depot's credit metrics -- already considered weak for the current rating -- could occur during 2009. "Given that a potential recovery in this segment may not occur until late-2009/early-2010, and Office Depot's concentration in the still hard-hit California and Florida markets, Moody's feels it likely that the company's credit profile could continue to deteriorate for the balance of 2009," added O'Shea. The upgrade to SGL-2 from SGL-3 of Office Depot's speculative grade liquidity rating considers that despite revenue and profit declines, cost-cutting and improved inventory management will result in improved internal sources of cash flow and reduced reliance on the company's asset-backed loan facility during the next 12-15 month period. Ratings downgraded: -- Corporate family rating to B2 from B1; -- Probability of default rating to B2 from B1, and -- Senior unsecured notes to Caa1 (LGD5, 77%) from B3 (LGD5, 74%). Rating upgraded: -- Speculative grade liquidity rating to SGL-2 from SGL-3 The last rating action for Office Depot was February 26, 2009 when Moody's lowered the company's corporate family and probability of default ratings to B1 from Ba3, downgraded the senior unsecured notes to B3 from B1, and placed the company's ratings on review for further possible downgrade. Office Depot, Inc., based in Boca Raton, Florida, is the second largest retailer of office supplies with roughly 1,160 retail locations in North America. The company generates annual revenues of about $13.5 billion. OILEXCO NORTH: Hearing on Chapter 15 Petition Set on May 20 ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has scheduled a hearing on May 20, 2009, at 10:00 a.m. to consider the petition of Oilexco North Sea Limited for recognition of its insolvency proceedings in the U.K. as a "foreign main proceeding" under Chapter 15 of the Bankruptcy Code. In connection with this petition, the Bankruptcy Court issued on May 6, 2009, a preliminary injunction which will remain in effect pending the conclusion of the aforementioned hearing. Objetions to the continuation of the preliminary injunction or the Chapter 15 petition must be filed with the Bankruptcy Court no later than May 18, 2009, at 12:00 noon. Copies of the preliminary injunction, the petition, and the supporting documents are available upon request made to the counsel for the petitioners at: Chadbourne & Parke LLP Attn: Howard Seife, Esq. Franisco Vazquez, Esq. 30 Rockefeller Plaza New York, NY 10112 Tel: (212) 408-5100 As reported in the Troubled Company Reporter on April 30, 2009, Oilexco North Sea Ltd., the U.K. unit of a Canadian oil and gas exploration and production company, filed a Chapter 15 petition on April 28, 2009, in New York seeking recognition of insolvency proceedings in the U.K. as the "foreign main proceeding," Bloomberg's Bill Rochelle said. Chapter 15 allows a company to seek protection from creditors in the United States while its primary bankruptcy case is pending in another country. If the U.S. court grants the Chapter 15 petition, the assets in the U.S. can be liquidated or reorganized through the foreign proceeding. To qualify for Chapter 15, the Oilexco unit must show that the U.K. is the company's nerve center, Bloomberg said. On January 7, 2009, Oilexco North Sea entered Administration and R Bailey, A Bloom, T Burton, and C Dempster were appointed Joint Administrators. The appointment was made by the directors under the provisions of paragraph 22 of Schedule B1 to the Insolvency Act of 1986. Oilexco North Sea Ltd continues to trade under the supervision of the Joint Administrators "whilt they endeavour to realise a sale of Oilexco North Sea Ltd or its business and assets." The Company has an offer to sell the assets for $505 million to Premier Oil Plc, Mr. Rochelle said. As reported in the TCR Europe on February 9, 2009, Oilexco Incorporated obtained a court order Thursday for protection under the Companies' Creditors Arrangement Act (Canada). Ernst & Young Inc. was appointed monitor under the order. The order permits Oilexco (including its wholly-owned Alberta subsidiary Oilexco Technical Services Inc.) to remain in possession and control of its property, carry on its business, retain employees and other service providers and restructure its operations. Proceedings by creditors and others cannot be commenced without leave of the court and current proceedings are stayed. The order does not affect rights of The Royal Bank of Scotland plc and other lenders to shares of Oilexco's wholly-owned United Kingdom subsidiary Oilexco North Sea Limited ("ONSL"). Those shares were pledged by Oilexco as security for Oilexco's obligations as guarantor of amounts owed by ONSL under the US US$547.5 million senior and super senior credit facility and GBP100 million pre-development credit facility of ONSL with the lenders. About Oilexco Inc. Oilexco Incorporated is an oil and gas exploration and production company headquartered in Calgary, Canada. Oilexco was founded in 1994, and trades on the TSX Venture Exchange and the London Stock Exchange. The Company's trading symbol for both exchanges is "OIL". Oilexco North Sea Limited filed for Chapter 15 on April 28, 2009 (Bankr. S.D. N.Y. Case No. 09-12641). Roy Bailey, Alan Robert Bloom, Colin Peter Dempster and Thomas Merchant, as joint administrators, filed the Chapter 15 petition. The petitioners are represented by Howard Seife, Esq., at Chadbourne & Parke LLP. ORIENTAL TRADING: Moody's Confirms 'Caa3' Corporate Family Rating ----------------------------------------------------------------- Moody's Investors Service confirmed Oriental Trading Company, Inc.'s Corporate Family and Probability of Default Ratings at Caa3. Confirmations of rated debt instruments are detailed below. The rating outlook is negative. The rating actions conclude the review for possible downgrade that commenced on February 12, 2009 The rating confirmation reflects the amendment to OTC's first lien credit agreement that waives certain outstanding defaults related to non compliance with the company's financial covenants. The new agreement will require compliance with a minimum EBITDA and minimum liquidity covenants through and including its fiscal year ending March, 2010. After that time covenants will revert to previous levels commencing with the June 2010 testing period. The agreement also incorporates provisions that will enable the company to access its revolving credit facility to fund working capital needs over this period, providing adequate near term liquidity. The confirmation of OTC's Corporate Family Rating at Caa3 reflects the company's significant debt burden and its unsustainable capital structure given current operating performance. The company's financial performance continues to weaken with revenues in its most recent fiscal year falling more than 12% and EBITDA falling by approximately 19%. The negative rating outlook reflects Moody's expectations that OTC's performance will remain pressured in the year ahead given the weak economic environment. The company also has yet to demonstrate revenue and operating profit stability while it seeks to optimize catalog mailing costs. These ratings were confirmed: -- Probability of Default Rating at Caa3 -- Corporate Family Rating at Caa3 -- 1st lien credit facilities at Caa1 (LGD 2, 27%) -- 2nd lien Term Loan at Ca (LGD 5, 74%) Moody's last rating action on Oriental Trading was on February 12, 2009 when its probability of default rating was downgraded to Caa3 from Caa2 and placed on review for a further possible downgrade. Headquartered in Omaha, Nebraska, Oriental Trading is a direct marketer of value-priced novelties, toys, and party supplies and a leading direct marketer of home d�cor products. Revenues in its most recent fiscal year end were approximately $544 million. ORIENTAL TRADING: S&P Downgrades Corporate Credit Rating to 'CCC' ----------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its corporate credit rating on Omaha-based Oriental Trading Co. Inc. to 'CCC' from 'CCC+'. S&P also revised the ratings on both the company's $410 million first-lien term loan and its $50 million first-lien revolving credit facility to 'CCC' from 'CCC+'. The recovery rating on these facilities remains at '4', indicating the expectation for average (30%-50%) recovery of principal in the event of default. S&P has also lowered the rating on OTC's $180 million second-lien term loan to 'CC' and the recovery rating on the loan remains at '6', indicating the expectation for negligible (0%-10%) recovery of principal in the event of default. OTC obtained a waiver and an amendment to its credit facility which replaces total leverage and interest coverage covenants with minimum EBITDA and minimum liquidity covenants. "Although the amendment provides for some flexibility," said Standard & Poor's credit analyst Mariola Borysiak, "we believe that ongoing weak operating performance will result in a narrow cushion to these covenants, thereby pressuring OTC's liquidity position." Moreover, the amendment lasts only though April 4, 2010, after which the covenants reset to the original pre- amendment total leverage and interest coverage covenants. "As such," added Ms. Borysiak, "we believe that OTC will have difficulty complying with these reset covenants and its capital structure is unsustainable in the long run." OSI RESTAURANT: Bank Debt Sells at 24% Off in Secondary Market -------------------------------------------------------------- Participations in a syndicated loan under which OSI Restaurant Partners, Inc., is a borrower traded in the secondary market at 75.08 cents-on-the-dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 5.33 percentage points from the previous week, the Journal relates. The loan matures May 9, 2014. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's B+ rating. Participations in a syndicated loan under which Michaels Stores Inc. is a borrower traded in the secondary market at 74.29 cents- on-the-dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 5.71 percentage points from the previous week, the Journal relates. The loan matures October 31, 2013. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's B rating. Participations in a syndicated loan under which Neiman Marcus Group Inc. is a borrower traded in the secondary market at 75.75 cents-on-the-dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 5.75 percentage points from the previous week, the Journal relates. The loan matures April 6, 2013. The Company pays 175 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's BB- rating. About OSI Restaurant OSI Restaurant Partners is the #3 operator of casual-dining spots (behind Darden Restaurants and Brinker International), with more than 1,400 locations in the US and 20 other countries. Its flagship Outback Steakhouse chain boasts more than 950 locations that serve steak, chicken, and seafood in Australian-themed surroundings. OSI also operates the Carrabba's Italian Grill chain, with about 240 locations. Other concepts include Bonefish Grill, Fleming's Prime Steakhouse, and Cheeseburger In Paradise. Most of the restaurants are company owned. A group led by chairman Chris Sullivan took the company private in 2007. * * * As reported by the Troubled Company Reporter on Feb. 24, 2009, Moody's Investors Service downgraded OSI Restaurant's Probability of Default rating to Ca from Caa1 and lowered the rating on its $550 million 10% senior unsecured notes to C from Caa3. Moody's also placed OSI's Corporate Family and senior secured ratings on review for possible downgrade. The review was prompted by the recent announcement that OSI continues to experience a substantial decline in earnings and store traffic to levels worse than Moody's previously expected. The company also announced that it will likely need to take an impairment charge of between $480 and $540 million for goodwill due to a reduction in its projected results for future periods as a result of poor overall economic conditions. PACIFIC ETHANOL: May File Chapter 11, Expects $23.9MM Q1 Loss ------------------------------------------------------------- Reuters repots that Pacific Ethanol Inc. has warned again that it would have to file for bankruptcy protection if it fails to restructure its debt soon. Pacific Ethanol said in a filing with the U.S. Securities and Exchange Commission that it was unable to file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, in a timely manner without unreasonable effort or expense because management needs additional time to complete the financial and other disclosures in the Quarterly Report. The Company has been actively pursuing a number of alternatives, including seeking to restructure its debt and seeking to raise additional debt or equity financing, or both, and has been diligently negotiating with its various lenders. However, there can be no assurance that the Company will be successful. If the Company cannot restructure its debt and obtain sufficient liquidity in the very near-term, the Company will need to seek protection under the U.S. Bankruptcy Code. Because of the extraordinary demands that these activities have placed on the time and attention of the Company's senior management and staff, the Company was unable to timely complete the financial and other disclosures in the Quarterly Report. The Company plans to file its Quarterly Report by May 18, 2009, in compliance with Rule 12b-25. Preliminary Results The Company anticipates reporting net sales of $86.7 million for the three months ended March 31, 2009, as compared to net sales of $161.5 million for the same period in 2008. The decrease in net sales resulted primarily from a decrease in both the volume of ethanol sold by the Company and lower average sales prices. The volume of ethanol sold by the Company for the three months ended March 31, 2009, decreased by approximately 24% as compared to the same period in 2008. The Company's average sales price of ethanol decreased 28% to $1.65 per gallon for the three months ended March 31, 2009, from an average sales price of $2.30 per gallon for the same period in 2008. The Company anticipates reporting a gross loss of $11.1 million for the three months ended March 31, 2009, as compared to gross profit of $15.7 million for the same period in 2008. The Company anticipates reporting that its gross margin was negative 12.8% for the three months ended March 31, 2009, as compared to a gross profit margin of 9.7% for the same period in 2008. The decline in the Company's gross margins was primarily due to increased costs to operate its four ethanol production facilities in relation to their reduced production levels and lower average sales prices. The Company anticipates reporting a net loss of approximately $23.9 million for the three months ended March 31, 2009, as compared to a net loss of $35.2 million for the same period in 2008. The Company anticipates reporting loss available to common stockholders of approximately $24.7 million for the three months ended March 31, 2009, net of preferred stock dividends, as compared to a loss available to common stockholders of $36.3 million for the same period in 2008. The Company anticipates reporting a diluted net loss per common share of approximately $0.43 for the three months ended March 31, 2009, as compared to a net loss per common share of $0.90 for the same period in 2008. The Company had 57.0 million weighted- average basic and diluted shares outstanding for the three months ended March 31, 2009. About Pacific Ethanol, Inc Based in Sacramento, California, Pacific Ethanol, Inc. (NASDAQ GM: PEIX) -- http://www.pacificethanol.net/-- is the largest West Coast-based marketer and producer of ethanol. Pacific Ethanol has ethanol plants in Madera and Stockton, California; Boardman, Oregon; and Burley, Idaho. Pacific Ethanol also owns a 42% interest in Front Range Energy, LLC which owns an ethanol plant in Windsor, Colorado. PMI GROUP: Fitch Downgrades Issuer Default Rating to 'CC/RR5' ------------------------------------------------------------- Fitch Ratings has downgraded the long-term issuer and senior debt ratings of The PMI Group, Inc. to 'CC/RR5' from 'CCC' and the junior subordinated debt ratings of PMI Capital I to 'C/RR6'. A list of affected ratings follows the end of this press release. Concurrent with these ratings actions, Fitch is withdrawing coverage of TPG and related ratings of its operating companies. The long term issuer and debt ratings of TPG are being withdrawn as the agency believes that limited market interest remains for maintaining these ratings. With respect to the Insurer Financial Strength ratings of TPG's main operating subsidiary PMI Mortgage Insurance Co., Fitch notes that the company no longer shares information on its insured portfolio necessary to maintain the IFS ratings. The rating action reflects the announcement made by TPG that it has reached an agreement with its lenders under the company's revolving credit facility on terms and conditions of an amended credit agreement that would replace, contingent on TPG satisfying certain conditions, the existing credit facility. The amended credit agreement would reduce the amount outstanding on the credit facility to $125 million from $200 million, remove certain covenants and events of default, and reduce the minimum adjusted consolidated net worth requirement. The restructuring of the credit facility could be viewed as neutral to moderately positive for PMI, as liquidity and risk- adjusted capital would improve upon the sale of a contingent note to TPG that arose from the divestiture of PMI Australia which took place in 2008. The restructuring, however, has a negative impact on the position of TPG's senior debtholders relative to the credit facility lenders, as the restated credit amendment puts in place significant protections for the credit facility lenders at the expense of unsecured senior debtholders. In the event the restructuring is unsuccessful, acceleration of the bank facility to avoid a default would substantially deplete liquidity at TPG. In either event, the ratings assigned to the debt issues reflect Fitch's expectations of low recoveries in the event of an eventual default at TPG, which is reflected in the assigned Recovery Ratings. In order for the amended and restated credit agreement to become effective, TPG would have to purchase the $187 million contingent note from PMI and pledge the note as collateral for the $125 million amended credit facility. The sale of the contingent note from PMI to TPG is subject to regulatory and third-party approval. If TPG is unable to successfully obtain the required approvals for the sale of the contingent note by May 29, 2009, TPG would either have to repay the current $200 million outstanding under the credit facility with holding company cash or face an event of default under the current terms of the credit facility. TPG maintained approximately $234 million of cash as of March 31, 2009, and therefore maintains enough capacity to repay the facility in full, although doing so would significantly reduce TPG's remaining financial flexibility. Alternatively, if TPG does not pay down the credit facility in full, causing an event of default, the company would be subject to an acceleration of the $200 million outstanding under the credit facility and $400 million of outstanding senior notes. TPG would not have sufficient liquidity to meet its obligations in this scenario. If the sale of the contingent note is approved, TPG would use about $75 million to reduce the size of the credit facility to $125 million and an additional $75 million to purchase the contingent note from PMI (with potentially another $25 million payment to PMI subject to performance of the note to be paid at the note's maturity). As a result, pro-forma holding company cash would be about $84 million. While holding company liquidity would be significantly reduced, the amendment of the credit facility terms would also remove the risk of an imminent event of default. TPG would have limited financial flexibility after this transaction with the $84 million holding company cash and a potential $30 million-$40 million of additional liquidity to be provided by PMI from a tax-sharing arrangement over the next two years. Pro-forma annual holding company interest and financing expenses would be approximately $37 million-$39 million upon implementation of the amended credit facility. Moreover, the size of the amended credit facility would be limited to 80% of the value of the contingent note as determined by procedures set forth in the restated credit agreement. Hence, any reduction of the value of the contingent note below $156 million would cause TPG to use its limited cash resources to pay down the credit facility (prior to its maturity) to a level that would bring the size of the facility down to 80% of the value of the note. Fitch has downgraded and concurrently withdrawn these ratings: The PMI Group Inc. -- Long-term issuer to 'CC' from 'CCC'; -- $250 million 6% senior notes due Sept. 15, 2016 to 'CC/RR5' from 'CCC'; -- $150 million 6.625% senior notes due Sept. 15, 2036 to 'CC/RR5' from 'CCC'. PMI Capital I -- $51.593 million 8.309% junior subordinated debentures due Feb. 1, 2027 to 'C/RR6' from 'CC'. These ratings have not been affected by this action and also have been withdrawn: PMI Mortgage Insurance Co. PMI Insurance Co. PMI Mortgage Insurance Company Limited -- IFS at 'BB'. The Rating Outlook on all ratings at the time of withdrawal is Negative. For its current action, Fitch relied on public information on TPG and its subsidiaries as well as certain non-public information previously received from TPG regarding its mortgage insurance portfolio. However, Fitch no longer regularly meets with TPG management, nor does it receive non-public information from the company on an ongoing basis. POWERMATE CORP: Court Okays Settlement Agreement With Home Depot ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has approved the settlement agreement between Powermate Holding Corp., et al., and Home Depot U.S.A., Inc. regarding the adversary proceeding commenced by the Debtors against Home Depot U.S.A. Inc. (Adv. Proc. No. 08-50637 KG), to recover accounts receivable claimed by Powermate to be owed to it by Home Depot. Home Depot disputed the claims and asserted its own right of setoff, recoupment, deduction and offset. Certain portions of the approved Settlement Agreement have been filed under seal, as authorized by the Court, to protect the entities from potential harm that may result from the disclosure of certain confidential information relating to the settlement. Pursuant to the redacted version of the settlement agreement, Home Depot agrees to pay to Powermate the total sum of $2,271,474 by wire transfer within 10 calendar days after the Effective Date of the agreement. In addition, Home Depot agrees to place the sum of $100,000 into an escrow or trust account for the purpose of [deleted]. Pursuant to the agreement, upon receipt and clearance of the settlement payment and the establishment and funding of the [deleted] escrow account, Home Depot and the Debtors mutually agree to fully release each other from any and all other claims, demands and causes of action except with respect to claims arising out of the settlement agreement or the [deleted] escrow account. Any claims filed by Home Depot in Powermate's bankruptcy case will be deemed voluntarily withdrawn by Home Depot as of the Effective Date of the agreement. About Powermate Corp. Headquartered in Aurora, Illinois, Powermate Corp. -- http://www.powermate.com/-- manufactures portable and home standby generators, air compressors, air tools, pressure washer and accessories. Products were distributed through mass retailers, home centers, specialty store chains, industry buying cooperatives, online e-Dealers, and independent hardware retailers. Prior to the Petition Date, the Debtors sold their air compressor business and related assets. Sun Capital Partners bought 95% of Powermate in 2004. Powermate Holding Corp. is the parent of Powermate Corp. In turn Powermate Corp. owns 100% of Powermate International Inc. The three companies filed for Chapter 11 protection on March 17, 2008 (Bankr. D. Del. Lead Case No.08-10498). Neil Herman, Esq., at Morgan, Lewis & Bokius, represents the Debtors as counsel. Kenneth Enos, Esq., and Michael Nestor, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors as local counsel. Monika J. Machen, Esq., at Sonnenschein Nath Rosenthal LLP, represents the Official Committee of Unsecured Creditors as counsel. Charlene D. Davis, Esq., Eric M. Sutty, Esq., and Daniel A. O'Brien, Esq., at Bayard P.A., represent the Creditors Committee as local counsel. In schedules filed with the Court, the Debtors listed total assets of and debts of over $69 million and $144 million, respectively. PROPEX INC: BNP, Black Diamond Appeal DIP Loan Payment Order ------------------------------------------------------------ BNP Paribas Securities Corp., as administrative agent for the prepetition lender group under Propex Inc.'s prepetition senior credit facility, and Black Diamond Capital Management, LLC, on behalf of itself and various funds it represents, took an appeal to the U.S. District Court for the Eastern District of Tennessee from the order of Judge John C. Cook of the United States Bankruptcy Court for the Eastern District of Tennessee authorizing the Debtors to pay and satisfy the 2009 DIP loan from the net proceeds of the sale. The Appellants want the District Court to review whether the Bankruptcy Court erred in granting the Debtors' Emergency Motion to pay and satisfy the 2009 DIP Loan from the net proceeds of the sale of substantially all of the Debtors' assets without having considered all relevant information presented. The Appellants assert that the Motion to satisfy the 2009 DIP Loan caused the Debtors to breach their fiduciary duties to creditors and other parties-in-interest. Judge Cook in April permitted the Debtors to pay all obligations under the 2009 DIP Loan in full from the net proceeds received at the closing of the sale of the Debtors' assets. Upon payment of the obligations under the 2009 DIP Loan, the Debtors and their estates will not have any additional or remaining liabilities with respect to the 2009 DIP Loan, Judge Cook said. As reported by the Troubled Company Reporter, on March 30 the Court permitted Propex to sell substantially all of their assets as a going concern to an affiliate of Wayzata Investment Partners -- Xerxes Operating Company LLC and Xerxes Foreign Holding Corp. -- for $82,000,000, free and clear of all liens, claims, encumbrances and interests. In their motion, the Debtors said they are concerned that the Propex Sale Order prohibits payment of any of their indebtedness prior to closing of the sale, and the terms of their 2009 DIP Loan impose a 3% penalty for any prepayments of those obligations. Henry J. Kaim, Esq., at King & Spalding, LLP, in Houston, Texas, had told the Court that Black Diamond Capital Management, LLC, on behalf of itself and the various funds it represents, issued written threats on several occasions to the Debtors' officers and directors, in violation of the automatic stay and contrary to the express terms of the Propex Sale Order, that the Debtors should not give Xerxes the benefit of its bargain by selling the "Acquired Cash" -- which referred to any cash of the Debtors in excess of the Carve Out Cash Amount, but excluding the Restricted Cash -- to Xerxes under the parties' Asset and Purchase Agreement, but rather should divert the Acquired Cash to the immediate payment of some portion of the Debtors' obligations under the 2009 DIP Loan. In support of the Debtors' request, Xerxes told the Court that the parties' sale agreement clearly states it is buying all of the Debtors' "Acquired Cash", which include any cash of the company in excess of the Carve Out Cash Amount, but excluding restricted cash. Moreover, Xerxes said, the APA requires the Debtors to operate their business in the ordinary course of business and prohibits the payment of any indebtedness, including the 2009 DIP Loan, prior to closing. Xerxes asked the Court not to accept Black Diamond's invitation to meddle in the Debtors' business affairs, thereby imperiling their ability to close on the sale. BNP Paribas et al.'s Objection Black Diamond, BNP Paribas, Jeff Davis County, Georgia, objected to the Debtors' request, arguing that the 2009 DIP Loan should be paid out of all of the Debtors' "existing cash on hand" before utilizing the sale proceeds. Black Diamond said that solely utilizing proceeds from the sale transaction to pay off the 2009 DIP Loan results in a dollar for dollar reduction in the recovery to the Debtors' creditors. In the absence of a provision in the Xerxes APA clearly requiring that the Debtors deliver a minimum amount of cash to Xerxes at closing or a provision clearly prohibiting the Debtors' payment of the 2009 DIP Loan from cash on hand, it is the Debtors' fiduciary duties to maximize value to creditors, Black Diamond maintained. BNP Paribas argued the Debtors directly violate their obligation to maximize the value of the estates for creditors by failing to first look to the significant level of excess cash to pay off the obligations under the 2009 DIP Loan. For it part, Jeff Davis County, Georgia asked the Court to deny the Debtors' Motion to the extent it affects or modifies the terms and conditions of the Propex Sale Order dated March 30, 2009. In a separate filing, Hamilton County, Tennessee, joined in limited objection filed by Jeff Davis County. About Propex Inc. Headquartered in Chattanooga, Tennessee, Propex Inc. -- http://www.propexinc.com/-- produces geosynthetic, concrete, furnishing, and industrial fabrics and fiber. It also produces primary and secondary carpet backing. Propex operates in North America, Europe, and Brazil. The company and its debtor-affiliates filed for Chapter 11 protection on January 18, 2008 (Bankr. E.D. Tenn. Case No. 08-10249). The Debtors selected Edward L. Ripley, Esq., Henry J. Kaim, Esq., and Mark W. Wege, Esq. at King & Spalding, in Houston, Texas, to represent them. The Official Committee of Unsecured Creditors tapped Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld, LLP, in New York, to be its counsel. Propex Inc., and its affiliates delivered to the Court a Joint Plan of Reorganization and Disclosure Statement on October 29, 2008. As of June 29, 2008, the Debtors' balance sheet showed total assets of US$562,700,000, and total debts of US$551,700,000. Bankruptcy Creditors' Service, Inc., publishes Propex Bankruptcy News. The newsletter tracks the chapter 11 proceedings undertaken by Propex Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) PROPEX INC: Court OKs Stipulation Resolving BNP Paribas Dispute --------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Tennessee approved a stipulation among Propex Inc. and its affiliates, BNP Paribas Securities Corp., as administrative agent for the Debtors' prepetition lenders, the Official Committee of Unsecured Creditors, and Houlihan, Lokey, Howard & Zukin Capital, Inc., for the resolution of certain claims among them, including the payment of the Prepetition Lenders' claims from the sale of substantially all of the Debtors' assets. The Committee has asked the Court to dismiss an adversary complaint against BNP Paribas and certain of the Debtors' prepetition lenders, in light of the Court-approved stipulation it entered into with the Debtors, BNP Paribas and Houlihan Lokey for the resolution of the Debtors' prepetition secured indebtedness to BNP Paribas and the Prepetition Lenders. The Committee sued BNP Paribas and the Prepetition Lenders on September 23, 2008, challenging the validity of certain liens the Lenders held under the Prepetition Credit Agreement. The stipulation contemplates the dismissal of the Committee Complaint versus BNP Paribas, the allowance of a claim to the Prepetition Lenders equal to the aggregate prepetition loan of the Debtors of about $230 million, and the consent of the Prepetition Lenders to the allocation of the certain funds and net cash proceeds in the possession of the Debtors' estates. Under the stipulation, the Prepetition Lenders also waive any claim arising from adequate protection liens and claims. The parties also agree to award Houlihan Lokey, as the Debtors' financial advisors, a $500,000 success fee. Propex Concludes Asset Sale to Wayzata Propex related on April 28, 2009 the sale of substantially all of its assets to Propex Holding, LLC, an entity owned by a fund managed by Wayzata Investment Partners, a Minneapolis-based private equity firm. Bankruptcy Judge John C. Cook of the United States Bankruptcy Court for the Eastern District of Tennessee approved Wayzata's bid for Propex's assets on March 30, 2009. As reported by the Troubled Company Reporter, on March 30 the Court permitted Propex to sell substantially all of their assets as a going concern to an affiliate of Wayzata Investment Partners -- Xerxes Operating Company LLC and Xerxes Foreign Holding Corp. -- for $82,000,000, free and clear of all liens, claims, encumbrances and interests. Under the company name, Propex Holding, LLC, the premier global supplier of polypropylene fabrics and fibers for geosynthetic, concrete, furnishings and industrial markets will continue to operate under the trade name, Propex, worldwide and will aggressively pursue business opportunities in its current markets as well as expand into new markets. "I would like to thank Wayzata for helping us become a stronger company with new financing in place to grow our business and strengthen our trusted-brands," Propex's Chief Executive Officer Stan Brant said in a statement. In connection with the sale, Propex has permanently shed more than $380 million of debt and long-term liabilities. "I would also like to thank our customers, employees and vendors for their continued support and for working with us to successfully complete our restructuring," Brant added. Propex Inc. voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code on January 18, 2008. The company has continued to operate under the supervision of the Bankruptcy Court throughout the Chapter 11 process. About Propex Inc. Headquartered in Chattanooga, Tennessee, Propex Inc. -- http://www.propexinc.com/-- produces geosynthetic, concrete, furnishing, and industrial fabrics and fiber. It also produces primary and secondary carpet backing. Propex operates in North America, Europe, and Brazil. The company and its debtor-affiliates filed for Chapter 11 protection on January 18, 2008 (Bankr. E.D. Tenn. Case No. 08-10249). The Debtors selected Edward L. Ripley, Esq., Henry J. Kaim, Esq., and Mark W. Wege, Esq. at King & Spalding, in Houston, Texas, to represent them. The Official Committee of Unsecured Creditors tapped Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld, LLP, in New York, to be its counsel. Propex Inc., and its affiliates delivered to the Court a Joint Plan of Reorganization and Disclosure Statement on October 29, 2008. As of June 29, 2008, the Debtors' balance sheet showed total assets of US$562,700,000, and total debts of US$551,700,000. Bankruptcy Creditors' Service, Inc., publishes Propex Bankruptcy News. The newsletter tracks the chapter 11 proceedings undertaken by Propex Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) QUEBECOR WORLD: RR Donnelley Offers $1.35BB Cash, Stock for Assets ------------------------------------------------------------------ Quebecor World Inc. received an unsolicited, non-binding and conditional indication of interest from R.R. Donnelley & Sons Company to acquire all or substantially all of the assets of Quebecor World. RR Donnelley proposes to pay the Quebecor Debtors in the aggregate: * cash in an amount equal to the cash amount contemplated for distribution under the draft First Amended Plan of Reorganization proposed with respect to the U.S. bankruptcy proceeding and the draft Plan of Reorganization and Compromise proposed with respect to the Canadian reorganization of QWI, which RR Donnelley believe is approximately US$700,000,000; plus * cash on balance sheet -- estimated as of June 30, 2009, at $257,000,000 pursuant to the Plans; plus * 30 million shares of RRD common stock, which represent approximately 15% of RRD's outstanding shares and have a value of US$394,200,000 based on the closing trading price on May 11, 2009. RRD common stock is listed for trading on the New York Stock Exchange, and the current market capitalization of RRD is approximately US$2.7 billion. The non-binding proposal was communicated on May 12, 2009 in a letter from Thomas J. Quinlan III, R.R. Donnelley's President and Chief Executive Officer, to Jacques Mallette, President and Chief Executive Officer of Quebecor World, David McCarthy, President of Quebecor World (USA) Inc., and Steven Strom, Managing Director of Jefferies & Company, Inc., an advisor to Quebecor World. R.R. Donnelley & Sons indicated to Quebecor World that it was prepared to move expediently to a legally binding purchase agreement, pending the completion of due diligence. The Company noted that it believed the non-binding proposal offered Quebecor World's debtors and their creditors superior terms to the current draft amended reorganization plans recently proposed as part of Quebecor World's ongoing bankruptcy proceedings in the United States and Canada. "Quebecor World and RR Donnelley have long represented a strong strategic fit with one another and, through this proposal, we have the opportunity to join them together in a way that greatly benefits stakeholders of both companies, including Quebecor World's debtors and their creditors," said Thomas J. Quinlan III, RR Donnelley's President and Chief Executive Officer. "Our offer would significantly enhance our ability to provide customers more comprehensive end-to-end printing solutions, expand our geographic reach into the important Canadian market and better balance our capacity with customer demand -- all while achieving significant immediate and long-lasting synergies. We look forward to the chance to work with the debtors as they develop the plan that they feel is in the best interests of their stakeholders." RR Donnelley explained the proposed acquisition price is based on publicly-available information and our deep knowledge of the industry. RRD assumed (i) interim operations in the ordinary course, (ii) normalized working capital at closing, (iii) the assets and properties of the Quebecor Debtors (and their Latin American subsidiaries) are consistent with RRD's business expectations based on its industry knowledge and review of public financial information, (iv) the non-debtor subsidiaries are free of liabilities outside of the ordinary course of business, and (v) the assets and properties of the Quebecor Debtors will be transferred to RRD free and clear of all claims and liabilities (other than ordinary course trade payables, specific contracts that RRD will ask QWI to assume and assign to RRD, and other liabilities to be agreed. There would be no financing condition to the Acquisition. RRD said it has sufficient funds to pay the cash portion of the consideration from cash on hand or availability under the existing revolving credit facility. The transaction under the proposed terms would be accretive to RR Donnelley shareholders after the first 12 months of combined operations. The Board of Directors of Quebecor World is currently in the process of reviewing the terms and conditions of the proposed transaction together with its financial and legal advisors and will be discussing it with its major stakeholders. Quebecor World will be proceeding as scheduled with its Canadian court hearing on May 14, 2009, with respect to the convening of a creditors' meeting for the consideration of its proposed plan of reorganization and compromise under the Companies' Creditors Arrangement Act and the Canada Business Corporations Act as well as with its U.S. Bankruptcy Court hearing on May 15, 2009, with respect to its disclosure statement, as amended, and the voting by creditors of its U.S. subsidiaries party to the U.S. creditor protection proceedings on its proposed U.S. plan of reorganization, as amended. RR Donnelley first expressed its intent to acquire Quebecor World on August 11, 2008. "Although we have not received any response to our previous proposal, we have continued to follow the publicly-available information concerning your reorganization proceedings," RR Donnelley said. RR Donnelley said it does not require any exclusivity period, no- shop provisions or expense reimbursement to conduct due diligence or finalize the terms of the proposed Acquisition. However, once the parties execute a definitive asset purchase agreement, RRD said it will require customary protections for a stalking horse bidder in light of the value created for the Quebecor Debtors by its offer, including overbid protections and other bidding procedures to be agreed, milestones to closing and a termination right if the milestones are not met, expense reimbursement, and, in the event the Quebecor Debtors consummate an alternative transaction, a break-up fee in an amount to be agreed. RR Donnelley, in the letter, suggested that QWI immediately identify a working group at the Quebecor Debtors that can work with RRD and its advisors, Sullivan & Cromwell LLP, and Osler, Hoskin & Harcourt LLP, to conduct the due diligence process and finalize the terms of the definitive asset purchase agreement. Prior to signing a definitive asset purchase agreement, RR Donnelley requires no expense reimbursement and no deal protection of any sort. The Quebecor Debtors would be free to abandon discussions with RRD at any time (and vice versa). "We believe that we can progress very quickly to agree upon a transaction without materially impairing your ability to solicit approval of the current draft Plans later if for any reason you decide not to proceed with a transaction with RRD. We stand ready to execute a customary confidentiality agreement upon request," the letter added. A full-text copy of RR Donnelley's letter is available at no charge at http://ResearchArchives.com/t/s?3ccd Quebecor World's Plan RR Donnelley said it reviewed Quebecor World's draft First Amended Plan of Reorganization. The U.S. Court hearing on the approval of the Disclosure Statement, which will form the basis on which creditors will vote on the U.S. Plan of Reorganization, is currently scheduled to be held before the U.S. Bankruptcy Court on May 15, 2009. "After reviewing the draft Plans in light of our own valuation of the relevant companies as stand-alone businesses, we believe that the proposed transaction set out in this letter is superior for the Quebecor Debtors and their creditors to the restructuring proposed by the Plans in their current form," RR Donnelley said. RR Donnelley, accordingly, has submitted a preliminary indication of interest to purchase all or substantially all of the assets and properties of the Quebecor Debtors (including shares of their Latin American subsidiaries), free and clear of all claims and interests. RRD is ready to proceed as quickly as possible to reducing its proposal to a legally-binding asset purchase agreement for implementation in a court-approved sale pursuant to Section 363(b) under the U.S. Bankruptcy Code and accompanying proceedings under the Companies' Creditors Arrangement Act. RRD said it would be willing to consummate the Acquisition prior to or in connection with plan confirmation, as the Debtors consider in the best interests of the Quebecor Debtors and their creditors. RRD's Proposal The key provisions of RR Donelley's proposal are as follows: (a) Purchase Consideration. RRD proposes to pay the Quebecor Debtors (in the aggregate): cash in an amount equal to the cash amount contemplated for distribution under the draft Plans, which we believe is approximately US$700,000,000; plus cash on balance sheet (estimated as of June 30, 2009, at $257,000,000 pursuant to the Plans); plus 30 million shares of RRD common stock, which represent approximately 15% of RRD's outstanding shares and have a value of US$394,200,000 based on the closing trading price on May 11, 2009. RRD common stock is listed for trading on the New York Stock Exchange, and the current market capitalization of RRD is approximately US$2.7 billion. RRD believes the publicly-listed common stock of the pro forma combined company will offer attractive investment characteristics for current creditors of the Quebecor Debtors when compared to the newly-issued securities of a stand-alone reorganized company. In addition to providing an attractive valuation and immediate liquidity, for those investors that choose to remain stockholders of RRD, our proposal offers the opportunity to enjoy the synergies involved in the Acquisition and participate in any future appreciation of RRD stock as we grow our business around the world. "This is an exciting opportunity and we expect that the Acquisition will be accretive to RRD stockholders after the first 12 months of combined operations," RRD said. (b) Valuation Assumptions. RRD's proposed acquisition price is based on publicly-available information and our deep knowledge of the industry. It has assumed (i) interim operations in the ordinary course, (ii) normalized working capital at closing, (iii) the assets and properties of the Quebecor Debtors (and their Latin American subsidiaries) are consistent with its business expectations based on its industry knowledge and RRD's review of public financial information, (iv) the non-debtor subsidiaries are free of liabilities outside of the ordinary course of business, and (v) the assets and properties of the Quebecor Debtors will be transferred to RRD free and clear of all claims and liabilities (other than ordinary course trade payables, specific contracts that RRD asks the Debtors to assume and assign to RRD, and other liabilities to be agreed). (c) Financing. There would be no financing condition to the Acquisition. RRD has sufficient funds to pay the cash portion of the consideration from cash on hand and/or availability under our existing revolving credit facility. (d) Internal Approvals. This proposal has been reviewed at the highest levels of RRD and the only further internal approval necessary for the execution and delivery of a binding asset purchase agreement is the approval of its Board of Directors. No shareholder approval is required. (e) Due Diligence. RRD is prepared to work with the Debtors and their respective advisors to proceed as expeditiously as possible to complete its business, financial, accounting, tax, environmental and legal due diligence review, including meetings with QWI's management, and the reasonable opportunity to inspect QWI's facilities. With access to the right data and personnel, we are confident that this work could be completed without material delay. (f) Regulatory Matters. The Acquisition will require expiration of the applicable waiting period under the U.S. Hart-Scott- Rodino Act and under the Competition Act Canada, if applicable, approval under the Investment Canada Act and, potentially, filings in other jurisdictions. RRD has done considerable work assessing the regulatory issues associated with the proposed Acquisition and are confident that the proposed Acquisition can be completed in a timely manner. (g) Competitively Sensitive Information. RRD is sensitive to any concerns that you may have with respect to the treatment of competitively sensitive information during the due diligence process. One of the first conversations that RRD would like to suggest take place would be between its antitrust counsel and QWI's antitrust counsel at Sullivan & Cromwell LLP and Osler, Hoskin & Harcourt LLP. Their advisors are very familiar with the issues relating to conducting diligence for potential strategic transactions in this industry and can describe the set of safeguards that we would implement to avoid any risk that information is shared inappropriately. (h) Structure and Documentation. The purchaser would be one or more wholly-owned subsidiaries of RRD. There would be no other investors or sources of capital or financing for the Acquisition. (i) Stalking Horse Protections. RRD does not require any exclusivity period, no-shop provisions or expense reimbursement to conduct due diligence or finalize the terms of the proposed Acquisition. However, once it executes a definitive asset purchase agreement, RRD will require customary protections for a stalking horse bidder in light of the value created for the Quebecor Debtors by its offer, including overbid protections and other bidding procedures to be agreed, milestones to closing and a termination right if the milestones are not met, expense reimbursement, and, in the event the Quebecor Debtors consummate an alternative transaction, a break-up fee in an amount to be agreed. RRD's advisors are Sullivan & Cromwell LLP, and Osler, Hoskin & Harcourt LLP. About RR Donnelley RR Donnelley (NYSE: RRD) -- http://www.rrdonnelley.com/-- is a full-service provider of print and related services, including business process outsourcing. Founded more than 144 years ago, the company provides products and solutions in commercial printing, direct mail, financial printing, print fulfillment, labels, forms, logistics, call centers, transactional print-and- mail, print management, online services, digital photography, color services, and content and database management to customers in the publishing, healthcare, advertising, retail, technology, financial services and many other industries. The largest companies in the world and others rely on RR Donnelley's scale, scope and insight through a comprehensive range of online tools, variable printing services and market-specific solutions. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (CA:IQW) -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. The company has operations in Mexico, Brazil, Colombia, Chile, Peru, Argentina, and the British Virgin Islands. Ernst & Young, Inc., the monitor of Quebecor World Inc., and its affiliates' reorganization proceedings under the Canadian Companies' Creditors Arrangement Act, filed a petition under Chapter 15 of the Bankruptcy Code before the U.S. Bankruptcy Court for the Southern District of New York on September 30, 2008, on behalf of QWI (Bankr. S.D.N.Y. Case No. 08-13814). The Chapter 15 case is before Judge James M. Peck. Kenneth P. Coleman, Esq., at Allen & Overy LLP, in New York, serves as counsel to the Chapter 15 petitioner. QWI and certain of its subsidiaries commenced the CCAA proceedings before the Quebec Superior Court (Commercial Division) on January 20, 2008. The following day, 53 of QWI's U.S. subsidiaries, including Quebecor World (USA), Inc., filed petitions under Chapter 11 of the U.S. Bankruptcy Code. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy before the U.S. Bankruptcy Court for the Southern District of New York (Lead Case No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP, represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The Company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective January 28, 2008. QWI is the only entity involved in the CCAA proceedings that is not a Debtor in the Chapter 11 Cases. As of June 30, 2008, Quebecor World's unaudited consolidated balance sheet showed total assets of US$3,412,100,000 total liabilities of US$4,326,500,000 preferred shares of US$62,000,000 and total shareholders' deficit of US$976,400,000. RANDA LUGGAGE: Files Ch. 11 in Delaware, Seeks Asset Sale --------------------------------------------------------- According to Bloomberg's Bill Rochelle, Randa Luggage Inc., filed a Chapter 11 petition yesterday in Delaware for what it called a "prompt sale" of assets to the first-lien lender, Adnar Finance LLC. Randa says it was forced to use bankruptcy for selling the assets as a result of lower consumer spending and reductions in travel. Sales in 2008 were $56 million. Adnar will provide provide $16 million in financing to fund Randa's Chapter 11 case. Adnar is already owed $23 million on the first-lien financing, while another $16.9 million is outstanding on second-lien debt. Trade suppliers and unsecured creditors are owed less than $1 million. Assets on the filing date include $5.2 million cash and inventory with a book value of $12 million. Randa Luggage Inc., formerly known as Badanco Enterprises Inc., is a luggage marketer based in Totowa, New Jersey. Randa manufactures, distributes and markets luggage, bags, backpacks and briefcases under brand names including Tommy Bahama, Nautica, Diane von Furstenberg, Perry Ellis and Liz Claiborne. Randa Luggage and its affiliates including Badanco Acquisition LLC filed for Chapter 11 on May 11 (Bankr. D. Del. Case No. 09-11638). RECORDANT INC: Former Exec. May Restart Operations Under New Name ----------------------------------------------------------------- Recordant Inc. could restart operations four months after filing for Chapter 7 under a different name, Atlanta Business Chronicle reports. Dow Jones VentureWire's Venture Capital Dispatch relates that former Recordant sales vice president Marc Wallenstein bought the Company's patents, software, and trademarks at a bankruptcy auction in April 2009 for $1,000. Recordant, says the report, raised about $12 million for the sale of its assets, which include technologies that record and analyze interactions between salespeople and customers. Venture Capital Dispatch states that Mr. Wallenstein wants to restart Recordant under a different name and with a different business plan, using certain parts of its intellectual property. Alpharetta-based Recordant Inc. focused on retail, automotive, banking and hospitality industries. The Company filed for Chapter 7 bankruptcy protection in February 2009. The Company listed assets of up to $500,000 and debts of up to $10 million. RETAIL PRO: Sale of All Assets to Secured Lenders Approved ---------------------------------------------------------- Retail Pro Inc. has sold its assets to secured creditors Laurus Master Fund Ltd. and Midsummer Investment Ltd., which together are owed $19.6 million. The U.S. Bankruptcy Court for the District of Delaware has authorized the sale to Laurus/Midsummer for $400,000 in cash plus a credit bid using their secured claims. Retail Pro delayed the auction but still did not receive competing bids for its assets. Laurus previously filed a document with the Bankruptcy Court to state that it had encouraged interested parties to make a bid in the bankruptcy sale process. Laurus clarified that it had not barred any party from conducting due diligence or from bidding on the Debtors' assets. While it has 5.1% of the common stock of Retail Pro, it noted that it does not have any representative on the board and it has not exercised any control over the Debtors. 3Q Holdings Limited filed a "preliminary objection" to the proposed sale, citing that in the event Laurus, which is submitting a credit bid, is the only bidder or the winning bidder at the auction, the hearing should be adjourned to allow the Court the ability to adjudicate 3Q's interests. 3Q asserts certain claims against Laurus in connection with a pre- bankruptcy sale of Retail Pro's former division. 3Q says it does not object to the continuance of the sale process, or the closing on a sale that offers cash consideration to the estates that is sufficient to accomplish the return of 3Q's property after its rights are adjudicated by the Court. About Retail Pro Based in La Jolla, California, Retail Pro Inc. -- http://www.retailpro.com-- operates a chain of retail stores. The Company and three of its affiliates filed for Chapter 11 protection on January 10, 2009 (Bankr. D. Del. Lead Case No. 09-10087). Bruce Grohsgal, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl Young & Jones, represent the Debtors in their restructuring efforts. The Debtor proposed View Partners Capital LLC as their investment banker and Kurtzman Carson Consultants LLC as their notice, claims and solicitation agent. As of November 30, 2008, the Debtors have $24,652,353 in total assets and $28,867,462 in total debts. RH DONNELLEY: Continues Talks With Bondholders and Agent Banks -------------------------------------------------------------- R.H. Donnelley said it is continuing discussions with ad hoc steering committees representing its bondholders and bank lenders about a potential debt restructuring plan. In connection with such discussions, the company is seeking forbearance from certain of its bondholders and bank lenders with respect to the consequences of the expiration of the 30-day grace period relating to a $55 million interest payment on one series of the company's senior unsecured notes. The relevant interest payment was due April 15, 2009 and the 30-day grace period for such payment expires on May 15, 2009. Expiration of the 30-day grace period without making the interest payment would constitute an event of default under that series of notes and could potentially constitute an event of default under other debt obligations of the company or its subsidiaries. While the company currently expects to obtain forbearance agreements from certain of its bondholders and the requisite bank lenders under the company's and its subsidiaries' applicable debt agreements, it can give no assurances that it will be successful in doing so or as to the scope and breadth of any such forbearance agreement obtained. While the company remains optimistic that it will be successful in its discussions with the ad hoc steering committees, there can be no guarantee of that outcome. 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. RICARDO M SANCHEZ: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Ricardo Manuel Sanchez 2614 Richland Avenue San Jose, CA 95125 Bankruptcy Case No.: 09-53613 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court Northern District of California (San Jose) Debtor's Counsel: Shawn R. Parr, Esq. Parr Law Group, PC 1625 The Alameda #101 San Jose, CA 95125 Tel: (408) 267-4500 Email: shawn@parrlawgroup.com Total Assets: $3,682,500 Total Debts: $4,950,025 A full-text copy of Mr. Sanchez's petition, including his list of 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/canb09-53613.pdf The petition was signed by Mr. Sanchez. RIVER WOODS: Files Chapter 11 Petition in Boise ----------------------------------------------- River Woods LLC filed a Chapter 11 petition May 11 in Boise, Idaho, according to Bloomberg's Bill Rochelle. The petition listed debt totaling $16 million, with almost all owed to the Federal Deposit Insurance Corp. as receiver for Silver State Bank. Riverwoods is the developer of a riverfront property in Cascade, Idaho, with 120 residential lots. The project is some 80 miles from Boise. So far, 72 lots were developed, court papers say. The property was listed with a value of $12 million. ROSIE T.: Voluntary Chapter 11 Case Summary ------------------------------------------- Debtor: Rosie T., LLC 1745 E. Skyline Drive Tucson, AZ 85718 Bankruptcy Case No.: 09-10039 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court District of Arizona (Tucson) Judge: Eileen W. Hollowell Debtor's Counsel: Eric Slocum Sparks, Esq. 110 S Church Ave #2270 Tucson, AZ 85701 Tel: (520) 623-8330 Fax: (520) 623-9157 Email: eric@ericslocumsparkspc.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of 20 largest unsecured creditors when it filed its petition. The petition was signed by Victor Elias Trujillo, member of the Company. S&K FAMOUS: Court Okays Sale Process, Hilco as Lead Bidder ---------------------------------------------------------- Louis Llovio at Richmond Times-Dispatch reports that the U.S. Bankruptcy Court for the Eastern District of Virginia has approved the sale of S&K Famous Brands Inc., after the Company's chief restructuring officer, Jonathan Tibus, said that the retailer could be out of money by the middle of June. S&K Famous has less than $1 million on hand, and without some kind of monetary infusion, "we'll run out of cash sometime next month," Times-Dispatch states, citing Mr. Tibus. According to Times-Dispatch, S&K Famous has a deal with Hilco Merchant Resources LLC -- the stalking-horse bidder -- that guarantees the Company some $7.9 million for selling off its assets, including the merchandise and fixtures at its remaining 105 stores. Times-Dispatch relates that interested bidders have until Friday to submit offers. There will be an auction next Tuesday if a higher bid is made, says Times-Dispatch. The parties, according to the report, will come back to court next Wednesday for a sales hearing. Headquartered in Glen Allen, Virginia, S & K Famous Brands, Inc. - - http://www.skmenswear.com/-- sells men's swimwear. The Debtor filed for Chapter 11 protection on February 9, 2009 (Bank. E.D. Va. Case No. 09-30805). Lynn L. Tavenner, Esq., Paula S. Beran, Esq., at Tavenner & Beran, PLC and McGuireWoods LLP represent the Debtor in its restructuring efforts. Its financial advisor is Alvarez & Marsal North America LLC. The Debtor's DIP Lender is Wells Fargo Retail Finance LLC as administrative and collateral agent. The Debtor listed total assets of $41,440,100 and total debts of $35,499,00. SHEARIN FAMILY: Litigating With Unit Purchasers Over Status ----------------------------------------------------------- Bloomberg's Bill Rochelle reports that Shearin Family Investments LLC is litigating with two groups of purchasers who paid in full for condominium units. These purchasers assert that they should be treated as secured creditors in Shearin Family's proposed Chapter 11 plan. The buyers say the money they paid for the condominium units is a "constructive trust", thus giving them the status of secured creditors. Shearin Family insists that they should be treated as unsecured creditors. The outcome of the dispute will determine the recovery by the buyers. The plan submitted to the Court offers to pay secured claims in full while unsecured claims will only have a recovery of less than 1%. As reported by the Troubled Company Reporter on February 17, Shearin filed a plan of reorganization that contemplates its reorganization and the satisfaction of creditor claims from income. Construction of the Company's main asset, the Nautical Club project, will be financed with postpetition financing in the amount of $8,000,000 from RBC Real Estate Finance. This loan will be secured by a first priority deed of trust on the Nautical Club property, and a junior deed of trust on the Debtor's remaining real property. General unsecured claims total $11,550,876. The Debtor proposes to pay the unsecured creditors 5% of the net proceeds, after the payment of closing costs and RBC's release prices, from the sale of Nautical Club condominium payments, up to a maximum of $100,000. Payments will be distributed pro rata to holders of allowed general unsecured claims. The Debtor will treat the claims of RBC, Wachovia, ECB, Southern Bank, John Hamad, and Samer and Sumer Hamad as fully secured, with payments to be made from proceeds of the sale of the Debtor's property. A portion of the claims of Centurion Construction will be paid from RBC's post-petition financing, and the remainder will be treated as a general unsecured claim. The Debtor will pay the administrative costs in full within 10 days of the Plan's Effective Date or upon other mutually acceptable terms as the parties may agree. The claims remaining unpaid 10 days following the Effective Date will accrue interest at a rate of 8% p.a. All ad valorem taxes will be paid over a period of five years, in monthly installments, with interest at an annual rate of 5%, beginning on the fifteenth days of the first full month following the Plan's Effective Date. Any and all priority taxes due and owing to the Internal Revenue Service, N.C. Department of Revenue, or any other county or city taxing authority shall be paid over a period of five years in monthly installments with interest at an annual rate equal to the statutory rate as of the Plan's Effective Date, currently five percent (5%), beginning on the fifteenth day of the first full month following the Effective Date. The Debtor has assumed the executory contract with Summer Winds Condominiums, Inc., for the construction of a joint wastewater treatment plant. The Debtors will also investigate and pursue avoidance actions pursuant to Sections 547 and 548 of the Bankruptcy Code. Any funds collected through such actions will be distributed in accordance with the priorities established by the Bankruptcy Code and Orders of the Court. Classification and Treatment of Claims The Plan segregates claims against the Debtor and treatment for each class of claims into 11 classes: Class Description Treatment ----- ----------- --------- 1 Administrative Costs Impaired 2 Ad Valorem Taxes Impaired 3 Tax Claims Impaired 4 RBC Real Estate Finance ("RBC") Impaired 5 East Carolina Bank ("ECB") Impaired 6 Southern Bank & Trust Company Impaired 7 Wachovia Bank Impaired 8 Samer Hamad Impaired 9 John Hamad Impaired 10 Centurion Impaired 11 General Unsecured Claims Impaired All creditors holding allowed claims are entitled to vote to accept or reject the Plan of Reorganization. In the event that any class of creditors rejects the Plan, the Debtor intends to seek confirmation under the "cramdown" provisions under Sec. 1129(b) of the Bankruptcy Code. A full-text copy of the Debtor's Chapter 11 Plan of Reorganization, dated Feb. 11, 2009, is available at: http://bankrupt.com/misc/ShearinFamilyChapter11Plan.pdf A full-text copy of the Debtor's Disclosure Statement, dated Feb. 11, 2009, in support of its Chapter 11 Plan of Reorganization is available at: http://bankrupt.com/misc/ShearinFamilyDisclosureStatement.pdf Based in Rocky Mount, North Carolina, Shearin Family Investments, LLC owns and operates a condominium resort in Carteret County, in North Carolina. The company filed for Chapter 11 relief on Oct. 13, 2008 (Bankr. E.D. N.C. Case No. 08-07082). Amy M. Faber, Esq., at Stubbs & Perdue, P.A., and Trawick H. Stubbs, Jr., Esq., at Stubbs & Perdue, P.A., represent the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed assets of $46,327,546 and debts of $49,260,007. SMURFIT-STONE: Reports $214MM Loss, to Reduce Headcount in 2009 --------------------------------------------------------------- Smurfit-Stone Container Corp. reported a net loss of $214 million on net sales of $1.37 billion for three months ended March 31, 2009, compared with a net loss of $13 million on net sales of $1,795 billion during the same period last year. It incurred an operating loss of $6 million for the first quarter this year compared with a $20 million operating income during the same period in 2008. Smurfit-Stone disclosed $5.081 billion in assets on $6.675 billion of liabilities as of March 31, 2009. Smurfit-Stone has obtained DIP financing to fund its bankruptcy cases in the U.S. and Canada. The DIP Credit Agreement, as amended, provides for borrowings up to an aggregate committed amount of $750 million, consisting of a $400 million U.S. term loan for borrowings by Smurfit-Stone Container Enterprises, Inc.; a $35 million Canadian term loan for borrowings by Smurfit-Stone Container Canada Inc.; a $250 million U.S. revolving loan for borrowings by SSCE and/or SSC Canada; and a $65 million Canadian revolving loan for borrowings by SSCE and/or SSC Canada. The outstanding principal amount of the loans under the DIP Credit Agreement, plus interest accrued and unpaid, will be due and payable in full at maturity, which is January 28, 2010; provided, that the maturity date may be extended through April 28, 2010, and subsequently through July 28, 2010 upon the satisfaction of certain conditions precedent (including the payment of specified fees). The Company has the exclusive right for 120 days after the filing of the Chapter 11 Petition and Canadian Petition on January 26, 2009, to file a plan of reorganization. The Company will likely file one or more motions to request extensions of this exclusivity period, which are routinely granted up to 18 months in bankruptcy cases of this size and complexity. The Company's ability to continue as a going concern is dependent on market conditions and its ability to improve profitability, obtain alternative financing to replace the DIP Credit Agreement and pre-petition Credit Agreement and restructure its obligations in a manner that allows it to obtain confirmation of a plan of reorganization by the Bankruptcy Courts. In order to improve profitability, management is taking actions to further reduce corporate and operational expenses and is continuing to align manufacturing capacity to meet market demands and standardize manufacturing processes throughout all operations. These actions will result in the closure of additional manufacturing facilities and reductions in headcount during 2009. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?3ccb Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com/-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The Company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The Company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The Company employs approximately 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the Company reported approximately $7.450 billion in total assets and $5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed to reorganize under Chapter 11 on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. Smurfit-Stone joined pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corporacion Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCooper LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC acts as the Debtors' notice and claims agent. Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Smurfit-Stone Container Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SMURFIT-STONE: Court Extends Lease Decision, Removal Deadlines -------------------------------------------------------------- Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court for the District of Delaware granted the request of Smurfit-Stone Container Corp. and extended the Debtors' May 26, 2009 deadline to assume or reject non-residential real property leases by 90 days. The new lease decision deadline is August 24, 2009. The Court in a separate order, extended the Debtors' deadline within which they may file notices of removal of claims and causes of action pursuant to Section 1452 of the Bankruptcy Code and Rule 9027 of the Federal Rules of Bankruptcy Procedure by 120 days, through and including August 24, 2009. James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, said that, on the Petition Date, the Debtors were parties to approximately 130 Real Property Leases that must be assumed or rejected prior to expiration of the Assumption/Rejection Period. An extension of the Assumption/Rejection Period is consistent with the rehabilitative goals of the Bankruptcy Code and will not unduly prejudice any of the counterparties to the Real Property Leases, Mr. Conlan said. He noted that the Debtors are current on all of their postpetition obligations under the Real Property Leases. About Smurfit-Stone Container Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com/-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The Company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The Company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The Company employs approximately 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the Company reported approximately $7.450 billion in total assets and $5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed to reorganize under Chapter 11 on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. Smurfit-Stone joined pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corporacion Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCooper LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC acts as the Debtors' notice and claims agent. Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Smurfit-Stone Container Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SMURFIT-STONE: PwC Bills $1.6MM for 5-Week's Work ------------------------------------------------- Two professionals employed in the bankruptcy cases of Smurfit- Stone Container Corp. and its affiliates, filed applications for allowance of fees and reimbursement of expenses: Professional Period Fees Expenses ------------ ------ ---------- -------- PricewaterhouseCoopers Jan. 26 to $1,607,831 $83,484 LLP Feb. 2009 Young Conaway Jan. 26 to 108,646 23,145 Stargatt & Taylor Feb. 2009 LLP Mar. 2009 47,040 6,304 Members of the Official Committee of Unsecured Creditors also asked for reimbursement of expenses aggregating $3,006 incurred from February 4, 2009, through March 4: Committee Member Institution Representative Amount --------------- -------------------------- ------ UM Ban, N.A. Mark Heer $502 AEGON USA Investment James H. Rich 936 Management Voith Paper Fabrics Robert Gallo 1,094 US Sales Inc. Voith Holding Inc. Stephane S. Vincent 472 ------ TOTAL $3,006 ====== About Smurfit-Stone Container Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com/-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The Company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The Company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The Company employs approximately 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the Company reported approximately $7.450 billion in total assets and $5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed to reorganize under Chapter 11 on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. Smurfit-Stone joined pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corporacion Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCooper LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC acts as the Debtors' notice and claims agent. Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Smurfit-Stone Container Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SMURFIT-STONE: Seeks 4-Month Extension of Exclusive Periods ----------------------------------------------------------- Under Section 1121 of the Bankruptcy Code, Smurfit-Stone Container Corp. and its affiliates have the exclusive right to file a plan or plans of reorganization within the initial 120-day period after the Petition Date. Furthermore, the Debtors have the exclusive right during the 180-day period after the Petition Date to solicit and obtain acceptances of that plan. However, Section 1121(d) of the Bankruptcy Code permits the bankruptcy court to extend the Exclusive Periods "for cause" but not beyond 18 months after the date of the court's order. The Debtors' Exclusive Plan Filing Period is set to expire on May 26, 2009, and their Plan Solicitation Period will expire on July 25, 2009. Accordingly, the Debtors ask the U.S. Bankruptcy Court for the District of Delaware to extend the Exclusive Plan Filing Period by 120 days, through and including September 23, 2009, and the Exclusive Solicitation Period for 120 days, through and including November 23, 2009. James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, relates that the Debtors have been operating under Chapter 11 protection for just over three months but have made significant progress in stabilizing their business operations. At the same time, the Debtors and their professionals have also made significant efforts to ensure that the Chapter 11 cases are efficiently administered, Mr. Conlan adds. He points out that the Debtors have: (i) obtained significant "first day" and other relief; (ii) obtained final approval of a debtor-in-possession financing facility of up to $750 million and reached agreements on the consensual use of cash collateral; (iii) worked diligently to stabilize their operations in a very difficult and uncertain economic environment while minimizing the disruption to their businesses as they transitioned into Chapter 11; (iv) conducted meetings with and provided substantial information to key creditor constituencies, including the Official Committee of Unsecured Creditors; (v) coordinated with the Debtors' affiliates in Canada, Canadian professionals and the Canadian Court regarding the CCAA proceedings and the implementation of a cross- border insolvency protocol; (vi) prepared and filed schedules of assets and liabilities and statements of financial affairs for 25 individual Debtors and complied with all applicable reporting requirements under the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure; (vii) addressed cash management matters and continued to work toward satisfying the requirements of Section 345 of the Bankruptcy Code; (viii) with the Committee's consent and support, obtained authorization to implement their severance plan and a short-term and long-term incentive plan for certain of their employees; (ix) undertaken an analysis of executory contracts and leases, filed six motions seeking authority to reject certain executory contracts and unexpired leases, and obtained the Court's approval to reject more than 30 unexpired real property leases and more than 100 executory contracts and leases of personal property; (x) obtained an order approving procedures for the disposition of certain de minimis assets, and executed approximately 10 sales; and (xi) worked diligently to identify potential cost savings that will assist in the development of a "go forward" business plan that will form the basis for a plan of reorganization. Mr. Conlan emphasizes that the Debtors' extension request is warranted because their Chapter 11 cases are large and complex and consists of 25 individual Debtors operating one of the leading paperboard and paper-based packaging manufacturers in North America, with significant cross-border operations and a complex capital structure. He notes that the Debtors have focused substantial time and effort to stabilize their operations in a very difficult and uncertain economic environment while also ensuring a smooth transition into Chapter 11 and have also spent considerable time and expended extensive resources coordinating with the Cross-Border Debtors, Canadian professionals and the Canadian Court regarding the CCAA proceedings and the implementation of a cross-border insolvency protocol. Mr. Conlan explains that the Debtors are now engaged in the process of analyzing their business operations, the beginning of a process to develop the long-term business plan that will be necessary for the formulation of a plan of reorganization. He says that once substantial progress is made on the strategic initiatives, and a business plan has been finalized, the Debtors will be in a position to commence substantive negotiations with their major creditor constituencies respecting a Chapter 11 plan. Accordingly, the requested extension of the Exclusive Periods will allow the process to continue in an orderly fashion, he contends. Furthermore, Mr. Conlan argues that termination of the Exclusive Periods would adversely impact the Debtors' business operations and progress because if the Court were to deny the Debtors' request, any party-in-interest would be free to propose a plan of reorganization for each of the Debtors which would deny the Debtors a fair opportunity to formulate and negotiate a confirmable plan of reorganization. "Such a result would not advance the rehabilitative objectives of the Chapter 11 process, but would instead thwart those objectives," Mr. Conlan points out. Mr. Conlan notes that several contingencies exist in the Debtors' Chapter 11 cases, providing additional justification for extending the Exclusive Periods at an early juncture. For example, the Debtors have not yet: * established claims bar dates; * completed their review of unexpired leases and executory contracts; * considered all potential dispositions of the Debtors' assets; or * fully analyzed and implemented potential restructuring initiatives across the Debtors' lines of business. Only after the Debtors have fully addressed these and other strategic issues will the Debtors be in a position to formulate a viable plan of reorganization, Mr. Conlan submits. The Debtors note that, under all of the relevant facts and circumstances, an extension of the Exclusive Periods will not prejudice the legitimate interests of any creditor but will provide the Debtors with a meaningful and reasonable opportunity to negotiate with creditors and propose and confirm a plan of reorganization. For these reasons, the Debtors submit that ample cause exists to extend the Exclusive Periods. Judge Brendan Linehan Shannon will convene a hearing on May 20, 2009, at 2:00 p.m., to consider the Debtors' request. About Smurfit-Stone Container Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com/-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The Company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The Company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The Company employs approximately 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the Company reported approximately $7.450 billion in total assets and $5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed to reorganize under Chapter 11 on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. Smurfit-Stone joined pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corporacion Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCooper LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC acts as the Debtors' notice and claims agent. Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Smurfit-Stone Container Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SMURFIT-STONE: Seeks to Employ Grubb & Ellis as Real Estate Broker ------------------------------------------------------------------ Smurfit-Stone Container Corp. and its affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ Grubb & Ellis as their real estate broker in connection with matters related to the sale, lease, acquisition, or renegotiation of existing leases for the Debtors' manufacturing real estate assets throughout the United States and Canada, nunc pro tunc to February 27, 2009. Grubb & Ellis is one of the largest real estate services and investment companies worldwide with more than 130 owned and affiliated offices. James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, relates that Grubb & Ellis has extensive experience helping corporate clients with integrated real estate solutions, including, but not limited to, transactional, management, consulting and advisory services, and the renegotiation of existing leases as supported by proprietary market research and extensive local market expertise. Mr. Conlan reveals that the Debtors engaged Grubb & Ellis in March of 2007 as their exclusive agent for all real property transactions and since that time, Grubb & Ellis' professionals have worked closely with the Debtors' management team and the Debtors' other professionals. Accordingly, Grubb & Ellis has become well acquainted with the Debtors' business operations. In light of the size of the Debtors' Chapter 11 cases, they require the services of a seasoned and experienced real estate broker, and one that is familiar with their business operations and the Chapter 11 process, Mr. Conlan submits. Specifically, the Debtors need Grubb & Ellis to perform commercial real estate brokerage and consulting services relating to: * acquisitions, including, without limitation, lease acquisitions, lease renewals/renegotiations and property sales, pursuant to a process involving market studies, RFP solicitations and evaluation and leases and contract negotiations; * dispositions, including, without limitation, subleases, sale/leasebacks, lease buyouts and property sales, pursuant to a process involving market studies, RFP so1icitations, evaluation and lease/sublease/contract negotiations, including, without limitation, these specific services: (a) preparation of marketing plans; (b) preparation of broker's opinion of value; (c) copying, management and tabulation of information pertaining to the Debtors' properties, including information from the Debtors' existing paper property files, in paper and electronic form, on databases and software programs providing direct access by the Debtors; (d) provision of written quarterly status reports; and (e) preparation of marketing strategies and timelines. The Debtors will pay Grubb & Ellis a commission in accordance with the customary prevailing rates in the market where the specific property is located. However, all commissions received by Grubb & Ellis will be capped at eight percent of the total value of the acquisition, lease extension, renegotiation, or sale. In addition, if Grubb & Ellis receives a commission above a certain threshold amount, the Debtors will be entitled to certain service credits equal to 25% of any commission in excess of $10,000 received by Grubb & Ellis for representing the Debtors in connection with any acquisition or sale transaction. The Service Credits, however, are not redeemable for cash and are non-transferable, except to another Debtor or non-debtor affiliate of the Debtors. In the event of a renegotiation of an existing lease, Grubb & Ellis will be paid a fee equal to eight percent of the aggregate savings realized by the Debtors as a result of the lease renegotiation. Grubb & Ellis will indemnify and hold the Debtors harmless from and against any claim, actions, demands, damages or expenses, including court costs and reasonable attorneys fees; to the extent arising out of the actions or dealings of Grubb & Ellis' personnel and directly or indirectly out of: (a) any claim for commission in connection with any acquisition or disposition with respect to which Grubb & Ellis provided services; (b) any claim of fraud, or negligent or intentional misrepresentation; (c) any negligence of Grubb & Ellis' personnel; or (d) any claim for commission by any co-broker or permitted sub-agent. Shawn Mobley, executive vice president and managing director of Grubb & Ellis, assures the Court that his firm does not hold or represent any interest adverse to the Debtors' estates, and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Smurfit-Stone Container Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com/-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The Company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The Company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The Company employs approximately 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the Company reported approximately $7.450 billion in total assets and $5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed to reorganize under Chapter 11 on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. Smurfit-Stone joined pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corporacion Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCooper LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC acts as the Debtors' notice and claims agent. Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Smurfit-Stone Container Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SMURFIT-STONE: Seeks to Enter Into Zurich Insurance Agreement ------------------------------------------------------------- Smurfit-Stone Container Corp. and its debtor-affiliates seek permission from the U.S. Bankruptcy Court for the District of Delaware to enter into new insurance agreements with Zurich American Insurance Company. In the ordinary course of their businesses, the Debtors maintain a variety of insurance programs and policies that provide them with coverage for potential liabilities associated with various aspects of their operations. One of the providers of the Debtors' insurance programs is Zurich. James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, discloses that the applicable Zurich policies generally covered: -- injuries to the public and damage to property of others arising out of the Debtors' premises or operations or products manufactured or sold. The coverage is applicable in the U.S. and Canada; -- benefits to injured employees, including employers' liability coverage, which protected the Debtors from liability resulting from job-related bodily injury, sickness or disease. The coverage was applicable only in the U.S.; -- injury or damage to third parties resulting from (a) the ownership, maintenance or use of an owned, rented or leased automobile, or (b) an employee-owned automobile used during business. The coverage was applicable in the U.S. and Canada. According to Mr. Conlan, the Policies generally obligate the Debtors to pay a deductible with respect to most of the claims covered and that the obligations are secured by collateral provided by the Debtors to Zurich. He adds that the collateral requirements under a particular policy remain in place after the applicable policy period ends because claims covered by the policy continue to be brought after the policy period has ended. As of the Petition Date, Zurich was holding approximately $21,500,000 of collateral in the form of a letter of credit securing the Debtors' deductible-related obligations under Policies in 2002 to 2009, Mr. Conlan further discloses. The Debtors' most recent Policies were set to expire by their terms on April 1, 2009, Mr. Conlan relates. However, he notes that Zurich and the Debtors agreed to a 30-day extension which continued the coverage through May 1, 2009. During the Extension Period and thereafter, the Parties negotiated, and ultimately agreed to, the terms of new general liability, workers compensation and automobile liability insurance policies with policy periods from May 1, 2009, to April 1, 2010. Mr. Conlan contends that maintenance of adequate third-party general liability, workers compensation and automobile liability insurance is of paramount importance to the Debtors and constitutes a reasonable exercise of the Debtors' business judgment. He explains that the New Policies Agreement is essential for preserving the value of the Debtors' assets and estates, and is required by various regulations, laws and contracts that govern the Debtors' business operations. If the Debtors were not permitted to enter into the New Policies Agreement, they would risk violating certain state and local laws and regulations and would face increased exposure to liabilities that otherwise would have been payable by Zurich under the New Policies Agreement, Mr. Conlan argues. Although the entry into the New Policies Agreement would be within the ordinary course of the Debtors' businesses, Mr. Conlan says that the Debtors have filed a motion out of an abundance of caution, and because Zurich has asked the Debtors to obtain Court authorization. The New Policies Agreement The key terms of the New Policies Agreement between the Debtors and Zurich include: (a) General Liability Coverage in U.S. -- The deductible is $2,500,000, so Zurich insures the Debtors for claims up to the policy limits of $2,500,000 for each occurrence and $2,500,000 in the aggregate, but the Debtors reimburse Zurich for all the claims. The applicable premium is $3,017. (b) General Liability Coverage in Canada -- The self-insured retention/deductible is $2,500,000, so the Debtors pay directly up to $2,000,000 for every claim before Zurich responds to the loss. Zurich insures the Debtors for $500,000 in excess of the $2,000,000, but the Debtors reimburse Zurich for all claims within the limit. The applicable premium is $1,500. (c) Workers' Compensation. * Excess coverage for states where self-insured: a. Generally, there is a $1,500,000 self-insured retention and the Debtors are obligated to pay directly up to $1,500,000 for every workers' compensation claim before Zurich responds to the loss. b. $500,000 self-insured retention for employers' liability claims and the Debtors are obligated to pay up to $500,000 for every claim before Zurich responds to the loss. The employers' liability limit is $500,000 in excess of the self-insured retention. c. $393,455 premium. * Coverage for states where not self-insured: a. All workers' compensation claims are covered, but the Debtors reimburse Zurich for the first $1,500,000 of every claim. b. Employers' liability claims are covered up to $1,000,000, but the Debtors reimburse Zurich for up to $1,000,000. c. $350,415 premium. * Retrospective rating program: a. All workers' compensation claims are covered, but the Debtors reimburse Zurich for the first $1,500,000 of every claim. b. Employers' liability claims are covered up to $1,000,000, but the Debtors reimburse Zurich for up to $1,000,000. c. $10,607 premium. * Premium Adjustment -- The workers' compensation premium amounts are adjusted at the end of the term of the New Policies Agreement based on actual payroll amounts during the term. (d) Automobile Liability Coverage in U.S. -- The deductible is $2,000,000. Zurich insures the Debtors for claims up to $3,000,000, but the Debtors reimburse Zurich for the first $2,000,000 of each claim. The estimated premium is $44,779. (e) Automobile Liability Coverage in Canada -- The deductible is $2,000,000. Zurich insures the Debtors for claims up to $3,000,000, but the Debtors reimburse Zurich for the first $2,000,000 of each claim. The estimated premium is $13,440. (f) Collateral Obligations -- The $21,500,000 of collateral currently held by Zurich will be increased per the terms of the New Policies Agreement to $25,416,000. Of the amount, $7,045,000 relates to the Debtors' reimbursement obligations to Zurich for the 5/1/09 - 4/1/10 policy term. The portion of the collateral may be adjusted from time to time, but no earlier than September 30, 2010 (g) Failure to Meet Deductible Obligations -- If the Debtors fail to meet deductible obligations, Zurich can cancel the policies without obtaining relief from the automatic stay. (h) Affirmation of Obligations Under 2002-09 Policies -- The Debtors are affirming their remaining obligations under the 2002-09 Policies, which are comprised almost entirely of the collateral and deductible-related obligations. A full-text copy of the New Policies Agreement is available for free at http://bankrupt.com/misc/SmurfNewPolicy.pdf About Smurfit-Stone Container Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com/-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The Company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The Company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The Company employs approximately 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the Company reported approximately $7.450 billion in total assets and $5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed to reorganize under Chapter 11 on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. Smurfit-Stone joined pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corporacion Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCooper LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC acts as the Debtors' notice and claims agent. Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Smurfit-Stone Container Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SMURFIT-STONE: Sets 2009 Incentive Program; Union Hits Bonuses -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Smurfit-Stone Container Corp. and its affiliates to continue its performance-based short-term and long-term incentive plans beginning in 2009. In a regulatory filing with the Securities and Exchange Commission dated May 4, 2009, Craig A. Hunt, the Debtors' senior vice president, secretary, and general counsel, disclosed that annual and semi-annual performance targets under the 2009 Management Incentive Program have been established for the year ending December 31, 2009, including a threshold level of performance below which no award payment will be made, levels of performance at which specified percentages of the target award will be paid, and a maximum level of performance above which no additional award will be paid. On April 28, 2009, Mr. Hunt relates, the Compensation Committee established 2009 MIP performance objectives for certain of the Debtors' executive officers consistent with the parameters established by the 2009 MIP and the Court's Order and based on target awards: Officer Target ------- ------ Patrick J. Moore 125% Chairman & Chief Executive Officer Steven J. Klinger 125% President and Chief Operating Officer Charles A. Hinrichs 80% Senior Vice President and Chief Financial Officer Craig A. Hunt 100% Senior Vice President, Secretary and General Counsel Steven C. Strickland 100% Senior Vice President of Container Operations A copy of the report submitted by the Debtors to the SEC is available for free at http://tinyurl.com/q8duxj Union Outraged at $47-Mil. Bonus for Execs Forestry workers across Canada expressed outrage that the Company has awarded its executives with $47 million in bonuses. "It's totally obscene and scandalous," Dave Coles, President of the Communications, Energy and Paperworkers Union of Canada, said in a statement on April 28. "Instead of protecting the jobs and pensions of those who have toiled over the years to make them profitable, the company's credo is 'take the money and run.'" "Workers from coast to coast have done more than their fair share to help companies survive this financial crisis," added Mr. Coles. And now, Smurfit-Stone, currently under bankruptcy protection for financial reasons, hands out $47-million dollars in executive bonuses. Our members are outraged." "Members at the Smurfit-Stone mill in Portage-du-Fort, Quebec, for example, have twice agreed to negotiate cost-saving measures in the order of several million dollars. But the company ended up closing its doors last fall. In February, Smurfit-Stone placed itself under the protection of the courts. The company also met with directors of the mills in Ville Mont- Royal and Saint-Laurent to deliver an ultimatum. They told employees they had a week to present a plan, to reduce costs by $8 million per year. "Now, we know that while they were demanding concessions from workers, they were also seeking court approval for executive bonus pay packs," said Mr. Coles, who added that "CEP members have explored every angle to save forestry jobs and mills. "Since 2004, pulp and paper and sawmill workers at almost every worksite have been in constant negotiations and restructuring to assist struggling mills," he said. "They have negotiated efficiency and productivity measures worth hundreds of millions of dollars in savings for the companies." CEP represents more than 2,000 unionized Smurfit-Stone workers in 10 mills located in Quebec, Alberta and Saskatchewan. About Smurfit-Stone Container Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com/-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The Company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The Company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The Company employs approximately 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the Company reported approximately $7.450 billion in total assets and $5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed to reorganize under Chapter 11 on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. Smurfit-Stone joined pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corporacion Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCooper LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC acts as the Debtors' notice and claims agent. Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Smurfit-Stone Container Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SPANSION INC: Directors Report Acquisition of Common Stock ---------------------------------------------------------- In separate Form 4 filings with the U.S. Securities and Exchange Commission, three directors of Spansion Inc., disclosed that they acquired shares of Spansion Class A Common Stock: Shares Shares Beneficially Owned Director Acquired Date After Transaction -------- -------- ---- ------------------ David K. Chao 1,250 April 28, 2009 20,625 Eby Thomas T 2,858 April 28, 2009 49,374 9,000 April 28, 2009 58,374 Nawaz Ahmed 9,000 April 28, 2009 23,467 Mr. Ahmed discloses that he has disposed of these shares of Spansion Class A common stock on these dates: Shares Shares Beneficially Owned Disposed Date After Transaction -------- ---- ------------------ 3,346 April 30, 2009 20,121 185 April 30, 2009 19,936 The Directors further noted that they have derived beneficial ownership of restricted stock units, which were granted to them on these dates: Derived Shares Shares Beneficially Owned Name Acquired Date After Transaction ---- -------- ---- ------------------ David K. Chao 1,250 April 28, 2009 3,750 Eby Thomas T 2,858 April 28, 2009 0 9,000 April 28, 2009 27,000 Nawaz Ahmed 9,000 April 28, 2009 27,000 The restricted units were granted to Mr. Chao on December 15, 2005, and vest over a four-year period. One quarter of the shares subject to the award vested on January 8, 2007. The remaining shares subject to the award vest in equal installments quarterly, until 100% vested on January 28, 2010. Vested shares are delivered to Mr. Chao on each vesting date. The 2,858 restricted stock units were granted to Mr. Eby on December 15, 2005 and vest over a four-year period. One quarter of the shares subject to the award vested on April 28, 2006. The remaining shares subject to the award vest in equal installments quarterly, until 100% vested on April 28, 2009. Vested shares are delivered to the reporting person on each vesting date. The 9,000 restricted stock units were granted to Mr. Eby on April 28, 2008 and vest over a four-year period. One quarter of the shares subject to the award vested on April 28, 2009. The remaining shares subject to the award vest in equal installments quarterly, until 100% vested on April 28, 2012. Vested shares are delivered to the Mr. Eby on each vesting date. The 9,000 restricted stock units were granted to Mr. Ahmed on April 28, 2008 and vest over a four-year period. One quarter of the shares subject to the award vested on April 28, 2009. The remaining shares subject to the award vest in equal installments quarterly, until 100% vested on April 28, 2012. Vested shares are delivered to Mr. Ahmed on each vesting date. About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc. and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of $3,840,000,000, and total debts of $2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had $10 million to $50 million in assets and $50 million to $100 million in debts. SPANSION INC: Final Cash Collateral Hearing on May 15 ----------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware will convene a hearing May 15, 2009, to consider final approval of the request of Spansion Inc. and its affiliates to use cash collateral. Sommer L. Ross, Esq., at Duane Morris, LLP, in Wilmington, Delaware, submitted with the Court a proposed final cash collateral order to be considered at the hearing. The Proposed Final Order provides, among other things, that the Debtors' authorization to use cash collateral will immediately terminate on the earlier of: (i) the last day covered by the then current approved budget; and (ii) the occurrence of a termination event, provided that the Debtors may continue to use Cash Collateral for the payment of any unpaid postpetition administrative expenses incurred in accordance with the Approved Budget and the Final Order. According to Ms. Ross, the Termination Event occurs when: (a) the Court terminates the Debtors' authorization to use Cash Collateral; (b) the Debtors breach any other their obligations under the Final Order and have not cured that breach within five business days after the Debtors and the Official Committee of Unsecured Creditors receive written notice from the Prepetition Agent, the Ad Hoc Consortium or the FRN Trustee that it intends to terminate its consent to use Cash Collateral; (c) the Prepetition Agent withdraws its consent to use Cash Collateral; provided that the Prepetition Agent has provided at least five business days prior written notice to the Debtors, counsel to the Committee and counsel to the Ad Hoc Consortium of that withdrawal; (d) the Debtors fail to promptly provide notice to the Prepetition Agent, the Ad Hoc Consortium, the FRN Trustee and the Committee of any breach of their obligations under the Final Order; (e) any Chapter 11 case is dismissed or is converted to a case under Chapter 7 of the Bankruptcy Code; (f) an interim or permanent trustee is appointed in any Chapter 11 case or the appointment of a receiver or an examiner in any Chapter 11 case with expanded powers to operate or manage the financial affairs, the business, or reorganization of the Debtors; (g) the Debtors are dissolved; (h) except to the extent that each of the Prepetition Agent and the Ad Hoc Consortium has agreed in writing in its sole discretion, (1) any stay, vacatur, reversal, modification or other amendment of the Final Order, (2) the filing of a motion or other pleading by any of the Debtors seeking the entry of any order providing for any stay, vacatur, reversal, modification or other amendment with respect to the Final Order, or (3) the filing of a motion for reconsideration by any Debtor with respect to the Final Order; (i) entry of an order authorizing the sale, liquidation or other disposition of all or substantially all of the Debtors' assets; (j) the bringing of a motion or taking of any action by any Debtor in any Chapter 11 cases to use Cash Collateral under Section 363(c) of the Bankruptcy Code without the prior written consent of the Prepetition Agent and the Ad Hoc Consortium; and (k) the entry of an order modifying the automatic stay of Section 362 of the Bankruptcy Code to allow any creditor to execute upon or enforce a lien or security interest on any Prepetition Collateral or New Collateral, which would have a material adverse effect on (i) any Debtor or its financial condition, business, prospects or assets or (ii) the Prepetition Agent, the Prepetition Lenders, the FRN Trustee or the FRN Noteholders under the Final Order, the Prepetition Credit Agreement Documents or the Prepetition FRN Documents. The Debtors will pay the interest payments on the Floating Rate Noteholders that are due on June 1, 2009, and September 1, 2009. The payments will be reapplied to reduce the principal amount of the FRNs to the extent that the Court has determined that the FRN Noteholders are not entitled to interest pursuant to the Prepetition FRN Documents after the Petition Date under Section 506(b) of the Bankruptcy Code. The Debtors relate they have drafted a budget on April 23, 2009, setting forth on a line-item basis their anticipated cumulative cash receipts and expenditures on a weekly basis and all necessary expenses which they expect to incur. According to the Debtors, the Prepetition Agent, the Prepetition Lenders, the FRN Trustee, the Ad Hoc Consortium and the FRN Noteholders had relied upon the April 23 Budget in deciding to consent to the final order authorizing the use of cash collateral. The Debtors tell the Court that they will file the April 23 Budget prior to the Final Cash Collateral hearing. A full-text copy of the Proposed Final Cash Collateral Order is available for free at: http://bankrupt.com/misc/Spansion_PropFinalCashOrd.pdf Committee Objection The Official Committee of Unsecured Creditors asserts that the FRN Holders of certain prepetition Senior Secured Floating Rate Notes Due 2013 are contractually deemed to have consented to use of cash collateral under the Indenture and Intercreditor Agreement. The Committee relates that pursuant to the Amended and Restated Intercreditor Agreement by and between Bank of America, N.A., and Wells Fargo Bank, National Association, dated as of May 18, 2007, if Spansion LLC were to become subject to any insolvency proceedings and BofA were to permit the continued use of cash collateral, the Indenture Trustee, serving as the collateral agent under that agreement, has no ability to object or otherwise take a position with respect to the use of cash collateral. BofA has, in fact, permitted the Debtors to continue to use cash collateral, which consent is thus contractually binding on the FRN Holders, as the collateral agent under the Intercreditor Agreement, as well, the Committee adds. Blake M. Cleary, Esq., at Young, Stargatt, Taylor & Conaway LLP, in Wilmington, Delaware, proposed counsel for the Committee, asserts that nowhere in the Bankruptcy Code is there a provision for payment of interest arising after the Petition Date to a prepetition secured lender as "adequate protection" for the use of the lender's cash collateral. Rather, Mr. Cleary notes, cash or other periodic payments made to a prepetition secured lender as adequate protection are permissible only to the extent that the use of cash collateral results in a decrease in the value of the entity's interest in that collateral. Mr. Cleary asserts the payments which the Debtors propose to make to the FRN Holders as "adequate protection" are in fact straightforward payments of postpetition interest which may be permitted, if at all, only if the FRN Holders are oversecured, and the evidence will show that the FRNs are far from being oversecured. "In short, unlike the situation in which an indisputably oversecured creditor is paid postpetition interest as part of their eventual allowed claim, the premature payment of cash interest to an undersecured creditor, even if later reapplied to principal, will have negative repercussions not only on the Debtors, but on their unsecured creditors and other parties-in- interest as well," Mr. Cleary avers. Moreover, the Committee is seeking assurances that as a condition to the assertion of rights on behalf of all FRN Holders, the Ad Hoc Consortium of FRN Holders must represent at least 50.1% of the outstanding principal amount under the FRNs. Thus, the Committee wants the Proposed Order to included language that ensures those rights may only be exercised if the Ad Hoc Consortium consist of a majority of holders, measured in the amount of their claims. About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc. and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of $3,840,000,000, and total debts of $2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had $10 million to $50 million in assets and $50 million to $100 million in debts. SPANSION INC: Japanese Unit Seeks Injunctive Relief --------------------------------------------------- Spansion Japan Limited, a Japanese corporation, entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan on February 10, 2009. Spansion Japan voluntarily petitioned the Tokyo District Court to enter the proceeding to obtain protection from its creditors while it continues its restructuring efforts. The Tokyo District Court entered an order on March 3, 2009, commencing a proceeding for the corporate reorganization of the Spansion Japan and appointed Masao Taguchi as the duly authorized foreign representative to carry out the administration of Spansion Japan. On April 15, 2009, the Tokyo District Court certified the Foreign Representative's request for authority to file a petition for recognition of a foreign main proceeding under Chapter 15 of the Bankruptcy Code. Accordingly, Mr. Taguchi sought and obtained an order from the U.S. Bankruptcy Court for the District of Delaware enjoining all entities from: * executing against Spansion Japan' assets; * commencing or continuing action against Spansion Japan to recover a claim; * enforcing of a judgment against Spansion Japan or against property of Spansion Japan's estate; * any act to obtain possession of property of Spansion Japan or to exercise control over property of Spansion Japan's estate; * creating, perfecting or enforcing any lien against property of the Foreign Debtor's estate; * collecting, assessing, or recovering a claim against Spansion Japan; * transferring, relinquishing or disposing of any property of Spansion Japan to any person or entity other than Mr. Taguchi; and * the set off of any debt owing to Spansion Japan against any claim against it; provided that the injunction is to be effective solely within the territorial jurisdiction of the United States. Judge Carey further entitled Mr. Taguchi and Spansion Japan to the full protections and rights enumerated under Section 1519 of the Bankruptcy Code, including: (i) entrusting the administration or realization of all or part of Spansion Japan's assets located in the United States to Mr. Taguchi in order to protect and preserve the value of assets that are susceptible to devaluation or otherwise in jeopardy; (ii) the protection prohibiting other entities from transferring, encumbering or disposing of any assets of Spansion Japan located in the United States; (iii) the right and power to examine witnesses, take evidence or deliver information concerning Spansion Japan's assets, affairs, rights obligations or liabilities; and (iv) the right and power to seek additional relief that may be available to a trustee, except for relief available under Sections 522, 544, 545, 547, 548, 550 and724(a) of the Bankruptcy Code. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc. and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of $3,840,000,000, and total debts of $2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had $10 million to $50 million in assets and $50 million to $100 million in debts. SPANSION INC: Seeks to Employ T. Gray as Tax Consultant ------------------------------------------------------- Spansion Inc. seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ Timothy W. Gray as their tax consultant, nunc pro tunc to the Petition Date, pursuant to Sections 327(a) and 1107 of the Bankruptcy Code. The Debtors have selected Mr. Gray because of his experience and knowledge in the field of payroll integration for mergers and acquisition. The Debtors assure the Court that Mr. Gray's services will not duplicate the services provided by any other professionals. Mr. Gray will review the Debtors' tax forms, as well as file paperwork as necessary under State and Federal tax law to obtain, on behalf of Spansion LLC, a tax refund or decrease in taxes resulting from historical mergers and acquisitions by the company. Prior to the Petition Date, Mr. Gray has performed some work for the Debtors and has continued to provide services postpetition, which has included the preparation and filing of a request for a tax refund on April 15, 2009. Mr. Gray will also be filing an appeal relating to previous application that was denied by the Internal Revenue Service. The Debtors will pay Mr. Gray 25% of the payroll tax refund or tax decrease resulting from the engagement. Mr. Gray is appealing a denial of an application filed on February 2, 2009, and anticipating a potential tax refund or decrease related to the Chapter 11 filings of approximately $44,000 resulting in $11,000 for his compensation. In the second application filed on April 15, 2009, Mr. Gray anticipates a potential tax refund or decrease of approximately $296,000 resulting in $74,000 for his compensation. Mr. Gray assures the Court that he is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b), and does not hold or represent an interest adverse to the Debtors' estates. About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc. and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of $3,840,000,000, and total debts of $2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had $10 million to $50 million in assets and $50 million to $100 million in debts. STANFORD FINANCIAL: CIO Charged With Obstruction of Justice ----------------------------------------------------------- The U.S. Department of Justice said May 12 that a federal grand jury in Houston returned a two-count indictment charging Laura Pendergest-Holt, the chief investment officer of Houston-based Stanford Financial Group, with conspiring to obstruct a U.S. Securities and Exchange Commission (proceeding investigating SFG, as well as a substantive count of obstructing the SEC proceeding, Assistant Attorney General of the Criminal Division Lanny A. Breuer and acting U.S. Attorney for the Southern District of Texas Tim Johnson announced. The federal court in Houston will be issuing an order summoning Pendergest-Holt to appear in the near future for arraignment. Pendergest-Holt has been free on a $300,000 bond since being charged with obstruction in a criminal complaint issued from the Northern District of Texas on Feb. 26, 2009. According to the indictment, Stanford International Bank Ltd. (SIBL), marketed certificates of deposits (CDs). In a December 2008 monthly report, SIBL purported to have more than 30,000 clients and $8.5 billion in assets. The indictment alleges that investors were not advised of the fact that SIBL internally segregated its investment portfolio into three tiers: "Tier I," which represented cash and cash equivalents; "Tier II," which contained investments with "outside portfolio managers;" and "Tier III," described as "other assets." Internal SIBL documents show that as of June 30, 2008, Tier III contained more than 80 percent of SIBL's purported investments, according to the indictment. The indictment also alleges that approximately $3.2 billion of the purported Tier III value included investments in artificially valued real estate and approximately $1.6 billion included notes on personal loans to SFG "Executive A." The indictment alleges that in December 2008, as part of an ongoing investigation, the SEC made official inquiries of SFG regarding the value and content of SIBL's purported investments and provided notice that it intended to schedule testimony of witnesses. The indictment further alleges that on or about Jan. 21, 2009, at a meeting in Miami, Pendergest-Holt and SFG Executives "A" and "B" and an attorney for SFG, discussed how to respond to the SEC subpoenas. In addition, the indictment alleges that at a meeting in Houston on or about Jan. 23, 2009, the attorney for SFG requested that the SEC defer the subpoenas to Executives A and B and represented that Pendergest-Holt and the president of SIBL would be better witnesses because, the attorney claimed, Executives A and B were not knowledgeable about the details of SIBL's assets. The indictment alleges that prior to her SEC testimony, Pendergest-Holt suggested at a meeting in Miami that she only disclose the June 30, 2008, financials as those numbers "looked better," and that she received a phone call from Executive B in which he reminded her to only discuss Tier II. According to the indictment, as early as November 2008, Pendergest-Holt was aware of the current value of Tier III and the real estate holdings in Tier III. The indictment further alleges that just prior to her SEC testimony, Pendergest-Holt participated in preparing a document reflecting the value of Tier III and the assets in Tier III. The indictment alleges that on Feb. 10, 2009, Pendergest-Holt provided sworn testimony to the SEC in Fort Worth, Texas, where in response to questions by the SEC, she did not disclose the Miami meetings to prepare for her testimony and falsely represented that she did not know the content or allocations of the Tier III assets. The indictment further alleges that on Feb. 12, 2009, after her false testimony, Pendergest-Holt caused $4.3 million in SIBL funds to be wiretransferred to SIBL's operating account in Houston. Finally, on Feb. 17, 2009, as the indictment alleges, at a meeting with SEC attorneys in Memphis, Tenn., Pendergest-Holt falsely represented that if she "knew anything about Tier III," she would tell them. An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless proven guilty beyond a reasonable doubt. The maximum penalties for each of the conspiracy and obstruction counts are five years in prison and a fine of $250,000. The case is being investigated by the FBI's Houston Field Office, Internal Revenue Service-Criminal Investigation and the U.S. Postal Inspection Service. The case is being prosecuted by Senior Litigation Counsel Jack Patrick, Trial Attorney Matthew Klecka and Attorney Allan Medina of the Criminal Division's Fraud Section and Assistant U.S. Attorney Gregg Costa of the U.S. Attorney's Office for the Southern District of Texas. About Stanford Group Stanford Financial Group was a privately held global network of independent, affiliated financial services companies led by Chairman and CEO Sir Allen Stanford. The first Stanford Company was founded by his grandfather, Lodis B. Stanford in 1932. Stanford's core businesses are private wealth management and investment banking for institutions and emerging growth companies. Stanford had over $50 billion in assets under management or advisement. The U.S. Securities and Exchange Commission, on February 17, 2009, charged R. Allen Stanford and three of his companies for orchestrating a fraudulent, multi-billion dollar investment scheme centering on an US$8 billion Certificate of Deposit program. Mr. Stanford's companies include Stanford International Bank, Stanford Group Company (SGC), and investment adviser Stanford Capital Management. The U.S. District Court for the Northern District of Texas (Dallas) appointed Ralph Janvey as receiver for Stanford Group. STRATOS GLOBAL: S&P Assigns Ratings on Positive CreditWatch ----------------------------------------------------------- Standard & Poor's Ratings Services said it placed its ratings on Newfoundland-based satellite communications provider Stratos Global Corp. on CreditWatch with positive implications. At March 31, Stratos had about US$360 million of reported debt outstanding (excluding unamortized financing costs). In April 2009, Standard & Poor's Ratings Services said it raised its long-term corporate credit rating on Newfoundland-based satellite communications provider Stratos Global Corp. two notches to 'BB' from 'B+'. At December 31, 2008, Stratos had US$362 million of reported debt outstanding. At the same time, S&P raised the rating on the company's senior secured debt to 'BB+' from 'BB-', and the rating on the senior unsecured notes to 'B+' from 'B-'. The recovery ratings on these debts are unchanged. "The CreditWatch placement on Stratos follows our placement of U.K.-based Inmarsat Holdings Ltd. and related entities on CreditWatch with positive implications," said Standard & Poor's credit analyst Madhav Hari. This action on Stratos reflects the equalization of the ratings on Stratos with those on Inmarsat Holdings (parent of Inmarsat PLC; BB/Watch Pos/--) following the latter's purchase of Stratos on April 15. Stratos is a leading provider of fixed and mobile communications to customers in remote areas. It operates through two segments: mobile satellite services and broadband services. Through its MSS segment, Stratos provides remote mobile voice and data services to a broad group of customers, primarily through the distribution of Inmarsat satellite capacity. Through its broadband segment, the company provides fixed satellite services, primarily very small aperture terminal services, and other microwave-based broadband communications. Stratos' primary customers comprise governmental agencies and military forces, maritime organizations, and oil and gas companies. The company has historically grown through a combination of acquisitions and organic growth and has been a consolidator of Inmarsat distributors. On as stand-alone basis, results for the first-quarter 2009 ended March 31 are tracking modestly higher than S&P's expectations, with revenue up 6% year-over-year (to about US$157 million) driven by higher Inmarsat leasing revenue and sale of mobile terminals and equipment; and reported EBITDA is up 16% year-over-year (to US$27.8 million) owing to increased revenue and cost of sales reductions from increased volume discounts. Despite the strength of the first-quarter results, Standard & Poor's expects Stratos' revenue growth in 2009 to moderate to the low single-digit level, primarily owing to the slowing global economy. S&P also expect gross margin and EBITDA margins for 2009 to be pressured by about 200 basis points given the changing revenue mix (from higher- margin GAN to lower-margin BGAN), a revised commercial framework agreement that dictates lower volume discounts, and increased competition from alternative communication platforms. At March 31, Stratos' adjusted debt stood at about US$378 million. Stand-alone adjusted debt leverage of about 3.4x has improved from a pro forma 5.0x after the Xantic acquisition in early 2006, owing to what S&P consider improving profitability as well as modest debt reduction from excess cash flow and scheduled amortizations. Standard & Poor's expects to resolve the CreditWatch status on Stratos simultaneously with the resolution of the CreditWatch listing on Inmarsat. Given that the ratings on Stratos are equalized with those on Inmarsat, S&P would expect the ratings and outlook on Stratos to move in lock-step with the ratings on Inmarsat. As it relates to Standard & Poor's resolution of the CreditWatch listing on Inmarsat, S&P will likely raise the ratings on Inmarsat by one notch following confirmation of refinancing of its US$550 million senior facilities due May 2010, of which US$390 million was outstanding at March 31, 2009. An upgrade would also require that Inmarsat maintain a prudent financial policy, particularly with regard to share buybacks, and to maintain adequate liquidity and covenant headroom on debt instruments outstanding. SUBURBAN PROPANE: S&P Affirms 'BB-' Corporate Credit Rating ----------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on retail propane and fuel oil distributor Suburban Propane Partners L.P and revised the outlook to positive from stable. The positive outlook reflects the partnership's strong liquidity position and improved financial performance. In addition, S&P believes that Suburban will maintain its liquidity and a similar financial metrics through fiscal 2010, despite the weak economic environment and the challenges inherent within the propane industry. S&P believes Suburban may continue to exhibit financial metrics that are supportive of upward ratings momentum through the next heating season. While S&P acknowledge the challenges that Suburban and its rated peer group continue to face, specifically ongoing customer conservation and margin pressure, S&P believes that the partnership's flexible cost structure and its demonstrated ability to manage through the commodity cycle partially mitigate S&P's concerns. Furthermore, S&P view the partnership's strong liquidity position with $235 million in cash and $118 million of revolver capacity as of March 28, 2009, the ability to fund working capital needs with internally generated funds, and strong distribution coverage of about 1.7x as supportive of credit and the rating. Nevertheless, the weak economic environment, customer conservation, and commodity price volatility remain concerns. As of March 28, 2009, Whippany, New Jersey-based Suburban had total debt of about $593 million, adjusted for operating leases, pensions, and accrued interest. SWIFT TRANSPORTATION: Bank Debt Sells at 31% Discount ----------------------------------------------------- Participations in a syndicated loan under which Swift Transportation Co. Inc. is a borrower traded in the secondary market at 68.80 cents-on-the-dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 8.30 percentage points from the previous week, the Journal relates. The loan matures March 15, 2014. The Company pays 275 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's B- rating. Swift Transportation Co, Inc., headquartered in Phoenix, Arizona, is the largest provider of truckload transportation services in the United States, with line-haul, dedicated and inter-modal freight services. The Troubled Company Reporter said on December 5, 2008, that Moody's Investors Service has lowered the ratings of Swift Transportation's Corporate Family Rating to Caa1 from B3. The rating of the first lien credit facility was lowered to B3 from B1, while the second lien notes' ratings were lowered to Caa3 from Caa2. The rating outlook remains negative. TALLAHASSEE CENTER: Case Summary & Largest Unsecured Creditor ------------------------------------------------------------- Debtor: Tallahassee Center Commercial Properties, LLC 215 West College Avenue Suite 603 Tallahassee, FL 32301 Bankruptcy Case No.: 09-40411 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court Northern District of Florida (Tallahassee) Debtor's Counsel: Allen Turnage, Esq. Law Office of Allen Turnage P.O. Box 15219 2344 Centerville Road Suite 101 Tallahassee, FL 32317 Tel: (850) 224-3231 Fax: (850) 224-2535 Email: service.attyallen@embarqmail.com Total Assets: $1,801,000 Total Debts: $1,403,939 A full-text copy of the Debtor's petition, including its list of 1 largest unsecured creditor, is available for free at: http://bankrupt.com/misc/flnb09-40411.pdf The petition was signed by Craig Lee Chown, president of the Company. TARRAGON CORP: Plan Filing Period Extended to August 10 ------------------------------------------------------- The U.S. Bankruptcy Court for the District of if New Jersey has extended Tarragon Corp. and its debtor-affiliates' exclusive period to propose a plan, with the exception of One Las Olas, Ltd., and Central Square Tarragon LLC (collectively, the "Regions Borrowers), to August 10, 2009, and the Debtors' exclusive period to solicit acceptances of a plan, with the exception of the Regions Borrowers, to October 9, 2009. The motion as it relates to the Regions Borrowers is adjourned to May 14, 2009, at 10:00 a.m. The Regions Borrowers' exclusive period within which to file a plan of reorganization is extended to May 14, 2009, pending a hearing on the objection of Regions Bank to the motion with respect to the Regions Borrowers. As reported in the Troubled Company Reporter on April 6, 2009, the Debtors related they have not finalized any definitive course of action for emerging from Chapter 11. The Debtors say that they need additional time to closely examine all restructuring alternatives and, simultaneously, commence a dialogue with their creditor constituents. About Tarragon Corporation Based in New York City, Tarragon Corporation (NasdaqGS:TARR) -- http://www.tarragoncorp.com/-- is a leading developer of multifamily housing for rent and for sale. Tarragon's operations are concentrated in the Northeast, Florida, Texas, and Tennessee. Tarragon and its affiliates filed for Chapter 11 protection on January 12, 2009 (Bankr. D. N.J. Case No. 09-10555). The Hon. Donald H. Steckroth presides over the case. Michael D. Sirota, Esq., Warren A. Usatine, Esq., and Felice R. Yudkin, Esq., at Cole Schotz Meisel Forman & Leonard, P.A., represent the Debtor as bankruptcy counsel. Kurztman Carson Consultants LLC serves as notice and claims agent. Daniel A. Lowenthal, Esq., at Patterson Belknap Webb & Tyler, LLP, in New York, represents the Official Committee of Unsecured Creditors appointed in the case. Tarragon has said equity holders are out of the money with regard to its bankruptcy case. As of September 30, 2008, the Debtors had $840,688,000 in total assets and $1,035,582,000 in total debts. TEXAS MIDWEST: S&P Assigns 'BB' Rating on 2009 Revenue Bonds ------------------------------------------------------------ Standard & Poor's Ratings Services has assigned its 'BB' rating to Texas Midwest Public Facility Corporation, Texas' Project Revenue Bonds (Secure Treatment Facility Project), series 2009. The outlook is stable. "The rating reflects our view of the need for long-term demand for the facility; and the reliance on operator performance, including the need to renew the agreement with the operator after five years or replace the operator," said Standard & Poor's credit analyst James Breeding. The project's start-up nature, including the general risk associated with new construction and an aggressive construction schedule, also constrains the rating. Partially mitigating these negative factors are the state's responsibility to provide for these services; the continued and growing demand for correctional facilities; and the state's active monitoring of the facility. The corporation will issue the bonds, contract for the construction of the project, and lease the facility to Jones County. The cash flow generated from the financed prison facility secures the bonds. In addition to the pledged revenues, a deed of trust on the corporation's interest in the project further secures the bonds. The sole source of the funds used to make the payments is derived from a contract between the Texas Department of Criminal Justice and Jones County. Construction is scheduled to begin in June 2009 with a schedule of about 24 months. The stable outlook reflects S&P's expectation that concerns regarding the continued use of the facility will remain in place. As long as the state, or another entity, uses the facility, S&P expects adequate coverage of debt service. Standard & Poor's anticipates that the state will continue to need facilities to implement these types of programs, but demand could fluctuate, thereby providing a level of uncertainty regarding the continued use of a privately operated facility. The state has other facilities that could potentially accommodate these inmates, and there is no guaranteed occupancy rate or long-term contract in place. Rating stability, even at this speculative-grade rating level, is predicated on the continued use of the facility, coupled with the operator's proper management of it. TRIBUNE CO: June 12 Bar Date Filing for Proofs of Claim Set ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has established June 12, 2009, at 4:00 p.m. (Prevailing Eastern Time) as the bar date for filing of proofs of claim against any of Tribune Company and its debtor-affiliates' bankruptcy cases. Proofs of claim must be filed so that it is actually received on or before the general bar date with: a) if by first-class mail: Tribune Company Claims Processing Center c/o Epiq Bankruptcy Solutions, LLC FDR Station, P.O. Box 5069 New York, NY 10150-5069 b) if by messenger or overnight courier: Tribune Company Claims Processing Center c/o Epiq Bankruptcy Solutions, LLC 757 Third Avenue, 3rd Floor New York, NY 10017 Copies of the schedules and the bar date order are available for inspection during regular business hours at the office of the Clerk of the Bankruptcy Court, U.S. Bankruptcy Court for the District of Delaware, 3rd Floor, 824 Market St., Wilimington, DE 19801 or on Epiq's Web site at: http://chapter11.epiqsystems.com/tribune About Tribune Co. Headquartered in Chicago, Illinois, Tribune Company -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08-13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of December 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TURNKEY E&P: Posts $1,745 First Quarter Net Loss, $15,181 Deficit ----------------------------------------------------------------- Turnkey E&P Inc. incurred a net loss of $1,745,000 on $1,118,000 of revenues for three months ended March 31, 2009. The Company's consolidated financial statements for the three months ended March 31, 2009, have been prepared on a going concern basis which contemplates the realization of assets and settlement of liabilities in the normal course of operations. On Nov. 17, 2008, the Company's U.S. subsidiary through which the majority of the Company's activities are conducted filed for protection under Chapter 11 of the United States Bankruptcy Code. At December 31, 2008, the Company reported a working capital deficiency of $13,029,000 and a net loss and comprehensive loss for the year then ended of $89,729,000. The Corporation is engaged in a program to dispose of certain of its operating assets in order to discharge its liabilities. The Corporation's focus is to obtain an international drilling contract utilizing its specialized drilling equipment and technical knowledge to maximize the value of the assets and maintain an ongoing operation. The assets have been written down to their estimated realizable value. Due to uncertain global and industry economic conditions, the assets may not be realized at their carrying values on these financial statements. The Corporation may not be able to continue in business operations or emerge from Chapter 11. Turnkey E&P Summary Consolidated Balance Sheet (stated in thousands of U.S. dollars) March 31, December 31, 2009 2008 Assets Current assets Cash and cash equivalents $1,839 $4,021 Restricted cash - 1,000 Term deposits 1,000 1,000 Accounts receivable 1,404 938 Prepaid expenses 310 430 ------ ------ 4,553 7,389 Property and equipment 13,795 13,376 Other assets 59 67 18,407 20,832 Liabilities and shareholders' equity Current liabilities Accounts payable and accrued liabilities 10,462 10,108 Current debt 9,272 10,310 19,734 20,418 Asset retirement obligations 248 243 ------ ------ 19,982 20,661 Commitments and Contingencies Shareholders' equity Share capital 97,950 97,950 Contributed surplus 3,606 3,606 Deficit (103,130) (101,385) (1,575) 171 ------ ------ 18,407 20,832 Summary Consolidated Statement of Comprehensive Loss and Deficit (stated in thousands of U.S. dollars, except share data) March 31, March 31, 2009 2008 Revenue 1,118 8,812 Expenses Operating 1,457 6,989 General and administration 997 1,270 Depreciation, depletion and amortization 108 1,370 Stock-based compensation - 364 Interest expense 284 - Other expense (income) 17 (116) ------ ------ 2,863 9,897 Net loss and comprehensive loss for the period (1,745) (1,065) Deficit - Beginning of period (101,385) (11,656) Deficit - End of period (103,130) (12,821) Net loss per share Basic and diluted (0.07) (0.04) Weighted average number of common shares Basic 24,187,910 24,187,910 Diluted 24,187,910 24,187,910 Summary Consolidated Statement of Cash Flows (stated in thousands of U.S. dollars) March 31, March 31, 2009 2008 Cash provided by (used in) Operating activities Net loss for the year (1,745) (1,065) Items not involving cash Depreciation, depletion and amortization 108 1,370 Stock-based compensation - 364 Accretion expense 5 4 Foreign exchange losses 25 36 ------ ------ (1,607) 709 Changes in non-cash working capital Accounts receivable (466) (4,721) Prepaid expenses 121 (395) Accounts payable and accrued liabilities 39 3,119 Income and other taxes payable - - Net cash used in Operating Activities (1,913) (1,288) Financing activities Repayment of long-term debt (1,038) - Decrease in restricted cash 1,000 - Net cash used in Financing Activities (38) - Investing activities Purchase of property and equipment (529) (8,298) Other 8 7 Changes in accounts payable 315 36 Net cash used in Investing Activities (206) (7,930) Effect of foreign exchange losses on cash (25) (36) Decrease in cash and cash equivalents (2,182) (9,254) Cash and cash equivalents Beginning of period 4,021 19,959 Cash and cash equivalents End of period 1,839 10,705 Houston, Texas-based Turnkey E&P Corporation -- http://www.turnkeyep.com/-- is engage in gas and oil exploration. The Company filed for Chapter 11 bankruptcy protection on November 17, 2008 (Bankr. S.D. Texas Case No. 08-37358). Micheal W. Bishop, Esq., Mugdha S Kelkar, Esq., at Looper Reed, et al., assist the Company in its restructuring effort. The Company listed $10 million to $50 million in assets and $10 million to $50 million in debts. UNI-MARTS, LLC: Debtor's President Not Covered by Automatic Stay ---------------------------------------------------------------- WestLaw reports that the time pressures of a convenience store buyer's adversary proceeding against the Chapter 11 debtor-seller and the debtor's president did not present unusual circumstances justifying the extension of the automatic stay to the president, notwithstanding the president's contention that the demands of the action would hinder his ability to assist the debtor's reorganization efforts. The debtor's Chapter 11 case was small and relatively straightforward, and the adversary proceeding, which had a limited scope, was unlikely to consume significant portions of the president's time or energy. In re Uni-Marts, LLC, --- B.R. ----, 2009 WL 1143153 (Bankr. D. Del.). About Uni-Marts Headquartered in State College, Pennsylvania, Uni-Marts LLC sells consumer goods. The company and six of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. D. Del. Lead Case No.08-11037). Michael Gregory Wilson, Esq., at Hunton & Williams LLP represents the Debtors in their restructuring efforts. The Debtor selected Epiq Bankruptcy Solutions LLC as its claims, notice and balloting agent. The U.S. Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Blank Rome LLP as its counsel. Uni-Marts' debt includes $21.5 million owing to trade suppliers and $14.2 million for mortgages on stores in Ohio. The State College, Pennsylvania-based company at one time had 485 stores in five states. It was taken private in 2004 by the Sahakian family and private equity investors. A deal to sell Uni-Mart's assets to Atlantis Petroleum LLC for $17.7 million fell apart in April 2009. UNITED AIR LINES: Bank Debt Sells at 45% Off in Secondary Market ---------------------------------------------------------------- Participations in a syndicated loan under which UAL Corp.'s United Air Lines is a borrower traded in the secondary market at 54.50 cents-on-the-dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 4.61 percentage points from the previous week, the Journal relates. The loan matures February 13, 2013. The Company pays 200 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's B+ rating. About UAL Corporation Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on UAL Corp. and subsidiary United Air Lines Inc. (both rated B- /Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B-' from 'B', and removed the ratings from CreditWatch, where they had been placed with negative implications May 22, 2008, as part of an industrywide review. The outlook is negative. UNITED AIR LINES: 7th Cir. Says Airport Space Valuation was Flawed ------------------------------------------------------------------ WestLaw reports that in valuing the improved airport space that collateralized lenders' claim, for purpose of determining the fully secured, partially secured, or unsecured nature of a claim filed by the lenders in the debtor-airline's Chapter 11 case, a bankruptcy court clearly erred in relying on the rate at which the airport had rented out unimproved space at the airport to airlines, where it appeared that the airlines, rather than the airport, were contractually obligated to pay for the costs of any improvements to that space. While the court did not clearly err in rejecting lenders' assertion that the rate charged by the airport was not a market rate and reflected a discount to persuade air carriers to invest in the airport, it could not accept the $17 per square foot rate at which the airport rented out unimproved space as an accurate measure of the value of improved space after the airline had used $75 million borrowed from the lenders to make improvements, despite the fact that, from time these improvements were made more than a decade earlier, they may have depreciated in value. United Air Lines, Inc. v. Regional Airports Improvement Corp., --- F.3d ----, 2009 WL 1181852 (7th Cir.). About UAL Corporation Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The Company filed for Chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on January 20, 2006. The Company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on UAL Corp. and subsidiary United Air Lines Inc. (both rated B- /Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B-' from 'B', and removed the ratings from CreditWatch, where they had been placed with negative implications May 22, 2008, as part of an industrywide review. The outlook is negative. VENETIAN MACAU: Bank Debt Sells at 24% Off in Secondary Market -------------------------------------------------------------- Participations in a syndicated loan under which Venetian Macau US Finance Co., LLC, is a borrower traded in the secondary market at 75.79 cents-on-the-dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 3.42 percentage points from the previous week, the Journal relates. The loan matures May 25, 2013. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's B- rating. Participations in a syndicated loan under which parent Las Vegas Sands is a borrower traded in the secondary market at 69.06 cents- on-the-dollar during the week ended May 8, 2009, an increase of 9.08 percentage points from the previous week. The loan matures May 1, 2014. The Company pays 175 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and S&P's B- rating. About Venetian Macau Venetian Macau is a wholly-owned subsidiary of Las Vegas Sands. VML owns the Sands Macau in the People's Republic of China Special Administrative Region of Macau and is also developing additional casino hotel resort properties in Macau. Based in Las Vegas, Nevada, Las Vegas Sands Corp. (NYSE: LVS) -- http://www.lasvegassands.com/-- owns and operates The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and an expo and convention center. The company also owns and operates the Sands Macao, the first Las Vegas-style casino in Macao, China. On March 10, 2009, Moody's Investors Service lowered the Company's Corporate Family Rating to B3 from B2 and assigned a negative rating outlook. VICTOR BARCELLONA: Case Summary & 17 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Victor Anthony Barcellona dba Victor A. Barcellona, DDS 4400 19th St., #1 San Francisco, CA 94114 Bankruptcy Case No.: 09-31266 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court Northern District of California (San Francisco) Debtor's Counsel: Stephen D. Finestone, Esq. Law Offices of Stephen D. Finestone 456 Montgomery St. 20th Fl. San Francisco, CA 94104 Tel: 415) 421-2624 Email: sfinestone@pobox.com Total Assets: $1,387,455 Total Debts: $1,673,674 A full-text copy of the Mr. Barcellona's petition, including his list of 17 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/canb09-31266.pdf The petition was signed by Mr. Barcellona. VISTEON CORP: Posts Lower Revenues, Considering Restructuring ------------------------------------------------------------- Visteon Corp. said in its Form 10-Q submitted to the Securities and Exchange Commission that there exists substantial doubt as to its "ability to operate as a going concern and meet its obligations as they come due." While it has already taken significant restructuring and cost reduction measures and plans to implement further actions designed to provide additional liquidity, Visteon says "there can be no assurance that such actions will provide a sufficient amount of funds or that such actions will supply funds in a timely manner necessary to meet the Company's ongoing liquidity requirements." The Company also said it is exploring various strategic and financing alternatives and has retained legal and financial advisors to assist in this regard. The Company has commenced discussions with lenders under its credit facilities, including an ad hoc committee of lenders under its senior secured term loan, regarding the restructuring of the Company's capital structure. Visteon said that among restructuring alternatives considered is a voluntary bankruptcy filing under Chapter 11 of the U.S. Bankruptcy Code. The Company has assets of $4,561,000,000 on debts of $5,311,000,000 as of March 31, 2009. Visteon on May 11 announced its first-quarter 2009 results, reporting net income of $2 million, or 2 cents per share, on sales of $1.35 billion. The first-quarter 2009 profit includes a one- time, non-cash gain of $95 million related to the deconsolidation of the net assets associated with Visteon UK Ltd. For first quarter 2008, Visteon reported a net loss of $105 million, or 81 cents per share, on sales of $2.86 billion. Adjusted EBITDA, as defined below, for first quarter 2009 was $22 million, compared with $166 million in first quarter 2008. "Our first-quarter results were significantly affected by the global reduction in vehicle production," said Donald J. Stebbins, chairman and chief executive officer, in a news release announcing Visteon's firs quarter results. "Visteon is taking the necessary steps to protect capital, maintain viable operations and position our global business for future success." Visteon says it continues to execute cost-reduction actions in response to the current market conditions beyond those associated with the recently completed three-year improvement plan. These additional cost-reduction actions include previously announced global salaried and hourly workforce reductions, shortened work weeks, temporary reductions in pay and elimination of 401(k) matching contributions and merit increases, and other measures. Additionally, Visteon successfully completed the salaried employee reduction plan initiated in third quarter 2008. Savings from this program are expected to be about $90 million annually. Visteon says its first-quarter product sales remain diversified among customers and across regions. Approximately 31 percent of first quarter product sales were to Ford Motor Co., while Hyundai- Kia accounted for 25 percent. Renault-Nissan and PSA/Peugeot- Citroen accounted for about 7 percent and 6 percent of sales, respectively. On a regional basis, Europe accounted for about 38 percent of total product sales, with Asia representing 32 percent, North America representing 24 percent and the balance in South America. As announced on March 31, 2009, administrators were appointed for an affiliate of Visteon Corporation, Visteon UK Ltd., in accordance with the United Kingdom Insolvency Act 1986. This decision to place this subsidiary into administration was reached after all options were exhausted to address the continued substantial loss-making operations of the three Visteon UK Ltd. facilities. The effect of the administration of Visteon UK Ltd. was to place the management, affairs, business and property under the direct control of representatives from KPMG as administrators. Consequently, the net assets of Visteon UK Ltd. have been deconsolidated from those of Visteon Corporation. Visteon UK Ltd. had liabilities in excess of assets, and a negative net worth. The administration proceedings do not include Visteon Corporation or any of its other subsidiaries. "The actions undertaken with respect to our UK operations were a difficult, but necessary step to address a history of losses in these operations, and to support our goal of positioning Visteon as a competitive and viable company in this challenging environment," added Stebbins. First Quarter 2009 Results For first quarter 2009, total sales were $1.35 billion, including product sales of $1.30 billion and services revenue of $57 million. Product sales decreased by about $1.44 billion, or 53 percent, year-over-year as lower production, net of new business, reduced sales by about $1.1 billion. Divestitures and closures and foreign currency further reduced sales by about $210 million and $170 million, respectively. The company experienced lower sales in each of the major regions in which it operates, reflecting decreased production volumes by all customers as vehicle sales declined in response to weak global economic conditions. Product gross margin for first quarter 2009 was $44 million, compared with $194 million for the same period a year ago, a decline of 77 percent. The impact of lower production levels along with divestitures and closures more than offset savings from favorable net cost performance and restructuring activities. Selling, general and administrative expense for first quarter 2009 totaled $108 million, a decrease of $40 million, or 27 percent, compared with the same period a year ago. For first quarter 2009, the company reported net income of $2 million, or 2 cents per share. This compares with a net loss of $105 million, or 81 cents per share, in the same period a year ago. First-quarter 2009 results include a non-cash gain of $95 million related to deconsolidation of Visteon UK Ltd. net liabilities, as well as $34 million in restructuring and other reimbursable expenses. Additionally, there were $62 million of reimbursable costs from the escrow account, which included certain amounts related to the Visteon UK Ltd. administration. First- quarter 2008 results included $40 million of asset impairments and loss on divestiture and $47 million of restructuring and other reimbursable expenses, of which $24 million was reimbursed from the escrow account. Income tax expense for first quarter 2009 was $14 million, compared with $51 million for the same period a year earlier. Adjusted EBITDA for first quarter 2009 was $22 million, compared with $166 million for the same period a year ago. Cash Flow and Liquidity As of March 31, 2009, Visteon had cash balances totaling $767 million, of which $163 million is classified as restricted cash under the recently negotiated waivers for the company's secured lending facilities. Cash used by operating activities totaled $275 million for first quarter 2009, compared with $126 million used during the same period a year earlier. The increase was attributable to higher net losses, as adjusted for non-cash items, and higher trade working capital outflows. Trade working capital outflows in first quarter 2009 reflect the impact of lower customer sales in late 2008 and early 2009, and the settlement of year-end 2008 supplier payables in the first quarter 2009. Capital expenditures were $25 million for first quarter 2009, compared with $74 million in first quarter 2008, reflecting aggressive program management. Free cash flow, as defined below, was a use of $300 million for first quarter 2009, compared with a use of $200 million for the same period in 2008. Cash used by financing activities was $240 million during first quarter 2009, an increase of $228 million compared with first quarter 2008. The increase includes $163 million of cash restricted pursuant to the March 31, 2009, amendments and waivers to the secured lending facilities and a $44 million reduction in outstanding European accounts receivable securitization borrowings. Total debt was $2.72 billion, which included $105 million drawn on the company's asset-based U.S. revolving credit facility and $43 million outstanding under its European receivables securitization facility. Additional borrowing under these facilities, taking into account letters of credit issued under the U.S. facility, is limited. Visteon remains in compliance with the requirements of the temporary waivers provided by its secured lenders, the earliest of which expires on May 30, 2009, and continues to work with both lenders and customers to seek a longer-term solution. New Business Wins Visteon continues to win new business despite the difficult economic environment. During first quarter 2009, Visteon won approximately $240 million of new business. On a regional basis the new business wins were well-balanced, with Europe accounting for 37 percent, Asia 36 percent and North America 27 percent. "While the current production environment remains very challenging, Visteon continues to demonstrate our commitment to product and technology leadership," Stebbins said. "Our continued success in winning and retaining business from customers around the world speaks to the strength of Visteon's product capability and global engineering and manufacturing footprint." A copy of the Company's first quarter results on Form 10-Q is available for free at: http://researcharchives.com/t/s?3cd3 Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is an automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Mich. (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. * * * As reported by the Troubled Company Reporter on March 31, 2009, Moody's Investors Service lowered Visteon's Probability of Default and Corporate Family Ratings to Caa3 and Ca, respectively. In a related action, Moody's also lowered the ratings of Visteon's senior secured term loan to Caa2 from B3, unguaranteed senior unsecured notes to C from Caa3, and guaranteed senior unsecured notes to Ca from Caa2. Visteon's Speculative Grade Liquidity Rating was also lowered to SGL-4 from SGL-3. The outlook remains negative. On March 11, Fitch Ratings downgraded the Issuer Default Rating of Visteon Corporation to 'C' from 'CC', indicating that a default was imminent or inevitable. The ratings were removed from Rating Watch Negative, where they were placed on Dec. 11, 2008. The TCR said on Jan. 14, 2009, that Standard & Poor's Ratings Services lowered its corporate credit rating on Visteon Corp. to 'CCC' from 'B-' and removed all the ratings from CreditWatch, where they had been placed on Nov. 13, 2008, with negative implications. The outlook is negative. At the same time, S&P also lowered its issue-level ratings on the company's debt. WASHINGTON MUTUAL: Shareholders See New Hope to Recoup Losses ------------------------------------------------------------- Washington Mutual shareholders said in a press release they are experiencing renewed optimism due to recent events involving WMI's Chapter 11 bankruptcy case. The Chapter 11 filing followed the unprecedented seizure and "fire sale" of its banking unit by the FDIC. "Through collaborative efforts online, shareholders have uncovered a significant amount of information regarding the seizure of the well-capitalized Washington Mutual Bank (found at www.WaMuStory.com). They recently joined together to author this site and share their research findings amongst themselves and the public. The website has a plethora of documents, including links to official government documents regarding WaMu issues, pre and post seizure," the statement said. "Shareholders have long seen problems with the way this 'secret' auction (which was not very secret) was handled by the FDIC, and are pleased that an investigation has been requested through the Bankruptcy Court. Elliott Greenleaf and Quinn Emanuel Urquhart Oliver and Hedges, the attorneys appointed through lead Chapter 11 legal counsel Weil Gotshal & Manges LLP, filed a motion in the bankruptcy court recently asking for a complete investigation of the circumstances surrounding the seizure and sale of WaMu Bank and all activities leading to the destruction of this 119 year old Seattle based institution. This motion was based on another lawsuit filed in Texas which questioned the circumstances of the bank seizure and accused JPMorgan of corruption, breach of confidentiality and other improper activities," the statement said. Shareholders have long considered the seizure circumstances to be suspect and have written thousands of letters to legislators asking for a complete investigation. Their pleas to Congress seem to have been ignored to date, the statement said. At the time of seizure, Washington Mutual had $307 Billion in assets and was sold to JPMorgan for a mere 1.88 Billion dollars within hours by the FDIC. At the time of seizure, Washington Mutual Inc. had $4 billion in a cash account, which has been recently laid claim to by JP Morgan. In comparison, IndyMac, with only $32 Billion in assets was sold for $13.9 Billion in the following weeks. Indymac had only 33 branch offices as compared to Washington Mutual's 2,239 branches and 4,932 branded ATMs. As a result of this seemingly unfair compensation for WMI assets, WMI attorneys Weil, Gotshal & Manges LLP have also filed suit against the FDIC seeking proper compensation for the reasonable value of the assets seized by the OTS, and sold by the FDIC in the "fire sale." That matter is currently pending in a separate Federal court action. Washington Mutual Shareholders feel that "it is self evident that the sale of WaMu Bank was extremely flawed, and they are expecting the U.S. Federal Court system to right these wrongs. They see these recent court filings as a big step in the right direction." Contacts: JPresnall@WamuTruth.com Phone Number: 360-790-1149 Mike@WamuTruth.com Phone Number: 512-809-8556 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; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WINDSOR QUALITY: S&P Changes Outlook to Stable; Holds 'B+' Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it revised its outlook on Houston, Texas-based Windsor Quality Food Co. Ltd. to stable from negative. At the same time, S&P affirmed its existing ratings on the company, including the 'B+' corporate credit rating. As of April 4, 2009, Windsor had about $192.3 million of adjusted debt (including $20 million in unguaranteed debt at Chili Bowl, a Variable Interest Entity). The ratings on privately held Windsor reflect its highly leveraged, albeit improving, financial profile relative to its size, its narrow product focus, and modest competitive position in the highly competitive frozen-food market. Windsor benefits from its somewhat diverse channel mix, including consumer retail, industrial, and national customers, despite its significant exposure to the foodservice channel. The outlook is stable, reflecting S&P's belief that credit measures will remain better than medians for the ratings category over the next year, and that covenant cushion will remain adequate. Specifically, S&P expects leverage to remain well below 4.5x over the next year and funds from operations to total debt to exceed 20%. "Standard & Poor's could revise the outlook to negative if cushion on the company's leverage covenant tightens to well below 15%, as the maximum permitted leverage ratio begins stepping down in the second half of 2009 and into 2010," said Standard & Poor's credit analyst Christopher Johnson. S&P believes this could occur if annual sales fall by about 10% and trailing 12-month EBITDA margins decline by 150 basis points. "We are unlikely to revise the outlook to positive over the next year, given the company's modest competitive position and exposure to the foodservice industry," he continued. WP EVENFLO: Weak December 2008 Quarter Cues Moody's Junk Rating --------------------------------------------------------------- Moody's Investors Service downgraded WP Evenflo Holdings, Inc.'s corporate family rating to Caa1 from B3. Moody's also lowered the first lien senior secured credit facilities to B3 from B1, and the second lien term loan to Caa2 from Caa1. The ratings remain under review for further possible downgrade. The downgrade reflects the company's weak December 2008 quarter given the retail environment and Moody's expectation that business conditions will remain challenging over the medium-term. As such, Moody's remains concerned over the potential for near-term covenant violations as cushion was already limited through the September 2008 quarter. These ratings were downgraded: -- Corporate Family Rating to Caa1 from B3; -- Probability-of-Default Rating to Caa1 from B3; -- $40 million senior secured revolving credit facility due 2012 to B3 (LGD3, 33%) from B1 (LGD3, 33%); -- $115 million first lien term loan due 2013 to B3 (LGD3, 33%) from B1 (LGD3, 33%); -- $45 million second lien term loan due 2014 to Caa2 (LGD5, 78%) from Caa1 (LGD5, 77%). Moody's review will focus on Evenflo's ability to timely secure an amendment to its credit facilities or an equity cure in the event of a covenant violation. In addition the review will focus on fundamentals, the business outlook, cost reduction activities, and liquidity. If the company were to need an amendment, Moody's would also focus on how onerous any revised conditions may be. The last rating action was on December 22, 2008 when placed Evenflo's ratings, including its B3 corporate family rating, under review for possible downgrade. Headquartered in Miamisburg, Ohio, WP Evenflo is a leading provider of infant and juvenile products including car seats (convertible, booster, and infant), on-the-go products (strollers, travel systems, and portable playards), feeding products (breast pumps, feeding systems, bottles, high chairs, and pacifiers), and playtime products (carriers, stationary activity centers, and safety gates). Revenues were $365 million for the twelve months ended September 30, 2008. WYOMING VALLEY: PBGC Negotiates Pact to Preserve Pension Plan ------------------------------------------------------------- The Pension Benefit Guaranty Corporation entered into an agreement that will preserve a pension plan covering 3,800 workers and retirees at Wyoming Valley Health Care System Inc. in Wilkes- Barre, Pa. "We have been monitoring the pressures facing medical care providers and have been actively working to help them find solutions to their plan funding difficulties," said Vince Snowbarger, acting director of the PBGC. "The agency will continue to work with plan sponsors like Wyoming Valley to help keep their plans ongoing so current and retired employees can receive all the benefits they have earned." The pension plan faced abandonment following the sale of Wyoming Valley's assets to Community Health Systems Inc. of Franklin, Tenn. The transaction did not include the pension plan. Under an agreement with the PBGC, $50 million in sale proceeds will be used to shore up the pension plan. Following the sale's completion on May 1, a significant portion of the $50 million will be contributed to the plan. The remainder will be placed in a trust on behalf of the plan until 2013, when the plan sponsor is required to initiate a standard termination of the pension plan if the sponsor can satisfy the requirements for a standard termination at that time. In a standard termination, the plan sponsor opts to end a plan with assets sufficient to pay all benefits earned by those enrolled. To achieve this, the plan either buys annuities for participants and beneficiaries from a private-sector insurance company that provides annuities, or if the plan permits, pays the benefits directly to participants as lump sums. If there are not sufficient assets to fund a standard termination of the Wyoming Valley Health Care Pension Plan in 2013, then all remaining trust assets must be contributed to the plan. In fiscal year 2007, 1,225 single-employer plans ended in standard terminations, representing about 4 percent of all single-employer plans that the agency insured at the beginning of the year. Additionally, in fiscal year 2007, the agency became trustee of 110 insolvent plans that were sponsored by financially distressed employers. A majority of the single-employer plans that ended in standard termination during FY 2007 were small plans. Seventy-five percent had fewer than 25 participants, and more than 90 percent had fewer than 100 participants. The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in over 29,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by investment returns. * AlixPartners Opens Office in Washington, DC --------------------------------------------- AlixPartners LLP has opened an office in Washington, D.C., whose focus will include providing services for corporate and other investigations and for regulatory readiness and response. The new office, the firm's 14th globally and ninth new office in the past seven years, will serve as home base for many of AlixPartners' leading experts in areas such as litigation discovery, forensic accounting and information-management services, including Managing Directors Michael Faraci and Susan Markel, who joined AlixPartners in January after serving as chief accountant of the U.S. Securities and Exchange Commission's enforcement division. "For more than a quarter-century now, our firm has been a leader in financial-advisory services, in such areas as corporate investigations, litigation, valuations and information-management services," said Fred Crawford, chief executive officer of AlixPartners. "Clients turn to us because of our deeply experienced people, our responsiveness and our laser-like focus on results. "It's no secret," Crawford continued, "that financial-advisory services like these are in greater demand than ever these days, a demand that many believe will only grow in the future. With the opening of our new office in Washington, AlixPartners is better positioned than ever to provide clients with the expert services they need to navigate whatever lies ahead, be it on the regulatory or litigation front." AlixPartners' investigations expertise includes, according to the firm, a wealth of experience in dealing with such matters as financial irregularities and restatements, money-laundering, fraud, antitrust and pre-transaction due diligence, as well as international issues such as those covered by the Foreign Corrupt Practices Act. In litigation consulting, the firm's capabilities include services relating to economic damages, intellectual property, bankruptcy litigation, international arbitration, accounting and malpractice, securities and purchase-price disputes. The firm's electronic-discovery and data-analytics teams serve in both investigation and litigation engagements, employing advanced data-mining, sampling, statistical-analysis and high-volume data-accumulation tools and techniques. AlixPartners also offers valuation services in such areas as intellectual property, intangible assets and fairness opinions; and accounting and transaction services in such areas as mergers and acquisitions. AlixPartners said that firmwide it employs a large number of certified public accountants, certified fraud examiners and forensic-technology experts, and in addition to uncovering, compiling and analyzing mass amounts of data, is experienced in presenting its findings in SEC, criminal and other proceedings. AlixPartners' new office is located at 1602 L Street NW. The firm said that several of its corporate-turnaround and performance- improvement professionals would work out of the office as well. AlixPartners -- http://www.alixpartners.com/-- is a global business advisory firm offering comprehensive services to improve corporate performance, execute corporate turnarounds, and provide litigation consulting and forensic accounting services. The firm's specialty is urgent, high-impact situations when results really matter. It was the recipient of a record four awards from the Turnaround Management Association in 2008. The firm has more than 850 professionals in 14 offices across North America, Europe, and Asia. * Houlihan Lokey Announces Officer-Level Promotions --------------------------------------------------- Houlihan Lokey announced these promotions: -- Newly Appointed Managing Directors: Tanja Aalto Scott Kolbrenner David Misch George Odden David Roberts Michael Siegel Eric Winthrop -- Newly Appointed Directors: Marc Asbra Laurent Benshimon Michael DeLuke Gijs de Reuver Joshua Fox John-Paul Hanson Michael Krakovsky Niklas Lerche Brett Lowrey John McIntosh Glenn Neblett Toby Pearce Warren Romine Kevin Salmini Mark Schade Timothy Smith Jean Stack Kevin Stephens Dan Sullivan Jeffrey Tarbell Jennifer Wong -- Newly Appointed Senior Vice Presidents: Oscar Aarts Reed Anderson Michael Boone Asher Cohen Luca Crenna Kevin Hsieh Ranon Kent Kathleen Lauster Geoffrey Ligibel Bradley Meyer Karl Schmidt Yoon Song Fredrick Vescio Dimitar Voukadinov Lucia Wallace -- Newly Appointed Vice Presidents: Michael Abramson Michael Bett Lyle Chastaine Todd Hanson Joshua Langdon Angelo Lorenzana Michael McElhenney Hugh Nelson Phillip Preis Didier Saintot Ryan Sandahl Michael Thomas Yanson Wu Commenting on the appointments, Scott Beiser, Co-CEO of Houlihan Lokey, said, "When faced with the challenges the marketplace posed in the past year, these candidates demonstrated dedication and resolve when serving their clients. By distinguishing themselves through their performance, they have each enhanced the value of our firm." Houlihan Lokey -- http://www.HL.com/-- an international investment bank, provides a wide range of advisory services in the areas of mergers and acquisitions, financing, financial restructuring, and valuation. The firm was ranked the No. 1 M&A advisor for U.S. transactions under $2 billion in 2008 and the No. 1 U.S. fairness opinion advisor over the past 10 years by Thomson Reuters. In addition, the firm advised in 11 of the 15 largest corporate bankruptcies and on over 500 restructuring transactions valued in excess of $1.25 trillion in the past 10 years. The firm has over 800 employees in 14 offices in the United States, Europe and Asia. Each year we serve more than 1,000 clients ranging from closely held companies to Global 500 corporations. * SSG Capital Acquires Special Situations Group From NatCity ------------------------------------------------------------ The five senior investment bankers responsible for managing the Special Situations Group of National City Investment Banking have formed SSG Capital Advisors, LLC, and acquired the Special Situations Group from NatCity. The five professionals -- J. Scott Victor, Mark E. Chesen, Robert C. Smith, Matthew P. Karlson, and Michael S. Goodman -- are responsible for initiating, structuring and closing over 150 financial restructuring assignments over the past 10 years. SSG Capital Advisors, LLC, and its staff of professionals will remain based in West Conshohocken, Pennsylvania, and will maintain its office in New York, New York. The new boutique investment bank will continue to assist businesses facing operational or financial challenges with a focus on four core services: (1) distressed merger and acquisitions both in and outside of Chapter 11 bankruptcy; (2) private placements of senior debt, subordinated debt and equity for companies in transition; (3) complex financial restructurings involving bankruptcy and non-bankruptcy situations; and (4) complex valuations and fairness opinions involving challenging situations. "We are excited about this tremendous opportunity to reacquire SSG and continue to build upon the platform our team has developed going back to 1993. We have seen a great demand for financial advisory services for underperforming companies, and we believe the increased demand will last for several more years. SSG has worked hard to attain our national reputation and we are proud of the tremendous track record of more than 150 special situation transactions since 2001," explains Mr. Victor. Mr. Chesen stated, "We are focused on building on our track record of continuing to be one of the country's premier restructuring focused investment banking firms. We remain dedicated to assisting our client base in dealing with the current unprecedented economic turmoil." * 2009 on Pace to Reach Record-High Number Of Defaults, Says S&P ---------------------------------------------------------------- Globally, 62 companies (53 public and nine confidentially rated) defaulted in the first quarter of 2009, said an article published May 13 by Standard & Poor's. This is the largest number of defaults since the first quarter of 2002 at the tail end of the last economic downturn, and it follows a similarly harsh fourth- quarter 2008, which saw 61 defaults. The volume of rated debt affected by first quarter's defaults was a massive $541.2 billion--the largest quarterly amount on record (dating back to the first quarter of 2000), according to the article, titled "Quarterly Default Update And Rating Transitions (Premium)." Forty of the defaults in the first quarter of 2009 were domiciled in the U.S., with the remaining 22 residing in 22 countries globally. For a detailed description of this quarter's defaults, see "First-Quarter 2009 Quarterly Default Synopses (Premium)," published May 13, 2009, on RatingsDirect. The quarterly global speculative-grade default rate rose to 2.2% at the end of first-quarter 2009 from only 0.47% during the same period in 2008. On a trailing-12-month basis, the global speculative-grade default rate as of March 31, 2009, reached 4.9%--the highest point since the 5.3% seen in November 2003. The default rate is now above the long-term (1981-2008) average of 4.27%, after having remained below this level for 59 consecutive months. "After hitting record lows in 2007, the pace of defaults has picked up markedly since the second half of 2008," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "If the pace set in the first quarter is maintained through the remainder of the year, defaults would total 248 in 2009, the largest number on record, dating back to 1981." Our baseline forecast (with a 60% probability) is for a 12-month- forward (March 2010) corporate speculative-grade default rate of 14.3% in the U.S. This predicted range represents a record high in the 28-year history of the series. The current peak in the U.S. corporate speculative-grade default rate was recorded in July 1991 at 12.52%. To realize the baseline projection of 14.3%, 210 issuers must default in the next 12 months. * Parts Suppliers to Congress: Help Is Needed Now to Save Sector ---------------------------------------------------------------- Wes Smith, president of E&E Manufacturing, testified Wednesday before the House Small Business Committee at a hearing examining the economic impact of the domestic auto crisis on small suppliers throughout the United States. Mr. Smith's testimony outlined the stresses that dramatically reduced vehicle sales volumes and a crippling inability to gain access to credit place on smaller suppliers. "For small suppliers, the drop off in industry volumes can actually be greater, the credit freeze tighter, and the customer risk more significant," he stated. He asked the committee to consider authorizing a parts supplier program within the Small Business Administration to address the needs of small suppliers, saying that "assistance targeted to these manufacturers is critical." The testimony came just days after the Motor & Equipment Manufacturers Association and the Original Equipment Suppliers Association warned Congress that the result of the impending Chrysler bankruptcy and planned vehicle manufacturer shutdowns could be a supplier network no longer able to support to vehicle manufacturing in this country. In a letter to the full U.S. House and Senate, MEMA president and CEO Bob McKenna stated that "during these shutdowns, many suppliers will have no choice but to permanently close their facilities." The letter urged Congress and the Administration to provide direct financial assistance for suppliers beyond the Auto Supplier Assistance Program announced by the Department of Treasury in March and to immediately pass a short-term incentive program to encourage consumers to purchase new vehicles. "We need to take immediate steps to further protect the supply base," said OESA president and CEO Neil De Koker. "This is a critical time and the stakes could not be much higher. Thousands of good manufacturing jobs and the local economies those jobs support hang in the balance." MEMA recently released a report entitled Moving America Part by Part which shows that parts suppliers constitute the nation's largest manufacturing sector, directly employing over 686,000 people and contributing to more than 3.29 million jobs. Parts suppliers are also the largest manufacturing employer in eight states: Indiana, Kentucky, Michigan, Missouri, Ohio, Oklahoma, South Carolina and Tennessee. Suppliers manufacture the parts and technology used in the domestic production of millions of new cars and trucks produced each year, and the aftermarket products necessary to repair and maintain more than 247 million vehicles on the road today. MEMA supports its members through its three affiliate associations, Automotive Aftermarket Suppliers Association (AASA), Heavy Duty Manufacturers Association, and Original Equipment Suppliers Association. On the Net: http://www.mema.org/ * Sales Price for Existing Homes Drops Record 14% in Quarter ------------------------------------------------------------ First-time home buyers responding to improved affordability conditions, and lower prices of foreclosures and short sales, impacted metropolitan area median home prices in the first quarter, while existing-home sales remained sluggish in many parts of the country, according to the latest survey by the National Association of Realtors(R). The national median existing single-family price was $169,000, which is 13.8% below the first quarter of 2008 when conditions were closer to normal. The median is where half sold for more and half sold for less, but distressed homes typically are selling for 20% less than traditional homes and are downwardly skewing median prices. Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate of 4.59 million units in the first quarter, down 3.2% from 4.74 million units in the fourth quarter, and are 6.8% below the 4.93 million-unit pace in the first quarter of 2008. Lawrence Yun, NAR chief economist, sees the market in a lull before an upturn. "Over the past couple months, contract activity for home sales, buyer traffic and inquiries about the $8,000 tax credit have all increased," he said. "Close to 455,000 buyers purchased their first home during the first quarter, and those are likely just the first wave of new buyers coming into the market - they're critical for a housing recovery," Yun said. "Housing affordability conditions are at record high levels and we expect a measurable increase in home sales during the second half of the year, which would help stabilize prices in most areas." According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage fell to a record low 5.06% in the first quarter from 5.86% in the fourth quarter; the rate was 5.88 percent in the first quarter of 2008. According to Bill Rochelle at Bloomberg, the U.S. Labor Department reported May 12 that job openings fell to a record low 2 percent, suggesting that the unemployment rate will continue to rise. * Watson Wyatt Study Shows CEO Financial Fortunes Drop Sharply -------------------------------------------------------------- Chief executive officers at many of the nation's largest corporations saw portions of their financial fortunes drop sharply last year as the financial crisis and slumping stock market resulted in smaller annual bonus payouts, diminished ownership values and reduced value for equity holdings, according to an analysis of proxy statements conducted by Watson Wyatt, a leading global consulting firm. The 80 CEOs that Watson Wyatt analyzed experienced an aggregate decrease of $13.4 billion in levels of realizable pay (measured here by annual bonuses paid plus value of company ownership plus value of outstanding equity awards) in 2008. The typical CEO saw a decline of $39 million or 53 percent in value for the year, with a drop in annual bonuses alone of 30 percent. Shareholders saw a 40 percent loss on their investments and an overall loss of $2.23 trillion for the 80 companies. "Clearly, most CEOs at large companies were not immune to the financial fallout from the economic crisis and stock market losses of the last year," said Ira Kay, global director of compensation consulting at Watson Wyatt. "Pay packages will be realigned to reflect the new economic reality that is currently unfolding. And while there will be an increased focus on risk and stock ownership, every board will likely settle on the pay mix that works best for its industry and company." The 18 CEOs in the financial industry companies, the largest industry group in the analysis, collectively lost more than $3.1 billion in value, largely driven by decreases in the value of company ownership due to stock price declines in 2008. The analysis also found that despite a moderate stock market rebound in recent months, the typical CEO lost an additional 21 percent in equity value in the first three months of 2009. CEO Financial Fortunes Drop Across Major Industries in 2008 Aggregate CEO median Median 1-Year % 2008 decline decline CEO median Total Return to Industry (in $MM) (in $MM) % decline Shareholders -------- ------------ --------- ---------- ------------- Health Care -$202 -$13 -24% -17% Technology -$5,056 -$30 -38% -26% Consumer -$294 -$25 -45% -27% Materials/ Industrials -$1,209 -$42 -59% -40% Financial -$3,192 -$95 -76% -68% Energy/Utilities -$3,443 -$183 -58% -47% All Industries -$13,396 -$39 -53% -40% "Executive pay and performance will remain lightning rod issues as shareholders, the media and Congress continue to scrutinize how companies are compensating their executives. To be effective, the pay programs of the future will need to reward top talent without motivating excessive risk or reaching unwarranted levels when the economy and the stock market recover," said Kay. The Watson Wyatt analysis reviewed compensation levels for 2007 and 2008 at the first filers of the 20 largest companies with complete information available in each of six broad S&P industries. The industries include health care, technology, consumer, materials/industrials, financial and energy/utilities. Companies that were acquired or suffered bankruptcy during 2008 were included in the analysis. About Watson Wyatt Worldwide Watson Wyatt's -- http://www.watsonwyatt.com/-- global services include managing the cost and effectiveness of employee benefit programs; developing attraction, retention and reward strategies; advising pension plan sponsors and other institutions on optimal investment strategies; providing strategic and financial advice to insurance and financial services companies; and delivering related technology, outsourcing and data services. Watson Wyatt has 7,700 associates in 33 countries. * Chapter 11 Cases With Assets and Liabilities Below $1,000,000 --------------------------------------------------------------- In Re Signs West, Inc. Bankr. D. Nev. Case No. 09-17213 Chapter 11 Petition filed May 5, 2009 See http://bankrupt.com/misc/nvb09-17213.pdf In Re J & M Cylinder Gases, Inc. Bankr. N.D. Ala. Case No. 09-81858 Chapter 11 Petition filed May 6, 2009 See http://bankrupt.com/misc/alnb09-81858p.pdf See http://bankrupt.com/misc/alnb09-81858c.pdf In Re Town Furniture Co., Inc. Bankr. S.D. Ala. Case No. 09-12048 Chapter 11 Petition filed May 6, 2009 See http://bankrupt.com/misc/alsb09-12048.pdf In Re 1130 South Hope Street Investment Associates, LLC Bankr. C.D. Calif. Case No. 09-20914 Chapter 11 Petition filed May 6, 2009 See http://bankrupt.com/misc/cacb09-20914.pdf In Re Joyce Geonzon McDougall aka Joyce Geonzon McDougall Bankr. E.D. Calif. Case No. 09-29022 Chapter 11 Petition filed May 6, 2009 Filed as Pro Se In Re Raymond J. Zielinski aka Raymond John Zielinski fdba All About Construction dba All About Construction II dba R & Z Buckingham Group fdba Construction Management Services fdba All About Construction Operations fdba All About Construction Holdings Enterprises fdba Better Beams and Concrete fdba Zielinksi Holdings fdba The 2001 Group fdba Imagine Homes Merrie Lee Zielinski aka Merrie L. Zielinkski aka Merrie Roberts Zielinski fka Merrie Lee Roberts Bankr. M.D. Fla. Case No. 09-09325 Chapter 11 Petition filed May 6, 2009 See http://bankrupt.com/misc/flmb09-09325.pdf In Re Steven Max Firestone dba Firestone Auto Sales Bankr. N.D. Ind. Case No. 09-40374 Chapter 11 Petition filed May 6, 2009 Filed as Pro Se In Re Love Tree Farms, LLC Bankr. S.D. Ind. Case No. 09-06292 Chapter 11 Petition filed May 6, 2009 See http://bankrupt.com/misc/insb09-06292.pdf In Re Artemas & Family, Inc. d/b/a Kinaia Entrprises, Inc. Bankr. E.D. Mich. Case No. 09-54340 Chapter 11 Petition filed May 6, 2009 See http://bankrupt.com/misc/mieb09-54340p.pdf See http://bankrupt.com/misc/mieb09-54340c.pdf In Re Luxury Limousine Dearborn, Inc. Bankr. E.D. Mich. Case No. 09-54415 Chapter 11 Petition filed May 6, 2009 See http://bankrupt.com/misc/mieb09-54415p.pdf See http://bankrupt.com/misc/mieb09-54415c.pdf In Re Dark Star Marble and Granite, Inc. Bankr. S.D. Ohio Case No. 09-32789 Chapter 11 Petition filed May 6, 2009 See http://bankrupt.com/misc/ohsb09-32789.pdf In Re McCarty, Ott, Ott & Wynn, Ltd. dba Poblano Grill Bankr. E.D. Tex. Case No. 09-10239 Chapter 11 Petition filed May 6, 2009 See http://bankrupt.com/misc/txeb09-10239p.pdf See http://bankrupt.com/misc/txeb09-10239c.pdf In Re Tekcontrols, LLC Bankr. D. Utah Case No. 09-24604 Chapter 11 Petition filed May 6, 2009 Filed as Pro Se In Re 223 Wittmann, LLC Bankr. D. Ariz. Case No. 09-09709 Chapter 11 Petition filed May 7, 2009 Filed as Pro Se In Re Deep Sea Creations, LLC Bankr. C.D. Calif. Case No. 09-19569 Chapter 11 Petition filed May 7, 2009 See http://bankrupt.com/misc/cacb09-19569.pdf In Re Derek Paul Macelli Bankr. C.D. Calif. Case No. 09-19578 Chapter 11 Petition filed May 7, 2009 See http://bankrupt.com/misc/cacb09-19578.pdf In Re 2 Tucker 2, LLC Bankr. D. Conn. Case No. 09-50903 Chapter 11 Petition filed May 7, 2009 Filed as Pro Se In Re JL Family Planning, LLC Bankr. D. Conn. Case No. 09-50902 Chapter 11 Petition filed May 7, 2009 Filed as Pro Se In Re Cutter Power Equipment, Inc. Bankr. M.D. Fla. Case No. 09-09461 Chapter 11 Petition filed May 7, 2009 See http://bankrupt.com/misc/flmb09-09461p.pdf See http://bankrupt.com/misc/flmb09-09461c.pdf In Re Bernardo E. Ramos Bankr. C.D. Ill. Case No. 09-91011 Chapter 11 Petition filed May 7, 2009 Filed as Pro Se In Re Bunker, Inc. dba Keystone Sports Review Bankr. S.D. Ind. Case No. 09-06384 Chapter 11 Petition filed May 7, 2009 See http://bankrupt.com/misc/insb09-06384.pdf In Re Fresh-N-Lite 2, LLC aka Jimmy John's Gourmet, Sandw Bankr. D. Kans. Case No. 09-21445 Chapter 11 Petition filed May 7, 2009 See http://bankrupt.com/misc/ksb09-21445.pdf In Re James Donald Clark Bankr. D. Kans. Case No. 09-21436 Chapter 11 Petition filed May 7, 2009 Filed as Pro Se In Re Heider Construction, Inc. Bankr. D. Mass. Case No. 09-41776 Chapter 11 Petition filed May 7, 2009 See http://bankrupt.com/misc/mab09-41776.pdf In Re Royal Foods Distributors, LLC Bankr. D. N.J. Case No. 09-21748 Chapter 11 Petition filed May 7, 2009 See http://bankrupt.com/misc/njb09-21748.pdf In Re B and C Hospitality, LLC dba Tailor Bankr. S.D. N.Y. Case No. 09-12924 Chapter 11 Petition filed May 7, 2009 See http://bankrupt.com/misc/nysb09-12924.pdf In Re David E. Barlow dba The Barlow Group Bankr. S.D. Ohio Case No. 09-55130 Chapter 11 Petition filed May 7, 2009 See http://bankrupt.com/misc/ohsb09-55130.pdf In Re Crow Creek Tribal Farms, Inc. Bankr. D. S.D. Case No. 09-30021 Chapter 11 Petition filed May 7, 2009 Filed as Pro Se In Re Aza B. Cline Kristina Cline Bankr. W.D. Wash. Case No. 09-14452 Chapter 11 Petition filed May 7, 2009 See http://bankrupt.com/misc/wawb09-14452.pdf In Re Galaxy Textiles, Inc. Bankr. S.D. N.Y. Case No. 09-12978 Chapter 11 Petition filed May 8, 2009 Filed as Pro Se In Re Patricia Lea Behrens Bankr. C.D. Calif. Case No. 09-15514 Chapter 11 Petition filed May 10, 2009 See http://bankrupt.com/misc/cacb09-15514p.pdf See http://bankrupt.com/misc/cacb09-15514c.pdf In Re Ty Miles Incorporated Bankr. N.D. Ill. Case No. 09-16986 Chapter 11 Petition filed May 10, 2009 See http://bankrupt.com/misc/ilnb09-16986p.pdf See http://bankrupt.com/misc/ilnb09-16986c.pdf In Re Robert Wayne Larsen aka Robert W. Larsen dba Larsen Pizza dba Dominos Pizza Cheryle A. Larsen Bankr. N.D. Calif. Case No. 09-44012 Chapter 11 Petition filed May 11, 2009 See http://bankrupt.com/misc/canb09-44012.pdf In Re Interior Services Network, Inc. Bankr. D. Colo. Case No. 09-18859 Chapter 11 Petition filed May 11, 2009 See http://bankrupt.com/misc/cob09-18859p.pdf See http://bankrupt.com/misc/cob09-18859c.pdf In Re Morgan Trailer & Transport, LLC Bankr. D. Colo. Case No. 09-18809 Chapter 11 Petition filed May 11, 2009 See http://bankrupt.com/misc/cob09-18809p.pdf See http://bankrupt.com/misc/cob09-18809c.pdf In Re Olympia Club Fitness Center, LLC Bankr. D. Conn. Case No. 09-50922 Chapter 11 Petition filed May 11, 2009 See http://bankrupt.com/misc/ctb09-50922p.pdf See http://bankrupt.com/misc/ctb09-50922c.pdf In Re Falow Enterprises Bankr. M.D. Fla. Case No. 09-09644 Chapter 11 Petition filed May 11, 2009 Filed as Pro Se In Re Paul Delbert Sowders Bankr. M.D. Fla. Case No. 09-03751 Chapter 11 Petition filed May 11, 2009 See http://bankrupt.com/misc/flmb09-03751.pdf In Re Dental Smile Keepers Bankr. S.D. Fla. Case No. 09-19008 Chapter 11 Petition filed May 11, 2009 See http://bankrupt.com/misc/flsb09-19008.pdf In Re Hensaal Management Group, Inc. aka Southern Chef aka Mama D's Selection aka Soul Chef aka Perfect Pinch aka Gourmet Chef aka Wellness For Our People aka Hensaal Food Service, Inc. Bankr. N.D. Ill. Case No. 09-17084 Chapter 11 Petition filed May 11, 2009 See http://bankrupt.com/misc/ilnb09-17084.pdf In Re Fred J. Munichiello, Jr. Bankr. D. Mass. Case No. 09-14261 Chapter 11 Petition filed May 11, 2009 See http://bankrupt.com/misc/mab09-14261.pdf In Re DHD, LLC Bankr. E.D. Mich. Case No. 09-32535 Chapter 11 Petition filed May 11, 2009 Filed as Pro Se In Re Oceanfront Coffee, LLC dba Carmella's Cafe Bankr. D. N.J. Case No. 09-22037 Chapter 11 Petition filed May 11, 2009 See http://bankrupt.com/misc/njb09-22037.pdf In Re Centre Ave. Tower aka Bassam Naber Bankr. S.D. N.Y. Case No. 09-22776 Chapter 11 Petition filed May 11, 2009 Filed as Pro Se In Re P& T Brown Enterprises LLC dba Crumpy's Hot Wings & Memphis Style Hot Wings Bankr. W.D. Tenn. Case No. 09-25091 Chapter 11 Petition filed May 11, 2009 Filed as Pro Se In Re Wilson & Brown Enterprises LLC dba Crumpy's Hot Wings Bankr. W.D. Tenn. Case No. 09-25085 Chapter 11 Petition filed May 11, 2009 Filed as Pro Se In Re ProSystems, Inc. Bankr. N.D. W.Va. Case No. 09-01054 Chapter 11 Petition filed May 11, 2009 See http://bankrupt.com/misc/wvnb09-01054.pdf ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. 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 ***