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/raid1/www/Hosts/bankrupt/TCR_Public/101004.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, October 4, 2010, Vol. 14, No. 275 Headlines 24 HOUR: Moody's Downgrades Corporate Family Rating to 'B3' ADMI ACQUISITIONS: Moody's Assigns 'B2' Rating on $230 Mil. Loan AE BIOFUELS: Posts $2.23 Million Net Loss in June 30 Quarter AEROFLEX INCORPORATED: Moody's Raises Corp. Family Rating to 'B2' ALLIANZ GLOBAL: Recognition Hearing Scheduled for Nov. 9 AMERICAN APPAREL: Amends Credit Agreement with Lion Capital AMERICAN APPAREL: Annual Shareholders Meeting Set for Dec. 10 AMERICAN INTERNATIONAL: Fitch Affirms 'B' Rating on Securities AMERICAN SAFETY: Auction Overturned by Bankruptcy Judge AMERITYRE CORP: Recurring Losses Prompt Going Concern Doubt ANGELICA CORPORATION: Moody's Assigns 'B2' Corp. Family Rating ANGIOTECH PHARMA: Defers $9.7 Million Payment to Bondholders ANTHONY MOULTRIE: Case Summary & 12 Largest Unsecured Creditors ASBURY AUTOMOTIVE: Moody's Affirms 'B2' Corporate Family Rating ASCEND PERFORMANCE: Moody's Assigns 'B2' Corporate Family Rating ASCEND PERFORMANCE: Moody's Assigns 'B2' Corporate Family Rating ASSOCIATED MATERIALS: Carey Plans to Offer $730MM Sr. Sec. Notes ASSOCIATED MATERIALS: S&P Raises Corporate Credit Rating to 'B' AURASOUND INC: Net Losses Cue Going Concern Doubt AUTOTRADER.COM LLC: S&P Assigns 'BB+' Rating on $100 Mil. Loan AUTOTRADER.COM LLC: S&P Assigns 'BB+' Rating on $100 Mil. Loan AXCAN INTERMEDIATE: S&P Gives Negative Outlook, Keeps 'BB-' Rating BABY FOX: Losses Prompt Going Concern Doubt BAKER & TAYLOR: S&P Raises Corporate Credit Rating to 'B' BARRINGTON RUSSELL: Case Summary & 20 Largest Unsecured Creditors BB LOGGING: Case Summary & 20 Largest Unsecured Creditors BERRY PLASTICS: Dr. Rich to Replace Ira Boots as Pres. & CEO BIOLASE TECHNOLOGY: Inks Distribution & Supple Deal with Schein BIORELIANCE CORP: S&P Affirms Corporate Credit Rating at 'B+' BORGER ENERGY: S&P Downgrades Rating on Senior Notes to 'B+' BRADLEY STEPHENSON: Case Summary & 20 Largest Unsecured Creditors BROOKE CORP: Court Orders Orr to Turn Over Documents BROOKLANE ESTATES: Case Summary & 8 Largest Unsecured Creditors BURLINGTON TELECOM: CitiCapital Extends Forbearance to Oct. 29 CANNON RANCH: Case Summary & 10 Largest Unsecured Creditors CAREY ACQUISITION: Moody's Assigns 'B3' Corporate Family Rating CASCADE BANCORP: Inks Securities Purchase Deal with Investors CDW CORP: S&P Changes Outlook to Positive, Affirms 'B-' Rating CENGAGE LEARNING: Moody's Gives Positive Outlook, Keeps B3 Rating CHATEAU DE VILLE: Files for Chapter 11 in Seattle CHEM RX: Unsecured Creditors Object to Exclusivity Extension CJ'S HOME: Case Summary & 12 Largest Unsecured Creditors COLOWYO COAL: S&P Affirms 'BB-' Rating on $92.8 Mil. Bonds CONCORD CAMERA: Board Approves Liquidation Distribution of Shares DELPHI FINANCIAL: S&P Gives Stable Outlook, Affirms 'BB+' Rating DISTANCE LEARNING: Case Summary & 20 Largest Unsecured Creditors DR. RICHARD WOLFSON: Voluntary Chapter 11 Case Summary DRYSHIPS INC: Unit Gets American Exploration Company Award ELAN CORP: S&P Affirms Corporate Credit Rating at 'B' ELAINE WISBY: Case Summary & 8 Largest Unsecured Creditors EMMIS COMMS: Alden Media to Terminate Securities & Purchase Deal ENCORIUM GROUP: Extends Expiration of Pending Rights Offering ESCALON MEDICAL: Delays Filing of Form 10-K for Fiscal 2010 EWALD SCHUTZ: Case Summary & 4 Largest Unsecured Creditors EZRI NAMVAR: Partner Pleads Not Guilty in $23 Million Fraud Case FERTINITRO FINANCE: Fitch Maintains 'CCC' Rating on Secured Bonds FORTUNE INDUSTRIES: Posts $1.42 Million Net Income for FY 2010 FREECREST INVESTMENTS: Case Summary & Largest Unsecured Creditor FX REAL: Signs Stock Subscription Agreements with Directors GAMETCH INT'L: Gets NASDAQ Notice for Delay Filing of Form 10-Q GELTECH SOLUTIONS: Salberg & Company Raises Going Concern Doubt GENCORP INC: Earns $2.8 Million in Q3 Ended August 31 GEORGE GIANNAKAKIS: Case Summary & 15 Largest Unsecured Creditors GEORGE MICHAEL: Case Summary & 20 Largest Unsecured Creditors GRAHAM PACKAGING: Completes $568-Mil. Purchase of Liquid Container GREEN EARTH: Friedman LLP Raises Going Concern Doubt GROUP 1: Moody's Affirms Corporate Family Rating at 'B1' HAROLD MCCAFFREY: Case Summary & 11 Largest Unsecured Creditors HAWKER BEECHCRAFT: Nigel Wright to Resign as Director HEALTHCARE PARTNERS: S&P Lifts Counterparty Credit Rating From BB+ HEALTHSOUTH CORP: Inks Underwriting Deal with Citigroup Global HENRY RIDAD: Case Summary & 20 Largest Unsecured Creditors HOMELAND SECURITY: YA Global Extends Debt Maturity HOMELAND SECURITY: Posts $2.18 Million Net Income for FY2010 HOTELS NEVADA: Quarles & Brady Denied 95% of Fees IMPLANT SCIENCES: Delays Form 10-K Filing for Fiscal 2010 INDUSTRIAL SUPPLY: Case Summary & 18 Largest Unsecured Creditors INSIGHT HEALTH: S&P Downgrades Corporate Credit Rating to 'CC' INTEGRATED BIOPHARMA: Default on Notes Payable Cues Going Concern INTEGRATED SECURITY: Montgomery Coscia Raises Going Concern Doubt INTERTAPE POLYMER: To Appeal Jury Verdict in Inspired Litigation INTERNATIONAL RECTIFIER: S&P Puts B+ Rating on Positive Watch ISTAR FINANCIAL: Fitch Downgrades Issuer Default Rating to 'C' JOECELESTIN CIVIL: Voluntary Chapter 11 Case Summary KEVIN GREEN: Case Summary & 13 Largest Unsecured Creditors KINGS RANCH: Voluntary Chapter 11 Case Summary KJS REAL ESTATE: Voluntary Chapter 11 Case Summary L-3 COMMUNICATIONS: Fitch Affirms BB+ Rating on Convertible Notes LODGENET INTERACTIVE: To Explore Alternatives to $435MM Offering LODO INVESTORS: Voluntary Chapter 11 Case Summary LONESOME PINE: Case Summary & 5 Largest Unsecured Creditors MARCO COMMUNITY: Earns $635,000 in March 31 Quarter MARY TAPLETT: Plan Outline Hearing Continued Until November 17 MCG CAPITAL: Fitch Affirms Issuer Default Rating at 'BB+' MEDICURE INC: KPMG LLP Raises Going Concern Doubt MEHDI AHMADI: Case Summary & 9 Largest Unsecured Creditors MERCURY COMPANIES: Plan Confirmation Hearing Set for November 30 METALDYNE LLC: Moody's Assigns 'B1' Corporate Family Rating MICHAEL FORRET: Case Summary & 26 Largest Unsecured Creditors MIGUEL ANGELES-HERNANDEZ: Case Summary & Creditors List MOMENTIVE PERFORMANCE: Terminates CEO and CFO Without Cause MONEYGRAM INTERNATIONAL: Makes $30 Million Debt Prepayment MOULTONBOROUGH HOTEL: Files for Chapter 11 in New Hampshire MSGI SECURITY: Delays Filing of Form 10-K for Fiscal Year 2010 MXENERGY HOLDINGS: Posts $11.5 Million Net Income in FY2010 NAVJOT LLC: Plan Confirmation Hearing Scheduled for October 22 NBC ACQUISITION: S&P Gives Stable Outlook, Affirms 'B-' Rating NEFF CORP: Completes Restructuring With Wayzata-Sponsored Plan NEWARK GROUP: Moody's Assigns 'B3' Corporate Family Rating NM HOLDINGS: 6th Cir. Affirms Dismissal of Suit v. Deloitte NORDYKE VENTURES: Voluntary Chapter 11 Case Summary NORTEL NETWORKS: S&P Withdraws 'D' Ratings on Two US Lease Deals NOWAUTO GROUP: Delays Form 10-K Filing for Period Ended June 30 OMEGA HEALTHCARE: S&P Assigns 'BB+' Rating on $225 Mil. Notes OMNICITY CORP: Files Amendment to Form 10-K for Fiscal 2009 OMNICITY CORP: Restates Q1 FY 2010 Financials, Posts $644,136 Loss PAUL BARDOS: Case Summary & 14 Largest Unsecured Creditors PCS EDVENTURES: SEC Commences Civil Action in Idaho PETER GOULD: MORs, UST Fees Not Prerequisite for Final Decree PHILADELPHIA NEWSPAPERS: Court Again Approves Sale to Lenders POSEIDON POOL: Pre-Trial in Arbore Suit Continued to Oct. 26 PROMETRIC INC: S&P Raises Rating to 'BB-', Gives Positive Outlook PRUDENTIAL FINANCIAL: Fitch Affirms Issuer Default Ratings QUICK-MED TECHNOLOGIES: Recurring Losses Cue Going Concern Doubt RADIO ONE: Discloses Add'l Extension of Pending Exchange Offer RAFAELLA APPAREL: Delays Filing of Form 10-K for Fiscal 2010 ROBERT CRUMLEY: Case Summary & 19 Largest Unsecured Creditors ROBERT MICHAEL: Case Summary & 20 Largest Unsecured Creditors ROBERT VICKERY: Case Summary & 19 Largest Unsecured Creditors ROSLYN LANE: Case Summary & 5 Largest Unsecured Creditors ROBERT WOOD: Moody's Downgrades Rating on $10.4 Mil. Debt to 'Ba3' ROCK & REPUBLIC: Wins Court Nod to Proceed With Sale Talks SANDY CREEK: S&P Affirms 'BB-' Rating After Annual Review SANTA FE GOLD: Stark Schenkein Raises Going Concern Doubt SCHUTT SPORTS: Temporarily Allowed to Sell Infringing Helmets SEALY CORP: D. Ellinger and J. Replogle Named Ind. Directors SEALY CORP: Posts $16 Million Net Loss in Fiscal Q3 SEARS HOLDINGS: Fitch Assigns 'BB+' Rating on $665 Mil. Notes SHG SERVICES: Moody's Assigns 'B1' Corporate Family Rating SHORELINE BANK: Closed; GBC International Bank Assumes Deposits SEQUENOM INC: Faces Lawsuit From Former Chief Financial Officer SIRIUS XM: S&P Puts 'B' Corp. Rating on CreditWatch Positive SOMERSET MEDICAL: Moody's Affirms 'Ba2' Rating on $81.4 Mil. Bonds SOUTHEAST CAPITAL: Case Summary & 5 Largest Unsecured Creditors STAR GAS: Fitch Affirms Issuer Default Rating at 'B' STOKES EXCAVATING: Case Summary & 20 Largest Unsecured Creditors STREAM GLOBAL: S&P Gives Negative Outlook, Affirms 'B+' Rating STAR GAS: Fitch Affirms Issuer Default Rating at 'B' STREAM GLOBAL: S&P Gives Negative Outlook, Affirms 'B+' Rating SUN HEALTHCARE: S&P Affirms Corporate Credit Rating at 'B' SUNRISE ON THE BEACH: Voluntary Chapter 11 Case Summary SUPERIOR ACQUISTIONS: Case Summary & Creditors List SUPERTRAIL MANUFACTURING: DIP Lender Bound by Settlement Pact SYDNEY WILLIAMS: Case Summary & 11 Largest Unsecured Creditors T&M AVIATION: Case Summary & 3 Largest Unsecured Creditors TAX STRATEGIES: Case Summary & 19 Largest Unsecured Creditors TEKNI-PLEX INC: Moody's Assigns 'B3' Corporate Family Rating TEKNI-PLEX INC: S&P Assigns 'B-' Corporate Credit Rating TELLIGENIX CORP: Can't Use Deposit to Set-Off Admin. Rent Claim THANH TRAN: Case Summary & 8 Largest Unsecured Creditors TITAN SPECIALTIES: S&P Raises Corporate Credit Rating to 'B-' TODD STEPHENSON: Case Summary & 20 Largest Unsecured Creditors UAL CORPORATION: Moody's Raises Corporate Family Ratings to 'B2' UCI INTERNATIONAL: Moody's Raises Corporate Family Rating to 'B2' UNIFI INC: Moody's Upgrades Corporate Family Rating to 'B3' UNIGENE LABORATORIES: Former Sr. Manager Elected to Board UNILIFE CORPORATION: KPMG LLP Raises Going Concern Doubt USG CORPORATION: COO Metcalf Promoted to CEO and President VERTIS HOLDINGS: Discloses Extension of Exchange Offers VISTEON CORPORATION: Completes Reorganization, Emerges from Ch. 11 WAKULLA BANK: Closed; Centennial Bank Assumes All Deposits WALTER B. SCOTT: Commercial Reasonableness of Sale Debated WARNER MUSIC: Fitch Affirms Issuer Default Ratings WESTERN LIBERTY: Inks Warrant Restructuring Agreement with Holders WISE METALS: Names Wesley Oberholzer as Exec. VP & COO WAKULLA BANK: Closed; Centennial Bank Assumes All Deposits WORKFLOW MANAGEMENT: Files Joint Plan of Reorganization WORKFLOW MANAGEMENT: Wants Oct. 29 Schedules Filing Deadline WORKFLOW MANAGEMENT: Taps McGuireWoods as Bankruptcy Counsel WORKFLOW MANAGEMENT: Wants to Hire Kurtzman Carson as Claims Agent WORKFLOW MANAGEMENT: S&P Downgrades Corporate Credit Rating to 'D' YRC WORLDWIDE: Board Approves Tentative Agreement with IBT YRC WORLDWIDE: CEO Zollars to Retire After Recovery Plan Completed * 2010 Bank Failures Now 129 as Wakulla and Shoreline Banks Shut * S&P's List of Global Corporate Defaults Now at 57 This Year * Adviser Takes Heat for Helping Struggling Cities Sell Assets * BOND PRICING -- For Week From Sept. 27 to Oct. 1, 2010 ********* 24 HOUR: Moody's Downgrades Corporate Family Rating to 'B3' ----------------------------------------------------------- Moody's Investors Service downgraded the Corporate Family Rating and Probability of Default Rating of 24 Hour Fitness Worldwide, Inc. to B3 from B2 and changed the rating outlook to stable from negative. Concurrently, Moody's lowered the rating on the secured credit facility to Ba3 from Ba2. These ratings were downgraded: -- $75 million Revolving Credit Facility due 2015, to Ba3 (LGD 2, 18%) from Ba2 (LGD 2, 18%) -- $600 million Term Loan B Facility due 2016, to Ba3 (LGD 2, 18%) from Ba2 (LGD 2, 18%) -- Corporate Family Rating, to B3 from B2 -- Probability of Default rating, to B3 from B2 Ratings Rationale The downgrade of the CFR reflects declining Cash Revenues (before deferrals) and Adjusted EBITDA during 2009 and the first half of 2010. As a result, credit metrics have deteriorated and position the company weakly in the B3 rating category. The company's profitability has been negatively affected by the difficult environment for consumer spending, particularly for more discretionary services such as personal training, elevated customer attrition levels and the shift to monthly dues paying memberships. Cash Revenues, Adjusted EBITDA and customer attrition rates in 2010 were also negatively affected by a change in the member cancellation policy implemented as a result of a legal settlement. Moody's expect covenant headroom to decline in the second half of 2011 due to a contractual tightening of covenant requirements. The B3 corporate family is supported by the company's large base of profitable fitness clubs in leading markets, aggressive cost reduction and efficiency initiatives, and the pending maturation of fitness clubs opened over the last few years. The stable outlook anticipates relatively flat revenues and profitability in the back half of 2010 and modest growth in 2011. The ratings or outlook could be pressured if profitability substantially declines over the next few quarters, free cash flow turns negative on a sustained basis, or liquidity deteriorates. Given the company's weak credit metrics, upward rating momentum is not expected in the near term. Over the medium term, upward rating momentum could develop if improving financial performance or debt reduction results in sustained Debt to EBITDA and free cash flow to debt of 5x and 5%, respectively. 24 Hour Fitness is a significant owner and operator of fitness clubs in the United States. Reported revenues for the twelve month period ended June 30, 2010 were approximately $1.3 billion. ADMI ACQUISITIONS: Moody's Assigns 'B2' Rating on $230 Mil. Loan ---------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to the proposed $230 million first lien senior secured credit facility of ADMI Acquisitions LLC, a newly formed entity to facilitate the acquisition of AA Dental Management Holdings, LLC. Upon consummation of the acquisition, Aspen Dental Management, Inc., will become the borrower of the new credit facility. There are no changes to the B2 Corporate Family or Probability of Default Ratings, or the stable outlook. Concurrently, Moody's will withdraw the previously assigned instrument ratings as the proposed capital structure has changed. The proposed credit facility will be used in part to finance the acquisition of Aspen by Leonard Green & Partners, L.P., from the current equity sponsor, Ares Management LLC for $547.5 million. LGP is contributing approximately $250 million of common equity and Ares and management are rolling over approximately $117 million of equity. All ratings are subject to review of final documentation. Ratings Assigned: * $35 million senior secured revolving credit facility due 2015, B2, LGD3, 44% * $195 million senior secured term loan due 2016, B2, LGD3, 44% Ratings Withdrawn: * $35 million senior secured revolving credit facility due 2015, B1, LGD3, 34% * $150 million senior secured First-Out term loan, B1, LGD3, 34% * $45 million senior secured Last-Out term loan, Caa1, LGD5, 83% Ratings Rationale The B2 Corporate Family Rating reflects the company's limited absolute size, based on revenue and earnings, and the significant leverage that is being incurred as a result of the company's leveraged buyout. The company's aggressive de novo growth strategy is expected to continue to constrain profitability margins and free cash flow. However, the rating is supported by the company's flexibility to reduce de novo growth if necessary, and its ability to then generate solid free cash flow that could be used to deleverage. In addition, the rating is supported by the significant equity contribution (65% of total capitalization) by the financial sponsors and management. The credit profile benefits from the large population of people that are underserved in terms of access to dental care, which Moody's believe supports Aspen's growth prospects. A risk to the growth story is the high proportion of self-pay revenues, as Aspen's patients typically are responsible for a large portion of their bill and rely heavily on third party financing arrangements to pay for services. Aspen is therefore exposed to changes in consumer spending and credit availability trends. The ratings are also constrained by the risk of reputational damage of the Aspen brand, and regulatory and legal risks associated with the business model. If over time, the company were to demonstrate stable, positive same store sales growth and a more moderate growth strategy such that adjusted leverage were to be sustained below 4.0 times and free cash flow to debt exceeded 10%, Moody's could change the outlook to positive or upgrade the ratings. If Aspen, or the DPM industry in general, were to face an escalation in regulatory or legal risk, Moody's could change the outlook to negative or downgrade the ratings. The rating or outlook could also face downward pressure if adjusted debt to EBITDA were to rise above 6 times. Aspen, headquartered in East Syracuse, New York, provides general dentistry services to patients through its owned subsidiaries and affiliated professional corporations ("PC"). The parent company is a dental practice management company ("DPM") that provides dental lab services and various business and management services to its dentists through long-term management services agreements. Aspen affiliates with its dentists through two models: the staffing model and the practice ownership program ("POP"). Under the staffing model (~55% of offices), dentists are at-will employees of affiliated PCs, where the PCs own the medical records, patient lists, and operating records. Under the POP model (~45% of offices), dentists purchase the medical records from the PC to essentially own their own practice. The company's audited financials do not consolidate the POP practices. Audited revenues for the twelve months ended December 31, 2009, approximated $260 million. The consolidated (unaudited) revenues for all Aspen branded dental offices, including POP offices, approximated $322 million over the same period. AE BIOFUELS: Posts $2.23 Million Net Loss in June 30 Quarter ------------------------------------------------------------ AE Biofuels Inc. filed with the Securities and Exchange Commission its quarterly report on Form 10-Q, reporting a net loss $2.23 million on $1.81 million of sales for the three months ended June 30, 2010, compared with a net loss of $2.46 million on $994,462 of sales for the same period a year earlier. The Company's balance sheet at June 30, 2010, showed $18.99 million in total assets, $21.23 million in total current liabilities, $5.26 million in long-term debt, and a stockholders' deficit of $7.49 million. A full-text copy of the quarterly report on Form 10-Q is available for free at http://ResearchArchives.com/t/s?6be6 Cupertino, Calif.-based AE Biofuels, Inc. (OTC BB: AEBF) -- http://www.aebiofuels.com/-- is an international biofuels company focused on the development, acquisition, construction and operation of next-generation fuel grade ethanol and biodiesel facilities, and the distribution, storage, and marketing of biofuels. The Company currently operates a biodiesel manufacturing facility with a nameplate capacity of 55 million gallons per year (MGY) in Kakinada, India and has a next- generation integrated cellulose and starch ethanol demonstration facility in Butte, Montana. AEROFLEX INCORPORATED: Moody's Raises Corp. Family Rating to 'B2' ----------------------------------------------------------------- Moody's Investors Service upgraded the Corporate Family and Probability of Default Ratings of Aeroflex Incorporated to B2 from B3, upgraded the ratings on the term loans by one notch and affirmed its SGL-2 speculative grade liquidity rating. The rating outlook was changed to stable from positive. This is a summary of the rating actions: -- Corporate Family Rating to B2 from B3 -- Probability of Default Rating to B2 from B3 -- $50 Million Senior Secured First Lien Revolver due 2013 to Ba2 (LGD-2, 19%) from Ba3 (LGD-2, 19%) -- $389 Million (originally $400 Million) (First-Out) Senior Secured Term Loan due 2014 to Ba2 (LGD-2, 19%) from Ba3 (LGD- 2, 19%) -- $122 Million (originally $125 Million) (First-Loss) Senior Secured Term Loan due 2014 to B2 (LGD-4, 53%) from B3 (LGD-4, 54%) -- $166 Million (originally $120 Million) Senior Subordinated Unsecured PIK Term Loan due 2015 to Caa1 (LGD-6, 92%) from Caa2 (LGD-6, 92%) -- Speculative Grade Liquidity Rating affirmed at SGL-2 Ratings Rationale The upgrade of Aeroflex's CFR to B2 reflects the company's solid revenue growth and strong EBITDA expansion across both the Microelectronics and Test Solutions business segments plus improvement in leverage metrics and free cash flow following the recovery in demand for semiconductors and test and measurement products. Aeroflex experienced 9% year-over-year revenue growth as a result of expanded R&D investments, targeted product development and a string of small acquisitions that strengthened the company's product portfolio. This enabled it to move up the value chain by introducing new products for existing end markets and broadening the applications of existing technologies into new end markets. In fiscal 2010, Aeroflex witnessed good customer uptake for integrated circuits, microelectronic modules and wireless test products, which carry richer margins than the corporate average, and a favorable product mix shift in motion control, radio test and avionics products, all of which led to improvement in the company's consolidated gross margins. The rating revision considers the improvement in adjusted leverage (6.4x total debt to EBITDA in FY10 compared to 7.9x in FY09) and FCF generation ($61 million FCF in FY10 vs. $36 million in FY09), as well as the expectation that adjusted leverage will continue to improve as a result of continued EBITDA growth and potential debt reduction. The stable rating outlook reflects the company's exposure to the less cyclical aerospace & defense (government) sector, well- diversified product portfolio in which Aeroflex is the only (or principal) supplier and a rich portfolio of new products expected to ramp and contribute to revenue growth in fiscal 2011. The stable outlook takes into account Moody's expectation that increasing government-related backlog, improving customer and product diversification and new ATS programs will result in enhanced EBITDA and cash flow performance. The SGL-2 rating reflects Aeroflex's good liquidity from internal sources, which consists of $101 million of cash balances as of June 30, 2010 and Moody's expectation of solid FCF levels in fiscal 2010. External liquidity is supported by full access to an undrawn $50 million revolver. Moody's expect Aeroflex to remain compliant with its financial covenants over the next year. Moody's notes that to the extent an IPO is consummated and proceeds (depending on offering size) allocated to meaningfully reduce the unsecured debt obligations maturing 2015, ratings on the secured term loans would possibly experience a one-notch downgrade. The downgrade would result from the reduction of unsecured obligations in the consolidated debt capital structure, requiring the senior secured creditor class to absorb a higher loss under Moody's Loss Given Default Methodology. Aeroflex's ratings could experience upward pressure to the extent the company is able to: de-lever through expanded EBITDA and/or debt reduction resulting in total debt to EBITDA (Moody's adjusted) at or under 4.5x; and drive top-line revenue growth via effective R&D investments and product development targeted to moving up the value chain, and continued progress towards increasing the dollar content in existing programs and broadening applications for existing technologies into new end markets. Ratings could migrate lower if: Aeroflex experienced an erosion in its competitive position or product functionality due to under- investment in R&D, as evidenced by below market revenue growth, diminished pricing power or significant customer losses; the company suffers a sustained contraction in gross and operating margins, increases financial leverage above 7.0x or materially increases capital expenditures leading to negative FCF generation on a sustained basis; the company's liquidity position were to weaken; or there was a material change in the business profile. Aeroflex, headquartered in Plainview, NY, is a fabless specialty provider of microelectronics and test and measurement products to the aerospace, defense, wireless, broadband and medical markets. For the fiscal year ended June 30, 2010, revenues and EBITDA (Moody's adjusted) were $655 million and $168 million, respectively. ALLIANZ GLOBAL: Recognition Hearing Scheduled for Nov. 9 -------------------------------------------------------- The Honorable Stuart M. Bernstein will convene a hearing in Manhattan at 10:00 a.m. on Nov. 9, 2010, to consider the request by David McGuigan, the Foreign Representative for Allianz Global Corporate & Specialty (France) fka Compagnie d'Assurances Maritimes Aeriennes et Terrestres (when writing direct insurance and reinsurance business in the Camomile Underwriting Agencies Limited Pool) aka Allianz Marine & Aviation (France); Allianz IARD fka Assurances Generales de France I.A.R.T. (when writing direct insurance and reinsurance CUAL Pool); Delvag Luftfahrversicherungs-AG; and Nurnberger Allgemeine Versicherungs- AG to recognize the jointly administered adjustment of debt proceeding pursuant to Part 26 of the Companies Act of 2006 and the scheme of arrangement sanctioned by the High Court of Justice of England and Wales on July 9, 2010. The aim of the Scheme is to finalise the run-off of the Scheme Companies' involvement in the business underwritten for them by Camomile Underwriting Agencies Limited. The Scheme does not include any non-CUAL business nor, for the avoidance of doubt, any business underwritten for Sovereign Marine & General Insurance Company Limited whether for the business they underwrote through CUAL or otherwise. Copies of the Scheme Documnets are available at http://www.CUAL- Scheme.co.uk/ and further information can be obtained from the Scheme Manager: David McGuigan CUAL Scheme Manager PO Box 683 Redhill, RH1 9BY United Kingdom Fax: +44 (0)207 626 7937 E-mail: dmcguigan@limbo.eu David McGuigan, the Foreign Representative for Allianz Global Corporate & Specialty (France), Allianz IARD, Delvag Luftfahrversicherungs-AG and Nurnberger Allgemeine Versicherungs- AG, filed chapter 15 petitions (Bankr. S.D.N.Y. Case Nos. 10-14990 through 10-14993) on Sept. 22, 2010. The Foreign Representative is represented by Lee Stein Attanasio, Esq., at Sidley Austin LLP in New York. AMERICAN APPAREL: Amends Credit Agreement with Lion Capital ----------------------------------------------------------- American Apparel, Inc., announced Friday that on September 30, 2010, it entered into an amendment to its credit agreement with Lion Capital which, among other things, eliminates the minimum Consolidated EBITDA covenant for the dates through and including December 31, 2010, and provides for the minimum Consolidated EBITDA covenant to be tested monthly during 2011. "Lion Capital has enormous admiration for both American Apparel and its founder, Dov Charney," said Lyndon Lea, Founder and Partner of Lion Capital. "We are working together with Dov to realign the capital structure of American Apparel to support a number of key initiatives within the business, including the hiring of several new senior executives. We wholeheartedly support the Company's 'Made in USA' philosophy under which 7,000 industrial workers in downtown Los Angeles are paid a fair wage. We are particularly impressed by Dov's passion and energy, and have complete confidence in the American Apparel brand and its business model as an integrated manufacturer and retailer." "We are grateful for this expression of continued support for American Apparel's mission by Lion Capital," said Dov Charney, Chairman, CEO and founder of American Apparel. "I am touched that Lion Capital is sensitive to the unique challenges that the company has faced in the past year. We look forward to continuing to work closely with Lyndon and Lion Capital over the next several years as we work to build a great future for American Apparel." About American Apparel American Apparel, Inc. (NYSE Amex: APP) -- http://www.americanapparel.com/-- is a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel based in downtown Los Angeles, California. As of September 30, 2010, American Apparel employed roughly 10,000 people and operated over 280 retail stores in 20 countries, including the United States, Canada, Mexico, Brazil, United Kingdom, Ireland, Austria, Belgium, France, Germany, Italy, the Netherlands, Spain, Sweden, Switzerland, Israel, Australia, Japan, South Korea, and China. American Apparel also operates a leading wholesale business that supplies high quality T-shirts and other casual wear to distributors and screen printers. In addition to its retail stores and wholesale operations, American Apparel operates an online retail e-commerce website at http://www.americanapparel.com/ The Company's balance sheet as of March 31, 2010, showed $295.74 million in total assets, $180.40 million in total liabilities, and a stockholders' equity of $115.34 million. * * * As reported in the Troubled Company Reporter on August 19, 2010, the Company disclosed that based upon results of operations for the three months ended March 31, 2010, and trends occurring in the Company's business since the first quarter and projected for the remainder of 2010, the Company may not have sufficient liquidity necessary to sustain operations for the next twelve months. Also, the Company's current operating plan indicates that losses from operations are expected to continue through at least the third quarter of 2010. The Company also believes that it is probable that as of September 30, 2010, the Company will not be in compliance with the minimum Consolidated EBITDA covenant under the Lion Credit Agreement. The Company said the foregoing factors, among others, raise substantial doubt about its ability to continue as a going concern. AMERICAN APPAREL: Annual Shareholders Meeting Set for Dec. 10 ------------------------------------------------------------- American Apparel, Inc., in a regulatory filing Wednesday, discloses that its 2010 Annual Meeting of Stockholders has been tentatively scheduled for December 10, 2010. Because the tentative date of the 2010 Annual Meeting is more than 30 days after the anniversary date of the 2009 Annual Meeting of Stockholders, in accordance with Rule 14a-5(f) under the Securities Exchange Act of 1934, as amended, the Company is informing stockholders of the change. For a stockholder proposal to be considered for inclusion in the Company's proxy statement for the 2010 Annual Meeting in accordance with Rule 14a-8 under the Exchange Act, the proposal must be received by the Company's Secretary at the address set forth below no later than October 11, 2010. The stockholder proposal also must comply with Rule 14a-8 under the Exchange Act. For a stockholder proposal that is not intended to be included in the Company's proxy statement for the 2009 Annual Meeting under Rule 14a-8 under the Exchange Act, written notice of the proposal, which notice must include the information required by the Company's bylaws, must be received by the Company's Secretary at the address set forth below no later than the tenth (10th) day following the date on which notice of the date of the 2010 Annual Meeting is mailed or public disclosure of the date of the 2010 Annual Meeting is made, whichever first occurs, in accordance with the advance notice provisions of the Company's bylaws. The address of the Company's Corporate Secretary is: American Apparel, Inc. Attention: Glenn A. Weinman, Secretary 747 Warehouse Street Los Angeles, CA 90021 About American Apparel American Apparel, Inc. (NYSE Amex: APP) -- http://www.americanapparel.com/-- is a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel based in downtown Los Angeles, California. As of September 30, 2010, American Apparel employed roughly 10,000 people and operated over 280 retail stores in 20 countries, including the United States, Canada, Mexico, Brazil, United Kingdom, Ireland, Austria, Belgium, France, Germany, Italy, the Netherlands, Spain, Sweden, Switzerland, Israel, Australia, Japan, South Korea, and China. American Apparel also operates a leading wholesale business that supplies high quality T-shirts and other casual wear to distributors and screen printers. In addition to its retail stores and wholesale operations, American Apparel operates an online retail e-commerce website at http://www.americanapparel.com/ The Company's balance sheet as of March 31, 2010, showed $295.74 million in total assets, $180.40 million in total liabilities, and a stockholders' equity of $115.34 million. * * * As reported in the Troubled Company Reporter on August 19, 2010, the Company disclosed that based upon results of operations for the three months ended March 31, 2010, and trends occurring in the Company's business since the first quarter and projected for the remainder of 2010, the Company may not have sufficient liquidity necessary to sustain operations for the next twelve months. Also, the Company's current operating plan indicates that losses from operations are expected to continue through at least the third quarter of 2010. The Company also believes that it is probable that as of September 30, 2010, the Company will not be in compliance with the minimum Consolidated EBITDA covenant under the Lion Credit Agreement. The Company said the foregoing factors, among others, raise substantial doubt about its ability to continue as a going concern. AMERICAN INTERNATIONAL: Fitch Affirms 'B' Rating on Securities -------------------------------------------------------------- Fitch Ratings has affirmed these ratings of American International Group, Inc.: -- Issuer Default Rating at 'BBB'; -- Senior unsecured notes at 'BBB'; -- Subordinated hybrid securities at 'B'; -- Short-term IDR at 'F1'; -- Insurer Financial Strength ratings of non-life insurance companies at 'A+' and life insurance companies at 'A-'. AIG's Rating Outlook is Stable. Fitch's rating actions follow the announcement by AIG of a broad- based re-capitalization plan under which AIG will use proceeds from asset divestitures to repay monies owed under its credit facility with the Federal Reserve Bank of New York, and under which AIG will over time redeem the FRBNY's preferred interests in various special purpose vehicles, ultimately relieving itself of all FRBNY obligations. Also under the recapitalization plan, the AIG preferred shares held by the U.S. Treasury and the AIG Credit Facility Trust that provide Treasury with a majority ownership interest in AIG, will be converted into common shares. A key goal of the recapitalization plan is to simplify AIG's capital structure, and to remove any subordination of senior debt obligations that existed under the FRBNY obligations, in order to improve AIG's access to traditional sources of capital. Accordingly, AIG also plans to access the capital markets in the future. Fitch's IDR and debt ratings of AIG continue to reflect an implied government support floor based on the company's majority ownership by the AIG Credit Facility Trust for the sole benefit of the U.S. Treasury. Absent this assumption of government support, Fitch would currently rate AIG's IDR at 'BB' and both new and existing senior debt at 'BB-' (i.e. on a so-called 'stand-alone' basis). AIG's Rating Outlook remains Stable. The Stable Outlook in part reflects an expectation that government support provided to AIG will decrease over the next 12 months as AIG becomes increasingly less systemically important, and as the Treasury sells off its equity interests. Decreases in assumed government support will reduce the uplift Fitch would factor into its ratings relative to the implied stand-alone ratings. Offsetting this, however, is Fitch's view that the recapitalization plan and a renewed access to traditional forms of capital, together with various reductions in AIG's risk profile executed by management over the past two years, will lead to upward migration in AIG's stand-alone ratings over the same time period. Accordingly, Fitch believes it is likely that the negative ratings impact of reduced government support will be offset by improvements in AIG's stand-alone profile, ultimately allowing AIG's 'BBB' IDR and senior debt ratings to remain at or close to their current levels, even after government support is lifted. Reductions in AIG's risk profile include success the company has had in reducing the net notional value of AIG Financial Products Corp.'s portfolio of credit-default swaps, entering into an agreement to sell the company's consumer finance subsidiary, which Fitch viewed as more highly-leveraged than AIG's insurance operations, and stabilizing the near-term liquidity and funding structure at the company's International Lease Finance Corporation aircraft leasing subsidiary. The agency notes that at the 'BB' level, AIG's stand-alone IDR reflects significantly wider-than-standard notching from the company's 'A+' rated non-life and 'A-' rated life insurance subsidiaries (typically holding company senior unsecured securities are rated three notches below insurance subsidiaries' IFS ratings). Fitch attributes this more conservative notching primarily to ongoing, albeit reduced, risks emanating from AIGFP and, to a lesser extent, ILFC and views these risks as atypical of those faced by the majority of its rated insurance holding companies. Further, these entities contribute significantly to leverage ratios, principally Fitch's Total Financing & Commitment ratio which is based on a broad definition of financial and operating debt, and financial obligations, including notional derivative exposures, that continue to exceed those supportive of standard notching. At June 30, 2010, AIG's TFC stood at 2.2x much improved from 3.3x at Dec. 31, 2009 but still materially higher than general insurance industry averages of closer to 0.5x. Key rating drivers that could produce revisions in Rating Outlooks to Positive or lead to upgrades in AIG's subsidiaries' IFS ratings or the company's IDR include: -- Further stabilization of sales trends and profitability of the company's domestic life insurance subsidiaries; -- Enhanced underwriting profitability and reserve stability of the company's non-life insurance subsidiaries; -- Further declines in outstanding notional values of AIGFP's CDS portfolio without significant liquidity or capital drains. The agency notes that the net notional value of AIGFP's CDS portfolio declined to $90 billion at June 30, 2010 from $184 billion at year-end 2009 and the agency's expectation is that this portfolio will decline materially by year-end 2010. Such a decline would most directly affect Fitch's view of AIG's stand-alone IDR. -- Further clarity around AIG's plans for ILFC and how the company's funding needs over the long term can be met without adding contingent risks to AIG's profile. Key rating drivers that could produce revisions in Rating Outlooks to Negative or lead to downgrades in AIG's subsidiaries' IFS ratings or the company's IDR include: -- Deterioration in the company's domestic life subsidiaries' sales or profitability trends; -- Declines in underwriting profitability and heightened reserve volatility of the company's non-life insurance subsidiaries that Fitch views as inconsistent with that of comparably- rated peers and industry trends; -- Material declines in risk-based capital ratios at either the domestic life insurance or the non-life insurance subsidiaries; -- Evidence that AIGFP's CDS portfolio run-off is not proceeding as currently envisioned; -- A decline in Fitch's view of the implied rating support provided by the U.S. Treasury's interests in AIG that is not fully offset from a rating perspective by improvements in AIG's stand-alone financial profile. The agency believes that the most plausible situation under which this could occur would be a significant unwinding of the Treasury's ownership position prior to further run-off of AIGFP's CDS portfolio. Fitch notes that typically senior unsecured securities issued by an insurance holding company are rated one notch below the company's IDR. In AIG's case, in applying the government support floor, the company's IDR and senior debt have been set at the same level. Fitch plans to establish a one notch differential between its ratings on AIG's senior unsecured securities and the company's IDR as AIG emerges more fully from its period of government support. However, at this point Fitch cannot yet determine if the ratings on AIG's senior unsecured securities may be downgraded one notch or AIG's IDR may be upgraded by one notch to achieve this notching differential. Finally, Fitch expects to evaluate its 'B' ratings on AIG's subordinated hybrid securities in the near term as part of its ongoing analysis of AIG's liquidity profile and progress executing its re-structuring plan. Ratings on those securities reflect Fitch's view that coupon deferral is a meaningful risk and the agency's review will focus on whether its view of that risk has changed. Fitch has affirmed these ratings and assigned Stable Outlooks: American International Group, Inc. -- Long-term IDR at 'BBB'; -- Senior debt at 'BBB'; -- Short-term IDR at 'F1'; -- 6.25% series A-1 junior subordinated debentures due March 15, 2087 at 'B'; -- 5.75% series A-2 junior subordinated debentures due March 15, 2067 at 'B'; -- 4.875% series A-3 junior subordinated debentures due March 15, 2067 at 'B'; -- 6.45% series A-4 junior subordinated debentures due June 15, 2077 at 'B'; -- 7.7% series A-5 junior subordinated debentures due Dec. 18, 2062 at 'B'; -- 8.175% series A-6 junior subordinated debentures due May 15, 2058 at 'B'; -- 8% series A-7 junior subordinated debentures due May 22, 2038 at 'B'; -- 8.625% series A-8 junior subordinated debentures due May 22, 2068 at 'B'; -- 5.67% series B-1 debentures due Feb. 15, 2041 at 'B'; -- 5.82% series B-2 debentures due May 1, 2041 at 'B'; -- 5.89% series B-3 debentures due Aug. 1, 2041 at 'B'. AIG Funding, Inc. -- Commercial paper at 'F1'. AIG International, Inc. -- Long-term IDR at 'BBB'; -- Senior debt at 'BBB'; -- 5.6% senior unsecured notes due July 31, 2097 at 'BBB'. AIG Life Holdings (US), Inc. -- Long-term IDR at 'BBB'; -- 7.5% senior unsecured notes due July 15, 2025 at 'BBB'; -- 6.625% senior unsecured notes due Feb. 15, 2029 at 'BBB'. American General Capital II -- 8.5% preferred securities due July 1, 2030 at 'B'. American General Institutional Capital A -- 7.57% capital securities due Dec. 1, 2045 at 'B'. American General Institutional Capital B -- 8.125% capital securities due March 15, 2046 at 'B'. Fitch has affirmed these IFS ratings at 'A+' with Stable Outlooks: -- Chartis Property Casualty Company; -- American Home Assurance Company; -- Chartis Casualty Company; -- Commerce and Industry Insurance Company; -- Granite State Insurance Company; -- Illinois National Insurance Co.; -- National Union Fire Insurance Company of Pittsburgh, PA; -- New Hampshire Insurance Company; -- The Insurance Company of the State of Pennsylvania; -- Chartis Select Insurance Company; -- Landmark Insurance Company; -- Lexington Insurance Company; -- AIU Insurance Company; -- Chartis Specialty Insurance Company; -- Chartis MEMSA Insurance Company; -- Chartis UK Ltd.; -- Chartis Overseas, Limited. Fitch has affirmed these IFS ratings at 'A-' with Stable Outlooks: -- American General Life Insurance Company of Delaware; -- AGC Life Insurance Company; -- Western National Life Insurance Company; -- SunAmerica Annuity and Life Assurance Company; -- American General Life and Accident Insurance Company; -- American General Life Insurance Company; -- American International Life Assurance Company of New York; -- First SunAmerica Life Insurance Company; -- SunAmerica Life Insurance Company; -- The United States Life Insurance Company in the City of New York; -- The Variable Annuity Life Insurance Company. ASIF II Program ASIF III Program ASIF Global Financial Program -- Program ratings at 'A-'. These 'A+' IFS rating remains on Rating Watch Positive: -- American Life Insurance Company. These 'A+' IFS rating remains on Rating Watch Evolving: -- American International Assurance Company (Bermuda) Limited. AMERICAN SAFETY: Auction Overturned by Bankruptcy Judge ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that U.S. Bankruptcy Judge Mary F. Walrath rejected the results of the auction conducted by American Safety Razor Co. At a hearing on September 30, Judge Walrath read her ruling into the record from the bench and directed ASR to hold another auction, this time permitting bids from Energizer Holdings Inc., the maker of Schick shavers. ASR didn't allow Energizer to bid at a previously scheduled auction, claiming antitrust concerns might scotch a sale and slow the disposition of the business. Judge Walrath, according to Mr. Rochelle, said the process at the first auction "has not been fair." The judge also questioned whether ASR had been correct in demanding that Energizer make a non-refundable deposit. As reported in the Troubled Company Reporter on September 9, the Debtors asked for approval to sell their assets to RZR Acquisition Company, LLC, RZR Holding Corporation, and USB AG, Stamford Branch in exchange for their debt. The Debtors had conducted an auction where the Debtors selected the lenders over rival Energizer Holdings Inc., which offered $301 million in cash. American Safety financial adviser Andrew Torgove, managing director of Lazard Middle Market LLC, said the bid of Energizer, maker of Schick shavers, raises too many antitrust issues. BlackRock Kelso Capital Corp and GSO/Blackstone Debt Funds Management LLC, who together hold about $49.2 million of American Safety Razor's second-lien debt, opposed the sale to the first- lien lenders group. The second lien lenders are institutions collectively holding approximately 33.7% of the $178.1 million second lien bank debt owed by the Debtors. The second-lien lenders said that the management was making excuses not to accept a far more attractive offer Energizer. About American Safety American Safety Razor Company, LLC, doing business as Personna American Safety Razor, manufactures private-label shaving razors and blades. ASR also makes and distributes blades and bladed hand tools for a variety of industrial uses and specialty industrial and medical blades. The Company has roots going back to 1875. American Safety, along with affiliates, sought Chapter 11 relief (Bankr. D. Del. Case No. 10-12351) on July 28, 2010. Mark J. Thompson, Esq., and Morris J. Massel, Esq., at Simpson Thacher & Bartlett LLP, serve as bankruptcy attorneys. Howard A. Cohen, Esq., at Drinker Biddle & Reath LLP, is co-counsel. In addition, Lazard Middle Market LLC is the investment banker and Kurtzman Carson Consultants LLC is the claims and notice agent. American Safety estimated assets at $100 million to $500 million and debts at $500 million to $1 billion in its Chapter 11 petition. AMERITYRE CORP: Recurring Losses Prompt Going Concern Doubt ----------------------------------------------------------- Amerityre Corporation filed on September 28, 2010, its annual report on Form 10-K for the fiscal year ended June 30, 2010. HJ & Associates, LLC, in Salt Lake City, Utah, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring losses from operations that have resulted in an accumulated deficit. The Company reported a net loss of $1.4 million on $3.7 million of revenue for fiscal 2010, compared with a net loss of $3.6 million on $3.2 million of revenue for fiscal 2009. For the fiscal year ended June 30, 2010, the Company had $1.1 million of total gross profit compared to $874,147 for 2009. The $2.2 million decrease in net loss was due primarily to the reduction in payroll and payroll taxes, sales and marketing, research and development, and other general and administrative expenses. The Company has a retained deficit of $56.0 million as of June 30, 2010. The Company's balance sheet at June 30, 2010, showed $2.5 million in total assets, $602,577 in total liabilities, and stockholders' equity of $1.9 million. A full-text copy of the Form 10-K is available for free at: http://researcharchives.com/t/s?6bf3 About Amerityre Corporation Boulder City, Nev.-based Amerityre Corporation (OTC BB: AMTY.OB) - - http://www.amerityre.com/-- is engaged in the research and development of technologies related to the formulation of polyurethane compounds and the manufacturing process for producing tires from polyurethane. ANGELICA CORPORATION: Moody's Assigns 'B2' Corp. Family Rating -------------------------------------------------------------- Moody's Investors Service assigned Angelica Corporation a B2 corporate family rating and a B3 probability of default rating. At the same time, Moody's also assigned a B2 rating to each of Angelica's proposed $35 million senior secured revolver, $50 million senior secured term loan A and $100 million senior secured term loan B. The proposed credit facility will be used to refinance about $100 million of existing debt, pay a cash dividend of about $34 million and cover transaction costs. The rating outlook is stable. These instrument ratings and LGD assessments have been assigned: Angelica Corporation: -- Corporate family rating at B2; -- Probability of default rating at B3; -- $35 million senior secured revolving credit facility at B2 (LGD3, 35%); -- $50 million senior secured term loan A at B2 (LGD3, 35%); -- $100 million senior secured term loan B at B2 (LGD3, 35%); Ratings Rationale Angelica's B2 Corporate Family Rating reflects the company's new projected leverage level, which is acceptable for the B2 rating category. In addition, the rating reflects recent trends in the healthcare sector including declining patient visits and pressure on physicians and hospital administrators to lower overall operating costs as a consequence of healthcare reform. The rating is supported by the company's good customer diversification and leading market share in most of the operating areas in which the company competes. Moody's rates Angelica Corp's secured bank facilities B2 with a loss given default of LGD3, 35%. The B2 rating for the secured facilities reflects their secured interest in substantially all of the tangible and intangible assets of the company. Given the company's all 1st lien bank capital structure, Angelica's probability of default rating is B3, one notch lower than the corporate family rating of B2. Angelica's stable outlook reflects Moody's expectation that it will attain at least modest growth in fiscal 2011, driven largely by incremental sales to existing clients. We'd also expect that operating performance will benefit somewhat from improved sales mix in the clinic segment and from other cost saving actions taken in fiscal 2010. While Angelica's relatively modest scale constrains the rating, in the event that it sustainably increases its relative scale without incrementally increasing leverage, the rating could be upgraded. A positive action would also require that the company maintain a good liquidity profile. The ratings could be downgraded as a result of poor liquidity management, maintaining adjusted debt-to-EBITDA leverage above 5.5x, or in the event its core business began to erode due to a change in competitive forces. This is the first time Moody's has provided a public rating for Angelica. Angelica Corporation is a leading provider of textile rental and linen management services to the U.S. healthcare market. Angelica provides laundry and linen management services to hospitals, long term care facilities, and out-patient medical practices from 26 service centers across the nation. The company is headquartered in Alpharetta, Georgia. The company reported net sales of approximately $433 million for the last twelve months end August 28, 2010. ANGIOTECH PHARMA: Defers $9.7 Million Payment to Bondholders ------------------------------------------------------------ Angiotech Pharmaceuticals, Inc., on Friday said it has determined, in connection with discussions being conducted with holders of approximately 72% of the Company's 7.75% Senior Subordinated Notes, that it will not make interest payments totaling approximately $9.7 million due to holders of the Subordinated Notes on October 1, 2010. The Company is currently in discussions with holders of its Subordinated Notes to effectuate a transaction that would materially reduce the Company's existing debt levels. The transaction, if completed and approved, would provide for substantial improvement in the Company's credit ratios, liquidity and operating flexibility. Angiotech expects to announce specific details relating to the transaction in the very near future. In the near term, the Company's operating entities remain adequately supported, with cash on hand in excess of $25 million as of September 24, 2010. Concurrent with these discussions, the Company has entered into a Forbearance Agreement with Wells Fargo Capital Finance, LLC, pursuant to which Wells Fargo has agreed to leave in place the Company's existing revolving credit facility and not immediately exercise rights or remedies it may have relating to the Company's decision to defer the interest payment due to the holders of the Subordinated Notes. "We believe concluding these discussions will be a critical step in advancing Angiotech's primary mission of providing innovative surface modified medical devices, drug-device combinations and novel locally delivered therapeutics to our physician customers and their patients," said Dr. William Hunter, President and CEO of Angiotech. "We appreciate our Subordinated Note holders and our lenders at Wells Fargo working with the Company to facilitate a consensual transaction that allows our business plan to move forward consistent with our strategic vision and in partnership with our customers, operations, and employees." "To date, we have held substantive and constructive discussions with the holders of a significant majority of our Subordinated Notes, who have been supportive of our business plan and are excited about Angiotech's future prospects," said Thomas Bailey, Chief Financial Officer of Angiotech. "We expect to complete discussions in the very near future, and if concluded the transaction is expected to immediately and substantially improve our financial flexibility and competitive position." Mr. Bailey added, "Throughout this transaction process we will continue to remain focused on providing our customers with quality products and on-time deliveries, and our employees, suppliers, partners and trade creditors will continue to receive all amounts owing to them in the ordinary course of business." Pursuant to the terms of the Subordinated Notes, Angiotech has a 30-day grace period from the date an interest payment is due in which to make the required interest payment to the holders of the Subordinated Notes before the Company is in default of its obligations. Angiotech intends to utilize the 30-day grace period to attempt to reach an agreement which Angiotech believes will be beneficial for all of its stakeholders. Failure to make the interest payment on the Subordinated Notes within 30 days of the due date -- or such extended grace period as may be agreed to by the requisite bondholders -- would constitute an event of default under the indenture governing the Subordinated Notes. Any such event of default would permit holders of 25% or more of the aggregate outstanding principal amount of such Subordinated Notes to accelerate obligations under the Subordinated Notes. Additionally, if the Company fails to make the interest payment due on the Subordinated Notes prior to the expiration of any applicable grace period, such failure will also result in an event of default under the indenture governing the Company's Senior Floating Rate Notes due 2013. Under the Company's Credit Agreement with Wells Fargo, the failure to make interest payments on the Subordinated Notes would constitute an event of default, which in turn would permit Wells Fargo to accelerate the Company's obligations thereunder and terminate any outstanding commitments. As noted, the Company has entered into a Forbearance Agreement with Wells Fargo, pursuant to which Wells Fargo has agreed not to take any action under the Company's Credit Agreement before October 31, 2010 with respect any event of default relating to the Company's decision to defer interest payments due on October 1, 2010. To date, the Company has no borrowings outstanding under the Wells Fargo facility. As of September 24, 2010, the Company had no advances outstanding and available liquidity of approximately $15 million under the Credit Agreement. As of October 1, 2010, the Company has not reached an agreement with the holders of the Subordinated Notes and the Company can give no assurance that an agreement will be reached. Any recapitalization transaction resulting from the discussions with the holders of the Subordinated Notes would be subject to completion of definitive documentation and the satisfaction of any conditions contained therein. The discussions between Angiotech and holders of the Subordinated Notes follow previous announcements that the Company had retained the Blackstone Group LP to analyze its capital structure and advise it in its exploration of financial and strategic alternatives for all or part of its business. Over the course of the past 24 months, working together with Blackstone and the Company's legal advisors at Osler, Hoskin & Harcourt LLP and Willkie Farr & Gallagher LLP, the Company has undertaken significant initiatives to reduce costs and manage its liquidity, implemented a senior secured revolving credit facility with Wells Fargo, and explored a wide range of potential strategic and financial transactions, with the primary goals of improving the Company's credit ratios, reducing the aggregate amount of its indebtedness and securing additional working capital liquidity to fund the Company's various business initiatives. In addition, Angiotech and its advisors have explored, and will continue to explore, opportunities that could capture strategic value for part or all of the business or that could enhance the Company's competitive position, or could provide for sharing of certain of the Company's significant investments in commercial and research initiatives with a corporate partner or partners. The Company has said it will provide further updates on said processes as information warrants. About Angiotech Based in Vancouver, British Columbia, Angiotech Pharmaceuticals, Inc. (NASDAQ: ANPI, TSX: ANP) -- http://www.angiotech.com/-- is a global specialty pharmaceutical and medical device company. Angiotech discovers, develops and markets innovative treatment solutions for diseases or complications associated with medical device implants, surgical interventions and acute injury. The Company's balance sheet at June 30, 2010, showed $110.6 million in total assets, $51.8 million in total current liabilities, $622.2 million total non-current liabilities, and $339.7 million in stockholders' deficit ANTHONY MOULTRIE: Case Summary & 12 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Anthony Moultrie 140 N. Hillcrest Inglewood, CA 90301 Tel: (310) 259-0084 Bankruptcy Case No.: 10-51334 Chapter 11 Petition Date: September 28, 2010 Court: U.S. Bankruptcy Court Central District of California (Los Angeles) Judge: Alan M. Ahart Debtor's Counsel: William H. Brownstein, Esq. 1250 Sixth Street, Suite 205 Santa Monica, CA 90401 Tel: (310) 458-0048 Fax: (310) 576-3581 E-mail: Brownsteinlaw.bill@gmail.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's 12 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb10-51334.pdf ASBURY AUTOMOTIVE: Moody's Affirms 'B2' Corporate Family Rating --------------------------------------------------------------- Moody's Investors Service affirmed the B2 Corporate Family and Probability of Default ratings for Asbury Automotive, Inc., and changed the outlook to stable from negative. Rating Rationale The change in outlook to stable from negative recognizes the positive impact on Asbury's credit metrics of its improved operating performance. "Asbury continues to navigate a difficult operating environment, with its improved credit profile evidence of the success," stated Moody's Senior Analyst Charlie O'Shea. "We feel that barring a double-dip macroeconomic scenario, Asbury's credit profile should continue to reflect incremental improvement such that it is more reflective of a B2 credit." The B2 rating considers Asbury's weak, though improving, credit metrics, as well as its strong market position in the still very fragmented auto retailing segment. The rating also considers Asbury's historically-favorable brand mix, with 83% of new vehicle sales coming from luxury and import brands, and its operating profit trend away from new vehicle sales. Asbury's business model, with solid parts and service and finance and insurance segments, as well as improving focus on used car sales, reduces reliance on new car sales. Ratings affirmed and LGD point estimates adjusted include: -- Corporate family rating at B2 -- Probability of default rating at B2 -- Sr. Subordinated Debt at Caa1 (LGD 5, 88%) from Caa1 (LGD 5, 87%) The stable outlook reflects Moody's expectation that Asbury's performance will remain solid and that credit metrics will remain at least at current levels over the next twelve months. Ratings could be upgraded if Asbury's operating performance continues to improve and leverage as measured by debt/EBITDA is sustained below 5.5 times and interest coverage as measured by EBITA/interest is sustained above 2.25 times. Qualitatively, an upgrade would also factor in Asbury's ability to potentially "flex" its operating model should the macroeconomic factors that are critical to the auto retail segment exhibit signs of stress. Additionally, for an upgrade Moody's would expect liquidity to remain adequate. Ratings could be downgraded if Asbury's operating performance were to weaken such that debt/EBITDA approaches 6.5 times, liquidity worsens, or if EBITA/interest fell below 1.5 times. The last rating action for Asbury Automotive was the March 25, 2009 downgrade of the Corporate Family and Probability of Default ratings to B2 from B1, the downgrade of the Senior subordinated notes to Caa1 (LGD5, 87%) from B3 (LGD5, 85%), and the assignment of a negative outlook. ASCEND PERFORMANCE: Moody's Assigns 'B2' Corporate Family Rating ---------------------------------------------------------------- Moody's Investors Service assigned a B2 Corporate Family Rating to Ascend Performance Materials Holdings, Inc. APMH is a major integrated Nylon 6,6 manufacturer and this is its initial Moody's rating. The proposed debt, consists of a senior secured asset backed revolver (unrated) and a secured term loan, with a dual purpose of a $922 million dividend to the owners. Moody's assigned a B2 rating to the proposed $800 million guaranteed secured Term Loan B issued by Ascend Performance Materials LLC. The proposed rating outlook is stable. Ratings Rationale APMH is the former Integrated Nylon division of Solutia (Solutia's CFR is B1- positive outlook). APMH was identified as a non-core asset and in 2008; Solutia further classified the division as a discontinued operation for sale. On June 1, 2009, SK Capital closed the acquisition of this company with Solutia retaining a small equity ownership position of about 2%. SK Capital Partners is a sector-focused investment firm with industry and operating expertise in Specialty Materials, Specialty Chemicals and Healthcare. APMH has proposed new Credit Facilities including a $275 million, 4.5 year, senior secured ABL and an $800 million, 6-year, senior secured term loan. The proceeds of which will be used to fund a $922 million distribution to APMH shareholders and pay related fees and expenses. APMH's ratings and outlook are subject to review of the final documentation of the financing and closing of the transaction as described. Ratings Assigned: Ascend Performance Materials Holdings, Inc * Corporate Family Rating -- B2 * Probability of Default Rating -- B2 Ascend Performance Materials LLC * $800 million Sr Sec Term Loan B due 2016 - -- B2 (LGD4, 55%) APMH's B2 CFR is weakly positioned in the B2 category and reflects significant debt leverage, a limited operating history as an independent company, severely abbreviated audited historic financials, the prospect of volatile raw materials in the event that current contracts recently negotiated are not renewed on a sustainable basis, and significant cash resources exiting the business in the form of a series of one time dividends amounting to over $1 billion. The proposed $922 million dividend contemplated by this new debt exceeds the total assets reported at the end of June 2010 of $694 million by 33% and is over 3X the book equity reported at the end of June 2010. Debt, when adjusted for Moody's standard adjustments, (including unfunded pensions of $80 million and capitalized rents of $7 million at the end of 2009) is about $1,053 million. During 2010 the under funding of the pension has been reduced. An additional concern is the prospect of reduced liquidity under the ABL if a proposed incremental dividend of $120 million is permitted in the 4th quarter of 2010. At this level of debt Moody's proforma estimated leverage for 2010 would be about 3.7. In 2010 APMH EBITDA has benefited from cost savings initiated by the former owners consisting of a 33% reduction of the company's global workforce. In addition management is likely to benefit from more favorable contract terms over time as long as the main industry competitors continue to operate at close to industry capacity. If the global economy were to contract again contract terms might change upon renewal. APMH's rating reflects the very difficult reported financial performance in recent years notwithstanding several large unusual items that contributed to the poor performance including $113 million of annual cost savings from a 1,300 employee downsizing initiative and a $256 million impact, over two years, from overvalued inventory caused by high raw material prices combined with an unexpectedly large decrease in demand. In addition, it is estimated that in 2010 APMH will export 55% of its nylon 6,6 revenues to Europe and Asia. Exports to Asia alone are estimated at 34% of 2010 nylon 6,6 revenues and will continue to increase as Asian growth is expected to eclipse growth in the U.S. and Europe by a wide margin. Moody's remains concerned that the company's cost position may weaken over time due to the availability and pricing of key feedstocks which may reduce its export margins. AMPH's B2 CFR also takes into consideration the sponsor's publicly stated focus on the ability to de-lever as well as the proposed limitation on future dividends until at least 50% of the term loan has been paid down and leverage drops to 2X. The rating outlook for AMPH is stable. Factors that could have negative rating implications include a failure to maintain historical margins as raw material prices become volatile and deterioration in its key end-market conditions. Factors that could have positive rating implications include a substantial improvement in financial performance and meaningful permanent debt reductions supported by a publicly stated financial philosophy. AMPH operates in three business segments. The largest segment, with some 44% of revenues (for the LTM period ending June 30, 2010), is the chemical segment. This segment provides chemicals for external and internal use. The next largest segment, with some 29% of revenues is the engineered plastics segment followed by the polymer and fiber segment with 27% of the revenues. The B2 rating on the term loan B reflects its dominant position in the company's debt structure, relative proximity to the operating assets and benefits of the collateral package. The facility will be secured by a first priority lien on the capital stock as well as all domestic PP&E assets of the company and its subsidiaries, and will be guaranteed on a senior secured basis by all current and future domestic subsidiaries. AMPH is also expected to guarantee the credit facilities. ASCEND PERFORMANCE: Moody's Assigns 'B2' Corporate Family Rating ---------------------------------------------------------------- Moody's Investors Service assigned a B2 Corporate Family Rating to Ascend Performance Materials Holdings, Inc. APMH is a major integrated Nylon 6,6 manufacturer and this is its initial Moody's rating. The proposed debt, consists of a senior secured asset backed revolver (unrated) and a secured term loan, with a dual purpose of a $922 million dividend to the owners. Moody's assigned a B2 rating to the proposed $800 million guaranteed secured Term Loan B issued by Ascend Performance Materials LLC. The proposed rating outlook is stable. Ratings Rationale APMH is the former Integrated Nylon division of Solutia (Solutia's CFR is B1- positive outlook). APMH was identified as a non-core asset and in 2008; Solutia further classified the division as a discontinued operation for sale. On June 1, 2009, SK Capital closed the acquisition of this company with Solutia retaining a small equity ownership position of about 2%. SK Capital Partners is a sector-focused investment firm with industry and operating expertise in Specialty Materials, Specialty Chemicals and Healthcare. APMH has proposed new Credit Facilities including a $275 million, 4.5 year, senior secured ABL and an $800 million, 6-year, senior secured term loan. The proceeds of which will be used to fund a $922 million distribution to APMH shareholders and pay related fees and expenses. APMH's ratings and outlook are subject to review of the final documentation of the financing and closing of the transaction as described. Ratings Assigned: Ascend Performance Materials Holdings, Inc * Corporate Family Rating -- B2 * Probability of Default Rating -- B2 Ascend Performance Materials LLC * $800 million Sr Sec Term Loan B due 2016 - -- B2 (LGD4, 55%) APMH's B2 CFR is weakly positioned in the B2 category and reflects significant debt leverage, a limited operating history as an independent company, severely abbreviated audited historic financials, the prospect of volatile raw materials in the event that current contracts recently negotiated are not renewed on a sustainable basis, and significant cash resources exiting the business in the form of a series of one time dividends amounting to over $1 billion. The proposed $922 million dividend contemplated by this new debt exceeds the total assets reported at the end of June 2010 of $694 million by 33% and is over 3X the book equity reported at the end of June 2010. Debt, when adjusted for Moody's standard adjustments, (including unfunded pensions of $80 million and capitalized rents of $7 million at the end of 2009) is about $1,053 million. During 2010 the under funding of the pension has been reduced. An additional concern is the prospect of reduced liquidity under the ABL if a proposed incremental dividend of $120 million is permitted in the 4th quarter of 2010. At this level of debt Moody's proforma estimated leverage for 2010 would be about 3.7. In 2010 APMH EBITDA has benefited from cost savings initiated by the former owners consisting of a 33% reduction of the company's global workforce. In addition management is likely to benefit from more favorable contract terms over time as long as the main industry competitors continue to operate at close to industry capacity. If the global economy were to contract again contract terms might change upon renewal. APMH's rating reflects the very difficult reported financial performance in recent years notwithstanding several large unusual items that contributed to the poor performance including $113 million of annual cost savings from a 1,300 employee downsizing initiative and a $256 million impact, over two years, from overvalued inventory caused by high raw material prices combined with an unexpectedly large decrease in demand. In addition, it is estimated that in 2010 APMH will export 55% of its nylon 6,6 revenues to Europe and Asia. Exports to Asia alone are estimated at 34% of 2010 nylon 6,6 revenues and will continue to increase as Asian growth is expected to eclipse growth in the U.S. and Europe by a wide margin. Moody's remains concerned that the company's cost position may weaken over time due to the availability and pricing of key feedstocks which may reduce its export margins. AMPH's B2 CFR also takes into consideration the sponsor's publicly stated focus on the ability to de-lever as well as the proposed limitation on future dividends until at least 50% of the term loan has been paid down and leverage drops to 2X. The rating outlook for AMPH is stable. Factors that could have negative rating implications include a failure to maintain historical margins as raw material prices become volatile and deterioration in its key end-market conditions. Factors that could have positive rating implications include a substantial improvement in financial performance and meaningful permanent debt reductions supported by a publicly stated financial philosophy. AMPH operates in three business segments. The largest segment, with some 44% of revenues (for the LTM period ending June 30, 2010), is the chemical segment. This segment provides chemicals for external and internal use. The next largest segment, with some 29% of revenues is the engineered plastics segment followed by the polymer and fiber segment with 27% of the revenues. The B2 rating on the term loan B reflects its dominant position in the company's debt structure, relative proximity to the operating assets and benefits of the collateral package. The facility will be secured by a first priority lien on the capital stock as well as all domestic PP&E assets of the company and its subsidiaries, and will be guaranteed on a senior secured basis by all current and future domestic subsidiaries. AMPH is also expected to guarantee the credit facilities. ASSOCIATED MATERIALS: Carey Plans to Offer $730MM Sr. Sec. Notes ---------------------------------------------------------------- Associated Materials LLC said that Carey Acquisition Corp. and its subsidiary intend to offer $730 million in aggregate principal amount of senior secured notes due 2017 in a private placement, subject to market and other conditions. The net proceeds from the offering of the Notes will be used, in part, to finance the previously announced acquisition of the parent company of Associated Materials, LLC by affiliates of Hellman & Friedman, LLC, and the offering of the Notes is conditioned upon the contemporaneous closing of the acquisition. Upon completion of the offering and the acquisition, the Notes will become obligations of Associated Materials, LLC. The Notes will be guaranteed by all of the direct and indirect domestic subsidiaries of Associated Materials, LLC that guarantee the new senior secured asset-based revolving credit facility that is expected to entered into in connection with the acquisition. About Associated Materials Based in Cuyahoga Falls, Ohio, Associated Materials LLC fka Associated Materials Inc. -- http://www.associatedmaterials.com/ -- is a manufacturer of exterior residential building products, which are distributed through company-owned distribution centers and independent distributors across North America. AMI produces a broad range of vinyl windows, vinyl siding, aluminum trim coil, aluminum and steel siding and accessories, as well as vinyl fencing and railing. AMI is a privately held, wholly owned subsidiary of Associated Materials Holdings Inc., which is a wholly-owned subsidiary of AMH, which is a wholly owned subsidiary of AMH II, which is controlled by affiliates of Investcorp S.A. and Harvest Partners Inc. Associated Materials and its subsidiaries' consolidated balance sheet at July 3, 2010, showed $849.49 million in total assets, $232.23 million in total current liabilities, $48.27 million in deferred income taxes, $59.96 million in other liabilities, $212.68 million in long-term debt, and a $296.34 million members' equity. * * * Associated Materials carries 'B-' corporate credit ratings from Standard & Poor's Ratings Services. S&P has placed its ratings, including the 'B-' corporate credit ratings, Associated Materials, and its parent Company AMH Holdings LLC, on CreditWatch with developing implications, following the definitive agreement with Heller & Friedman. "The CreditWatch developing reflects the potential for Standard & Poor's to either raise, lower, or affirm its ratings on Associated Materials, depending on our assessment of the changes from this transaction on the Company's financial risk profile, including its ownership structure, capital structure, liquidity profile, and expected financial policy," said Standard & Poor's credit analyst Thomas Nadramia. ASSOCIATED MATERIALS: S&P Raises Corporate Credit Rating to 'B' --------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit ratings on siding and windows manufacturer Associated Materials LLC and its parent company, AMH Holdings LLC, to 'B' from 'B-'. All ratings are removed from CreditWatch, where they were placed with developing implications on Sept. 9, 2010. At the same time, S&P assigned a 'B' (the same as the corporate credit rating) issue-level rating to Associated Materials' proposed $730 million senior secured notes due 2017. These proposed notes will be co-issued by Carey New Finance Inc. The securities are expected to be sold pursuant to Rule 144A of the Securities Act. The recovery rating on the proposed notes is '4', indicating S&P's expectation of average (30%-50%) recovery in the event of a payment default. The rating outlook is stable. The company will use proceeds from the proposed note issuance, combined with an approximately $600 million equity contribution, excess cash balances, and expected borrowings under a new revolving credit facility, to fund the nearly $1.35 billion acquisition of the company (including refinancing Associated Materials' existing debt) by affiliates of Hellman and Friedman LLC (H&F). Pro forma for the proposed transactions, AMI will have approximately $800 million of outstanding consolidated debt. S&P expects to withdraw its ratings on the existing bank facilities and note issues currently outstanding at both AMH and AMI upon refinancing of these financings. "The upgrade reflects S&P's expectations that Cuyahoga Falls, Ohio-based AMI's operating performance will continue to benefit from increased unit volumes across all product categories, lower costs, and improved efficiencies," said Standard & Poor's credit analyst Thomas Nadramia. The stable rating outlook reflects S&P's expectation that AMI's earnings and cash flow will continue to benefit from increased operating efficiencies, as well as stable demand in the repair and remodeling markets. Moreover, S&P projects that adjusted debt to EBITDA should fall to between 5x and 6x by the end of 2010 and interest coverage to be around 2x, levels S&P would consider to be consistent with the current rating. This is based upon expectations of housing starts of at least 600,000 in 2011 and continued growth of about 5% in repair and remodeling. In addition, S&P expects liquidity to remain adequate based upon availability under the company's $225 million ABL facility and its history of positive cash flow generation. A negative rating action could occur if spending tied to the residential construction markets falls below S&P's forecasted levels, which would negatively affect AMI's operating performance. Specifically, S&P could lower the rating if adjusted debt to EBITDA rose to above 6x on a sustained basis, or if liquidity under the proposed ABL facility were to fall below $50 million. This could occur if a renewed recession caused a contraction in repair and remodeling spending of 10% of more, or if the company pursued debt-financed acquisition or shareholder distributions. S&P would consider revising the outlook to positive if residential construction activity exceeded expectations on a sustained basis such that the company reduced leverage to below 5x. This could occur as a result of unexpected growth in housing starts to levels more in line with the annual average 1.5 million and repair and remodeling growth exceed S&P's expectations. AURASOUND INC: Net Losses Cue Going Concern Doubt ------------------------------------------------- AuraSound, Inc., filed on September 28, 2010, its annual report on Form 10-K for the fiscal year ended June 30, 2010. Kabani & Company, Inc., in Los Angeles, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that during the year ended June 30, 2010, the Company incurred net losses of $2.2 million, and had negative cash flow from operating activities of $202,383. The Company reported a net loss of $2.2 million on $7.5 million of revenue for fiscal 2010, compared with a net loss of $2.6 million on $1.6 million of revenue for fiscal 2009. As of June 30, 2010, the Company had a working capital deficit of $6.6 million compared to a deficit of $4.4 million as of June 30, 2009. On June 30, 2010, the Company had $129,939 in cash as compared to $321,455 in cash on June 30, 2009. As of September 28, 2010, the Company has sufficient cash to continue its operations for a period of about two months. The Company's balance sheet at June 30, 2010, showed $4.2 million in total assets, $10.7 million in total liabilities, and stockholders' deficit of $6.5 million. A full-text copy of the Form 10-K is available for free at: http://researcharchives.com/t/s?6bf1 About AuraSound, Inc. Santa Fe Springs, Calif.-based AuraSound, Inc. (OTC BB: ARUZ) -- http://www.aurasound.com/-- through its wholly-owned subsidiary, AuraSound, Inc. ("AuraSound"), a California corporation, develops, manufactures and markets premium audio products. Specifically, AuraSound has developed and is currently marketing undersized speakers that will deliver sound quality to devices such as laptops, flat-panel televisions and displays that the Company believes to be superior to the sound quality currently found in these devices. During the year ended June 30, 2010, the Company's operations in China were conducted through Well-Tech International Co., a Hong Kong company owned by Susanne Lee who is the Company's office administrator in Hong Kong. The Company's operations in Taiwan are conducted by AuraSound as a foreign corporation doing business in Taiwan. With its recent acquisition of ASI Audiotechnologies, which closed on July 31, 2010, the Company has an industry leading TV soundbar business, additional proprietary transducer technology, application specific amplifier designs, and award winning ID designs. AUTOTRADER.COM LLC: S&P Assigns 'BB+' Rating on $100 Mil. Loan -------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its issue-level ratings to Atlanta, Ga.-based AutoTrader.com LLC's $100 million incremental term loan A-2 due 2016. The term loan is rated 'BB+' (same as the corporate credit rating on the company). S&P also assigned the facility a recovery rating of '3', indicating S&P's expectation of meaningful (50% to 70%) recovery for lenders in the event of a payment default. S&P affirmed all other ratings, including the 'BB+' corporate credit rating were affirmed. The outlook is stable. The company plans to use the proceeds of the term loan A-2, $15 million of revolver borrowings, and new equity to fund the acquisition of vAuto Inc. The equity was provided by Cox Enterprises Inc. (BBB-/Positive/A-3) and Providence Equity Partners, which continue to maintain 68% and 25% respective ownership stakes. Pro forma for the transaction, total debt outstanding as of June 30, 2010, was $622 million. "The 'BB+' corporate credit rating reflects the intense competition of the online automotive classified market, AutoTrader.com's concentration of earnings from this market, and some cyclicality in the business," said Standard & Poor's credit analyst Hal Diamond. "Nevertheless, the company's leading market share, strong brand, and good discretionary cash flow generation support S&P's view that the company's business risk profile is fair." AutoTrader has an aggressive financial profile, in S&P's view because of the company's acquisitive growth strategy in the highly competitive online auto advertising industry with low barriers to entry. S&P is concerned about large debt-financed acquisitions and integration risk. AutoTrader.com is the world's largest automotive classifieds marketplace and consumer information Web site. The company competes with other online Web sites, as well as with traditional print and newspaper classified advertising. Although the company has benefited from advertising spending shifting from print to online platforms, traditional media still captures the majority of automotive advertising. AutoTrader generates roughly 80% of its revenues from auto dealers, largely from monthly subscriptions and advertising. The next largest source of revenue is national advertising from auto dealer groups and manufacturers, at 14% of revenues. The company has a diverse revenue stream, with no client accounting for more than 2% of revenues. The rating outlook is stable, reflecting S&P's expectation that AutoTrader.com will maintain adequate liquidity and compliance with covenants over the intermediate term. S&P could lower the rating if weaker operating performance causes the company's margin of compliance to fall below a 15% EBITDA cushion with no outlook for improvement on a sustained basis. Specifically, this could occur if competition or a resurgence of economic pressures cause revenue and EBITDA to decline, or if the company undertakes large debt financed acquisitions. S&P could also lower the rating on AutoTrader.com if the rating on parent company Cox is lowered. S&P views the prospect for raising the rating as remote. Although not currently anticipated, S&P could raise the rating if Cox reestablishes 100% ownership of the company. AUTOTRADER.COM LLC: S&P Assigns 'BB+' Rating on $100 Mil. Loan -------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its issue-level ratings to Atlanta, Ga.-based AutoTrader.com LLC's $100 million incremental term loan A-2 due 2016. The term loan is rated 'BB+' (same as the corporate credit rating on the company). S&P also assigned the facility a recovery rating of '3', indicating S&P's expectation of meaningful (50% to 70%) recovery for lenders in the event of a payment default. S&P affirmed all other ratings, including the 'BB+' corporate credit rating were affirmed. The outlook is stable. The company plans to use the proceeds of the term loan A-2, $15 million of revolver borrowings, and new equity to fund the acquisition of vAuto Inc. The equity was provided by Cox Enterprises Inc. (BBB-/Positive/A-3) and Providence Equity Partners, which continue to maintain 68% and 25% respective ownership stakes. Pro forma for the transaction, total debt outstanding as of June 30, 2010, was $622 million. "The 'BB+' corporate credit rating reflects the intense competition of the online automotive classified market, AutoTrader.com's concentration of earnings from this market, and some cyclicality in the business," said Standard & Poor's credit analyst Hal Diamond. "Nevertheless, the company's leading market share, strong brand, and good discretionary cash flow generation support S&P's view that the company's business risk profile is fair." AutoTrader has an aggressive financial profile, in S&P's view because of the company's acquisitive growth strategy in the highly competitive online auto advertising industry with low barriers to entry. S&P is concerned about large debt-financed acquisitions and integration risk. AutoTrader.com is the world's largest automotive classifieds marketplace and consumer information Web site. The company competes with other online Web sites, as well as with traditional print and newspaper classified advertising. Although the company has benefited from advertising spending shifting from print to online platforms, traditional media still captures the majority of automotive advertising. AutoTrader generates roughly 80% of its revenues from auto dealers, largely from monthly subscriptions and advertising. The next largest source of revenue is national advertising from auto dealer groups and manufacturers, at 14% of revenues. The company has a diverse revenue stream, with no client accounting for more than 2% of revenues. The rating outlook is stable, reflecting S&P's expectation that AutoTrader.com will maintain adequate liquidity and compliance with covenants over the intermediate term. S&P could lower the rating if weaker operating performance causes the company's margin of compliance to fall below a 15% EBITDA cushion with no outlook for improvement on a sustained basis. Specifically, this could occur if competition or a resurgence of economic pressures cause revenue and EBITDA to decline, or if the company undertakes large debt financed acquisitions. S&P could also lower the rating on AutoTrader.com if the rating on parent company Cox is lowered. S&P views the prospect for raising the rating as remote. Although not currently anticipated, S&P could raise the rating if Cox reestablishes 100% ownership of the company. AXCAN INTERMEDIATE: S&P Gives Negative Outlook, Keeps 'BB-' Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Montreal-based specialty pharmaceutical company Axcan Intermediate Holdings Inc. to negative from stable. At the same time, Standard & Poor's affirmed all of its ratings on Axcan, including its 'BB-' long-term corporate credit rating on the company. "The outlook revision reflects S&P's concern that the ongoing cease-distribution order from the Federal Drug Administration for Axcan's key ULTRASE and VIOKASE drugs could negatively affect the products' market share if and when they are re-approved for sale," said Standard & Poor's credit analyst Donald Marleau. The financial implications of the cease-distribution order have been muted by the diversity of the company's earnings streams, but S&P believes that a material and sustained decline in profitability from these drugs would result in weaker product diversity. Moreover, S&P is concerned about the cost and earnings pressure in 2011 associated with regaining lost market shares after existing patient-level stocks are depleted in late 2010. "The rating affirmation reflects S&P's view of the company's steady cash flow despite the sales disruption, which supports its strong liquidity," Mr. Marleau added. The ratings on Axcan reflect what Standard & Poor's sees as the company's weak business risk profile, characterized by the susceptibility of its products to competition and regulatory changes, although S&P believes these risks are contained by the niche position of these products in gastroenterology and the relative diversity of Axcan's portfolio. The company's aggressive financial risk profile is evidenced by a heavy debt burden that is supported by its fairly steady cash flow. Axcan specializes in the treatment of gastrointestinal diseases and disorders, including pancreatic enzyme deficiencies, cholestatic liver diseases, and inflammatory bowel disease. The negative outlook on Axcan stems from S&P's concern that the cease-distribution order for pancreatic enzyme products could damage the company's share of this growing market, while costs to regain its position could dampen profitability. Although S&P believes that a lengthy delay could contribute to a lower rating by impairing the strength and diversity of Axcan's cash flow streams, S&P's view is not predicated on a specific timeline for Federal Drug Administration approval. S&P believes that Axcan will continue to generate steady free cash flow and maintain strong liquidity as it invests in re-marketing its PEPs and maintains research and development expenditures for new products. Furthermore, S&P still expects that Axcan could use its excess cash flow to make tuck-in acquisitions that expand its drug portfolio, which S&P believes could strengthen the company's credit profile if it preserves adequate liquidity and ultimately contributes to lower leverage. More aggressive financial policies, such as by large dividend payments or recapitalization, could also threaten the current ratings. BABY FOX: Losses Prompt Going Concern Doubt ------------------------------------------- Baby Fox International, Inc., filed on September 28, 2010, its annual report on Form 10-K for the fiscal year ended June 30, 2010. Friedman LLP, in Marlton, N.J., expressed substantial doubt about the Company's ability as a going concern. The independent auditors noted of the Company's losses, negative cash flows from operations and working capital deficiency. The Company reported a net loss of $435,531 on $25.2 million of revenue for fiscal 2010, compared to a net loss of $4.5 million on $24.3 million of revenue for fiscal 2009. As of June 30, 2010, the Company had cash and cash equivalents of $180,476 and negative working capital of $6.5 million. The Company's balance sheet at June 30, 2010, showed $10.3 million in total assets, $17.3 million in total liabilities, and a stockholders' deficit of $7.0 million. A full-text copy of the Form 10-K is available for free at: http://researcharchives.com/t/s?6bee About Baby Fox International Shanghai Minhang District, P.R.C.-based Baby Fox International, Inc., is a Nevada corporation organized on August 13, 2007, by Hitoshi Yoshida, a Japanese citizen, as a listing vehicle to acquire Shanghai Baby Fox Fashion Co., Ltd. The Company is a growing specialty retailer, developer, and designer of fashionable, value-priced women's apparel and accessories. The Company's products are aimed to target women aged 18 to 40 in China. The Baby Fox brand was initially registered in Italy in May of 2003 and it is promoted as an international brand in China. BAKER & TAYLOR: S&P Raises Corporate Credit Rating to 'B' --------------------------------------------------------- Standard & Poor's Ratings Services said that it raised its corporate credit rating on Charlotte-based Baker & Taylor Acquisition Corp. to 'B' from 'B-'. The rating outlook is stable. The company distributes books, music, and video to the library, educational, and retail markets. At the same time, S&P raised its senior secured debt rating to 'CCC+' from 'CCC', the recovery rating remains a '6'; indicating its expectation of negligible (0-10%) recovery for note holders in the event of a payment default. "The upgrade on privately owned Baker & Taylor reflects its improving operating and financial performance over the past year, despite top-line pressures in both of its business segments because of the weak economic environment," said Standard & Poor's credit analyst Jayne Ross. S&P believes some of the trends in the retail segment have bottomed out and stabilized, although S&P does expect the library and education segment to remain under some pressure because of lowering funding, high unemployment, and a weak economy. The vulnerable business risk profile on Baker & Taylor reflect S&P's view of the company's susceptibility to small changes in costs given its low operating margins as a distributor, customer concentration, and its position in the book, music and video distribution industry, especially in the institutional book segment. BARRINGTON RUSSELL: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Barrington Anthony Russell aka Barrington A. Russell aka Barrington A. Russell, Sr. 4040 NW 47 Terr Ft. Lauderdale, FL 33319 Bankruptcy Case No.: 10-39641 Chapter 11 Petition Date: September 29, 2010 Court: United States Bankruptcy Court Southern District of Florida (Fort Lauderdale) Judge: Raymond B. Ray Debtor's Counsel: Zach B. Shelomith, Esq. LEIDERMAN SHELOMITH, P.A. 2699 Stirling Rd # C401 Ft Lauderdale, FL 33312 Tel: (954) 920-5355 Fax: (954) 920-5371 E-mail: zshelomith@lslawfirm.net Scheduled Assets: $357,032 Scheduled Debts: $2,093,119 A list of the Debtor's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/flsb10-39641.pdf BB LOGGING: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: BB Logging, LLC 118 Second Street Fitzgerald, GA 31750 Bankruptcy Case No.: 10-11698 Chapter 11 Petition Date: September 30, 2010 Court: United States Bankruptcy Court Middle District of Georgia (Albany) Judge: James D. Walker Jr. Debtor's Counsel: William O. Woodall, Esq. WOODALL AND WOODALL P.O. Box 3335 1003 Patterson Street Valdosta, GA 31604 Tel: (229) 247-1211 E-mail: will@orsonwoodall.com Scheduled Assets: $1,273,600 Scheduled Debts: $1,877,356 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/gamb10-11698.pdf The petition was signed by Brian Christopher Brown, CEO. BERRY PLASTICS: Dr. Rich to Replace Ira Boots as Pres. & CEO ------------------------------------------------------------ Berry Plastics Corporation, an Apollo Management, L.P. and Graham Partners portfolio company, said that Ira G. Boots has decided to retire as Chairman and CEO effective October 4, 2010. Replacing Ms. Boots as CEO will be Dr. Jonathan Rich, the President and CEO of Momentive Performance Materials. Ms. Boots plans to remain with Berry Plastics as a member of the Board of Directors and as a business consultant. Ms. Boots has been an employee of Berry and its predecessors since 1978 and has been CEO since 2001. During Ms. Boots' career with Berry he has been instrumental in growing the business from approximately $4 million in annual net sales in 1978 to more than $4 billion in annual net sales today. Additionally, Boots has been instrumental in developing the strategic direction of Berry through the successful acquisition of 30 companies. "Berry Plastics is a special company. Our customers, employees, communities, vendors and investors have created a rare business with proven success. I am grateful for the opportunity to be a small part of Berry's incredible journey. Meaning to my life has been enhanced by walking with God, my family and working alongside our 16,000 employees. Berry's continued success will be a result of their talents and efforts," stated Boots. Jon Rich joins Berry from Momentive Performance Materials where he was President, CEO and a member of the Board of Directors. Prior to Momentive, Jon held executive positions at Goodyear Tire and Rubber including President of Goodyear North American Tire and President of Goodyear Chemical. Jon began his career at General Electric in 1982 where he was employed for 20 years in a variety of R&D, operational and executive roles. Jon has a Bachelor of Science degree in Chemistry from Iowa State University, and a PhD in Chemistry from the University of Wisconsin. "I am very excited to join the world class team at Berry Plastics. Berry has grown tremendously under the leadership of Ira Boots, and I look forward to continuing that tradition into the future," stated Jon Rich. "We are extremely fortunate to have a successor of the caliber of Jon Rich to lead Berry going forward. Jon brings to Berry proven leadership talents and an outstanding track record of growth and innovation, all of which will position Berry for continued success. I also want to thank Ira for his over 30 years of service to Berry. Under Ira's stewardship, Berry has been transformed from a regional packaging business into one of the largest and most respected specialty packaging companies in the world," said Josh Harris, Managing Partner and co-founder of Apollo Management. Don Graham, founder of Graham Group and a Director of Berry Plastics said "We appreciate all that Ira has accomplished during his tenure at Berry and are pleased to have him continue to serve the business as member of the Board and a consultant. As we move into the next phase of Berry's evolution, we are highly confident that Jon Rich, along with the rest of the Berry management team and employees, will drive the business to new heights." About Berry Plastics Berry Plastics Corporation manufactures and markets plastic packaging products, plastic film products, specialty adhesives and coated products. At January 2, 2010 the Company had more than 80 production and manufacturing facilities, primarily located in the United States. Berry is a wholly-owned subsidiary of Berry Plastics Group, Inc. Berry Group is primarily owned by affiliates of Apollo Management, L.P. and Graham Partners. Berry, through its wholly owned subsidiaries operates five reporting segments: Rigid Open Top, Rigid Closed Top, Flexible Films, Tapes/Coatings and Specialty Films. The Company's customers are located principally throughout the United States, without significant concentration in any one region or with any one customer. On December 3, 2009, Berry Plastics obtained control of 100% of the capital stock of Pliant upon Pliant's emergence from reorganization pursuant to a proceeding under Chapter 11 for a purchase price of $602.7 million. Pliant is a leading manufacturer of value-added films and flexible packaging for food, personal care, medical, agricultural and industrial applications. The acquired business is primarily operated in Berry's Specialty Films reporting segment. * * * Berry Plastics has a 'B3' corporate family rating, with stable outlook, from Moody's Investors Service. Moody's said in April 2010 that Berry's B3 CFR reflects weakness in certain credit metrics, financial aggressiveness and acquisitiveness and a continued difficult operating and competitive environment especially in the flexible plastics and tapes segments. The rating also reflects the Company's exposure to more cyclical end markets, relatively weak contracts with customers and a high percentage of commodity products. BIOLASE TECHNOLOGY: Inks Distribution & Supple Deal with Schein --------------------------------------------------------------- Biolase Technology Inc. entered on September 23, 2010, into a Distribution and Supply Agreement with Henry Schein, Inc. The Agreement terminated that certain License and Distribution Agreement, dated as of August 8, 2006, by and between the Company and Henry Schein, as amended, which provided for, among other things, exclusive distribution rights for Henry Schein in North America. Under the Agreement, the Company granted Henry Schein certain non-exclusive distribution rights in North America, and in other international markets, with respect to the Company's dental laser systems, accessories, and related support and services. In addition, the Company granted Henry Schein exclusivity in selected international markets. The Agreement is effective as of August 30, 2010. Concurrent with the execution of the Agreement, Henry Schein placed an irrevocable $9 million open purchase order for the Company's products, together with certain advance payment amounts in respect of such products. In connection with the advance payment, the Company agreed to enter into an Amended and Restated Security Agreement, dated September 23, 2010 and with an effective date of August 30, 2010, which amended and restated that certain Security Agreement, dated February 16, 2010. The Security Agreement granted to Henry Schein a security interest in the Company's inventory and assets as security for advance payment amounts made under the Agreement and the Terminated Distribution Agreement, such security interest to be released by Henry Schein upon products delivered in respect of the purchase order set forth above. The Agreement has an initial term that ends on December 31, 2013, after which the Agreement will automatically renew for successive terms unless certain notice is provided by either party to the other, and Henry Schein's distribution rights in those territories other than North America shall terminate on December 31, 2012. As part of the Agreement, Henry Schein agreed to engage in a substantial marketing and promotional campaign with regard to the Company's iLase product line throughout North America. On September 23, 2010, the Company entered into a Waiver and Amendment No. 1 to Loan and Security Agreement, with MidCap Funding III, LLC and Silicon Valley Bank. In connection with the Waiver, the Lenders agreed to, among other things, waive certain covenants under that certain Loan and Security Agreement, dated as of May 27, 2010, by and between the Company and the Lenders, specifically with respect to the Company's non-compliance with certain minimum EBITDA financial covenants. The Waiver contains amendments and additional covenants regarding, among other things, loan amortization, loan prepayment without penalty for certain periods, equity raise covenants, supplemental financial reporting, supplemental cooperation with the Lenders, and additional disclosures and notices. In connection with the Waiver, the Company entered into an amendment to those certain existing warrants previously issued to the Lenders in connection with the Loan Agreement, which amendment contains a new per share exercise price of $0.84. About BIOLASE Technology Irvine, Calif.-based BIOLASE Technology, Inc. (NASDAQ: BLTI) -- http://www.biolase.com/-- is a dental laser company. The Company develops, manufactures and markets Waterlase technology and lasers and related products that advance the practice of dentistry and medicine. The Company's balance sheet at June 30, 2010, showed $20.3 million in total assets, $21.6 million in total liabilities, and a stockholders' deficit of $1.3 million. As reported in the Troubled Company Reporter on March 22, 2010, BDO Seidman, LLP, in Costa Mesa, Calif., expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted that the Company has suffered recurring losses from operations, has had declining revenues, has limited financial resources at December 31, 2009, and is substantially dependent upon its primary distributor for future purchases of the Company's products. BIORELIANCE CORP: S&P Affirms Corporate Credit Rating at 'B+' ------------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its ratings on Rockville, Md.-based BioReliance Corp., including the 'B+' corporate credit rating. S&P also revised the outlook on the company to stable from negative. At the same time, S&P lowered its senior secured rating on the company's second-lien term loan to 'B-' from 'B' and revised the recovery rating on the loan to '6' from '5'. The '6' recovery rating indicates expectations of negligible (0%-10%) recovery of principal in the event of payment default. "The ratings on BioReliance continue to reflect the company's position as a small player in the broader market for contract research services, the current uncertain demand for preclinical services, and the company's highly leveraged capital structure," said Standard & Poor's credit analyst Arthur Wong. Its leading position in its niche markets and the potential for continued operational improvements partly mitigate those risks. BioReliance is a contract research organization (CRO), focusing primarily on the preclinical space. It provides biologics safety testing services (about three-quarters of revenues), toxicology services, lab animal diagnostics, and contract viral manufacturing. The company derives over half its revenues from the U.S., with the remainder coming from Europe and Asia. As a CRO, BioReliance remains subject to risk stemming from contract cancellations, nonrenewals, and volatility. BORGER ENERGY: S&P Downgrades Rating on Senior Notes to 'B+' ------------------------------------------------------------ Standard & Poor's Ratings Services said it lowered its rating on Borger Energy/Borger Funding's $117 million ($89 million outstanding as of June 30, 2010) senior secured notes due Dec. 31, 2022 to 'B+' from 'BB-'. The recovery rating remains unchanged at '4', indicating that lenders can expect an average (30%-50%) recovery of principal in a default scenario. The outlook is stable. The project formed on May 6, 1997 to build, own, and operate a 230 megawatt gas-fired cogeneration facility near Borger, Texas. Commercial operations at the facility began on June 12, 1999. The project sells its energy output and electrical capacity to Southwestern Public Service Co., a subsidiary of Xcel Energy Inc., under the terms of a 25-year purchased-power agreement. The project also sells its steam output to ConocoPhillips under a 20-year steam sales and operating agreement. DCP Midstream L.P. (formerly Duke Energy Field Services LLC) supplies fuel under a 20-year gas supply agreement. At the 'B+' rating level, the stable outlook incorporates uncertainties surrounding the project's exposure to operational and financial risks, including the rotor refurbishment and steam offtake by ConocoPhillips. Under S&P's gas price scenario and using the project's current major maintenance funding assumptions, S&P think it likely that the DSCR will average about 1.01x over the next five years. S&P could lower the rating if plant performance deteriorates and/or the refinery's steam offtake by the refinery declines below 800,000 pounds per hour and the DSCR falls further. Moreover, if rotor refurbishment becomes certain then S&P could lower rating by multiple notches. Although less likely, S&P could raise the rating should gas prices rise and or the project revise with the independent engineer its major maintenance funding assumptions such that DSCR rises to about 1.2x on a sustained basis. Furthermore, such a rating increase would be contingent on greater clarity around the rotor replacement. BRADLEY STEPHENSON: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Joint Debtors: Bradley A. Stephenson Stacey L. Stephenson 1016 E. 700 N. Fortville, IN 46040 Bankruptcy Case No.: 10-14687 Chapter 11 Petition Date: September 29, 2010 Court: U.S. Bankruptcy Court Southern District of Indiana (Indianapolis) Judge: Anthony J. Metz, III Debtors' Counsel: Deborah Caruso, Esq. Meredith R. Thomas, Esq. DALE & EKE, P.C. 9100 Keystone Crossing, Suite 400 Indianapolis, IN 46240 Tel: (317) 844-7400 Fax: (317) 574-9426 E-mail: dcaruso@daleeke.com mthomas@daleeke.com Estimated Assets: Not Stated Estimated Debts: $1,000,001 to $10,000,000 A list of the Joint Debtors' 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/insb10-14687.pdf Debtor-affiliates that filed separate Chapter 11 petitions: Entity Case No. Petition Date ------ -------- ------------- B & T Farms 10-05327 04/14/10 Todd B. & Christina D. Stephenson 10-14702 09/29/10 BROOKE CORP: Court Orders Orr to Turn Over Documents ---------------------------------------------------- The trustee overseeing the liquidation of Brooke Corp. has won a court order requiring Leland Orr, a central figure in Brooke's operations, to produce documents and talk under oath about the scandal-ridden company and its affiliates, Bankruptcy Law360 reports. According to Law360, Judge Dale L. Somers of the U.S. Bankruptcy Court for the District of Kansas on Wednesday granted Chapter 7 trustee Albert A. Riederer's motion. About Brooke Corp. Headquartered in Kansas, Brooke Corp. (NASDAQ: BXXX) -- http://www.brookebanker.com/-- was an insurance agency and finance company. The Company owns 81% of Brooke Capital. The majority of the Company's stock was owned by Brooke Holding Inc., which, in turn was owned by the Orr Family. A creditor of the family, First United Bank of Chicago, foreclosed on the BHI stock. Brooke Corp. and its affiliate, Brooke Capital Corp. filed for Chapter 11 protection on October 28, 2008 (Bankr. D. Kan. Case No. 08-22786). Angela R. Markley, Esq., is the Debtors' in-house counsel. Richard A. Wieland, the U.S. Trustee for Region 20, appointed seven creditors to serve on an Official Committee of Unsecured Creditors for the Debtors' Chapter 11 cases. Albert A. Riederer was appointed Chapter 11 Trustee. Husch Blackwell Sanders LLP in Kansas City, Missouri, represents the Chapter 11 Trustee. The Debtors disclosed assets of $512,855,000 and debts of $447,382,000 as of the petition date. Bankruptcy Judge Dale Somers entered an order that converted the Chapter 11 bankruptcy cases of Brooke to cases under Chapter 7 of the Bankruptcy Code, effective as of June 19, 2009. Albert A. Riederer, the Chapter 11 Trustee, sought conversion of the Debtors' cases to Chapter 7. BROOKLANE ESTATES: Case Summary & 8 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Brooklane Estates, LLC 1136 Delaplain Road Georgetown, KY 40324 Bankruptcy Case No.: 10-53072 Chapter 11 Petition Date: September 28, 2010 Court: U.S. Bankruptcy Court Eastern District of Kentucky (Lexington) Judge: Tracey N. Wise Debtor's Counsel: Fred E. Fugazzi, Jr., Esq. 333 W. Vine Street, #1700 Lexington, KY 40507 Tel: (859) 252-2202 E-mail: bfugazzi@bowlesrice.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 A list of the Company's eight largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/kyeb10-53072.pdf The petition was signed by Mary Scarbrough, member. BURLINGTON TELECOM: CitiCapital Extends Forbearance to Oct. 29 -------------------------------------------------------------- The city of Burlington on Thursday said an agreement has been reached with CitiCapital to extend the period of forbearance -- set to expire September 30 -- to October 29, 2010, with respect to payments under the City's lease-purchase agreement with CitiCapital for Burlington Telecom. Negotiations between the City and CitiCapital are ongoing and will continue during the forbearance period. John Briggs, writing for The Burlington (Vt.) Free Press, reports that Burlington Telecom has been given an additional month to make its August 2010 debt payment of $707,000. The August bill was for interest and principal on BT's commercial debt. Free Press relates that Burlington Telecom owes $33.7 million to CitiCapital. That lease-purchase agreement was concluded in the summer of 2007 and consolidated an earlier lease-purchase debt to Koch Financial. Free Press says the $33.7 million was spent by late 2007, and the Kiss administration began using public money from the city's central checking account to pay for BT expenses. BT is unable to repay that $16.9 million from the city's cash pool and has acknowledged to state regulators that the failure to repay the public money violated taxpayer-safeguards in BT's 2005 state license. Free Press notes the city was unable to make two earlier interest payments this year to CitiCapital. Those bills, each of them $386,000, were taken from the reserve fund established as part of the lease-purchase agreement. That fund is now insufficient to meet the payment schedule. Another interest payment is due in November, Free Press adds. CANNON RANCH: Case Summary & 10 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Cannon Ranch, LLC 100 Pasadera Drive Monterey, CA 93940 Bankruptcy Case No.: 10-23503 Chapter 11 Petition Date: September 29, 2010 Court: U.S. Bankruptcy Court Middle District of Florida (Tampa) Debtor's Counsel: David S. Jennis, Esq. JENNIS & BOWEN, P.L. 400 N. Ashley Drive, Suite 2540 Tampa, FL 33602 Tel: (813) 229-1700 Fax: (813) 229-1707 E-mail: ecf@jennisbowen.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The petition was signed by Lee E. Newell, president of New Cities Land Company, Inc., manager and member. Debtor-affiliate filing separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- Professional Land Development, LLC 10-02569 02/05/10 Debtor's List of 10 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Oldcastle Precast, Inc. -- $308,445 P.O. Box 402721 Atlanta, GA 30384 Wilson Miller -- $250,000 P.O. Box 409756 Atlanta, GA 30384 Bricklemyer Smolker & Bolves -- $52,000 500 E. Kennedy Boulevard, Suite 200 Tampa, FL 33602 Johnson Pope Bokor Ruppel & Burns -- $14,250 Ferguson Waterworks -- $13,500 Farella Braun & Martel LLP -- $13,500 Heidt & Associates -- $11,434 The Solomon Law Group -- $11,100 Tetra Rouge Group -- $5,115 Stichter Riedel, et al -- $2,200 CAREY ACQUISITION: Moody's Assigns 'B3' Corporate Family Rating --------------------------------------------------------------- Moody's Investor Service assigned ratings to Carey Acquisition Corp., becoming Associated Materials, LLC, upon closing of the acquisition: Corporate Family Rating -- B3; Probability of Default Rating -- B3; and, senior secured notes -- B3. The outlook is stable. The purpose of the notes and other credit facilities is to fund the acquisition of Associated by affiliates of Hellman & Friedman LLC for an aggregate purchase price of approximately $1.3 billion including the refinancing of existing debt. In a related action, Moody's confirmed the ratings of AMH Holdings, LLC: Corporate Family Rating -- B3; Probability of Default Rating -- B3; and, senior unsecured notes due 2014 -- Caa2. Moody's also confirmed Associated Materials, LLC's existing second lien senior secured notes due 2016 at B1. The outlook for AMH Holdings, LLC, is stable. It is anticipated that upon closing of the acquisition, all existing debt of AMH Holdings, LLC, and Associated Materials, LLC, will be repaid or defeased, and that all existing ratings assigned to these two entities will be withdrawn. These rating actions conclude the review which Moody's initiated on September 8, 2010. These ratings/assessments were affected by this action: Associated Materials, LLC * Corporate Family Rating assigned B3; * Probability of Default Rating assigned B3; * Senior Secured Notes due 2017 at B3 (LGD4, 53%); and, * $200 million second lien senior secured notes due 2016 confirmed at B1 (LGD2, 24%). AMH Holdings, LLC: * Corporate Family Rating confirmed at B3; * Probability of Default Rating confirmed at B3; and, * $431 million senior subordinated notes due 2014 confirmed at Caa2 (LGD5, 79%). Ratings Rationale Associated's B3 Corporate Family Rating considers the company's exposure to cyclical end markets including new home construction and the repair and remodeling sector -- the main drivers of the company's revenues. Associated is also exposed to volatile raw material costs for commodities such as vinyl resin, aluminum, steel and glass. The credit is supported by Associated's position as one of the larger manufacturers and distributors of windows and vinyl siding in North America. Additionally, Associated's cost reduction actions appear to be resulting in improved operating efficiencies. These efficiencies have improved operating margins. Associated's EBITA margin was 12.9% for 2Q10 versus 11.5% for 2Q09 (Moody's adjusted), exhibiting the company's greatest credit strength. The proposed acquisition will increase overall debt by approximately $160 million on a pro forma basis, partially offsetting the benefit recent operating improvements have had on the company's financial metrics. With adjusted debt increasing at closing, credit metrics will deteriorate modestly due to higher debt service requirements. On a pro-forma basis for last twelve months through July 3, 2010, Associated's credit metrics will show some deterioration: debt-to-EBITDA will increase to about 6.3 times from 5.4 times and free cash flow-to-debt will contract to about 4.4% from 5.1% (all ratios adjusted per Moody's methodology). Interest coverage will likely remain about 1.4 times on a pro forma basis since some high coupon debt is being refinanced with debt projected to have lower interest rates. Moody's views the pro forma financial metrics of Associated Materials, LLC following the acquisition as being consistent with the maintenance of a B3 Corporate Family Rating. The stable outlook reflects Moody's expectations that Associated's improving credit metrics and good liquidity profile should provide the company with financial flexibility to contend with uncertainties in its end markets and volatile commodity costs. For an improvement in ratings Associated needs to demonstrate that it has permanently improved its cost structure, resulting in stronger performance. Operating performance that results in EBITA-to-interest expense trending towards 2.5 times or debt-to- EBITDA sustained below 5.0 times (all ratios adjusted per Moody's methodology) could result in a rating upgrade. Factors which might result in a downgrade in the ratings include deterioration in the company's liquidity profile or erosion in operating performance, resulting in EBITA-to-interest expense trending towards 1.0 times or debt-to-EBITDA near 6.0 times (all ratios adjusted per Moody's methodology). The last rating action was on September 1, 2010, at which time Moody's upgraded AMH Holdings, LLC's Corporate Family Rating to B3 from Caa1. Associated Materials, LLC, headquartered in Cuyahoga Falls, Ohio, is a North American manufacturer and distributor of exterior residential building products. The company's core products are vinyl windows, vinyl siding, aluminum trim coil, and aluminum and steel siding and accessories. Revenues for the last twelve months through July 3, 2010, totaled $1.1 billion. CASCADE BANCORP: Inks Securities Purchase Deal with Investors ------------------------------------------------------------- Cascade Bancorp has entered into an agreement with each of David F. Bolger and an affiliate of Lightyear Fund II, L.P., amending the Securities Purchase Agreements between the Company and Mr. Bolger and the Company and Lightyear dated October 29, 2009, as amended February 16, 2010, June 1, 2010, June 30, 2010, July 15, 2010, July 30, 2010, August 31, 2010 and September 15, 2010, to extend their conditional commitments to October 29, 2010. Per the new agreement, the extended date by which conditions of closing must be satisfied is now October 29, 2010. The sales to Mr. Bolger and to Lightyear are conditioned upon the Company's simultaneous sale of shares of its common stock in additional private placements to other investors under separate written agreements such that the total net proceeds from the offerings is at least $150 million, in addition to the other closing conditions set forth in each of the Securities Purchase Agreements. About Cascade Bancorp Bend, Ore.-based Cascade Bancorp (Nasdaq: CACB) through its wholly-owned subsidiary, Bank of the Cascades, offers full-service community banking through 32 branches in Central Oregon, Southern Oregon, Portland/Salem Oregon and Boise/Treasure Valley Idaho. Cascade Bancorp has no significant assets or operations other than the Bank. Weiss Ratings has assigned its E- rating to Bend, Ore.-based Bank of The Cascades. The rating company says that the institution currently demonstrates what it considers to be significant weaknesses and has also failed some of the basic tests it uses to identify fiscal stability. "Even in a favorable economic environment," Weiss says, "it is our opinion that depositors or creditors could incur significant risks." As of March 31, 2010, the institution's balance sheet showed $2,083,883,000 in assets. CDW CORP: S&P Changes Outlook to Positive, Affirms 'B-' Rating -------------------------------------------------------------- Standard & Poor's Ratings Services said it revised its outlook on Vernon Hills, Ill.-based CDW Corp. to positive from stable. In addition, S&P affirmed all its ratings on the company, including its 'B-' corporate credit rating. "The ratings on CDW reflect S&P's expectation that an improved North American IT spending environment and consistent profitability will lead to a strengthening of its currently very leveraged financial profile in the near term," said Standard & Poor's credit analyst Martha Toll-Reed, "despite highly competitive industry conditions and lingering economic uncertainty." CDW is the leading value-added-reseller of IT products and services to business, government, and education customers in the U.S. and Canada. It reaches its existing and prospective customers through catalogs, direct mail, outbound telemarketing, Web sites and Web advertising, and a direct sales force. CDW's "weak" business profile reflects the company's good position in the highly fragmented value-added reseller market for technology products and services, narrow geographic presence, and relatively low-margin characteristics. CENGAGE LEARNING: Moody's Gives Positive Outlook, Keeps B3 Rating ----------------------------------------------------------------- Moody's Investors Service changed Cengage Learning Acquisitions, Inc.'s rating outlook to positive from stable and upgraded the company's speculative-grade liquidity rating to SGL-2 from SGL-3. The change to a positive rating outlook reflects Moody's view that projected earnings growth and debt reduction will continue to reduce leverage from the very high levels that resulted from the July 2007 leveraged buyout by Apax Partners and OMERS Capital Partners. Cengage's B3 Corporate Family Rating, B3 Probability of Default Rating and debt instrument ratings are not affected. Upgrades: Issuer: Cengage Learning Acquisitions, Inc. -- Speculative Grade Liquidity Rating, Upgraded to SGL-2 from SGL-3 Outlook Actions: Issuer: Cengage Learning Acquisitions, Inc. -- Outlook, Changed To Positive From Stable Cengage's debt-to-EBITDA leverage of approximately 8.8x (FY 6/30/10 incorporating Moody's standard adjustments, cash pre- publication costs as an expense, and a shift in revenue from changes in customer ordering patterns) declined from 12.3x over the last two years. Moody's anticipates scheduled debt repayments, revenue growth and relatively stable margins will lower debt-to-EBITDA to an 8x or lower range over the next 12-24 months, which if sustainable could position the company for an upgrade. Cengage is benefiting from strong counter-cyclical higher education enrollment growth to deliver stable organic revenue performance throughout the economic downturn and weak recovery despite pressure on the more cyclical business lines that are dependent on state/local government budgets (library reference, K-12 school) and corporate spending, as well as declines in legacy print reference products. Moody's anticipates enrollment growth will moderate but remain positive over the next few years as the unemployment rate begins to decline. This along with modest price increases should sustain low to mid-single digit revenue growth. Cost reductions and operating leverage improved margins significantly and contributed to strong EBITDA since the LBO. Moody's anticipates margins will be relatively flat over the next few years as the company will likely ramp up investments in new products. Moody's believes Cengage's free cash flow and the unused revolver capacity will be sufficient to meet projected debt service through 2013 (including the July 2012 AHYDO-related redemption), but significant refinancing risk exists as the vast majority of the company's debt matures in July 2014 and July 2015. Moody's believes the liquidity position creates low near-term default risk, and provides flexibility for Cengage to execute its operating plans. However, Moody's views continued leverage reduction and free cash flow growth as necessary to successfully manage the refinancing risk. Moody's would need to view Cengage's ability to refinance its 2014/2015 maturities as manageable in order for the company to be upgraded. The upgrade of Cengage's speculative-grade liquidity rating to SGL-2 from SGL-3 reflects the improvement in free cash flow generation driven largely by the aforementioned EBITDA growth. Moody's now projects that Cengage can comfortably meet required annual debt service through internally generated cash flow, thereby reducting reliance on the revolver. There is sufficient capacity on the $300 million revolver (expiring in July 2013; seasonal $66 million draw and $6 million of LCs as of June 30, 2010) to cover seasonal borrowing needs, moderately sized acquisitions and additional funding should cash flow be weaker than expected. Moody's anticipates Cengage will maintain a sizable cushion within its 7.75x maximum senior secured leverage covenant, which is the lone financial maintenance covenant. The last rating action was on September 23, 2009, when Moody's lowered Cengage Learning's senior secured credit facility rating to B2 from B1. Cengage's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of Cengage's core industry and Cengage's ratings are believed to be comparable to those of other issuers of similar credit risk. Cengage, headquartered in Stamford, CT is a provider of learning products to colleges, universities, professors, students, libraries, reference centers, government agencies, corporations and professionals. Cengage publishes college textbooks and reference materials, and supplements its print publications with software tools and training/assessment applications. Annual revenue is approximately $2.0 billion. CHATEAU DE VILLE: Files for Chapter 11 in Seattle ------------------------------------------------- Chateau de Ville LLC filed for Chapter 11 protection on September 30, 2010 (Bankr. W.D. Wash. Case No. 10-21648). Larry B. Feinstein, Esq., at Vortman & Feinstein , in Seattle, Washington, serves as counsel to the Debtor. Chateau de Ville is the owner of 47 condominium units in Renton, Washington. The project owner contends the units are worth $12 million, while secured and unsecured debt totals $10.1 million. The Debtor was facing a suit by the lender on the debt. The bankruptcy filing automatically stayed the suit. CHEM RX: Unsecured Creditors Object to Exclusivity Extension ------------------------------------------------------------ Unsecured creditors are objecting to Chem RX Corp.'s request for an extension of its exclusive period to propose a Chapter 11 plan. Dow Jones' DBR Small Cap reports that counsel to the official committee of unsecured creditors said in court papers that the Company doesn't deserve more time to file a bankruptcy-exit plan because the company is trying to sell its assets instead of reorganize. "Once such a sale is approved by the court, there is no complexity to these cases which necessitates" more time to file a plan, the creditors committee said, according to Dow Jones. As a result, the unsecured creditors committee -- which would like the opportunity to file its own plan for the company -- urged the court overseeing Chem RX's bankruptcy case not to extend the company's exclusive right to file a bankruptcy-exit plan without the threat of creditors filing a rival strategy, the report adds. A hearing on the requested exclusivity extension is scheduled today, October 4 at 11:30 a.m. Objections, if any, are due September 21 at 4:00 p.m. The Debtors are seeking an extension of the their exclusive periods to file and solicit acceptances for the proposed Chapter 11 Plan until December 7, 2010, and February 6, 2011, respectively. The Debtors explained in the Exclusivity Extension Motion that they need additional time to complete the process to identify the stalking horse bidder and file a motion to approve bid procedures and a stalking horse asset purchase agreement for the sale of substantially all their assets. The Debtors are also in the process of developing proposals to discuss with the First Lien Lenders and the Official Committee of Unsecured Creditors for the resolution of these cases post sale. Sale Process As reported in the Troubled Company Reporter on September 30, 2010, Chem Rx Corp. has filed a motion seeking approval of a sale process to sell its assets to PharMerica Corp. for $70.6 million plus the assumption of specified liabilities, absent higher and better bids for the assets. The bankruptcy judge scheduled a hearing for Oct. 4 to rule on proposed auction and sale procedures. If adopted by the judge, competing bids would be due initially by Oct. 25, followed by an auction on Oct. 27. A hearing to approve the sale would take place around Oct. 28. Prior to selecting PharMerica as stalking horse bidder, Chem RX signed 65 prospective buyers to confidentiality agreements. PharMerica operates 90 institutional pharmacies in 41 states. About Chem RX Corporation Long Beach, N.Y.-based Chem RX Corporation, aka Paramount Acquisition Corp. -- http://www.chemrx.net/-- is a major institutional pharmacy serving the New York City metropolitan area, as well as parts of New Jersey, upstate New York, Pennsylvania and Florida. Chem Rx's client base includes skilled nursing facilities and a wide range of other long-term care facilities. Chem Rx annually provides more than six million prescriptions to more than 69,000 residents of more than 400 institutional facilities. The Company and five affiliates sought Chapter 11 protection (Bankr. D. Del. Case No. 10-11567) on May 11, 2010. Dennis A. Meloro, Esq., and Scott D. Cousins, Esq., at Greenberg Traurig, LLP, represents the Company in its restructuring. Cypress Holdings, LLC, is the Company's financial advisor. RSR Consulting, LLC, is the Company's chief restructuring officer. Brunswick Group LLP is the Company's public relations consultant. Grant Thornton LLP is the Company's independent auditor. Lazard Middle Market LLC is the Company's investment banker. Eichen & Dimeglio PC is the Company's tax advisor. Kurtzman Carson Consultants is the Company's claims and notice agent. The Company disclosed $169,690,868 in assets and $178,281,128 in debts as of February 28, 2010. CJ'S HOME: Case Summary & 12 Largest Unsecured Creditors -------------------------------------------------------- Debtor: CJ's Home Care, Inc. aka CJ's Abundant Care 523 W. Plum Street Chesterfield, IN 46017 Bankruptcy Case No.: 10-14728 Chapter 11 Petition Date: September 29, 2010 Court: U.S. Bankruptcy Court Southern District of Indiana (Indianapolis) Judge: James K. Coachys Debtor's Counsel: Eric C. Redman, Esq. REDMAN LUDWIG PC 151 N. Delaware Street, Suite 1106 Indianapolis, IN 46204 Tel: (317) 685-2426 E-mail: ksmith@redmanludwig.com Scheduled Assets: $214,221 Scheduled Debts: $1,079,995 A list of the Company's 12 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/insb10-14728.pdf The petition was signed by Jayleen Roberts, president. COLOWYO COAL: S&P Affirms 'BB-' Rating on $92.8 Mil. Bonds ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' rating on Colowyo Coal Funding Corp.'s $92.8 million 9.56% amortizing bonds due Nov. 15, 2011 (about $17 million outstanding) and $100 million 10.19% amortizing bonds due Nov. 15, 2016 ($100 million outstanding). The outlook is negative. CONCORD CAMERA: Board Approves Liquidation Distribution of Shares ----------------------------------------------------------------- Concord Camera Corp.'s board of directors approved on September 28, 2010, a liquidating distribution of $0.40 per share to the shareholders of record at the close of business on May 11, 2009, in accordance with the previously announced Plan of Dissolution and Liquidation. In accordance with the Plan of Liquidation, the Company's stock transfer books were closed at the close of business on May 11, 2009 and no transfers of its common stock were recorded after that time. The Company currently anticipates that payment of the liquidating distribution will be made in October 2010 and shareholders of record on the Record Date will receive a communication from the Company's stock transfer agent in October 2010 regarding the distribution. The timing and amounts of any future distributions, if any, will be determined by the Company's Board of Directors in accordance with the Plan of Liquidation. There can be no assurance that there will be any future distributions. On April 29, 2010, the Company entered into a Purchase and Release Agreement with Citigroup Global Markets, Inc., pursuant to which Citigroup purchased all of the Company's remaining auction rate securities, having an aggregate par value of $18,950,000, for $16,202,228 and the Company retained the option to repurchase, on or before October 28, 2012, any or all of the issues of auction rate securities purchased by Citigroup under the Purchase Agreement at the purchase price paid by Citigroup for such securities. In June of 2010, the Company exercised its option under the Purchase Agreement to repurchase auction rate securities, having an aggregate par value of $8,350,000, for $7,091,222 from Citigroup and the Company then resold those securities to third parties realizing a net gain of $493,028. Under the Purchase Agreement, the Company continues to hold the option to repurchase any or all of the issues of the remaining auction rate securities sold to Citigroup, having an aggregate par value of $10,600,000 and an aggregate purchase price of $9,111,006, until October 28, 2012. About Concord Camera Headquartered in Hollywood, Florida, Concord Camera Corp. (NASDAQ:LENS) -- http://www.concord-camera.com/-- through its subsidiaries, provides easy-to-use 35mm single-use and traditional film cameras. Concord markets and sells its cameras on a private- label basis and under the POLAROID and POLAROID FUNSHOOTER brands through in-house sales and marketing personnel and independent sales representatives. The POLAROID trademark is owned by Polaroid Corporation and is used by Concord under license from Polaroid. DELPHI FINANCIAL: S&P Gives Stable Outlook, Affirms 'BB+' Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services said it revised its outlook on Delphi Financial Group Inc. and its insurance operating subsidiaries, Reliance Standard Life Insurance Co. and First Reliance Standard Life Insurance Co., and Safety National Casualty Corp., to stable from negative. At the same time, S&P affirmed its 'BBB' counterparty credit rating and 'BB+' junior subordinated debt rating on DFG and S&P's 'A' counterparty credit and financial strength ratings on RSL and SNCC. "The counterparty credit rating on DFG and the insurer financial strength ratings on its subsidiaries reflect the group's consistently strong operating performance and strong competitive positions within its chosen niches," said Standard & Poor's credit analyst Ferris Joanis. The group's modest scope of market niches, which limits the potential for profitable growth, and an investment risk tolerance that is aggressive relative to peers' somewhat offset these factors. The revised outlook reflects the company's reduced level of exposure to higher-risk investments, particularly the alternative asset classes, and an increased level of capitalization at RSL. As of March 31, 2010, Delphi's alternative asset holdings represented only about 4.6% of the company's investment portfolio, compared with a historical average of about 10%. Strong operating results in conjunction with capital relief related to its asset reallocations during 2009 and the first half of 2010 has helped return RSL's capitalization to an 'A' level redundancy as measured by Standard & Poor's capital model. S&P does note that, although management has reduced the overall risk level of the company's investment portfolio, the credit risks level of RSL's bond portfolio continues to be high relative to peers. For example, as of March 31, 2010, the proportion of RSL's fixed-maturity investments in speculative-grade instruments was 15%, compared with industry averages that are typically below 10%. The stable outlook on the ratings of Delphi and its insurance subsidiaries reflects S&P's expectation that the group will maintain its overall strong competitive composition in its chosen niche businesses and continue to generate strong operating results. Capital is expected to remain redundant at the 'A' level or higher over the next two years. S&P expects Delphi's financial leverage to remain less than 35%, and generally accepted accounting principles and statutory coverage should remain higher than 5x and 2x, respectively. S&P would likely lower the ratings if earnings and capitalization fall below S&P's expectations. S&P does not foresee any positive movement in the ratings over the next two years. DISTANCE LEARNING: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Distance Learning Systems Indiana, Inc. 107 North State Road 135, Suite 302 Greenwood, IN 46142 Bankruptcy Case No.: 10-14617 Chapter 11 Petition Date: September 28, 2010 Court: U.S. Bankruptcy Court Southern District of Indiana (Indianapolis) Judge: James K. Coachys Debtor's Counsel: Gary Lynn Hostetler, Esq. HOSTETLER & KOWALIK, P.C. 101 W. Ohio Street, Suite 2100 Indianapolis, IN 46204 Tel: (317) 262-1001 Fax: (317) 262-1010 E-mail: glh@hostetler-kowalik.com Scheduled Assets: $2,175,511 Scheduled Debts: $3,882,125 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/insb10-14617.pdf The petition was signed by Derrick K. Christy, CFO. DR. RICHARD WOLFSON: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: Dr. Richard Craig Wolfson 4929 E. Villa Rita Drive Scottsdale, AZ 85254 Tel: (602) 493-2326 Bankruptcy Case No.: 10-31440 Chapter 11 Petition Date: September 29, 2010 Court: U.S. Bankruptcy Court District of Arizona (Phoenix) Judge: Randolph J. Haines Debtor's Counsel: Tracy S. Essig, Esq. LAW OFFICE OF TRACY S. ESSIG 3509 E. Shea Boulevard, Suite 117 Phoenix, AZ 85028 Tel: (602) 493-2326 Fax: (602) 482-3164 E-mail: tracyessiglaw@cox.net Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of creditors together with its petition. Debtor-affiliate that filed separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- Nick Lees -- -- DRYSHIPS INC: Unit Gets American Exploration Company Award ---------------------------------------------------------- DryShips Inc. said that its fully-owned subsidiary Ocean Rig UDW Inc. has received a Letter of Award from an American exploration company for a four well contract for exploration drilling offshore West Africa for a period of about 300 days, commencing in the first or second quarter of 2011. The contract value is approximately USD 135 million. The contract is subject to final documentation. Mr. George Economou, Chairman and CEO of DryShips Inc. and interim CEO of Ocean Rig UDW Inc., said: "We are pleased to secure employment for one of our first two drillships that will be delivered from Samsung during the first quarter 2011. This will serve as a catalyst to securing bank financing on preferred terms. We continue to see strong interest for our state of the art sixth generation drillships operated by our experienced ultra-deepwater operator Ocean Rig." About DryShips Inc. Based in Greece, DryShips Inc. -- http://www.dryships.com/-- -- is an owner and operator of drybulk carriers and offshore oil deep water drilling units that operate worldwide. As of September 10, 2010, DryShips owns a fleet of 40 drybulk carriers (including newbuildings), comprising 7 Capesize, 31 Panamax and 2 Supramax, with a combined deadweight tonnage of over 3.6 million tons and 6 offshore oil deep water drilling units, comprising of 2 ultra deep water semisubmersible drilling rigs and 4 ultra deep water newbuilding drillships. DryShips's common stock is listed on the NASDAQ Global Select Market where it trades under the symbol "DRYS". As reported in the Troubled Company Reporter on Sept. 29, 2010, the Company said it is currently in negotiations with its lenders to obtain waivers, waiver extensions or to restructure its debt. Management expects that the lenders will not demand payment of the loans before their maturity, provided that the Company pays loan installments and accumulated or accrued interest as they fall due under the existing credit facilities. Management plans to settle the loan interest and scheduled loan repayments with cash generated from operations. As of June 30, 2010, the Company's theoretical exposure (current portion of long-term debt less cash and cash equivalents less restricted cash) amounted to $761.4 million. The Company's balance sheet as of June 30, 2010, showed $5.983 billion in total assets, $3.101 billion in total liabilities, and stockholders equity of $2.882 billion. ELAN CORP: S&P Affirms Corporate Credit Rating at 'B' ----------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed its 'B' corporate credit rating and its 'B' issue-level rating on Ireland- based Elan Corp. PLC. At the same time, S&P revised its rating outlook to stable from positive. "The outlook revision reflects financial underperformance relative to S&P's expectations when S&P revised the outlook to positive in September 2009," said Standard & Poor's credit analyst Michael Berrien, "including delayed free operating cash flow generation and slower-than-anticipated growth in the company's main product, Tysabri." The outlook revision also reflects governance-related issues following the departure of three members of the board of directors over the past six months, during periods of business challenges. ELAINE WISBY: Case Summary & 8 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Elaine J. Wisby Revocable Living Trust 1136 Delaplain Road Georgetown, KY 40324 Bankruptcy Case No.: 10-53073 Chapter 11 Petition Date: September 28, 2010 Court: U.S. Bankruptcy Court Eastern District of Kentucky (Lexington) Judge: Tracey N. Wise Debtor's Counsel: Fred E. Fugazzi, Jr., Esq. 333 W. Vine Street, #1700 Lexington, KY 40507 Tel: (859) 252-2202 E-mail: bfugazzi@bowlesrice.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 A list of the Debtor's eight largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/kyeb10-53073.pdf The petition was signed by Mary Scarbrough, trustee. EMMIS COMMS: Alden Media to Terminate Securities & Purchase Deal ---------------------------------------------------------------- Emmis Communications Corporation, JS Acquisition LLC, and JS Acquisition Inc. entered on May 25, 2010, into an Agreement and Plan of Merger, pursuant to which, upon the successful completion of JS Acquisition's offer to purchase all of the outstanding shares of Class A Common Stock, par value $0.01 per share, of Emmis, JS Acquisition would merge with and into Emmis. Among the conditions to the Merger Agreement was that JS Acquisition have purchased Class A Shares pursuant to the Offer and among the conditions to the Offer was that certain amendments to the terms of the 6.25% Series A Preferred Stock, $0.01 par value, of Emmis obtained the required vote at a special meeting of Emmis shareholders prior to the expiration of the Offer. On September 9, 2010, the special meeting of Emmis shareholders was held at 8:30 am, local time, at One Emmis Plaza, 40 Monument Circle, Indianapolis, Indiana 46204, and the required vote of Emmis shareholders was not obtained. Accordingly, the required vote was not obtained prior to the expiration of the Offer, and as a result, since the condition was not satisfied, the Offer was terminated. No Class A Shares were accepted for payment, and the depositary for the Class A Shares was instructed to return all Class A Shares tendered into the Offer to the tendering shareholders, without any action required on the part of the shareholders. On September 27, 2010, Alden Media Holdings, LLC delivered a notice to JS Parent pursuant to Section 8.1(c) of the Securities Purchase Agreement, dated May 24, 2010, by and among Alden Global Distressed Opportunities Master Fund, L.P., Alden Global Value Recovery Master Fund, L.P., Alden Media Holdings, LLC, JS Parent and Mr. Smulyan, electing to terminate the Securities Purchase Agreement because the conditions to the Offer were not satisfied or waived as of the close of business on September 24, 2010. As a result, on the same day, the Rollover Agreement, dated May 24, 2010, by and among JS Parent and the Rolling Shareholders, was automatically terminated pursuant to Section 5.3 thereof. Pursuant to Section 10.01(b)(i) of the Merger Agreement, the Merger Agreement may be terminated and the Offer and the Merger may be abandoned at any time by JS Parent prior to the effective time of the Merger if the date on which the Class A Shares are first accepted for payment shall not have occurred on or before September 24, 2010. A full-text copy of the Letter of Termination is available for free at http://ResearchArchives.com/t/s?6bfd About Emmis Headquartered in Indianapolis, Indiana, Emmis Communications Corporation -- http://www.emmis.com/-- owns and operates radio stations and magazine publications in the U.S. and in Europe. At February 28, 2010, the Company had $498,168,000 in total assets; $487,246,000 in total liabilities and $140,459,000 in Series A Cumulative Convertible Preferred Stock; and a shareholders' deficit of $178,959,000. At February 28, 2010, the Company had non-controlling interests of $49,422,000 and total deficit of $129,537,000. As of April 15, 2010, the Company had not paid the Preferred Stock dividend for six consecutive quarterly periods. * * * In April 2009, Moody's cut its corporate family rating on the Company to 'Caa2'. In May 2009, S&P raised its corporate credit rating on the Company to 'CCC+'. In June, S&P withdrew the 'CCC+' Corp. Credit Rating at the Company's request. ENCORIUM GROUP: Extends Expiration of Pending Rights Offering ------------------------------------------------------------- Encorium Group, Inc. has extended the expiration date for its pending rights offering from September 30, 2010 to October 15, 2010. The subscription rights may now be exercised at any time prior to 5:00 p.m. ET on Friday, October 15, 2010. As of September 30, 2010 Encorium stockholders have exercised rights to purchase Common Stock of the Company for an aggregate subscription price of approximately $2,898,240, consisting of the exercise of basic rights to purchase Common Stock of the Company for an aggregate subscription price of approximately $1,621,144.00 and the exercise of oversubscription rights to purchase Common Stock of the Company for an aggregate subscription price of approximately $1,277,096. As previously announced, included in the subscription is the exercise of approximately $1,776,250 of subscription rights by Ilari Koskelo for which Mr. Koskelo and the Company have agreed to cancel the promissory notes outstanding in favor of Mr. Koskelo, in lieu of cash consideration. Encorium's Chief Executive Officer, Dr. Kai Lindevall, said, "I am pleased at the participation in this rights offering. By extending the offering, we are giving Encorium's stockholders a further opportunity to subscribe and support the future growth of the Company and its efforts to meet the stockholders' equity requirements to remain listed on Nasdaq." About the Rights Offering Under the rights offering, each stockholder of record as of August 11, 2010 has received, at no charge, one non-transferable subscription right for each share of the Company's common stock owned on August 11, 2010. In addition, a holder one of the Company's warrants had received rights on a substantially similar basis. Each right entitles the holder to purchase one share of the Company's common stock at the subscription price of $1.75 per share, which is referred to as the basic subscription right. If a holder fully exercises all of its basic subscription rights, and other holders do not fully exercise their basic subscription rights, such holder will be entitled to exercise an oversubscription privilege to purchase a portion of the unsubscribed shares at the same price of $1.75 per share, subject to proration and subject, further, to reduction under certain circumstances. Assuming full participation in the rights offering, Encorium estimates that the net proceeds from the offering would be approximately $5.9 million, which includes the conversion of the promissory notes. Encorium intends to use the proceeds to repay outstanding indebtedness and to support working capital. Rights offering materials, including a Prospectus and other items necessary to exercise the rights, were mailed on or about August 25, 2010 to eligible stockholders. The Prospectus contains important information about the rights offering, and stockholders are urged to read the Prospectus carefully. Any questions about the rights offering may be directed to Alliance Advisors, LLC, our information agent for the rights offering, at 866-458-9858. NASDAQ Listing The Company is currently listed on The NASDAQ Capital Market. On August 25, 2009, the Company received a letter from The NASDAQ Stock Market notifying the Company that, based on its Form 10-Q for the period ended June 30, 2009, the Company's stockholders' equity did not comply with the minimum $2.5 million stockholders' equity requirement for continued listing on The NASDAQ Capital Market. As provided in the NASDAQ Marketplace Rules, the Company submitted to NASDAQ a plan and timeline to achieve and sustain compliance. NASDAQ granted the Company an extension until December 8, 2009 to comply and notified Company that, if at the time of its periodic report for the year ending December 31, 2009, the Company did not evidence compliance; the Company's common stock may be subject to delisting. As of December 31, 2009 the stockholders' equity of the Company was $2.3 million, which failed to meet the $2.5 million minimum stockholders equity requirement. The Company received a delisting action on April 22, 2010 from the NASDAQ Stock Market notifying the Company of its failure to comply with the requirement. In accordance with the terms of the Market Place Rules, the Company requested a hearing before the NASDAQ Listing Qualifications Panel. The Company met with the NASDAQ Listing Qualifications Panel on June 10, 2010 and presented its plan of compliance which was substantially based on its acquisition of Progenitor and the successful completion of the rights offering pursuant to this Prospectus. On July 9, 2010 the Listing Qualifications Panel granted the Company's request for continued listing, subject to certain conditions, including that on or before October 19, 2010, the Company must disclose the closing of the rights offering and the resulting stockholders' equity which must be at least $2.5 million and provided that the Company is able to demonstrate compliance with all other requirements for continued listing on The Nasdaq Capital Market. If the rights offering is not fully subscribed, the Company may not be able to meet the $2.5 million stockholders equity requirement and the Company's stock will be delisted from the Nasdaq Capital Market. In the event the Company's stock is ultimately delisted, the Company anticipates that its common stock would be eligible to trade on the OTC Bulletin Board or in the "Pink Sheets." However, securities may become eligible for such trading only if a market maker makes application to register and quote the security in accordance with SEC Rule 15c2-11, and such application is cleared. Only a market maker may file such application. About Encorium Group Wayne, Pa.-based Encorium Group, Inc. (Nasdaq: ENCO) is a clinical research organization that engages in the design and management of complex clinical trials for the pharmaceutical and biotechnology industries. * * * As reported in the Troubled Company Reporter on April 23, 2010, Deloitte and Touche, LLP, in Philadelphia, Pa., expressed substantial doubt about the Company's ability to continue as a going concern in its report on the Company's 2009 financial statements. The independent auditors noted that of the Company's recurring losses from operations, current available cash, and anticipated level of capital requirements. ESCALON MEDICAL: Delays Filing of Form 10-K for Fiscal 2010 ----------------------------------------------------------- Escalon Medical Corp. says the filing of its annual report for the fiscal year ended June 30, 2010, will be delayed. The Company says that it needs additional time to ensure the disclosure related to discontinued operations is complete. As was the case in the Form 10-K for the fiscal year ended June 30, 2009, the Company's Form 10-K for fiscal year ended June 30, 2010, will include an explanatory paragraph from the Company's independent registered public accounting firm expressing substantial doubt about the Company's ability to continue as a going concern. The Company does not anticipate any significant change in results of operations from the corresponding period for the last fiscal year. About Escalon Medical Escalon Medical Corp. (Nasdaq Capital Market: ESMC) -- http://www.escalonmed.com/-- develops, markets and distributes ophthalmic diagnostic, surgical and pharmaceutical products. Drew Scientific, which operates as a separate business unit, provides instrumentation and consumables for the diagnosis and monitoring of medical disorders in the areas of diabetes, cardiovascular diseases and hematology, as well as veterinary hematology and blood chemistry. The Company has headquarters in Wayne, Pennsylvania, and operations in Long Island, New York, New Berlin, Wisconsin, Lawrence, Massachusetts, Dallas, Texas, Waterbury, Connecticut, Miami, Florida, Barrow-in-Furness, U.K. and Le Rheu, France. The Company's balance sheet as of March 31, 2010, showed $23.4 million in total assets, $12.9 million in total liabilities, and stockholders' equity of $10.5 million. * * * Mayer Hoffman McCann P.C., in Plymouth Meeting, Pennsylvania, expressed substantial doubt about the Company's ability to continue as a going concern, following its results for the fiscal year ended June 30, 2009. The independent auditors noted that the Company has incurred recurring operating losses and negative cash flows from operating activities and the debt payments related to the Biocode acquisition are scheduled to commence within the next three months. EWALD SCHUTZ: Case Summary & 4 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Ewald Robert Schutz 1718 Abbot Kinney Blvd Venice, CA 90291 Bankruptcy Case No.: 10-52111 Chapter 11 Petition Date: September 30, 2010 Court: United States Bankruptcy Court Central District Of California (Los Angeles) Judge: Vincent P. Zurzolo Debtor's Counsel: Leonard Pena, Esq. PE�A & SOMA, APC 555 W Fifth St., 31st Floor Los Angeles, CA 90013 Tel: (213) 996-8336 E-mail: lpena@penalaw.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's four largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb10-52111.pdf EZRI NAMVAR: Partner Pleads Not Guilty in $23 Million Fraud Case ---------------------------------------------------------------- The business partner of Los Angeles real estate tycoon Ezri Namvar has denied charges that he was involved in a scheme to shift $23 million in client funds to pay off creditors of another bankrupt company controlled by Namvar, Bankruptcy Law360 reports. According to Law360, Hamid Tabatabai was arraigned and pled not guilty at a hearing Tuesday in the U.S. District Court for the Central District of California.. Ezri Namvar, Chairman, CEO, is founder and principal shareholder of Namco Capital Group, Inc., a privately held holding company for companies engaged in real estate investments and financial services. Creditors with $7.7 million in claims filed involuntary Chapter 11 petitions on December 22, 2008, against Mr. Namvar and Namco Capital (Bankr. C.D. Calif. Case No. 08-32349, and 08- 32333). FERTINITRO FINANCE: Fitch Maintains 'CCC' Rating on Secured Bonds ----------------------------------------------------------------- Fitch Ratings maintains FertiNitro Finance Inc.'s US$250 million 8.29% secured bonds due 2020 at 'CCC' on Rating Watch Negative. Fitch expects rating pressure to remain through 2011, when the project reaches its maximum annual debt service requirement. The subsequent decline in debt service coincides with the maturity of bank debt separate from the secured bonds. The rating action reflects FertiNitro's payment on Sept. 28 of $40.3 million in semi-annual debt service. The timely payment (due Oct. 1) prevents further decline to FertiNitro's rating. Overall, FertiNitro continues to make progress since Fitch's last review in March 2010 with improved operational performance, resulting in positive cash flow and a debt service coverage ratio of 1.98 times. As another indication of FertiNitro's improved financial position, it is expected to deposit over $36 million to the debt service reserve fund after the October debt payment. Continued execution of the capital investment plan appears to be stabilizing plant operating performance with fewer forced outages compared to recent years. As of August 2010, the number of forced outages was 15.39 days for the urea plant and 7.47 days for the ammonia plant, compared to total 2009 outages of 43 days (urea) and 27.5 days (ammonia). The Rating Watch Negative status remains as there are near-term pressures that could adversely affect cash flow including whether management remains committed to capital investments, ability to pay for fuel supply on an accelerated basis, and possible fluctuations in global prices. While FertiNitro originally planned to implement a nearly $20 million capital plan in 2010, it has executed about $11.5 million and is committed to an additional $6 million to be spent by the end of 2010. The reduced 2010 total of $17.5 million is due to overestimation of some capital investments and reassessment of system needs. FertiNitro has already acquired spare critical parts to mitigate forced outages and installed a new boiler among other improvements to increase efficiency. Fitch will monitor FertiNitro's continued implementation of its capital plan (including the planned 30-day outage in October) and the impact on plant operating performance. Fitch has been concerned by the adequacy and reliability of gas supply by PDVSA as well as FertiNitro's ability to pay its fuel obligations. Based upon discussions with FertiNitro, by mid- October PDVSA will improve gas delivery with new pipelines for greater capacity and more efficient fuel delivery. While FertiNitro benefits from the ability to pay for gas up to 180 days after delivery, its arrangement with PDVSA will revert to payment after 30 days delivery in January 2011. Fitch will monitor FertiNitro's ability to maintain adequate cash flow to meet its fuel payment obligations. As urea makes up 80% of project revenues, Fitch is concerned that the average urea price through August 2010 of $219.46 per metric ton is lower than the average price in 2009 of $223/MT. The lower price has resulted in revenues below management's budget projection. However, FertiNitro benefited from both increased demand and prices for ammonia, which average $314/MT through August 2010 compared to the 2009 average of $216/MT. Fitch will monitor these key drivers that could affect FertiNitro's rating: -- Adequate cash flow to make the next debt service payment due April 2011; -- Continued improvement in plant production levels and minimization of forced outages; -- Trend in urea and ammonia prices; -- Domestic sales trend in relation to management's budget; and -- Impact of additional government intervention. Security Offshore accounts, project agreements, some real property and some real shares in FertiNitro. Project Summary FertiNitro, located in the Jose Petrochemical Complex in Venezuela, ranks as one of the world's largest nitrogen-based fertilizer plants, with nameplate daily production capacity of 3,600 MT of ammonia and 4,400 MT of urea. FertiNitro is owned 35% by a Koch Industries, Inc. subsidiary, 35% by Pequiven, 20% by a Snamprogetti S.p.A. subsidiary, and 10% by a Cerveceria Polar, C.A. subsidiary. FORTUNE INDUSTRIES: Posts $1.42 Million Net Income for FY 2010 -------------------------------------------------------------- Fortune Industries filed its annual report on Form 10-K for the period ended June 30, 2010, reporting $29.34 million in total assets, $9.73 million in total liabilities, and stockholders' equity of $19.61 million. The Company reported net income of $1.42 million on $60.69 million of total revenues for the year ended June 30, 2010, compared with net income on $1.38 million on $72.91 million of total revenues for the tenth month ended June 30, 2009. A full-text copy of the annual report on Form 10-K is available for free at http://ResearchArchives.com/t/s?6bec No More Going Concern Doubt Somerset CPAs, P.C., in Indianapolis, Indiana, expressed substantial doubt about Fortune Industries, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for fiscal periods ended June 30, 2009, Aug. 31, 2008, and 2007. The auditor noted that the Company has had recurring losses from operations and has a net capital deficiency. The report of Somerset CPAs for the fiscal 2010 results did not contain a going concern qualification. About Fortune Industries Fortune Industries, Inc., is a holding company of providers of full service human resources outsourcing services through co- employment relationships with their clients. FREECREST INVESTMENTS: Case Summary & Largest Unsecured Creditor ---------------------------------------------------------------- Debtor: Freecrest Investments, LLC 21342 Timbercreek Court Shorewood, IL 60404 Bankruptcy Case No.: 10-43501 Chapter 11 Petition Date: September 29, 2010 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Eugene R. Wedoff Debtor's Counsel: Chris D. Rouskey, Esq. ROUSKEY AND BALDACCI 151 Springfield Ave. Joliet, IL 60435 Tel: (815) 741-2118 Fax: (815) 741-0670 E-mail: rouskey-baldacci@sbcglobal.net Scheduled Assets: $7,456,200 Scheduled Debts: $4,640,454 In its list of 20 largest unsecured creditors, the Company placed only one entry: Entity Nature of Claim Claim Amount ------ --------------- ------------ Donald Kinsella Personal loan to $40,000 21342 Timbercreek Court business Shorewood, IL 60404 The petition was signed by Donald J. Kinsella, manager. FX REAL: Signs Stock Subscription Agreements with Directors ----------------------------------------------------------- FX Real Estate and Entertainment Inc. entered on Sept. 27, 2010, into subscription agreements with certain of its directors, executive officers and greater than 10% stockholders and other accredited investors, pursuant to which the Purchasers purchased from the Company an aggregate of 300 units at a purchase price of $1,000 per Unit. Each Unit consists of (x) one share of the Company's Series B Convertible Preferred Stock, $0.01 par value per share, and (y) a warrant to purchase up to 11,389.52 shares of the Company's common stock at an exercise price of $0.2634 per share. The Warrants are exercisable for a period of 5 years. The Company generated aggregate proceeds of $300,000 from the sale of the Units pursuant to the Subscription Agreements. The Company intends to use the proceeds to fund working capital requirements and for general corporate purposes. Pursuant to the Subscription Agreements, the Company sold a total of 300 Units in a private placement, all of which were sold to its following directors, executive officers and greater than 10% stockholders: * Laura Baudo Sillerman, the spouse of Robert F.X. Sillerman, the Company's Chairman and Chief Executive Officer, purchased 100 Units. * Paul C. Kanavos, the Company's President, and his spouse, Dayssi Olarte de Kanavos, purchased 100 Units. * TTERB Living Trust, an affiliate of Brett Torino, a greater than 10% stockholder of the Company, purchased 100 Units. These sales of securities were made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. About FX Real Estate FX Real Estate and Entertainment Inc. owns 17.72 contiguous acres of land located at the southeast corner of Las Vegas Boulevard and Harmon Avenue in Las Vegas, Nevada. The Las Vegas Property is currently occupied by a motel and several commercial and retail tenants with a mix of short and long-term leases. On June 23, 2009, as a result of the default under the first mortgage loan, the first lien lenders had a receiver appointed to take control of the property. The Company is headquartered in New York City. The Company's balance sheet as of June 30, 2010, showed $141.8 million in total assets, $515.1 million in total liabilities, and a stockholders' deficit of $373.3 million. * * * As reported in the Troubled Company Reporter on April 15, 2010, LL Bradford, in Las Vegas, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company is in default under the mortgage loan, has limited available cash, has a working capital deficiency and will need to secure new financing or additional capital in order to pay its obligations. The Company disclosed in its Form 10-Q for the quarter ended June 30, 2010, that it has no current cash flow and cash on hand as of August 13, 2010, is not sufficient to fund its short-term liquidity requirements, including its ordinary course obligations as they come due. On April 21, 2010, the Company's remaining Las Vegas subsidiary, namely FX Luxury Las Vegas I, LLC, filed for Chapter 11 in the U.S. Bankruptcy Court for the District of Nevada (Case No. 10-17015). GAMETCH INT'L: Gets NASDAQ Notice for Delay Filing of Form 10-Q --------------------------------------------------------------- GameTech International Inc. received a letter from the NASDAQ Stock Market stating that GameTech did not timely file its Quarterly Report on Form 10-Q for the period ended August 1, 2010 with the Securities and Exchange Commission. As a result, GameTech is not in compliance with the continued listing requirements under NASDAQ Listing Rule 5250(c)(1). The notification of noncompliance has no immediate effect on the listing or trading of GameTech's common stock on the NASDAQ Global Market. As previously reported by GameTech on September 16, 2010, filing of its quarterly report has been delayed primarily due to the efforts required to complete its assessment of an expected non- cash impairment of goodwill and long-lived assets relating to its bingo reporting unit and an expected non-cash impairment of intangible and other long-lived assets relating to its VLT/Slot reporting unit. GameTech intends to file its quarterly report as soon as practicable upon completion of its assessment. Pursuant to the NASDAQ Listing Standards, GameTech has 60 calendar days from the date of the notice to submit a plan to regain compliance, and if NASDAQ accepts GameTech's plan, it can grant an exception of up to 180 calendar days from the quarterly report's due date, or until March 21, 2011, to regain compliance. Based in Reno, Nevada, GameTech develops and manufactures gaming entertainment products and systems. GameTech holds a significant position in the North American bingo market with its interactive electronic bingo systems, portable and fixed-based gaming units, and complete hall management modules. It also holds a significant position in select North American VLT markets, primarily Montana, Louisiana, and South Dakota, where it offers video lottery terminals and related gaming equipment and software. It also offers Class III slot machines and server-based gaming systems. GELTECH SOLUTIONS: Salberg & Company Raises Going Concern Doubt --------------------------------------------------------------- GelTech Solutions, Inc., filed on September 28, 2010, its annual report on Form 10-K for the fiscal year ended June 30, 2010. Salberg & Company, P.A., in Boca Raton, Fla., expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has a net loss and net cash used in operating activities in 2010 of $3.5 million and $2.6 million, respectively, and has an accumulated deficit, a stockholders' deficit and working capital deficit of $9.6 million, $1.1 million, and $1.7 million, respectively, at June 30, 2010. The Company reported a net loss of $3.5 million on $566,240 of revenue for fiscal 2010, compared to a net loss of $2.8 million on $334,364 of revenue for fiscal 2009. The Company's balance sheet at June 30, 2010, showed $1.5 million in total assets, $2.6 million in total liabilities, and a stockholders' deficit of $1.1 million. A full-text copy of the Form 10-K is available for free at: http://researcharchives.com/t/s?6be8 About GelTech Solutions, Inc. Jupiter, Fla.-based GelTech Solutions. Inc. (OTC Bulletin Board: GLTC) -- http://www.GelTechsolutions.com/-- is a Delaware corporation organized in 2006. The Company creates innovative, Earth-friendly, cost-effective products that help industry, agriculture, and the general public accomplish environmental and safety goals, such as water conservation and the protection of lives, homes, and property from fires. The Company's current business model is focused on the following products: 1) FireIce(R), a fire suppression product, 2) SkinArmor(TM), an ointment used for protecting skin from direct flame and high temperatures, and 3) Soil2O(TM), a line of agricultural moisture retention products. GENCORP INC: Earns $2.8 Million in Q3 Ended August 31 ----------------------------------------------------- GenCorp Inc. reported results for the third quarter of 2010. Net income for the third quarter ended August 31, 2010, was $2.8 million compared to net income of $10.3 million for the third quarter of 2009. The Company's balance sheet at Aug. 31, 2010, showed $981.8 million in total assets, $1.21 billion in total liabilities, and a stockholders' deficit of $230.2 million. As of August 31, 2010, the Company had $202.0 million in net debt. "Our results for the third quarter of 2010 demonstrated continued improvement in our core operating results," said Scott J. Seymour, GenCorp Inc. President and CEO, and President, Aerojet - General Corporation. "We continue to focus on delivering excellent program performance, driving strong financial performance, and creating long-term value for our shareholders." As of December 1, 2009, the Company adopted a new accounting standard which applies to convertible debt securities that, upon conversion, may be settled by the issuer fully or partially in cash. The guidance is effective for fiscal years beginning after December 15, 2008, and is to be applied retrospectively to all past periods presented-even if the instrument has matured, converted, or otherwise been extinguished as of the effective date of this guidance. The Company's adoption of this guidance affects its 2 1/4 Convertible Subordinated Debentures. Accordingly, during the third quarter and first nine months of 2010, interest expense includes $1.6 million and $5.5 million, respectively, of non-cash debt discount amortization. Additionally, during the third quarter and first nine months of 2009 interest expense includes $1.9 million and $5.7 million, respectively, of non-cash debt discount amortization. As of August 31, 2010, the borrowing limit under the revolving credit facility was $65.0 million with all of it available. Also, as of August 31, 2010, the Company had $69.1 million outstanding letters of credit under the $100.0 million letter of credit subfacility and had permanently reduced the amount of its term loan subfacility to the $51.2 million outstanding. A full-text copy of the Company's earnings release is available for free at http://ResearchArchives.com/t/s?6bfc About GenCorp Inc. Rancho Cordova, Calif.-based GenCorp Inc. (NYSE: GY) -- http://www.GenCorp.com/-- is a manufacturer of aerospace and defense products and systems with a real estate segment that includes activities related to the re-zoning, entitlement, sale, and leasing of the Company's excess real estate assets. * * * On March 26, 2010, Moody's Investors Service upgraded both GenCorp Inc.'s Corporate Family Rating to B2 from B3 and Probability of Default ratings to B2 from Caa1. In addition, the senior secured credit facilities were upgraded to Ba2 from Ba3, as well as the convertible subordinated notes to Caa1 from Caa2. The 9-1/2% senior subordinated notes were confirmed at B1. On January 22, 2010, Standard & Poor's Ratings Services raised its ratings of GenCorp Inc. to B- from CCC+ and removed all ratings from CreditWatch. GEORGE GIANNAKAKIS: Case Summary & 15 Largest Unsecured Creditors ----------------------------------------------------------------- Joint Debtors: George V. Giannakakis Fotini Giannakakis 36409 Tara Court Ingleside, IL 60041 Bankruptcy Case No.: 10-43388 Chapter 11 Petition Date: September 28, 2010 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Eugene R. Wedoff Debtor's Counsel: Joel A. Schechter, Esq. LAW OFFICES OF JOEL SCHECHTER 53 W Jackson Blvd., Suite 1522 Chicago, IL 60604 Tel: (312) 332-0267 Fax: (312) 939-4714 E-mail: joelschechter@covad.net Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Joint Debtors' 15 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ilnb10-43388.pdf GEORGE MICHAEL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: George S. Michael 1955 Shore Acres Road Lake Bluff, IL 60044 Bankruptcy Case No.: 10-43637 Chapter 11 Petition Date: September 29, 2010 Court: U.S. Bankruptcy Court Northern District of Illinois (Chicago) Judge: Pamela S. Hollis Debtor's Counsel: Abraham Brustein, Esq. Julia Jensen Smolka, Esq. DIMONTE & LIZAK, LLC 216 West Higgins Road Park Ridge, IL 60068 Tel: (847) 698-9600 Ext. 221 (847) 698-9600 Ext. 231 Fax: (847) 698-9623 E-mail: abrustein@dimonteandlizak.com jjensen@dimonteandlizak.com Estimated Assets: $0 to $50,000 Estimated Debts: $50,000,001 to $100,000,000 A list of the Debtor's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ilnb10-43637.pdf Debtor-affiliate that filed separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- R&G Properties 09-37463 10/08/09 GRAHAM PACKAGING: Completes $568-Mil. Purchase of Liquid Container ------------------------------------------------------------------ Graham Packaging Company Inc. said that its subsidiaries, Graham Packaging GP Acquisition LLC, and Graham Packaging LP Acquisition LLC, have completed the acquisition of Liquid Container, L.P., and its subsidiaries for $568.0 million. In conjunction with the closing of the acquisition, Graham entered into a new $913.0 million aggregate principal amount term loan facility under its existing senior secured credit agreement and completed its offering of $250.0 million senior unsecured notes. Approximately $563.0 million of the proceeds from the Term Loan D, along with cash on hand, were used to refinance in full the existing term loan B facility under its senior secured credit agreement. A portion of the remaining proceeds from the Term Loan D and the proceeds from the new notes were used to finance the acquisition of Liquid Container and pay related fees and expenses. The Term Loan D bears an interest rate of LIBOR plus 425 basis points, with a LIBOR floor of 1.75%, and matures in September 2016. The senior unsecured notes bear a coupon of 8.25% and mature in October 2018. "We are pleased to have completed the acquisition of Liquid Container and related financings in a timely manner," said Mark Burgess, CEO of Graham Packaging. "We are now focused on the integration of Liquid and are excited about unlocking the opportunities to grow both the top and bottom lines of our combined businesses. Additionally, the refinancing of our Term Loan B to 2016 leaves no meaningful debt maturities until 2014." About Graham Packaging Headquartered in York, Pennsylvania, Graham Packaging Holdings Company, -- http://www.grahampackaging.com/-- the parent company of Graham Packaging Company, L.P., is engaged in the design, manufacture and sale of customized blow molded plastic containers for the branded food and beverage, household, automotive lubricants and personal care/specialty product categories. As of the end of June 2008, the company operated 83 manufacturing facilities throughout North America, Europe and South America. The Company's balance sheet for June 30, 2010, showed $2.09 billion in total assets, $368.26 million total current liabilities, $2.20 billion in long term debt, $17.57 million in deferred income taxes, $91.73 million in other non-current liabilities, and a stockholders' deficit of $586.82 million. Graham Packaging carries 'B' issuer credit ratings from Standard & Poor's. GREEN EARTH: Friedman LLP Raises Going Concern Doubt ---------------------------------------------------- Green Earth Technologies, Inc., filed on September 28, 2010, its annual report on Form 10-K for the fiscal year ended June 30, 2010. Friedman LLP, in East Hanover, N.J., expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that of the Company's losses, negative cash flows from operations and its limited ability to pay its outstanding liabilities through 2011. The Company reported a net loss of $12.9 million on $2.4 million of revenue for fiscal 2010, compared to a net loss of $15.3 million on $3.8 million of revenue for fiscal 2009. At June 30, 2010, the Company had $1.4 million in cash and an accumulated deficit of $45.2 million. As June 30, 2010 the Company had working capital of $371,00, compared to a working capital deficiency of $2.4 million as of June 30, 2009. The Company's balance sheet at June 30, 2010, showed $5.5 million in total assets, $3.4 million in total liabilities, and stockholders' equity of $2.1 million. A full-text copy of the Form 10-K is available for free at: http://researcharchives.com/t/s?6beb About Green Earth Technologies White Plains, N.Y.-based Green Earth Technologies, Inc. (OTC QB: GETG) -- http://www.getg.com/-- markets, sells and distributes an array of branded, environmentally-friendly, bio-based performance and cleaning products to the automotive, outdoor power equipment and marine markets. GROUP 1: Moody's Affirms Corporate Family Rating at 'B1' -------------------------------------------------------- Moody's Investors Service affirmed the B1 Corporate Family and Probability of Default ratings for Group 1 Automotive, Inc., and changed the outlook to stable from negative. Moody's also assigned ratings to Group 1's multi-seniority shelf registration. Rating Rationale The change in outlook to stable from negative recognizes Group 1's improved debt protection measures resulting from continued operating discipline and an overall upswing in the auto retailing segment. "Group 1 has done a nice job continuing to remain disciplined with its operating strategy in what remains a difficult macroeconomic environment, with the result that the risk of deterioration in its credit profile has diminished significantly," stated Moody's Senior Analyst Charlie O'Shea. "Moody's feels that there is now a reasonable level of cushion at the B1 rating level for Group 1." The B1 rating considers Group 1's weak, though improving, credit metrics, as well as its strong market position in the still very fragmented auto retailing segment. The rating also considers Group 1's historically-favorable brand mix, with approximately 83% of new vehicle sales coming from luxury and import brands, and its operating profit trend away from new vehicle sales. Group 1's business model, with solid parts and service and finance and insurance segments, reduces reliance on new car sales. Finally, Group 1 is moderately diverse geographically, with stores in more than a dozen U.S. states and the United Kingdom. New ratings assigned: -- Senior unsecured shelf at (P)B3 (LGD 5, 87%) -- Senior subordinated shelf at (P)B3 (LGD 5, 88%) -- Preferred shelf at (P)B3 (LGD 6, 97%) Ratings affirmed: -- Corporate family rating at B1 -- Probability of default rating at B1 The stable outlook anticipates that Group 1 will continue to maintain solid credit metrics that position the company comfortably at the B1 rating level, and that metrics will neither materially improve nor deteriorate over the next year. Ratings could be upgraded if Group 1 can reduce leverage such that debt/EBITDA was sustained below 5 times. Qualitatively, an upgrade would also depend on the state of the overall macroeconomic factors that drive the auto retail segment, and the flexibility with which Group 1 is able to maneuver its various operating segments during periods of stress. Ratings could be downgraded if improvements in Group 1's operating performance were to stall, or if it is otherwise unable to improve its credit metrics over the near term. Quantitatively, if debt/EBITDA were sustained above 5.75 times, ratings could be downgraded. The last rating action for Group 1 was on March 20, 2009 when the Corporate Family and Probability of Default ratings were downgraded to B1 from Ba3, the Senior Subordinated Notes were downgraded to B3 (LGD5, 87%) from B2 (LGD5, 84%), the Senior Unsecured Shelf was downgraded to (P)B3 (LGD5, 84%) from (P)B1 (LGD5, 79%), the Senior Subordinated Shelf was downgraded to (P)B3 (LGD5, 87%) from (P)B2 (LGD5, 84%), the Preferred Shelf was downgraded to (P)B3 (LGD 6, 97%) from (P)B2 (LGD6, 97%), and a negative outlook was assigned. HAROLD MCCAFFREY: Case Summary & 11 Largest Unsecured Creditors --------------------------------------------------------------- Joint Debtors: Harold McCaffrey Sandra Lee McCaffrey 1331 S. Wolfe Road #68 Sunnyvale, CA 94087 Bankruptcy Case No.: 10-60196 Chapter 11 Petition Date: September 30, 2010 Court: United States Bankruptcy Court Northern District of California (San Jose) Judge: Roger L. Efremsky Debtor's Counsel: John G. Downing, Esq. LAW OFFICES OF JOHN G. DOWNING 2021 The Alameda #295 San Jose, CA 95126 Tel: (408) 247-4715 E-mail: john@downinglaw.com Scheduled Assets: $1,227,524 Scheduled Debts: $1,637,500 A list of the Joint Debtors' 11 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/canb10-60196.pdf HAWKER BEECHCRAFT: Nigel Wright to Resign as Director ----------------------------------------------------- Nigel S. Wright, director of Hawker Beechcraft, Inc., the owner of Hawker Beechcraft Acquisition Company, informed the Company on September 24, 2010, that he has decided to resign from his position as a director of Hawker Beechcraft, Inc., during the month of October, 2010. His resignation is not the result of a disagreement with the Company; the Company expects a replacement to be appointed in connection with his resignation. Hawker Beechcraft Acquisition Company, LLC, headquartered in Wichita, Kansas, is a manufacturer of business jets, turboprops and piston aircraft for corporations, governments and individuals worldwide. Hawker Beechcraft Acquisition Company LLC reported a net loss of $63.4 million on $568.2 million of total sales for the three months ended March 28, 2010, compared with net income of $53.1 million on $537.6 million of sales for the three months ended March 29, 2009. The Company's balance sheet at March 28, 2010, showed $3.41 billion in total assets, $3.36 billion in total liabilities, and stockholders' equity of $56.5 million. HEALTHCARE PARTNERS: S&P Lifts Counterparty Credit Rating From BB+ ------------------------------------------------------------------ Standard & Poor's Ratings Services said it raised its counterparty credit rating on HealthCare Partners LLC to 'BBB-' from 'BB+'. At the same time, S&P affirmed its 'BBB-' senior secured rating on the company's outstanding debt, and S&P withdrew the '2' recovery rating because S&P does not assign recovery ratings on investment- grade debt issuances. The outlook is stable. "The upgrade reflects HCP's growing market scale, improving financial profile, and strengthening competitive position," said Standard & Poor's credit analyst Joe Marinucci. Operating performance continues to benefit from effective care-management initiatives, partly as a result of the company's successful rollout of its electronic medical records project. "In addition, HCP's generally well-managed acquisition and integration track record has meaningfully increased the company's scale and has diversified its business profile," said Mr. Marinucci. HCP has strengthened its balance sheet by sustaining growth in liquidity and equity (primarily because of the net retention of earnings) as well as by reducing the amount of outstanding debt. The outlook is stable, reflecting S&P's view that it is unlikely S&P will change the rating in the next 12 to 24 months. However, S&P could lower the rating if the company announces a significant deal or materially alters its capital structure in a way that increases debt and decreases equity. S&P expects that HCP's revenue will total $2.1 billion to $2.3 billion at both year-end 2010 and 2011 and that the company will serve more than 625,000 delegated managed-care members. If HCP meets S&P's earnings expectations, its pretax income would exceed 10%. Over the intermediate term, adjusted debt to EBITDA and adjusted EBITDA interest coverage will likely be 0.5x to 1.5x and significantly in excess of 10x, respectively. S&P would consider these financial leverage and coverage metrics conservative for the rating category. HEALTHSOUTH CORP: Inks Underwriting Deal with Citigroup Global -------------------------------------------------------------- HealthSouth Corporation and certain of its subsidiaries, as guarantors, entered on Sept. 28, 2010, into an underwriting agreement with Citigroup Global Markets Inc., Banc of America Securities LLC, Barclays Capital Inc., Goldman, Sachs & Co., and Morgan Stanley & Co. Incorporated, as representatives of the several underwriters named therein. Pursuant to the underwriting agreement, the Company agreed to issue and sell to the Underwriters, and the Underwriters have agreed to purchase for resale to the public, $275 million in aggregate principal amount of the Company's 7.250% Senior Notes due October 1, 2018, at a public offering price of 100% of the principal amount, and $250 million in aggregate principal amount of the Company's 7.750% Senior Notes due September 15, 2022, at a public offering price of 100% of the principal amount. The Notes are expected to be issued on October 7, 2010. The Notes will be senior unsecured obligations of the Company and will be jointly and severally guaranteed on a senior unsecured basis by all of its existing and future subsidiaries that guarantee borrowings under the Company's credit agreement and other capital markets debt. The Company intends to use the net proceeds from the Notes offering to repay a portion of the amounts outstanding under the term loans under its existing credit agreement. The Company also intends to use a portion of its cash and cash equivalents to repay a portion of the remaining amount outstanding under the term loans after the application of the use of proceeds of the Notes offering. The Notes offering is conditioned upon customary closing conditions. A full-text copy of the Underwriting Agreement is available for free at http://ResearchArchives.com/t/s?6bfb About HealthSouth Corp. Birmingham, Alabama-based HealthSouth Corporation (NYSE: HLS) -- http://www.healthsouth.com/-- is the nation's largest provider of inpatient rehabilitative healthcare services. Operating in 26 states across the country and in Puerto Rico, HealthSouth serves patients through its network of inpatient rehabilitation hospitals, long-term acute care hospitals, outpatient rehabilitation satellites, and home health agencies. The Company's balance sheet at June 30, 2010, showed $1.7 billion in total assets, $2.1 billion in total liabilities, and a shareholders' deficit of $817.3 million. HealthSouth continues to carry a 'B2' corporate family rating with "stable" outlook, from Moody's. It has 'B' foreign and local issuer credit ratings, with "positive" outlook, from Standard & Poor's. HENRY RIDAD: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Joint Debtors: Henry Lacerona Ridad Eloisa Varilla Ridad 3001 Canada Blvd. Glendale, CA 91208 Bankruptcy Case No.: 10-52061 Chapter 11 Petition Date: September 30, 2010 Court: United States Bankruptcy Court Central District Of California (Los Angeles) Judge: Peter Carroll Debtor's Counsel: Majid Foroozandeh, Esq. LAW OFFICES OF FOROOZANDEH, APC 9891 Irvine Center Dr., Ste. 130 Irvine, CA 92618 Tel: (949) 336-8505 Fax: (208) 485-5959 E-mail: majidf@foroozandeh-law.com Scheduled Assets: $2,648,452 Scheduled Debts: $4,080,880 A list of the Joint Debtors' 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb10-52061.pdf HOMELAND SECURITY: YA Global Extends Debt Maturity -------------------------------------------------- Homeland Security Capital Corporation entered on September 23, 2010, into a Debt Maturity Extension Agreement with YA Global Investments, L.P., as lender, pursuant to which the maturity date of the following secured term notes: * a Note dated March 13, 2008 in the principal amount of $6,310,000 * a Note dated March 13, 2008 in the principal amount of $6,750,000; * a Note dated March 13, 2008 in the principal amount of $878,923; * a Note dated November 26, 2008 in the principal amount of $178,655; and * a Note dated November 28, 2008 in the principal amount of $71,345 The Notes have been extended to July 15, 2011, in consideration of the Company's payment of $500,000 towards accrued interest due under the First Note. A full-text copy of the Debt Maturity Extension Agreement is available for free at http://ResearchArchives.com/t/s?6c00 About Homeland Security Homeland Security Capital Corporation is an international provider of specialized technology-based radiological, nuclear, environmental disaster relief and electronic security solutions to government and commercial customers. * * * The Company's balance sheet at June 30, 2010, showed $37.47 million on total assets, $38.36 million in total liabilities, and a stockholders' deficit of $1.01 million. HOMELAND SECURITY: Posts $2.18 Million Net Income for FY2010 ------------------------------------------------------------ Homeland Security Capital Corporation filed its annual report on Form 10-K for the period ended June 30, 2010, reporting $37.47 million on total assets, $38.36 million in total liabilities, and a stockholders' deficit of $1.01 million as of June 30, 2010. The Company reported net income of $2.18 million on $97.90 million of net contract revenues for the year ended June 30, 2010, compared with a net loss of $9.53 million on $80.84 million of net contract revenue for the same period a year ago. The Company said its primary source of financing since its inception has been through the issuance of equity and debt securities. Management recognizes it will be necessary to continue to generate positive cash flow from operations and have availability to other sources of capital to continue as a going concern and has implemented measures to increase profitability on our operations and reduce certain expenses. During the course of fiscal year 2011, it remains management's intention to continue to explore all options available to the Company, which include among other things, additional acquisitions, private placements, sale of subsidiaries and significant expense reductions where ever possible. A full-text copy of the annual report on Form 10-K is available for free at http://ResearchArchives.com/t/s?6bed About Homeland Security Homeland Security Capital Corporation is an international provider of specialized technology-based radiological, nuclear, environmental disaster relief and electronic security solutions to government and commercial customers. HOTELS NEVADA: Quarles & Brady Denied 95% of Fees ------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Quarles & Brady LLP was denied 95% of the almost $900,000 in fees that the law firm requested for representing a company whose attempted reorganization in Chapter 11 was converted to a liquidation in Chapter 7. U.S. Bankruptcy Judge Bruce A. Markell in Las Vegas denied most of the fees because he found the services "did nothing to bring value into the estate." Hotels Nevada LLC sought Chapter 11 protection in 2009 (Bankr. D. Nev. Case No. 09-31131) after the company and a controlling officer were hit with a $141 million arbitration award. Quarles & Brady prepared the Chapter 11 petition. Less than four months after filing, the judge switched the case to Chapter 7. In the course of converting the case, Judge Markell concluded that the Chapter 11 petition hadn't been filed in good faith. IMPLANT SCIENCES: Delays Form 10-K Filing for Fiscal 2010 --------------------------------------------------------- Implant Sciences Corporation said it could not timely file its annual report on Form 10-K for the period ended June 30, 2010, with the Securities and Exchange Commission. The Company said it is evaluating whether a non-cash charge to its income statement is required in connection with certain changes to the price at which its lender, DMRJ Group LLC, is entitled to convert certain promissory notes into shares of the Registrant's common stock. In conjunction with the deterioration in the economic environment and the material reduction in the market value of the Company's publicly traded common stock, the Registrant has evaluated and tested its goodwill for impairment in accordance with Accounting Standards Codification ASC 350 "Intangibles - Goodwill and Other." These analyses and their implication on the Company's financial statements has caused the Company to be unable to file, without unreasonable effort and expense, its Annual Report on Form 10-K for the year ended June 30, 2010, because its audited financial statements for that period have not been completed. It is anticipated that the Form 10-K, along with the audited financial statements, will be filed within the fifteen-day extension period. The Company said it anticipates reporting net loss from continuing operations of approximately $2,723,000 on revenues of about $3,474,000 for the fiscal year ended June 30, 2010 as compared to net loss from continuing operations of $13,559,000 on revenues of approximately $8,737,000 for the fiscal year ended June 30, 2009. The decrease in net loss from continuing operations is primarily the result of a $5,000,000 non-cash benefit recorded by the Registrant in connection with cancellation of the Series E Convertible Preferred Stock, which had been issued in settlement of its litigation with Evans Analytical Group, compared to a non- cash charge of $5,700,000 recorded in connection with its litigation with Evan Analytical Group in the year ended June 30, 2009, decreased operating expenses of $4,040,000, decreased payroll and related fringe benefits, partially offset increased interest expense and a non-cash charge of $348,000 to record the change in fair value of an embedded derivative related to a warrant. The anticipated results do not include potential non- cash charges related to certain changes to the price at which its lender, DMRJ Group LLC, is entitled to convert certain promissory notes into shares of the Registrant's common stock and the completion of the Company's goodwill impairment evaluation and testing. About Implant Sciences Implant Sciences Corporation (OBB: IMSC.OB) -- http://www.implantsciences.com/-- develops, manufactures and sells sensors and systems for the security, safety and defense (SS&D) industries. The Company's balance sheet at March 31, 2010, showed $6.22 million in total assets and $15.34 million in total liabilities and $5 million in series E convertible preferred stock, for a stockholder's deficit of $14.12 million. As reported by the Troubled Company Reporter on January 15, 2010, Implant Sciences renegotiated its credit agreements with its senior secured investor, DMRJ Group LLC. DMRJ increased Implant Sciences' line of credit from $3,000,000 to $5,000,000; extended the maturity of all of Implant Sciences' indebtedness from December 10, 2009, to June 10, 2010; waived all existing defaults through the new maturity date; reduced the interest rate payable on Implant Sciences' obligations to 15% per annum; and removed all profit sharing arrangements from the agreements. Implant Sciences' total indebtedness to DMRJ, including all principal and accrued interest, now stands at $7,570,000. INDUSTRIAL SUPPLY: Case Summary & 18 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Industrial Supply, Inc. 1250 N. Winchester, Suite F Olathe, KS 66061 Bankruptcy Case No.: 10-23386 Chapter 11 Petition Date: September 29, 2010 Court: U.S. Bankruptcy Court District of Kansas (Kansas City) Debtor's Counsel: Jeffrey A. Deines, Esq. LENTZ CLARK DEINES PA 9260 Glenwood Overland Park, KS 66212 Tel: (913) 648-0600 Fax: (913) 648-0664 E-mail: jdeines@lcdlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 18 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ksb10-23386.pdf The petition was signed by Ronald L. Woods, president. INSIGHT HEALTH: S&P Downgrades Corporate Credit Rating to 'CC' -------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its corporate credit rating on InSight Health Services Corp. to 'CC' from 'CCC'. In addition, S&P lowered the 'CC' rating on the company's $315 million secured floating rate notes to 'C'; the recovery rating of '6' is unchanged. "Lake Forest, Calif.-based InSight Health Services Corp.'s 'CC' rating reflects expectations that the company will need to restructure and refinance its debt," says Standard & Poor's credit analyst Cheryl Richter. The audited financial statements for fiscal year ended June 30, 2010, contain an explanatory paragraph written by the company's independent registered public accounting firm that expresses substantial doubt about InSight Health's ability to continue. This opinion would cause a breach in financial covenants of the company's revolving credit facility, which are required to be delivered 120 days after the end of the fiscal year. The company has executed an amendment and received a forebearance from its lenders that will allow full access to the revolver until Dec. 1, 2010. The amendment reduces the total facility size to $20 million from $30 million and the letter of credit limit to $15 million from $5 million. If not remedied, outstanding debt could become due and payable. Although InSight Health has no outstanding debt balance, it has a $1.6 million LOC under the facility. The company has engaged a global investment advisor to develop and finalize a restructuring and refinancing plan to significantly reduce its outstanding debt balance and improve its cash and liquidity position. InSight Health provides diagnostic imaging services through its network of 62 fixed-site and 104 mobile facilities as of fiscal year-end 2010 (June 30, 2010), and serves patients in more than 30 states. InSight Health Services Holdings Corp. and its wholly owned subsidiary, InSight Health Services Corp., emerged from bankruptcy on Aug. 1, 2007, and exchanged about $194 million of its notes for 90% of its common stock per its prepackaged plan of reorganization. A new executive team was hired in 2008 to manage InSight Health's core strategy of establishing a more cohesive regional presence in order to achieve synergies and operate more efficiently. Despite several asset sales and purchases, its efforts have been unsuccessful and results have steadily deteriorated. Revenues and EBITDA, adjusted for asset acquisitions and dispositions, declined 13% and 26% respectively in fiscal 2010 over fiscal 2009. The declines reflected the closure of a fixed-site center (related to a large health care provider), contract reductions, reimbursement cuts, and incentive for mobile customers to take their business in-house because of the company's aging mobile fleet. Debt to EBITDA was 10.5X for fiscal 2010. INTEGRATED BIOPHARMA: Default on Notes Payable Cues Going Concern ----------------------------------------------------------------- Integrated BioPharma, Inc., filed on September 28, 2010, its annual report on Form 10-K for the fiscal year ended June 30, 2010. Friedman, LLP, in East Hanover, N.J., expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that he Company has a working capital deficiency, recurring net losses, has defaulted on its $7.8 million Notes Payable due on November 15, 2009, and is in the process of seeking additional capital and renegotiating its Notes Payable obligation. The Notes Payable are secured by a pledge of substantially all of the Company's assets. On March 19, 2010, the Company received a payment demand for default interest from one of the holders of the Notes Payable representing approximately 73% of the outstanding balance. As of September 28, 2010, the Company has not repaid the Notes Payable or the default interest referenced in the Notice. As of September 28, the Company has not received any additional demand of payment notices from the amended Notes Payable holders nor have the note holders exercised their rights to foreclose on the pledged collateral. As of June 30, 2010, the Company is also in technical default of certain financial covenants under the Securities Purchase Agreement relating to the Company's tangible net worth requirements and minimum net capital requirements. The Company remains in technical default with respect to the Notes Payable and, although the Company continues to work with the note holders to obtain a formal waiver for the default of the covenants, at this time the Company has not obtained a waiver. The Company reported a net loss of $5.5 million on $37.0 million of revenue for fiscal 2010, compared to a net loss of $18.2 million on $39.4 million of revenue for fiscal 2009. At June 30, 2010, the Company had cash and cash equivalents of $648,00 a working capital deficit of $9.7 million, primarily attributable to the classification of the amended Notes Payable in the amount of $7.8 million, which matured on November 15, 2009, the Convertible Note Payable in the amount of $3.6 million (stated principal amount of $4.5 million), due in February 2011, and an accumulated deficit of $49,900. The Company's balance sheet at June 30, 2010, showed $13.8 million in total assets, $19.5 million in total liabilities, and a stockholders' deficit of $5.7 million. A full-text copy of the Form 10-K is available for free at: http://researcharchives.com/t/s?6be4 About Integrated BioPharma Based in Hillside, N.J., Integrated BioPharma, Inc. (INBP.OB) -- -- http://www.healthproductscorp.us/-- is engaged primarily in manufacturing, distributing, marketing and sales of vitamins, nutritional supplements and herbal products. The Company's customers are located primarily in the United States. The Company was previously known as Integrated Health Technologies, Inc.. and, prior to that, as Chem International, Inc. The Company was reincorporated in its current form in Delaware in 1995. The Company continues to do business as Chem International, Inc., with certain of its customers and certain vendors. INTEGRATED SECURITY: Montgomery Coscia Raises Going Concern Doubt ----------------------------------------------------------------- Integrated Security Systems, Inc., filed on September 28, 2010, its annual report on Form 10-K for the fiscal year ended June 30, 2010. Montgomery Coscia Greilich LLP, in Plano, Tex., expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted of the Company's accumulated losses and limited access to capital. The Company reported net loss attributable to common stockholders of $68,507 on $8.2 million of revenue for fiscal 2010, compared with net income attributable to common stockholders of $5.5 million on $8.5 million of revenue for fiscal 2009. The Company's cash position decreased $8,254 during fiscal year 2010. At June 30, 2010, the Company had $22,690 in cash and cash equivalents and $80,049 outstanding under its factoring agreement with Capital Funding Solutions. The factoring agreement, which is secured by substantially all of the Company's assets, permits the Company to borrow up to $1.0 million based on eligible invoices. The Company's balance sheet at June 30, 2010, showed $3.8 million in total assets, $2.2 million in total liabilities, and stockholders' equity of $1.6 million. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?6bf0 About Integrated Security Based in Carrollton, Texas, Integrated Security Systems, Inc. (OTC BB: IZZI.OB) -- designs, develops, distributes and services security and traffic control products used in the commercial, industrial and government sectors through its wholly-owned subsidiary, B&B ARMR Corporation, and a joint venture entity, B&B Roadway, LLC. B&B ARMR Corporation designs and markets anti-terrorist crash rated barriers and other security systems for government, industrial and business use. B&B Roadway, LLC, is a joint venture with Causey Lyon Enterprises, Inc operating in the state and federal road and bridge market. The Company owns 65% of B&B Roadway, LLC. Causey Lyon Enterprises owns the remaining 35%, manages their operations, and manufactures and distributes all products relating to the road and bridge industry, including product lines specifically designed for that market. INTERTAPE POLYMER: To Appeal Jury Verdict in Inspired Litigation ---------------------------------------------------------------- Intertape Polymer Group Inc. said it intends to appeal the judgment entered against its subsidiary, Intertape Polymer Corp., in the case of Intertape Polymer Corp. v. Inspired Technologies, Inc. pending in the United States District Court for the Middle District of Florida. The case principally involved claims for breach of contract asserted by both parties. Yesterday the jury in the case reached a decision that Intertape had breached certain obligations under agreements between the parties relating to Intertape's production and supply of products to ITI. As part of this decision, the jury concluded that ITI should be awarded damages based on the decrease in the value of ITI when it sold its assets, and, on this basis, awarded ITI damages in the amount of $13,150,000. The Company is disappointed with the jury's decision. The Company firmly believes that ITI's allegations were unfounded, that there was no competent evidence to justify the amount of the damage award, and that such damages are unsupportable as a matter of law. The Company will promptly file an appeal with the 11th Circuit Court of Appeals and vigorously seek reversal of the judgment. The execution of the judgment will be stayed during the appeal process upon posting of an appellate bond. About Intertape Polymer Group Intertape Polymer Group Inc. (TSX:ITP) (NYSE:ITP) develops and manufactures specialized polyolefin plastic and paper based packaging products and complementary packaging systems for industrial and retail use. Headquartered in Montreal, Quebec and Sarasota/Bradenton, Florida, the Company employs approximately 2,100 employees with operations in 17 locations, including 13 manufacturing facilities in North America and one in Europe. * * * As reported by the Troubled Company Reporter on April 6, 2009, Standard & Poor's Ratings Services lowered its ratings, including its corporate credit rating, to 'CCC+' from 'B' on Intertape Polymer Group Inc. and related entities. At the same time, S&P removed the ratings from CreditWatch with negative implications,s where S&P placed them on March 23, 2009. The outlook is negative. Moody's Investors Service revised the rating outlook on Intertape Polymer Group Inc. to negative from stable and affirmed the B2 Corporate Family Rating. Moody's also affirmed the SGL-3 speculative grade liquidity rating and instrument ratings. INTERNATIONAL RECTIFIER: S&P Puts B+ Rating on Positive Watch ------------------------------------------------------------- Standard & Poor's Ratings Services said it placed its 'B+' corporate credit rating on U.S.-based power management semiconductor manufacturer International Rectifier Corp. on CreditWatch with positive implications. "In line with the broad-based industry upturn, IR has experienced strong year-on-year ongoing sales growth, up 21% for the fiscal year ended June 2010, and up 65% for the June quarter," said Standard & Poor's credit analyst Lucy Patricola. Growth was strong in most segments with two areas of focus, Power Management Devices and Energy Saving Products, expanding 101% and 82%, respectively, year on year in the June quarter. Profitability has improved, reflecting restructuring actions and higher than 90% utilization in the June quarter. Adjusted EBITDA margin reached 11% in June, nearing pre-downturn levels, although it continues to lag those of its peers. "Cash flow measures are still weak," added Ms. Patricola, "with working capital investments and capital expenditures largely offsetting funds from operations." Nevertheless, S&P expects IR to sustain these operating trends for the balance of 2010, potentially allowing for further improvement in profitability ratios. Based on improving operating trends and S&P's expectations of continued growth, S&P believes the company is re-establishing capacity for potential leverage. IR maintains an unfunded balance sheet and liquidity has strengthened modestly, with cash equivalents and short-term investments of $539 million as of the June quarter. S&P will meet with management to evaluate current growth strategies and financial policies to determine the final outcome of the CreditWatch. S&P's action will likely be limited to a potential one-notch upgrade. ISTAR FINANCIAL: Fitch Downgrades Issuer Default Rating to 'C' -------------------------------------------------------------- Absent a significant improvement in commercial real estate fundamentals which would result in iStar Financial Inc. receiving a substantial amount of loan repayments from its borrowers, it is inevitable that the company will need to effect a coercive debt exchange with its second lien noteholders to avoid bankruptcy, according to Fitch Ratings. A CDE is considered a default as outlined in Fitch's global criteria report 'Coercive Debt Exchange Criteria', published on March 3, 2009. In response, Fitch has downgraded iStar's Issuer Default Rating and certain outstanding debt ratings: -- IDR to 'C' from 'CC'; -- First priority credit agreement to 'B-/RR1' from 'B/RR1'; -- Second priority credit agreement to 'CCC/RR2' from 'B-/RR2'; -- 2011 second lien notes to 'CCC/RR2' from 'B-/RR2'; -- 2014 second lien notes to 'CCC/RR2' from 'B-/RR2'. Fitch has affirmed these security ratings at their current level, as 'C' is the lowest assigned financial obligation rating: -- Unsecured revolving credit facilities at 'C/RR5'; -- Senior unsecured notes at 'C/RR5'; -- Convertible senior floating-rate notes at 'C/RR5'; -- Preferred stock at 'C/RR6'. The rating actions are driven by the substantial amount of debt maturities in the second quarter of 2011, consisting primarily of a second lien term loan and second lien revolving credit agreement in aggregate amounting to approximately $1.7 billion, and an unsecured revolving credit facility of approximately $500 million. Fitch's estimates of liquidity (unrestricted cash, expected cash flows from operating activities and borrower loan repayments less debt maturities, expected future funding obligations and preferred stock dividends) result in a substantial cash shortfall. In order to avoid maturity defaults on the second lien obligations and unsecured revolving credit facility due June 2011, a coercive debt exchange would need to be effected, whereby the company negotiates with certain of its debt holders a material reduction in terms to avert bankruptcy. The rating actions are also driven by continued weakening of the quality of iStar's loan portfolio. For the quarter ended June 30, 2010, iStar recognized $109 million of loan loss provisions, and iStar has recognized over $750 million of loan loss provisions over the last 12 months. As of June 30, 2010, non-performing and watch list loans collectively represented nearly 54% of iStar's total gross loan portfolio, compared with 50% as of June 30, 2009. Fitch expects that the company's non-performing and watch list loans as a percentage of total loans will not improve, as a majority of iStar's non-performing loans consists of loans backed by condominium or land assets, the ultimate recovery of which is uncertain. Challenging property-level fundamentals, combined with the decline in commercial real estate values over the past several years, have decreased the ability of iStar's borrowers to repay loans. The decreased ability of iStar's borrowers to repay loans, combined with Fitch's expectation that iStar will face a protracted and difficult environment in which to monetize its portfolio, reduces the company's ability to meet its future funding obligations and debt maturities. iStar's cash source reduction will likely result in a liquidity shortfall between now and the middle of 2011. The likelihood of a shortfall increases when including iStar's debt maturities over the next 24 months. iStar has limited draw capacity under its term loans and revolving credit facilities and thus is reliant upon unrestricted cash, asset sales and loan repayments as its primary sources of liquidity. Under a scenario whereby iStar receives only 30% of contractual loan repayments between now and the end of 2011, it would face a liquidity deficit of over $2 billion, assuming that it was unable to sell or monetize any assets. Given that over 58% of iStar's unencumbered loans and other lending investments are non-performing, Fitch believes that it will be challenging for the company to reduce unsecured debt meaningfully via asset sales, and it will need to modify the terms of certain of its debt maturing in 2011 and 2012 to more effectively match the maturities of its assets with that of its indebtedness. Further, the terms of iStar's first and second priority credit agreements restrict the amount of additional secured debt iStar can incur to $750 million, limiting the company's ability to access its unencumbered asset pool as a source of contingent liquidity. In accordance with Fitch's Recovery Rating methodology, Fitch has taken these rating actions: -- Downgraded the ratings for iStar's first priority credit agreement to 'B-/RR1', or a 3-notch positive differential from the 'C' IDR based on the current capital structure. This security is secured by a first lien security claim on the collateral pool selected by the creditors party to the first and second priority credit agreements. -- Downgraded the ratings for iStar's second priority credit agreement, 2011 second lien notes and 2014 second lien notes to 'CCC/RR2', or a 2-notch positive differential from the 'C' IDR based on the current capital structure. These securities, while junior to the first priority credit agreement, have structural seniority relative to unsecured creditors and have a second lien security claim on the collateral pool selected by the creditors party to the first and second priority credit agreements. -- Affirmed the ratings for iStar's unsecured revolving credit facilities, senior unsecured notes and convertible senior floating-rate notes at 'C/RR5', reflecting no notching from the 'C' IDR, based on the current capital structure. -- Affirmed the ratings for iStar's preferred stock at 'C/RR6', reflecting no notching from the 'C' IDR. Headquartered in New York City, iStar provides structured financing and corporate leasing of commercial real estate nationwide. iStar leverages its expertise in real estate, capital markets, and corporate finance to serve real estate investors and corporations with sophisticated financing requirements. As of June 30, 2010, iStar had $11 billion of undepreciated assets and $2.2 billion of undepreciated book equity. JOECELESTIN CIVIL: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Joecelestin Civil Engineer & General Builder Corp 396 NW 159 Street Miami, FL 3316 Bankruptcy Case No.: 10-39600 Chapter 11 Petition Date: September 29, 2010 Court: U.S. Bankruptcy Court Southern District of Florida (Miami) Judge: Robert A. Mark Debtor's Counsel: J. Wil Morris, Esq. 10800 Biscayne Boulevard, #560 Miami, FL 33161 Estimated Assets: $500,000,001 to $1 billion Estimated Debts: $0 to $50,000 The Company did not file a list of creditors together with its petition. The petition was signed by Josabhat Celestin, officer. KEVIN GREEN: Case Summary & 13 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Kevin Green 1508 18th Street, SE, Suite #2 Washington, DC 20020 Tel: (202) 678-4620 Bankruptcy Case No.: 10-00965 Chapter 11 Petition Date: September 29, 2010 Court: U.S. Bankruptcy Court District of Columbia (Washington, D.C.) Judge: S. Martin Teel, Jr. Debtor's Counsel: Philip McNutt, Esq. HUGHES & BENTZEN, PLLC 1100 Connecticut Avenue, NW, Suite 340 Washington, DC 20036 Tel: (202) 293-8975 E-mail: pmcnutt@hughesbentzen.com Scheduled Assets: $2,321,436 Scheduled Debts: $1,912,275 A list of the Debtor's 13 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/dcb10-00965.pdf KINGS RANCH: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Kings Ranch, L.L.C. fka Kinjockity Ranch, L.L.C. MCEVOY, DANIELS & DARCY, P.C. 4560 East Camp Lowell Drive Tucson, AZ 85712 Tel: (520) 326-0133 Bankruptcy Case No.: 10-31329 Chapter 11 Petition Date: September 29, 2010 Court: U.S. Bankruptcy Court District of Arizona (Tucson) Judge: James M. Marlar Debtor's Counsel: Sally M. Darcy, Esq. MCEVOY, DANIELS & DARCY P.C. Camp Lowell Corporate Center 4560 East Camp Lowell Drive Tucson, AZ 85712 Tel: (520) 326-0133 Fax: (520) 326-5938 E-mail: DarcySM@aol.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Kenneth C. Komenda, manager. KJS REAL ESTATE: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: KJS Real Estate Holdings, LLC aka KJS Holdings LLC KJS Real Estate Holding, LLC 1620 W. Hudson Way Gilbert, AZ 85233 Bankruptcy Case No.: 10-31448 Chapter 11 Petition Date: September 29, 2010 Court: U.S. Bankruptcy Court District of Arizona (Phoenix) Judge: George B. Nielsen, Jr. Debtor's Counsel: Tracy S. Essig, Esq. LAW OFFICE OF TRACY S. ESSIG 3509 E. Shea Boulevard, Suite 117 Phoenix, AZ 85028 Tel: (602) 493-2326 Fax: (602) 482-3164 E-mail: tracyessiglaw@cox.net Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Kenneth J. Schroeder, managing member. L-3 COMMUNICATIONS: Fitch Affirms BB+ Rating on Convertible Notes ----------------------------------------------------------------- Fitch Ratings has affirmed the Issuer Default Rating for L-3 Communications', along with these: L-3 Communications Holdings, Inc. -- IDR at 'BBB-'; -- Contingent convertible subordinated notes at 'BB+'. L-3 Communications Corporation -- IDR at 'BBB-'; -- Senior unsecured notes at 'BBB-'; -- Senior unsecured revolving credit facility at 'BBB-'; -- Senior subordinated debt affirmed at 'BB+'. The Rating Outlook remains Stable. Approximately $4.2 billion of debt outstanding is covered by the ratings. The senior subordinated notes remain one notch below the IDR and senior unsecured debt due to contractual subordination. Key factors that support the affirmation are L-3's solid credit metrics for the rating, liquidity position, and Fitch's expectation of steady operating margins and substantial free cash flow. Other positive factors include high levels of defense spending; L-3's diverse portfolio of products and services that are in line with the Department of Defense requirements; and a balanced contract mix, including generation of more than 50% of revenues from the Operations & Maintenance account in the DOD budget. Concerns relate to the potential for larger debt-financed acquisitions, some uncertainty regarding core defense spending trends beyond fiscal year 2011, the longer-term outlook for supplemental DOD budgets related to operations in Iraq and Afghanistan, the underfunded pension position and the Air Force's ongoing investigation into the Special Support Programs Division (previously known as the Joint Operations Group, or JOG). The rating and Outlook incorporate Fitch's expectations of small- to medium-sized acquisitions and meaningful cash deployment toward shareholders. An upward revision to the rating could occur if L-3 moderated its acquisition strategy, kept spending within free cash flow, and focused capital on improving the credit profile. Alternatively, Fitch could consider a downward revision to the ratings or Outlook if L-3 did a large debt-funded acquisition, unless some equity was used to limit the increase in leverage. A downgrade is also possible if the company's end-markets show substantial deterioration which is viewed as unlikely in the near to medium term. L-3 has generated strong free cash flow through sales growth, strong operating performance, working capital management, and acquisitions. In the latest 12 months, ending in the second quarter of 2010, the company generated $1.1 billion of FCF. In 2009 it was also $1.1 billion and in 2008 it was $1 billion. Helped by its history of aggressive acquisitions, the company achieved a five-year compound annual growth rate of 11% in FCF (before dividends) by the end of 2009. Robust sales growth (13% CAGR for the same period), effective merger integration management, and working capital management have all contributed to the results. FCF also benefits from low capital expenditures as a percentage of sales; it has averaged 1.3% of sales between 2006 and 2009. L-3 forecasts 2010 FCF before dividends to be approximately $1.3 billion, which Fitch believes is an achievable target. While cash generation is forecasted to remain very healthy in 2010, Fitch does not expect to see debt reduction become a priority for L-3. Historically, the company has directed cash to acquisitions, share repurchases and dividends. In Fitch's view, acquisitions remain the main risk to the credit profile. In the first half of 2010, L-3 spent $613 million on the acquisition of Insight Technologies. Two small acquisitions were made after the end of the second quarter: Airborne Technologies and 3Di Technologies, both for undisclosed amounts. Share repurchases have also been a significant use of cash and a new $1 billion share repurchase program was authorized in July 2010; it extends through Dec. 31, 2012. The company's prior $1 billion share repurchase program was authorized in November 2008 and it extends through Dec. 31, 2010. In the first half of 2010, the company repurchased $254 million of common shares. During 2009, share repurchases were $505 million. Given the share repurchases to date in 2010, Fitch expects to see a total of $500 million to $550 million spent on share repurchases in 2010. As of June 25, 2010, leverage defined as debt-to-EBITDA was 1.9 times on a pro forma basis when accounting for July 2010 redemption of $400 million of notes due 2013. Liquidity remains healthy in Fitch's view. L-3 had a liquidity position of approximately $2 billion, consisting of $1,023 million of cash and $967 million of revolving credit facility availability. L-3 has $700 million of convertible debt outstanding. The notes bear interest of 3% and the final maturity date is 2035. The noteholders can put all or some of the notes to L-3 on the next put date which is Feb. 1, 2011. At the end of 2009, L-3's pension plan was 66% funded, or $660 million underfunded. Fitch believes that the funding deficit may increase at the end of 2010 due to asset returns and a likely decline in the discount rate (currently 6.3%). This is currently a common concern for pension plans in the industrial sector. As a defense contractor L-3 can factor in certain pension costs as allowable expenses in some government contracts although there can be timing issues for cash flows. Also, like most defense contractors L-3 is exempt from PPA funding requirements until the PPA is harmonized with government cost accounting standards. L-3's credit quality continues to be supported by large U.S. defense budgets. U.S. defense spending trends are key drivers of the company's financial performance given that the company generates approximately 76% of its revenues from the DOD. Core spending in fiscal 2011 is expected to continue to rise, so the outlook for L-3's defense operations is still favorable in the near term. Beyond fiscal 2011, there is more uncertainty for core spending levels due to fiscal pressures. Supplemental budgets for overseas contingency operations will likely trend downward in the next several years. Funding for the supplemental budget is not likely to disappear immediately because of increased activity in Afghanistan, the need for Afghanistan and Iraq to build up their own militaries, and the need for the U.S. to 'reset' its forces. Fitch believes that L-3 has credit metrics strong enough to withstand lower defense spending levels while retaining the current ratings. In late July 2010, the Air Force lifted the temporary suspension on the Special Support Programs Division and an agreement between the two parties was signed. However, the investigation is ongoing. L-3 will not have the opportunity to re-compete for this contract which is an unfavorable event for L-3, but Fitch does not view it as a significant credit event because Fitch expects the future cash impact will not be material to the company's overall results. LODGENET INTERACTIVE: To Explore Alternatives to $435MM Offering ---------------------------------------------------------------- LodgeNet Interactive Corporation said that it is exploring alternatives to the $435 million offering of senior secured second lien notes announced on September 20, 2010. The alternatives under consideration include, but are not limited to, possible amendment of the Company's existing credit facility, together with a smaller issuance of senior secured notes, the proceeds of which would be used to reduce the amount outstanding under the existing credit facility and thereby extend the term of a significant portion of the Company's debt beyond the current maturity in 2014. While a variety of alternatives are under consideration, it is also possible that the Company may elect to defer any immediate transaction if the pricing and terms are not acceptable to the Company, as the Company is fully compliant with the covenants in its existing credit facility and believes that it will continue to remain compliant with the terms of such credit facility. About LodgeNet Interactive Sioux Falls, South Dakota-based LodgeNet Interactive Corporation (Nasdaq:LNET) -- http://www.lodgenet.com/-- provides media and connectivity solutions designed to meet the unique needs of hospitality, healthcare and other guest-based businesses. LodgeNet Interactive serves more than 1.9 million hotel rooms worldwide in addition to healthcare facilities throughout the United States. The Company's services include: Interactive Television Solutions, Broadband Internet Solutions, Content Solutions, Professional Solutions and Advertising Media Solutions. LodgeNet Interactive Corporation owns and operates businesses under the industry leading brands: LodgeNet, LodgeNetRX, and The Hotel Networks. The Company's balance sheet at June 30, 2010, showed $466.45 million in total assets, $522.34 million in total liabilities, and a stockholders' deficit of $55.89 million. * * * As reported by the Troubled Company Reporter on June 21, 2010, Standard & Poor's Ratings Services affirmed its ratings on Sioux Falls, S.D.-based LodgeNet Interactive, including the 'B-' corporate credit rating. At the same time, S&P revised the rating outlook to positive from stable. LODO INVESTORS: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Lodo Investors Group Champa LLC 1800 S. Sheridan Boulevard, #306 Denver, CO 80232 Bankruptcy Case No.: 10-34739 Chapter 11 Petition Date: September 29, 2010 Court: U.S. Bankruptcy Court District of Colorado (Denver) Judge: Elizabeth E. Brown Debtor's Counsel: Scott Tene, Esq. 104 Broadway, #600 Denver, CO 80203 Tel: (303) 693-3600 Fax: (303) 731-4167 E-mail: ScottTene@aol.com Scheduled Assets: $2,000,700 Scheduled Debts: $2,107,913 The list of unsecured creditors filed together with its petition does not contain any entry. The petition was signed by Mahinder M. Bajaj, manager. LONESOME PINE: Case Summary & 5 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Lonesome Pine Holdings, LLC P.O. Box 5266 Buena Vista, CO 81211 Bankruptcy Case No.: 10-34560 Chapter 11 Petition Date: September 28, 2010 Court: U.S. Bankruptcy Court District of Colorado (Denver) Judge: Howard R. Tallman Debtor's Counsel: Lee M. Kutner, Esq. 303 E. 17th Avenue, Suite 500 Denver, CO 80203 Tel: (303) 832-2400 E-mail: lmk@kutnerlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's five largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cob10-34560.pdf The petition was signed by John Cogswell, manager. MARCO COMMUNITY: Earns $635,000 in March 31 Quarter --------------------------------------------------- Marco Community Bancorp, Inc., filed on September 29, 2010, its quarterly report for the quarterly period ended March 31, 2010. The Company reported net income of $635,000 on $37,000 of interest income for the three months ended March 31, 2010, compared with a net loss of $209,000 on $53,000 of interest income for the three months ended March 31, 2009. The Company's balance sheet at March 31, 2010, showed $2.0 million in total assets, $77,000 in total liabilities, and stockholders' equity of $1.9 million. As reported in the Troubled Company Reporter on September 1, 2010, Hacker, Johnson & Smith, P.A., in Tampa, Fla., expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted of the closing of Marco Community Bank in February 19, 2010. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?6bf6 About Marco Community Marco Island, Fla.-based Marco Community Bancorp, Inc. was incorporated under the laws of the State of Florida on January 28, 2003, for the purpose of organizing Marco Community Bank and purchasing 100% of the to-be-issued capital stock of the Bank. On February 19, 2010, the Bank was closed by the Florida Office of Financial Regulation and the FDIC was appointed as receiver of the Bank. Subsequent to the closure, Mutual of Omaha Bank, Omaha, Nebraska, assumed all of the deposits of the Bank, and purchased essentially all of the Bank's assets in a transaction facilitated by the FDIC. On February 20, 2010, the one office of the Bank reopened as a branch of Mutual of Omaha. The Company's principal asset is the capital stock that it owns in the Bank at February 19, 2010, and, as a result of the closure of the Bank, the Company has minimal remaining tangible assets. The Company did not realize any recovery following the closing of the Bank and sale of its assets by the FDIC, nor is any recovery expected. Since the closing of the Bank, the principal assets of the Company are its office condominium, a participation in a loan receivable, and cash. The Company is exploring methods of winding down its operations. Any ultimate distribution of assets will occur in accordance with Florida law, the Company's Articles of Incorporation and the terms of the Company's outstanding series of Preferred Stock. MARY TAPLETT: Plan Outline Hearing Continued Until November 17 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Washington has continued until November 17, 2010, at 2:00 p.m., the hearing to consider adequacy of the Disclosure Statement explaining Mary L. Taplett and Columbia Feeders, Inc.'s Plan of Reorganization. According to the Disclosure Statement, the Plan provides for the development and marketing the Debtor's real property. The Plan is to pay debt off quickly so CFI and Mary L. Taplett can exit Chapter 11. The Plan will be accomplished through the sale and distribution of proceeds from the real property. Under the Plan, the Debtor will sell Taplett Fruit Land and Columbia Feeders land and option additional RF Taplett land to Ivan Kriger who will develop the land. Columbia Feeders land will be sold for $2,005,000, RF Taplett Land for $1,630,000 and additional RF Taplett land will be optioned for $900,000 for a total of $4,535,000 in proceeds to fund the Plan. All allowed secured, administrative and priority claims against the Debtors will be paid in full, and unsecured creditors may be paid in full after the administrative, priority and secured claims are paid in full. Holders of corporate or shareholder interests will retain those interests under the Plan. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/MaryTaplett_DS.pdf The Debtor is represented by: Christina M. Davitt, Esq. DAVITT LAW GROUP, PLLC 1630 N. Wenatchee Ave. Suite 18 Wenatchee, WA 98801 Tel: (509) 888-2925 Fax: (509) 888-2926 E-mail: christina@davittlaw.com About Mary L. Taplett East Wenatchee, Washington-based Mary L. Taplett filed for Chapter 11 bankruptcy protection on May 10, 2010 (Bankr. E.D. Wash. Case No. 10-02835). The Company estimated its assets at $10 million to $50 million debts at $1 million to $10 million in liabilities. Two affiliates -- Taplett Family Ltd. Partnership and Taplett Orchard, Inc. -- filed for Chapter 11 in 2009. MCG CAPITAL: Fitch Affirms Issuer Default Rating at 'BB+' --------------------------------------------------------- Fitch Ratings has affirmed the long-term Issuer Default Rating and unsecured debt rating of MCG Capital Corporation at 'BB+'. The Rating Outlook remains Negative. Approximately $44 million of unsecured debt is affected by these actions. Fitch has affirmed these with a Negative Outlook: MCG Capital Corporation -- Long-term IDR at 'BB+'; -- Senior unsecured debt at 'BB+'. The ratings affirmation reflects MCG's relatively low leverage, successful investment monetization strategy, emergence of operating stability, and improved liquidity profile. Ratings are constrained by the company's relatively small asset size, outsized portfolio equity exposure which brings increased valuation risk, and limited funding flexibility given the 2009 retirement of its unsecured bank revolver, its cash sweep debt repayment requirements, and an inability to access the equity markets for growth capital, given its stock trading discount to net asset value (NAV). MCG's asset coverage improved from 199% at March 31, 2009, to 224% at June 30, 2010, due largely to asset sales, with a focus on non- yielding equity investments, and debt repayments. From July 2008 through July 2010, the company completed 35 portfolio investment sales amounting to $341.2 million, consisting of $329.6 million of sales which have been completed at 99.5% of cost and 100.3% of their most recently reported fair value, and one distressed sale of TNR Holdings at 23.8% of cost and 42.3% of its most recently reported fair value. Fitch views favorably the company's ability to monetize investments at or near fair value in an effort to de- leverage the balance sheet and reduce equity concentrations, which have yielded more valuation volatility over time. Fitch expects asset sales to continue at a measured pace, with proceeds being redeployed into cash-yielding debt investments, in order to support earnings growth and dividend payments. Fitch believes MCG's liquidity position has improved year-over- year with an increase in unrestricted cash balances and additional SBIC borrowing availability, which is not included in asset coverage calculations. As of June 30, 2010, the company had $44.2 million of unrestricted cash, $37.3 million of SBIC borrowing capacity, $91.5 million of cash in securitization accounts, $17.2 million of restricted cash, and $50 million of availability in its collateralized loan obligation securitization vehicle, all of which is available for portfolio originations. Dividends were reinstated in 2010 with the declaration of an $0.11 per share dividend on April 29, 2010, which compared to first- quarter 2010 (1Q'10) distributable net operating income of $0.13 per share, and the declaration of a $0.12 dividend per share on Aug. 3, 2010, relative to 2Q'10 DNOI of $0.13 per share. Fitch views the DNOI coverage of the dividend payment positively and believes the company will continue to manage distributions conservatively in the context of cash income. Fitch believes the reinstatement of the dividend, when combined with the deployment of origination capacity, should help narrow the gap between NAV and equity share price over time. The retention of the Negative Outlook reflects the continued recognition of unrealized portfolio depreciation, due primarily to movement in larger portfolio holdings, limited funding flexibility, and an inability to access the equity markets for growth capital, given the current trading discount to NAV. Negative rating action could be triggered by unrealized portfolio depreciation which yields lower asset coverage, declining operating earnings resulting from reduced operating leverage and/or weakening asset quality, and deterioration in the company's liquidity position, which includes an inability to fully fund the current dividend from cash operating earnings. Rating stability could be driven by the reversal of unrealized portfolio depreciation, consistent asset growth that supports improved operating performance, a reduction in non-accrual levels, an enhanced liquidity profile (including term borrowing capacity), and improved funding flexibility, including the ability to access the equity markets for growth capital. MEDICURE INC: KPMG LLP Raises Going Concern Doubt ------------------------------------------------- Medicure Inc. filed on September 29, 2010, its annual report on Form 20-F for the fiscal year ended May 31, 2010. KPMG LLP, in Winnipeg, Canada, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has experienced operating losses and cash flows from operations since incorporation and has significant debt servicing obligations that it does not have the ability to repay. The Company reported a net loss of C$5.5 million on C$3.3 million of revenue for fiscal 2010, compared with a net loss of C$13.3 million on C$4.8 million of revenue for fiscal 2009. At May 31, 2010, the Company was in default of the terms of its long-term debt financing obligations, and continues to be in default. Under an event of default, the lender can exercise its security rights under the agreement, and accordingly the long-term debt obligation has been classified as a current liability as at May 31, 2010. The Company has accumulated a deficit of C$154.1 million as at May 31, 2010. Based on the Company's operating plan, its existing working capital is not sufficient to fund its planned operations, capital requirements, debt servicing obligations, and commitments through the end of the fiscal 2011 year without restructuring of its debt and raising additional capital. The Company is in ongoing discussions with its senior lender to restructure its debt, and in January 2010, retained advisors to assist in the evaluation of financial alternatives and fund raising options, and to assist in the partnership, license or sale of AGGRASTAT(R). No agreements with the lender or other potential lenders or investors have been reached yet and there can be no assurance that such agreements will be reached. At May 31, 2010 the Company had cash and cash equivalents totaling C$371,262 compared to roughly C$2.0 million as of May 31, 2009. As at May 31, 2010, the Company had a working capital deficiency of C$29.4 million compared to working capital a working capital deficiency of C$535,328 at May 31, 2009. The reduction of working capital was mainly due to increases in accrued interest on long- term debt, the reclassification of the debt to a current liability, and use of funds to support operations. The Company's balance sheet at May 31, 2010, showed C$6.0 million in total assets, C$30.9 million in total liabilities, and a stockholders' deficit of C$24.9 million. A full-text copy of the Form 20-F is available for free at: http://researcharchives.com/t/s?6bf5 Medicure Inc. also filed consolidated financial statements, and management's discussion and analysis for year ended May 31, 2010. A full-text copy of the Consolidated Financial Statements is available for free at http://ResearchArchives.com/t/s?6c01 A full-text copy of the Management's Discussion and Analysis is available for free at http://ResearchArchives.com/t/s?6c02 About Medicure Inc. Based in Manitoba, Canada, Medicure Inc. (TSX/NEX: MPH.H) -- http://www.medicure.com/-- is a specialty pharmaceutical Company engaged in the research, clinical development and commercialization of human therapeutics. The Company's primary focus is on the sale and marketing of its acute care cardiovascular drug, AGGRASTAT(R) (tirofiban hydrochloride) in the United States and its territories through its U.S. subsidiary, Medicure Pharma Inc. MEHDI AHMADI: Case Summary & 9 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Mehdi Ahmadi fka Murray Oncology Associates 1534 Springcreek Drive Murray, KY 42071 Bankruptcy Case No.: 10-51175 Chapter 11 Petition Date: September 29, 2010 Court: U.S. Bankruptcy Court Western District of Kentucky (Paducah) Judge: Thomas H. Fulton Debtor's Counsel: Mark C. Whitlow, Esq. WHITLOW, ROBERTS, HOUSTON & STRAUB, PLLC P.O. Box 995 300 Broadway Paducah, KY 42002-0995 Tel: (270) 443-4516 Fax: (270) 443-4571 E-mail: lhuff@whitlow-law.com Scheduled Assets: $2,130,975 Scheduled Debts: $3,195,800 A list of the Debtor's nine largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/kywb10-51175.pdf MERCURY COMPANIES: Plan Confirmation Hearing Set for November 30 ---------------------------------------------------------------- The Hon. Michael E. Romero of the U.S. Bankruptcy Court for the District of Colorado will convene a hearing on November 30, 2010, at 9:30 a.m., to consider confirmation of Mercury Companies, Inc., et al's proposed Plan of Reorganization. Objections, if any, are due November 16. Plan materials and ballots will be mailed on October 20. Ballots accepting or rejecting the Plan must be submitted by 5:00 p.m. on November 16, to the Debtors' counsel: Brownstein Hyatt Farber Schreck, LLP 410 17th Street, Suite 2200 Denver, CO 80202 As reported in the Troubled Company Reporter on August 12, according to the Disclosure Statement, Mercury said it made significant progress in liquidating assets, generating cash, and resolving disputes. Upon the effective date of the Plan, Mercury will set $25 million cash aside in a fund for distribution to general unsecured creditors. The fund will not be burdened with any future administrative or operational costs. Distributions from the fund will be made quickly as possible pro rata to undisputed claims appearing on the claims register as of that time, subject to hold backs with respect to disputed claims. Meanwhile, Mercury will continue the process of resolution of disputed claims so that money from the fund will be distributed only to creditors whose claims are properly allowed. Mercury estimates that at the conclusion of the claims resolution process the total allowed general unsecured claims will be approximately $35 million. The initial $25 million must be sufficient to pay unsecured creditors approximately 70% of their claims (although it will not be paid all at once because of the need to reserve for disputed claims). Mercury's remaining activities will generate more cash so that eventually creditors must receive greater distributions. Treatment of Claims Class Estimated Distribution ----- ---------------------- 1- Priority Claims 100% 2- Secured Claims 100% 3- General Unsecured Claims 70+% 4- Equity Interests 0+% A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/MERCURYCOS_DS.pdf About Mercury Companies Inc. 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. The units' cases are jointly administered with Mercury's (Bankr. D. Colo. Lead Case No. 08-23125). Brownstein Hyatt Farber Schreck, LLP serves as the Debtors' bankruptcy counsel. Lars H. Fuller, Esq., at Baker Hostetler, serves as the official committee of unsecured creditors' counsel. Mercury Companies disclosed $21,820,135 in assets and $63,553,229 in liabilities as of the Petition Date. METALDYNE LLC: Moody's Assigns 'B1' Corporate Family Rating ----------------------------------------------------------- Moody's Investors Service assigned first time ratings to Metaldyne, LLC -- Corporate Family and Probability of Default Ratings, B1; and $225 million senior secured term loan facility, B1. The rating outlook is stable. Proceeds from the $225 million term loan will be used to repay existing debt, fund a distribution to the company's shareholders (including the company's lead sponsors, The Carlyle Group and Solus Alternative Asset Management LP), and pay related fees and expenses. The B1 Corporate Family Rating reflects Metaldyne's modest leverage, despite the company's shareholder distribution, exposure to the cyclical automotive industry, and high customer concentrations to the Detroit-3. Approximately 36% of the company's revenues are from the Detroit-3, with Ford representing the largest customer. The rating also reflects Metaldyne's operating performance since being purchased out of Chapter 11 in October 2009. This performance has benefited from recovering automotive production levels in North American (about 51% of revenues) and Europe (36%), and from restructuring activities enacted in late 2009. These restructuring actions included the sale of certain of the company's non-core domestic and international facilities. Industry conditions are expected to improve over the trough in 2009 with U.S. retail sales improving to 11.5 million units during 2010. While first half 2010 car registrations in Europe have improved over prior period levels, the second half of 2010 is expected to reflect seasonal softness and the impact of expired government scrappage programs. European registrations in 2011 also are expected to be challenged by a potential negative impact of European government debt restructuring programs on automobile demand. The stable outlook incorporates Moody's expectation that Metaldyne's strong credit metrics will help to mitigate the higher business risk associated with the company's relatively small revenue base and high customer concentrations with the Detroit-3. Metaldyne is expected to have an adequate liquidity profile over the near-term supported by cash balances and free cash flow generation. The company is expected to have about $100 million of cash on hand following the close of the transaction. Moody's anticipates that the company's free cash flow generation over the near-term will be positive after working capital and capital expenditure needs. While the new term loan will have modest amortization requirements, the company's liquidity profile has to accommodate the potential risk that factoring programs might not be renewed on a timely basis. Metaldyne's $40 million asset based revolving credit is modest in size and is expected to remain largely unused over the near-term and support a modest amounts of letters of credit. The asset based revolving credit facility will have a springing fixed charge coverage covenant of 1x, based on an availability trigger under the facilities. Covenants under the secured term loan will include a minimum interest coverage test and a maximum leverage test. Alternate sources of raising liquidity are limited as essentially all the company's domestic assets will secure the ABL and term loan facilities. The rating and/or outlook could improve if Metaldyne were to demonstrate continued improvement in revenues, and operating performance resulting in debt/EBITDA reducing to 2.5x on sustained basis and EBIT/interest coverage approaching 3.0x. Further customer and industry diversification could also result in positive ratings momentum. The outlook or rating could be lowered if North American automotive production levels do not recover as anticipated, resulting in substantially weaker profitability or a deterioration in liquidity. If operations were to weaken such that debt/EBITDA were to approach 4.5 times or free cash flow generation was not realized, the company's rating and/or outlook could be lowered. These ratings were assigned: -- Corporate Family Rating, B1; -- Probability of Default, B1; -- B1 (LGD3, 44%), for the $225 million senior secured term loan Metaldyne, LLC, is a leading global manufacturer of highly engineered metal-based components for light vehicle engine, transmission and driveline applications for the global automotive light vehicle market. The company is wholly-owned subsidiary of MD Investors Corporation which itself is owned by a coalition of investors led by The Carlyle Group and Solus Alternative Asset Management LP. MICHAEL FORRET: Case Summary & 26 Largest Unsecured Creditors ------------------------------------------------------------- Joint Debtors: Michael J. Forret Jane E. Kelly-Forret 7097 NW 5th Court Ankeny, IA 50021 Bankruptcy Case No.: 10-04829 Chapter 11 Petition Date: September 28, 2010 Court: United States Bankruptcy Court Southern District of Iowa (Des Moines) Debtor's Counsel: Jerrold Wanek, Esq. GARTEN & WANEK 835 Insurance Exchange Bldg. 505 Fifth Avenue Des Moines, IA 50309 Tel: (515) 243-1249 Fax: (515) 244-4471 E-mail: wanek@dwx.com Scheduled Assets: $1,195,111 Scheduled Debts: $1,505,186 A list of the Joint Debtors' 26 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/iasb10-04829.pdf MIGUEL ANGELES-HERNANDEZ: Case Summary & Creditors List ------------------------------------------------------- Joint Debtors: Miguel Angel Angeles-Hernandez Maria Perez Angeles 892 Entrada Drive Soledad, CA 93960 Bankruptcy Case No.: 10-60102 Chapter 11 Petition Date: September 28, 2010 Court: U.S. Bankruptcy Court Northern District of California (San Jose) Judge: Charles Novack Debtors' Counsel: Rattan Dev S. Dhaliwal, Esq. LAW OFFICES OF DHALIWAL AND ROUHANI 2005 De La Cruz Boulevard, #185 Santa Clara, CA 95050 Tel: (408) 988-7722 E-mail: rdsdhaliwal@yahoo.com Scheduled Assets: $520,276 Scheduled Debts: $1,024,276 A list of the Joint Debtors' 17 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/canb10-60102.pdf MOMENTIVE PERFORMANCE: Terminates CEO and CFO Without Cause ----------------------------------------------------------- Momentive Performance Materials Inc. said the employment of Dr. Jonathan Rich, the president and chief executive officer, and Anthony Colatrella, the chief financial officer, will be terminated without cause, each effective as of Oct. 1, 2010, respectively. In connection with their termination, each of Messrs. Rich and Colatrella have entered into separation agreements with the Company. The termination of Messrs. Rich and Colatrella's employment is in connection with the anticipated completion of the transactions contemplated by that certain Combination Agreement, dated as of September 11, 2010, by and among Momentive Performance Materials Holdings Inc., Hexion LLC, Mercury Sub 1 LLC, Mercury Sub 2 LLC, Hexion Newco 1, LLC and Hexion Newco 2, LLC. A full-text copy of the Rich Separation Agreement is available for free at http://ResearchArchives.com/t/s?6bf9 A full-text copy of the Colatrella Separation Agreement is available for free at http://ResearchArchives.com/t/s?6bfa About Momentive Performance Momentive Performance Materials, Inc., is a producer of silicones and silicone derivatives, and is engaged in the development and manufacture of products derived from quartz and specialty ceramics. As of Dec. 31, 2008, the Company had 25 production sites located worldwide, which allows it to produce the majority of its products locally in the Americas, Europe and Asia. Momentive's customers include companies in industries, such as Procter & Gamble, 3M, Goodyear, Unilever, Saint Gobain, Motorola, L'Oreal, BASF, The Home Depot and Lowe's. As of March 30, 2010, Momentive had $3.22 billion in total assets, $3.79 billion in total liabilities, and stockholders' deficit of $565.8 million. Momentive carries a 'CCC-' corporate credit rating from Standard & Poor's Ratings Services. Standard & Poor's Ratings Services said that it affirmed all its ratings on Hexion Specialty Chemicals Inc., including the 'B-' corporate credit rating. The outlook is stable. At the same time, S&P placed all its ratings on Momentive Performance Materials Inc., including the 'CCC+' corporate credit rating, on CreditWatch with positive implications. MONEYGRAM INTERNATIONAL: Makes $30 Million Debt Prepayment ---------------------------------------------------------- MoneyGram International said it will make an optional $30 million prepayment on its tranche B term loan under the senior secured credit facility. The loan payment will be made on Sept. 29, 2010. Including this latest payment, MoneyGram International will have paid $277 million toward its outstanding debt obligation. This represents a 28 percent decrease in the company's total outstanding debt since Jan. 1, 2009. About Moneygram International MoneyGram International, Inc. (NYSE: MGI) -- http://www.moneygram.com/-- is a leading global payment services company. The Company's major products and services include global money transfers, money orders and payment processing solutions for financial institutions and retail customers. MoneyGram is a New York Stock Exchange listed company with 203,000 global money transfer agent locations in 191 countries and territories. The Company's balance sheet as of June 30, 2010, showed $5.461 billion in total assets, $5.450 billion in total liabilities, $929.2 million in total mezzanine equity, and a stockholders' deficit of $918.0 million. * * * According to the Troubled Company Reporter on July 1, 2010, Fitch Ratings has affirmed the Issuer Default Ratings for MoneyGram International Inc. and MoneyGram Payment Systems Worldwide, Inc., at 'B+'. Outlook is stable. Fitch noted that the ratings could be negatively impacted by further declines in remittance volumes driven by macro economic factors or decreases in migrant labor populations worldwide. MOULTONBOROUGH HOTEL: Files for Chapter 11 in New Hampshire ----------------------------------------------------------- Moultonborough Hotel Group, LLC, filed for Chapter 11 protection in Manchester, New Hampshire (Bankr. D. N.H. Case No. 10-14214) on September 30, 2010. Moultonborough is the owner of the Hampton Inn & Suites in Tilton, New Hampshire. The petition says there is almost $12 million owing to three different secured creditors. The largest is a $9.4 million mortgage. Steven M. Notinger, Esq., at Donchess & Notinger, PC, in Nashua, New Hampshire, serves as counsel to the Debtor. MSGI SECURITY: Delays Filing of Form 10-K for Fiscal Year 2010 -------------------------------------------------------------- MSGI Security Solutions Inc. said it could not timely file its annual report on Form 10-K for the period ended June 30, 2010, with the Securities and Exchange Commission. About MSGI Security MSGI Security Solutions, Inc. (Other OTC: MSGI) -- http://www.msgisecurity.com/-- is a provider of proprietary solutions to commercial and governmental organizations. The Company is developing a global combination of innovative emerging businesses that leverage information and technology. The Company is headquartered in New York City where it serves the needs of counter-terrorism, public safety, and law enforcement and is developing new technologies in nanotechnology and alternative energy as a result of its recently formed relationship with The National Aeronautics and Space Administration. The Company's balance sheet at March 31, 2010, showed $2.1 million in total assets, $20.3 million in liabilities, and a stockholders' deficit of $18.2 million. Amper, Politziner & Mattia, LLP, in Edison, New Jersey, expressed substantial doubt about MSGI Security Solutions, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the years ended June 30, 2009, and 2008. The auditing firm reported that the Company has suffered recurring losses from operations, and negative cash flows from operations, and has a substantial amount of notes payable due on demand or within the next 12 months and has very limited capital resources. MXENERGY HOLDINGS: Posts $11.5 Million Net Income in FY2010 ----------------------------------------------------------- MXEnergy Holdings Inc. filed its annual report on Form 10-K for the period ended June 30, 2010, reporting $202.02 million in total assets, $115.07 million in total liabilities, and stockholders' equity of $86.95 million. The Company reported net income of $11.51 million on $561.21 million of sales of natural gas and electricity for the fiscal year ended June 30, 2010, compared with a net loss of $100.21 million on $789.78 million of sales of natural gas and electricity for the same period a year ago. A full-text copy of the annual report on Form 10-K is available for free at http://ResearchArchives.com/t/s?6bea About MxEnergy Holdings MxEnergy Holdings Inc. was founded in 1999 as a retail energy marketer. The two principal operating subsidiaries of Holdings are MxEnergy Inc. and MxEnergy Electric Inc. which are engaged in the marketing and supply of natural gas and electricity, respectively. Holdings and its subsidiaries operate in 39 market areas located in 14 states in the United States and in two Canadian provinces. The Company's balance sheet at March 31, 2010, showed $221.4 million in total assets and $134.1 million in total liabilities, for a $87.3 million total stockholders' equity. MxEnergy carries Caa3 long term corporate family and Ca/LD probability of default ratings from Moody's Investors Service. NAVJOT LLC: Plan Confirmation Hearing Scheduled for October 22 -------------------------------------------------------------- The Hon Alan Jaroslovsky of the U.S. Bankruptcy Court for the Northern District of California will convene a hearing on October 22, 2010, at 9:00 a.m., to consider the confirmation of Navjot, LLC's Chapter 11 Plan. The last day for filing written acceptances or rejections of the Plan, and for filing of objections, is on October 15. According to the Disclosure Statement, the Debtor will surrender the real property collateral in full satisfaction of the Debtor's liability to the holders upon the effective date of the Plan. The Debtor will continue to collect the monthly rents from retained properties and apply same to expenses of operation and to the debt secured by the properties. The Debtor will place any defaulted secured real property taxes on a five year payment plan with the County of Marin unless the property is sold or refinanced in which instance, the claims will be paid on the closing date of the sale or refinance. Under the Plan, secured claims will be paid in full, or, otherwise, will retain the real property collateral in full satisfaction of said allowed claim. Unsecured claims will be paid the aggregate sum of $147,000, in 18 quarterly installments. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/NAVJOTLLC_DS.pdf About Navjot, LLC San Rafael, California-based Navjot, LLC, filed for Chapter 11 bankruptcy protection on April 27, 2010 (Bankr. N.D. Calif. Case No. 10-11533). David N. Chandler, Esq., at the Law Offices of David N. Chandler, assists the Debtor in its restructuring effort. The Company disclosed $14,370,100 in assets and $13,509,156 in liabilities as of the Petition Date. NBC ACQUISITION: S&P Gives Stable Outlook, Affirms 'B-' Rating -------------------------------------------------------------- Standard & Poor's Ratings Services said that it revised its outlook on NBC Acquisition Corp. and its wholly owned operating subsidiary, Nebraska Book Co. Inc., to stable from positive. In addition, S&P affirmed its 'B-' corporate credit rating. "The ratings on NBC and related entities reflect S&P's view that the business risk profile of the company is weak because of its relatively small size, highly seasonal operating results, increasing competition, lack of business diversification and a weak economic environment," said Standard & Poor's credit analyst Jayne Ross. In addition, S&P views NBC's financial risk profile as highly leveraged, given the substantial amount of debt outstanding, upcoming maturities, modest cash flow, and thin cash flow protection measures. Nebraska Book maintains a leading position among used college textbook wholesalers. The company remains acquisitive, adding 12 bookstore locations and one start-up location during the June 2010 quarter. However, in S&P's opinion, its lack of scale and business diversification leaves it vulnerable to changes in the market environment, including increased competition from online and student-to-student transactions and alternative media sources. S&P remain concerned that competition from these sources will continue to grow over the longer term, although S&P does not expect any material impact over the near term. NEFF CORP: Completes Restructuring With Wayzata-Sponsored Plan -------------------------------------------------------------- Neff Rental, Inc. have emerged from Chapter 11 after successfully completing a financial restructuring sponsored by private investment funds managed by Wayzata Investment Partners. "We are extremely pleased to have completed our financial restructuring and are excited about the bright future for the company, its customers, employees, and suppliers," said Graham Hood, Neff's chief executive officer. "Our restructuring puts Neff on very solid financial footing and has the company positioned to explore growth opportunities as our markets improve," continued Hood. Neff filed its prearranged Chapter 11 cases on May 16, 2010. Pursuant to Neff's Chapter 11 plan, which was confirmed by the United States Bankruptcy Court for the Southern District of New York on September 21, 2010, Neff has transferred substantially all of its businesses and operations to Neff Rental LLC, which will own and manage Neff's operations. In addition, in connection with the transactions contemplated by Neff's Chapter 11 plan, Wayzata has provided approximately $181.6 million in equity financing to Neff, and Neff has secured a $175 million revolving credit facility from its existing lenders. Neff was advised by AlixPartners LLP, Kirkland & Ellis LLP, and Miller Buckfire & Co. LLC. Wayzata was advised by Houlihan Lokey Howard & Zukin and Stroock & Stroock & Lavan LLP. About Neff Corp. Privately held Neff Corp., doing business as Neff Rental, provides construction companies, golf course developers, industrial plants, the oil industry, and governments with reliable and quality equipment that is delivered on time where it is needed. With more than 1,000 employees operating from branches coast to coast, Neff Rental is ranked by Rental Equipment Register (RER) magazine as one of the nation's 10 largest equipment rental companies. Neff Corp. and its units, including Neff Rental Inc. filed for Chapter 11 on May 17, 2010 (Bankr. S.D.N.Y. Case No. 10-12610). Based in Miami, Neff had assets of $299 million and debt of $609 million as of the Petition Date, according to the disclosure statement explaining the plan. Funded debt totals $580 million. Revenue in 2009 was $192 million. Neff has selected an affiliate of Wayzata Investment Partners as the successful bidder to sponsor its reorganization plan. The Plan provides (i) cash recoveries available to second lien lenders of $73 million, (ii) payment in full in cash or right to participate in a rights offering for up to $181.6 million for first lien lenders. The deadline to vote on Neff's Plan is September 1, 2010, with Neff's confirmation hearing scheduled to occur on September 14, 2010. NEWARK GROUP: Moody's Assigns 'B3' Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service assigned B3 ratings to The Newark Group Inc.'s corporate family rating, probability of default rating, and new term loan facility. The company's new credit facilities include a $70 million asset-based revolving credit facility (unrated) and a $110 million term loan facility. The new credit facilities were arranged in connection with the company's emergence from bankruptcy in July 2010. Proceeds from the new credit facilities were used primarily to repay prepetition debt. The outlook is stable. Assigned: Issuer: Newark Group, Inc. (The) -- Corporate family rating, B3 -- Probability of default rating, B3 -- Senior secured term loan, B3 (LGD4, 54%) Ratings Rationale TNG's B3 corporate family rating reflects the company's relatively weak margins primarily due to its concentration in the uncoated recycled boxboard sector, the commoditized nature of its overall product mix, and a weak liquidity profile that includes tight financial covenants in the near term. Most of the company's products are supplied to the film, paper, tape, construction, stationery, looseleaf, game board, and book publishing end- markets, where TNG's pricing power is often modest. The ratings consider anticipated weak demand for the company's products, and volatile input costs that may constrain margin expansion and free cash flow generation. The company's ratings are supported by a significant reduction in debt and interest expense post- bankruptcy, its position as one of the largest collectors, brokers and suppliers of recovered paper and producers of tubes, cores and graphicboard in North America, and a mill system that is forward integrated into converting plants. Moody's views TNG's integrated operations and recent cost-cutting measures as positive factors for managing costs. The company's ongoing efforts to improve operational efficiency and optimize capacity utilization should help margins during a weak economic environment. The stable outlook reflects recent industry plant rationalization and improving operating rate trends, as well as higher recycled board prices for the company and the industry. Although lower energy and freight costs are expected in the near term, Moody's believes a slow recovery in the economy could affect pricing and the company's ability to hold recent price increases. If the company is successful at offsetting weak demand with supply management and cost-cutting measures, and improves its liquidity position by increasing room under the financial covenants, an upgrade would be considered. The ratings may be downgraded should the company face a modest level of price or volume deterioration, persistent negative free cash flow, or a breach of its financial covenants. The Newark Group Inc., headquartered in Cranford, NJ, is an integrated producer of 100% recycled paperboard and paperboard products in North America and Europe. NM HOLDINGS: 6th Cir. Affirms Dismissal of Suit v. Deloitte ----------------------------------------------------------- The United States Court of Appeals for the Sixth Circuit affirmed a lower court ruling dismissing the lawsuit by Stuart Gold, the Chapter 7 Trustee of NM Holdings Company LLC, f/k/a Venture Holdings Company, LLC, against Deloitte & Touche LLP, Venture's former auditor. The Chapter 7 trustee alleged Deloitte (1) negligently performed its audits by failing to uncover and report unsound related-party transactions entered into by Venture's sole shareholder and CEO, and (2) aided and abetted the CEO's breach of his fiduciary duty to Venture. Deloitte filed a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure on the basis that Gold had failed to state a claim upon which relief can be granted. The district court granted Deloitte's motion. It held that Mr. Gold's claim against Deloitte for professional negligence failed because Michigan's "sole-actor rule" prevented Mr. Gold from establishing that Venture relied on Deloitte's audits. In addition, the court held that Mr. Gold's claim that Deloitte aided and abetted the CEO's breach of his fiduciary duty to Venture was barred by Michigan's three-year statute of limitations applicable to such claims. A three-man panel consisting of Circuit Judges Ronald Lee Gilman and Helene N. White, and the Hon. Michael H. Watson, U.S. District Judge for the Southern District of Ohio, sitting by designation, hold that Mr. Gold still fails to state a claim for relief even if the Michigan courts would apply the innocent-decision-maker exception in the imputation context. They also hold that Mr. Gold's aiding-and-abetting claim is not based on an allegation that Deloitte breached its duty to Venture, but rather that CEO Larry Winget breached his duty to Venture and that Deloitte knowingly provided substantial assistance to help him do so. Mr. Gold's claim of aiding and abetting is significantly different from his claim of professional negligence, thus warranting the application of a different statute of limitations. The case is STUART A. GOLD, CHAPTER 7 TRUSTEE OF NM HOLDINGS COMPANY LLC (F/K/A VENTURE HOLDINGS COMPANY, LLC), NM EMCO, INC., NM INDUSTRIES CORPORATION, NM MOLD & ENGINEERING CORPORATION, NM OLD LEASING COMPANY, NM NEMCO LEASING, INC., NM HOLDINGS CORPORATION, NM SERVICE COMPANY, NM EXP LLC, AND NM EU CORPORATION, PLAINTIFFS-APPELLANTS, v. DELOITTE & TOUCHE LLP, DEFENDANT-APPELLEE, case no. 09-1870. (6th Cir., September 30, 2010). A copy of the Court's opinion is available at: http://www.leagle.com/unsecure/page.htm?shortname=infco20100930179 Mr. Gold et al. are represented by: Gregory D. Hanley, Esq. Timothy O. McMahon, Esq. KICKHAM HANLEY PLLC, 100 Beacon Centre 26862 Woodward Avenue Royal Oak, MI 48067 Telephone: 248-544-1500 Facsimile: 248-544-150 Deloitte is represented by: John F. Hartmann, P.C., Esq. Mark S. Hamill, Esq. KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, IL 60654 Telephone: 312-862-2215 E-mail: john.hartmann@kirkland.com Venture was an automotive-parts supplier that filed for Chapter 11 bankruptcy in March 2003. In January 2006, its bankruptcy proceeding was converted into a Chapter 7 liquidation. Mr. Gold was appointed as the Chapter 7 trustee for Venture later that same month. NORDYKE VENTURES: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Nordyke Ventures LLC 8558 W. 21st Street N., Suite 200 Wichita, KS 67205 Bankruptcy Case No.: 10-13332 Chapter 11 Petition Date: September 28, 2010 Court: U.S. Bankruptcy Court District of Kansas (Wichita) Judge: Robert E. Nugent Debtor's Counsel: W. Thomas Gilman, Esq. 245 North Waco, Suite 402 Wichita, KS 67202 Tel: (316) 262-8361 E-mail: wtgilman@redmondnazar.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Mark Nordyke, managing member. NORTEL NETWORKS: S&P Withdraws 'D' Ratings on Two US Lease Deals ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'D' ratings from two U.S. credit tenant lease transactions. S&P withdrew its ratings from the two CTL transactions following its downgrades of each single tranche transaction to 'D'. S&P had previously lowered the ratings to 'D' due to recurring interest shortfalls primarily due to special servicing fees. S&P lowered its rating on Nortel Networks Lease Pass-Through Trust's series 2001-1 to 'D' on Oct. 13, 2009, due to recurring interest shortfalls related to ongoing special servicing fees. According to the September 2010 trustee report, the accumulated interest shortfalls total $4.8 million. S&P lowered its rating on Short-Term Asset Receivables Trust's series BC 2000-A to 'D' on Jan. 23, 2008, due to recurring special servicing fees. The fees followed the transfer of one of the two loans collateralizing the transaction to special servicing after litigation began between the borrower and a tenant. Following settlement of the litigation, the affected loan was returned to the master servicer in May 2010. The special servicing and other fees of approximately $18,000 per month resulted in $539,755 in principal losses to the transaction. Ratings Withdrawn Nortel Networks Lease Pass-Through Trust Pass-through trust certificates series 2001-1 Rating ------ Class To From ----- -- ---- Certs NR D Short-Term Asset Receivables Trust Net lease pass-through certificates series BC 2000-A Rating ------ To From -- ---- NR D NOWAUTO GROUP: Delays Form 10-K Filing for Period Ended June 30 --------------------------------------------------------------- NowAuto Group Inc. said it could not timely file its annual report on Form 10-K for the period ended June 30, 2010, with the Securities and Exchange Commission. NowAuto Group, Inc., operates three buy-here-pay-here used vehicle dealerships in Arizona. The Company manages all of its installment finance contracts and purchases installment finance contracts from a select number of other independent used vehicle dealerships. The Company's balance sheet at March 31, 2010, showed $4.6 million in total assets and $12.5 million in total liabilities, for a total stockholders' deficit of $7.8 million. In its March 2010 quarterly report, the Company indicated it sustained a material loss in the year ended June 30, 2005, and continued to sustain material losses through March 31, 2010. This raises substantial doubt about its ability to continue as a going concern. OMEGA HEALTHCARE: S&P Assigns 'BB+' Rating on $225 Mil. Notes ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' rating to Omega Healthcare Investors Inc.'s proposed $225 million 6.75% senior unsecured notes due 2022. At the same time, S&P assigned its '2' recovery rating to the notes, which reflects its expectation for a substantial (70%-90%) recovery in the event of a payment default. The note offering does not affect S&P's 'BB' corporate credit rating and positive outlook on Omega. Hunt Valley, Md.-based Omega intends to use the proceeds from the offering to repay borrowings under its secured credit facility. The company drew on the credit facility, in part, to fund the $588 million acquisition of 103 long-term-care facilities from CapitalSource Inc. (B+/Negative/C) in June 2010. Omega is a smaller REIT with a portfolio of 395 skilled-nursing and assisted- living facilities. S&P expects Omega's leverage to gradually improve as cash flow from the recently acquired properties boosts EBITDA. S&P expects debt to EBITDA to be closer to 4.5x by year- end. S&P also expect fixed-charge coverage to remain near 3.0x despite the higher interest cost on the proposed notes relative to the current credit facility borrowings. Ratings List Omega Healthcare Investors Inc. Corporate credit BB/Positive/-- Rating Assigned Omega Healthcare Investors Inc. 6.75% senior unsecured notes due 10/15/2022 BB+ Recovery rating 2 OMNICITY CORP: Files Amendment to Form 10-K for Fiscal 2009 ----------------------------------------------------------- Omnicity Corp. filed on September 29, 2010, Amendment No. 1 to its annual report for the fiscal year ended July 31, 2009, as originally filed on October 23, 2009, in response to certain comments from the U.S. Securities and Exchange Commission to the Company about its annual report. The Company reported a net loss of $2.6 million on $1.7 million of revenue for fiscal 2009, compared to a net loss of $979,861 on $1.0 million of revenue for fiscal 2008. The Company's balance sheet at July 31, 2009, showed $3.3 million in total assets, $4.4 million in total liabilities, and a stockholders' deficit of $1.1 million. A full-text copy of the Form 10-K/A is available for free at: http://researcharchives.com/t/s?6bfe About Omnicity Corp. Based in Rushville, Indiana, Omnicity Corp. (OTC BB: OMCY) -- http://www.omnicitycorp.com/-- provides broadband access via wireless and fiber infrastructure to business, government and residential customers in rural markets in the Midwest. * * * Weaver & Martin LLC, in Kansas City, Mo., expressed substantial doubt about the Company's ability to continue as a going concern, following its results for fiscal 2009. The independent auditors noted that Company has suffered recurring losses and had negative cash flows from operations. OMNICITY CORP: Restates Q1 FY 2010 Financials, Posts $644,136 Loss ------------------------------------------------------------------ Omnicity Corp. filed on September 29, 2010, Amendment No. 1 to its quarterly report on Form 10-Q for the quarterly period ended October 31, 2009, as originally filed on December 21, 2009, in response to certain comments from the U.S. Securities and Exchange Commission to the Company about its quarterly report. The Company reported a restated net loss of $644,136 on $617,000 of revenue for the three months ended October 31, 2009, compared with a net loss of $403,257 on $327,733 of revenue for the three months ended October 31, 2008. The Company's balance sheet at October 31, 2009, showed $3.9 million in total assets, $4.4 million in total liabilities, and a stockholders' deficit of $510,101. A full-text copy of the Form 10-Q/A is available for free at: http://researcharchives.com/t/s?6bff About Omnicity Corp. Based in Rushville, Indiana, Omnicity Corp. (OTC BB: OMCY) -- http://www.omnicitycorp.com/-- provides broadband access via wireless and fiber infrastructure to business, government and residential customers in rural markets in the Midwest. * * * Weaver & Martin LLC, in Kansas City, Mo., expressed substantial doubt about the Company's ability to continue as a going concern, following its results for fiscal 2009. The independent auditors noted that Company has suffered recurring losses and had negative cash flows from operations. PAUL BARDOS: Case Summary & 14 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Paul Phillip Bardos dba Cadmus Construction Co. 8034 Camino Predera Rancho Cucamonga, CA 91730 Bankruptcy Case No.: 10-41455 Chapter 11 Petition Date: September 29, 2010 Court: U.S. Bankruptcy Court Central District of California (Riverside) Judge: Thomas B. Donovan Debtor's Counsel: Martha A. Warriner, Esq. REID & HELLYER APC P.O. Box 1300 Riverside, CA 92502 Tel: (951) 682-1771 Fax: (951) 686-2415 E-mail: mwarriner@rhlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's 14 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb10-41455.pdf PCS EDVENTURES: SEC Commences Civil Action in Idaho --------------------------------------------------- PCS Edventures!.com said that the Securities and Exchange Commission had filed a civil action against the Company as well as its Chief Executive Officer and former Chief Financial Officer in U.S. District Court for the District of Idaho. The Company has been informed that two class action lawsuits involving similar allegations have been filed on behalf of shareholders who purchased shares of the Company's common stock during the period between March 28, 2007, and August 15, 2007. The Company has not yet been served with either complaint. About PCS Edventures!.com Boise, Idaho-based PCS Edventures!.com, Inc. (OTC BB: PCSV) -- http://www.edventures.com/-- is engaged in the design, development and delivery of educational learning labs bundled with related technologies and programs to the K-12 market worldwide. The PCS suite of products ranges from hands-on learning labs in technology-rich topics in Science, Technology, Engineering and Math (STEM) to services rich in imagination, innovation, and creativity. PCS programs operate in over 6,000 sites in all 50 United States as well as in 17 countries internationally. The Company's balance sheet as of June 30, 2010, showed $1.64 million in total assets, $480,236 in total liabilities, and a stockholders' equity of $1.16 million. * * * M&K CPAS PLLC expressed substantial doubt about the Company's ability to continue as a going concern, following its fiscal 2010 results. The firm noted that the Company has suffered reoccurring losses and negative cash flow from operations. PETER GOULD: MORs, UST Fees Not Prerequisite for Final Decree ------------------------------------------------------------- The Hon. Alan H. S. Shiff grants Peter J. Gould's motion for final decree closing his Chapter 11 case, over the objection of the United States Trustee. The resulting controversy is motivated by Mr. Gould's intention to terminate his obligation to pay post- confirmation quarterly fees and the U.S. Trustee's determination to collect them. Judge Shiff says the estate has been fully administered as the confirmation order is final, all payments have been made in accordance with Mr. Gould's second amended plan, all other distributions due under the plan have been made, and there are no outstanding motions, contested matters or adversary proceedings. Judge Shiff explains that despite the fact that the court's order confirming Mr. Gould's plan concludes by ordering Mr. Gould "to file a Final Report with an Application for Final Decree . . .", the court notes that the Administrative Office no longer requires the reporting of the statistical information collected in that report. Thus, under the AO's 2008 directive, cases in the Connecticut court are routinely closed without filing a closing report. Judge Shiff also holds that neither the text of Sec. 350(a) of the Bankruptcy Code and Fed. R. Bankr. P. 3022, nor the comments and cases that construe "fully administered", support the U.S. Trustee's argument for post-confirmation quarterly fees payment. On October 1, 2009, the U.S. Trustee filed a motion to compel Mr. Gould to pay post-confirmation chapter 11 quarterly fees and to file Monthly Operating Reports. The motion was granted on November 5, 2009. On December 3, 2009, Mr. Gould filed multiple MORs, and on December 21, 2009, he filed amended MORs. On December 4, 2009, the U.S. Trustee notified Gould that he owed post-confirmation quarterly fees in the amount of $20,475 for quarters from July 2006 through the third quarter of 2009. On December 18, 2009, Gould tendered a check for $6,350.00. A copy of the Court's memorandum and order is available at: http://www.leagle.com/unsecure/page.htm?shortname=inbco20100930777 Peter J. Gould commenced his chapter 11 case (Bankr. D. Conn. 03-51180) on August 22, 2003. His second amended plan of reorganization was confirmed on November 29, 2004. Thereafter, the management of the case was consumed by litigation which caused the case to remain open. Peter L. Ressler, Esq., at Groob, Ressler & Mulqueen PC, in New Haven, serves as his bankruptcy counsel. PHILADELPHIA NEWSPAPERS: Court Again Approves Sale to Lenders ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Philadelphia Newspapers LLC once again has a confirmed Chapter 11 plan as secured lenders, for a second time, were authorized to purchase the publisher of the Philadelphia Inquirer and Philadelphia Daily News for $105 million in cash. The bankruptcy judge in Philadelphia approved the sale and confirmed the revised plan at a hearing September 30. Philadelphia Newspapers previously won confirmation of a plan based on the sale of the business to the same group of lenders for $139 million. The sale failed to close because the buyers weren't able to reach agreement on a new labor contract with the Teamsters union. After another auction on September 23, the lenders again emerged as the winning bidder with a $110 million offer, lower than what the group offered last April. The lenders group surpassed the $85 million offer of local philanthropist and business mogul, Raymond Perelman. The new auction bars the successful bidder from refusing to complete the acquisition. According to Mr. Rochelle, the terms of the revised plan: -- As with the prior version of the plan, 2.3% of the stock will be distributed to holders of $110 million in unsecured debt claims. Creditors under this class would get 1.5%. -- $1.09 million in cash will be estimated for general unsecured creditors with claims estimated at $4.2 million. Claims in the class could grow by $12.8 million if the claim of McClatchy Co. is allowed. Claims in the class will increase another $150 million if the buyer doesn't take over pension claims. The recovery for general unsecured creditors will range from under 1% to 23%. -- Secured lenders, with claims of $318.8 million, will receive cash left over from the sale plus the value of real estate estimated to be worth $29.5 million. The plan required the lenders to waive their deficiency claims. According to The Associated Press, the lenders group surpassed the $85 million offer of local philanthropist and business mogul, Raymond Perelman. About Philadelphia Newspapers Philadelphia Newspapers -- http://www.philly.com/-- owns and operates numerous print and online publications in the Philadelphia market, including the Philadelphia Inquirer, the Philadelphia Daily News, several community newspapers, the region's number one local Web site, philly.com, and a number of related online products. The Company's flagship publications are the Inquirer, the third oldest newspaper in the country and the winner of numerous Pulitzer Prizes and other journalistic recognitions, and the Daily News. Philadelphia Newspapers and its debtor-affiliates filed for Chapter 11 bankruptcy protection on February 22, 2008 (Bankr. E.D. Pa. Case No. 09-11204). Mark K. Thomas, Esq., and Paul V. Possinger, Esq., at Proskauer Rose LLP in Chicago, Illinois; and Lawrence G. McMichael, Esq., Christie Callahan Comerford, Esq., and Anne M. Aaronson, Esq., at Dilworth Paxson LLP, in Philadelphia, Pennsylvania, serve as bankruptcy counsel. The Debtors' financial advisor is Jefferies & Company Inc. The Garden City Group, Inc., serves as claims and notice agent. Ben Logan, Esq., at O'Melveny & Myers LLP in Los Angeles, California; and Gary Schildhorn, Esq., at Eckert Seamans Cherin & Mellott, LLC in Philadelphia, represent the Official Committee of Unsecured Creditors. Fred S. Hodara, Esq., Abid Qureshi, Esq., and Alexis Freeman, Esq., at Akin Gump Strauss Hauer & Feld LLP in New York, represent the Steering Group of Prepetition Secured Lenders. Philadelphia Newspapers estimated assets and debts of $100 million to $500 million in its bankruptcy petition. POSEIDON POOL: Pre-Trial in Arbore Suit Continued to Oct. 26 ------------------------------------------------------------ In Andrew M. Thaler, Trustee, Estate of Poseidon Pool & Spa Recreational, Inc., v. Estate of Vincent J. Arbore, Deceased, Diane Arbore, in her capacity as Executrix of the Estate of Vincent J. Arbore, Diane Arbore, Ann Arbore, Peter Arbore, Jayvin Arbore, Allison Arbore, Michael Arbore, Katherine Arbore, Alan Arbore, James Arbore, Rosa Dinicolo and Rita Cannillo, Adv. Proc. No. 06-8222 (Bankr. E.D.N.Y., September 30, 2010), the Hon. Dorothy Eisenberg finds by a preponderance of the evidence that the Debtor was insolvent or rendered insolvent from July 1, 2003, and thereafter but is unable to find that the Debtor was insolvent from May 24, 2002 to June 30, 2003, under section 513(a) of N.Y. BUS. CORP. LAW. Judge Eisenberg will continue pre-trial conference in the adversary proceeding on October 26, 2010, at 10:00 a.m. On June 8, 2006, the Debtor sued the Defendants seeking the return of payments made by the Debtor to Mr. Arbore and his estate pursuant to a Redemption Agreement within one year of the Debtor's bankruptcy filing on the grounds that the Debtor received no consideration in exchange for the payments under the Redemption Agreement, that the Debtor was insolvent commencing on or about January 1, 2005, and the payments were made at a time when the Debtor was insolvent, thereby rendering the payments fraudulent or voidable transfers under, inter alia, 11 U.S.C. Sec. 544 and 550, NEW YORK DEBTOR AND CREDITOR LAW Sec. 270 et. al. and NEW YORK BUSINESS CORPORATION LAW Sec. 513(a). The Debtor sought to recover payments made from January 1, 2005 to the Petition date. A copy of the Court's memorandum decision is available at: http://www.leagle.com/unsecure/page.htm?shortname=inbco20100930787 The Chapter 7 Trustee is represented by: Kim D. Victor, Esq. THALER & GERTLER, LLP 90 Merrick Avenue, Suite 400 East Meadow, NY 11554 Telephone: (516) 228-3553 Facsimile: (516) 228-3396 E-mail: victor@thalergertler.com Arbore et al. are represented by: Linda S. Agnew, Esq. JASPAN SCHLESINGER HOFFMAN LLP 300 Garden City Plaza, 5th Floor Garden City, NY 11530 Telephone: 516-393-8228 Facsimile: 516-393-8282 E-mail: lagnew@jaspanllp.com Poseidon Pool & Spa Recreational, Inc., sold pools, spas and related items to retail customers. Mr. Arbore was an employee, officer and director of the Debtor. He was also a shareholder of the Debtor with a one-third ownership interest. Poseidon Pool filed for chapter 11 bankruptcy relief (Bankr. E.D.N.Y. Case No. 05-87603) on October 7, 2005. In its bankruptcy petition and schedules, the Debtor disclosed $541,501 in assets and $3,937,364 in liabilities as of the Petition Date. The Debtor subsequently amended its petition to include an additional $750,000 of general unsecured liabilities. Andrew Thaler, Esq., was appointed the Chapter 11 Operating Trustee on September 12, 2006. The case was subsequently converted to a chapter 7 on the Operating Trustee's motion on September 21, 2006, and Mr. Thaler was appointed as the Chapter 7 trustee. PROMETRIC INC: S&P Raises Rating to 'BB-', Gives Positive Outlook ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on Baltimore, Md.-based Prometric Inc. to 'BB-' from 'B+'. The rating outlook is positive. In addition, S&P revised its recovery rating on the company's senior credit facility to '1', indicating its expectation of very high (90% to 100%) recovery for lenders in the event of a payment default, from '2'. S&P raised the issue-level rating on this debt to 'BB+' -- two notches higher than the 'BB-' corporate credit rating--in accordance with S&P's notching criteria for a '1' recovery rating. The revised recovery rating reflects the significant prepayment of the term loan, ahead of the required amortization schedule, since the company was acquired in October 2007. Prometric had total debt of $243 million at June 30, 2010. "The upgrade reflects Prometric's improved profitability, good discretionary cash flow, and lower leverage," said Standard & Poor's credit analyst Hal Diamond. S&P believes that the company will be able to continue to grow revenues at a low-single-digit percentage rate while increasing EBITDA at a mid-single-digit percentage rate in full-year 2010 and 2011. This will enable the company to continue to generate meaningful discretionary cash flow, and provide the ability to reduce lease-adjusted total leverage to below 2.5x and widen the margin of compliance with the senior leverage ratio to over 30% from a current level of 9%. The 'BB-' rating reflects Prometric's relatively stable operating performance, along with S&P's expectation that leverage will continue to decline. S&P views the company's business risk profile as "fair" given its good position in the highly concentrated and competitive standardized-test delivery market. Prometric is the larger of two principal providers of computer- based testing services; U.K.-based Pearson PLC owns its main competitor, Pearson VUE. Prometric serves the academic, financial, information technology, government, professional associations, and health care market segments; the corporate sector accounts for less than 5% of revenues. PRUDENTIAL FINANCIAL: Fitch Affirms Issuer Default Ratings ---------------------------------------------------------- Fitch Ratings has affirmed the 'BBB+' issuer default and 'BBB' senior debt ratings of Prudential Financial Inc. upon the company's announcement that it plans to acquire two Japanese life insurance companies from American International Group for $4.8 billion. At the same time, Fitch has affirmed the 'A+' Insurer Financial Strength ratings of Prudential Insurance Company of America and all of the group's ratings. The Outlook for all ratings is Stable. A complete list of ratings is provided at the end of this release. The affirmation follows a review of the planned acquisition and its financing, as well as implications for existing ratings assigned to PFI and its affiliates. Fitch believes the acquisition of AIG Star Life Insurance Co. Ltd. and AIG Edison Life Insurance Co. (Star/Edison), which is expected to close in the first quarter of 2011, will strengthen PFI's already strong position in the Japanese life insurance market, adding significant scale and distribution capacity as well as an additional source of stable earnings going forward. Mortality-based earnings in Japan are already the most important source of earnings for PFI, helping to offset the impact of equity market volatility related to variable annuities in the U.S. operations. The $4.8 billion consideration paid by PFI to AIG is expected to consist of $4.2 billion of cash and $600 million of assumed third- party debt. Fitch expects the cash consideration to be funded by $1.7 billion of available capital, the issuance of $1.2 billion of senior debt and $1.3 billion of common equity. Following the close of the transaction, Fitch expects PFI's equity-adjusted financial leverage to increase modestly but remain within Fitch's expectations. At June 30, 2010, Fitch's equity adjusted leverage was 25%. Fitch expects PFI's GAAP EBIT-to- interest expense coverage ratio to remain in the range of 5-6 times. The Total Financing and Commitments ratio is expected to remain at 1.3x on a pro forma basis. Fitch has affirmed these ratings with a Stable Outlook: Prudential Financial, Inc. -- Long-term Issuer Default Rating at 'BBB+'; -- Senior notes at 'BBB'; -- Junior subordinated notes at 'BB+'; -- Short-term IDR at 'F2'; -- Commercial paper at 'F2'. Prudential Insurance Company of America -- Insurer Financial Strength at 'A+'; -- Long-term IDR at 'A'; -- Surplus notes at 'A-'; -- Short-term IDR at 'F1'. Prudential Funding, LLC -- Medium-term notes at 'A'; -- Commercial paper at 'F1'. PRICOA Global Funding I -- Secured notes program at 'A+'. PRUCO Life Insurance Company Prudential Annuities Life Assurance Corp. Prudential Retirement Insurance & Annuity Company PRUCO Life Insurance Company of New Jersey -- IFS at 'A+'. Prudential Bank & Trust, FSB -- Long-term IDR at 'BBB+'; -- Long-term deposit at 'A-'; -- Short-term IDR at 'F2'; -- Short-Term deposit at 'F1'; -- Individual at 'B/C'; -- Support at '1'. QUICK-MED TECHNOLOGIES: Recurring Losses Cue Going Concern Doubt ---------------------------------------------------------------- Quick-Med Technologies, Inc., filed on September 29, 2010, its annual report on Form 10-K for the fiscal year ended June 30, 2010. Daszkal Bolton LLP, in Boca Raton, Fla., expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has experienced recurring losses and negative cash flows from operations for the years ended June 30, 2010. and 2009, and has a net capital deficiency. The Company reported a net loss of $3.6 million on $993,943 of revenue for fiscal 2010, compared with a net loss of $2.0 million on $1.0 million of revenue for fiscal 2009. The Company says its current cash balance of $628,026 as of June 30, 2010, coupled with accounts receivable of $336,077, of which roughly $200,000 have been subsequently collected after June 30, 2010, will satisfy its cash requirements for roughly more than five (5) months assuming no further receipt of revenues and additional debt or equity financing. The Company's balance sheet at June 30, 2010, showed $1.3 million in total assets, $7.6 million in total liabilities, and a stockholders' deficit of $6.3 million. A full-text copy of the Form 10-K is available for free at: http://researcharchives.com/t/s?6bf4 About Quick-Med Technologies Gainesville, Fla.-based Quich-Med Technologies, Inc. is a life sciences company that develops proprietary technologies for the medical and consumer healthcare markets. RADIO ONE: Discloses Add'l Extension of Pending Exchange Offer -------------------------------------------------------------- Radio One, Inc. had further extended the expiration time of its previously announced exchange offer for its 8-7/8% Senior Subordinated Notes due 2011 (the "2011 Notes") and its 6-3/8% Senior Subordinated Notes due 2013 (the "2013 Notes," and together with the 2011 Notes, the "Existing Notes"), and the related consent solicitation, to 5:00 p.m., New York City time, on October 22, 2010. As of 5:00 p.m., New York City time, on September 30, 2010, approximately 92% of the outstanding Existing Notes had been validly tendered into the exchange offer and not withdrawn. At the previously scheduled expiration time, the conditions necessary to consummate the exchange offer as set forth in the Company's Exchange Offer and Consent Solicitation Statement and Offering Memorandum, dated June 16, 2010 (the "Offering Memorandum"), were not satisfied and, as a result, the Company has determined to further extend the exchange offer. The Company believes that it continues to make significant progress in reaching an agreement with the members of the ad hoc group of holders of a significant portion of its Existing Notes relating to certain amendments to the terms of the exchange offer and the related exchange notes, including the conditions to the exchange offer, and with its lenders under its existing senior secured credit facility relating to an amendment thereto. As previously reported, the agent under the Company's existing senior secured credit facility delivered a payment blockage notice to the trustee under the indenture relating to the 2013 Notes on August 5, 2010, and neither the Company nor any of its guaranteeing subsidiaries was permitted to make the scheduled interest payment on such notes due August 16, 2010. The 30-day grace period provided in the indenture expired on September 15, 2010. As a result, there currently exists an event of default under the indenture relating to the 2013 Notes. In addition, the Company's forbearance agreement with its lenders relating to certain defaults and events of defaults under the existing senior secured credit facility expired in accordance with its terms on September 10, 2010. Based on its constructive dialogue with the members of the ad hoc group and its existing lenders, the Company does not expect such members of the ad hoc group or its existing lenders to exercise any remedies under such indenture or senior secured credit facility, as applicable, in the near term. At this time, however, the Company can provide no assurances that holders of the 2013 Notes or its existing lenders will not exercise any such remedies, that it will ultimately reach an agreement with the members of the ad hoc group and its existing lenders or that such parties will enter into a new support agreement to replace the prior agreement that expired in accordance with its terms on September 1, 2010 or a new forbearance agreement, as applicable. Except as set forth herein, the terms of the exchange offer and related consent solicitation and subscription offer remain the same as set forth in the Offering Memorandum and the related offering materials previously distributed to eligible holders. The offers are only made, and copies of the offering documents will only be made available, to holders of Existing Notes that have certified certain matters to the Company, including their status as a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3), or (7) under the Securities Act or as a "non-U.S. Person" within the meaning of the Securities Act (together, "eligible holders"). BNY Mellon Shareowner Services is acting as exchange agent, information agent and subscription agent and may be contacted at (800) 777-3674 or (201) 680-6579. About Radio One Lanham, Maryland-based Radio One, Inc. (Nasdaq: ROIAK and ROIA) -- http://www.radio-one.com/-- is a diversified media company that primarily targets African-American and urban consumers. The Company is one of the nation's largest radio broadcasting companies, currently owning 53 broadcast stations located in 16 urban markets in the United States. The Company owns a controlling interest in Reach Media, Inc. -- http://www.blackamericaweb.com/-- owner of the Tom Joyner Morning Show and other businesses associated with Tom Joyner. Beyond its core radio broadcasting business, Radio One owns Interactive One -- http://www.interactiveone.com/-- an online platform serving the African-American community through social content, news, information, and entertainment, which operates a number of branded sites, including News One, UrbanDaily, HelloBeautiful, Community Connect Inc. -- http://www.communityconnect.com/-- an online social networking company, which operates a number of branded Web sites, including BlackPlanet, MiGente, and Asian Avenue and an interest in TV One, LLC -- http://www.tvoneonline.com/-- a cable/satellite network programming primarily to African- Americans. Ernst & Young LLP, in Baltimore, Maryland, expressed substantial doubt about the Company's ability to continue as a going concern in its report on the Company's restated consolidated financial statements for 2009. The independent auditors noted that in June and July 2010 the Company violated certain covenants of its loan agreements, which ultimately may result in significant amounts of outstanding debt becoming callable by lenders. Moody's Investors Service has repositioned Radio One Inc.'s Probability of Default Rating to Caa2/LD, from Caa2, following expiration of the 30-day grace period under the indenture governing the company's 6.375% senior subordinated notes due 2013. The August interest payment was not made in accordance with the scheduled terms, and Moody's treats the failure to meet the original contractual terms as a limited default. All of Radio One's debt ratings remain under review for possible downgrade, including Radio One's Caa1 corporate family rating. RAFAELLA APPAREL: Delays Filing of Form 10-K for Fiscal 2010 ------------------------------------------------------------ Rafaella Apparel Group, Inc., disclosed in a regulatory filing Wednesday that its annual report on Form 10-K for the fiscal year ended June 30, 2010, could not be filed within the prescribed time period without an unreasonable effort and expense. The Company currently has outstanding senior secured notes which mature on June 15, 2011, and an amended and restated credit facility with HSBC Bank USA, National Association which expires on June 10, 2011. The Company says it is currently exploring and evaluating various strategic and restructuring alternatives, including but not limited to long-term financing, with respect to both the Senior Notes and the Credit Facility in advance of their respective maturity and expiration dates. As of June 30, 2010, the Company had cash on hand of roughly $20.6 million, outstanding principal amount of Senior Notes of roughly $71.9 million, no direct debt borrowings with respect to its Credit Facility, and roughly $10.2 million of letters of credit outstanding under the Credit Facility. The Company says that as a result of the substantial resources and considerable time and effort the Company has devoted to evaluating various strategic and restructuring financing alternatives, its ability to complete its financial statements required to be disclosed on a timely basis have been impacted. To-date, however, the Company has not been able to effect a restructuring or alternative financing. In the event that it is not able to effect a restructuring or alternative financing prior to the filing of its Form 10-K, the Company anticipates that its Form 10-K will contain a reference to the fact that the absence of such a restructuring or alternative financing raises substantial doubt about its ability to continue as a going concern. The Company expects that it will file its Form 10-K on or before October 13, 2010. About Rafaella Apparel Group New York-based Rafaella Apparel Group, Inc., is a wholesaler, designer, sourcer, marketer and distributor of a full line of women's career and casual sportswear separates. The Company outsources the manufacturing and production of its clothing line to factories primarily in Asia. It sells directly to department, specialty and chain stores and off-price retailers. The Company's balance sheet at March 31, 2010, showed $82.3 million in total assets, $87.5 million in total liabilities, $59.1 million in redeemable convertible preferred stock, and a stockholders' deficit of $64.3 million. ROBERT CRUMLEY: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------------- Joint Debtors: Robert L. Crumley Kimberly T. Crumley 2479 Athens Hwy Gainesville, GA 30507-7455 Bankruptcy Case No.: 10-24348 Chapter 11 Petition Date: September 28, 2010 Court: United States Bankruptcy Court Northern District of Georgia (Gainesville) Debtor's Counsel: Charles N. Kelley, Jr., Esq. CUMMINGS & KELLEY PC P.O. Box 2758 Gainesville, GA 30501-2758 Tel: (770) 531-0007 Fax: (678) 866-2360 E-mail: ckelley@cummingskelley.com Scheduled Assets: $125,324 Scheduled Debts: $1,036,055 A list of the Joint Debtors' 19 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ganb10-24348.pdf ROBERT MICHAEL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Robert C. Michael 5650 N. Central Avenue Chicago, IL 60646 Bankruptcy Case No.: 10-43640 Chapter 11 Petition Date: September 29, 2010 Court: U.S. Bankruptcy Court Northern District of Illinois (Chicago) Judge: A. Benjamin Goldgar Debtor's Counsel: Abraham Brustein, Esq. Julia Jensen Smolka, Esq. DIMONTE & LIZAK, LLC 216 West Higgins Road Park Ridge, IL 60068 Tel: (847) 698-9600 Ext. 221 (847) 698-9600 Ext. 231 Fax: (847) 698-9623 E-mail: abrustein@dimonteandlizak.com jjensen@dimonteandlizak.com Estimated Assets: $0 to $50,000 Estimated Debts: $10,000,001 to $50,000,000 A list of the Debtor's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ilnb10-43640.pdf Debtor-affiliate that filed separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- R&G Properties 09-37463 10/08/09 ROBERT VICKERY: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Robert A. Vickery 630 Marine View Drive Del Mar, CA 92014 Bankruptcy Case No.: 10-17355 Chapter 11 Petition Date: September 30, 2010 Court: United States Bankruptcy Court Southern District of California (San Diego) Judge: Margaret M. Mann Debtor's Counsel: Arthur Stockton, Esq. STOCKTON LAW OFFICES 27322 Calle Arroyo, Suite 36D San Juan Capistrano, CA 92675 Tel: (866) 682-8776 Fax: (866) 207-4082 E-mail: art@stocktonlawoffices.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's 19 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/casb10-17355.pdf ROSLYN LANE: Case Summary & 5 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Roslyn Lane LLC P.O. Box 2773 La Jolla, CA 92038 Bankruptcy Case No.: 10-17563 Chapter 11 Petition Date: September 30, 2010 Court: United States Bankruptcy Court Southern District of California (San Diego) Judge: Louise DeCarl Adler Debtor's Counsel: Kit J. Gardner, Esq. LAW OFFICES OF KIT J. GARDNER 501 W. Broadway, Suite 800 San Diego, Ca 92101 Tel: (619) 525-9900 E-mail: kgardner@gardnerlegal.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's five largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/casb10-17563.pdf The petition was signed by V.B. Cushman, president of Commerce Resource Inc., managing member. ROBERT WOOD: Moody's Downgrades Rating on $10.4 Mil. Debt to 'Ba3' ------------------------------------------------------------------ Moody's Investors Service has downgraded the long-term debt rating to Ba3 from Ba2 on Rahway Hospital's, now known as Robert Wood Johnson University Hospital at Rahway, $10.4 million of outstanding debt. The downgrade is reflective of a continued decline in operating performance in FY 2009 and continuing through the first seven months of fiscal year 2010, and Moody's expectation that Rahway will end FY 2010 with the second consecutive year of operating losses, placing pressure on the balance sheet to maintain liquidity. The outlook has been revised to negative from stable at the Ba3 rating given the material declines in volumes and the fundamental challenges facing the hospital as it seeks to repair its current financial profile. Ratings Rationale Legal Security: Series 1998 bonds are secured by a gross revenue pledge of Rahway Hospital. The Series 2003 bonds ($11 million) are backed by a Letter of Credit from Wells Fargo Bank and rated Aa2/VMIG1. The Letter of Credit expires August 15, 2012. Covenants include 65 days cash on hand measured semiannually and 1.25 times rate covenant measured quarterly based on past twelve months performance. Interest Rate Derivatives: Floating-to-floating rate swap with Wells Fargo Bank based on $11 million notional amount; expires 2014; management reports that there are no collateral requirements. Challenges * Material 12% decline in inpatient admissions and observation stays in FY 2009 from FY 2008 and continued 11% decline through seven months of FY 2010 * Decline in operating performance through seven months of FY 2010 with an operating loss of $1.75 million (-2.3% operating margin) and operating cash flow of $1.8 million (2.4% operating cash flow margin) compared to an operating loss of $203 thousand (- 0.3% operating margin) and operating cash flow of $3.2 million (4.2% operating cash flow margin) during the same period last year * Decline in cash position as of July 31, 2010 with unrestricted cash and investments down to $24.1 million or 69 days cash on hand from $26.6 or 75.7 days (Moody's days cash on hand computation does not exclude bad debt expense) * High reliance on Medicare, 58% of revenues; no Blue Cross Blue Shield contract for many years * Location in competitive and fragmented market of Union and Middlesex counties with other sizable community hospitals providing a larger array of services than Rahway; stagnant and aging population demographics in Rahway's primary service area also impair performance * High age of plant (19.9 years) due to low level of capital spending the last several years ($5.0 million in FYE 2009) * While A2-rated Robert Wood Johnson University Hospital (New Brunswick) is the long standing legal parent of Rahway, Moody's does not expect any financial assistance to Rahway at this time * Currently in ongoing negotiations with Rahway's largest managed care plan for a new contract * Half of outstanding debt is variable rate exposing the hospital to put risk and bank risk Strengths * Management proactively engaged turnaround consulting firm to examine productivity, non-salary expenses, revenue cycle, managed care rates, and help with strategic planning; plan goes to the Board on October 26, 2010, for review * Robert Wood Johnson University Hospital has aided Rahway with its strategic planning and financial planning efforts * Cash to debt remains above average for the Ba category at 112.5% as of July 31, 2010, although the trend is declining Recent Developments/Results The downgrade to Ba3 from Ba2 and negative outlook reflects the recent material decline in volumes and the impact on financial performance. Through the first seven months of FY 2010 ending July 31, 2010, operating performance has declined to an operating loss of $1.75 million (-2.3% operating margin) and operating cash flow of $1.8 million (2.4% operating cash flow margin) compared to smaller $340 thousand operating loss (-0.3% operating margin) and stronger operating cash flow of $5.3 million (4.0% operating cash flow margin) in FY 2009. Management proactively hired a turnaround consultant but does expect to make the 1.25 times rate covenant measured at September 30, 2010 and December 31, 2010 after realizing $2 million in reserve funds due through 3rd party adjustments. The financial downturn for Rahway is driven by a material decline in admissions and observation stays (11%), outpatient visits (6.7%) and emergency room visits (14%) through July 31, 2010 compared to July 31, 2009. These recent trends follow a 12% decline in admissions and observation stays in FY 2009 from FY 2008. As a result, absolute revenues have declined 1.7% through July 31, 2010, compared to the prior year period. According to management, the volume decline reflects the current recession and a reduction in elective services, as well as a 20% decline in out- of-network commercial insurance visits. For many years Rahway has not had a contract with one of the largest payers in the state; and is presently renegotiating the Aetna contract which expired in June. The operating losses in FY 2009 and year to date performance has had a negative impact on the balance sheet. Unrestricted cash and investments is down to $24.1 million or 69 days cash as of July 31, 2010, from $26.6 million (75.7 days cash) at the end of FY 2009. This declining cash position likely will limit the hospital's ability to face the challenges of a highly competitive market. It furthermore reduces the ability of the hospital to invest in the facility (average age of plant is a very high 19.9 years in FY 2009 compared to the national median of 10 years) and improve the underfunded position of the frozen pension plan (73% funded pension plan at FYE 2009). Cash is conservatively invested in 99.7% cash and equivalents and 0.3% traditional equities. To its credit, management made structural changes to the expense base in April 2010. These changes include a salary reduction of 10% for management and 5% for staff, suspension of the match to the defined contribution plan, and supply expense reduction through a new g.p.o. The FTE count was reduced over the last year through a 10 FTE layoff in November 2009, some resignations following salary reductions, and closely monitoring any open positions before hiring. All of the expense reductions have produced $3.9 million in expense savings. Moody's restates bad debt as an expense item in the interim financial statements. Even though bad debt expense grew, management held expenses flat through July 31, 2010, compared to the prior year period. Rahway expects to end the year with an operating loss of $1.2 million barring any further declines in volume. Management engaged a turnaround consultant, Quorum Health Resources, to examine productivity, revenue cycle, non-salary costs, managed care contracts, and to help with strategic planning. The report from the consultants is due to be presented to the Board at the end of October 2010. Management has indicated that Quorum is acceptable to the bond issuing authority in the event that the hospital does not meet its rate covenant. Rahway's service area remains crowded with many other community hospitals in Union and Middlesex counties. The immediate service area continues to age as evidenced by the above average Medicare exposure (58% of revenue). As with many providers in the area, Rahway does not have any material service niche to distinguish itself and is a small-sized provider with $135 million in revenues in FY 2009. However, for many years Rahway has had a legal affiliation with A2 rated Robert Wood Johnson University Hospital (RWJUH) although RWJUH does not guaranty the bonded debt of Rahway. RWJUH has indicated that it does not foresee providing any financial assistance to Rahway at this time. The CEO of RWJUH has been actively engaged in recent financial decisions of Rahway including the hiring of an outside turnaround firm. Outlook Moody's negative outlook reflects fundamental challenges facing the hospital and expectations that FY 2010 will likely show another year of weaker financial results. What could change the rating -- Up Unlikely given the negative outlook, however, an upgrade would be a function of material improvement in operating performance that is sustainable; gains in liquidity; substantial volume gains What could change the rating -- Down Continued decline in operating performance from current levels; decline in liquidity; continued decline patient volumes Key Indicators Assumptions & Adjustments: -- Based on financial statements for Robert Wood Johnson University Hospital at Rahway And Affiliates -- First number reflects audit year ended December, 31, 2008 -- Second number reflects audit year ended December 31, 2009 -- Investment returns normalized at 6% unless otherwise noted * Inpatient admissions: 8,399; 7,784 * Total operating revenues: $138.6 million; $135,119 million * Moody's-adjusted net revenue available for debt service: $14.5 million; $7.7 million * Total debt outstanding: $25.8 million; $23.4 million * Maximum annual debt service (MADS): $3.6 million; $3.6 million * Moody's-adjusted MADS Coverage with normalized investment income: 4.03 times; 2.15 times * Debt-to-cash flow: 2.03 times; 3.79 times * Days cash on hand: 91.7days; 78.4 days * Cash-to-debt: 124.7%; 120.2% * Operating margin: 4.5%; -0.3% * Operating cash flow margin: 8.7%; 4.0% Outstanding Bonds (as of July 31, 2010) -- Series 1998: $10.4 million outstanding; Ba2 -- Series 2003: $11 million outstanding; LOC from Wells Fargo; Aa2/VMIG1 The last rating action was on October 14, 2009, when the bond rating of Rahway Hospital was affirmed at Ba2 and the outlook was revised to stable from positive. ROCK & REPUBLIC: Wins Court Nod to Proceed With Sale Talks ---------------------------------------------------------- Dow Jones' DBR Small Cap reports that a bankruptcy judge agreed to let Rock & Republic Enterprises Inc. proceed with exclusive sale talks with a buyer that's offering at least $33 million in exchange for the apparel company's assets. Judge Arthur J. Gonzalez of the U.S. Bankruptcy Court in Manhattan Earlier extended Rock & Republic's exclusive period to propose a Chapter 11 plan until November 15, 2010, and the exclusive period to solicit acceptances of that plan until Jan. 14, 2011. Rock & Republic said in its request for an extension that it had been busy hunting for a strategic partner to assist it in crafting a reorganization plan and that it is in talks with a newly formed entity called GR Acquisition LLC, which offered to purchase its assets for at least $33 million. About Rock & Republic New York-based Rock & Republic Enterprises, Inc., is a wholesale and retail apparel company specializing in an avant-garde and distinctive line of clothing. Originally started in 2002 by its Chief Executive Officer, Michael Ball, primarily as an American jeans company, the Debtors have expanded their lines to include high fashion clothing for men, women and children as well as shoes, cosmetics and accessories. The Company's merchandise can be found at most high end retail stores such as Nordstrom, Neiman Marcus, Bergdorf Goodman, Bloomingdales, Lord & Taylor, Harvey Nichols and Saks Fifth Avenue, as well as in small upscale boutiques. The Company filed for Chapter 11 bankruptcy protection on April 1, 2010 (Bankr. S.D.N.Y. Case No. 10-11728). Alex Spizz, Esq., and Arthur Goldstein, Esq., at Todtman, Nachamie, Spizz & Johns, P.C., assist the Company in its restructuring effort. Manderson, Schaefer & McKinlay, LLP, is the Company's special corporate counsel. The Company estimated $50 million to $100 million in assets and $10 million to $50 million in liabilities. The Company's affiliate, Triple R, Inc., filed a separate Chapter 11 petition on April 1, 2010 (Bankr. S.D.N.Y. Case No. 10- 11729). SANDY CREEK: S&P Affirms 'BB-' Rating After Annual Review --------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its 'BB-' ratings on Sandy Creek Energy Associates L.P., following the completion of S&P's annual review. SCEA is a Delaware-based special-purpose, bankruptcy-remote limited partnership formed to build, finance, own, and operate the Sandy Creek Energy Station. The '2' recovery rating on the facilities remains unchanged. It indicates substantial recovery (70%-90%) of principal in a default scenario. A $170 million senior secured term loan at holding company Sandy Creek Holdings LLC is unrated. The outlook is stable. The rating on SCEA's $835 million first-lien senior secured credit facilities is 'BB-', and consists of $735 million of construction loans and $100 million of tax-exempt notes. At the time of the original financing in August 2007, the construction loan amount available was $1 billion. SCEA raised $100 million of tax-exempt financing in two tranches in October 2007 and February 2008, reducing the construction loan amount to $900 million. The project subsequently resized this $900 million loan to $735 million when a sale of a portion of the ownership interest occurred in June 2008. The stable outlook reflects S&P's expectation of greater cash flow certainty after SCEA entered into another PPA with LCRA. S&P could raise the ratings if SCEA can further execute additional long-term PPAs, resulting in a greater percentage of capacity under contract. S&P could change the outlook to negative or lower ratings if there are substantial construction issues, if environmental-compliance costs go up, market dynamics in ERCOT deteriorate. Also, if the facility's net revenues are weaker than projected resulting in Opco-level cash available for debt service to mandatory debt service falling below 1.75 times from the expected range of 2.0x, S&P could take a negative action. A ruling against SCEA in the Sierra Club lawsuit that it did not comply with existing environmental laws or violated provisions of the Clean Air Act could also negatively affect the outlook and ratings. Ratings List Ratings Affirmed Sandy Creek Energy Associates L.P. Senior Secured $200 mil term bank ln due 2015 BB-/Stable Recovery Rating 2 $800 mil construction bank ln due 2015 BB-/Stable Recovery Rating 2 SANTA FE GOLD: Stark Schenkein Raises Going Concern Doubt --------------------------------------------------------- Santa Fe Gold Corporation filed on September 28, 2010, its annual report on Form 10-K for the fiscal year ended June 30, 2010. Stark Schenkein, LLP, in Denver, Colo., expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring losses from operations, has no current significant source of operating revenues, has a working capital deficit and needs to secure financing to remain a going concern. The Company reported a net loss of $1.2 million on $320,145 of revenue for fiscal 2010, compared with a net loss of $5.5 million on $72,624 of revenue for fiscal 2009. As of June 30, 2010, the Company had cash and cash equivalents of roughly $5.5 million as compared to $509,846 at June 30, 2009. As of June 30, 2010, the Company had a working capital deficit of $5.4 million, which is attributable to the current portion of its non-cash derivative instrument liabilities of $9.8 million. The Company had a working capital deficit of $664,108 as of June 30, 2009. The Company's balance sheet at June 30, 2010, showed $27.4 million in total assets, $25.5 million in total liabilities, and stockholders' equity of $1.9 million. A full-text copy of the Form 10-K is available for free at: http://researcharchives.com/t/s?6bf2 About Santa Fe Gold Albuquerque, N.M.-based Santa Fe Gold Corporation (OTC BB: SFEG) - - http://www.santafegoldcorp.com/-- is a U.S. mining company, incorporated in 1991 in the state of Delaware. Presently, the Company has four projects: its Summit silver-gold and Ortiz gold projects located in New Mexico; and its Black Canyon mica and Planet micaceous iron oxide projects located in Arizona. The Company has constructed a mill and is developing an underground mine at our Summit silver-gold project, which successfully started up in 2010. The Company expects commercial production to be achieved in 2011. SCHUTT SPORTS: Temporarily Allowed to Sell Infringing Helmets ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Schutt Sports Inc. received an order from the bankruptcy judge allowing it to continue selling DNA and ION helmets through Dec. 31 despite a district court judgment in August that the products infringe a patent owned by competitor Riddell Inc. According to the report, Schutt filed under Chapter 11 to halt collection of the $29 million infringement judgment. Unless Schutt decides to proceed in some aspect of the lawsuit, the bankruptcy judge declined to allow Riddell to continue the patent suit that's pending in U.S. District Court in Wisconsin. The bankruptcy judge told Riddell it could return to bankruptcy court for permission to proceed with the suit if conditions change. In the meantime, the bankruptcy judge is permitting Schutt to continue selling the infringing helmets through year-end so long as 6% of the sale price is placed into special escrow account, according to Mr. Rochelle. About Schutt Sports Litchfield, Illinois-based Schutt Sports, Inc. -- fka Schutt Manufacturing Company; aka Schutt Sports Manufacturing Co., Schutt Sports Distribution Company, and Schutt Athletic Sales Company -- designs, manufactures, distributes and markets team sporting goods equipment, offering an extensive line of football, baseball and softball protective gear and complementary accessories. Schutt Sports filed for Chapter 11 bankruptcy protection on September 6, 2010 (Bankr. D. Del. Case No. 10-12795). Victoria Watson Counihan, Esq., at Greenberg Traurig, LLP, assists the Debtor in its restructuring effort. Ernst & Young is the Debtor's financial advisor. Oppenheimer & Co., Inc., is the Debtor's investment banker. Logan & Company, Inc., is the Debtor's claims, noticing and balloting agent. The Debtor estimated its assets and debts at $50 million to $100 million. Affiliates Circle System Group, Inc. (Bankr. D. Del. Case No. 10-12796), Melas, Inc. (Bankr. D. Del. Case No. 10-12797), Mountain View Investment Co. of Illinois (Bankr. D. Del. Case No. 10-12794), R.D.H. Enterprises, Inc. (Bankr. D. Del. Case No. 10-12798), and Triangle Sports, Inc. (Bankr. D. Del. Case No. 10-12799) filed separate Chapter 11 petitions on September 6, 2010. SEALY CORP: D. Ellinger and J. Replogle Named Ind. Directors ------------------------------------------------------------ The Board of Directors of Sealy Corporation appointed Deborah G. Ellinger and John B. Replogle to serve as a independent directors of the Company. In addition, the Company appointed Lawrence J. Rogers, President and Chief Executive Officer of Sealy Corporation to the Board of Directors. Also, the Company announced that Matthew W. King has agreed to step down as a member of the Board of Directors effective September 28, 2010. Mr. King did not serve on any Committees of the Board of Directors and did not have any disagreements with the Company. Ms. Ellinger is currently an advisor to Catterton Partners, with whom she has worked since 2004. As part of her responsibilities she served as the President of Restoration Hardware as well as the Chief Executive Officer of Old Mother Hubbard/Wellness Pet Food. Prior to her work with Catterton, Ms. Ellinger was the Executive Vice President, Strategy and Business Development for CVS Caremark Corporation, the largest pharmacy health care provider in the United States. She has also held senior level positions at Staples, Inc. and The Boston Consulting Group Inc., and began her career with Mellon Financial Corporation. Ms. Ellinger serves on the Board of Directors of National Life Group, a financial services holding company with subsidiaries in life insurance and asset management. Ms. Ellinger qualified as a Barrister-at-Law in London, where she is affiliated with the Inner Temple, and has an MA and BA in Law and Mathematics from the University of Cambridge in England. Mr. Replogle is currently the Chief Executive Officer of Burt's Bees, Inc, a position he has held since January 2006. Previously, he was with Unilever where he served as the General Manager of Unilever's Skin Care division from 2003 until 2006. Prior to Unilever, Mr. Replogle worked for Diageo, Plc for seven years in a number of different capacities including President of Guinness Bass Import Company, Managing Director of Guinness Great Britain as well as multiple roles in Marketing, Sales and Strategy. He started his career with the Boston Consulting Group. Mr. Replogle has a Master of Business Administration degree in General and Entrepreneurial Management from Harvard Business School and a Bachelor of Arts degree in Political Science from Dartmouth College. Mr. Rogers was appointed President and Chief Executive Officer of Sealy Corporation effective July 22, 2008. Prior to this appointment, Mr. Rogers served as Interim Chief Executive Officer of the Company since March 12, 2008. From December 15, 2006 through March 12, 2008, Mr. Rogers served as the President, North America. Prior to that, Mr. Rogers was President, Sealy International. Since joining us in 1979, Mr. Rogers has served in numerous other capacities within our operations, including President of Sealy of Canada. About Sealy Corp. Trinity, North Carolina-based Sealy Corp. (NYSE: ZZ) -- http://www.sealy.com/-- is the largest bedding manufacturer in the world with sales of $1.5 billion in fiscal 2008. The Company manufactures and markets a broad range of mattresses and foundations under the Sealy(R), Sealy Posturepedic(R), including SpringFree(TM), PurEmbrace(TM) and TrueForm(R); Stearns & Foster(R), and Bassett(R) brands. Sealy operates 25 plants in North America, and has the largest market share and highest consumer awareness of any bedding brand on the continent. In the United States, Sealy sells its products to approximately 3,000 customers with more than 7,000 retail outlets. At May 31, 2009, the Company had $1.0 billion in total assets; $222.8 million in current liabilities, $836.6 million in long-term obligations, net of current portion, $95.9 million in rights liability for convertible notes, $69.1 million in other liabilities, $6.7 million in deferred income tax liabilities; and $230.4 million in shareholders' deficit. * * * As reported by the Troubled Company Reporter on May 19, 2009, Standard & Poor's Ratings Services lowered its corporate credit rating on Sealy Corp. to 'B' from 'B+'. At the same time, S&P lowered the issue-level ratings on the company's senior secured credit facilities to 'BB-', from 'BB', while maintaining the '1' recovery rating. S&P also lowered the issue-level rating on the Company's senior subordinated notes to 'CCC+' from 'B+', and revised the recovery rating on these notes to '6' (indicating the likelihood of negligible [0%-10%] recovery in a payment default) from '4'. At the same time, Standard & Poor's assigned its 'BB-' issue-level rating with a recovery rating of '1' (indicating the likelihood of very high [90%-100%] recovery) to Sealy Mattress' proposed seven-year $350 million senior secured notes due 2016, and a 'B' issue-level rating with a recovery rating of '4' (indicating the likelihood of average [30%-50%] recovery) to its proposed $177 million senior secured convertible pay-in-kind notes due 2016. Sealy's proposed $100 million asset-based revolving credit facility maturing in 2013 is not rated. On May 18, the TCR said Moody's Investors Service assigned a Ba3 rating to Sealy's proposed senior secured notes. At the same time, Sealy's B2 corporate family rating and probability-of- default rating was affirmed as was the Caa1 rating on the senior subordinated notes and SGL 3 liquidity rating. The ratings outlook remains negative. SEALY CORP: Posts $16 Million Net Loss in Fiscal Q3 --------------------------------------------------- Sealy Corporation reported results for its third quarter of fiscal year 2010. Net sales for the third fiscal quarter were $346.2 million, a decrease of (1.0)% compared to the same prior year period. The Company's balance sheet at Aug. 29, 2010, showed $964.88 million in total assets, $206.78 million in total current liabilities, $794.66 million in long-term obligations, $58.00 million in other liabilities, $875,000 in deferred income tax liabilities, and a stockholders' deficit of $95.43 million. Gross profit for the third fiscal quarter decreased by $8.5 million to $137.6 million from the prior year quarter. Gross margin declined by 205 basis points to 39.7%, driven primarily by higher discounting on products that are at the end of their life cycle in an increasingly competitive market as well as the impact of inflation on material costs. Partially offsetting these decreases were improvements in operations efficiencies. Income from operations for the third fiscal quarter of $11.6 million was negatively impacted by a non-cash, impairment charge of $23.0 million related to a write down of the assets of the company's European segment to their fair market value. The impairment is a non-cash charge to earnings and did not affect the Company's liquidity, cash flows from operating activities or Adjusted EBITDA for debt covenant purposes. For more information on these and other various items impacting the period, please refer to the last table of this release. Excluding the impairment, the Company's income from operations would have been $34.5 million, compared to $39.2 million in the same prior year period. The decline was driven by lower sales and higher per unit material costs. The net loss for the third quarter was $15.8 million or $0.16 per diluted share, using a diluted share count of 97.0 million shares. Excluding the impairment, the Company's net income for the period would have been $7.1 million based on a 291.6 million diluted share count, compared to $12.1 million based on a 279.2 million diluted share count, in the comparable prior year period. For further information on the calculation of diluted shares, please see the attached schedule. Adjusted EBITDA for the third fiscal quarter decreased 12.6% to $46.9 million from $53.7 million. Adjusted EBITDA margin decreased to 13.5%, compared to 15.4% in the prior year period. "While our third quarter results reflect the inconsistent industry demand and on-going pressures in the overall macroeconomic and retail environment, we remain focused on actions within our control to drive our future performance. In light of this challenging marketplace, we are actively working with our retail partners to execute promotions that will bring the consumer back into their stores, while continuing to make investments in new product rollouts and new product development to drive future sales growth. The Sealy Promotional line has now been fully rolled out and the specialty Embody line rollout will be completed in Q4. While we would like to have had both rollouts completed faster, both lines are now performing better than their predecessors and have shown improvement from the beginning to the end of the quarter. In addition, our 2009 Stearns & Foster line continues to deliver strong growth. Lastly, we are excited by the progress made on our Next Generation Posturepedic line, which remains on track for a January 2011 launch," stated Larry Rogers, Sealy's President and Chief Executive Officer. Fiscal 2010 Third Quarter Results Total U.S. net sales decreased 2.2% to $251.0 million from the third quarter of fiscal 2009. Wholesale unit volume decreased 0.3%, while wholesale average unit selling price decreased 2.3% on a year-over-year basis. The decrease in unit volume is primarily attributable to lower sales related to the company's Posturepedic line, offset by the growth of its Stearns & Foster line. The decrease in wholesale average unit selling price is due to the company's response to competitive pressure including a growing mix of promotional priced bedding as it seeks to capture more sales with its new Sealy branded products. International net sales increased $2.3 million, or 2.5%, from the third quarter of 2009 to $95.1 million. Excluding the effects of currency fluctuation, international net sales increased 2.6% from the third quarter of 2009. This increase was primarily due to increased sales in the Canadian market driven by strategic promotional activity and the success of the company's new Stearns & Foster line. Canadian unit volume for the quarter increased 7.4% from the comparable prior year quarter. Gross profit decreased 5.8% to $137.6 million compared to $146.1 million in the third quarter of fiscal 2009. Gross profit margin was 39.7%, a decrease of 205 basis points compared to the prior year third quarter. U.S. gross profit margin decreased 353 basis points to 40.4%. The decrease in percentage of net sales was driven primarily by higher discounting on products that are at the end of their life cycle in an increasingly competitive market, as well as the impact of inflation on material costs. Partially offsetting these decreases were improvements in operations efficiencies. Selling, general, and administrative expenses were $107.5 million for the third quarter of fiscal 2010, a decrease of $2.8 million versus the comparable period a year earlier primarily due to a decrease in compensation costs. A full-text copy of the Company's earnings release is available for free at http://ResearchArchives.com/t/s?6be7 About Sealy Corp. Trinity, North Carolina-based Sealy Corp. (NYSE: ZZ) -- http://www.sealy.com/-- is the largest bedding manufacturer in the world with sales of $1.5 billion in fiscal 2008. The Company manufactures and markets a broad range of mattresses and foundations under the Sealy(R), Sealy Posturepedic(R), including SpringFree(TM), PurEmbrace(TM) and TrueForm(R); Stearns & Foster(R), and Bassett(R) brands. Sealy operates 25 plants in North America, and has the largest market share and highest consumer awareness of any bedding brand on the continent. In the United States, Sealy sells its products to approximately 3,000 customers with more than 7,000 retail outlets. At May 31, 2009, the Company had $1.0 billion in total assets; $222.8 million in current liabilities, $836.6 million in long-term obligations, net of current portion, $95.9 million in rights liability for convertible notes, $69.1 million in other liabilities, $6.7 million in deferred income tax liabilities; and $230.4 million in shareholders' deficit. * * * As reported by the Troubled Company Reporter on May 19, 2009, Standard & Poor's Ratings Services lowered its corporate credit rating on Sealy Corp. to 'B' from 'B+'. At the same time, S&P lowered the issue-level ratings on the company's senior secured credit facilities to 'BB-', from 'BB', while maintaining the '1' recovery rating. S&P also lowered the issue-level rating on the Company's senior subordinated notes to 'CCC+' from 'B+', and revised the recovery rating on these notes to '6' (indicating the likelihood of negligible [0%-10%] recovery in a payment default) from '4'. At the same time, Standard & Poor's assigned its 'BB-' issue-level rating with a recovery rating of '1' (indicating the likelihood of very high [90%-100%] recovery) to Sealy Mattress' proposed seven-year $350 million senior secured notes due 2016, and a 'B' issue-level rating with a recovery rating of '4' (indicating the likelihood of average [30%-50%] recovery) to its proposed $177 million senior secured convertible pay-in-kind notes due 2016. Sealy's proposed $100 million asset-based revolving credit facility maturing in 2013 is not rated. On May 18, the TCR said Moody's Investors Service assigned a Ba3 rating to Sealy's proposed senior secured notes. At the same time, Sealy's B2 corporate family rating and probability-of- default rating was affirmed as was the Caa1 rating on the senior subordinated notes and SGL 3 liquidity rating. The ratings outlook remains negative. SEARS HOLDINGS: Fitch Assigns 'BB+' Rating on $665 Mil. Notes ------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' rating to the $665 million senior secured notes due 2018 that is being offered by Sears Holdings Corporation. $165 million is being offered to Holdings' domestic pension plan through a private placement. The notes being offered have a second lien on all domestic inventory and credit card receivables, essentially representing the same collateral package that backs the $2.4 billion credit facility on a first lien basis. The notes contain provisions which require Holdings to maintain minimum asset coverage for total secured debt (failing which the company has to offer to buy notes sufficient to cure the deficiency at 101%). The company's asset base provides lenders strong credit protection and given the significant collateral that backs both the first and second lien debt, the new bonds are being rated at the same level as the senior secured facility and one notch above the company's senior unsecured notes. The company plans to use proceeds to repay borrowings under its senior secured revolving credit facility, fund working capital requirements and capital expenditures, and for general corporate purposes, including common share repurchases and pension funding obligations. Fitch would expect Sears to manage its capital structure to maintain credit metrics in line with current levels. Fitch has also affirmed these ratings: Sears Holdings Corporation -- Long-term Issuer Default Rating at 'BB-'; -- Secured bank facility at 'BB+'. Sears, Roebuck and Co. -- Long-term IDR at 'BB-'. Sears Roebuck Acceptance Corp. -- Long-term IDR at 'BB-'; -- Short-term IDR at 'B'; -- Commercial paper at 'B'; -- Senior unsecured notes at 'BB'. Sears DC Corp. -- Long-term IDR at 'BB-'; -- Senior unsecured notes at 'BB'; Kmart Holding Corporation -- Long-term IDR at 'BB-'. The Rating Outlook is Stable. The ratings reflect Holdings' broad market presence in the moderate department store, hardline and discount retail segments and strong proprietary brands. The ratings also incorporate underperformance in top line with negative domestic comparable store sales trends for the majority of the past 10 years resulting in below industry average operating profitability. The top line weakness reflects competitive pressures, inconsistent merchandising execution and the lack of clarity about its longer term retail strategy. Sears' continued allocation of cash to share buybacks at the cost of store level investments remains a concern. While 2009 EBITDA (excluding store closing and non-cash pension expenses) improved to $1.8 billion from $1.6 billion in 2008, reflecting cost-cutting measures that offset gross profit dollar declines, latest 12 months EBITDA has deteriorated modestly reflecting continued pressure at its Sears Domestic business. This combined with higher debt levels to fund working capital needs and the increase in Holdings' stake of Sears Canada to 90% from 73% has increased Holdings' leverage from 3.6 times at the end of 2009 to almost 4.0x for the LTM period ended July 31, 2010. Leverage metrics are expected to remain within the 4.0x range over the next 12-18 months. This contemplates modest pressure on EBITDA and some increase in overall debt relative to 2009 levels. Holdings operates over 3,500 store locations in the U.S., of which approximately 2,200 are big boxes (mall-based and off-mall) and over 1,300 are specialty stores (such as dealer stores, Sears and Orchard Hardware, and outlet stores). Sears also has approximately 440 full-line and specialty stores in Canada operating through Sears Canada Inc., a 90%-owned subsidiary. Domestic Sears and Kmart stores have been underperforming their retail peers on top line growth for many years and the combined domestic entity has lost almost $5.5 billion or 12% of its 2005 domestic revenue base of $45 billion (the two companies merged in March 2005). The company's challenge will be to generate longer term sales and earnings growth at both Sears and Kmart in the face of continued market share gains by its largest retail peers within the department store, discount and big-box specialty retail segments. While Sears has been likened to a department store, its mix is more heavily weighted towards hardlines which might somewhat explain the more negative comps over the last few years. Fitch expects Sears comps to be in the negative low single digit growth in 2010. On the Kmart side, sales trends over the last few years have been disappointing as the retailer has lost share to Wal-Mart and Target even as the discount category continues to take overall retail share. While comps were positive for three consecutive quarters through the first quarter of 2010 and indicated stabilization in the Kmart business, comps turned negative 1.4% in the second quarter and could remain slightly negative for the remainder of the year. Weakness in top line has resulted in operating margins that significantly lag its peers. This is in spite of the company undertaking aggressive cost cutting measures between 2006 to 2009 which resulted in a $1.2 billion reduction in domestic selling and administrative expenses. Sears domestic LTM EBITDA margin at 3.4% has been tracking 600 basis points lower on average over the last three years compared to its largest retail peers in the discount, department and hardline retail categories. Given chronic underinvestment in the stores due to years of cost cutting and low level of capital expenditures and the lack of a well articulated strategy to stop market share losses, Fitch expects the high differential will likely continue. Liquidity remains strong, supported by a cash balance of $1.2 billion (with domestic cash of $0.5 billion) and close to $1 billion of availability under its $2.4 billion credit facility as of July 31, 2010. In addition, the company recently put in place a new CAD$800 million ABL facility due 2015 at its Sears Canada division. Fitch expects Sears to generate strong free cash flow in 2010 although at levels closer to 2008 when free cash flow was $0.5 billion rather than the $1.1 billion generated in 2009 due to significant working capital reduction. Pension contributions (included in free cash flow calculations) could be a drain on cash over the next few years with a domestic underfunded liability of $1.8 billion or a funded status of 67%. Holdings contributed $170 million to domestic pension plans in 2009 and expects current cash contributions to be $275 million in 2010 and $340 million in 2011. In addition, Sears could continue to pursue shareholder friendly activities. Through the first half of this year, the company has bought back $273 million in stock (with $309 million of remaining authorization) and has bought back close to $4.6 billion in stock over the past five years. The 'BB+' rating of Holdings' $2.4 billion secured revolver, under which SRAC and Kmart are the borrowers, reflects a downstream guarantee from Holdings to both SRAC and Kmart and cross- guarantees between SRAC and Kmart as well as significant collateral. The facility is secured primarily by domestic inventory which ranges from $7 billion to $9 billion around peak levels in November, and pharmacy and credit card receivables which range from $650 million to $700 million. The credit facility has an accordion feature that enables the company to increase the size of the credit facility or add a first lien term loan tranche in an aggregate amount of up to $1 billion. The company can also issue up to $2 billion in second-lien debt subject to certain conditions. The credit agreement imposes various requirements, including (but not limited to) these: (1) if availability under the credit facility is beneath a certain threshold, the fixed charge ratio as of the last day of any fiscal quarter be not less than 1.0 to 1.0 (2) a cash dominion requirement if excess availability on the revolver falls below designated levels, and (3) limitations on its ability to make restricted payments, including dividends and share repurchases. Sears also agreed to limit the amount of cash accumulated when borrowings are outstanding under the credit facility. The 'BB' ratings of SRAC's senior notes reflect a guarantee provided by Sears. In addition, Sears DC Corp. benefits from an agreement by Sears to maintain a minimum fixed-charge coverage at SDC of 1.005x. Sears also agrees to maintain an ownership of and a positive net worth at SDC. Based on the company's assets (relative to secured debt), Fitch views there is adequate collateral to back unsecured debt at SRAC and SDC. SHG SERVICES: Moody's Assigns 'B1' Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service assigned B1 Corporate Family and Probability of Default Ratings to SHG Services, Inc., a wholly owned subsidiary of Sun Healthcare Group, Inc. SHG will comprise the operating assets of Sun Healthcare Group following the current restructuring of the company. Moody's also assigned a Ba2 (LGD2, 23%) rating to SHG's proposed senior secured credit facility, consisting of a $60 million revolver and a $225 million term loan. The rating outlook is stable. Finally, Moody's assigned a Speculative Grade Liquidity Rating of SGL-2. On May 24, 2010, Sun Healthcare Group announced a plan to restructure the business by separating the real estate and operating assets into two separate publicly traded entities. Under the terms of the transaction, substantially all of the company's operations will be held or assumed by SHG (which will ultimately be renamed Sun Healthcare Group) while substantially all of the company's owned real property and related mortgage indebtedness will be held or assumed by Sabra Health Care REIT, Inc. SHG will enter into lease agreements for the properties transferred to Sabra. The transaction is expected to be completed in the fourth quarter of 2010. The existing ratings of Sun Healthcare Group remain unchanged and are expected to be withdrawn at the close of the transaction. Moody's understands that the proceeds of the proposed SHG credit facility and other debt to be issued by Sabra will be used to retire the existing debt of Sun Healthcare Group. This is a summary of Moody's rating actions. Ratings assigned: SHG Services, Inc. * $60 million revolver due 2015, Ba2 (LGD2, 23%) * $225 million term loan due 2016, Ba2 (LGD2, 23%) * Corporate Family Rating, B1 * Probability of Default Rating, B1 * Speculative Grade Liquidity Rating, SGL-2 Ratings unchanged and expected to be withdrawn at the close of the transaction: Sun Healthcare Group, Inc. * Senior secured revolver due 2013, Ba2 (LGD2, 29%) * Synthetic line of credit, Ba2 (LGD2, 29%) * Senior secured term loan due 2014, Ba2 (LGD2, 29%) * Senior subordinated notes due 2015, B3 (LGD5, 84%) * Corporate Family Rating, B1 * Probability of Default Rating, B1 * Speculative Grade Liquidity Rating, SGL-2 Ratings Rationale SHG's B1 Corporate Family Rating reflects the moderate debt level but still considerable adjusted leverage when considering Moody's adjustment to capitalize operating leases, which is significant given the company will not initially own any of the properties in which it has operations. The rating also reflects the company's track record of organic growth, which has contributed to improved margins and stable cash flow generation. However, the ratings continue to reflect the risks associated with the reliance on government programs for a significant portion of revenue. Medicare reimbursement is expected to be impacted in the current year by the adoption of the RUG-IV methodology and other changes that could impact reimbursement for therapy services while Medicaid reimbursement could see continued pressure as states are still faced with significant budget shortfalls. If the company is able to continue to drive expansion in profitability margins and cash flow through the implementation of the new Medicare reimbursement rules, Moody's could consider changing the outlook to positive or upgrading the ratings. More specifically, Moody's would consider positive pressure on the ratings if adjusted debt to EBITDA was expected to be sustained below 4.0 times and free cash flow coverage of debt was expected to approach 10%. Moody's could consider changing the outlook to negative or downgrading the ratings if the company is unable to maintain adjusted debt to EBITDA below 5.0 times because of either adverse reimbursement developments or other operational issues. Additionally, Moody's would consider negative pressure on the ratings if the company were to incur additional indebtedness for acquisitions or development beyond Moody's expectations. If any combination of these factors were to result in the expectation of sustained free cash flow to adjusted debt below 5%, Moody's could downgrade the ratings. This is the first time Moody's are assigning ratings to SHG Services, Inc. The last rating action on Sun Healthcare Group, Inc. was on March 12, 2007, when the B1 Corporate Family and Probability of Default Ratings were assigned along with ratings on the company's senior secured credit facility and senior subordinated notes. SHG Services, Inc., is a wholly owned subsidiary of Sun Healthcare Group, Inc. Sun Healthcare Group is a leading provider of healthcare services to seniors. At June 30, 2010, Sun Healthcare Group's inpatient services division, SunBridge, operated 116 skilled nursing centers, 16 combined skilled nursing, assisted and independent living centers, 10 assisted living centers, two independent living centers and eight mental health centers. Sun Healthcare also provides rehabilitation services through its SunDance division and healthcare staffing services through its CareerStaff Unlimited subsidiary. Sun Healthcare recognized approximately $1.9 billion of revenue for the twelve months ended June 30, 2010. SHORELINE BANK: Closed; GBC International Bank Assumes Deposits --------------------------------------------------------------- Shoreline Bank of Shoreline, Wash., was closed on October 1, 2010, by the Washington Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with GBC International Bank of Los Angeles, Calif., to assume all of the deposits of Shoreline Bank. The three branches of Shoreline Bank will reopen during their normal business hours as branches of GBC International Bank. Depositors of Shoreline Bank will automatically become depositors of GBC International Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage. Customers of Shoreline Bank should continue to use their existing branch until they receive notice from GBC International Bank that it has completed systems changes to allow other GBC International Bank branches to process their accounts as well. As of June 30, 2010, Shoreline Bank had around $104.2 million in total assets and $100.2 million in total deposits. GBC International Bank will pay the FDIC a premium of 0.25 percent to assume all of the deposits of Shoreline Bank. In addition to assuming all of the deposits of the failed bank, GBC International Bank agreed to purchase approximately $65.7 million of the failed bank's assets. The FDIC will retain the balance of the assets for later disposition. The FDIC and GBC International Bank entered into a loss-share transaction on $49.2 million of Shoreline Bank's assets. GBC International Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. For more information on loss share, visit: http://www.fdic.gov/bank/individual/failed/lossshare/index.html Customers who have questions about today's transaction can call the FDIC toll-free at 1-800-613-0378. Interested parties also can visit the FDIC's Web site at: http://www.fdic.gov/bank/individual/failed/shoreline.html The FDIC estimates that the cost to the Deposit Insurance Fund will be $41.4 million. Compared to other alternatives, GBC International Bank's acquisition was the least costly resolution for the FDIC's DIF. Shoreline Bank is the 129th FDIC-insured institution to fail in the nation this year, and the tenth in Washington. The last FDIC-insured institution closed in the state was North County Bank, Arlington, on September 24, 2010. SEQUENOM INC: Faces Lawsuit From Former Chief Financial Officer --------------------------------------------------------------- Clarke Neumann, vice president and general counsel of Sequenom Inc. said the Company was served on September 24, 2010, with an amended complaint in the lawsuit filed on August 26, 2010 by Paul Hawran, the Company's former chief financial officer, in the Superior Court of California for the North County of San Diego. Hawran v. Hixson et al, case no. 37-2010-00058632-CU-DF-NC. Mr. Hawran has amended his complaint to name to the Company as a defendant in addition to the three individuals previously named and to add claims of breach of contract and negligent misrepresentation to his previously stated claims for defamation, invasion of privacy, negligent and intentional interference with prospective economic advantage, and unfair business practices under California Business and Professions Code Section 17200. Mr. Hawran alleged in his amended complaint that he was asked to resign because he had raised concerns about the conduct of certain of the Company's directors. About Sequenom Sequenom, Inc. (NASDAQ: SQNM) -- http://www.sequenom.com/-- is a life sciences company committed to improving healthcare through revolutionary genetic analysis solutions. Sequenom develops innovative technology, products and diagnostic tests that target and serve discovery and clinical research, and molecular diagnostics markets. The company was founded in 1994 and is headquartered in San Diego, California. At June 30, 2010, the Company had total assets of $105,943,000, total current liabilities of $57,696,000, deferred revenue, less current portion of $283,000, other long-term liabilities of $3,026,000, long-term portion of debt and obligations of $1,344,000, and stockholders' equity of $43,594,000. * * * In its March 15, 2010 audit report, Ernst & Young LLP of San Diego, California, expressed substantial doubt against Sequenom's ability as a going concern. The auditor noted that the Company has incurred recurring operating losses and does not have sufficient working capital to fund operations through 2010. The Company, in its Form 10-Q report for the period ended June 30, 2010, said it believes its cash, cash equivalents and current marketable securities will be sufficient to fund operating expenses and capital requirements through the second quarter of 2011. The Company said it will require additional financing to fund planned operations. SIRIUS XM: S&P Puts 'B' Corp. Rating on CreditWatch Positive ------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'B' corporate credit rating for Sirius XM Radio Inc. and XM Satellite Radio Holdings Inc. (which S&P analyzes on a consolidated basis), as well as all related issue-level ratings for the company, on CreditWatch with positive implications. "The action is based on the company's improving operating performance, declining debt leverage, and the prospects for continued improvement in credit measures for full-year 2010," said Standard & Poor's credit analyst Hal Diamond. New York City-based Sirius XM had total debt outstanding of $3.1 billion as of June 30, 2010. Revenues and EBITDA increased 16% and 17%, respectively, in the three months ended June 30, 2010, reflecting an 11% increase in monthly average revenue per subscriber and a 6% increase in subscribers. Debt to EBITDA declined to 5.9x for the 12 months ended June 30, 2010, from 6.6x at Dec. 31, 2009. The company has affirmed its full-year 24% EBITDA growth guidance, which S&P believes is achievable, implying 19% EBITDA growth in the second half of 2010. As a result, S&P believes that the company will be able to lower debt leverage to roughly 5.6x in 2010, supported by modest subscriber growth and selective price increases. Subscribers increased 6.1% in the second quarter of 2010, versus the same period last year, which marked the fourth consecutive quarter of subscriber gains. U.S. auto sales, the primary source of new subscribers, increased 8.4% through the end of August. The conversion rate of subscribers rolling off automaker promotions to fully paid status improved to 46.7% in the second quarter of 2009, versus 44.3% a year ago. This is still down from 50% in 2007- 2008, due to increasing penetration of the service across automakers' model lineups, particularly lower-end models for which conversion tends to be lower. Average monthly churn of self-pay subscribers declined to 1.8% for the three months ended June 30, 2010, compared with 2.0% for the same period last year. Beginning Aug. 1, 2009, Sirius XM effectively raised subscriber prices 14% to pass on increased music royalty costs incurred since 2007. Pricing could rise somewhat further, following the July 2011 expiration of a three-year moratorium on price increases for the company's basic $12.95 monthly subscription package, which Sirius XM agreed to in its 2008 agreement with the FCC. The company's five-year agreement with radio talk show host Howard Stern expires on Dec. 31, 2010. Despite onerous contract costs, Stern has been important to the growth of the service due to his loyal fan base and exclusive content, which is not available on terrestrial radio. S&P believes that subscriber churn would increase, potentially dramatically, should he decide not to renew his contract. If S&P becomes convinced that Sirius XM will continue to demonstrate consistency in subscriber and EBITDA growth, and adhere to a financial policy that will facilitate debt leverage of less than 6x, S&P would likely raise the rating, irrespective of the status of the Howard Stern contract. SOMERSET MEDICAL: Moody's Affirms 'Ba2' Rating on $81.4 Mil. Bonds ------------------------------------------------------------------ Moody's Investors Service has affirmed the Ba2 long-term bond rating assigned to Somerset Medical Center's $81.4 million of outstanding bonds issued by the New Jersey Health Care Facilities Finance authority. The outlook is revised to stable from negative, reflective of the growth in unrestricted cash and investments and increased headroom under SMC's letter of credit covenants, as well as improvement in financial performance since FY 2007. Legal Security: First mortgage on the medical center physical plant; Gross revenues pledge; Debt Service Reserve Fund. Cross default provisions for the Series 2008 bonds and 2003 bonds. Bank covenants match bond covenants for days cash on hand test (50 days) and MADS coverage (1.1 times). However, an inability to meet these tests would constitute an event of default if remain unremedied for thirty days after notice from the liquidity provider under the letter of credit and option for an immediate acceleration of the bonds. Interest Rate Derivatives: None. Strengths * Located in Somerset County, NJ in the City of Somerville with favorable demographics characterized by population growth, median income levels above state and national averages, and relatively low Medicaid population * Dominant inpatient market share as the only acute care hospital in its primary service area of Somerset County. Favorable inpatient volume growth in fiscal year (FY) 2009 primarily from the closure of Muhlenberg Regional Medical Center in August 2008; although volumes have shown deterioration through the first six months of FY 2010 due to the weakened economy and patients' deferral of medical care * Improved liquidity position at June 30, 2010, with $42.5 million of unrestricted cash and investments (61 days cash on hand) compared to $38.2 million at FYE 2008 (59 days cash on hand) and $26.5 million at FYE 2007 (44 days cash on hand). SMC is currently in compliance with its days cash on hand covenant (50 days measured semi-annually.) * Operating performance has stabilized over the past two fiscal years, after a particularly difficult operating year in FY 2007 (-4.2% operating margin), although during FY 2009 SMC still did not achieve operating profitability or breakeven performance with an operating margin of -1.3% *Conservative investment allocation with 57% invested in fixed income securities and remainder in cash Challenges * Risk of debt structure for a below investment grade rating that includes 21% of debt in variable rate demand bonds supported by a letter of credit, somewhat mitigated by SMC's cash-to-puttable debt measuring an adequate 172% as of June30, 2010. While liquidity has improved from Moody's last review, SMC currently maintains limited headroom under the 50 days cash on hand covenant under bank agreement which increases the possibility of acceleration risk by the liquidity provider in the event the covenant falls below the minimum requirement * Continued outpatient surgery volume declines due to increased competition from physician-owned ambulatory surgery centers that have opened in the market; outpatient surgery volume declined by a material 16% in FY 2008 and 6.8% in FY 2009; however through six months of FY 2010 outpatient surgeries showed a modest increase of 0.6% * History of modest operating performance (FY 2009 is the seventh consecutive year of posting an operating loss before investment income) and cash flow generation that has inadequately offset annual debt service requirements and resulted in weak coverage levels * Leveraged balance sheet measured by weak cash-to-debt of 34.3% and debt-to-cash flow a high 10.7 times in FY 2009 * Sale of its cancer center in 2008 reduced debt by $15 million and added approximately $10 million of unrestricted cash to the balance sheet, although the debt was exchanged for a long-term operating lease that results in annual rental expense of approximately $2.0 million over 18 years Recent Developments/Results The continued improvement to liquidity levels is a key factor in the revision of Moody's outlook to stable from negative, as SMC has gained some headroom under its letter of credit days cash on hand covenant (described below). At Moody's last review, the potential for SMC to not meet its liquidity covenant was a significant credit concern, but since that time the possibility of a covenant violation has been somewhat abated due to SMC's growth in unrestricted cash and investments. SMC's current debt structure includes 24% of variable rate demand debt supported by a letter of credit agreement with TD Bank, N.A. (expires August 7, 2013), which exposes the organization to renewal, put, and acceleration risk. Under the LOC agreement, SMC is required to maintain financial covenants including days cash on hand (no less than 50 days measured semiannually). As of June 30, 2010, SMC maintains some headroom under the required liquidity covenant with 60.5 days cash on hand. While liquidity has improved and the risk of a potential acceleration under the LOC was avoided, Moody's note that in order to remain at the current rating level it will be vital for SMC to maintain liquidity and operating performance at least to current levels over the intermediate term. Somerset Medical Center is a 361 licensed-bed hospital located in Somerville, New Jersey and is the sole acute care provider in Somerset County (Aaa General Obligation rating). Somerset County is among the wealthiest counties in the state and the nation, with income levels that exceed state and national medians. The favorable demographics, and SMC's dominant market share as the only provider in the immediate service area, resulted in a payer mix consisting of relatively low Medicaid and self-pay patients and volume trends in FY 2009 that saw admissions grow by 2.3%. SMC's competitors include Robert Wood Johnson University Hospital (rated A2 by Moody's) and Saint Peter's Healthcare System (rated Baa2 by Moody's) which are both located in New Brunswick, in the neighboring county. Despite some SMC physicians splitting their admissions among SMC, Robert Wood Johnson, and Saint Peter's, SMC is located far enough away from the very crowded and competitive New Jersey markets that exist to the north and east of Somerset County that the hospital has been able to maintain market share in their primary service area that exceeds 50%. In addition, SMC benefited from the August 2008 closure of Muhlenberg Regional Medical Center which resulted in increased utilization at SMC in FY 2009. SMC competes with several surgery centers in the area, the most recent of which was formed in 2008 by SMC neurosurgeons, orthopedists, and ENT physicians, and SMC has seen its surgical volumes suffer as a result of the increased competition. Surgical volumes declined by 5.8% in FY 2009, although through the first six months of FY 2010 the loss in surgical volumes seems to have flattened, as surgeries were flat when compared to the prior year. Since 2008, a New Jersey state law was passed which requires any new surgery center to be part of a joint venture with an acute care hospital. During FY 2009, utilization trends were mixed with 2.3% growth in inpatient admissions, 9.4% growth in outpatient visits, 6.2% increase in observation stays, but with a 5.8% decline in total surgeries and a 7.2% decline in newborn admissions. Through six months of FY 2010, inpatient admissions declined by 2.3%, surgeries were flat, and newborn admissions were down 18.6%. Management reports that the stressed economic environment has resulted in patients delaying medical care, which is consistent with what has been seen at other New Jersey hospitals. In addition, severe winter weather during January and February 2010 also drove down utilization trends. SMC's operating performance has historically been highly variable, as evidenced by operating margins ranging from -4.2% to -0.6% over the past 5 years. FY 2009 resulted in an operating loss of $3.4 million (-1.3% margin), down from the $1.5 million loss (-0.6% margin) reported in FY 2008. (Moody's removes investment income from other revenue.) During the fourth quarter of FY 2009, SMC booked an accrual for a medical malpractice case in the amount of $3 million, which accounted for the loss for the year. Moody's note favorably that both FY 2009 and FY 2008 show improvement over FY 2007 during which SMC posted a loss of $9.5 million (-4.2% margin). Operating cash flow during FY 2009 was $13.2 million (5.1% margin), a decline from the $16.7 million (6.7% margin) reported in FY 2008, but also an improvement over just $10 million (4.5% margin) in cash flow reported in FY 2007. Through the first six months of FY 2010, SMC's income from operations was slightly above breakeven (when removing investment income from other revenue), similar to the same period the prior year. . Management's prepared budget for FY 2010 anticipates operating income of $350,000 (0.1% margin) and operating cash flow of $17.4 million (6.3% margin). SMC has engaged a consultant to do a 60-day revenue cycle assessment, which management believes will result in improved operating performance going forward. SMC also expects to receive sizable rate increases under managed care contracts in the remainder of FY 2010 and FY 2011. Debt coverage showed weakening in FY 2009, with debt to cash flow increasing to 10.7 times from 8.85 times in FY 2008, and Moody's adjusted MADS coverage declining to 1.3 times from 1.6 times the prior year. However, both FY 2009 and FY 2008 compare favorably to FY 2007, when debt to cash flow was a very high 26.2 times, and MADS coverage was below 1 times. Nonetheless, the debt levels are very thin compared to national medians. Unrestricted cash and investments has grown for the second consecutive year, in part due to the sale of SMC's cancer center in FY 2008. SMC sold the cancer center property in a sale- leaseback transaction for approximately $25 million to a health care REIT, and used the proceeds of the sale to reduce debt by $15 million and add approximately $10 million to unrestricted cash to SMC's balance sheet in FY 2008. At FYE 2009 unrestricted cash and investments was $40.1 million (58.5 days cash on hand), up from $38.2 million (58.5 days cash on hand) at FYE 2008 and $26.5 million (43.7 days cash on hand) at FYE 2007. The more comfortable distance from these 50 days cash on hand covenant supports the stable; a level that is closer to 50 days will warrant consideration for a negative outlook. Due to SMC's relatively high debt load relative to its liquidity position, cash-to-debt ratio is improved, but still remains weak at 34.3% at FYE 2009 from 33.2% at FYE 2008. The operating lease for the cancer center is a total of $37 million, and adds annual rental payments of approximately $2.0 million over 18 years. With the inclusion of the Cancer Center lease, SMC currently has off- balance sheet operating leases which equate to a debt-equivalent of a sizeable $46 million (calculated using Moody's six times multiplier method). Including this debt, Moody's adjusted debt measures result in debt service coverage of 1.19 times and 24.5% cash-to-debt for FY 2009. Moody's notes favorably that SMC adheres to a relatively conservative investment policy that helps to preserve liquidity in the current market environment, with investments primarily in fixed income securities (57%) and cash (36%). SMC's entire investment portfolio can be liquidated in one month or less. In terms of capital needs, SMC expects to spend $10 million in FY 2010, of which $5 million will be funded through cash flow and the remaining $5 million funded through an equipment note. Management does not anticipate issuing any additional debt in the near future, other than this equipment note. Outlook The revision in the outlook to stable from negative is attributable to the growth in unrestricted cash and investments and increased headroom under SMC's letter of credit covenants, as well as improvement in financial performance since FY 2007. What could change the rating -- Up Growth and stability of inpatient and outpatient volume; continued trend of improved operating performance and ability to sustain improved levels in the near term, material improvement in debt coverage and liquidity measures What could change the rating -- Down Further declines in volumes; sustained declined in operating performance, weakening of liquidity balance, significant unexpected debt issuance without commensurate increase in cash and cash flow generation Key Indicators Assumptions & Adjustments: -- Based on financial statements for Somerset Medical Center -- First number reflects audit year ended December 31, 2008 -- Second number reflects audit year ended December 31, 2009 -- Investment returns normalized at 6% unless otherwise noted -- Investment income removed from other revenue * Inpatient admissions: 15,709; 16,070 * Total operating revenues: $249.0 million; $258.3 million * Moody's-adjusted net revenue available for debt service: $19.1 million; $15.8 million * Total debt outstanding: $115.3 million; $116.7 million * Maximum annual debt service (MADS): $12.1 million; $12.1 million * MADS Coverage with reported investment income: 1.58 times; 1.28 times * Moody's-adjusted MADS Coverage with normalized investment income: 1.58 times; 1.31 times * Debt-to-cash flow: 8.9 times; 10.7 times * Days cash on hand: 58.5 days; 58.5 days * Cash-to-debt: 33.2%; 34.3% * Operating margin: -0.6%; -1.3% * Operating cash flow margin: 6.7%; 5.1% Rated Debt (debt outstanding as of December 31, 2009): -- Series 2003 fixed rate bonds ($81.4 million outstanding); rated Ba2 The last rating action with respect to the Somerset Medical Center was on June 5, 2009, when a municipal finance scale rating of Ba2 was affirmed and negative outlook maintained. That rating was subsequently recalibrated to Ba2 on May 7, 2010. SOUTHEAST CAPITAL: Case Summary & 5 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Southeast Capital LLC 218 E. Bearss Ave. #409 Tampa, FL 33613 Bankruptcy Case No.: 10-32028 Chapter 11 Petition Date: September 30, 2010 Court: United States Bankruptcy Court Northern District of Florida (Pensacola) Debtor's Counsel: Jeffery J. Hartley, Esq. HELMSING, LEACH, HERLONG, NEWMAN & ROUSE P.O. Box 2767 Mobile, AL 36652 Tel: (251) 432-5521 Fax: (251) 432-0633 E-mail: jjh@helmsinglaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's five largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/flnb10-32028.pdf The petition was signed by Ronald E. Scaglione, manager of sole member. STAR GAS: Fitch Affirms Issuer Default Rating at 'B' ---------------------------------------------------- Fitch Ratings has taken these rating actions on Star Gas Partners, L.P.'s long-term Issuer Default Rating and outstanding debt: -- IDR affirmed at 'B'; -- Outstanding 10.25% senior unsecured notes due 2013, co-issued with its special purpose financing subsidiary Star Gas Finance Company (the notes), upgraded to 'BB/RR1' from 'BB- /RR2'. The Rating Outlook is Stable. Approximately $82.8 million of long-term debt is affected by this rating action. The decision to affirm Star's IDR with a Stable Outlook reflects projected credit metrics which take into account the company's stable operating performance, a seasoned management team, adequate liquidity, and low leverage. There has been no fundamental change in the company's overall risk profile or significant changes in cash flow. Key rating factors include: -- Comprehensive hedging program -- Effective acquisition strategy -- Robust liquidity position -- Reduction in leverage Fitch's Recovery Rating for the outstanding notes, a relative indicator of creditor recovery on a given obligation in the event of a default, was revised to 'RR1' from 'RR2'. This change was the sole result of the reduction in the amount of notes outstanding to $83 million from $133 million in February 2010. The notes were redeemed at a premium to par. 'RR1' indicates an estimated recovery level exceeding 90% in event of a default. According to Fitch's methodology, the change in the Recovery Rating leads to a one notch upgrade to 'BB' from 'BB-'. Key rating concerns include: -- Commodity price sensitivity -- Continued customer attrition -- Exposure to weather sensitivity Star utilizes a hedging program which mitigates commodity price sensitivity for protected price customers. Additionally, roughly half of Star's customers are on a variable pricing plan. As a way to mitigate exposure to weather variability Star carries weather insurance with a maximum payout of $12.5 million. The macroeconomic outlook for the home heating oil industry is negative due to the natural volatility in the heating oil market, continued customer attrition, and the loss of volumes due to both natural gas conversions and conservation. Given that the home heating oil industry is mature, and customer attrition is a part of the business, the only way to grow and maintain the business is through acquisitions. On May 10, 2010, Star entered into an Equity Purchase Agreement whereby it acquired 100% of the capital stock of Champion Energy Corporation (Champion) for a purchase price of approximately $50.1 million plus working capital of approximately $7.5 million at a 5 times EBITDA multiple. This acquisition is typical of how Star grows its business and is a natural fit for the company as Champion serves over 45,000 home heating oil customers in markets in which Star currently operates. Star has sufficient liquidity to cover financing, investing, and working capital needs. As of June 30, 2010, Star had $241.7 million of liquidity available, including $44 million of cash on hand and $198 million under its subsidiary's (Petroleum Heat and Power Company) secured revolving credit facility that matures in 2012. The company's strong liquidity position helps to mitigate the risk for creditors and ensures that Star has ample ability to meet its seasonal working capital needs and work its way through difficult operating environments. Fitch believes that Star Gas will maintain the financial capacity and flexibility to successfully manage the 2013 maturity of the $83 million of senior unsecured notes. For the LTM period ending June 30, 2010, EBITDA interest coverage improved slightly to 4.9x as compared to 4.8x for 2009. For the LTM period ending June 30, 2010, leverage, as measured by Debt to EBITDA, strengthened to 1.1x as compared to 1.5x for the same period due to the reduction of $50 million of notes. Going forward, absent any material acquisitions or further debt reductions, Fitch expects EBITDA interest coverage to exceed 4.0x and Debt to EBITDA to be less than 2.0x. STOKES EXCAVATING: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Stokes Excavating, Inc. P.O. Box 4403 Aurora, IL 60507 Bankruptcy Case No.: 10-74818 Chapter 11 Petition Date: September 28, 2010 Court: U.S. Bankruptcy Court Northern District of Illinois (Rockford) Judge: Manuel Barbosa Debtor's Counsel: G. Alexander McTavish, Esq. MYLER, RUDDY & MCTAVISH 105 E. Galena Boulevard, 8th Floor Aurora, IL 60505 Tel: (630) 897-8475 Fax: (630) 897-8076 E-mail: alexmctavish@mrmlaw.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ilnb10-74818.pdf The petition was signed by Danny Stokes, president. STREAM GLOBAL: S&P Gives Negative Outlook, Affirms 'B+' Rating -------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Wellesley, Mass.-based Stream Global Services Inc. to negative from positive. Ratings on the company, including the 'B+' corporate credit rating, were affirmed. "The outlook change reflects weak first-half 2010 operating performance following the merger with eTelecare Global Solutions, a peer in the Business Process Outsourcing sector, resulting in deteriorating credit-protection metrics," explained Standard & Poor's credit analyst Jennifer Pepper. The 'B+' rating reflects Stream's ongoing integration risk, concentration of customers, and significant competitive pressures in the customer relationship management sector of the BPO market. A high customer-retention rate and favorable outsourcing trends provide rating support. Stream's service offerings include inbound telephone, email, and Internet-based services, providing technical support, sales and revenue generation, and customer care. The company is primarily focused in the computer/hardware and telecom/service provider verticals, but also has limited exposure to financial services, health care, and retail. Revenues for the last-12-month period ending June 30, 2010, were $704 million, which includes partial- period results from eTelecare Global Solutions, which merged with Stream on Oct. 1, 2009. The company's "weak" business profile is characterized by a highly competitive landscape, relatively thin EBITDA margins, and significant customer concentration (the company's top three customers account for approximately 40% of revenue). These factors are partially offset by the company's high (nearly 90%) client-retention rate and contracts that are recurring in nature, providing some revenue visibility. S&P deems Stream's financial risk profile as "aggressive." At the close of the eTelecare transaction, the combined company's total debt (including capitalized operating leases) to pro forma EBITDA (excluding synergies) was approximately 4.5x, which was moderate for the rating. In the first half of 2010, the company experienced competitive pressures resulting in weak operating results that more than offset approximately $20 million of realized merger synergies. Annualizing performance for the first half of 2010, adjusted leverage is approximately 6.1x. STAR GAS: Fitch Affirms Issuer Default Rating at 'B' ---------------------------------------------------- Fitch Ratings has taken these rating actions on Star Gas Partners, L.P.'s long-term Issuer Default Rating and outstanding debt: -- IDR affirmed at 'B'; -- Outstanding 10.25% senior unsecured notes due 2013, co-issued with its special purpose financing subsidiary Star Gas Finance Company (the notes), upgraded to 'BB/RR1' from 'BB- /RR2'. The Rating Outlook is Stable. Approximately $82.8 million of long-term debt is affected by this rating action. The decision to affirm Star's IDR with a Stable Outlook reflects projected credit metrics which take into account the company's stable operating performance, a seasoned management team, adequate liquidity, and low leverage. There has been no fundamental change in the company's overall risk profile or significant changes in cash flow. Key rating factors include: -- Comprehensive hedging program -- Effective acquisition strategy -- Robust liquidity position -- Reduction in leverage Fitch's Recovery Rating for the outstanding notes, a relative indicator of creditor recovery on a given obligation in the event of a default, was revised to 'RR1' from 'RR2'. This change was the sole result of the reduction in the amount of notes outstanding to $83 million from $133 million in February 2010. The notes were redeemed at a premium to par. 'RR1' indicates an estimated recovery level exceeding 90% in event of a default. According to Fitch's methodology, the change in the Recovery Rating leads to a one notch upgrade to 'BB' from 'BB-'. Key rating concerns include: -- Commodity price sensitivity -- Continued customer attrition -- Exposure to weather sensitivity Star utilizes a hedging program which mitigates commodity price sensitivity for protected price customers. Additionally, roughly half of Star's customers are on a variable pricing plan. As a way to mitigate exposure to weather variability Star carries weather insurance with a maximum payout of $12.5 million. The macroeconomic outlook for the home heating oil industry is negative due to the natural volatility in the heating oil market, continued customer attrition, and the loss of volumes due to both natural gas conversions and conservation. Given that the home heating oil industry is mature, and customer attrition is a part of the business, the only way to grow and maintain the business is through acquisitions. On May 10, 2010, Star entered into an Equity Purchase Agreement whereby it acquired 100% of the capital stock of Champion Energy Corporation (Champion) for a purchase price of approximately $50.1 million plus working capital of approximately $7.5 million at a 5 times EBITDA multiple. This acquisition is typical of how Star grows its business and is a natural fit for the company as Champion serves over 45,000 home heating oil customers in markets in which Star currently operates. Star has sufficient liquidity to cover financing, investing, and working capital needs. As of June 30, 2010 Star had $241.7 million of liquidity available, including $44 million of cash on hand and $198 million under its subsidiary's (Petroleum Heat and Power Company) secured revolving credit facility that matures in 2012. The company's strong liquidity position helps to mitigate the risk for creditors and ensures that Star has ample ability to meet its seasonal working capital needs and work its way through difficult operating environments. Fitch believes that Star Gas will maintain the financial capacity and flexibility to successfully manage the 2013 maturity of the $83 million of senior unsecured notes. For the LTM period ending June 30, 2010, EBITDA interest coverage improved slightly to 4.9x as compared to 4.8x for 2009. For the LTM period ending June 30, 2010, leverage, as measured by Debt to EBITDA, strengthened to 1.1x as compared to 1.5x for the same period due to the reduction of $50 million of notes. Going forward, absent any material acquisitions or further debt reductions, Fitch expects EBITDA interest coverage to exceed 4.0x and Debt to EBITDA to be less than 2.0x. STREAM GLOBAL: S&P Gives Negative Outlook, Affirms 'B+' Rating -------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Wellesley, Mass.-based Stream Global Services Inc. to negative from positive. Ratings on the company, including the 'B+' corporate credit rating, were affirmed. "The outlook change reflects weak first-half 2010 operating performance following the merger with eTelecare Global Solutions, a peer in the Business Process Outsourcing sector, resulting in deteriorating credit-protection metrics," explained Standard & Poor's credit analyst Jennifer Pepper. The 'B+' rating reflects Stream's ongoing integration risk, concentration of customers, and significant competitive pressures in the customer relationship management sector of the BPO market. A high customer-retention rate and favorable outsourcing trends provide rating support. Stream's service offerings include inbound telephone, email, and Internet-based services, providing technical support, sales and revenue generation, and customer care. The company is primarily focused in the computer/hardware and telecom/service provider verticals, but also has limited exposure to financial services, health care, and retail. Revenues for the last-12-month period ending June 30, 2010, were $704 million, which includes partial- period results from eTelecare Global Solutions, which merged with Stream on Oct. 1, 2009. The company's "weak" business profile is characterized by a highly competitive landscape, relatively thin EBITDA margins, and significant customer concentration (the company's top three customers account for approximately 40% of revenue). These factors are partially offset by the company's high (nearly 90%) client-retention rate and contracts that are recurring in nature, providing some revenue visibility. S&P deems Stream's financial risk profile as "aggressive." At the close of the eTelecare transaction, the combined company's total debt (including capitalized operating leases) to pro forma EBITDA (excluding synergies) was approximately 4.5x, which was moderate for the rating. In the first half of 2010, the company experienced competitive pressures resulting in weak operating results that more than offset approximately $20 million of realized merger synergies. Annualizing performance for the first half of 2010, adjusted leverage is approximately 6.1x. SUN HEALTHCARE: S&P Affirms Corporate Credit Rating at 'B' ---------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its 'B' corporate credit rating on Irvine, Clif.-based Sun Healthcare Group Inc. At the same time, S&P assigned a 'B+' (one notch above the corporate credit rating) issue-level rating and a '2' recovery rating to Sun's proposed $60 million senior secured revolving credit facility due in 2015, and its $225 million senior secured term loan due in 2016. The '2' recovery rating indicates S&P's expectation of substantial (70%-90%) recovery for lenders in the event of default. "The speculative-grade ratings on Sun reflect third-party reimbursement risk and high debt leverage," said Standard & Poor's credit analyst David Peknay. These risk factors overshadow Sun's geographic diversity and experience integrating and improving operations at acquired facilities. "Sun's 'weak' business risk profile reflect its many industry challenges, particularly with government reimbursement," added Mr. Peknay. The company derives about 30% and 40% of its total revenues from Medicare and Medicaid, respectively. After raising its rates to nursing homes by 3.4% for the rate-year 2009, Medicare reduced its rates by about 1% on Oct. 1, 2009. For 2011, Medicare's final rule reflects a rate increase of 1.7% for skilled nursing homes, but a cut of about 12% for therapy services under Medicare's Part B reimbursement. SUNRISE ON THE BEACH: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: Sunrise on the Beach, Inc. dba Ramada Inn Historic 25 Old Mission Aveneu St. Augustine, FL 32084 Bankruptcy Case No.: 10-08556 Chapter 11 Petition Date: September 29, 2010 Court: U.S. Bankruptcy Court Middle District of Florida (Jacksonville) Debtor's Counsel: Nina M. LaFleur, Esq. P.O. Box 861128 St. Augustine, FL 32086-1128 Tel: (904) 797-7995 Fax: (904) 797-7996 E-mail: nina@lafleurlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Gunnar Hedqwist, president. SUPERIOR ACQUISTIONS: Case Summary & Creditors List --------------------------------------------------- Debtor: Superior Acquistions, Inc. 1 First Street Lakeport, CA 95453 Bankruptcy Case No.: 10-13730 Chapter 11 Petition Date: September 28, 2010 Court: U.S. Bankruptcy Court Northern District of California (Santa Rosa) Judge: Alan Jaroslovsky Debtor's Counsel: Michael C. Fallon, Esq. LAW OFFICES OF MICHAEL C. FALLON 100 E. Street, #219 Santa Rosa, CA 95404 Tel: (707) 546-6770 E-mail: mcfallon@fallonlaw.net Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Barry C. Johnson, president. Debtor's List of 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ First Community Bank Bare Land $2,500,000 438 First Street Santa Rosa, CA 95401 Bay Sierra Mobile Home Park $1,250,000 1410 Neotomas Avenue, Suite 106 and RV Resort Santa Rosa, CA 95405 Bay Sierra Office Building $250,000 1410 Neotomas Avenue, Suite 106 Santa Rosa, CA 95405 Bob Nutto Mobile Home Park $120,000 and RV Resort J. Berger Mobile Home Park $110,000 and RV Resort Lake County Tax Collector Mobile Home Park $87,418 and RV Resort Clear Lake Lava Mobile Home Park $41,000 and RV Resort Village Properties Bare Land $40,000 Shasta County Tax Collector Office Building $18,744 Lake County Tax Collector Bare Land $12,490 Lake County Tax Collector Office Parking Lot $2,778 SUPERTRAIL MANUFACTURING: DIP Lender Bound by Settlement Pact ------------------------------------------------------------- WestLaw reports that a creditor that had provided postpetition financing to a Chapter 11 debtor and that had been granted a superpriority lien, having previously agreed, in connection with a distribution of estate funds that enabled him to settle a third party's claim against him and to receive a $536,000 payment, to a $1.5 million hold-back from sums payable on his remaining superpriority and other claims in order to pay the claim of Internal Revenue Service, was judicially estopped from subsequently moving for a distribution of assets that would have the effect of depleting the estate of the balance of assets available to satisfy creditor claims, including, notably, the claim of the IRS. His current motion was inconsistent with the position previously taken, a position from which he had profited when the court approved the prior distribution. In re Supertrail Mfg. Co., Inc., --- B.R. ---, 2010 WL 2342446, 105 A.F.T.R.2d 2010-2867, 2010-1 USTC P 50,450 (Bankr. N.D. Miss.) (Houston, J.). A copy of the Honorable David W. Houston, III's Opinion dated June 4, 2010, is available at: http://www.msnd.uscourts.gov/bk/Opinions/Houston/supertrail- op4.pdf Supertrail Manufacturing CO., Inc., filed a voluntary chapter 11 petition (Bankr. N.D. Miss. Case No. 96-20040) on Jan. 4, 1996, projecting a distribution to unsecured creditors. Supertrail sold certain real property located in Palm Beach County, Fla., to Lennar/Centex at Bayhill, LLC, in a Sec. 363 sale transaction in April 2006. SYDNEY WILLIAMS: Case Summary & 11 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Sydney Jackson Williams, Jr. aka Jack Williams 282 Mermaids Bite Naples, FL 34103 Bankruptcy Case No.: 10-23699 Chapter 11 Petition Date: September 30, 2010 Court: United States Bankruptcy Court Middle District of Florida (Ft. Myers) Debtor's Counsel: Richard Johnston, Jr., Esq. FOWLER, WHITE, BOGGS, P.A. P.O. Box 1567 Fort Myers, FL 33902-1567 Tel: (239) 334-7892 Fax: (239) 334-3240 E-mail: richard.johnston@fowlerwhite.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's 11 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/flmb10-23699.pdf T&M AVIATION: Case Summary & 3 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: T&M Aviation, Inc. 9 Jimmy C. Vorhoff Jr. Drive Abbeville, LA 70510-4210 Tel: (337) 893-9074 Bankruptcy Case No.: 10-51520 Chapter 11 Petition Date: September 29, 2010 Court: U.S. Bankruptcy Court Western District of Louisiana (Lafayette/Opelousas) Judge: Robert Summerhays Debtor's Counsel: Louis M. Phillips, Esq. Ryan James Richmond, Esq. GORDON ARATA MCCOLLAM DUPLANTIS & EAGAN LLP One American Place 301 Main Street, Suite 1600 Baton Rouge, LA 70825-0004 Tel: (225) 381-9643 Fax: (225) 336-9763 E-mail: lphillips@gordonarata.com rrichmond@gordonarata.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's three largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/lawb10-51520.pdf The petition was signed by Ronald Wolf, president. TAX STRATEGIES: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Tax Strategies Group, LLC 120 N. LaSalle St., Suite 1200 Chicago, IL 60602 Bankruptcy Case No.: 10-43448 Chapter 11 Petition Date: September 28, 2010 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: A. Benjamin Goldgar Debtor's Counsel: John Collen, Esq. TRESSLER LLP 233 South Wacker Drive, 22nd Floor Chicago, IL 60606 Tel: (312) 627-4193 Fax: (312) 627-1717 E-mail: jcollen@tresslerllp.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 19 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ilnb10-43448.pdf The petition was signed by Wayne R. Hannah, III, manager. TEKNI-PLEX INC: Moody's Assigns 'B3' Corporate Family Rating ------------------------------------------------------------ Moody's Investors Service assigned a B3 Corporate Family Rating to Tekni-Plex, Inc., with a stable outlook. Moody's also assigned a B1 rating to a new $285 million first lien term loan. The proceeds of the term loan will be used to repay existing debt and cover transaction expenses. Moody's took this action: -- Assigned Corporate Family Rating, B3 -- Assigned Probability of Default Rating, B3 -- Assigned $285 million six-year first lien term loan, B1 (LGD 3, 32%) The ratings outlook is stable. Ratings Rationale The B3 Corporate Family Rating reflects the uncertainty of the sustainability of the recent credit metric improvements due to weakness in certain segments and the lack of pricing power and long-term contracts with cost pass through provisions. Only approximately 26% of business is under contract with raw material cost pass-throughs, contributing to potentially significant operating margin volatility. While most credit metrics are in line with the rating category, adjusted debt to revenue is high at over 90%. The new smaller revolver may strain liquidity if there is any negative variance in operating performance. Strengths in the company's profile include a high concentration in less cyclical food and healthcare markets, completed cost-cutting and footprint rationalization initiatives, and long-term customer relationships. The company also benefits from some custom pharmaceutical and medical products that increase switching costs for customers. Management's initiatives to better integrate the company's separate businesses, reduce costs and add new customers are projected to also support credit metrics going forward. What Could Change the Rating -- Up The ratings could be upgraded if Tekni-Plex demonstrates an ability to sustain the recent improvement in credit metrics. An upgrade would also be contingent upon the maintenance of adequate liquidity and stability in the operating and competitive environment. Specifically, the ratings could be upgraded if free cash flow to debt increases to mid single digits, debt to EBITDA declines to below 5.7 times, the EBIT margin increases to the high single digits, and EBIT/Interest increases to approximately over 1.3 times. What Could Change the Rating -- Down The ratings could downgraded if liquidity or operating performance decline. The ratings could also be downgraded if there is a deterioration in the operating and competitive environment. Specifically, the ratings could be downgraded if free cash flow to debt falls below 3%, debt to EBITDA increases above 6.5 times and the EBIT margin falls below 5%. TEKNI-PLEX INC: S&P Assigns 'B-' Corporate Credit Rating -------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned a preliminary 'B-' corporate credit rating to Tekni-Plex Inc. The outlook is stable. At the same time, S&P assigned a preliminary '2' recovery rating and preliminary 'B' issue rating to the company's proposed $285 million first-lien term loan due 2016. The '2' recovery rating indicates S&P's expectation of substantial recovery (70%- 90%) in the event of a payment default. The proposed $60 million asset-based lending revolving credit facility is unrated. "The ratings reflect the packaging and tubing manufacturer's highly leveraged financial risk profile, including very high debt balances and weak cash flow generation," said Standard & Poor's credit analyst James Siahaan. "The ratings also reflect the company's weak business risk profile, characterized by exposure to the price fluctuations of its polymer-based raw materials and customer concentration, partially offset by moderate end-market and geographic diversity." With approximately $600 million in sales, King of Prussia, Pa.- based Tekni-Plex is a manufacturer of rigid and flexible packaging serving the health care, foods, consumer products, and specialty markets. TELLIGENIX CORP: Can't Use Deposit to Set-Off Admin. Rent Claim --------------------------------------------------------------- WestLaw reports that a Chapter 11 debtor's liability for postpetition rent did not arise before case commencement, as required for setoff under the Bankruptcy Code, which preserved a creditor's right to offset only with regard to prepetition claims between the debtor and the creditor. It did not matter that the underlying lease agreement was a prepetition contract. Instead, the rent obligation gave rise to an administrative expense that the former landlord could not be required to offset against the debtor's security deposit before offsetting its prepetition claim for lease rejection damages. In re Telligenix Corp., --- B.R. --- -, 2010 WL 3705266 (Bankr. M.D. Fla.) (Jennemann, J.). "Although the Court is sympathetic to the debtor's financial plight and acknowledges that the goal of every Chapter 11 case is to facilitate the reorganization of a viable debtor and to maximize payments to creditors," the Honorable Karen S. Jennemann says, "neither the Bankruptcy Code nor case law supports the debtor's position. Section 553(a) of the Bankruptcy Code preserves a creditor's right to offset only with regard to pre- petition claims between the debtor and the creditor. . . ." Accordingly, the Debtor's $1.5 million security deposit will be used to reduce the landlord's $2.4 million rejection damage claim and the Debtor will need to satisfy the landlord's $284,000 administrative rent claim some other way. Telligenix Corp. -- http://www.telligenix.com/-- provides educational process management to a number of independently contracted seminar providers and individuals, including Robert Allen, and others. Telligenix handles the educational process management for a number of training institutes and others in the real estate, investment and entrepreneurship spaces. Based in Orlando, FLa., Telligenix Corporation sought chapter 11 protection (Bankr. M.D. Fla. Case No. 09-15238) on Oct. 8, 2009; is represented by R Scott Shuker, Esq., at Latham Shuker Eden & Beaudine LLP, in Orlando, Fla.; and estimated its assets at less than $10 million and its debts at $10 million to $50 million at the time of the filing. THANH TRAN: Case Summary & 8 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Thanh Huu Tran 19465 Hiawatha Street Northridge, CA 91326-2956 Bankruptcy Case No.: 10-22244 Chapter 11 Petition Date: September 28, 2010 Court: U.S. Bankruptcy Court Central District of California (San Fernando Valley) Judge: Geraldine Mund Debtor's Counsel: Jerome Bennett Friedman, Esq. 1901 Avenue of the Stars, Suite 1700 Los Angeles, CA 90067-4409 Tel: (310) 552-8210 Fax: (310) 733-5442 E-mail: jfriedman@jbflawfirm.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's eight largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb10-22244.pdf TITAN SPECIALTIES: S&P Raises Corporate Credit Rating to 'B-' ------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Titan Specialties Ltd. to 'B-' from 'CCC+'. The outlook is stable. In addition, S&P raised the rating on the company's first-lien senior secured credit facilities to 'B' from 'B-', one notch higher than the corporate credit rating on the company. The recovery rating on this debt remains '2', indicating expectations of substantial (70% to 90%) recovery in the event of default. Additionally, S&P raised the rating on the company's second-lien senior secured term loan to 'CCC' from 'CCC-', two notches lower than the corporate credit rating. The recovery rating remains '6', indicating S&P's expectation of negligible (0% to 10%) recovery in the event of default. "The upgrade on the corporate credit rating reflects the increase in North American drilling activity and improved liquidity and credit metrics from private equity contributions," said Standard & Poor's credit analyst Kenneth Cox. The ratings on Titan take into account an increase in drilling activity by exploration and production companies, the company's highly leveraged financial profile, the small scale and scope of operations, eased concerns of covenant violations, improved liquidity, high inventory risk levels, and its narrow business position in the cyclical North American oilfield services market. As of June 30, 2010, Titan had $193.3 million in total debt. Standard & Poor's Ratings Services considers the company's $15.8 million in subordinated seller's payment-in-kind notes as debt. S&P deems Titan's business profile as vulnerable. Through its business lines, which include perforating, energetics, and instruments, Titan sells an array of niche products that map well geography and identify potential production zones. Its perforating guns create communication holes between zones and well bores. Titan is highly dependent on the extent of E&P spending, regional drilling activity levels, and commodity prices. The U.S. rig count is currently up 64% from the same point one year ago, which seemingly bodes well for the company's operations. Titan is also subject to inventory risk. Inventory turnover is very low. Although industry conditions have improved, the company could be forced to sell inventory at lower-than-anticipated market prices should conditions worsen considerably. This could squeeze its margins in the short term, which is a concern given the company's high leverage. Titan's cash flow protection measures are aggressive. Adjusted debt to trailing-12-months EBITDA was 6.7x as of June 30, 2010, while adjusted debt to annualized second-quarter June 30, 2010, EBITDA was a more manageable 4.2x. Additionally, EBITDA to interest coverage was satisfactory at 2.8x as of June 30, 2010. S&P expects a modest improvement these metrics over the near term. Although prevailing industry conditions are somewhat soft, an improvement in U.S. drilling activity (particularly in horizontal drilling) has led to better financial performance for Titan. S&P could take a negative ratings action if liquidity declines below $25 million or if EBITDA interest coverage falls below 1x. Given Titan's small scale and scope of operations and its inherent volatility, a positive ratings action is unlikely at this time. TODD STEPHENSON: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Joint Debtors: Todd B. Stephenson Christina D. Stephenson aka Christy Stephenson 7493 N. SR 9 Fortville, IN 46040 Bankruptcy Case No.: 10-14702 Chapter 11 Petition Date: September 29, 2010 Court: U.S. Bankruptcy Court Southern District of Indiana (Indianapolis) Judge: James K. Coachys Debtors' Counsel: Deborah Caruso, Esq. Meredith R. Thomas, Esq. DALE & EKE, P.C. 9100 Keystone Crossing, Suite 400 Indianapolis, IN 46240 Tel: (317) 844-7400 Fax: (317) 574-9426 E-mail: dcaruso@daleeke.com mthomas@daleeke.com Estimated Assets: Not Stated Estimated Debts: $1,000,001 to $10,000,000 A list of the Joint Debtors' 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/insb10-14702.pdf Debtor-affiliates that filed separate Chapter 11 petitions: Entity Case No. Petition Date ------ -------- ------------- B & T Farms 10-05327 04/14/10 Bradley A. & Stacey L. Stephenson 10-14687 09/29/10 UAL CORPORATION: Moody's Raises Corporate Family Ratings to 'B2' ---------------------------------------------------------------- Moody's Investors Service raised its debt ratings of UAL Corporation: Corporate Family and Probability of Default each to B2 from B3. Concurrently, Moody's affirmed its ratings of Continental Airlines, Inc: Corporate Family and Probability of Default each at B2. The ratings for certain of CAL's EETCs were lowered in consideration of continuing weak secondary market values for regional aircraft: Series 2003-1 A tranche to Ba3 from Ba2: Series 2004-1 A tranche to Ba3 from Ba2 and Series 2005-1 A tranche to Ba3 from Ba1. Moody's affirmed the SGL-2 Speculative Grade Liquidity ratings of each company. The respective ratings outlook for each carrier is stable. The rating actions on UAL conclude the review for possible upgrade initiated on May 3, 2010, upon the joint announcement of the stock-for-stock merger of the two airlines. The companies have completed the necessary steps to close the merger which is expected to occur on October 1, 2010. The upgrade of the UAL ratings reflects Moody's expectation of further strengthening of credit metrics and liquidity in upcoming quarters. "We believe that industry demand will remain stable, supporting traffic and yields," said Moody's Airline Analyst, Jonathan Root. Moody's also anticipate little pressure on the cost of fuel and modest capital expenditures as there are no near term aircraft deliveries. These factors should lead to the generation of free cash flow at UAL in upcoming periods. Improving liquidity and modest strengthening of credit metrics also support the affirmation of CAL's B2 Corporate Family rating. While CAL maintains higher leverage than that of UAL or Delta Airlines, Inc. (B2, Stable outlook), its operating trends continue to show strength as business and consumer travel increases, and cash flow and coverage metrics continue to support the B2 rating. Continental's ongoing reinvestment in its fleet and less exposure to trans-pacific routes with relatively higher operating leverage slow the rate of improvement in its credit metrics, relative to that its two peers are currently experiencing. Moody's plans to maintain separate Corporate Family, Probability of Default and SGL ratings on UAL, to be renamed United Continental Holdings, Inc., and on CAL until the combined group receives a single operating certificate from the Federal Aviation Administration. Receipt of the SOC, which is not expected for at least 12 months, is important because it will allow the airline operating companies to merge as a single carrier. During the interim period, neither company will provide a guarantee of the other's debt obligations. When the SOC is received and the airline operating companies merge, the surviving entity will become the contractual obligor of the debt (including EETC-related equipment notes and leases) of both predecessor airlines. At that time the ratings will be combined under a single Corporate Family and Probability of Default assessment. UHC and CAL will continue to provide separate financial reporting at least until the airline operating companies are merged. Moody's will maintain distinct Corporate Family ratings for the two companies until their operations are combined under a SOC, as long as adequate financial information remains available. Moody's current expectation is that at the time the operating companies are merged the combined company will maintain a B2 credit profile. The combined operation will be the world's largest carrier, with an improved business profile and competitive position. The merger integration is not without execution risks, principally related to the conversion to single airline operating systems. Given that integration will occur over an extended period, Moody's believe that management will have ample time to prepare primary and contingency plans that mitigate integration risks. The combination of pro forma unrestricted cash approaching $8.5 billion at June 30, 2010, and Moody's estimate of free cash flow approaching $2.0 billion for the full year of 2010 also provide sufficient cushion to fund non-recurring merger-related costs and debt maturities in the event of an unexpected weakening of demand, or larger than anticipated one-time payments to labor upon reaching new labor agreements. Some increase in labor costs is likely, particularly at UAL that will offset some of the anticipated cost synergies. Capacity discipline by most industry players is also likely to remain in place, limiting additional pressure on yields. Moody's downgraded the ratings of certain CAL EETCs because of continued pressure on secondary market values of the Embraer regional jets included in these transactions. The upgrade of the UAL EETCs reflects loan-to-values that are in the range of the similarly-rated CAL EETCs. Each of these UAL transactions is cross-collateralized, which reduces the likelihood of a rejection of the aircraft under a reorganization scenario. A mix of aircraft types comprised of Boeing and Airbus aircraft, also typically the younger vintages in UAL's fleet, composes the collateral. Moody's believes the relatively younger vintages also reduce the likelihood of a rejection under a reorganization scenario. Moody's anticipates little upwards pressure on the ratings while a SOC is being sought. EBITDA that is sustained below 4.5 times, Funds from Operations + Interest to Interest that remains above 3.5 times or free cash flow to Debt in excess of 10% could suggest some upward potential for the ratings or outlook. The ratings of each carrier could be downgraded if the cost of jet fuel was to significantly increase above $2.60 per gallon or if unrestricted cash was to fall below $2.5 billion at CAL or below $3.5 billion at UAL. Sustained negative free cash flow, Debt to EBITDA that is sustained above 6.5 times or Funds from operations + interest to interest of below 2.5 times could also negatively affect the ratings of either or both companies. The last rating action on UAL was on August 2, 2010 when Moody's upgraded UAL to B3 (Corporate Family rating) and left the ratings on review for upgrade. The last rating action on CAL was on August 2, 2010, when Moody's affirmed the B2 Corporate Family rating. Downgrades: Issuer: Continental Airlines, Inc. -- Senior Secured Enhanced Equipment Trust, Series 2003 ERJ-1 Class A and 2004 ERJ- Class A Downgraded to Ba3 from Ba2, and Series 2005 ERJ-1 Class A Downgraded to Ba3 from Ba1 Upgrades: Issuer: Denver (City & County of) CO -- Senior Unsecured Industrial Revenue Bonds, Upgraded to B3 from Caa1 Issuer: UAL Corporation -- Probability of Default Rating, Upgraded to B2 from B3 -- Corporate Family Rating, Upgraded to B2 from B3 Issuer: United Air Lines, Inc. -- Multiple Seniority Shelf, Upgraded to (P)Ba3 from (P)B3 -- Senior Secured Bank Credit Facility, Upgraded to Ba3 from B1 -- Senior Secured Enhanced Equipment Trust, Series 2009-1 and 2009-2, Upgraded to a range of Ba2 to Baa2 from a range of B1 to Ba1 -- Senior Secured Pass-Through Certificates, Series 2007-1, Upgraded to a range of Ba3 to Baa2 from a range of B2 to Ba1 -- Senior Secured Regular Bond/Debenture, Upgraded to a range of B3 to Ba2, LGD2, 22% from a range of Caa1 to Ba3, LGD2, 24% Outlook Actions: Issuer: Continental Airlines Finance Trust II -- Outlook, Changed To Stable From Negative Issuer: Continental Airlines, Inc. -- Outlook, Changed To Stable From Negative Issuer: UAL Corporation -- Outlook, Changed To Stable From Rating Under Review Issuer: United Air Lines, Inc. -- Outlook, Changed To Stable From Rating Under Review Confirmations: Issuer: Denver (City & County of) CO -- Senior Unsecured Revenue Bonds, Confirmed at LGD5, 71% Issuer: United Air Lines, Inc. -- Senior Secured Bank Credit Facility, Confirmed at LGD2, 27% -- Senior Secured Regular Bond/Debenture, Confirmed at LGD4, 64% Continental Airlines, Inc., based on Houston Texas, is the world's fifth largest airline as measured by the number of scheduled miles flown by revenue passengers in 2009. United Air Lines, Inc., and its parent UAL Corporation are based in Chicago, Illinois. United is one of the largest passenger airlines in the world. UCI INTERNATIONAL: Moody's Raises Corporate Family Rating to 'B2' ----------------------------------------------------------------- Moody's Investors Service raised the ratings of UCI International, Inc. -- Corporate Family and Probability of Default -- to B2 from Caa1. UCI is the ultimate parent of United Components, Inc. This action follows the execution of the new senior secured bank credit facilities and completes the review initiated on September 2, 2010. In a related action, Moody's also raised the rating of UCI's unguaranteed senior unsecured notes, to Caa1 from Caa3. The rating outlook is stable. See Moody's press release dated September 2, 2010. Ratings Rationale The raising of UCI's Corporate Family Rating to B2 reflects the enhanced credit profile following the company's refinancing of its existing credit facilities. The refinancing eliminated major amortization requirements under the previous term loan which would have begun in December 2011. The revolving credit also provides additional liquidity to support the high debt service and other payments needed to avoid losing certain tax benefits created by UCI's $339.2 million (as of June 30, 2010) floating rate senior PIK notes. As disclosed in the company's 2009 10K, the company expects to make a $96.5 million payment on the notes in March 2012 in order to avoid losing certain tax benefits created by issuing the notes. UCI recently announced that on September 23, 2010, that it and United Components, Inc. entered into a new Credit Agreement consisting of a $425.0 million senior secured term loan facility and a $75.0 million senior secured revolving credit facility. A portion of the proceeds from the term loan facility were used to repay the outstandings under the previous $172 million senior secured term loan facility. Additionally, on September 23, 2010, UCI instructed the Trustee of UCI's 9-3/8% Senior Subordinated Notes due 2013 (the Notes) to provide holders of the Notes with a notice of redemption in accordance with the terms of the indenture governing the Notes, and deposited cash from a portion of the proceeds of the new term loan facility with the Trustee to satisfy and discharge the Note indenture and to fund the redemption of all outstanding Notes. The redemption date has been set for October 25, 2010. The stable rating outlook reflects the company's improved profitability over recent quarters due to the effects of cost reduction initiatives, a stabilizing business environment, and adequate liquidity profile. UCI also filed an S-1 with the SEC on July 27, 2010. Moody's will assess any additional impact from the net proceeds of this contemplated transaction upon its completion. These ratings are raised: United Components, Inc. * Corporate Family Rating, to B2 from Caa1; * Probability of Default Rating, to B2 from Caa1; * Unguaranteed senior unsecured notes; to Caa1 (LGD5, 86%) from Caa3 (LGD5, 85%) These ratings are affirmed: United Components, Inc. * Ba3 (LGD2, 24%), new $75 million guaranteed senior secured revolving credit due 2015; * Ba3 (LGD2, 24%), new $425 million guaranteed senior secured term loan due 2017; These ratings are withdrawn: United Components, Inc. * B1 (LGD1, 8%), $172 million (remaining amount) guaranteed senior secured bank term loan due 2012; * Caa2 (LGD4, 58%), $230 million of guaranteed 9-3/8% senior subordinated notes maturing 2013 The last rating action for UCI was on September 2, 2010, when the Caa1 Corporate Family Rating was placed under review for upgrade. UCI, headquartered in Evansville, Indiana, is one of the larger and more diversified companies primarily servicing the vehicle aftermarket. The company supplies a broad range of filtration products, fuel delivery systems, cooling systems, and vehicle electronics products. While approximately 88% of revenues are automotive related, UCI also services customers within the trucking, marine, mining, construction, agricultural, and industrial vehicle markets. Annual revenues in 2009 were approximately $885 million. UCI is a portfolio company of The Carlyle Group. UNIFI INC: Moody's Upgrades Corporate Family Rating to 'B3' ----------------------------------------------------------- Moody's Investors Service upgraded Unifi Inc.'s Corporate Family Rating and Probability of Default ratings to B3 from Caa1. Concurrently, the rating on Unifi's 11.5% senior secured notes was upgraded to Caa1 from Caa2. The ratings outlook is positive. Ratings upgraded: * Corporate Family Rating to B3 from Caa1; * Probability of Default Rating to B3 from Caa1; * Senior Secured Notes due 2014 to Caa1 (LGD 4, 66%) from Caa2 (LGD 4, 68%) Ratings Rationale The ratings upgrade and positive outlook reflect Moody's expectation that Unifi's improved operating performance and credit metrics will be sustained, largely as a result of the ongoing stabilization of its North American end market, coupled with incremental growth opportunities in global growth markets, continued focus on improving efficiencies and sustainability, and growing the contribution from its higher-margin premier value- added products. Unifi's revenue grew 11.4% in fiscal 2010 ended June 27, 2010, and EBITA margin grew to 7.5% from 0.7% in the prior year, mainly as a result of improved cost of operations, a modest recovery in the company's end user markets, and strong results from its Brazilian operations. When coupled with opportunistic debt reduction, Unifi's consolidated Debt/EBITDA and EBITA/Interest improved to 2.8x and 2.0x, respectively. Unifi's B3 corporate family rating is supported by strong credit metrics for the rating category and good liquidity, its leading position in the North American multi-filament polyester and nylon fiber markets, and its customer and end market diversity. Significant rating constraints include the volatility in the prices of raw materials, the cyclicality of the global textile industry, and the intense competition inherent in the industry, specifically from foreign competitors that have significant cost advantages including lower personnel costs, better capital costs and favorable exchange rates. The company is also reliant on a political environment that continues to support domestic (or regional) yarn and textile protection in the face of ongoing trends toward trade liberalization. To be upgraded, the company will need to demonstrate that its operating performance and credit metrics can be sustained at or near current levels while maintaining good liquidity, and that potential developments in the global trade environment will be manageable over the longer term. Conversely, stabilization of the ratings outlook could stem from material declines in the company's operating performance, credit metrics or liquidity. The last rating action on Unifi occurred on November 18, 2009, when Moody's affirmed the company's Caa1 Corporate Family Rating and changed the outlook to stable from negative. Unifi, Inc., based in Greensboro, NC, is a diversified producer and processor of multi-filament polyester and nylon textured yarns and related raw materials. Key Unifi brands include, but are not limited to: Repreve(R), aio(R), Sorbtek(R), A.M.Y.(R), Mynx(R) UV, and Reflexx(R). Unifi's yarns and brands are readily found in apparel, hosiery, automotive upholstery, home furnishings as well as industrial, military, and medical applications. Unifi had revenue of $617 million for the fiscal year ended June 27, 2010. UNIGENE LABORATORIES: Former Sr. Manager Elected to Board --------------------------------------------------------- Unigene Laboratories Inc. elected Joel A. Tune to its Board of Directors. Mr. Tune, a former senior manager at Baxter, brings to Unigene over 20 years' experience in developing, marketing and licensing drug delivery technology. Ashleigh Palmer, President and Chief Executive Officer stated, "[Mr. Tune's] expertise and industry experience are well aligned with Unigene's new business strategy. He has a strong track record of growing businesses and has been successful in the commercial marketing and sales of products, technology and services in the pharmaceutical and biotechnology industries. Joel will bring valuable perspective to the Company as we increase the visibility of our Peptelligence technologies and capabilities and refocus the Company's business development initiatives. We are pleased to welcome Joel to the Unigene Board." Mr. Tune commented, "Unigene is a well-kept secret in the industry. The Company has leading technology assets as well as a strong pipeline and is well-positioned to capitalize on the growth of the therapeutic peptides market. The newly established strategic business units enable Unigene to more aggressively market the Company's assets and expose the value to potential partners and shareholders alike. The new leadership of Unigene is committed to unlocking the Company's value from its established technologies by strengthening the commercial side of Unigene. I believe there is great potential here." Mr. Tune is the Principal of JTune Consulting LLC where he provides consulting services to small healthcare companies and private equity firms and investors. Prior to starting his consulting firm, Mr. Tune held positions of increasing responsibility at Baxter International, most recently as Vice President and General Manager, Global Drug Delivery. Concurrently, he served on Baxter's senior management team with active involvement in cross-business communications, investor relations and industry outreach and awareness. At Baxter, Mr. Tune also served as Vice President, Strategy & Business Development for the Medication Delivery Group, Director of Business Planning for the IV Systems Division & US Healthcare Group, and Director of Marketing for Ambulatory Care Technologies and Ambulatory Infusion Business. Mr. Tune received his B.S. degree in biomedical engineering from the University of Louisville and his M.B.A. degree from Marquette University. About Unigene Unigene Laboratories, Inc. OTCBB: UGNE) -- http://www.unigene.com/ -- is a biopharmaceutical company focusing on the oral and nasal delivery of large-market peptide drugs. Unigene's balance sheet at June 30, 2010, showed $27.60 million in total assets, $60.32 million in total liabilities, and $32.72 million in stockholders' deficit. Grant Thornton LLP, in New York, expressed substantial doubt about Unigene Laboratories' ability to continue as a going concern following the Company's 2009 results. The firm noted that the Company has incurred a net loss of $13,400,000 during the year ended December 31, 2009 and has an accumulated deficit of approximately $143,000,000 as of December 31, 2009. As of that date, the Company's current liabilities exceeded its current assets by $1,251,000 and its total liabilities exceeded total assets by $30,442,000. UNILIFE CORPORATION: KPMG LLP Raises Going Concern Doubt -------------------------------------------------------- Unilife Corporation filed on September 28, 2010, its annual report on Form 10-K for the fiscal year ended June 30, 2010. KPMG LLP, in Harrisburg, Pa., expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring losses from operations and has an accumulated deficit. The Company reported a net loss of $29.7 million on $11.4 million of revenue for fiscal 2010, compared to a net loss of $517,000 on $20.0 million of revenue for fiscal 2009. The Company believes that its cash on hand will be sufficient to sustain planned operations through the second quarter of fiscal year 2011. Certain bank loans secured by a subsidiary company had a minimum debt service ratio financial covenant, with which the Company was not in compliance as of June 30, 2010. The $1.3 million long-term portion outstanding as of June 30, 2010, under these bank term loans has been reclassified to the current portion of long-term debt. In September 2010 the Company received a waiver from its lender for its previous non-compliance with this covenant. The Company's balance sheet at June 30, 2010, showed $64.8 million in total assets, $20.4 million in total liabilities, and stockholders' equity of $44.4 million. A full-text copy of the Form 10-K is available for free at: http://researcharchives.com/t/s?6bef About Unilife Corporation Lewisberry, Pa.-based Unilife Corporation (NASDAQ: UNIS; ASX: UNS) -- http://www.unilife.com/-- is a medical device company focused on the design, development, manufacture and supply of a proprietary range of retractable syringes. Primary target customers for the Company's products include pharmaceutical manufacturers, suppliers of medical equipment to healthcare facilities, and distributors to patients who self-administer prescription medication. USG CORPORATION: COO Metcalf Promoted to CEO and President ---------------------------------------------------------- USG Corporation said that effective January 1, 2011, James S. Metcalf, currently President and Chief Operating Officer, will become Chief Executive Officer and President, succeeding William C. Foote as CEO. Mr. Metcalf will assume full responsibility for USG's strategic growth and development and for ensuring its continued operational excellence. Mr. Foote will continue as executive Chairman of the USG Board of Directors. These changes continue the implementation of an ongoing executive succession plan developed and overseen by Mr. Foote and the USG Board of Directors over the past few years. Mr. Metcalf joined USG as a sales trainee in 1980. In addition to his experience in the Company's sales organization, he has served as President of the Company's Building Systems unit, which includes United States Gypsum Company and USG Interiors, Inc., and President of its L&W Supply Corporation distribution business. His executive management experience also includes roles in marketing and strategy. Mr. Metcalf serves on the board of directors of USG Corporation, Molex, Inc., and the National Association of Manufacturers. He is also a policy advisory board member for the Joint Center for Housing Studies at Harvard University, a chair of the Business Advisory Committee for the Robert Crown Center in Hinsdale, Ill., and a trustee of the USG Foundation. "Jim Metcalf has almost thirty years of experience with USG, and as President and COO for the past four years, has built a strong operational team," Mr. Foote stated. "[Mr. Metcalf] has led the Company's restructuring efforts to adjust our operations to meet the challenging conditions we face in the construction and building materials industries. [Mr. Metcalf] has excellent relationships with our customers and has played a key role in representing the Company with the investment community." "It has been a distinct privilege to lead this great Company over the past 15 years," Mr. Foote continued. "[Mr. Metcalf] has prepared himself extremely well to become USG's next chief executive and I look forward to working closely with him as he assumes this well-deserved role." Mr. Metcalf said, "I am deeply grateful to have the opportunity to lead USG's exceptional team as CEO, and I greatly appreciate the Board's confidence in me. While we certainly face challenging economic conditions, I am proud of the resilience of the Company and excited about our ability to return to a growth agenda as our markets recover. We are focused on four strategic priorities: strengthening our core businesses, expanding internationally, growing product adjacencies and accelerating innovation. We are making excellent progress in all four areas and are confident our strategy will deliver superior results for our customers, shareholders and other stakeholders." About USG Corp. USG Corporation, headquartered in Chicago, Illinois, is a leading producer and distributor of building materials in the Unites States, Canada and Mexico. The company manufactures and markets gypsum wallboard and operates a specialty distribution business that sells to professional contractors. It also manufactures ceiling tiles and ceiling grids used primarily in commercial applications. Revenues for the last 12 months through March 31, 2010, totaled approximately $3.1 billion. * * * As reported by the Troubled Company Reporter on June 28, 2010, Moody's Investors Service downgraded USG Corporation's Corporate Family Rating and Probability of Default Rating to Caa1 from B3. In a related rating action Moody's downgraded the guaranteed senior unsecured notes due 2014 to B2 from B1 and the other senior unsecured debt to Caa2 from Caa1. The Speculative Grade Liquidity rating remains SIGIL-3. The outlook is stable. The downgrades result from weaker than previously anticipated operating performance. Moody's believes that potential demand increases for wallboard from North American new home construction and repair and remodeling will not be adequate to generate sufficient volumes and operating profits to cover USG's interest expense over the intermediate term. Furthermore, the non- residential construction end market, which accounts for about 30% of USG's revenues, is expected to contract well into 2011. VERTIS HOLDINGS: Discloses Extension of Exchange Offers ------------------------------------------------------- Vertis Holdings, Inc. discloses extension of its previously announced comprehensive refinancing of substantially all of its principal operating subsidiary Vertis, Inc.'s ("Vertis") outstanding secured and unsecured indebtedness. The purpose of the Refinancing Transactions is to reduce overall debt and interest costs which would improve Vertis' financial condition. In an effort to achieve the goals of the Refinancing Transactions, Holdings continues to pursue certain amendments to the terms of the Refinancing Transactions, including the previously commenced (i) private exchange offer, tender offer and consent solicitation relating to its 13(1)/2 percent Senior Pay-in-Kind Notes due 2014 (the "Senior Notes") and (ii) private exchange offer and consent solicitation relating to its 18(1)/2 percent Senior Secured Second Lien Notes due 2012 (the "Existing Second Lien Notes" and, together with the Senior Notes, the "Notes") (collectively, the "Offers"). These amendments may include changing the consideration offered to holders of Notes. Holdings also continues to evaluate the appropriate term loans and revolving credit facility to best achieve its operating and financial goals. Holdings continues to consider these changes and there can be no assurance that Holdings will effect these amendments or that Holdings will not make other changes to the Refinancing Transactions. Holdings also announced that it will subsequently make available certain important supplemental materials regarding the Offers. The supplemental materials will contain important updates regarding any changes to the consideration offered to Holders, any expiration of the Withdrawal Period (as defined below), any changes to the New Expiration Time (as defined below), any changes to the other components of the Refinancing Transactions and other information regarding Vertis and the Offers. Holders are advised to carefully review the supplemental materials when available. Until such materials are available, except as set forth herein, the terms of the Offers as currently set forth in the Offering Memorandum (as defined below) remain in effect. As a result of the foregoing, Holdings announced the extension of the expiration dates of the Offers from 5:00 p.m., New York City time, on September 30, 2010, to 5:00 p.m., New York City time, on October 29, 2010 (the "New Expiration Time"). Holders who have tendered their Notes pursuant to the Offers continue to be given the opportunity to withdraw their tendered Notes and revoke their consents until further notice (the "Withdrawal Period"). Holders who validly withdraw their Notes and revoke their consents will not receive the consideration for their Notes in the applicable Offer unless such Notes are validly re-tendered in the applicable Offer at or prior to the New Expiration Time. Other Vertis may elect to extend one or both of the Offers. The Offers are subject to the terms and conditions set forth in the applicable confidential offering memorandum and consent solicitation statement (each, as supplemented, an "Offering Memorandum") and the related letters of transmittal (each a "Letter of Transmittal"), each dated April 15, 2010 and as may be amended by the supplemental materials referred to above. Vertis reserves the right to waive, amend or modify in whole or in part any of the conditions of the Offers in its sole discretion, including the minimum participation conditions. The Existing Second Lien Notes Offer is being extended without a dealer manager. Consummation of the Refinancing Transactions, including the Offers, is subject to the satisfaction or waiver by Vertis of numerous conditions set forth in the applicable Offering Memorandum and Letter of Transmittal, as may be amended by the supplemental materials referred to above, and we cannot assure you that they will be consummated on the terms described herein, on the timetable described herein or at all. As of 5:00 p.m., New York City time, on September 30, 2010, approximately $186.2 million aggregate principal amount (or approximately 77.0 percent) of the Senior Notes were validly tendered in the Senior Notes Offer and the related consents thereby delivered, and not validly withdrawn. In addition, as of 5:00 p.m., New York City time, on September 30, 2010, approximately $350.8 million aggregate principal amount (or approximately 92.2 percent) of the Existing Second Lien Notes (not including Existing Second Lien Notes held by Avenue Capital) were validly tendered in the Existing Second Lien Notes Offer and the related consents thereby delivered, and not validly withdrawn. About Vertis Headquartered in Baltimore, Maryland, Vertis Holdings, Inc. -- http://www.vertisinc.com/-- provides targeted print advertising and direct marketing solutions to America's retail and consumer services companies. Vertis Holdings' Vertis Inc. and its subsidiaries disclosed that as of June 30, 2010, it had $1,467,320,000 in total assets, including $257,193,000 in cash and cash equivalents; and $1,493,277,000 in total liabilities, including $265,734,000 in total current liabilities, and a stockholders' deficit of $25,957,000. The company and its six affiliates previously filed for Chapter 11 protection on July 15, 2008 (Bankr. D. Del. Case No. 08-11460). In August 2008, it emerged from bankruptcy, after completing a merger with ACG Holdings. * * * As reported by the Troubled Company Reporter on April 27, 2010, Moody's Investors Service assigned Vertis, Inc., a Caa1 Corporate Family Rating, Caa1 Probability of Default Rating and SGL-3 Speculative Grade Liquidity rating. Moody's said Vertis' Caa1 CFR reflects the company's high leverage, thin coverage of total interest costs, and long-term price and volume pressure on the print-based advertising and direct marketing products and services that comprise the majority of the company's revenue. Moody's noted Vertis' proposed refinancing transactions would be a second restructuring closely on the heels of Vertis' 2008 bankruptcy reorganization. VISTEON CORPORATION: Completes Reorganization, Emerges from Ch. 11 ------------------------------------------------------------------ Visteon Corporation has completed its reorganization and emerged from the U.S. Chapter 11 process. With its significantly improved capital structure, the company is well-positioned for profitable and sustainable growth. Visteon completed all conditions of its plan of reorganization, which was confirmed by the U.S. Bankruptcy Court on Aug. 31 after overwhelming approval by all creditor and shareholder classes. Visteon emerged with a stronger balance sheet and about $2.1 billion less consolidated debt than when the company and certain of its affiliates voluntarily filed for Chapter 11 in the U.S. on May 28, 2009. "Today marks a new beginning for Visteon, an opportunity to truly capitalize on the many operational and financial improvements achieved before and during the reorganization process," said Donald J. Stebbins, who continues as chairman, chief executive officer and president. "I thank our employees who worked tirelessly throughout our reorganization. Additionally, I am extremely grateful to our customers, suppliers, secured lenders, bondholders and many others for their support throughout this difficult process." Visteon improved its capital and cost structure significantly during the Chapter 11 process, reducing consolidated debt from approximately $2.7 billion at the time of the filing to about $600 million today -- a level that allows Visteon to be very competitive in the Tier 1 automotive supplier industry. "The new Visteon is focused on four strong product lines -- climate, electronics, interiors and lighting," Stebbins said. "We have an outstanding global manufacturing and engineering footprint, with particular strength in the fast-growing markets in Asia, Eastern Europe and Brazil. We have an experienced and talented employee base, complemented by strong joint venture partners and strategic alliances that provide a competitive advantage in the key automotive markets of the world." Ordinary Shareholders Appeal Plan Order Bankruptcy Law360 reported that two Visteon Corp. shareholders are challenging a bankruptcy court decision that they say gave members of the ad hoc equity committee, but not "ordinary shareholders" in a separate class, the right to buy a potentially valuable chunk of stock in the reorganized auto parts maker. Appellants Mark Taub and Andrew Shirley argue that the disparate status of their equity claims in the plan, approved Aug. 31, violates an "equality of treatment" requirement in bankruptcy law, Law360 says. About Visteon Corp 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 automakers. The Company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company disclosed assets of US$4,561,000,000 and debts of US$5,311,000,000 as of March 31, 2009. Visteon Corporation and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring effort. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Judge Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware entered an order on August 31, 2010, confirming the Fifth Amended Plan of Reorganization of Visteon Corporation and its debtor affiliates. Visteon expects to emerge from Chapter 11 upon completion of necessary closing conditions, which the Company expects to occur by October 1. WAKULLA BANK: Closed; Centennial Bank Assumes All Deposits ---------------------------------------------------------- Wakulla Bank of Crawfordville, Fla., was closed on October 1, 2010, by the Florida Office of Financial Regulation, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Centennial Bank of Conway, Ark., to assume all of the deposits of Wakulla Bank. The 12 branches of Wakulla Bank will reopen during normal banking hours as branches of Centennial Bank. Depositors of Wakulla Bank will automatically become depositors of Centennial Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage. Customers of Wakulla Bank should continue to use their existing branch until they receive notice from Centennial Bank that it has completed systems changes to allow other Centennial Bank branches to process their accounts as well. As of June 30, 2010, Wakulla Bank had around $424.1 million in total assets and $386.3 million in total deposits. Centennial Bank did not pay the FDIC a premium for the deposits of Wakulla Bank. In addition to assuming all of the deposits of the failed bank, Centennial Bank agreed to purchase essentially all of the assets. The FDIC and Centennial Bank entered into a loss-share transaction on $212.7 million of Wakulla Bank's assets. Centennial Bank will share in the losses on the asset pools covered under the loss- share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. For more information on loss share, visit: http://www.fdic.gov/bank/individual/failed/lossshare/index.html Customers who have questions about today's transaction can call the FDIC toll-free at 1-800-528-6357. Interested parties also can visit the FDIC's Web site at: http://www.fdic.gov/bank/individual/failed/wakulla.html The FDIC estimates that the cost to the Deposit Insurance Fund will be $113.4 million. Compared to other alternatives, Centennial Bank's acquisition was the least costly resolution for the FDIC's DIF. Wakulla Bank is the 128th FDIC-insured institution to fail in the nation this year, and the twenty-fifth in Florida. The last FDIC-insured institution closed in the state was Haven Trust Bank Florida, Ponte Vedra, on September 24, 2010. WALTER B. SCOTT: Commercial Reasonableness of Sale Debated ---------------------------------------------------------- WestLaw reports that the standards for the sale of collateral set forth in a security agreement executed by the Chapter 11 debtor and the creditor were "manifestly unreasonable" under Idaho law. Accordingly, whether the creditor's sale of certain logging equipment was commercially reasonable would be governed by the Idaho Uniform Commercial Code. Under the security agreement, only two things were required for a sale to be deemed commercially reasonable: (1) notice of the sale to the debtor at least ten days prior to the date of any public sale or after which any private sale would occur, and (2) publication of the notice of sale in a newspaper of general circulation in the county where the sale would occur at least once within ten days prior to the sale. The agreement was either silent as to any other aspects of the sale or expressly disavowed obligations on the part of the creditor. Such restraints were tantamount to a waiver or variation of the debtor's right to commercial reasonableness in "every" aspect of a sale, including method, manner, time, place, and other terms. In re Walter B. Scott & Sons, Inc., --- B.R. ----, 2010 WL 3633927 (Bankr. D. Idaho) (Myers, C.J.). A copy of the Honorable Terry L. Myers' Memorandum of Decision dated Sept. 13, 2010, in Financial Federal Credit Inc. v. Walter B. Scott & Sons, Inc., et al., Adv. Pro. No. 09-07037 (Bankr. D. Idaho), is available at: http://www.leagle.com/unsecure/page.htm?shortname=inbco20100913399 Chief Judge Myers finds that the Debtor has produced sufficient facts to establish a genuine issue for trial as to the commercial reasonableness of the auction. To determine the reasonable commercial practices applicable in this case, and thus whether the auction was ultimately commercially reasonable, the Court will be required to weigh the opinions of the parties' respective expert witnesses, and Judge Myers says a trial with the benefit of live testimony and cross-examination will be necessary. Accordingly, Chief Judge Myers denied FFCI's request for declaratory relief on the commercial reasonableness of the auction. Walter B. Scott & Sons, Inc, a logging company based in St. Maries, Idaho, sought chapter 11 protection (Bankr. D. Idaho Case No. 09-20996) on Sept. 10, 2009; is represented by Gregory Richard Rauch, Esq., at The Law Offices of Magyar, Rauch & Thie, PLLC, in Moscow, Idaho; and disclosed assets of at least $1,265,000 and liabilities totalling $3,462,545 in its Schedules of Assets and Liabilities. WARNER MUSIC: Fitch Affirms Issuer Default Ratings -------------------------------------------------- Fitch Ratings has affirmed the Issuer Default Ratings and issue ratings of Warner Music Group Corp. and its subsidiaries. The Rating Outlook is Stable. Rating Rationale: -- The ratings are supported by WMG's market position as the third largest music distributor/label, with a 20% market share according to Nielsen SoundScan. -- Liquidity is sufficient, as the company generates sufficient cash to support operations and capital expenditures. As of June 30, 2010, WMG had $400 million in consolidated cash and cash equivalents (including $176 million of cash at the parent holding company). There are no maturities until 2014, when approximately $900 million in subordinated debt (including WMG Holdings Corp. notes) are due. -- Fitch notes that 60% to 80% of the company's costs are variable / discretionary and the company has been successful in reducing costs to offset revenue declines. The company operates in a hit driven cyclical industry in which the timing of artist albums release has a material impact on the operations of the business. -- The industry has been materially impacted by piracy and the secular shift from physical recording sales to digital sales. Fitch believes that the move to Expanded Right Contracts will drive revenue growth at all the major labels and along with growth in digital revenues, provide a meaningful offset to the decline in physical revenues. -- Fitch acknowledges that metrics have weakened as a result of a very light release schedule over the last nine months and the secular challenges facing the industry. For the remainder of 2010, Fitch expects the release schedule to be more robust with recently released albums from Linkin Park, Trey Songz, Avenged Sevenfold and Fitch's expected upcoming releases from TI, Kid Rock and Flo Rida. Going forward, Fitch expects that the cash interest coverage metric of 2.3 times will expand from this level as higher margin digital revenues grow. -- Fitch expects the company to continue to make small acquisitions in the music publishing industry in order to expand its catalogue. Fitch does not expect and the ratings do not have any tolerance for any leveraging acquisitions. Rating Drivers: -- Fitch does not expect digital sales to offset physical sales declines in the intermediate term. However, an acceleration in physical sales declines and/or low single digit digital revenue growth that continue to drive overall revenue decline in the high single digit may pressure the ratings. -- Also, the ratings could be pressured if the second half of 2010 release schedule is unable to maintain cash interest coverage above 2.0x on a latest 12 months basis. -- Given the secular challenges facing the industry, rating upside is limited. Fitch believes that the June 2010 LTM cash interest coverage of 2.3x and Fitch calculated free cash flow (before dividend) of $106 million is at a cyclical trough. In addition to the light release schedule, FCF has been impacted by some of the unwinding of the negative working capital on the balance sheet. Fitch's base case projections assume revenues continue to decline due to physical declines, however, higher margin digital revenues are expected to provide EBITDA growth. Fitch expects WMG to generate Fitch calculated FCF (before dividend) in the range of $100 million to $150 million range in 2010 and 2011. As of June 30, 2009, Fitch calculates WMG's gross leverage at approximately 4.9x and net leverage at approximately 3.9x. Fitch expects leverage to remain near these levels in 2010 and 2011. Fitch has affirmed these ratings: Warner Music Group Corp. -- IDR at 'BB-'. WMG Holdings Corp. -- IDR at 'BB-'; -- Unsecured notes at 'B'. WMG Acquisition Corp. -- IDR at 'BB-'; -- Secured notes at 'BB'; -- Subordinated notes at 'B+'. WESTERN LIBERTY: Inks Warrant Restructuring Agreement with Holders ------------------------------------------------------------------ Western Liberty Bancorp entered into a Merger Agreement, dated Nov. 6, 2009, as amended by a First Amendment to the Merger Agreement dated June 21, 2010, each among WL-S1 Interim Bank, a Nevada corporation, Service1st Bank of Nevada, a Nevada-chartered non-member bank and Curtis W. Anderson, as representative of the former stockholders of Service1st. The Amended Merger Agreement provides for the merger of Merger Sub with and into Service1st, with Service1st being the surviving entity and becoming WLBC's wholly-owned subsidiary. In order to assist WLBC in gaining the requisite approval of certain bank regulatory authorities in connection with the Acquisition, on Sept. 23, 2010, WLBC entered into a Letter Agreement with certain warrant holders who have represented to WLBC that they collectively hold at least a majority of its outstanding warrants confirming the basis and terms upon which the parties have agreed to amend the Amended and Restated Warrant Agreement, dated as of July 20, 2009, as amended by the Amendment No. 1, dated as of October 9, 2009, each between WLBC and Continental Stock Transfer & Trust Company, as warrant agent, previously filed with the Securities and Exchange Commission. The Warrant Restructuring Letter Agreement serves as the consent and approval of each of the Consenting Warrant Holders to amend and restate the Warrant Agreement. A full-text copy of the Second Amended And Restated Warrant Agreement is available for free at: http://ResearchArchives.com/t/s?6be5 About Western Liberty Western Liberty Bancorp, formerly Global Consumer Acquisition Corp., was formed to consummate an acquisition, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The Company is focused on operating as a bank holding company. It focuses on providing a range of community banking services. During the year ended December 31, 2009, the Company had not generated any revenue. Western Liberty Bancorp. reached a consent agreement with the Federal Deposit Insurance Corp. Western Liberty entered into a Merger Agreement, dated as of November 6, 2009, for the merger of WL-S1 Interim Bank, a Nevada corporation, with and into Service1st Bank of Nevada, a Nevada- chartered non-member bank. On September 1, 2010, Service1st, without admitting or denying any possible charges relating to the conduct of its banking operations, agreed with the FDIC and the Nevada Financial Institutions Division to the issuance of a Consent Order. Under the Consent Order, Service1st has agreed, among other things, to: (i) assess the qualification of, and have and retain qualified, senior management commensurate with the size and risk profile of Service1st; (ii) maintain a Tier 1 leverage ratio at or above 8.5% (as of June 30, 2010, Service1st's Tier 1 leverage ratio was at 9.62%) and a total risk-based capital ratio at or above 12.0% (as of June 30, 2010, Service1st's total risk-based capital ratio was at 16.88%); and (iii) continue to maintain an adequate allowance for loan and lease losses. WISE METALS: Names Wesley Oberholzer as Exec. VP & COO ------------------------------------------------------ Wise Metals Group said that Wesley Oberholzer, formerly with Alcoa, has been named Executive Vice President/Chief Operating Officer. The announcement was made by David D'Addario, Chairman and CEO of Wise Metals Group. D'Addario also announced one promotion from within Wise Metals Group, and the creation of an advisory position on his staff. Joseph Pampinto has been named Plant Manager of Wise Alloys in Alabama, and J. Phil Tays has been named Special Advisor to the Chairman. Oberholzer and his family will locate to the Shoals area from Massena, New York, and he will be headquartered at the Muscle Shoals facility. He will report directly to Chairman and CEO, David D'Addario, and his responsibilities as Executive Vice President/Chief Operating Officer will include all divisions. Wesley Oberholzer began his career after graduation from Pennsylvania State University with a degree in Industrial and Business Management Systems Engineering. He worked as quality supervisor for Hofmann Industries, then industrial engineer and manufacturing manager with Cressona Aluminum Company before being named General Manager of Aavid Precision Extrusion, Inc., in Franklin, New Hampshire. In 2000, he joined Alcoa Engineered Products in Elizabethton, Tennessee, as General Manager, moving to Alcoa Engineered Solutions in 2002 to become General Manager, Director of Logistics and Metal Planning, and then Location Manager for Massena Primary Metals. Under his leadership, Massena successfully renegotiated a long term power contract enabling a $1 billion modernization investment, reduced lost workday injuries by 100%, and widened operating margins by 19%. The Massena plant has annual revenues in excess of $1 billion. Joseph Pampinto will serve as Plant Manager of the Muscle Shoals facility for Wise Alloys. He has more than 15 years of experience in the facility, serving as supervisor, superintendent, area manager and Senior Vice President/General Manager of Manufacturing Operations. His responsibilities, in addition to manufacturing operations, have included metallurgy, continuous improvement, and Toledo operations. During his leadership as Senior VP and General Manager of Manufacturing Operations, the Muscle Shoals facility completed two multi-million dollar modernizations and has increased and exceeded production, safety and quality goals. In addition, Pampinto has served as a member of the Muscle Shoals City Council and was past President of the Colbert County Board of Education. He and his family live in Muscle Shoals. As Special Advisor to the Chairman, Mr. Tays will use his extensive experience in the aluminum industry to help direct Wise's moves within the marketplace. Mr. Tays began his career in the aluminum business in 1969. He has held several leadership and management positions, most recently Executive Vice President/Plant Manager of Wise Alloys, a position he has held since 2006. The Mr. Tays family makes their home in Florence. "We are delighted to add Wes Oberholzer to our team, and are also pleased to better utilize two highly qualified and experienced team members from within our ranks," said David D'Addario. "We are experiencing tremendous growth in our business, and these management changes will continue to propel us forward. We congratulate Phil and Joe on their new responsibilities, and welcome Wes to our company and to the community." About Wise Metals Based in Baltimore, Md., Wise Metals Group LLC includes Wise Alloys, the world's third-leading producer of aluminum can stock for the beverage and food industries; Wise Recycling, one of the largest, direct-from-the-public collectors of aluminum beverage containers in the United States; Listerhill Total Maintenance Center, specializing in providing maintenance, repairs and fabrication to manufacturing and industrial plants worldwide; Alabama Electric Motor Service specializing in electric motor and pump service, repair and replacement; and Alabama Spares And Parts providing on-site spare part inventory management and procurement services. The Company's balance sheet at June 30, 2010, revealed $534.25 million in total assets, $658.57 million in total current liabilities, $171.04 million in total non-current liabilities, and $392.27 million in total members' deficit. WAKULLA BANK: Closed; Centennial Bank Assumes All Deposits ---------------------------------------------------------- Wakulla Bank of Crawfordville, Fla., was closed on October 1, 2010, by the Florida Office of Financial Regulation, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Centennial Bank of Conway, Ark., to assume all of the deposits of Wakulla Bank. The 12 branches of Wakulla Bank will reopen during normal banking hours as branches of Centennial Bank. Depositors of Wakulla Bank will automatically become depositors of Centennial Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage. Customers of Wakulla Bank should continue to use their existing branch until they receive notice from Centennial Bank that it has completed systems changes to allow other Centennial Bank branches to process their accounts as well. As of June 30, 2010, Wakulla Bank had around $424.1 million in total assets and $386.3 million in total deposits. Centennial Bank did not pay the FDIC a premium for the deposits of Wakulla Bank. In addition to assuming all of the deposits of the failed bank, Centennial Bank agreed to purchase essentially all of the assets. The FDIC and Centennial Bank entered into a loss-share transaction on $212.7 million of Wakulla Bank's assets. Centennial Bank will share in the losses on the asset pools covered under the loss- share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. For more information on loss share, visit: http://www.fdic.gov/bank/individual/failed/lossshare/index.html Customers who have questions about today's transaction can call the FDIC toll-free at 1-800-528-6357. Interested parties also can visit the FDIC's Web site at: http://www.fdic.gov/bank/individual/failed/wakulla.html The FDIC estimates that the cost to the Deposit Insurance Fund will be $113.4 million. Compared to other alternatives, Centennial Bank's acquisition was the least costly resolution for the FDIC's DIF. Wakulla Bank is the 128th FDIC-insured institution to fail in the nation this year, and the twenty-fifth in Florida. The last FDIC-insured institution closed in the state was Haven Trust Bank Florida, Ponte Vedra, on September 24, 2010. WORKFLOW MANAGEMENT: Files Joint Plan of Reorganization ------------------------------------------------------- Workflow Management, Inc., et al., have filed a joint plan of reorganization with the U.S. Bankruptcy Court for the Eastern District of Virginia. A copy of the Plan is available for free at: http://bankrupt.com/misc/WORKFLOW_MANAGEMENT_plan.pdf The Debtors have yet to file the disclosure statement explaining the terms of the Plan. Treatment of Claims With respect to classified claims: Classification Treatment -------------- --------- Class 1 - Priority Unimpaired; will be fully reinstated or Non-Tax Claims retained; claim will be paid in full Class 2 - First Lien Holders will retain liens securing first Lender Claims lien lender claim and receive deferred cash payments Class 3 - First Lien Holders will retain liens securing first Lender Claims of lien lender claim and receive deferred Cross Lien Holders cash payments Class 4 - Second Holders will retain the liens securing the Lien Lender Claims second lien lender claim and receive deferred cash payments Class 5 - Second Holders will retain liens securing the Lien Lender Claims second lien lender claim and receive of Cross Lien deferred cash payments Holders Class 6 - Other Holders will (i) receive cash equal to the Secured Claims amount of the claim; (ii) retain its lien in the property, or the proceeds of the property, securing the allowed Other Secured Claim and be paid in the ordinary course of business in accordance with the terms existing between the Debtors and the holder with respect to the claim prior to the Petition Date; (iii) retain its lien in the property, or the proceeds of the property, securing the allowed Other Secured Claim and receive deferred cash payments totaling at least the amount of the allowed Other Secured Claim, as of the Effective Date, or (iv) be transferred the collateral securing the claim, each in full and complete satisfaction of the claim Class 7 - General Holders will receive either (i)(a) on the Unsecured Claims Distribution Date cash payment equal to 50% of the amount of each holder's allowed General Unsecured Claim, without interest, and (b) 60 days after the Distribution Date, an additional cash payment of 50% of the amount of each holder's allowed General Unsecured Claim, without interest; or (ii) payment in the ordinary course of business in accordance with the terms existing between the Debtor and the holder with respect to the claim prior to the Petition Date. Class 8 - Lease Holders will receive either (i) (a) on the Rejection Damage Distribution Date cash payment equal to 50% Claims of the amount of the holder's claim, without interest, and (b) 60 days after the Distribution Date, an additional cash payment equal to 50% of the amount of the holder's Lease Rejection Damage Claim, without interest; or (ii) on the Distribution Date cash payment in the amount of 1/12th of the amount of the Allowed Rejection Damage Claim, without interest, and additional cash payments in the amount of 1/12th of the allowed amount of the claim, without interest, on the last Business Day of each calendar month for the subsequent eleven calendar months beginning in the calendar month that is after the month in which the Distribution Date occurs. Class 9 - Unsecured Each claim will be, in full and complete Note Claims satisfaction, settlement and release of and in exchange for the claim, reinstated Class 10 - Unsecured Each claim will receive, upon the allowed Contingent Claims claim becoming a liquidated, fixed, and non- contingent claim (i) (a) 30 days after such date, a cash payment equal to 50% of the amount of the holder's claim, without interest, and (b) 60 days after such date, an additional cash payment in an amount equal to 50% of the amount of the holder's claim without interest; or (ii) all of the legal, equitable and contractual rights to which the claim entitles the holder in respect of the claim will be fully reinstated and retained. Class 11 - Each claim will be unimpaired under the Intercompany Claims Plan, and will be fully reinstated and retained. Class 12 - WF Each allowed WF Capital Equity Interest will Capital Equity be unimpaired under the Plan, and will be Interests fully reinstated and retained. Class 13 - Each allowed Subsidiary Equity Interest will Subsidiary Equity be unimpaired under the Plan, and will be Interests fully reinstated and retained. Class 14 - Each holder of an allowed claim will receive Convenience Claims on the Distribution Date a single cash payment equal to 100% of the holder's allowed claim, without interest. Administrative Expense Claims and Priority Tax Claims are treated in accordance with Sections 1129(a)(9)(A) and 1129(a)(9)(C) of the U.S. Bankruptcy Code, respectively. About Workflow Management Dayton, Ohio-based Workflow Management, Inc. -- http://www.workflowone.com/-- fka Workflow Graphics, Inc., offers commercial printing services, including print buying and document management capabilities, through three divisions: WorkflowOne, Freedom Graphics Services, and United Envelope. It also distributes office products and promotional items through an online ordering system. Its customers include both small and large companies throughout North America in such sectors as financial services, health care, retail, and government. Workflow Management and its affiliates filed for Chapter 11 bankruptcy protection on September 29, 2010 (Bankr. E.D. Va. Lead Case No. 10-74617). Cullen A. Drescher, Esq., Daniel F. Blanks, Esq., Douglas M. Foley, Esq., and Patrick L. Hayden, Esq., at McGuireWoods LLP; Sarah Beckett Boehm, Esq., at McGuireWoods LLP; and Rosa J. Evergreen, Esq., at Arnold & Porter LLP, assist the Debtor in its restructuring effort. Tavenner & Beran, PLC, is the Debtor's co-counsel and conflicts counsel. Arnold & Porter LLP is the Debtor's special counsel. Kaufman & Canoles, P.C., is the Debtor's corporate counsel. FTI Consulting is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the Debtor's claims agent. The Debtor estimated its assets and debts at $100 million to $500 million as of the Petition Date. WORKFLOW MANAGEMENT: Wants Oct. 29 Schedules Filing Deadline ------------------------------------------------------------ Workflow Management, Inc., et al., ask for authorization from the U.S. Bankruptcy Court for the Eastern District of Virginia to extend by 16 days -- until October 29, 2010 -- the deadline to file their schedules of assets and liabilities, statement of financial affairs, and equity list. The schedules, statement and list are currently due on October 13, 2010. The Debtors say that due to the complexity and diversity of their operations, they will be unable to complete their Schedules, statement, and equity list by the deadline. About Workflow Management Dayton, Ohio-based Workflow Management, Inc. -- http://www.workflowone.com/-- fka Workflow Graphics, Inc., offers commercial printing services, including print buying and document management capabilities, through three divisions: WorkflowOne, Freedom Graphics Services, and United Envelope. It also distributes office products and promotional items through an online ordering system. Its customers include both small and large companies throughout North America in such sectors as financial services, health care, retail, and government. Workflow Management Inc., and its affiliates, filed for Chapter 11 bankruptcy protection on September 29, 2010 (Bankr. E.D. Va. Lead Case No. 10-74617). Cullen A. Drescher, Esq., Daniel F. Blanks, Esq., Douglas M. Foley, Esq., and Patrick L. Hayden, Esq., at McGuireWoods LLP; Sarah Beckett Boehm, Esq., at McGuireWoods LLP; and Rosa J. Evergreen, Esq., at Arnold & Porter LLP, assist the Debtors in their restructuring effort. Tavenner & Beran, PLC, is the Debtors' co-counsel and conflicts counsel. Arnold & Porter LLP is the Debtors' special counsel. Kaufman & Canoles, P.C., is the Debtors' corporate counsel. FTI Consulting is the Debtors' financial advisor. Kurtzman Carson Consultants LLC is the Debtors' claims agent. Workflow Management estimated its assets and debts at $100 million to $500 million as of the Petition Date. WORKFLOW MANAGEMENT: Taps McGuireWoods as Bankruptcy Counsel ------------------------------------------------------------ Workflow Management, Inc., et al., ask for authorization from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ McGuireWoods LLP as bankruptcy counsel. McGuireWoods will, among other things: (a) advise and consulting on the conduct of the Debtors' Bankruptcy cases, including all of the legal and administrative requirements of operating in Chapter 11; (b) attend meetings and negotiating with representatives of creditors, Debtors' employees and other parties in interest; (c) advise the Debtors in connection with any sales of assets or business combinations, including the negotiation of asset, stock purchase, merger or joint venture agreements, evaluate competing offers, draft appropriate corporate documents with respect to the proposed sales, and counsel the Debtors in connection with the closing of such sales; and (d) advise the Debtors in connection with any debtor-in- possession and exit financing and cash collateral arrangements, and negotiate and draft documents relating thereto, and provide advice and counsel with respect to any prepetition financing arrangements. McGuireWoods will be paid based on the hourly rates of its personnel: Associates $325 Partners $725 Legal Assistants & Support Staff $100-$255 Douglas M. Foley, Esq., a partner at McGuireWoods, assures the Court that the firm is a "disinterested person," as that term is defined in section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy Code. About Workflow Management Dayton, Ohio-based Workflow Management, Inc. -- http://www.workflowone.com/-- fka Workflow Graphics, Inc., offers commercial printing services, including print buying and document management capabilities, through three divisions: WorkflowOne, Freedom Graphics Services, and United Envelope. It also distributes office products and promotional items through an online ordering system. Its customers include both small and large companies throughout North America in such sectors as financial services, health care, retail, and government. Workflow Management Inc., and its affiliates, filed for Chapter 11 bankruptcy protection on September 29, 2010 (Bankr. E.D. Va. Lead Case No. 10-74617). Tavenner & Beran, PLC, is the Debtors' co- counsel and conflicts counsel. Arnold & Porter LLP is the Debtors' special counsel. Kaufman & Canoles, P.C., is the Debtors' corporate counsel. FTI Consulting is the Debtors' financial advisor. Kurtzman Carson Consultants LLC is the Debtors' claims agent. Workflow Management estimated its assets and debts at $100 million to $500 million as of the Petition Date. WORKFLOW MANAGEMENT: Wants to Hire Kurtzman Carson as Claims Agent ------------------------------------------------------------------ Workflow Management, Inc., et al., ask for authorization from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Kurtzman Carson Consultants LLC as claims, noticing, and balloting agent. KCC will, among other things: (a) establish and maintain the master list of creditors; (b) serve required notices; (c) notify potential creditors of the existence and amount of Their respective claims as evidenced by the Schedules; and (d) maintain a copy of the schedules of assets and liabilities and statements of financial affairs that the Debtors filed with the Court, listing the Debtors' known creditors and the amounts owed thereto and provide assistance in preparing same if requested by the Debtors. KCC will charge the Debtors for its services, expenses and supplies at the rates or prices it set in effect as of the date of its services agreement with the Debtors in accordance with the KCC fee structure. A copy of the services agreement is available for free at: http://bankrupt.com/misc/WORKFLOW_claimsagentservicespact.pdf Albert H. Kass, KCC Vice President of Corporate Restructuring Services, assures the Court that the firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. About Workflow Management Dayton, Ohio-based Workflow Management, Inc. -- http://www.workflowone.com/-- fka Workflow Graphics, Inc., offers commercial printing services, including print buying and document management capabilities, through three divisions: WorkflowOne, Freedom Graphics Services, and United Envelope. It also distributes office products and promotional items through an online ordering system. Its customers include both small and large companies throughout North America in such sectors as financial services, health care, retail, and government. Workflow Management Inc., and its affiliates, filed for Chapter 11 bankruptcy protection on September 29, 2010 (Bankr. E.D. Va. Lead Case No. 10-74617). Cullen A. Drescher, Esq., Daniel F. Blanks, Esq., Douglas M. Foley, Esq., and Patrick L. Hayden, Esq., at McGuireWoods LLP; Sarah Beckett Boehm, Esq., at McGuireWoods LLP; and Rosa J. Evergreen, Esq., at Arnold & Porter LLP, assist the Debtors in their restructuring effort. Tavenner & Beran, PLC, is the Debtors' co-counsel and conflicts counsel. Arnold & Porter LLP is the Debtors' special counsel. Kaufman & Canoles, P.C., is the Debtors' corporate counsel. FTI Consulting is the Debtors' financial advisor. Workflow Management estimated its assets and debts at $100 million to $500 million as of the Petition Date. WORKFLOW MANAGEMENT: S&P Downgrades Corporate Credit Rating to 'D' ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Workflow Management Inc. to 'D' from 'CCC-'. S&P also lowered the issue-level ratings on the company's first-lien credit facilities to 'D' from 'CCC'; the corresponding recovery ratings remain unchanged. S&P expects to withdraw the ratings over the next several days. The rating downgrades follow Workflow's announcement September 29 that it and its domestic subsidiaries have filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the State of Virginia. The previous 'CCC-' corporate credit rating reflected S&P's belief that the potential existed for a near-term financial covenant violation, as well as its expectation that the company would have difficulties in generating sufficient cash flow to meet debt service obligations through the remainder of 2010. YRC WORLDWIDE: Board Approves Tentative Agreement with IBT ---------------------------------------------------------- YRC Worldwide Inc. said its board of directors has approved a tentative agreement with the International Brotherhood of Teamsters, and the Teamsters approved submitting the tentative agreement to the company's Teamster represented employees for ratification. The agreement is designed to significantly improve the company's competitive position in the marketplace. Additionally, the agreement provides for re-entry of the YRCW operating companies into the multi-employer pension plans to which they contribute in a manner that provides important member benefits while maintaining an improved competitive market position for the company. Additional details regarding the terms of the tentative agreement can be found in the Form 8-K current report filed today with the Securities and Exchange Commission. As previously announced, the ratification of the agreement by company's employees represented by the Teamsters is targeted for completion by late October 2010. The Company plans to amend its certificate of incorporation on September 30, 2010, to implement a reverse stock split with a ratio of 1:25. The reverse stock split will be effective on the NASDAQ exchange on October 1, 2010. The reverse stock split will reduce the number of authorized common shares to 80 million from the current 2 billion and reduce the number of outstanding common shares to approximately 48 million from the current approximately 1.2 billion. A full-text copy of the Agreement for Restructuring is available for free at http://ResearchArchives.com/t/s?6bf8 About YRC Worldwide Headquartered in Overland Park, Kan., YRC Worldwide Inc. (NASDAQ: YRCW) -- http://www.yrcw.com/-- is a holding company that through wholly owned operating subsidiaries offers its customers a wide range of transportation services. These services include global, national and regional transportation as well as logistics. The company's balance sheet for June 30, 2010, showed $2.8 billion in total assets, $1.1 billion in total current liabilities, $913.4 million in long term debt, $146.2 million deferred income taxes, $352.6 million pension and post retirement, $359.2 million claims and other liabilities, $37,000 noncurrent liabilities, and a $77.2 million stockholders' deficit. * * * As reported in the Troubled Company Reporter on March 18, 2010, KPMG LLP, in Kansas City, Missouri, expressed substantial doubt about YRC Worldwide's ability to continue as a going concern in its report on the Company's consolidated financial statements as of and for the year ended December 31, 2009. The independent auditors noted that the Company has experienced significant declines in operations, cash flows, and liquidity. YRC WORLDWIDE: CEO Zollars to Retire After Recovery Plan Completed ------------------------------------------------------------------ YRC Worldwide Inc. reported that William D. Zollars, chairman, president and chief executive officer, has informed the Company's board of directors of his decision to retire from the Company upon the successful completion of YRC Worldwide's comprehensive recovery plan. Mr. Zollars and the board have agreed that he will retain his current positions through the finalization of the process and until a new CEO is named. "Upon the successful resolution of many of our recent business challenges, the time would be right for me to hand over the reins to new leadership," said Mr. Zollars. "I am particularly proud of all we, as an organization, have accomplished over the past two years. We have faced unprecedented challenges and had to deal with the most difficult economic environment our industry has ever experienced. I am especially grateful to my team and the many stakeholders who partnered with us to put the company on an operationally and financially stable path to recovery. By informing the board now of my decision, we will have sufficient time to identify my successor and ensure a seamless transition to new leadership." John A. Lamar, lead director for YRC Worldwide, commenting for the board, said, "We are grateful to Bill for his exemplary leadership, first directing the company's business expansion over more than a decade, and most recently switching gears to help navigate the organization through its most challenging period. We are pleased that he will remain at the helm through this process as we work together to identify his successor." The company said it would seek candidates from both inside and outside the organization. Mr. Zollars, 62, leads one of the largest and most recognizable global transportation providers. He was named to his current position in November 1999. Prior to that, Mr. Zollars was president of Yellow Transportation, Inc., a predecessor company of YRCW. He serves on the boards of CIGNA Corporation, Cerner Corporation, The Business Roundtable, National Association of Manufacturers, United Way of Greater Kansas City, American Trucking Associations and The Carlson School of Management at the University of Minnesota. About YRC Worldwide Headquartered in Overland Park, Kan., YRC Worldwide Inc. (NASDAQ: YRCW) -- http://www.yrcw.com/-- is a holding company that through wholly owned operating subsidiaries offers its customers a wide range of transportation services. These services include global, national and regional transportation as well as logistics. The company's balance sheet for June 30, 2010, showed $2.8 billion in total assets, $1.1 billion in total current liabilities, $913.4 million in long term debt, $146.2 million deferred income taxes, $352.6 million pension and post retirement, $359.2 million claims and other liabilities, $37,000 noncurrent liabilities, and a $77.2 million stockholders' deficit. * * * As reported in the Troubled Company Reporter on March 18, 2010, KPMG LLP, in Kansas City, Missouri, expressed substantial doubt about YRC Worldwide's ability to continue as a going concern in its report on the Company's consolidated financial statements as of and for the year ended December 31, 2009. The independent auditors noted that the Company has experienced significant declines in operations, cash flows, and liquidity. * 2010 Bank Failures Now 129 as Wakulla and Shoreline Banks Shut ---------------------------------------------------------------- Shoreline Bank of Shoreline, Washington, was closed on Friday by the Washington Department of Financia Institutions, which appointed the U.S. Federal Deposit Insurance Corp. as receiver. The FDIC signed a deal for GBC International Bank, based in Los Angeles, to assume all deposits of Shoreline Bank. Wakulla Bank, based in Crawfordville, Florida, was also seized by a state regulator. Centennial Bank, Conway, Arkansas, assumed all of the deposits of Wakulla Bank. The two failures drained $154.8 million from the FDIC deposit- insurance fund. The closing raises the total number of U.S. bank failures to 129 for the year. 2010 Failed Banks List The FDIC was appointed as receiver for the closed banks. To protect the depositors, the FDIC entered into a purchase and assumption agreement with various banks that agreed to assume the deposits of most of the closed banks. The FDIC also entered into loss-share transactions on assets bought by the banks. For this year, the failed banks are: Loss-Share Transaction Party FDIC Cost Assets of Bank That Assumed to Insurance Closed Bank Deposits & Bought Fund Closed Bank (millions) Certain Assets (millions) ----------- ---------- -------------- ----------- Wakulla Bank $424.1 Centennial Bank $113.4 Shoreline Bank $104.2 GBC International $41.4 Haven Trust Bank $148.6 First Southern $31.9 North County Bank $288.8 Whidbey Island $72.8 First Commerce $248.2 Community & Southern $71.4 Bank of Ellijay $168.8 Community & Southern $55.2 Bramble Savings Bank $47.5 Foundation Bank $14.6 Maritime Savings Bank $350.5 North Shore Bank $83.6 The Peoples Bank $447.2 Community & Southern $98.9 ISN Bank $81.6 Customers Bank $23.9 Horizon Bank $187.8 Bank of the Ozarks $58.9 Los Padres Bank $870.4 Pacific Western $8.7 Pacific State Bank $312.1 Rabobank, N.A. $32.6 ShoreBank $2,160.0 Urban Partnership $367.7 Butte Community Bank $498.8 Rabobank, N.A. $17.4 Sonoma Valley Bank $337.1 Westamerica Bank $10.1 Imperial Savings & Loan $9.4 River Community $3.5 Community National $67.9 CenterState Bank of Fla. $10.3 Independent National $156.2 CenterState Bank of Fla. $23.2 Palos Bank and Trust $493.4 First Midwest Bank $72.0 Ravenswood Bank $264.6 Northbrook Bank & Trust $68.1 Northwest Bank & Trust $167.7 State Bank and Trust $39.8 Bayside Savings Bank $66.1 Centennial Bank, Conway $16.2 Coastal Community Bank $362.9 Centennial Bank, Conway $94.5 The Cowlitz Bank $529.3 Heritage Bank $68.9 LibertyBank $768.2 Home Federal Bank $115.3 The Cowlitz Bank $529.3 Heritage Bank $68.9 Coastal Community $372.9 Centennial Bank $94.5 Bayside Savings $66.1 Centennial Bank $16.2 NorthWest Bank $167.7 State Bank and Trust $39.8 Williamsburg First $139.3 First Citizens Bank $8.8 Thunder Bank, Sylvan $32.6 The Bennington State $4.5 Community Security $108.0 Roundbank, Waseca $18.6 Crescent Bank $1,010.0 Renasant Bank $242.4 Sterling Bank $407.9 IBERIABANK $45.5 Home Valley Bank $251.8 South Valley Bank $37.1 SouthwestUSA Bank $214.0 Plaza Bank, Irvine $74.1 Turnberry Bank $263.9 NAFH National $34.4 First National Bank $682.0 NAFH National $74.9 Mainstreet Savings $97.4 Commercial Bank $11.4 Woodlands Bank $376.2 Bank of the Ozarks $115.0 Metro Bank of Dade $442.3 NAFH National $67.6 Olde Cypress Community $168.7 CenterState Bank $31.5 USA Bank, Port Chester $193.3 New Century Bank $61.7 Bay National Bank $282.2 Bay Bank, FSB $17.4 Ideal Federal Savings $6.3 -- None -- $2.1 Home National Bank $644.5 RCB Bank, Claremore $78.7 First National $252.5 The Savannah Bank $68.9 High Desert $80.3 First American $20.9 Peninsula Bank $644.3 Premier American $194.8 Nevada Security Bank $480.3 Umpqua Bank $80.9 Washington First $520.9 East West Bank $158.4 TierOne Bank $2,800.0 Great Western Bank $297.8 Arcola Homestead $17.0 -- None -- $3.2 First National Bank $60.4 Jefferson Bank $12.6 Sun West Bank $360.7 City National Bank $96.7 Granite Community $102.9 Tri Counties Bank $17.3 Bank of Fla- Southeast $595.3 EverBank $71.4 Bank of Fla- Southwest $559.9 EverBank $91.3 Bank of Fla- Tampa Bay $245.2 EverBank $40.3 Pinehurst Bank $61.2 Coulee Bank $6.0 Southwest Community $96.6 Simmons First Nat'l $29.0 New Liberty Bank $109.1 Bank of Ann Arbor $25.0 Satilla Community Bank $135.7 Ameris Bank $31.3 Midwest Bank & Trust $3,170.0 Firstmerit Bank $216.4 1st Pacific Bank $335.8 City National Bank $87.7 Access Bank $32.0 PrinsBank, Prinsburg $5.5 Towne Bank of Ariz $120.2 Commerce Bank $41.8 The Bank of Bonifay $242.9 First Federal Bank $78.7 Frontier Bank $3,500.0 Union Bank, NA $1,370.0 BC National Banks $67.2 Community First $11.4 Champion Bank $187.3 BankLiberty $52.7 CF Bancorp $1,650.0 First Michigan Bank $615.3 Westernbank PR $11,940.0 Banco Popular de PR $3,310.0 R-G Premier Bank $5,920.0 Scotiabank de PR $1,230.0 Eurobank, SJ, PR $2,560.0 Oriental Bank & Trust $743.9 Lincoln Park Savings $199.9 Northbrook Bank $48.4 Peotone Bank $130.2 First Midwest $31.7 Wheatland Bank $437.2 Wheaton Bank $133.0 New Century Bank $485.6 MB Financial $125.3 Citizens Bank&Trust $77.3 Republic Bank $20.9 Broadway Bank $1,200.0 MB Financial $394.3 Amcore Bank $3,800.0 Harris $220.3 Lakeside Community $53.0 People's United $11.2 Innovative Bank $268.9 Center Bank $37.8 City Bank $1,130.0 Whidbey Island $323.4 Butler Bank $233.2 People's United $22.9 AmericanFirst Bank $90.5 TD Bank, N.A. $10.5 First Federal $393.3 TD Bank, N.A. $6.0 Riverside National $3,420.0 TD Bank, N.A. $491.8 Tamalpais Bank $628.9 Union Bank, N.A. $81.1 Beach First National $585.1 Bank of NC $130.3 McIntosh Commercial $362.9 CharterBank, West Point $123.3 Desert Hills Bank $496.6 New York Community Bank $106.7 Unity National Bank $292.2 Bank of the Ozarks $67.2 Key West Bank $88.0 Centennial Bank $23.1 State Bank of Aurora $28.2 Northern State Bank $4.2 First Lowndes Bank $137.2 First Citizens Bank $38.3 Bank of Hiawassee $377.8 Citizens South Bank $137.7 Appalachian Community $1,010.0 Community & Southern $419.3 Advanta Bank Corp. $1,600.0 - None - $635.6 Century Security $96.5 Bank of Upson $29.9 American National $70.3 National Bank and Trust $17.1 The Park Avenue Bank $520.1 Valley National Bank $50.7 Statewide Bank $243.2 Home Bank, Lafayette $38.1 Old Southern Bank $315.6 Centennial Bank $94.6 LibertyPointe Bank $209.7 Valley National $24.8 Sun American Bank $535.7 First-Citizens Bank $103.8 Waterfield Bank $155.6 {FDIC Created} $51.0 Centennial Bank $215.2 Zions Bank $96.3 Bank of Illinois $211.7 Heartland Bank $53.7 Rainier Pacific Bank $446.2 Umpqua Bank, Roseburg $95.2 Carson River Community $51.1 Heritage Bank of Nevada $7.9 George Washington $412.8 FirstMerit Bank $141.4 La Jolla Bank $3,600.0 OneWest Bank, FSB $882.3 The La Coste Nat'l $53.9 Community National $3.7 Marco Community Bank $119.6 Omaha Bank $38.1 1st American State $18.2 Community Development $3.1 First National Bank $832.6 Community & Southern $260.4 Florida Community $875.5 Premier American Bank $352.6 American Marine Bank $373.2 Columbia State Bank $58.9 Marshall Bank, N.A. $59.9 United Valley Bank $4.1 First Regional Bank $2,180.0 First-Citizens Bank $825.5 Comm. Bank & Trust $1,210.0 SCBT, N.A. $354.5 Charter Bank $1,200.0 Charter, Albuquerque $201.9 Evergreen Bank $488.5 Umpqua Bank, Roseburg $64.2 Columbia River Bank $1,100.0 Columbia State Bank $172.5 Bank of Leeton $20.1 Sunflower Bank $8.1 Premier American Bank $350.9 Bond Street subsidiary $85.0 Town Community $69.6 Bank First American $17.8 St. Stephen State $24.7 First State Bank $7.2 Barnes Banking $827.8 {DINB Created} $271.3 Horizon Bank $1,400.0 Washington Federal $539.1 In 2009, there were 140 failed banks, compared with just 25 for 2008. A complete list of banks that failed since 2000 is available at: http://www.fdic.gov/bank/individual/failed/banklist.html 829 Banks Now in FDIC's Problem List The Federal Deposit Insurance Corporation said the number of institutions on its "Problem List" rose to 829 at June 30, 2010 from 775 at March 31, 2010. However, the total assets of "problem" institutions declined from $431 billion to $403 billion. Also, while the number of "problem" institutions is the highest since March 31, 1993, when there were 928, it is the smallest net increase since the first quarter of 2009. The FDIC said 45 insured institutions failed during the second quarter. The FDIC said commercial banks and savings institutions insured by the agency reported an aggregate profit of $21.6 billion in the second quarter of 2010, a $26 billion improvement from the $4.4 billion net loss the industry posted in the second quarter of 2009. The Deposit Insurance Fund balance improved for the second quarter in a row. The DIF balance -- the net worth of the fund -- improved from negative $20.7 billion to negative $15.2 billion during the second quarter. The improvement stemmed primarily from assessment revenues and from a reduction in the contingent loss reserve, which covers the costs of expected failures. The reserve declined from $40.7 billion to $27.5 billion during the quarter. The FDIC's liquid resources -- cash and marketable securities -- remained strong. Liquid resources stood at $44 billion at the end of the second quarter, a decline from $63 billion at the end of the first quarter. The decline in cash balances reflects previously anticipated outlays, primarily related to three bank failures in Puerto Rico on April 30th. "As we expected," Chairman Bair said, "demands on cash have increased this year. But our projections indicate that our current resources are more than enough to resolve anticipated failures." Total insured deposits declined by 0.7% ($39 billion) during the quarter. Problem Institutions Failed Institutions -------------------- ------------------- Year Number Assets (Mil) Number Assets (Mil) ---- ------ ------------ ------ ------------ 2009 702 $402,800 140 $169,700 2008 252 $159,405 25 $371,945 2007 76 $22,189 3 $2,615 2006 50 $8,265 0 $0 2005 52 $6,607 0 $0 2004 80 $28,250 4 $170 A copy of the FDIC's Quarterly Banking Profile for the quarter ended March 31, 2010, is available for free at: http://bankrupt.com/misc/FDIC_QBP_Q1_10.pdf * S&P's List of Global Corporate Defaults Now at 57 This Year ------------------------------------------------------------- Japan-based Takefuji Corp. and U.S.-based Workflow Management Inc. filed for bankruptcy last week. These two defaults bring the year-to-date 2010 global corporate default tally to 57, said an article published by Standard & Poor's, titled "Global Corporate Default Update (Sept. 24 - 30, 2010) (Premium)." By region, the current year-to-date default tallies are 41 in the U.S., two in Europe, five in the emerging markets, and nine in the other developed region (Australia, Canada, Japan, and New Zealand). So far this year, missed interest or principal payments are responsible for 18 defaults; distressed exchanges account for 16; Chapter 11 and foreign bankruptcy filings account for 14; receiverships account for two; regulatory directives, debt reorganization, and the exercising of payment-in-kind toggle options are responsible for one each; and the remaining four defaulted issuers are confidential. Of the global corporate defaulters in 2010, 41% of issues with available recovery ratings had recovery ratings of '6' (indicating our expectation for negligible recovery of 0% to 10%), 11% of the issues had recovery ratings of '5' (modest recovery prospects of 10% to 30%), 13% had recovery ratings of '4' (average recovery prospects of 30% to 50%), and 16% had recovery ratings of '3' (meaningful recovery prospects of 50% to 70%). And for the remaining two rating categories, 11% of the issues had recovery ratings of '2' (substantial recovery prospects of 70% to 90%) and 9% had recovery ratings of '1' (very high recovery prospects of 90% to 100%). * Adviser Takes Heat for Helping Struggling Cities Sell Assets -------------------------------------------------------------- As cities around the U.S. struggle to raise money, a little-known financial-advisory firm has grown in clout and courted some controversy along the way, Dow Jones' DBR Small Cap reports. * BOND PRICING -- For Week From Sept. 27 to Oct. 1, 2010 -------------------------------------------------------- Company Coupon Maturity Bid Price 155 E TROPICANA 8.750% 4/1/2012 5.375 ABITIBI-CONS FIN 7.875% 8/1/2009 8.000 ADVANTA CAP TR 8.990% 12/17/2026 12.000 AFFINITY GROUP 10.875% 2/15/2012 47.250 AHERN RENTALS 9.250% 8/15/2013 60.000 AMBAC INC 9.375% 8/1/2011 36.625 AMBASSADORS INTL 3.750% 4/15/2027 50.000 AMER GENL FIN 5.000% 10/15/2010 99.000 AT HOME CORP 0.525% 12/28/2018 0.016 BANK NEW ENGLAND 8.750% 4/1/1999 12.813 BANK NEW ENGLAND 9.875% 9/15/1999 12.625 BANKUNITED FINL 6.370% 5/17/2012 5.000 BEXP-CALL10/10 9.625% 5/1/2014 104.468 BLOCKBUSTER INC 9.000% 9/1/2012 3.250 BOWATER INC 6.500% 6/15/2013 27.500 BOWATER INC 9.500% 10/15/2012 26.000 BRODER BROS CO 11.250% 10/15/2010 98.000 C&D TECHNOLOGIES 5.500% 11/15/2026 69.000 CAPMARK FINL GRP 5.875% 5/10/2012 34.750 CELL GENESYS INC 3.125% 5/1/2013 35.000 CHENIERE ENERGY 2.250% 8/1/2012 42.125 CIR-CALL10/10 10.250% 5/1/2014 103.000 EDDIE BAUER HLDG 5.250% 4/1/2014 5.000 EK-CALL10/10 3.375% 10/15/2033 97.000 ELEC DATA SYSTEM 3.875% 7/15/2023 96.500 EVERGREEN SOLAR 4.000% 7/15/2013 40.375 FAIRPOINT COMMUN 13.125% 4/1/2018 7.550 FAIRPOINT COMMUN 13.125% 4/2/2018 8.050 FEDDERS NORTH AM 9.875% 3/1/2014 0.500 FRANKLIN BANK 4.000% 5/1/2027 1.125 GENERAL MOTORS 7.125% 7/15/2013 31.753 GENERAL MOTORS 7.700% 4/15/2016 30.500 GENERAL MOTORS 9.450% 11/1/2011 28.000 GREAT ATLA & PAC 5.125% 6/15/2011 72.375 GREAT ATLA & PAC 6.750% 12/15/2012 56.773 INDALEX HOLD 11.500% 2/1/2014 0.750 INTL LEASE FIN 4.850% 10/15/2010 96.875 KEYSTONE AUTO OP 9.750% 11/1/2013 40.000 LEHMAN BROS HLDG 4.500% 8/3/2011 20.500 LEHMAN BROS HLDG 4.700% 3/6/2013 17.500 LEHMAN BROS HLDG 4.800% 2/27/2013 19.750 LEHMAN BROS HLDG 4.800% 3/13/2014 21.750 LEHMAN BROS HLDG 5.000% 1/22/2013 18.750 LEHMAN BROS HLDG 5.000% 2/11/2013 20.375 LEHMAN BROS HLDG 5.000% 3/27/2013 20.500 LEHMAN BROS HLDG 5.000% 8/3/2014 19.750 LEHMAN BROS HLDG 5.000% 8/5/2015 19.000 LEHMAN BROS HLDG 5.100% 1/28/2013 19.000 LEHMAN BROS HLDG 5.150% 2/4/2015 20.000 LEHMAN BROS HLDG 5.250% 2/6/2012 22.375 LEHMAN BROS HLDG 5.250% 1/30/2014 18.857 LEHMAN BROS HLDG 5.250% 2/11/2015 20.500 LEHMAN BROS HLDG 5.400% 3/20/2020 15.200 LEHMAN BROS HLDG 5.500% 4/4/2016 22.500 LEHMAN BROS HLDG 5.550% 2/11/2018 19.000 LEHMAN BROS HLDG 5.625% 1/24/2013 23.125 LEHMAN BROS HLDG 5.700% 1/28/2018 19.875 LEHMAN BROS HLDG 5.750% 4/25/2011 21.500 LEHMAN BROS HLDG 5.750% 7/18/2011 21.031 LEHMAN BROS HLDG 5.750% 5/17/2013 21.500 LEHMAN BROS HLDG 5.875% 11/15/2017 21.000 LEHMAN BROS HLDG 6.000% 4/1/2011 20.125 LEHMAN BROS HLDG 6.000% 7/19/2012 22.000 LEHMAN BROS HLDG 6.000% 12/18/2015 19.000 LEHMAN BROS HLDG 6.000% 2/12/2018 18.000 LEHMAN BROS HLDG 6.200% 9/26/2014 22.625 LEHMAN BROS HLDG 6.625% 1/18/2012 21.500 LEHMAN BROS HLDG 6.875% 5/2/2018 23.750 LEHMAN BROS HLDG 6.875% 7/17/2037 0.010 LEHMAN BROS HLDG 7.000% 4/16/2019 19.875 LEHMAN BROS HLDG 7.250% 4/29/2038 18.500 LEHMAN BROS HLDG 8.000% 3/5/2022 19.375 LEHMAN BROS HLDG 8.000% 3/17/2023 19.000 LEHMAN BROS HLDG 8.050% 1/15/2019 20.125 LEHMAN BROS HLDG 8.400% 2/22/2023 19.750 LEHMAN BROS HLDG 8.500% 8/1/2015 21.500 LEHMAN BROS HLDG 8.500% 6/15/2022 19.000 LEHMAN BROS HLDG 8.750% 12/21/2021 18.500 LEHMAN BROS HLDG 8.800% 3/1/2015 21.000 LEHMAN BROS HLDG 8.920% 2/16/2017 19.000 LEHMAN BROS HLDG 9.000% 3/7/2023 19.000 LEHMAN BROS HLDG 9.500% 12/28/2022 19.944 LEHMAN BROS HLDG 9.500% 1/30/2023 19.760 LEHMAN BROS HLDG 9.500% 2/27/2023 17.510 LEHMAN BROS HLDG 10.000% 3/13/2023 18.950 LEHMAN BROS HLDG 10.375% 5/24/2024 20.000 LEHMAN BROS HLDG 11.000% 6/22/2022 19.000 LEHMAN BROS HLDG 11.000% 3/17/2028 18.500 LEHMAN BROS HLDG 11.500% 9/26/2022 19.750 LEHMAN BROS HLDG 18.000% 7/14/2023 18.735 LEHMAN BROS INC 7.500% 8/1/2026 11.000 LOCAL INSIGHT 11.000% 12/1/2017 31.250 MAGNA ENTERTAINM 8.550% 6/15/2010 17.000 MERRILL LYNCH 1.580% 3/9/2011 98.500 NETWORK COMMUNIC 10.750% 12/1/2013 35.013 NEWPAGE CORP 10.000% 5/1/2012 50.050 NEWPAGE CORP 12.000% 5/1/2013 23.500 NORTH ATL TRADNG 9.250% 3/1/2012 62.685 PALM HARBOR 3.250% 5/15/2024 64.150 PL-CALL10/10 5.500% 4/15/2019 98.880 RASER TECH INC 8.000% 4/1/2013 37.000 RESTAURANT CO 10.000% 10/1/2013 30.150 RESTAURANT CO 10.000% 10/1/2013 29.500 SPHERIS INC 11.000% 12/15/2012 21.000 THORNBURG MTG 8.000% 5/15/2013 4.750 TIMES MIRROR CO 7.250% 3/1/2013 41.900 TOUSA INC 10.375% 7/1/2012 1.048 TRANS-LUX CORP 8.250% 3/1/2012 10.200 TRICO MARINE 3.000% 1/15/2027 10.000 TRICO MARINE SER 8.125% 2/1/2013 15.250 WASH MUT BANK FA 5.125% 1/15/2015 0.100 WCI COMMUNITIES 4.000% 8/5/2023 1.000 WCI COMMUNITIES 7.875% 10/1/2013 0.500 ********* 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. Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Howard C. Tolentino, Joseph Medel C. Martirez, Denise Marie Varquez, Philline Reluya, 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 2010. 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 ***