/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/130208.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, February 8, 2013, Vol. 17, No. 38 Headlines AFFINITY GAMING: Z Capital Angles for Control of Casino Operator ALLY FINANCIAL: Swings to $1.2 Billion Profit in 2012 ALLY FINANCIAL: Working to Repay Treasury Stock in "Near Future" AMERICAN AIRLINES: ALPA Objects to Deal with Republic AMERICAN AIRLINES: Travelport Seeks Court's Help in Legal Battle AMERICAN RENAL: Moody's Rates $450MM Sr. Debt Facilities 'Ba3' ATP OIL & GAS: Judge Refuses to Give Quick Approval of New Loan BEAZER HOMES: Closes Offering of $200 Million Senior Notes BEECHCRAFT HOLDINGS: To Exit Ch. 11 With 'B+' Corporate From S&P BEHRINGER HARVARD FUND: Founder Permanently Disabled, Quits as GP BERNARD L MADOFF: Brother Agrees to Pay $90-Mil. in Picard Suit BIG RIVERS: Fitch Cuts Rating on Series 2010A Bonds to 'BB' BIG RIVERS: Moody's Cuts Rating on $83.3 Million Bonds to 'Ba1' BLACKBOARD INC: S&P Affirms 'B' Corporate Credit Rating BON-TON STORES: Unit Merges with Bon-Ton Giftco LLC CAESARS ENTERTAINMENT: $1.5-Bil. of Sr. Notes Priced at 97.5% CAPITOL BANCORP: Delaware Trust Had 5% Ownership as of Dec. 31 CASH STORE: S&P Cuts Issuer Credit Rating to 'CCC+'; Outlook Neg COMPETITIVE TECHNOLOGIES: Carl O'Connell Appointed to Board CORMEDIX INC: NYSE MKT Extends Listing Compliance Deadline CORUS ENTERTAINMENT: S&P Assigns 'BB+' Rating to C$600MM Notes CPI CORP: Fails to Comply with OTCQX's Bid Price Rule CREDITRON FINANCIAL: Ex-Owners Win More Time to File Payment Plan CYPRESS OF TAMPA: Hearing on Cash Use Continued Until Feb. 21 CYPRESS OF TAMPA: Keeps United American as Property Manager DEL MONTE CORP: S&P Retains 'B' Rating Following $100MM Add-On DIGITAL DOMAIN: Executives Mostly Miss Bonus Targets DOROTHY ZOUZALIK: Voluntary Chapter 11 Case Summary DUNKIN' BRANDS: Credit Amendment No Impact on Moody's 'B2' CFR E. KING CONSTRUCTION: Case Summary & 5 Unsecured Creditors ECOSPHERE TECHNOLOGIES: Names SKM's D. Brooks as New Interim CFO ELAN CORP: Large Cash Balance Prompts Moody's Ba3 CFR Affirmation EASTMAN KODAK: Makes Peace with Apple Over Digital Camera Patents ELMIRA DOWNTOWN: Strikes Deal With Arena Mortgage Holder ENERGYSOLUTIONS INC: Samana Capital No Longer Owns Shares FANNIE MAE: Susan McFarland to Retire as EVP and CFO FIRST DATA: Terminates Employment of Exec. VP Kevin Kern FIRST PLACE: KPMG Resigns as Accountants Stating No Reason FREESCALE SEMICONDUCTOR: S&P Rates 'B' to Loans Due 2016 and 2020 GARY PHILLIPS: Has Access to Cash Collateral Until April GELTECH SOLUTIONS: Borrows $250,000 From Principal Shareholder GELTECH SOLUTIONS: Michael Reger Owns 40.6% of Total Shares GEOKINETICS INC: Commences Solicitation of Votes for Ch. 11 Plan GEOMET INC: T. Rowe Price Discloses 17.4% Equity Stake GEOMET INC: Central Securities Discloses 5.1% Equity Stake HAWKER BEECHCRAFT: Given Formal Approval for PBGC Settlement HAYES IRON: Case Summary & 20 Largest Unsecured Creditors HEALTHWAREHOUSE.COM INC: Fully Satisfies 2010 and 2011 Loans HURLEY MEDICAL: Moody's Rates $65.515-Mil. Fixed Rate Bonds 'Ba1' INSPIRATION BIOPHARMA: Celtic Welcomes Hemophilia Asset Sale INTEGRA TELECOM: Moody's Rates New $555 Million Senior Debt 'B2' INTEGRA TELECOM: S&P Revises Outlook to Stable; Affirms 'B' CCR IRON MOUNTAIN: Credit Pact Changes No Effect on Moody's Ba3 CFR ISC8 INC: Delaware Charter Guarantee Holds 9% Equity Stake J.C. PENNEY: Seeks to Bar Claim it Defaulted on Bonds JAMES RIVER: Has Significant Default Risk, Says Fitch K-V-PHARMACEUTICAL: Noteholders Say No Ambiguity in Makena Liens K-V PHARMACEUTICAL: Keeps Control of Bankruptcy Case KAIDANS INC: Voluntary Chapter 11 Case Summary KB HOME: S&P Revises Outlook to Stable; Affirms 'B' CCR KILOWATT PARK: Case Summary & 13 Largest Unsecured Creditors LEED CORP: Wins Confirmation of Reorganization Plan LEHMAN BROTHERS: Bankruptcy Court Blocks Taxes on Deals LEHMAN BROTHERS: UK Watchdog Closes Case vs. Ernst & Young LEHMAN BROTHERS: Creditors Say No Conflict of Interest for Milbank LEHMAN BROTHERS: Files Retirees Benefit Plan Report LEHMAN BROTHERS: SunPower Gets $74.6-Mil. Cash From Claim Sale MARTIN MIDSTREAM: S&P Rates Proposed $250MM Unsecured Notes 'B' METALS USA: Moody's Reviews 'B1' CFR for Possible Upgrade METALS USA: S&P Puts 'B+' Corp. Credit Rating on CreditWatch Pos. MF GLOBAL: Customer Funds Rules Get Another CFTC Hearing MICRON TECHNOLOGY: S&P Affirms 'BB-' CCR; Outlook Negative MMRGLOBAL INC: NEHTA Possibly Infringing on Two Patents MOSS FAMILY: Court Approves Use of Banks' Cash Collateral MUNICIPAL MORTGAGE: TE Bond Sub Plans to Issue $74MM Pref. Shares MUSCLEPHARM CORP: Completes $12MM Offering of Series D Stock NATIONAL MENTOR: $30-Mil. Debt Add-On No Impact on Moody's B3 CFR NEENA HOSPITALITY: Case Summary & 27 Largest Unsecured Creditors NEW ENERGY CORP: Shuttered Ethanol Plant Sold for $2.5 Million NEWPORT LIQUORS: Case Summary & 11 Largest Unsecured Creditors NII HOLDINGS: Moody's Lowers CFR to B2; Rates $400MM Notes B2 NORTH AMERICAN BREWERIES: S&P Assigns 'B' CCR Following Merger NORTHAMPTON GENERATING: Has Until March 15 to Use Cash Collateral NPS PHARMACEUTICALS: BlackRock Discloses 6.1% Equity Stake OHIO HOUSING: Moody's Cuts Rating on $5.4MM Debt to 'B2' PARAMJEET MALHOTRA: Relators Didn't Uncover Trustee's Fraud PATRIOT COAL: Promotes Michael Day to EVP for Operations PEDEVCO CORP: Files Amendment No. 3 to Form S-1 Prospectus PENSON WORLDWIDE: March 14 Set for Disclosure Statement Hearing PETTERS COMPANY: Withers Okayed for Virgin Islands Issues PINK TEA CUP: Greenwich Village Eatery Files for Bankruptcy PINNACLE AIRLINES: New COO to Get $265,000 as Annual Salary POTOMAC SUPPLY: Consents to Chapter 7 After Assets Sold PRIUM SPOKANE: To Present Plan for Confirmation on March 28 REVEL AC: Inks Third Amendment to JPMorgan Credit Agreement REVSTONE INDUSTRIES: Says Ch. 11 Trustee No Longer Necessary ROCHA DAIRY: Required to File Amended Plan by Feb. 15 ROLLING R GOLF: Case Summary & 15 Largest Unsecured Creditors ROTHSTEIN ROSENFELDT: Trustee's Plan Hangs on $72M TD Bank Deal SATCON TECHNOLOGY: Reorganization Becomes Chapter 7 Liquidation SCHOOL SPECIALTY: Stadium Capital No Longer Owns Common Shares SEMINOLE TRIBE: Moody's Changes Outlook on 'Ba1' CFR to Positive SEQUENOM INC: BlackRock Discloses 6.2% Equity Stake SHERIDAN HOLDINGS: $75MM Debt Add-on No Impact on Moody's B2 CFR SHERIDAN HEALTHCARE: S&P Affirms 'B+' Corporate Credit Rating SKY KING: Secures DIP Financing from Carson-Led Investors ST. PAUL HOUSING: Moody's Cuts Rating on $3.64MM Debt to 'B1' STOCKTON, CA: Bankr. Judge Relegated to Hands-Off Role SUNY DOWNSTATE: LICH Complex Price Tag Could Reach $500MM THERAPEUTICSMD INC: Obtains $10MM Credit Commitment From Plato THQ INC: Assets Sold, Terminates Top Executives THQ INC: Seeks Early Releases for Top Company Executives TRAVELPORT LTD: Richard Buccarelli Resigns from Board TWIN DEVELOPMENT: Case Summary & 11 Largest Unsecured Creditors UNIVERSAL HEALTH CARE: Files for Ch. 11 as State Seeks Takeover UNIVERSAL HEALTH CARE: Sec. 341(a) Meeting Scheduled for March 11 UNIVERSAL HEALTH CARE: Case Summary & 20 Top Unsecured Creditors VECTOR GROUP: Note Upsizing No Impact on Moody's 'B2' CFR VITESSE SEMICONDUCTOR: Incurs $5.03-Mil. Net Loss in Q1 2013 VIVARO CORP: Committee Can Retain Arent Fox as Counsel VIVARO CORP: Has Interim OK to Obtain Carrier Services on Credit VIVARO CORP: Wants to Keep Control of Restructuring W.R. GRACE: Seeks to Extend Terms of ART Credit Agreements W.R. GRACE: Linn County BOC Approves Loan for Grace Facility WASH MULTIFAMILY: Moody's Rates Sr. Secured Debt Facilities 'B2' WASH MULTIFAMILY: S&P Assigns 'B-' Corporate Credit Rating WENNER MEDIA: Debt Facility Changes No Impact on Moody's Ratings XINERGY CORP: Has Significant Default Risk, Says Fitch XZERES CORP: William Hagler Replaces Ron Elvidge as Director YONKERS INDUSTRIAL: Moody's Affirms 'Ba1' Rating on Revenue Bonds * Fitch Sees Lackluster Outlook for U.S. Casino Operators * Moody's Sees More Maturing Debt from Low-Rated Companies * Media Services Bonds Weak on Restricted Payments, Says Moody's * Moody's Notes Negative Outlook for US Toll Road Sector in 2013 * Moody's Outlook on Utility/Power Industries Remains Negative * Moody's Sees Higher Costs for Fertilizer Producers in 2013 * Moody's Assesses Hurricane Sandy's Impact on P&C Insurers * Carried Interest Thrust Again into Tax Debate * Justice Department Faces Uphill Battle in Proving S&P Fraud * Royal Bank of Scotland to Settle Rate-Rigging Case * BOOK REVIEW: Corporate Venturing -- Creating New Businesses ********* AFFINITY GAMING: Z Capital Angles for Control of Casino Operator ---------------------------------------------------------------- Nick Brown, writing for Reuters, reported that distressed investor Z Capital Partners has upped its ownership stake in Affinity Gaming Corp, the latest twist in a brewing dispute over control of the formerly bankrupt casino operator. In filings with the U.S. Securities & Exchange Commission on Monday night and Tuesday afternoon, Z Capital said it raised its stake in Affinity to 30.5 percent from 24.97 percent, Reuters related. The investor has been steadily raising its stake since first earning an equity share through the company's bankruptcy. Large investors like Z Capital and Silver Point Capital have also been buying up shares in Affinity. Silver Point, the second- largest shareholder, owned 24.9 percent of Affinity as of December, according to SEC filings, Reuters said. Affinity owns hotels and casinos in Nevada, including Primm Valley Casino Resorts and Terrible's Hotel & Casino, as well as resorts in Colorado and Missouri, according to Reuters. Reuters said Z Capital has made no secret of its aim to own a substantial chunk of Affinity, saying in SEC filings last year that it may ultimately acquire a controlling stake. And, in an Oct. 19 letter to Affinity's board it said it would "seek representation on the company's board to permit us to fulfill our fiduciary duty to our own investors." It also heaped praise on Chief Executive David Ross and his team, saying the "current management team is an outstanding one that should be fully supported." Affinity has not commented publicly on Z Capital's aspirations or its efforts to earn board membership, and the company declined to comment for this story but on Dec. 20 Affinity's board updated bylaws in ways that appear to reduce shareholder influence over its operations, Reuters further recalled. Under the new rules, submitted to the Nevada Secretary of State, directors have discretion to determine suitability of shareholders, and appointing new directors now requires a majority, rather than plurality, of stockholder approval, Reuters related. The board can also adopt shareholder rights agreements that would allow it to issue new securities without shareholder votes, essentially giving it the power to create poison pills. In its filing on Tuesday, Z Capital hinted that it could sue the board over the governance changes, saying it reserved the legal right to challenge the rights agreement, according to Reuters. Bernard Black, a governance expert and professor at Northwestern University School of Law, told Reuters the board may be willing to risk getting sued for the chance to keep control of Affinity's operations. "Board members might have adopted the idea of 'Let them sue us,'" Black told Reuters. "You might think it's not a great way to think, but they wouldn't be the first board to do that." About Herbst Gaming Headquartered in Reno, Nevada, Herbst Gaming, Inc., which operated 16 casinos in Nevada, Iowa and Missouri and 6,300 slot machines in non-casino locations, filed for Chapter 11 protection (Bankr. D. Nev. Lead Case No. 09-50752) on March 22, 2009. Thomas H. Fell, Esq., and Gerald M. Gordon, Esq., at Gordon Silver, represented the Debtors in their restructuring effort. The Bankruptcy Court confirmed Herbts' joint plan of reorganization in January 2010. Herbst Gaming LLC, the reorganized entity, changed its name to Affinity Gaming LLC in May 2011. ALLY FINANCIAL: Swings to $1.2 Billion Profit in 2012 ----------------------------------------------------- Ally Financial Inc. reported net income of $1.4 billion for the fourth quarter of 2012, compared to net income of $384 million in the prior quarter and a net loss of $206 million for the fourth quarter of 2011. The company reported core pre-tax income of $19 million in the fourth quarter of 2012, compared to core pre-tax income of $341 million in the prior quarter and a core pre-tax loss of $172 million in the comparable prior year period. Also during the fourth quarter, Ally incurred certain charges to reposition the company. During the fourth quarter, these charges included: $94 million pension expense resulting from the company's strategic decision to de-risk its long-term pension liability through lump-sum buy-outs and annuity placements for former subsidiaries; $148 million charge incurred for the early prepayment of certain Federal Home Loan Bank (FHLB) debt to further reduce Ally's funding costs; and $46 million in legal, advisory fees, and other expenses related to the ResCap bankruptcy and disposition of Ally's international operations. For the full year 2012, Ally reported net income of $1.2 billion, compared to a net loss of $157 million in 2011. The core pre-tax loss in 2012 totaled $419 million, compared to core pre-tax income of $11 million in the prior year. Excluding certain costs to reposition the company, as well as ResCap's financial results prior to deconsolidation at the time of its bankruptcy filing, total impairment of Ally's $442 million equity interest in ResCap, and a $750 million charge incurred by Ally as part of the bankruptcy filing, the Company's core pre-tax income totaled $1.1 billion in 2012 and $865 million in 2011. "This past year represented another significant step forward in Ally's evolution and further defining its future path. A number of strategic actions were taken that will reshape and strengthen the company going forward. Agreements were reached to sell the international operations at a substantial premium, and steps were taken to further address the legacy mortgage risks," said Ally Chief Executive Officer Michael A. Carpenter. "In addition, our core auto services and direct banking platforms made substantial progress amid competitive markets." "Our U.S. auto finance franchise continued to demonstrate the strength of its dealer-focused business model with U.S. earning assets up approximately 18 percent year-over-year, driven by a more diverse and profitable origination mix," Mr. Carpenter continued. "Ally's premium service levels and comprehensive product offerings are unmatched in the marketplace and have enabled us to evolve our business model over time to one that is no longer reliant on exclusive rights to subvented loans, but rather centered on delivering the best value for dealers and consumers." Mr. Carpenter concluded, "The momentum created in 2012 positions Ally to make additional strides in 2013. Our focus remains on delivering strong results from our leading franchises, completing our strategic transformation, gaining additional efficiencies in the business and repaying the U.S. Treasury investment." A copy of the press release is available for free at: http://is.gd/7hoO9M On Feb. 1, 2013, Ally Financial Inc. closed its previously announced sale of the Canadian automotive finance operations, Ally Credit Canada Limited, and ResMor Trust to Royal Bank of Canada. Ally received approximately $3.7 billion in proceeds upon closing, which is subject to customary post-closing adjustments, and $400 million of dividends paid following the announcement of the transaction but prior to close. The proceeds were calculated based on an estimate of the net asset value as of the closing date and will ultimately need to be finalized. In connection with the disposition of Ally Canada, Ally filed certain pro forma financial information, which is available at http://is.gd/n3Wa89 About Ally Financial Ally Financial Inc., formerly GMAC Inc. -- http://www.ally.com/-- is one of the world's largest automotive financial services companies. The company offers a full suite of automotive financing products and services in key markets around the world. Ally's other business units include mortgage operations and commercial finance, and the company's subsidiary, Ally Bank, offers online retail banking products. Ally operates as a bank holding company. GMAC obtained a $17 billion bailout from the U.S. government in exchange for a 56.3% stake. Private equity firm Cerberus Capital Management LP keeps 14.9%, while General Motors Co. owns 6.7%. Ally reported a net loss of $157 million in 2011, compared with net income of $1.07 billion in 2010. Net income was $310 million for the three months ended March 31, 2012. The Company's balance sheet at Sept. 30, 2012, showed $182.48 billion in total assets, $163.71 billion in total liabilities and $18.76 billion in total equity. * * * In February 2012, Fitch Ratings downgraded the long-term Issuer Default Rating (IDR) and the senior unsecured debt rating of Ally Financial and its subsidiaries to 'BB-' from 'BB'. The Rating Outlook is Negative. The downgrade primarily reflects deteriorating operating trends in ResCap, which has continued to be a drag on Ally's consolidated credit profile, as well as exposure to contingent mortgage-related rep and warranty and litigation issues tied to ResCap, which could potentially impact Ally's capital and liquidity levels. As reported by the Troubled Company Reporter on May 22, 2012, Standard & Poor's Ratings Services revised its outlook on Ally Financial Inc. to positive from stable. At the same time, Standard & Poor's affirmed its ratings, including its 'B+' long- term counterparty credit and 'C' short-term ratings, on Ally. "The outlook revision reflects our view of potentially favorable implications for Ally's credit profile arising from measures the company announced May 14, 2012, designed to resolve issues relating to Residential Capital LLC, Ally's troubled mortgage subsidiary," said Standard & Poor's credit analyst Tom Connell. In the May 28, 2012 edition of the TCR, DBRS, Inc., has placed the ratings of Ally and certain related subsidiaries, including its Issuer and Long-Term Debt rating of BB (low), Under Review Developing. This rating action follows the decision by Ally's wholly owned mortgage subsidiary, Residential Capital to file a pre-packaged bankruptcy plan under Chapter 11 of the U.S. Bankruptcy Code. ALLY FINANCIAL: Working to Repay Treasury Stock in "Near Future" ---------------------------------------------------------------- Rick Rothacker, Tanya Agrawal and Anil D'Silva, writing for Reuters, reported that Ally Financial Inc, the U.S. auto lender that is majority-owned by the U.S. government, is working to repay $5.9 billion in preferred stock owned by the U.S. Treasury "in the near future," Chief Executive Officer Michael Carpenter said. The preferred stock is part of the $17.2 billion that the government poured into Ally, the former auto lending arm of General Motors Co, during a series of crisis-era bailouts, the Reuters report related. Part of the investment was restructured into a 74 percent common equity stake. After the Treasury sells its remaining stock in automaker GM, Ally will be the largest remaining recipient of bailout dollars, Reuters said. As of Feb. 15, Ally will have paid $5.9 billion to the government, including dividends. In his bid to repay the Treasury, Mr. Carpenter is streamlining the company to focus on U.S. auto lending and Internet banking, according to Reuters. In May, Ally's Residential Capital mortgage unit filed for bankruptcy in an effort to wipe out liabilities from mortgage- backed securities sold to investors during the housing boom, Reuters noted. Ally has also struck agreements to sell international operations, which are expected to bring in $9.2 billion in proceeds. In a report last month, an internal Treasury watchdog said the agency did not have a concrete plan for getting its money back from Ally, Reuters recalled. The agency responded that it can either sell its stock or sell more Ally assets after the ResCap bankruptcy and the international sales are completed. Settlement in Question In a sign of increased tensions in ResCap's bankruptcy case, Carpenter said Ally could withdraw a $750 million settlement offer made to creditors last year, according to Reuters. As part of ResCap's bankruptcy filing in May 2012, Ally agreed to make the payment in exchange for a release of any possible claims against the company but in a letter sent to Ally's board in November, some creditors said the settlement is much less than Ally's actual liability and that the lender could face damages for stripping assets from ResCap, Reuters recalled. Ally is "extremely confident that such claims are completely without merit," Carpenter said during the conference, according to Reuters. The lender hopes for a resolution in "the near term" but "if we have to go the litigation route, we will," he added. In a letter sent to ResCap's board on Friday and obtained by Reuters, a group of creditors said there is "no support among the creditor constituencies" for the settlement "because the amount is far too low in comparison to the value of the claims that have been and may be asserted against Ally." The group asked the ResCap board to terminate the agreement. A person close to the creditors said Ally should be paying "billions" to ResCap's creditors, Reuters said. Reuters related that as part of the bankruptcy, ResCap reached agreements to sell mortgage operations and other assets to Ocwen Financial Corp., Walter Investment Management Corp and Berkshire Hathaway Inc in an auction last fall. Ocwen's purchase closed last week, and Carpenter said Berkshire would complete its portfolio purchase on Tuesday and Ocwen would finalize its deal this month. Ally's banking unit is also selling a portfolio of mortgage servicing rights, which Carpenter said has received interest from a number of bidders. Reuters reported last week that Ocwen was in the lead to purchase the portfolio of servicing rights. About Ally Financial Ally Financial Inc., formerly GMAC Inc. -- http://www.ally.com/-- is one of the world's largest automotive financial services companies. The company offers a full suite of automotive financing products and services in key markets around the world. Ally's other business units include mortgage operations and commercial finance, and the company's subsidiary, Ally Bank, offers online retail banking products. Ally operates as a bank holding company. GMAC obtained a $17 billion bailout from the U.S. government in exchange for a 56.3% stake. Private equity firm Cerberus Capital Management LP keeps 14.9%, while General Motors Co. owns 6.7%. Ally reported a net loss of $157 million in 2011, compared with net income of $1.07 billion in 2010. Net income was $310 million for the three months ended March 31, 2012. The Company's balance sheet at Sept. 30, 2012, showed $182.48 billion in total assets, $163.71 billion in total liabilities and $18.76 billion in total equity. * * * In February 2012, Fitch Ratings downgraded the long-term Issuer Default Rating (IDR) and the senior unsecured debt rating of Ally Financial and its subsidiaries to 'BB-' from 'BB'. The Rating Outlook is Negative. The downgrade primarily reflects deteriorating operating trends in ResCap, which has continued to be a drag on Ally's consolidated credit profile, as well as exposure to contingent mortgage-related rep and warranty and litigation issues tied to ResCap, which could potentially impact Ally's capital and liquidity levels. As reported by the Troubled Company Reporter on May 22, 2012, Standard & Poor's Ratings Services revised its outlook on Ally Financial Inc. to positive from stable. At the same time, Standard & Poor's affirmed its ratings, including its 'B+' long- term counterparty credit and 'C' short-term ratings, on Ally. "The outlook revision reflects our view of potentially favorable implications for Ally's credit profile arising from measures the company announced May 14, 2012, designed to resolve issues relating to Residential Capital LLC, Ally's troubled mortgage subsidiary," said Standard & Poor's credit analyst Tom Connell. In the May 28, 2012 edition of the TCR, DBRS, Inc., has placed the ratings of Ally and certain related subsidiaries, including its Issuer and Long-Term Debt rating of BB (low), Under Review Developing. This rating action follows the decision by Ally's wholly owned mortgage subsidiary, Residential Capital to file a pre-packaged bankruptcy plan under Chapter 11 of the U.S. Bankruptcy Code. AMERICAN AIRLINES: ALPA Objects to Deal with Republic ----------------------------------------------------- The Air Line Pilots Association, Int'l. (ALPA), the union that represents the American Eagle pilots, on Feb. 7 filed a formal objection to the capacity purchase agreement recently announced between American Airlines and Republic Airways. The objection was filed in the United States Bankruptcy Court for the Southern District of New York. The proposed agreement between American and Republic would severely divert the flying of large regional jets to a competitor and would needlessly undermine the value of American Eagle, threatening the livelihood of Eagle's pilots and other employees at the airline. American Eagle, a wholly owned subsidiary of AMR, has provided the substantial majority of regional flying for American Airlines, which is also an AMR subsidiary. "The Eagle pilots negotiated and approved a labor agreement that provides Eagle with market-competitive labor rates for the next eight years," said Tony Gutierrez, chairman of the Eagle unit of ALPA. "This potential deal signifies AMR's huge and unnecessary commitment to a third-party company at the expense of its own employees. If this transaction is approved, it is unclear whether a viable number of large regional jet opportunities for American would remain available to Eagle." In December, the bankruptcy court approved a long-term collective bargaining agreement between ALPA and Eagle that met cost-savings targets that Eagle management and AMR represented as necessary for Eagle to position itself as competitive in the regional airline industry. In the pilots' collective bargaining agreement, Eagle management has committed to "aggressively seek to increase flying opportunities when it is economical, practical and feasible to do so, including, but not limited to, bidding on opportunities to provide additional feed to American Airlines." Under the proposed agreement, Republic would operate large regional jets (53 Embraer E175 aircraft) under the American Eagle brand with service to start in June 2013 and continue to increase through 2015. The agreement will then extend through 2027, as it will run for 12 years from each of the covered aircraft's entry into service. "Given the lack of disclosure of the economic considerations that led to this contract, the relationship of this agreement to AMR's strategic choices, and the lack of consideration for Eagle's interests, we believe that the Court should decline to approve the Republic motion," states the objection submitted by ALPA. Founded in 1931, ALPA -- http://www.alpa.org-- is the world's largest pilot union, representing more than 53,000 pilots at 37 airlines in the United States and Canada. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Travelport Seeks Court's Help in Legal Battle ---------------------------------------------------------------- Jacqueline Palank at Daily Bankruptcy Review reports Travelport Ltd., whose technology is used to search for and compare airfares, is asking a bankruptcy court for help in an ongoing antitrust battle with American Airlines. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR disclosed $24.72 billion in total assets and $29.55 billion in total liabilities as of Sept. 30, 2011. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN RENAL: Moody's Rates $450MM Sr. Debt Facilities 'Ba3' -------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to American Renal Holdings, Inc.'s proposed USD450 million senior secured credit facilities, consisting of a USD50 million revolver expiring 2018 and a USD400 million term loan B due 2019. In addition, Moody's assigned a Caa1 rating to the proposed USD240 million senior secured second lien term loan due 2020. American Renal's B2 Corporate Family Rating and B2-PD Probability of Default Rating are affirmed. The outlook is stable. Proceeds from the new credit facilities will be used to refinance existing debt, pay a USD200 million special dividend to shareholders and cover transaction fees and expenses associated with the refinancing. Following is a summary of Moody's ratings actions for American Renal Holdings, Inc.: American Renal Holdings, Inc.: Ratings Assigned: USD50 million senior secured revolving credit facility expiring 2018 at Ba3 (LGD 3, 31%) USD400 million senior secured term loan B due 2019 at Ba3 (LGD 3, 31%) USD240 million senior secured second lien term loan due 2020 at Caa1 (LGD 5, 84%) Ratings Affirmed: Corporate Family Rating, B2 Probability of Default Rating, B2-PD Speculative Grade Liquidity Rating, SGL-2 Ratings to be withdrawn: USD37.5 million senior secured revolver expiring 2015, Ba3 (LGD2, 23%) USD250 million 1st lien senior secured notes due 2018, B1 (LGD3, 32%) American Renal Holdings Company, Inc.: USD125 million senior PIK toggle notes due 2016, Caa1 (LGD5, 86%) Ratings Rationale American Renal's B2 Corporate Family Rating is prospective given its aggressive financial policy, which is characterized by its high leverage and the disbursement of about USD330 million in debt financed dividends over the past two years. The rating also reflects the company's modest size and Moody's expectation that American Renal will use available cash flow to aggressively grow through the development of de novo centers. Finally, the rating reflects the risks associated with its sole focus on the dialysis services marketplace and its high concentration of revenues from government based programs. The rating does benefit from the company's unique strategy of developing clinics in partnership with practicing nephrologists, which has resulted in favorable operating performance and fairly rapid maturation of newly developed centers. The rating also reflects the relatively stable business profile characterized by increasing incidences of end stage renal disease (ESRD) and the medical necessity of the service provided. The stable rating outlook reflects Moody's expectation that the company will continue to recruit and partner with nephrologists, which should drive treatment and top line growth; however, it will also constrain the majority of available free cash flow. The stable outlook also encompasses Moody's expectation that the company will delever to about 6.5 times by the end of fiscal 2013. Moody's could downgrade the rating should the company take on additional debt to fund either an acquisition or additional dividends, such that leverage fails to decline below 6.5 times over the next 12 months. Additionally, Moody's could downgrade the ratings if it anticipates that the company will have negative free cash flow coverage of debt for a sustained period of time. Though not anticipated in the near-term, a rating upgrade could be considered if American Renal substantially increases its size, while geographically diversifying its clinics. More specifically, if the company improves operating results or repays debt, such that adjusted debt to EBITDA is sustained below 4.5 times and free cash flow to adjusted debt reaches around 8%, Moody's could upgrade the ratings. The principal methodology used in rating American Renal was the Global Healthcare Service Providers published in December 2011.Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Beverly, MA, American Renal Holdings, Inc. (American Renal) is a provider of outpatient dialysis services to patients with chronic kidney failure. As of September 30, 2012, American Renal operated 125 centers in 21 states and the District of Columbia. The centers are jointly owned by nephrologists partners. The company provides managerial, accounting, financial, technological and administrative support services to the joint venture partners. ATP OIL & GAS: Judge Refuses to Give Quick Approval of New Loan --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that ATP Oil & Gas Corp. proposed a new loan the creditors' committee called "shocking and offensive" in view of an "outrageous original issue discount" requiring the oil and gas exploration and production company to repay $142 million while receiving only $99 million. According to the report, ATP wanted U.S. Bankruptcy Judge Marvin Isgur in Houston to approve the new loan on four days' notice. He told the company at a Feb. 5 hearing to return to court on Feb. 11 for interim approval, if the company can overcome creditor opposition. The committee, the report relates, said it intends to file a motion soon for appointment of a Chapter 11 trustee. Although the creditors concede there is a need for new funding, the committee believes conversion of the reorganization to liquidation in Chapter 7 is preferable to approving the new loan with its "exorbitant and unprecedented fees." According to the report, the committee takes the position the new loan is designed so secured lenders receive possibly all of the "upside" otherwise going to other creditors. Prior violation of the loan enabled the lenders to force ATP into selling assets. Judge Isgur scheduled an auction for the shallow- water properties on Feb. 26. He will hold a hearing on Feb. 14 to approve auction procedures for ATP's deep-water properties. The report recounts that ATP received approval in September for $250 million in new borrowing power as part of a financing that converts about $365 million in pre-bankruptcy secured debt into a post-bankruptcy obligation. New financing is from some of the same lenders owed $365 million on a first-lien loan where Credit Suisse AG serves as agent. Bank of New York Mellon Trust Co. is agent for the second-lien notes. The new loan comes in ahead of the existing second-lien debt. ATP's $1.5 billion in 11.875 percent second-lien notes last traded at 3:57 p.m. on Feb. 6 for 3.625 cents on the dollar, a 50% decline in price since Jan. 17, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. About ATP Oil Houston, Tex.-based ATP Oil & Gas Corporation is an international offshore oil and gas development and production company focused in the Gulf of Mexico, Mediterranean Sea and North Sea. ATP Oil & Gas filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-36187) on Aug. 17, 2012. Attorneys at Mayer Brown LLP, serve as bankruptcy counsel. Munsch Hardt Kopf & Harr, P.C., is the conflicts counsel. Opportune LLP is the financial advisor and Jefferies & Company is the investment banker. Kurtzman Carson Consultants LLC is the claims and notice agent. ATP disclosed assets of $3.6 billion and $3.5 billion of liabilities as of March 31, 2012. Debt includes $365 million on a first-lien loan where Credit Suisse AG serves as agent. There is $1.5 billion on second-lien notes with Bank of New York Mellon Trust Co. as agent. ATP's other debt includes $35 million on convertible notes and $23.4 million owing to third parties for their shares of production revenue. Trade suppliers have claims for $147 million, ATP said in a court filing. An official committee of unsecured creditors has been appointed in the case. Evan R. Fleck, Esq., at Milbank, Tweed, Hadley & McCloy, in New York, represents the Creditors Committee as counsel. BEAZER HOMES: Closes Offering of $200 Million Senior Notes ---------------------------------------------------------- Beazer Homes USA, Inc., completed its offering of $200 million of 7.250% Senior Notes due 2023. The Notes were initially sold pursuant to a purchase agreement, dated Jan. 29, 2013, among the Company, the wholly-owned subsidiaries named as guarantors and Credit Suisse Securities (USA) LLC. On Feb. 1, 2013, the Company used a portion of the net cash proceeds from the offering of the Notes to pre-fund the redemption of all $172,454,000 in aggregate principal amount outstanding of its 6-7/8% Senior Notes due 2015. The 2015 Notes will be redeemed at 101.146% of the principal amount, plus accrued and unpaid interest to the redemption date, which is Feb. 19, 2013. Conference Call The Company held a conference call on Jan. 31, 2013, announcing its results of operations for the fiscal quarter ended Dec. 31, 2012. "The first quarter represented very good progress in our path to profitability," said Allan Merrill, the company's chief executive officer. "We were able to report year over year improvements in virtually every major financial metric including revenue, gross margins, SG&A and adjusted EBITDA. These results stem from both an improving housing market and our improving internal operations." For the quarter, the Company generated $7.7 million in positive adjusted EBITDA, up $3.9 million from last year. The Company recorded 932 new home orders, an increase of 29%, driven by improvements in absorption rates and a significantly lower cancellation rate. The Company closed 1,038 new homes, up 20%. A copy of the conference call transcript is available at: http://is.gd/kyMgzM Annual Meeting At the Company's annual meeting of stockholders held on Feb. 1, 2013, stockholders: (1) elected Elizabeth S. Acton, Laurent Alpert, Brian C. Beazer, Peter G. Leemputte, Allan P. Merrill, Norma A. Provencio, Larry T. Solari and Stephen P. Zelnak, Jr., to serve as directors until the next annual meeting of stockholders and until their successors are elected and qualified; (2) ratified the selection of Deloitte & Touche LLP as the Company's independent registered public accounting firm for the fiscal year ending Sept. 30, 2013; (3) voted for, on a non-binding, advisory basis, the compensation paid to the Company's named executive officers; (4) voted for a proposal to amend the Company's Amended and Restated Certificate of Incorporation to decrease the authorized number of shares of the Company's common stock from 100,000,000 to 63,000,000; (5) approved the amendment to the Company's Amended and Restated Certificate of Incorporation to extend the term of a protective amendment designed to help preserve certain tax benefits primarily associated with the Company's net operating losses; and (6) approved a new Section 382 Rights Agreement to become effective upon the expiration of the Company's existing Section 382 Rights Agreement, to help continue to protect the tax benefits primarily associated with the Company's net operating losses. The Company filed the Charter Amendment with the Delaware Secretary of State on Feb. 4, 2013, and it became effective on that date. A copy of the Charter Amendment is available for free at http://is.gd/kTpkmr About Beazer Homes Beazer Homes USA, Inc. (NYSE: BZH) -- http://www.beazer.com/-- headquartered in Atlanta, is one of the country's 10 largest single-family homebuilders with continuing operations in Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, New Jersey, New Mexico, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, and Virginia. Beazer Homes is listed on the New York Stock Exchange under the ticker symbol "BZH." The Company's balance sheet at Dec. 31, 2012, showed $1.92 billion in total assets, $1.67 billion in total liabilities and $242.61 million in total stockholders' equity. Beazer Homes incurred a net loss of $145.32 million for the fiscal year ended Sept. 30, 2012, a net loss of $204.85 million for the fiscal year ended Sept. 30, 2011, and a net loss of $34.04 million for the fiscal year ended Sept. 30, 2010. * * * Beazer carries a 'B-' issuer credit rating, with "negative" outlook, from Standard & Poor's. In the Jan. 30, 2013, edition of the TCR, Moody's Investors Service raised Beazer Homes USA, Inc.'s corporate family rating to Caa1 from Caa2 and probability of default rating to Caa1-PD from Caa2-PD. The ratings upgrade reflects Moody's increasing confidence that Beazer's credit metrics, buoyed by a stregthening housing market, will gradually improve for at least the next two years and that the company may be able to return to a modestly profitable position as early as fiscal 2014. As reported by the TCR on Sept. 10, 2012, Fitch Ratings has upgraded the Issuer Default Rating (IDR) of Beazer Homes USA, Inc. (NYSE: BZH) to 'B-' from 'CCC'. The upgrade and the Stable Outlook reflect Beazer's operating performance so far this year, its robust cash position, and moderately better prospects for the housing sector during the remainder of this year and in 2013. The rating is also supported by the company's execution of its business model, land policies, and geographic diversity. BEECHCRAFT HOLDINGS: To Exit Ch. 11 With 'B+' Corporate From S&P ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'B+' corporate credit rating to Beechcraft Holdings LLC. The outlook is stable. At the same time, S&P is assigning its preliminary 'BB-' issue rating and preliminary '2' recovery rating to the $375 million term loan, indicating S&P's expectation of substantial (70%-90%) recovery in the event of payment default. S&P will assign final ratings upon emergence from bankruptcy. "The ratings on Beechcraft reflect our expectations that the company will emerge from bankruptcy with much lower leverage and that the elimination of the business jet manufacturing business, which has been losing money and market share in recent years, should result in solid revenues and earnings growth from the remaining businesses," said Standard & Poor's credit analyst Christopher DeNicolo. Cash generation should also improve due to lower interest expense and improved operations, enabling debt reduction and therefore strengthening credit measures over the next 12 months. S&P assess the company's business risk profile as "weak," as defined in S&P's criteria, reflecting its position as a well- established manufacturer of turboprops and piston aircraft, which the cyclical and competitive nature of the business aviation market, limited end-market diversity, and uncertain long-term prospects for its military trainers and attack aircraft offset. S&P assess the company's financial risk profile as "aggressive" based on the company's reduced leverage and "adequate" liquidity, but limited free cash flow in the next two years due to high capital expenditure and working capital requirements. Beechcraft, formerly known as Hawker Beechcraft Acquisition Corp., recently announced plans to emerge from Chapter 11 bankruptcy. Its predecessor filed for bankruptcy in May 2012 after continued losses related to the downturn in business aviation resulted in the company's inability to meet payments on debt obligations. In association with emergence, the company is issuing a $375 million term loan, the proceeds of which it will use primarily for the repayment of the debtor-in-possession facility, as well as cure payments and other bankruptcy related costs, and to provide initial liquidity. As part of its plan of reorganization, approximately $2.6 billion of debt was forgiven, warranties for certain aircraft models were voided, and the company ceased production of business jets, including the Hawker 4000, 900, and Premier. The company will now be primarily owned by its secured creditors, which will receive 86% of the equity value. Leverage and other credit measures will be much better than before bankruptcy, although still aggressive, and S&P expects 2013 pro forma debt to EBITDA of about 3.8x, funds from operations (FFO) to debt of about 20%, and EBITDA interest coverage of 3.5x-4x. S&P also expects revenues and earnings to improve significantly in 2013 and 2014 due to the return of customers that were wary of ordering during the bankruptcy, the elimination of bankruptcy- related supplier disruptions, some improvement in the general aviation market, and efforts to improve products and reduce costs. However, cash generation over the period will be constrained by investments in capital expenditures and working capital, but still enough to reduce debt in excess of required amortization. S&P believes this could result in debt to EBITDA of 1.5x-2x and FFO to debt above 30% in 2014, but there is still some uncertainty of how successful the company will be achieving these results post- bankruptcy. The newly re-organized company will operate in three business segments: Business and General Aviation (B&GA; 55% of estimated 2013 sales), which includes the popular King Air models as well as Barons and Bonanza piston planes; Global Customer Support (GCS; 32%), the service portion of the business; and Beechcraft Defense Co. (BDC; 13%), which produces military trainers and light attack aircraft. The King Air brand is well positioned in the turboprops segment of the market, and the company hopes to gain additional share through planned product enhancements. In addition, the company has historically been successful selling special mission versions of the King Air to militaries and other government agencies, although orders declined during the bankruptcy partly because of uncertainty about the company's possible owner upon emergence. On the defense side of the business, the primary program is to provide T-6 trainers to the U.S. Air Force and Navy through 2015 under the Joint Primary Aircraft Training System (JPATS) contract. The company has also sold T-6s to foreign customers and there could be additional international demand, as well service and upgrades to the U.S. aircraft. The company is also developing a light attack version, the AT-6, for primarily foreign customers, although prospects for this model are uncertain. While demand for business jets remains weak since the drop off in 2009, the market for turboprops and pistons has started to show signs of life as this segment of the business aviation market becomes more attractive in the face of high fuel prices. Inventory levels for used turboprops have started to come down from 2011 levels, and shipments of both turboprops and piston aircraft picked up slightly in 2012. For 2012, Beechcraft's deliveries are still down compared with the prior year because of customer avoidance during the bankruptcy, bankruptcy-related supply chain disruptions, and operating inefficiencies associated with the transfer of production to the Mexico facility. S&P believes that demand for Beechcraft's products will remain muted through 2013 due to overall market conditions and customer uncertainty in the company's products as they emerge from bankruptcy. S&P also believes sales at GCS will improve, as customers had reservations about servicing aircraft with an organization in bankruptcy. A key focus of management will be restoring customer confidence as they emerge from bankruptcy this month. Product diversity is limited as the company attempts to refocus operations after emergence and exit business jet manufacturing. On the commercial side, Beechcraft produces three King Air models (350ER/350i, 250, C90), which have strong brand and market presence. Beechcraft primarily sells King Air 350s to commercial customers, but about 45% are high-margin "special mission" vehicles used to perform functions such as air ambulance, cargo, search and rescue, and electronic intelligence gathering. Beechcraft also manufactures Baron and Bonanza models, which are smaller piston engine aircraft used for personal travel and serve as an introductory product for customers who may eventually upgrade to a King Air. On the military side, the T-6 aircraft are used as trainers for the U.S. Air Force and Navy under the JPATS program. Before the bankruptcy, the company began to focus on cost cutting and efficiency improvements, but the decline in demand for business jets and other issues overwhelmed these initiatives. Beechcraft has since undertaken efforts including workforce reduction, rationalizing operations and facilities, and outsourcing. The company has taken additional cost-saving efforts in bankruptcy, including further headcount reductions, footprint downsizing, and manufacturing overhead and general and administrative cost reduction. Beechcraft is also planning additional right-sizing and sales of facilities and inventory. The company has also reduced pension costs by transferring certain pension plans to the Pension Benefit Guaranty Corp., freezing its hourly plan, and implementing a defined contribution plan for its workforce. Overall profitability should improve gradually as shipments and prices increase, the business aviation market improves, operating efficiency initiatives begin to materialize, and investments in upgrades translate into more attractive products and higher sales. S&P expects EBITDA margins to be in the mid- to high-single digits in 2013 and improve to more than 10% in 2014. The outlook is stable. Revenues and earnings should increase materially in 2013 and 2014 due to higher deliveries, especially of King Airs; the return of customers that were reluctant to order from a company in bankruptcy; and the benefits of cost reductions and efficiency improvements taken during bankruptcy. S&P expects that higher earnings and debt reduction using excess free cash flow should result in steadily improving credit ratios. S&P do not expect to raise the ratings in the next year but could do so if cash flow and debt reduction is greater than it expects, resulting in debt to EBITDA below 3x and FFO to debt above 30%. S&P is also unlikely to lower the ratings but could do so if lower-than-expected earnings result in debt to EBITDA increasing above 5x or FFO to debt declining below 15%. BEHRINGER HARVARD FUND: Founder Permanently Disabled, Quits as GP ----------------------------------------------------------------- Robert Behringer informed Behringer Harvard Short-Term Opportunity Fund I LP that, as of Jan. 31, 2013, he has received a medical diagnosis of a condition affecting his speech causing Mr. Behringer to be permanently disabled. As a result, an Event of Withdrawal has occurred under the Fund's Amended and Restated Agreement of Limited Partnership, and Mr. Behringer has ceased to be a general partner of the Fund. Behringer Harvard Advisors II LP remains as a general partner of the Fund. Mr. Behringer also informed the Fund that he has resigned as Chairman of the Advisor effective Jan. 31, 2013. About Behringer Harvard Addison, Tex.-based Behringer Harvard is a limited partnership formed in Texas on July 30, 2002. The Company's general partners are Behringer Harvard Advisors II LP and Robert M. Behringer. As of Sept. 30, 2011, seven of the twelve properties the Company acquired remain in the Company's portfolio. The Company's Agreement of Limited Partnership, as amended, provides that the Company will continue in existence until the earlier of Dec. 31, 2017, or termination of the Partnership pursuant to the dissolution and termination provisions of the Partnership Agreement. For the year ended Dec. 31 2011, Deloitte & Touche LLP, in Dallas, Texas, noted that the uncertainty surrounding the ultimate outcome of settling unpaid debt and its effect on the Partnership, as well as the Partnership's operating losses at its subsidiaries, raise substantial doubt about its ability to continue as a going concern. The Partnership is facing a significant amount of debt maturities in the near future and debt which has matured but remains unpaid, which is recourse to the Partnership. Behringer reported a net loss of $50.15 million in 2011, a net loss of $18.71 million in 2010, and a net loss of $15.47 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $49.06 million in total assets, $52.94 million in total liabilities and a $3.88 million total deficit. BERNARD L MADOFF: Brother Agrees to Pay $90-Mil. in Picard Suit --------------------------------------------------------------- Maria Chutchian of BankruptcyLaw360 reported that Bernard L. Madoff's brother, Peter, agreed to shell out $90.4 million Wednesday to settle the clawback suit brought by the trustee liquidating the Ponzi schemer's collapsed firm, months after being handed a 10-year prison sentence for his role in the scandal. Trustee Irving Picard's suit targeting Peter Madoff and others members of the extended family seeks $255 million in allegedly illegal transfers that he said belongs to Bernard L. Madoff Investment Securities LLC customers, the report related. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.) The SIPA Trustee has said that as of March 31, 2012, through prepetition litigation and other settlements, he has successfully recovered, or reached agreements to recover, more than $9 billion -- over 50% of the principal lost in the Ponzi scheme by those who filed claims -- for the benefit of all customers of BLMIS. The liquidation has so far has cost the Securities Investor Protection Corp. $1.3 billion, including $791 million to pay a portion of customers' claims. Mr. Picard has so far made only one distribution in October of $325 million for 1,232 customer accounts. Uncertainty created by various appeals has limited Mr. Picard's ability to distribute recovered funds. BIG RIVERS: Fitch Cuts Rating on Series 2010A Bonds to 'BB' ----------------------------------------------------------- Fitch Ratings has downgraded the rating on Big Rivers Electric Corporation's $83.3 million County of Ohio, KY's pollution control refunding revenue bonds series 2010A to 'BB' from 'BBB-'. The Rating Outlook is revised to Negative. Security The bonds are secured by a mortgage lien on substantially all of the Big Rivers' owned tangible assets, which include the revenue generated from the sale or transmission of electricity. Sensitivities/Rating Drivers SPECULATIVE GRADE RISK: The rating downgrade and Outlook revision reflect Fitch's view that the credit quality of Big Rivers has become increasingly speculative, following the recent decisions by Alcan Primary Products Corporation and Century Aluminum Co. to terminate their respective power supply agreements with Big Rivers. SALES DOMINATED BY SMELTERS: Alcan and Century both own and operate large aluminum smelting facilities served by Big Rivers, through its largest member Kenergy Corp. Together the two facilities account for approximately 65% and 70% of Big Rivers' total energy sales and revenues, respectively. INCREASED RELIANCE ON WHOLESALE MARKET: Long-term stability at Big Rivers is likely to become increasingly reliant on less predictable off-system sales and related margins following closure of the smelting facilities. The use of cash reserves will partially mitigate this risk, but prevailing low power prices will stress results. ABUNDANT LOW COST RESOURCES: Big Rivers benefits from abundant low-cost coal-fired power resources and an average wholesale system rate ($39.07/MWh in 2011, net of credits) that is regionally competitive and among the lowest in the nation. SUBJECT TO RATE REGULATION: The electric rates charged by Big Rivers and its members are regulated by the Kentucky Public Service Commission (KPSC), which could limit the cooperative's financial flexibility and may delay the timing or amount of necessary rate increases. LIQUIDITY SOLID BUT FINANCIAL RESULTS UNCERTAIN: Big Rivers reported cash of $113.25 million at Sept. 30, 2012, excluding restricted funds available for member rate mitigation. Funds are available to support operations and may be used to meet the cooperative's June 2013 scheduled debt maturity ($58.8 million). Longer-term financial forecasts are being developed. WHAT COULD TRIGGER A RATING ACTION INABILITY TO FIND ACCEPTABLE PURCHASERS: Extended overreliance on short-term power sales as a replacement for the Century and Alcan agreements to meet debt service payments. INSUFFICIENT REGULATORY SUPPORT: Inadequate or untimely support by the KPSC would be viewed negatively. IMPLEMENTATION OF REASONABLE MITIGATION PLAN: Implementation of a mitigation plan that maintains reasonable financial and operating stability would be supportive of credit quality. Credit Profile Big Rivers provides wholesale electric and transmission service to three electric distribution cooperatives. These distribution members provide service to a total of about 112,500 retail customers located in 22 western Kentucky counties. Kenergy Corporation, the largest of the three systems, is unique in that its electric load is dominated by two aluminum smelting facilities, owned and operated by Alcan and Century. CENTURY AGREEMENT TERMINATED AUGUST 2012 Under the power supply agreements between Kenergy and the smelters, which expire in 2023, the smelters are required to take- or-pay for specific quantities of energy, irrespective of their needs. The contracts further provide for termination on one years' notice without penalties subject to certain conditions including the termination and cessation of all aluminum smelting operations at the relevant facilities. On Aug. 20, 2012, Century issued a notice to terminate its power agreement with Big Rivers and stated its intent to close its Hawesville, KY smelter. Century claimed that the smelter was not economically viable despite electric rates well below the national average. BIG RIVERS IMPLEMENTS MITIGATION PLAN Big Rivers began looking into alternative arrangements with other power purchasers to redeploy its excess generating capacity immediately after the Century notice, consistent with the mitigation plan previously developed by management to address the potential loss of aluminum smelter load. In addition, Big Rivers has also filed for an increase in rates with the Kentucky Public Service Commission to eliminate anticipated short-falls in revenue as a result of the loss of the Century smelting load. The filing, submitted on Jan. 15, 2013, requests an increase in total revenue of $74.5 million or 21.4%. ALCAN FOLLOWS WITH TERMINATION NOTICE Alcan delivered notice to Big Rivers' on Jan. 31, 2013 of its decision to terminate its power supply agreement noting, in particular, the Jan. 15, 2013 rate filing and anticipated increase in electric rates. Similar to the Century notice, Alcan stated that the planned rate increase would make the smelting facility in Robards, KY unprofitable, and that all smelting operations would be ceased at the end of the one-year notice period. Closure of the smelting facilities has significant potential implications for Big Rivers, which has acknowledged that the termination notices are valid. Besides the impact of the loss of some 1,400 plant workers, the remaining residential and commercial customers of Big Rivers will most likely have to absorb meaningfully higher rates, with the increase reflecting the amount, pricing and contractual provisions of surplus power sold to new customers. Big Rivers has redoubled its efforts to secure alternative power supply customers in the wake of the Alcan notice, but future firm contractual arrangements are unlikely over the near term. As a result, it is expected that Big Rivers will seek to modify its request for rate relief from the KPSC to reflect the loss of the full smelter load over time. Fitch notes that Big Rivers and Kenergy have also reportedly entered into negotiations with Century to enter into an agreement to assist Century to access market power in order to keep the smelting operations open beyond Aug. 20, 2013. Alcan has requested a similar accommodation. Fitch expects that any such accommodation would be part of broader plan to address the operating and financial effect on Big Rivers FUTURE FINANCIAL RESULTS UNCLEAR Big Rivers margins are expected to remain adequate to service financial obligations through at least August 2013 since both Century and Alcan remain obligated to make all required payments to Kenergy. For the nine months ended Sept. 30, 2012, Big Rivers reported operating revenue, earnings before interest, taxes and depreciation and net margins, that were all largely in line with budget, and the same nine month period through 2011. Positively, Big Rivers reported cash and cash equivalents of $113.25 million at Sept. 30, 2012, excluding additional amounts held as special, restricted funds available for member rate mitigation. Big Rivers' unrestricted funds are available to support operations and may be used to meet the cooperative's June 2013 scheduled debt maturity ($58.8 million). As time passes, however, it will be necessary for Big Rivers' to develop and implement a revised business and financial plan that captures the related regulatory decisions, contractual negotiations and anticipated revenue volatility, and for Fitch to assess the impact on the cooperative's ability to meet scheduled debt service payments. For additional information on the rating, see Fitch's report, 'Big Rivers Electric Corporation', dated Aug. 31, 2011. BIG RIVERS: Moody's Cuts Rating on $83.3 Million Bonds to 'Ba1' --------------------------------------------------------------- Moody's Investors Service downgraded the senior secured rating of USD83.3 million of County of Ohio, Kentucky (the county) Pollution Control Refunding Revenue Bonds (Big Rivers Electric Corporation Project) to Ba1 from Baa2. The rating, which had been placed under review for downgrade on August 21, 2012, remains under review for further downgrade. "The rating downgrade related to the aforementioned bonds, which were previously issued by the county on behalf of Big Rivers Electric Corporation (BREC), reflects the significantly increased financial and operating risks for BREC due to the January 31, 2013 announcement by Alcan Corporation that its subsidiary, Alcan Primary Products Corporation (Rio Tinto Alcan) issued a 12-month notice to terminate its power contract with BREC", said Kevin Rose, Vice President-Senior Analyst. This announcement follows the August 20, 2012 announcement by Century Aluminum Company that its subsidiary, Century Aluminum of Kentucky issued a 12-month notice to terminate its power contract with BREC. Both announcements cite that smelter operations at Rio Tinto Alcan's Sebree smelter and Century's Hawesville smelter are not economically viable with current contract power rates and under current market conditions. "On a combined basis, one of BREC's three member-owners, Kenergy Corp., has been serving the two aluminum smelters comprising roughly two-thirds of BREC's annual energy sales and accounting for just under 60% of its system demand and in excess of 60% of annual revenues", Rose added. Despite the fact that BREC will continue receiving revenues from base energy charges over the respective 12 month notice periods (ending August 20, 2013 in the case of Century and January 31, 2014 in the case of Rio Tinto Alcan), the rating remains under review for downgrade, reflecting the uncertainty concerning BREC's mitigation strategies under consideration, including whether BREC will obtain approval from the Kentucky Public Service Commission (KPSC) for significant rate increases to address anticipated revenue shortfalls. Moody's noted that BREC is among the few electric generation and transmission cooperatives subject to rate regulation, which can sometimes pose challenges in implementing timely rate increases. In addition to monitoring the recently filed request for a rate increase at the KPSC, the rating review will also consider BREC's prospects for mitigating the impact from the termination notices through other steps, including through shoring up liquidity, entering into bilateral sales arrangements; making short-term off system sales in the wholesale market; participating in the capacity markets; temporarily idling generation and reducing staff; and possibly selling generating assets. BREC filed a rate case with the KPSC on January 15, 2013, seeking approval for a USD74.5 million rate increase. While the substantial majority of this sizable request is due to impending load loss when Century's notice period expires, additional amounts would make up for declining margins from off system sales and other cost pressures. The actual percentage rate impact would vary by customer class and Moody's notes the availability of funds in the economic and rural economic reserve accounts that can be used to offset the significant impact for the non-smelter customer classes. Since filing its rate case in January, BREC has responded to additional data requests from the KPSC and is requesting that new rates become effective August 20, 2013. If the case is not decided by then, BREC would be permitted under state statutes to implement the rate increase, subject to refund, pending a final KPSC decision in the rate case. In terms of liquidity, BREC has a cash balance in excess of USD100 million available to repay its impending USD58.8 million tax- exempt debt maturity on June 1, 2013 and external liquidity is currently comprised of USD100 million of multi-year revolving credit facilities evenly split between National Rural Utilities Cooperative Finance Corporation and CoBank. Maintaining bank facilities to supplement its internally generated cash flow in the face of existing challenges will be integral to BREC's credit profile going forward. In light of the rating review for possible downgrade and the uncertainty at BREC that persists following the announcements by Century and Rio Tinto, the rating is not likely to be upgraded or stabilized in the near term. Several factors are likely to cause us to further lower BREC's rating including Moody's assessment of the likelihood of success in implementing the numerous mitigation strategies on the drawing board. Of particular interest to the rating review is the degree to which BREC's future financial results will depend upon the margins from the unregulated wholesale power market through both short-term and long-term off- system sales as well as Moody's assessment of the cooperative's ability to secure needed rate increases from the non-smelter member load. The rating could also be negatively affected should efforts to shore up external liquidity sources fail to meet Moody's understanding of BREC's near-term objectives. Further, downward rating pressure could occur should environmental capital requirements increase substantially particularly with the lack of a clear regulatory mechanism in place. The principal methodology used in this rating was U.S. Electric Generation & Transmission Cooperatives published in December 2009. Big Rivers Electric Corporation is an electric generation and transmission cooperative headquartered in Henderson, Kentucky and owned by its three member system distribution cooperatives? Jackson Purchase Energy Corporation; Kenergy Corp; and Meade County Rural Electric Cooperative Corporation. These member system cooperatives provide retail electric power and energy to approximately 113,000 residential, commercial, and industrial customers in 22 Western Kentucky counties. BLACKBOARD INC: S&P Affirms 'B' Corporate Credit Rating ------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Washington, D.C.-based Blackboard Inc. The outlook is stable. At the same time, S&P affirmed its 'B+' issue- level rating (one notch higher than the corporate credit rating) on Blackboard's proposed $375 million incremental term loan B-2, with a recovery rating of '2',indicating substantial (70% to 90%) recovery of principal in the event of a payment default. S&P believes Blackboard Inc.'s "highly leveraged" financial risk profile more than offsets the company's "fair" business risk profile. S&P estimates pro forma year-end 2012 adjusted leverage to be about 7.6x following the recent acquisitions of Moodlerooms and NetSpot. "The company plans to use the incremental $375 million term loan B-2 largely to repay existing debt, and we do not expect the loan to have a material impact on leverage," said S&P's credit analyst Jacob Schlanger. S&P expects leverage to remain at the mid-7x level for the next year, given modest availability of free operating cash flow to pay down debt. Blackboard has a leading position in the educational technology market, with its products allowing users to deliver Web-based teaching, course and content management, community collaboration, rapid communication, and on- and off-campus e-commerce facilitation. While the company derives more than half of its revenues from the higher education market, the 2011 acquisition of Edline enabled it to solidify its position and cross-sell its products in the K-12 market as well. In addition, the recent purchase of Moodlerooms and NetSpot will enable the company to further its offerings in the open source market. The acquired companies, now a part of Blackboard's new Education Open Source Services group, are complementary to the company's existing product portfolio and support their efforts to service a more value-oriented customer segment. The stable outlook reflects S&P's expectations that Blackboard's leading market position and significant base of recurring revenues will support consistent revenue growth and operating margins. S&P considers an upgrade to be unlikely over the near term given the company's highly leveraged capital structure. S&P could lower the rating if increased competition lead to a deteriorating market position or profitability, or if further debt-financed acquisitions cause leverage to approach 8x. BON-TON STORES: Unit Merges with Bon-Ton Giftco LLC --------------------------------------------------- The Bon-Ton Giftco, Inc., a subsidiary of The Bon-Ton Stores, Inc. (the "Parent"), merged with and into The Bon-Ton Giftco, LLC, with Bon-Ton Giftco as the surviving entity. In connection with the Bon-Ton Giftco Merger, on Jan. 31, 2013, Parent, The Bon-Ton Department Stores, Inc., a wholly-owned subsidiary of the Parent, Bon-Ton Giftco and certain subsidiaries of the Issuer, as guarantors, entered into each of: (1) the Third Supplemental Indenture with The Bank of New York Mellon, as trustee under the indenture governing the Issuer's 10 1/4% Senior Notes due 2014; (2) the Second Supplemental Indenture with Wells Fargo Bank, National Association, as trustee under the indenture governing the Issuer's 10 5/8% Second Lien Senior Secured Notes due 2017; (3) Supplement No. 1 to the Second Lien Security Agreement by and among the Issuer, Bon-Ton Giftco and Wells Fargo Bank, National Association, as trustee and collateral agent; (4) the Omnibus Joinder Agreement to Loan Documents by and among Bon-Ton Giftco, as new guarantor, the Issuer, as borrower agent, and Bank of America, N.A., as administrative agent and co-collateral agent; and (5) the Guaranty by Bon-Ton Giftco, as new guarantor, in favor of Bank of America, N.A., as agent, the lenders and the other secured parties. The Bon-Ton Giftco Supplemental Indentures amend the Issuer's existing indentures to include Bon-Ton Giftco as a guarantor under each of the notes. The Bon-Ton Giftco Security Agreement Supplement added Bon-Ton Giftco as a grantor under the Second Lien Security Agreement, by and among the Issuer, the Parent and the other signatories thereto, dated as of July 9, 2012. The Bon-Ton Giftco Joinder joins Bon-Ton Giftco as a guarantor under the Second Amended and Restated Loan and Security Agreement, dated as of March 21, 2011, as amended by the First Amendment to Second Amended and Restated Loan and Security Agreement, dated as of Oct. 25, 2012, by and among the Issuer, Carson Pirie Scott II, Inc., Bon-Ton Distribution, Inc., McRIL, LLC and The Bon-Ton Stores of Lancaster, Inc., as borrowers, each of the other obligors party thereto, the lenders party thereto, Bank of America, N.A., as agent, and the other agents and arrangers from time to time party thereto, and each other Loan Document. The Bon-Ton Giftco Guaranty requires Bon-Ton Giftco to guarantee obligations incurred under the Loan Agreement and the other Loan Documents. The amendments to the Bon-Ton Giftco Supplemental Indentures were effected pursuant to a provision in each of the indentures that permits the Issuer, the Guarantors and the applicable trustee to amend each of the indentures without notice to or consent of any noteholder in order to provide for the assumption of a Guarantor's obligations to holders of notes in the case of a merger of a Guarantor. On Feb. 2, 2013, Carson Pirie Scott II, Inc., a Mississippi corporation, subsidiary of the Parent and a Guarantor of the Notes, will merge with and into Carson Pirie Scott II, Inc., a Florida corporation, with the Carson Pirie as the surviving entity. In connection with the Carson Pirie Merger, on Feb. 2, 2013, the Issuer, Carson Pirie and the Guarantors, entered into each of: (1) the Fourth Supplemental Indenture with The Bank of New York Mellon, as trustee under the indenture governing the 2014 Notes Supplemental Indenture; (2) the Third Supplemental Indenture with Wells Fargo Bank, National Association, as trustee under the 2017 Notes Supplemental Indenture; (3) Supplement No. 2 to the Second Lien Security Agreement by and among the Issuer, Carson Pirie and Wells Fargo Bank, National Association, as trustee and collateral agent; (4) the Joinder Agreement to Loan Agreement by and among Carson Pirie, as new borrower, the Issuer, as borrower agent, and Bank of America, N.A., as administrative agent and co- collateral agent; and (5) the Guaranty by Carson Pirie, as new guarantor, in favor of Bank of America, N.A., as agent, the lenders and the other secured parties. The Carson Pirie Supplemental Indentures amend the Issuer's existing indentures to include Carson Pirie as a guarantor under each of the notes. The Carson Pirie Security Agreement Supplement added Carson Pirie as a grantor under the Second Lien Security Agreement. The Carson Pirie Joinder joins Carson Pirie as a borrower and a guarantor under the Loan Agreement and each other Loan Document. The Carson Pirie Guaranty requires Carson Pirie to guarantee obligations incurred under the Loan Agreement and the other Loan Documents. The amendments to the Carson Pirie Supplemental Indentures were effected pursuant to a provision in each of the indentures that permits the Issuer, the Guarantors and the applicable trustee to amend each of the indentures without notice to or consent of any noteholder in order to provide for the assumption of a Guarantor's obligations to holders of notes in the case of a merger of a Guarantor. A complete copy of the Form 8-K is available for free at: http://is.gd/a2ux2c About Bon-Ton Stores The Bon-Ton Stores, Inc., with corporate headquarters in York, Pennsylvania and Milwaukee, Wisconsin, operates 273 department stores, which includes 11 furniture galleries, in 24 states in the Northeast, Midwest and upper Great Plains under the Bon-Ton, Bergner's, Boston Store, Carson Pirie Scott, Elder-Beerman, Herberger's and Younkers nameplates and, in the Detroit, Michigan area, under the Parisian nameplate. The Company's balance sheet at Oct. 27, 2012, showed $1.84 billion in total assets, $1.80 billion in total liabilities, and $40.30 million in total shareholders' equity. * * * As reported by the TCR on July 13, 2012, Moody's Investors Service revised The Bon-Ton Stores, Inc.'s Probability of Default Rating to Caa1/LD from Caa3. The Caa1/LD rating reflects the company's exchange of $330 million of new senior secured notes due 2017 for $330 million of its unsecured notes due 2014. Moody's also affirmed the company's Corporate Family Rating at Caa1 and affirmed the Caa3 rating assigned to the company's senior unsecured notes due 2014. Moody's said the affirmation of the company's 'Caa1' corporate family rating reflects the company's persistent negative trends in sales and operating margins and uncertainties that the company's strategies to reverse these trends will be effective. CAESARS ENTERTAINMENT: $1.5-Bil. of Sr. Notes Priced at 97.5% ------------------------------------------------------------- Caesars Entertainment Corporation said that its wholly owned subsidiaries, Caesars Operating Escrow LLC and Caesars Escrow Corporation, intends to offer, through a private placement, 9% senior secured notes due 2020, subject to market and other conditions. On Feb. 4, 2013, the Escrow Issuers priced $1,500,000,000 aggregate principal amount of 9% senior secured notes due 2020 at an issue price of 97.50%, plus accrued interest, if any, from Feb. 15, 2013. The notes are being offered in a private offering that is exempt from the registration requirements of the Securities Act of 1933, as amended. The closing of the offering is subject to a number of conditions. Upon the satisfaction of certain conditions, Caesars Entertainment Operating Company, Inc., will assume the Escrow Issuers' obligations under the notes. About Caesars Entertainment Caesars Entertainment Corp., formerly Harrah's Entertainment Inc. -- http://www.caesars.com/-- is one of the world's largest casino companies, with annual revenue of $4.2 billion, 20 properties on three continents, more than 25,000 hotel rooms, two million square feet of casino space and 50,000 employees. Caesars casino resorts operate under the Caesars, Bally's, Flamingo, Grand Casinos, Hilton and Paris brand names. The Company has its corporate headquarters in Las Vegas. Harrah's announced its re-branding to Caesar's on mid-November 2010. The Company reported a net loss of $666.70 million in 2011, and a net loss of $823.30 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $28.34 billion in total assets, $28.22 billion in total liabilities and $114.7 million in total Caesars stockholders' equity. * * * Caesars Entertainment carries a 'CCC' long-term issuer default rating, with negative outlook, from Fitch and a 'Caa1' corporate family rating with negative outlook from Moody's Investors Service. As reported in the TCR on Feb. 5, 2013, Moody's Investors Service lowered the Speculative Grade Liquidity rating of Caesars Entertainment Corporation to SGL-3 from SGL-2, reflecting declining revolver availability and Moody's concerns that Caesars' earnings and cash flow will remain under pressure causing the company's negative cash flow to worsen. CAPITOL BANCORP: Delaware Trust Had 5% Ownership as of Dec. 31 -------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, the Delaware Charter Guarantee & Trust Company dba Principal Trust Company as Trustee for the Capitol Bancorp Limited Retirement Plan disclosed that, as of Dec. 31, 2012, it beneficially owns 2,267,268 shares of common stock of Capitol Bancorp Ltd. representing 5.51% of the shares outstanding. A copy of the filing is available at http://is.gd/q3pdEd About Capitol Bancorp Capitol Bancorp Ltd. and Financial Commerce Corporation filed voluntary Chapter 11 bankruptcy petitions (Bankr. E.D. Mich. Case Nos. 12-58409 and 12-58406) on Aug. 9, 2012. Capitol Bancorp -- http://www.capitolbancorp.com/-- is a community banking company with a network of individual banks and bank operations in 10 states and total consolidated assets of roughly $2.0 billion as of June 30, 2012. CBC owns roughly 97% of FCC, with a number of CBC affiliates owning the remainder. FCC, in turn, is the holding company for five of the banks in CBC's network. CBC is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, 12 U.S.C. Sec. 1841, et seq., and trades on the OTCQB under the symbol "CBCR." Lawyers at Honigman Miller Schwartz and Cohn LLP represent the Debtors as counsel. John A. Simon, Esq., of Foley & Lardner LLP represents the Official Committee of Unsecured Creditors as counsel. In its petition, Capitol Bancorp scheduled $112,634,112 in total assets and $195,644,527 in total liabilities. The petitions were signed by Cristin K. Reid, corporate president. The Company's balance sheet at Sept. 30, 2012, showed $1.749 billion in total assets, $1.891 billion in total liabilities, and a stockholders' deficit of $141.8 million. The Debtor's plan would exchange debt and trust-preferred securities for equity. Holders of $6.8 million in senior notes would see a full recovery by receipt of new stock. Holders of $151.3 million in trust-preferred securities would take equity worth $50 million, for a one-third recovery. Holders of $5 million in preferred stock would have a 20% recovery from new equity, while common stockholders would take stock worth $15 million. CASH STORE: S&P Cuts Issuer Credit Rating to 'CCC+'; Outlook Neg ---------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its issuer credit rating on Edmonton, Alberta-based The Cash Store Financial Services Inc. (CSF) to 'CCC+' from 'B-'. The outlook is negative. At the same time, Standard & Poor's lowered its rating on CSF's senior secured notes to 'CCC+' from 'B-'. The '4' recovery rating on the senior secured notes, which indicates S&P's expectation for average (30%-50%) recovery of principal if a default occurs, is unchanged. "The downgrades follow a proposal by the payday loan registrar in Ontario to revoke CSF's payday lending licenses and CSF's announcement that it has discontinued its payday loan product in the region," said Standard & Poor's credit analyst Igor Koyfman. The company's businesses in Ontario, which account for approximately one-third of its store count, will begin offering a new line of credit product to its customers. S&P believes this is to offset the loss of its payday lending product; however, this is a relatively new product, and S&P believes that it will be challenging for the company to replace its lost earnings from the payday loan product. S&P also believe that the registrar's proposal could lead to similar actions in other territories. The negative outlook reflects S&P's view that a significant portion of CSF's business is being discontinued and the cash flows from the company's new line of credit product may not be sufficient to replace those lost cash flows. In addition, S&P still believes that CSF's governance and the potential for legal issues regarding the loan receivables acquired in January 2012 pose potential risks. S&P could revise the outlook to stable if the company's governance issues and legal risks abate while earnings, leverage, and interest coverage stabilize. COMPETITIVE TECHNOLOGIES: Carl O'Connell Appointed to Board ----------------------------------------------------------- The Board of Directors of Competitive Technologies, Inc., appointed Carl O'Connell to the Board of Directors. On Jan. 29, 2013, Richard D. Hornidge, Jr., resigned as a director of the Company. About Competitive Technologies Fairfield, Conn.-based Competitive Technologies, Inc. (OTC QX: CTTC) -- http://www.competitivetech.net/-- was established in 1968. The Company provides distribution, patent and technology transfer, sales and licensing services focused on the needs of its customers and matching those requirements with commercially viable product or technology solutions. Sales of the Company's Calmare(R) pain therapy medical device continue to be the major source of revenue for the Company. After auditing the 2011 results, Mayer Hoffman McCann CPAs, in New York, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred operating losses since fiscal year 2006. The Company reported a net loss of $3.59 million in 2011. The Company reported a net loss of $2.40 million on $163,993 of product sales for the five months ended Dec. 31, 2010. The Company's balance sheet at Sept. 30, 2012, showed $4.70 million in total assets, $8.06 million in total liabilities and a $3.35 million total shareholders' deficit. "The Company incurred operating losses for the past six quarters, having produced marginal net income in the first quarter of 2011, after having incurred operating losses each quarter since fiscal 2006. The Company has taken steps to significantly reduce its operating expenses going forward and expects revenue from sales of Calmare medical devices to grow. However, even at the reduced spending levels, should the anticipated increase in revenue from sales of Calmare devices not occur the Company may not have sufficient cash flow to fund operating expenses beyond the first quarter of calendar 2013. These conditions raise substantial doubt about the Company's ability to continue as a going concern," the Company said in its quarterly report for the period ended Sept. 30, 2012. CORMEDIX INC: NYSE MKT Extends Listing Compliance Deadline ---------------------------------------------------------- CorMedix Inc. disclosed that it received a notice on February 1, 2013 from the NYSE MKT LLC that the NYSE MKT granted it an extension until April 15, 2013 to regain compliance with the continued listing standards of the NYSE MKT. The NYSE MKT is continuing CorMedix's listing pursuant to the extension. CorMedix will be subject to periodic review by the NYSE MKT during the extension period. Failure to make progress consistent with the plan or to regain compliance with continued listing standards by the end of the extension period could result in CorMedix being delisted from the NYSE MKT. CorMedix previously received notice on April 20, 2012 from the NYSE MKT informing it that CorMedix was below certain of the NYSE MKT's continued listing standards due to financial impairment as set forth in Section 1003(a)(iv) of the NYSE MKT Company Guide. CorMedix was afforded the opportunity to submit a plan to the NYSE MKT to regain compliance and, on May 17, 2012, presented its plan to the NYSE MKT. On June 27, 2012, the NYSE MKT accepted CorMedix's plan and granted it an extension until August 22, 2012 to regain compliance with the continued listing standards. On September 21, 2012, the NYSE MKT notified CorMedix that it granted CorMedix another extension to January 31, 2013 to regain compliance with the NYSE MKT continued listing standards. About CorMedix CorMedix Inc. -- http://www.cormedix.com-- is a pharmaceutical company that seeks to in-license, develop and commercialize therapeutic products for the prevention and treatment of cardiac and renal dysfunction, also known as cardiorenal disease. CorMedix most advanced product candidate: CRMD003 (Neutrolin(R)) for the prevention of catheter related bloodstream infections and maintenance of catheter patency in tunneled, cuffed, central venous catheters used for vascular access in hemodialysis patients. CORUS ENTERTAINMENT: S&P Assigns 'BB+' Rating to C$600MM Notes -------------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its ratings on Toronto-based Corus Entertainment Inc., including its 'BB+' long- term corporate credit rating. The outlook is stable. In addition, S&P assigned its 'BB+' issue-level rating and '3' recovery rating to Corus' proposed senior unsecured notes of up to C$600 million due 2020. The '3' recovery rating indicates S&P's expectation of meaningful (50%-70%) recovery in the event of default. S&P understands that proceeds of the new notes will be used to refinance Corus' existing senior unsecured notes due 2017. Standard & Poor's also assigned its 'BB+' preliminary debt rating to the company's C$1 billion shelf registration. The notes are being issued under the shelf registration. The ratings on Corus reflect what Standard & Poor's views as the company's "fair" business risk profile and "significant" financial risk profile. "The business risk profile reflects the company's good market position in specialty television and radio, as well as the favorable Canadian broadcasting regulatory regime, which limits competition," said Standard & Poor's credit analyst Lori Harris. However, participation in the media industry is challenging because of its cyclical nature (particularly for advertising and content) and competitive pressures from alternative content and distribution channels. Corus' financial risk profile is supported by its strong EBITDA margin and liquidity, as well as adequate credit protection measures, partially offset by the company's sizable annual dividend, which reduces free cash flow. Corus' business comprises two operating divisions: -- Television (77% of total revenue for the first quarter ended Nov. 30, 2012): The company is a leading specialty and pay television broadcaster with a controlling interest in 19 channels, including four of Canada's top specialty networks (YTV, W, Treehouse, and TELETOON); Canada's western pay-TV business (Movie Central, which includes HBO Canada for western Canada); and three conventional stations. Corus also owns content through its wholly owned subsidiary, Nelvana Ltd., one of the world's largest producers and distributors of children's animated programming and related consumer products. -- Radio (23%): Corus has 37 radio stations in seven of the top 10 Canadian markets and seven of the largest eight English markets. Vertical integration in the cable, telecom, and media industries raises the likelihood of additional transactions in the future. Given that Corus and Calgary, Alta.-based cable TV services provider Shaw Communications Inc. share some common ownership indirectly through the Shaw family, there exists the possibility of a transaction between the two companies in the medium term. However, Standard & Poor's has not factored any such transaction into its ratings on Corus. The stable outlook on Corus reflects S&P's expectation that the company will retain solid market positions in its core businesses and will pursue a financial policy and growth strategy in line with the ratings. Upside to the ratings is limited by the company's fair business risk profile. However, S&P's could raise the ratings on Corus in the medium term if the company improves its market position, operating performance, and credit protection measures on a sustainable basis. Although unlikely in the near term, S&P could consider lowering the ratings if Corus demonstrates a more aggressive financial policy resulting in adjusted leverage trending toward 4x. Further downward pressure on the ratings could also come from the company's failure to sustain its market position in specialty television. CPI CORP: Fails to Comply with OTCQX's Bid Price Rule ----------------------------------------------------- CPI Corp. received a notice from OTC Markets, Inc., regarding its determination that the bid price of the Company's shares of common stock, as quoted on the OTCQX U.S. tier, has closed below $0.10 for more than 30 consecutive trading days and no longer meets the Standards for Continued Qualification for the OTCQX U.S. Pursuant to Section 3.2.b of the OTCQX Rules for U.S. Companies, the Company has a 180 calendar day grace period to regain compliance. Compliance can be regained by having the minimum bid price of the Company's shares of common stock at the close of business be at least $0.10 for ten consecutive trading days. In the event that the Company does not regain compliance, the quotations for the Company's shares of common stock will be moved from the OTCQX U.S. to the OTCQB tier. About CPI Corp. Headquartered in St. Louis, Missouri, CPI Corp. provides portrait photography services at more than 2,500 locations in the United States, Canada, Mexico and Puerto Rico and provides on location wedding photography and videography services through an extensive network of contract photographers and videographers. The Company reported a net loss of $39.9 million on $123.2 million of net sales for the 24 weeks ended July 21, 2012, compared with a net loss of $5.6 million on $159.5 million of net sales for the 24 weeks ended July 23, 2011. The Company's balance sheet at July 21, 2012, showed $61 million in total assets, $159.6 million in total liabilities, and a stockholders' deficit of $98.6 million. CREDITRON FINANCIAL: Ex-Owners Win More Time to File Payment Plan ----------------------------------------------------------------- Ed Palattella, writing for Erie Times-News, reports that Alfred D. Covatto and his wife, Joyce M. Covatto, the former owners of Telatron Marketing Group Inc., a telemarketing business, have reached a preliminary agreement with the Internal Revenue Service and the state Department of Revenue, which gives them a month to file a plan to pay millions of dollars in back taxes. The deal is subject to bankruptcy court approval. The two agencies are among the largest creditors in the Covattos' personal Chapter 11 case, which started in May 2011. The tax claims total more than $1.6 million, including penalties, according to court records and interviews. The report notes Chief U.S. Bankruptcy Judge Thomas P. Agresti is considering whether to allow the Covattos to stay in Chapter 11, which would allow them to keep their assets as they reorganize their debts to pay creditors, or convert the case to Chapter 7, or liquidation. The judge last week said he needed more information on the stipulation to evaluate whether to convert the case to Chapter 7. According to the report, the Covattos' lawyer, Guy Fustine, is arguing that Chapter 11 remains the best way for Alfred Covatto, 73, and Joyce Covatto, 61, to pay creditors. The U.S. Trustees Office in Pittsburgh, wants the case converted to Chapter 7. Based in Erie, Pennsylvania, Creditron Financial Corporation, dba Telatron Marketing Group Inc., filed for Chapter 11 bankruptcy protection (Bankr. W.D. Penn. Case No. 08-11289) on July 3, 2008. Stephen H. Hutzelman, Esq., at Plate Shapira Hutzelman Berlin May, et al., represents Creditron. The Debtor disclosed $3 million in total assets and $4.8 million in total liabilities in its bankruptcy petition. In January 2012, Telatron's assets were sold to to Y&B Holdings LLC, for $600,000. Alfred D. Covatto and Joyce M. Covatto filed for personal bankruptcy (Bankr. W.D. Pa. Case No. 11-10849) on May 18, 2011 in Erie, Pennsylvania. CYPRESS OF TAMPA: Hearing on Cash Use Continued Until Feb. 21 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida continued until Feb. 21, 2013, at 9:30 a.m., the hearing to consider The Cypress of Tampa LLC's request to use cash collateral. As reported in the TCR on Dec. 10, 2012, the Debtor obtained interim Court approval to use property that may constitute cash collateral comprised of cash, lease, and rent payments and other income derived from the Debtor's property. The assets would be used to fund the Debtor's operating expenses and costs of administration in the Chapter 11 case pursuant to a budget for the duration of the chapter 11 case. The Debtor also won permission to provide replacement liens as adequate protection for the interests in its cash collateral. The Debtor believes Cypress Retail Holdings LLC, Wells Fargo, or RAM Development Company may assert liens or security interests in Cash Collateral. The Debtor proposes to grant as adequate protection the collection and disbursement of all cash collateral through the Debtor's property manager, periodic reporting and the grant of replacement liens on all cash collateral acquired by the Debtor or the estate on or before the Petition Date to the same extent, validity, and priority held as of the Petition Date. About Cypress of Tampa The Cypress of Tampa LLC and its affiliate The Cypress of Tampa II, LLC, own and operate a retail and office space, together with certain outparcels, known as The Cypress located in Hillsborough County, Florida. They filed voluntary Chapter 11 petitions (Bankr. M.D. Fla. Case Nos. 12-17518 and 12-17520) on Nov. 20, 2012. Jennis & Bowen, P.L., serves as the Debtors' counsel. Cypress of Tampa disclosed $23,185,648 in assets and $24,172,594 in liabilities as of the Chapter 11 filing. CYPRESS OF TAMPA: Keeps United American as Property Manager ----------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida authorized The Cypress of Tampa LLC and its affiliates to operate under its management agreement with United American Realty Corp. The Debtors, in their motion, also requested that they be authorized to pay for the postpetition services at the contractual rate of 4% of collected net revenues for the property -- a retail space known as The Cypress located in Hillsborough County, Florida. Prior to the Petition Date, the Debtor utilized United as property manager for the property pursuant to the management agreement. About Cypress of Tampa LLC The Cypress of Tampa LLC and The Cypress of Tampa II LLC filed voluntary Chapter 11 petitions (Bankr. M.D. Fla. Case No. 12-17518 and 12-17520) on Nov. 20, 2012. The Cypress of Tampa LLC said it is a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B). Judge K. Rodney May oversees the cases. Jennis & Bowen, P.L., serves as the Debtors' counsel. The Debtor disclosed $23,185,648 in assets and $24,172,594 in liabilities as of the Chapter 11 filing. No official committee have yet been appointed in the case. DEL MONTE CORP: S&P Retains 'B' Rating Following $100MM Add-On -------------------------------------------------------------- Standard & Poor's Ratings Services stated the 'B' issue-level rating on Del Monte Corp.'s senior secured term loan maturing 2018 remains unchanged following the company's $100 million add-on and amendment to this facility. The recovery rating on the senior secured term loan remains '3', indicating S&P's expectation for meaningful (50% to 70%) recovery in the event of a payment default. The 'B' corporate credit rating on Del Monte also remains unchanged. As well as adding a drawn $100 million commitment to the term loan, the second amendment reduced pricing by lowering the LIBOR floor to 1.0% from 1.5% and added a lower leverage-based LIBOR spread of 2.75% if debt to EBITDA falls below 5.75x. Prior to the amendment, the facility had a fixed 3% LIBOR spread. The ratings on Del Monte reflect its "fair" business risk profile and "highly leveraged" financial risk profile. Key credit factors considered in assessing Del Monte's business risk profile include its participation in the highly competitive packaged produce and pet food market segments, exposure to volatile commodity costs, limited customer and geographic diversification, and the seasonality of its business. These factors are partially offset by the company's good product diversity within its business segments, and portfolio of well-known brands. S&P's "highly leveraged" financial risk profile is based on the company's significant debt burden and S&P's view of its very aggressive financial policy. Del Monte also benefits from a strong liquidity profile. RATINGS LIST Del Monte Corp. Corporate Credit Rating B/Stable Ratings Affirmed Del Monte Corp. Senior Secured Term loan B Recovery Rating 3 DIGITAL DOMAIN: Executives Mostly Miss Bonus Targets ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Digital Domain Media Group Inc. is one Chapter 11 case where the company's top officers won't receive all the bonuses they were offered. The report recounts that in October the bankruptcy judge in Delaware approved an incentive bonus program for executives where payments were dependent on how successfully the assets were sold. According to the report, as it turned out, just one threshold was met, so the executives are receiving only $63,000 from the $350,000 in bonuses. About Digital Domain Port St. Lucie, Florida-based Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/-- engaged in the creation of original content animation feature films, and development of computer-generated imagery for feature films and trans-media advertising primarily in the United States. Digital Domain Media Group, Inc. and 13 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12568) on Sept. 11, 2012, to sell its business for $15 million to Searchlight Capital Partners LP, subject to higher and better offers. The company disclosed assets of $205 million and liabilities totaling $214 million. The Debtors also have sought ancillary relief in Canada, pursuant to the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the Debtors. FTI Consulting, Inc.'s Michael Katzenstein is the chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. An official committee of unsecured creditors appointed in the case is represented by lawyers at Sullivan Hazeltine Allinson LLC and Brown Rudnick LLP. At a bankruptcy auction, the principal part of the business was purchased by a joint venture between Galloping Horse America LLC, an affiliate of Beijing Galloping Horse Co., and an affiliate of Reliance Capital Ltd., based in Mumbai. The $36.7 million total value of the contact includes $3.6 million to cure defaults on contracts and $2.9 million in reimbursement of payroll costs. As the result of a settlement negotiated by the unsecured creditors' committee with secured lenders, there will be some recovery for the committee's constituency. DOROTHY ZOUZALIK: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Dorothy E. Zouzalik Estate Trust P.O. Box 54021 Lubbock, TX 79493 Bankruptcy Case No.: 13-50029 Chapter 11 Petition Date: February 5, 2013 Court: United States Bankruptcy Court Northern District of Texas (Lubbock) Judge: Robert L. Jones Debtor's Counsel: Max Ralph Tarbox, Esq. TARBOX LAW, P.C. 2301 Broadway Lubbock, TX 79401 Tel: (806) 686-4448 E-mail: kathy@tarboxlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Mark Zouzalik, trustee. DUNKIN' BRANDS: Credit Amendment No Impact on Moody's 'B2' CFR -------------------------------------------------------------- Moody's Investors Service reports that Dunkin' Brands Inc.'s proposed amendment to its bank credit facility is credit neutral and the company's ratings and stable rating outlook are unaffected. The proposed amendment includes a favorable re-pricing of the facility as well as lowering its re-financing risk by extending maturities. In a report dated July 27, 2012, Moody's rated Dunkin' Brands as follows: B2 Corporate Family Rating; B3 Probability of Default Rating; B2 (LGD 3, 33%) USD100 million guaranteed senior secured revolver due 2015; B2 (LGD 3, 33%) USD1.9 billion guaranteed senior secured term loan B, including the potential USD400 million incremental term loan; SGL-2 Speculative Grade Liquidity rating Dunkin' Brands is the franchisor of approximately 17,450 quick service restaurants under the brand names Dunkin' Donuts and Baskin-Robbins. The company only owns and operates a very small number of its own stores. Annual revenues are approximately USD660 million, although systemwide sales are over USD8.7 billion. E. KING CONSTRUCTION: Case Summary & 5 Unsecured Creditors ---------------------------------------------------------- Debtor: E. King Construction Company, Inc. 3865 W. Columbus Chicago, IL 60652 Bankruptcy Case No.: 13-04363 Chapter 11 Petition Date: February 5, 2013 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Pamela S. Hollis Debtor's Counsel: David R. Herzog, Esq. HERZOG & SCHWARTZ PC 77 W Washington, Suite 1717 Chicago, IL 60602 Tel: (312) 977-1600 E-mail: drhlaw@mindspring.com Estimated Assets: not indicated Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its five largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/ilnb13-04363.pdf ECOSPHERE TECHNOLOGIES: Names SKM's D. Brooks as New Interim CFO ---------------------------------------------------------------- Ecosphere Technologies, Inc., accepted the resignation of Barbara Carabetta as the Company's interim Chief Financial Officer, who resigned for medical reasons. On Feb. 5, 2013, the Company appointed David Brooks as the Company's interim Chief Financial Officer. Since June 6, 2012, Mr. Brooks has served as the Chief Financial Officer of SKM Media Corp., a data and services marketing company. Since November 2009, Mr. Brooks has been the Managing Shareholder of D. Brooks and Associates CPAs, P.A., which provides Chief Financial Officer and related services to businesses on a consulting basis. From August 2008 through October 2009, Mr. Brooks was an audit director and consultant for McGladrey & Pullen, LLP (now McGladrey LLP), a large assurance, tax and consulting services company. Mr. Brooks is a Certified Public Accountant in Florida. Mr. Brooks will be compensated as an independent contractor through Brooks and Associates and is being paid on an hourly basis. Mr. Brooks is 42 years old. About Ecosphere Technologies Stuart, Fla.-based Ecosphere Technologies, Inc. (OTC BB: ESPH) -- http://www.ecospheretech.com/-- is a diversified water engineering, technology licensing and environmental services company that designs, develops and manufactures wastewater treatment solutions for industrial markets. Ecosphere, through its majority-owned subsidiary Ecosphere Energy Services, LLC ("EES"), provides energy exploration companies with an onsite, chemical free method to kill bacteria and reduce scaling during fracturing and flowback operations. The Company reported a net loss of $5.86 million in 2011, following a net loss of $22.66 million in 2010, and a net loss of $19.05 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $11.70 million in total assets, $4.41 million in total liabilities, $4.05 million in total redeemable convertible cumulative preferred stock, and $3.22 million in total equity. ELAN CORP: Large Cash Balance Prompts Moody's Ba3 CFR Affirmation ----------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Elan Corporation, plc., including the Ba3 Corporate Family Rating, Ba2- PD Probability of Default Rating, and Ba3 rating on Elan's senior unsecured notes. The rating outlook remains stable. Ratings affirmed: Elan Corporation, plc.: Ba3 Corporate Family Rating Ba2-PD Probability of Default Rating Elan Finance plc: Ba3 (LGD4, 66%) senior unsecured notes due 2019, guaranteed by Elan Corporation plc and subsidiaries The Speculative Grade Liquidity Rating remains unchanged at SGL-1. "The collaboration restructuring will reduce Elan's EBITDA by roughly one-half and is credit negative," stated Michael Levesque, Moody's Senior Vice President. "However, the monetization proceeds are significant and provide Elan with significant flexibility for business development that could diversify revenue and generate EBITDA over time," continued Levesque. Ratings Rationale Elan's Ba3 Corporate Family Rating reflects the company's limited scale, high revenue concentration risk and large cash balance. Following the transaction Elan's revenues will be 100% composed of royalties on Tysabri, a blockbuster multiple sclerosis (MS) drug marketed by Biogen Idec. Tysabri utilization trends should remain strong and the pending approval in first-line use provides upside. However, the competitive landscape is rapidly evolving and new product launches will constrain Tysabri's rate of growth. Tysabri concentration will continue for the foreseeable future because Elan's most advanced pipeline compound is only in mid-stage development. The Ba3 rating also reflects Elan's strong balance sheet, set to benefit from a USD3.25 billion cash inflow from Biogen Idec, compared to USD600 million of gross debt. The cash inflow, net of any share repurchases, provides good flexibility for business development. However, business development could be risky, particularly if it involves pipeline assets in early or mid-stage development. Elan's shareholder distribution policies and its future business development plans are unknown and will evolve over time. Upward pressure on the rating is constrained until these issues become more clear and the revenue base is more diversified. The rating outlook is stable. Although royalties on Tysabri sales should remain strong in 2013 despite competitive threats, Elan's product concentration risk and unknown business development plans and shareholder distribution policies preclude upward pressure on the rating in the near term. Over time, an upgrade could occur with improved revenue diversity, well-articulated shareholder distribution policies, and debt/EBITDA sustained below 1.5 times. Conversely, the rating could be downgraded if debt/EBITDA is sustained above 3.0 times. While not currently expected, this could occur if royalties on Tysabri sales decline materially. The principal methodology used in this rating was the Global Pharmaceutical Industry published in December 2012. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Dublin, Ireland, Elan Corporation, plc is a specialty biopharmaceutical company with areas of expertise in neurological and autoimmune disease. Its sole product, Tysabri, marketed with Biogen Idec, is approved for the treatment of multiple sclerosis and Crohn's disease. EASTMAN KODAK: Makes Peace with Apple Over Digital Camera Patents ----------------------------------------------------------------- Maria Chutchian of BankruptcyLaw360 reported that Eastman Kodak Co. and Apple Inc. on Tuesday officially dropped all claims against each other surrounding digital camera patents after putting the finishing touches on the bankrupt imaging company's $527 million digital imaging portfolio sale. The two companies said they reached an agreement to resolve all outstanding issues between them and dismiss an adversary proceeding with prejudice after more than seven months of back- and-forth over the patents in Manhattan bankruptcy court, the report related. The agreement to end the litigation was part of the closing of the portfolio sale, the report added. About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. In recent years, Kodak has been working to transform itself from a business primarily based on film and consumer photography to a smaller business with a digital growth strategy focused on the commercialization of proprietary digital imaging and printing technologies. Kodak has 8,900 patent and trademark registrations and applications in the United States, as well as 13,100 foreign patents and trademark registrations or pending registration in roughly 160 countries. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. The Retirees Committee has hired Haskell Slaughter Young & Rediker, LLC, and Arent Fox, LLC as Co-Counsel; Zolfo Cooper, LLC, as Bankruptcy Consultants and Financial Advisors; and the Segal Company, as Actuarial Advisors. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. Kodak intends to reorganize by focusing on the commercial printing business. Other businesses are being sold or shut down. ELMIRA DOWNTOWN: Strikes Deal With Arena Mortgage Holder -------------------------------------------------------- Jason Whong, writing for Stargazette.com, reports that Michael Baum, Esq., attorney for Elmira Downtown Arena LLC, which manages the First Arena, told Judge Paul Warren that Elmira has reached a deal with Elm Arena LLC, which owns the mortgage for the building. Mr. Baum said Elm Arena will have the rights to the arena at the end of the 2012-13 ECHL hockey season. The rest of their agreement is confidential. According to the report, Tamer Afr, Jackals president and Elmira Downtown Arena representative; Kevin Keeley, president of Southern Tier Economic Development Inc., which owns the arena; and Tom Freeman, owner of Elm Arena, the company that holds the mortgage to the facility, all said they consented to the agreement. The report also relates Judge Warren said Elmira Downtown Arena consents to the dismissal of its case no later than 20 days after the end of the last Elmira Jackals hockey game this season. The U.S. Trustee sought dismissal of the case. The Court will hold a hearing May 23 to consider the request by Elmira Downtown Arena to borrow money from the Elmira Jackals. Based in Elmira, New York, Elmira Downtown Arena, LLC, filed for Chapter 11 protection on Aug. 16, 2012 (Bankr. W.D. N.Y. Case No. 12-21361). EDA is controlled by Michigan businessman Mostafa Afr. Judge Paul R. Warren presides over the case. Joshua P. Fleury, Esq., at Phillips Lytle LLP, represents the Debtor. The Debtor estimated assets of $100,000, and $500,000, and debts of between $1 million and $10 million. ENERGYSOLUTIONS INC: Samana Capital No Longer Owns Shares --------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Samana Capital, L.P., and its affiliates disclosed that, as of Dec. 31, 2012, they do not beneficially own any shares of common stock of EnergySolutions, Inc. A copy of the filing is available for free at http://is.gd/QsOps8 About EnergySolutions Salt Lake City, Utah-based EnergySolutions offers customers a full range of integrated services and solutions, including nuclear operations, characterization, decommissioning, decontamination, site closure, transportation, nuclear materials management, the safe, secure disposition of nuclear waste, and research and engineering services across the fuel cycle. The Company's balance sheet at Sept. 30, 2012, showed $2.85 billion in total assets, $2.54 billion in total liabilities, and $311.77 million in total stockholders' equity. * * * As reported in the Jan. 9, 2013 edition of the TCR, Standard & Poor's Ratings Services placed its ratings, including its 'B' corporate credit rating, on EnergySolutions on CreditWatch with developing implications. "The CreditWatch placement follows EnergySolutions' announcement that it has entered into a definitive agreement to be acquired by a subsidiary of Energy Capital Partners II," said Standard & Poor's credit analyst Jim Siahaan. EnergySolutions is permitted to engage in discussions with other suitors, which may include other financial sponsors or strategic buyers. FANNIE MAE: Susan McFarland to Retire as EVP and CFO ---------------------------------------------------- Susan R. McFarland, executive vice president and chief financial officer of Fannie Mae (formally, the Federal National Mortgage Association), notified the company that she will retire from the company after a transition period that will begin on the effective date of the appointment of a new Chief Financial Officer by Fannie Mae's Board of Directors and end no later than June 30, 2013. About Fannie Mae Federal National Mortgage Association, aka Fannie Mae, is a government-sponsored enterprise that was chartered by U.S. Congress in 1938 to support liquidity, stability and affordability in the secondary mortgage market, where existing mortgage-related assets are purchased and sold. Fannie Mae has been under conservatorship, with the Federal Housing Finance Agency acting as conservator, since September 6, 2008. As conservator, FHFA succeeded to all rights, titles, powers and privileges of the company, and of any shareholder, officer or director of the company with respect to the company and its assets. The conservator has since delegated specified authorities to Fannie Mae's Board of Directors and has delegated to management the authority to conduct day-to-day operations. The U.S. Department of the Treasury owns Fannie Mae's senior preferred stock and a warrant to purchase 79.9% of its common stock, and Treasury has made a commitment under a senior preferred stock purchase agreement to provide Fannie with funds under specified conditions to maintain a positive net worth. Fannie Mae reported a net loss of $16.85 billion in 2011, a net loss of $14.01 billion in 2010, and a net loss of $72.02 billion in 2009. The Company's balance sheet at June 30, 2012, showed $3.19 trillion in total assets, $3.19 trillion in total liabilities, and $2.77 billion in total equity. FIRST DATA: Terminates Employment of Exec. VP Kevin Kern -------------------------------------------------------- First Data Corporation has terminated the employment of Kevin Kern, an Executive Vice President of the Company. Mr. Kern will be eligible for benefits under First Data's Severance/Change in Control Policy, as amended. About First Data Based in Atlanta, Georgia, First Data Corporation provides commerce and payment solutions for financial institutions, merchants, and other organizations worldwide. For the 12 months ended Dec. 31, 2012, the Company incurred a net loss attributable to the Company of $700.9 million, compared with a net loss attributable to the Company of $516.1 million during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $37.89 billion in total assets, $35.20 billion in total liabilities, $67.4 million in redeemable noncontrolling interest, and $2.62 billion in total equity. * * * The Company's carries a 'B3' corporate family rating, with a stable outlook, from Moody's Investors Service, a 'B' corporate credit rating, with stable outlook, from Standard & Poor's, and a 'B' long-term issuer default rating from Fitch Ratings. FIRST PLACE: KPMG Resigns as Accountants Stating No Reason ---------------------------------------------------------- KPMG LLP resigned as First Place Financial Corp.'s independent registered public accounting firm without stating any reason for the resignation. KPMG had been the Company's independent registered public accounting firm since KPMG's appointment by the Audit Committee of the Company's Board of Directors on Aug. 28, 2009. KPMG issued an audit report, dated Sept. 22, 2010, on the consolidated financial statements of the Company as of and for the year ended June 30, 2010. KPMG also issued a report, dated Sept. 22, 2010, on the Company's internal control over financial reporting as of June 30, 2010. Neither report contained an adverse opinion or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope, or accounting principles. Following the Company's subsequent disclosure that its June 30, 2010, consolidated financial statements could no longer be relied upon and the related withdrawal of KPMG's reports dated Sept. 22, 2010, KPMG has not issued any reports on either the Company's consolidated financial statements or internal control over financial reporting. During the Company's two most recent fiscal years and the subsequent interim periods preceding KPMG's resignation, there has not been any matter that was the subject of a disagreement between the Company and KPMG. The Company announced that its previously issued consolidated financial statements as of and for the fiscal years ended June 30, 2010, June 30, 2009 and June 30, 2008, and its reports on internal control over financial reporting as of June 30, 2010, June 30, 2009 and June 30, 2008, as presented in the Company's respective Annual Reports on Form 10-K, could no longer be relied upon. In addition, the Company announced that its interim unaudited condensed consolidated financial statements as of and for the quarterly periods, within each of those fiscal years, as presented in the Company's respective Quarterly Reports on Form 10-Q, could no longer be relied upon. As of Feb. 5, 2013, because the Company has sold substantially all of its assets in the transaction and because the Company has no plans to reorganize under the bankruptcy laws, the Company is unable to, (i) file an amendment to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2010, and to restate its consolidated financial condition and results of operations as of and for the fiscal years ended June 30, 2010, 2009, and 2008, and the quarterly periods within those years; or (ii) file its Quarterly Reports on Form 10-Q for the periods ended Sept. 30, 2010, Dec. 31, 2010, and March 31, 2011, its Annual Report on Form 10-K for the fiscal year ended June 30, 2011, its Quarterly Reports on Form 10-Q for the periods ended Sept. 30, 2011, Dec. 31, 2011, and March 31, 2012, its Annual Report on Form 10-K for the fiscal year ended June 30, 2012, or its Quarterly Report on Form 10-Q for the quarter ended Sept. 30, 2012. As previously disclosed, on Oct. 26, 2012, the Company and Talmer Bancorp, Inc., entered into an Asset Purchase Agreement. As contemplated by the Purchase Agreement, the Company filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware on Oct. 29, 2012. In connection with the bankruptcy proceeding, the Company and the Purchaser submitted an Amended and Restated Asset Purchase Agreement, dated as of Dec. 14, 2012, by and among the Company and the Purchaser, concerning Purchaser's proposed acquisition of First Place Bank for approval by the Bankruptcy Court. On Dec. 14, 2012, the Bankruptcy Court entered an order approving and authorizing the Company to enter into the Amended Purchase Agreement. As previously disclosed, on Jan. 1, 2013, pursuant to the terms of the Amended Purchase Agreement, the Company completed the sale of substantially all of its assets, including all of the issued and outstanding shares of common stock of the Company's wholly-owned subsidiaries, First Place Bank and First Place Holdings, Inc., and certain other assets held in the name of the Company but used in the business of First Place Bank, to the Purchaser. During the Company's two most recent fiscal years and the subsequent interim periods preceding KPMG's resignation, two "reportable events" as defined in Item 304(a)(1)(v) of Regulation S-K) occurred. The first reportable event, pursuant to Item 304(a)(1)(v)(A) of Regulation S-K, was that KPMG advised the Company that for one or more years under audit by KPMG the Company did not have the internal controls necessary to develop reliable financial statements, including a material weakness in internal controls over financial reporting related to the valuation of the Company's allowance for loan losses. The material weakness resulted from a number of factors, including but not limited to, deficiencies in the methodology for assessing the allowance for loan losses, errors in the risk grading of loans and an ineffective internal asset review function. The Audit Committee discussed with KPMG the lack of internal controls necessary to develop reliable financial statements. The second reportable event, pursuant to Item 304(a)(1)(v)(C) of Regulation S-K, occurred when KPMG advised the Company in December 2011 that information reported to KPMG by the Audit Committee required an independent investigation pursuant to Section 10A of the Securities Exchange Act of 1934, as amended, and may: (A) materially impact the fairness or reliability of the financial statements to be issued covering the fiscal periods related to the restatement periods and subsequent periods under audit by KPMG or (B) cause KPMG to be unwilling to rely on management's representations or be associated with the Company's financial statements. The Audit Committee directed that an independent investigation of those matters be commenced and discussed this matter with KPMG. At the date of KPMG's resignation, the Company had not completed its investigation. About First Place First Place Financial Corp. is a $3.1 billion financial services holding company, based in Warren, Ohio. The First Place bank subsidiary isn't in bankruptcy. First Place filed a Chapter 11 petition (Bankr. D. Del. Case No. 12-12961) in Delaware on Oct. 28, 2012, to sell its bank unit to Talmer Bancorp, Inc., absent higher and better offers. The Debtor declared $175 million in total assets and $65.6 million in total liabilities as of Oct. 26, 2012. The Debtor has tapped Patton Boggs LLP and The Bayard Firm, PA as legal counsel, and FTI Consulting, Inc., as financial advisor. Donlin, Recano & Company, Inc. -- http://www.donlinrecano.com/-- is the claims and notice agent. The Official Committee of Trust Preferred Securities tapped to retain Kirkland & Ellis as counsel; Klehr Harrison Harvey Branzburg as co-counsel; Holdco Advisors as financial advisor; and Rothschild as investment banker and financial advisor. FREESCALE SEMICONDUCTOR: S&P Rates 'B' to Loans Due 2016 and 2020 ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' issue-level rating to Austin, Texas-based Freescale Semiconductor Inc.'s proposed first-lien term loans due 2016 and 2020. The recovery rating is '3', reflecting S&P's expectation for meaningful (50% to 70%) recovery for first-lien debtholders in the event of default. S&P's 'B' corporate credit and other ratings on the company are unchanged. The outlook is stable. The company intends to use the proceeds from this offering to refinance its existing term loans due 2016 and 2019. The ratings on Freescale reflect its position as one of the leading providers of automotive semiconductor products, moderated by its U.S. and European automotive client concentration and its exposure to cyclical market conditions, which contribute to a "fair" business risk profile. While Freescale's revenues and earnings declined in 2012 due to cyclical market weakness and the secular downturn of its cellular handset business, S&P expects modest revenue growth and flat earnings over the coming year, such that leverage remains elevated at about 9x during 2013 and begins to subside in late 2013. Consequently, the company's financial risk profile remains "highly leveraged" in S&P's assessment. Despite S&P's expectations for leverage to remain elevated in 2013, it expects liquidity to stay intact, given working capital management, as well as modest capital expenditures and modest debt maturities over the coming year. S&P views Freescale's liquidity as "adequate." Cash balances represented about $711 million as of Dec. 31, 2012, and the company's $425 million revolving credit facility was fully available, except for about $20 million outstanding letters of credit as of Dec. 31, 2012. S&P believes Freescale will gradually reduce leverage beginning in late 2013. A downgrade could occur if competitive or cyclical factors result in cash balances declining below $500 million. Given S&P's expectation for near-term business headwinds and slightly weaker financial metrics, S&P views an upgrade as unlikely in 2013. Over the longer term, an upgrade could occur if Freescale restores revenue and profit growth such that leverage were to subside under 5.0x on a sustained basis. Freescale Semiconductor Inc. Corporate Credit Rating B/Stable/-- New Ratings Freescale Semiconductor Inc. First-Lien Term Loan Due 2016 B Recovery Rating 3 First-Lien Term Loan Due 2020 B Recovery Rating 3 GARY PHILLIPS: Has Access to Cash Collateral Until April -------------------------------------------------------- The Hon. Marcia Phillips Parsons of the U.S. Bankruptcy Court for the Eastern District of Tennessee has signed agreed orders authorizing Gary Phillips Construction, LLC, to use cash collateral. The parties have agreed that the Debtors can use cash collateral until April 15, 2013, pursuant to a budget. The Debtors can use the cash collateral to pay the estimated expenses that are necessary to prevent immediate and irreparable harm to the Debtor's estate during the interim period. Any variance in the expense figures in excess of 10% will require approval of the Court. However, the Debtor won't be permitted to use rental checks received from Cold Water Cove. The Debtor is required to continue to be remitted to Citizens Bank. As adequate protection from any diminution value of the lenders' collateral, the Debtor will grant the secured creditors replacement liens as to all assets of the estate. With respect to properties being sold by order of the Court, Regions Bank, TruPoint Bank and TriSummit Bank are each granted replacement liens against the funds in the cash collateral account up to the amount of proceeds retained by the Debtor in accordance with the respective property to be sold. A hearing on April 2, at 9 a.m., has been set. Plan Required by April 15 The Debtors, the Official Committee of Unsecured Creditors, the U.S. Trustee, and Commercial Bank have also reached a deal to resolve the Bank's motion for relief from the automatic stay. The parties also agreed that funds held by Commercial Bank in a special interest bearing account of $25,000 may be used by the Debtor to complete subdivision improvements to the Allison Hills Subdivision, Phase IV, by using the funds to complete the final layer of asphalt to the existing road. The Debtor will complete the work through a licensed contractor, and submit the statement for services rendered to Commercial Bank. The Debtor will use its best efforts to complete the Phase IV of the Allison Hills Subdivision and obtain final plat approval of the Allison Hills Subdivision, Phase IV, by April 15, 2013. In exchange for Commercial Bank's consent to cash collateral use: 1. Beginning Nov. 1, 2012, and on the first day of each month thereafter until April 1, 2013, the Debtor will pay a monthly adequate protection payment to Commercial Bank in the amount of $2,300. 2. The automatic stay is modified so that Commercial Bank will be free to conduct power of sale foreclosure of its deeds of trust, if the Debtor fails to make any required adequate protection payment by the tenth day of any month without further notice or order of the Court. 3. The automatic stay is further modified so that Commercial Bank is free to conduct power of sale foreclosure without further notice or order of the Court, if the Debtor has not submitted and confirmed a chapter 11 plan by April 15, 2013. 4. If the Debtor is able to sell any lot in Phase IV, Allison Hills Subdivision, prior to plan confirmation, the sale will require approval, but Commercial Bank agrees that it will accept 80% of the gross process of the sale in exchange for a partial release of its deed of trust as to the said lot. However, the 80% payable to Commercial Bank will in no circumstance be less that $28,000 per lot. About Gary Phillips Construction Piney Flats, Tennessee-based Gary Phillips Construction, LLC, filed for Chapter 11 bankruptcy protection (Bankr. E.D. Tenn. Case No. 10-53097) on Dec. 3, 2010. Fred M. Leonard, Esq. -- fredmleonard@earthlink.net -- in Bristol, Tennessee, serves as the Debtor's counsel. The Debtor tapped Wayne Turbyfield as accountant. The Debtor tapped the law firm of Bearfield & Associates as special counsel. The Court denied the application to employ Crye-Leike Realtors as realtor. In its schedules, the Debtor disclosed $13,255,698 in assets and $7,614,399 in liabilities as of the Petition Date. Daniel M. McDermott, the U.S. Trustee for Region 8, appointed six creditors to serve on an Official Committee of Unsecured Creditors in the Debtor's case. Dean B. Farmer, Esq., at Hodges, Doughty & Carson, PLLC, serves as the committee's counsel. GELTECH SOLUTIONS: Borrows $250,000 From Principal Shareholder -------------------------------------------------------------- Michael Reger, the principal shareholder of GelTech Solutions, Inc., lent the Company $250,000. In connection with this loan, the Company consolidated all of the outstanding notes held by Mr. Reger and issued him a $1,997,482 note convertible at $0.35 per share due Dec. 31, 2016. Mr. Reger cancelled his $1,497,483 note convertible at $1.12 per share (due Feb. 18, 2016) and his $275,000 one-year 10% original issue discount note convertible at $0.35 per share (due Dec. 29, 2013). The 2013 Note bears an annual interest rate of 7.5% with interest to be paid annually in cash or common stock at $0.35 per share at Mr. Reger's option. Also on Feb. 28, 2013, the Company issued Mr. Reger 210,226 shares of common stock in lieu of a cash payment for $73,579 of interest owed under the 2011 Note and the 2012 Note. The 2013 Note and the shares of common stock were issued without registration under the Securities Act of 1933 in reliance upon the exemption provided in Section 4(a)(2) and Rule 506 thereunder. About GelTech Jupiter, Fla.-based GelTech Solutions. Inc., is a Delaware corporation organized in 2006. The Company markets four products: (1) FireIce(R), a water soluble fire retardant used to protect firefighters, structures and wildlands; (2) Soil2O(R) 'Dust Control', its new application which is used for dust mitigation in the aggregate, road construction, mining, as well as, other industries that deal with daily dust control issues; (3) Soil2O(R), a product which reduces the use of water and is primarily marketed to golf courses, commercial landscapers and the agriculture market; and (4) FireIce(R) Home Defense Unit, a system for applying FireIce(R) to structures to protect them from wildfires. The Company's balance sheet at Sept. 30, 2012, showed $1.8 million in total assets, $3.6 million in total liabilities, and a stockholders' deficit of $1.8 million. "As of Sept. 30, 2012, the Company had a working capital deficit, an accumulated deficit and stockholders' deficit of $514,338, $24,605,573 and $1,817,980, respectively, and incurred losses from operations of $1,805,687 for the three months ended Sept. 30, 2012. and used cash from operations of $943,191 during the three months ended Sept. 30, 2012. In addition, the Company has not yet generated revenue sufficient to support ongoing operations. These factors raise substantial doubt regarding the Company's ability to continue as a going concern." GELTECH SOLUTIONS: Michael Reger Owns 40.6% of Total Shares ----------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Michael Lloyd Reger disclosed that, as of Feb. 1, 2013, he beneficially owns 14,252,626 shares of common stock of GelTech Solutions, Inc., representing 40.6% based on 29,400,512 shares of common stock outstanding as of Feb. 5, 2013, plus shares issuable to the reporting person (within 60 days) upon the conversion of a note. Mr. Reger previously reported beneficial ownership of 9,134,152 common shares or a 42.3% equity stake as of Feb. 23, 2011. A copy of the amended filing is available at http://is.gd/LKw2un About GelTech Jupiter, Fla.-based GelTech Solutions. Inc., is a Delaware corporation organized in 2006. The Company markets four products: (1) FireIce(R), a water soluble fire retardant used to protect firefighters, structures and wildlands; (2) Soil2O(R) 'Dust Control', its new application which is used for dust mitigation in the aggregate, road construction, mining, as well as, other industries that deal with daily dust control issues; (3) Soil2O(R), a product which reduces the use of water and is primarily marketed to golf courses, commercial landscapers and the agriculture market; and (4) FireIce(R) Home Defense Unit, a system for applying FireIce(R) to structures to protect them from wildfires. The Company's balance sheet at Sept. 30, 2012, showed $1.8 million in total assets, $3.6 million in total liabilities, and a stockholders' deficit of $1.8 million. "As of Sept. 30, 2012, the Company had a working capital deficit, an accumulated deficit and stockholders' deficit of $514,338, $24,605,573 and $1,817,980, respectively, and incurred losses from operations of $1,805,687 for the three months ended Sept. 30, 2012. and used cash from operations of $943,191 during the three months ended Sept. 30, 2012. In addition, the Company has not yet generated revenue sufficient to support ongoing operations. These factors raise substantial doubt regarding the Company's ability to continue as a going concern." GEOKINETICS INC: Commences Solicitation of Votes for Ch. 11 Plan ---------------------------------------------------------------- Geokinetics Inc. on Feb. 7 disclosed that it was commencing a solicitation of votes for its pre-packaged chapter 11 plan of reorganization from holders of the Company's 9.75% senior secured notes due 2014, Series B-1 Senior Convertible Preferred Stock, par value $10.00 per share, and Series C-1 Senior Preferred Stock, par value $10.00 per share. Votes on the prepackaged plan of reorganization must be received by the voting agent by 12:00 p.m. (prevailing Eastern Time) on March 8, 2013, unless this deadline is extended. Copies of the Company's plan of reorganization and solicitation and disclosure statement may be accessed at http://www.GOKRestructuring.com Parties seeking additional information about the balloting process may contact GCG, the voting agent for the solicitation, at (800) 761-8709. Consistent with the previously announced restructuring support agreement, holders of more than 70% in aggregate principal amount of its Senior Secured Notes and holders of more than two-thirds of the Senior Preferred Stock have agreed to vote in favor of the chapter 11 plan. If, at the end of the solicitation period, the requisite number and amount of holders of Senior Secured Notes and Senior Preferred Stock vote in favor of the plan as required by the Bankruptcy Code, the Company intends to seek to implement its recapitalization plan through an expedited chapter 11 bankruptcy process. At the conclusion of the chapter 11 bankruptcy process, the holders of the Senior Secured Notes would become the stockholders of the reorganized Company, with the interests of current stockholders being cancelled. The plan of reorganization envisions that unsecured creditors of the Company will be paid in full either in the ordinary course of business or at the conclusion of the chapter 11 cases. Importantly, the proposed balance sheet reorganization is not expected to have an impact on the Company's operations. As part of the restructuring process, the Company expects to enter into a new credit facility to provide liquidity for operations after the restructuring. During the restructuring process, subject to conditions in the restructuring support agreement, the Company will seek authority from the bankruptcy court to obtain up to $25 million of debtor in possession financing provided by certain holders of the Senior Secured Notes and fully backstopped by two of the largest holders of Senior Secured Notes. This debtor in possession financing will fund certain of the Company's operations during the chapter 11 process and will be converted into common stock of the reorganized Company on the effective date of the chapter 11 plan. The Company's emergence from chapter 11 will be subject to, among other things, bankruptcy court approval of the solicitation and disclosure statement, exit financing and confirmation of the plan of reorganization. About Geokinetics Inc. Headquartered in Houston, Texas, Geokinetics Inc., a Delaware corporation founded in 1980, is provides seismic data acquisition, processing and integrated reservoir geosciences services, and land, transition zone and shallow water OBC environment geophysical services. These geophysical services include acquisition of 2D, 3D, time-lapse 4D and multi-component seismic data surveys, data processing and integrated reservoir geosciences services for customers in the oil and natural gas industry, which include national oil companies, major international oil companies and independent oil and gas exploration and production companies worldwide. The Company's balance sheet at Sept. 30, 2012, showed $415.71 million in total assets, $590.79 million in total liabilities, $90.72 million in mezzanine equity, and a $265.80 million total stockholders' deficit. * * * In the Oct. 5, 2011, edition of the TCR, Moody's Investors Service downgraded Geokinetics Holdings, Inc.'s (Geokinetics) Corporate Family Rating (CFR) and Probability of Default Rating (PDR) to Caa2 from B3. "The downgrade to Caa2 is driven by Geokinetics' lower than expected margins in its international markets, constrained liquidity and weak leverage metrics," commented Andrew Brooks, Moody's Vice-President. "The negative outlook highlights the company's continuing tight liquidity and weak financial metrics even in an improved oil and gas operating environment." As reported by the TCR on Oct. 3, 2011, Standard & Poor's Ratings Services lowered its corporate credit and senior secured ratings on Geokinetics Holdings Inc. (Geokinetics) to 'CCC+' from 'B-'. The rating action reflects uncertainty surrounding the costs, damage to reputation, and effect on operations following a liftboat accident in the Southern Gulf of Mexico that led to four fatalities, including two Geokinetics employees and two subcontractors. GEOMET INC: T. Rowe Price Discloses 17.4% Equity Stake ------------------------------------------------------ In a Schedule 13G filing with the U.S. Securities and Exchange Commission, T. Rowe Price Associates, Inc., and its affiliates disclosed that, as of Dec. 31, 2012, they beneficially own 7,816,122 shares of common stock of GeoMet, Inc., representing 17.4% of the shares outstanding. A copy of the filing is available for free at http://is.gd/DFPwNO About Geomet Inc. Houston, Texas-based GeoMet, Inc., is an independent energy company primarily engaged in the exploration for and development and production of natural gas from coal seams (coalbed methane) and non-conventional shallow gas. Its principal operations and producing properties are located in the Cahaba and Black Warrior Basins in Alabama and the central Appalachian Basin in Virginia and West Virginia. It also owns additional coalbed methane and oil and gas development rights, principally in Alabama, Virginia, West Virginia, and British Columbia. As of March 31, 2012, it owns a total of 192,000 net acres of coalbed methane and oil and gas development rights. "As of May 11, 2012, we had $148.6 million outstanding under our Fifth Amended and Restated Credit Agreement," the Company said in its quarterly report for the period ending March 31, 2012. "As of March 31, 2012, we were in compliance with all of the covenants in our Credit Agreement. The Credit Agreement provides, however, that if the amount outstanding at any time exceeds the 'borrowing base', we must provide additional collateral to the lenders or repay the excess as provided in the Credit Agreement. The borrowing base is set in the sole discretion of our lenders in June and December of each year based, in part, on the value of our estimated reserves as determined by the lenders using natural gas prices forecasted by the lenders." "Due to the decline in the bank group's price projections, we expect our outstanding loan balance at the June determination date will exceed the new borrowing base, resulting in a borrowing base deficiency. We do not have additional collateral to provide to the lenders and we expect that our operating cash flows would be insufficient to repay the expected borrowing base deficiency, as required under the Credit Agreement. As such, unless we amend the Credit Agreement, we may be in default under the agreement when the borrowing base is determined in June 2012. In addition, the elimination of the unused availability under the borrowing base, which is a factor in our working capital covenant, may result in a future default of that covenant under the Credit Agreement." The Company said it has begun discussions with its bank group. According to the Company, "Until the borrowing base for June 2012 has been determined, we will not know the amount of the deficiency. As of March 31, 2012, the debt is classified as long- term as we are not in violation of any debt covenants. Should we be in violation of any covenants which have not been waived or have a borrowing base deficiency as of June 30, 2012, some or all of the debt will be reclassified to current. There are no assurances that we will be able to amend our Credit Agreement or obtain a waiver. If we do obtain a waiver or an amendment, there can be no assurance as to the cost or terms of such an amendment." "These conditions raise substantial doubt about our ability to continue as a going concern for the next twelve months." The Company's balance sheet at Sept. 30, 2012, showed $108.08 million in total assets, $171.67 million in total liabilities, $33.28 million in mezzanine equity, and a $96.86 million total stockholders' deficit. GEOMET INC: Central Securities Discloses 5.1% Equity Stake ---------------------------------------------------------- Central Securities Corporation filed an amended Schedule 13G with the U.S. Securities and Exchange Commission on Feb. 6, 2013, disclosing that it beneficially owns 4,068,723 shares of Common Stock of GeoMet, Inc., representing 5.1% of the shares outstanding. A copy of the filing is available at: http://is.gd/Kpmwcr About Geomet Inc. Houston, Texas-based GeoMet, Inc., is an independent energy company primarily engaged in the exploration for and development and production of natural gas from coal seams (coalbed methane) and non-conventional shallow gas. Its principal operations and producing properties are located in the Cahaba and Black Warrior Basins in Alabama and the central Appalachian Basin in Virginia and West Virginia. It also owns additional coalbed methane and oil and gas development rights, principally in Alabama, Virginia, West Virginia, and British Columbia. As of March 31, 2012, it owns a total of 192,000 net acres of coalbed methane and oil and gas development rights. "As of May 11, 2012, we had $148.6 million outstanding under our Fifth Amended and Restated Credit Agreement," the Company said in its quarterly report for the period ending March 31, 2012. "As of March 31, 2012, we were in compliance with all of the covenants in our Credit Agreement. The Credit Agreement provides, however, that if the amount outstanding at any time exceeds the 'borrowing base', we must provide additional collateral to the lenders or repay the excess as provided in the Credit Agreement. The borrowing base is set in the sole discretion of our lenders in June and December of each year based, in part, on the value of our estimated reserves as determined by the lenders using natural gas prices forecasted by the lenders." "Due to the decline in the bank group's price projections, we expect our outstanding loan balance at the June determination date will exceed the new borrowing base, resulting in a borrowing base deficiency. We do not have additional collateral to provide to the lenders and we expect that our operating cash flows would be insufficient to repay the expected borrowing base deficiency, as required under the Credit Agreement. As such, unless we amend the Credit Agreement, we may be in default under the agreement when the borrowing base is determined in June 2012. In addition, the elimination of the unused availability under the borrowing base, which is a factor in our working capital covenant, may result in a future default of that covenant under the Credit Agreement." The Company said it has begun discussions with its bank group. According to the Company, "Until the borrowing base for June 2012 has been determined, we will not know the amount of the deficiency. As of March 31, 2012, the debt is classified as long- term as we are not in violation of any debt covenants. Should we be in violation of any covenants which have not been waived or have a borrowing base deficiency as of June 30, 2012, some or all of the debt will be reclassified to current. There are no assurances that we will be able to amend our Credit Agreement or obtain a waiver. If we do obtain a waiver or an amendment, there can be no assurance as to the cost or terms of such an amendment." "These conditions raise substantial doubt about our ability to continue as a going concern for the next twelve months." The Company's balance sheet at Sept. 30, 2012, showed $108.08 million in total assets, $171.67 million in total liabilities, $33.28 million in mezzanine equity, and a $96.86 million total stockholders' deficit. HAWKER BEECHCRAFT: Given Formal Approval for PBGC Settlement ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Hawker Beechcraft Inc. took care of one detail before the aircraft manufacturer can implement the reorganization plan the bankruptcy court approved by signing a confirmation order on Feb. 1. According to the report, U.S. Bankruptcy Judge Stuart M. Bernstein said at the confirmation hearing he would approve a settlement with the Pension Benefit Guaranty Corp. allowing termination of the pension plans for salaried workers and non-union workers in the customer-support arm of the business. The pension plan for hourly workers will be frozen at the year's end. Judge Bernstein, the report discloses, signed the formal order on Feb. 5 approving the PBGC settlement. As with the confirmation order, Judge Bernstein made numerous changes in the draft order given him by the parties. Among other things, he deleted a provision saying the requirements had been met under pension law for the distress termination of pension plans. About Hawker Beechcraft Hawker Beechcraft Acquisition Company, LLC, headquartered in Wichita, Kansas, manufactures business jets, turboprops and piston aircraft for corporations, governments and individuals worldwide. Hawker Beechcraft reported a net loss of $631.90 million on $2.43 billion of sales in 2011, compared with a net loss of $304.30 million on $2.80 billion of sales in 2010. Hawker Beechcraft Inc. and 17 affiliates filed for Chapter 11 reorganization (Bankr. S.D.N.Y. Lead Case No. 12-11873) on May 3, 2012, having already negotiated a plan that eliminates $2.5 billion in debt and $125 million of annual cash interest expense. The plan will give 81.9% of the new stock to holders of $1.83 billion of secured debt, while 18.9% of the new shares are for unsecured creditors. The proposal has support from 68% of secured creditors and holders of 72.5% of the senior unsecured notes. Hawker is 49%-owned by affiliates of Goldman Sachs Group Inc. and 49%-owned by Onex Corp. The Company's balance sheet at Dec. 31, 2011, showed $2.77 billion in total assets, $3.73 billion in total liabilities and a $956.90 million total deficit. Other claims include pensions underfunded by $493 million. Hawker's legal representative is Kirkland & Ellis LLP, its financial advisor is Perella Weinberg Partners LP and its restructuring advisor is Alvarez & Marsal. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Sidley Austin LLP serves as legal counsel and Houlihan Lokey Howard & Zukin Capital Inc. serves as financial advisor to the DIP Agent and the Prepetition Agent. Wachtell, Lipton, Rosen & Katz represents an ad hoc committee of senior secured prepetition lenders holding 70% of the loans. Milbank, Tweed, Hadley & McCloy LLP represents an ad hoc committee of holders of the 8.500% Senior Fixed Rate Notes due 2015 and 8.875%/9.625% Senior PIK Election Notes due 2015 issued by Hawker Beechcraft Acquisition Company LLC and Hawker Beechcraft Notes Company. The members of the Ad Hoc Committee -- GSO Capital Partners, L.P. and Tennenbaum Capital Partners, LLC -- hold claims or manage accounts that hold claims against the Debtors' estates arising from the purchase of the Senior Notes. Deutsche Bank National Trust Company, the indenture trustee for senior fixed rate notes and the senior PIK-election notes, is represented by Foley & Lardner LLP. An Official Committee of Unsecured Creditors appointed in the case has selected Daniel H. Golden, Esq., and the law firm of Akin Gump Strauss Hauer & Feld LLP as legal counsel. The Committee's financial advisor is FTI Consulting, Inc. HAYES IRON: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Hayes Iron & Metal, Inc. P.O. Box 157 Providence, NC 27315 Bankruptcy Case No.: 13-10157 Chapter 11 Petition Date: February 5, 2013 Court: United States Bankruptcy Court Middle District of North Carolina (Greensboro) Debtor's Counsel: Jason L. Hendren, Esq. Hendren & Malone, PLLC 4600 Marriott Drive, Suite 150 Raleigh, NC 27612 Tel: (919) 573-1422 Fax: (919) 420-0475 E-mail: jhendren@hendrenmalone.com Estimated Assets: $50,001 to $100,000 Estimated Debts: $10,000,001 to $50,000,000 A copy of the Company's list of its 20 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/ncmb13-10157.pdf The petition was signed by Douglas T. Alderson, II, president. HEALTHWAREHOUSE.COM INC: Fully Satisfies 2010 and 2011 Loans ------------------------------------------------------------ HealthWarehouse.com, Inc., completed private placements of a total of 3,501,975 units at a price of $1.00 per unit. Each unit consists of (i) one share of the Company's common stock, par value $0.001 per share, and (ii) warrants to purchase three shares of the Common Stock at an exercise price of $0.25 per share, which must be exercised within 5 years of Feb. 1, 2013. Substantially all of the proceeds from the sale of the units have been used by the Company to satisfy all its obligations under the 2010 Loan Documents and the 2011 Loan Documents. As a part of the Private Placement, Lalit Dhadphale, President and Chief Executive Officer of the Company, purchased 500,000 units. In connection with the Private Placement, Mr. Dhadphale has entered into repurchase agreements with each other purchaser of units, pursuant to which he has agreed to repurchase, subject to certain conditions, one-half of each holder's units at a purchase price of $1.00 per unit if the closing price of the Common Stock is less than $0.25 on five consecutive trading days at any time within one year of Feb. 1, 2013. Cape Bear Partners, LLC, which holds a substantial equity position in the Company, entered into repurchase agreements with each purchaser, other than Mr. Dhadphale, that are substantially similar to Mr. Dhadphale's agreements, except that Cape Bear's obligations are secured by a lien over certain real estate. As previously disclosed, the Company failed to make required payments of $1 million in principal and approximately $180,000 of accrued interest due under its Loan and Security Agreement dated Nov. 9, 2010, with two accredited investors and the 7% Convertible Promissory notes issued thereunder. Furthermore, the Company failed to make required payments of $2 million in principal and approximately $198,000 in accrued interest under its Loan and Security Agreement dated Sept. 2, 2011, with the Lenders and the 7% Convertible Promissory notes issued thereunder. Accordingly, the Company was previously in breach of its obligations under the 2010 Loan Documents and 2011 Loan Documents and subject to the Lenders' remedies thereunder, including remedies against the Company assets, including inventory and equipment, that secured its obligations thereunder. On Feb. 1, 2013, the Company applied substantially all of the proceeds of the Private Placement to satisfy the obligations under the 2010 Loan Documents and 2011 Loan Documents in full. Accordingly, its obligations under the 2010 Loan Documents and 2011 Loan Documents have been satisfied, and the 2010 Loan Documents and 2011 Loan Documents have been terminated. Notwithstanding the foregoing, the Company still has substantial indebtedness, lacks liquidity and believes that it currently does not have adequate working capital to run its business. It is in the process of considering alternatives to address these problems, including new debt financing and additional private placements of equity securities. There is no assurance that the Company will be able to pursue any course of action that will allow it to continue to operate its business as a going concern, or to continue to operate in a manner that preserves the interests of its current creditors and equity holders. About HealthWarehouse.com HealthWarehouse.com, Inc., headquartered in Florence, Kentucky, is a U.S. licensed virtual retail pharmacy ("VRP") and healthcare e- commerce company that sells brand name and generic prescription drugs as well as over-the-counter ("OTC") medical products. The Company's balance sheet at June 30, 2012, showed $2.24 million in total assets, $6.82 million in total liabilities, $752,226 in redeemable preferred stock, and a $5.33 million total stockholders' deficiency. The Company reported a net loss of $5.71 million in 2011, compared with a net loss of $3.69 million in 2010. "Since inception, the Company has financed its operations primarily through product sales to customers, debt and equity financing agreements, and advances from stock holders. As of June 30, 2012 and December 31, 2011, the Company had negligible cash and working capital deficiency of $5,724,914 and $2,404,464, respectively. For the six months ended June 30, 2012, cash flows included net cash used in operating activities of $581,948, net cash provided by investing activities of $138,241 and net cash provided by financing activities of $443,846. Additionally, all of the Company's outstanding convertible notes payable mature at the end of December 2012 and outstanding notes payable mature in January 2013. These conditions raise substantial doubt about the Company's ability to continue as a going concern," the Company said in its quarterly report for the period ended June 30, 2012. In the auditors' report accompanying the consolidated financial statement for the year ended Dec. 31, 2011, Marcum LLP, in New York, expressed substantial doubt about HealthWarehouse.com's ability to continue as a going concern. The independent auditors noted that the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. HURLEY MEDICAL: Moody's Rates $65.515-Mil. Fixed Rate Bonds 'Ba1' ----------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to Hurley Medical Center's Series 2013 A&B fixed rate revenue bonds to be issued through the City of Flint Hospital Building Authority. Concurrent with this action, Moody's has affirmed Hurley's Ba1 long-term rating on existing rated debt outstanding. The outlook remains stable. Moody's Rating: Issue: Series 2013 A&B Fixed Rate Revenue Bonds; Rating: Ba1; Sale Amount: USD65,515,000; Expected Sale Date: 02-25-2013; Rating Description: Revenue: Other Summary Rating Rationale: The assignment and affirmation of the Ba1 rating and stable outlook reflect Moody's expectation that Hurley will maintain the improved and adequate operating results as experienced through six months fiscal year 2013, adequate debt coverage ratios, and that HMC's balance sheet ratios will rebound. Moody's noted that Hurley continues to operate in a challenged and competitive service area. Strengths: - As expected, Hurley's operating margins have rebounded in interim FY 2013 (5.9% adjusted operating cash flow margin through six-months FY 2013, compared to 3.7% for the same period FY 2012) - Adequate pro forma adjusted debt coverage ratios for a Ba rated credit (6.9 times debt-to-cash flow, 1.9 times peak debt service coverage, 29% debt-to-total operating revenue, and 68% cash-to-debt) - Differentiation of essential high-end tertiary services (e.g., burn unit and Level I trauma) generates a draw of patients beyond the City of Flint and Genesee County. Management reports that more than 40% of Hurley's business is derived from patients outside the City of Flint. - Hurley management continues to be committed to reinvesting in the hospital's physical plant. Hurley's capital spending ratio has averaged 2.0 times over the last five years. Challenges - More modest balance sheet ratios at December 31, 2012 (67 days cash on hand), due largely to a significant increase in accounts receivable days, from 33 days at fiscal year-end 2011 to 50 days at FYE 2012 to 62 days at December 31, 2012 (note that because of a change in bad debt classification, A/R days at FYE 2011 are not entirely comparable with calculations for subsequent periods). Management notes that this trend is due largely to a system conversion, which Moody's expects to be corrected over time. - Weak demographic characteristics in the City of Flint as Medicaid represented a high 39% of gross revenues in FY 2012. - Hurley relies significantly on special funding from the state such as Medicaid disproportionate share (DSH), which accounts for a sizeable share of cash flow (just over USD51 million in FY 2012, according to management). While this funding demonstrates significant public policy support from the state, Moody's views these revenues as "at risk" and any contraction of these funds will require commensurate cost reductions. - Competitive service area, with the presence of two like-sized competitors in the immediate Flint area, both of which are part of larger healthcare systems. - Heavily unionized workforce as Hurley employees are represented by nine different labor bargaining units. Outlook The stable outlook reflects Moody's expectation that Hurley will maintain adequate operating margins as experience through six- months FY 2013 and debt coverage ratios, and that HMC's balance sheet ratios will rebound. What Could Make The Rating Go Up Sustained material improvement in cash flow generation and operating margins leading to improved debt coverage ratios; stronger balance sheet ratios; significant market share gain for profitable service lines What Could Make The Rating Go Down Reversion to thin operating margins; material decline in balance sheet measures; weaker debt coverage ratios; unexpected and significant increase in debt beyond the Series 2013 A&B bonds without commensurate growth in cash and cash flow The principal methodology used in this rating was Not-For-Profit Healthcare Rating Methodology published in March 2012. INSPIRATION BIOPHARMA: Celtic Welcomes Hemophilia Asset Sale ------------------------------------------------------------ Celtic Pharmaceutical Holdings L.P. on Feb. 7 welcomed [Thurs]day's announcement by Inspiration Biopharmaceuticals that it has successfully concluded the sale of its hemophilia product portfolio for an aggregate consideration that could exceed $1 billion. Celtic Pharma holds a substantial minority stake in Inspiration, and will participate in the transaction proceeds in accordance with an agreement reached between Ipsen as Debtor-in- Possession and the non-Ipsen stakeholders. "We were disappointed by the timing of Ipsen's decision to withdraw their strategic focus from hemophilia, which led to the sale of Inspiration's products under Chapter 11 of the Bankruptcy Code prior to their achieving regulatory approval, but we were pleased to be able to work constructively with Ipsen and Inspiration's management team to achieve a successful sale process and transition for the assets," said Stephen Evans-Freke, Managing General Partner, Celtic Pharma. "We are very pleased that the auction process has validated the commercial potential for these products, while retaining substantive value for Inspiration's stakeholders. We would like to thank the Inspiration management team led by John P. Butler for their exemplary performance on behalf of Inspiration's shareholders under difficult circumstances." About Celtic Pharmaceutical Holdings L.P. Celtic Pharmaceutical Holdings L.P. -- http://www.celticpharma.com -- is a private equity investment firm focused on the biotechnology and pharmaceutical industries. Celtic Pharma was founded by Stephen Evans-Freke and John Mayo, CBE and is based in Bermuda. Celtic Pharma has acquired and invested in late stage pharmaceutical programs and manages these programs through their development for ultimate sale to established pharmaceutical companies. Celtic Pharma is fully invested at this time. Celtic Pharma's aim has been to bridge the gap between the established pharmaceutical companies' new product pipeline crisis and the biotech industry's capital drought. About Inspiration Biopharmaceuticals Inspiration Biopharmaceuticals Inc. develops recombinant blood coagulation factor products for the treatment of hemophilia. Inspiration, based in Cambridge, Massachusetts, has two products in what the company calls "advanced clinical development." Two other products are in "pre-clinical development." None of the products can be marketed as yet. Inspiration filed for voluntary Chapter 11 reorganization (Bankr. D. Mass. Case No. 12-18687) on Oct. 30, 2012, in Boston. Bankruptcy Judge William C. Hillman oversees the case. Mark Weinstein and Michael Nolan, at FTI Consulting, Inc., serve as the Debtor's Chief Restructuring Officers. The Debtor is represented by Harold B. Murphy of Murphy & King. The petition shows assets and debt both exceed $100 million. Assets include patents, trademarks and the products in development. Liabilities include $195 million owing to Ipsen Pharma SAS, which is also a 15.5% shareholder. Ipsen -- http://www.ipsen.com/-- is also owed $19.4 million in unsecured debt. There is another $12 million in unsecured claims. Ipsen is pledged to provide $18.3 million in financing. The Debtor disclosed $20,383,300 in assets and $241,049,859 in liabilities. Ipsen is represented in the case by J. Eric Ivester, Esq., at Skadden Arps. The Official Committee of Unsecured Creditors tapped Jeffrey D. Sternklar and Duane Morris LLP as its counsel, and The Hawthorne Consulting Group, LLC as its financial advisor. INTEGRA TELECOM: Moody's Rates New $555 Million Senior Debt 'B2' ---------------------------------------------------------------- Moody's Investors Service assigned a B2 (LGD3-35%) rating to Integra Telecom, Inc.'s proposed USD555 million senior secured 1st lien term loan due 2019 and USD60 million senior secured revolver due 2018 and a Caa2 (LGD5-87%) rating to the USD225 million senior secured 2nd lien term loan due 2020. The net proceeds will be used to refinance Integra's existing senior secured term loan and USD475 million of 10.75% senior secured notes. Moody's has also changed Integra's ratings outlook to positive from stable to reflect Moody's expectation that the company will be able to achieve sustainable year over year revenue growth within the next twelve months. As part of the rating action, Moody's has also affirmed Integra's B3 Corporate Family Rating (CFR) and B3-PD Probability of Default Rating (PDR). Assignments: US$555M Senior Secured 1st Lien Term Loan due 2019, Assigned B2 (LGD3, 35%) US$60M Senior Secured Revolver due 2018, Assigned B2 (LGD3, 35%) US$225M Senior Secured 2nd Lien Term Loan due 2020, Assigned Caa2 (LGD5, 87%) Changes: Outlook, changed to Positive from Stable Ratings Rationale Integra's B3 corporate family rating reflects the company's competitive challenges from incumbent carriers like CenturyLink as it shifts to target larger size enterprises and from cable companies which hold a strong position within the small business segment. The rating is supported by the company's recent improvement in operating performance which has led to a stabilization of revenues since the first quarter of 2012. The improvement in revenue trajectory along with cost cutting efforts have allowed the company to grow EBITDA and reduce leverage. In addition, Moody's expects Integra to achieve positive free cash flow from lower interest expense following the refinance and a continuation of more modest capital investment. The proposed refinancing will extend the current maturities and save approximately USD15 million in annual interest expense. The company's extensive fiber-optic network assets in the Pacific Northwest and its relatively stable base of recurring revenues provide additional support. The ratings for the debt instruments reflect both the overall probability of default of Integra, to which Moody's assigns a probability of default rating (PDR) of B3-PD, the average family loss given default assessment and the composition of the debt instruments in the capital structure. Moody's assumes a 50% family recovery rate given the capital structure of first lien and second lien bank debt. The senior secured first lien term loan and revolver are rated B2 (LGD3-35%), one notch above the CFR due to loss absorption provided by the second lien debt, which is rated Caa2 (LGD5-87%) to reflect its junior ranking within the capital structure. Moody's believes that Integra will maintain good liquidity over the next twelve months with an undrawn USD60 million revolver and USD13 million of cash on hand as of September 30, 2012. The first lien debt will be subject to a 4.25x net first lien leverage covenant, which Moody's believes will have sufficient cushion for the next 12 months. Moody's could upgrade Integra's ratings if the company is able to generate consistent revenue growth and positive free cash flow while its Moody's adjusted Debt/EBITDA approaches 4x. Moody's could stabilize Integra's outlook if revenue growth fails to materialize and leverage remains above 4x over the next 12-18 months and could lower Integra's ratings if free cash flow turns negative, if liquidity becomes strained or if adjusted Debt/EBITDA leverage exceeds 6x for an extended period. The principal methodology used in rating Integra Telecom, Inc., was the Global Telecommunications Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. INTEGRA TELECOM: S&P Revises Outlook to Stable; Affirms 'B' CCR --------------------------------------------------------------- Standard & Poor's Ratings Services revised the outlook on Portland, Ore.-based competitive local exchange carrier (CLEC) Integra Telecom Inc. to stable from negative and affirmed S&P's 'B' corporate credit rating on the company. At the same time, S&P assigned 'B' issue-level and '3' recovery ratings to Integra's proposed $555 million senior secured term loan due 2019 and $60 million revolving credit facility due 2018. The '3' recovery rating on this debt indicates S&P's expectation for meaningful (50% to 70%) recovery in the event of a payment default. In addition, S&P assigned its 'CCC+' issue-level and '6' recovery ratings to the proposed $225 million second-lien term loan due 2020. The '6' recovery rating on this debt indicates S&P's expectation for negligible (0% to 10%) recovery in the event of payment default. The company will use the proceeds of the loans to refinance its existing debt and pay transaction fees and expenses. "The outlook revision to stable from negative reflects our expectation that leverage will be sustained below 5x over the next couple of years given the company's recent operational improvements," said Standard & Poor's credit analyst Michael Weinstein. Over the past year, Integra has stabilized monthly customer churn, and continued a trend of sequential EBITDA growth. The ratings on Integra reflect Standard & Poor's Ratings Services' view of the company's "vulnerable" business risk profile and "aggressive" financial risk profile. Key elements of the business risk assessment include intense industry competition and pricing pressure inherent in the company's business as a competitive local exchange carrier (CLEC), facing larger and better capitalized incumbent local exchange carriers (ILECs), and cable operators targeting smaller businesses for telecom services. These risks overshadow the company's good EBITDA margins relative to its CLEC peers and its ownership of fiber assets as opposed to a pure leasing model. The company's aggressive financial risk profile reflects its leveraged capital structure, with operating-lease-adjusted debt to EBITDA of 4.8x as of Sept. 30, 2012, pro forma for the proposed refinancing. S&P expects leverage to decline slightly, but remain within the 4x to 5x range, consistent with the aggressive financial risk assessment. Integra's return to EBITDA growth in 2012 reflects moderate success in its strategy to sell higher bandwidth, fiber-based products to targeted enterprise and wholesale customers. S&P's base-case operating forecast incorporates the following assumptions: -- Revenues grow in the low-single-digits in 2013 and 2014, as the company improves new customer sales under its upmarket strategy. -- S&P's revenue assumptions incorporate renewal discounts that are largely offset by contracted price increases. -- Monthly customer churn remains in the low-1% area of revenues over the next couple of years. -- EBITDA margins improve gradually over the next couple of years to around 32% in 2014 due to improved operating leverage from sales on or near existing network assets. EBITDA growth is sustained in the mid-single-digits over the next two years. -- Total leverage, adjusted for the present value of operating leases, declines to the mid-4x area at the end of 2013, and the low-4x area at the end of 2014. -- Capital expenditures range between $100 million to $115 million over the next two years. Capital spending is approximately 75% success-based, and would likely be curtailed if sales growth weakens. The outlook is stable, which reflects S&P's expectation that the company will sustain leverage at below 5x over the next couple of years given stabilized monthly customer churn and EBITDA growth driven by its upmarket sales focus. S&P could lower the rating if earnings decline precipitously, competitive conditions intensify, or economic conditions worsen. This could stem from higher revenue churn or operational missteps, resulting in adjusted leverage exceeding 5x, with no prospect for improvement. S&P projects that revenues would have to decline about 10% from its base-case scenario for this to occur by the end of 2013, or EBITDA margins would have to decline by 300 basis points. An upgrade is unlikely in the near term because of S&P's assessment of a vulnerable business risk profile, as it would require significant improvement in leverage to at least 4x or lower. IRON MOUNTAIN: Credit Pact Changes No Effect on Moody's Ba3 CFR --------------------------------------------------------------- Moody's Investors Service said that Iron Mountain Incorporated's recently executed amendment to its credit agreement does not currently impact its Ba3 Corporate Family Rating, SGL-3 Speculative Grade Liquidity Rating, or negative outlook; nonetheless, the amendment is modestly credit positive as it temporarily lowers the minimum fixed charges coverage ratio for which covenant compliance had previously been a concern. Headquartered in Boston, Iron Mountain provides information storage and related services. Annual revenues are approximately USD3 billion. ISC8 INC: Delaware Charter Guarantee Holds 9% Equity Stake ---------------------------------------------------------- In a Schedule 13G filing with the U.S. Securities and Exchange Commission, the Delaware Charter Guarantee & Trust Company dba Principal Trust Company as Trustee for the ISC8 Inc 401(k) and Stock Bonus Plan disclosed that, as of Dec. 31, 2012, it beneficially owns 12,798,582 shares of common stock of ISC8 Inc. representing 9% of the shares outstanding. A copy of the filing is available for free at http://is.gd/5CCyWj About ISC8 Inc. Costa Mesa, California-based ISC8 Inc. is engaged in the design, development, manufacture and sale of a family of security products, consisting of cyber security solutions for commercial and U.S. government applications, secure memory products, some of which utilize technologies that the Company has pioneered for three-dimensional ("3-D") stacking of semiconductors, systems in a package ("Systems in a Package" or "SIP"), and anti-tamper systems. Squar, Milner, Peterson, Miranda & Williamson, LLP, in Newport Beach, California, expressed substantial doubt about ISC8 Inc.'s ability to continue as a going concern. The independent auditors noted that as of Sept. 30, 2012. the Company has negative working capital of $10.1 million and a stockholders? deficit of $35.4 million. The Company reported a net loss of $19.7 million on $4.2 million of revenues in fiscal 2012, compared with a net loss of $15.8 million on $5.2 million of revenues in fiscal 2011. The Company's balance sheet at Sept. 30, 2012, showed $6.1 million in total assets, $41.5 million in total liabilities, and a stockholders' deficit of $35.4 million. J.C. PENNEY: Seeks to Bar Claim it Defaulted on Bonds ----------------------------------------------------- Sapna Maheshwari (sapnam@bloomberg.net) & Beth Jinks (bjinks1@bloomberg.net), writing for Bloomberg News, reported that J.C. Penney Co. (JCP), facing a potential threat to its turnaround plans, has come out swinging after debt holders claimed it technically defaulted on a bond. The report related that the department store chain filed a lawsuit in Delaware Chancery Court seeking to block efforts by a group of bondholders to declare a default on 7.4 percent bonds due in 2037. The company also asked lawyers at Brown Rudnick LLP to identify the investors they represent. The Boston-based firm said in a letter to the company that it represents holders of more than half of the debt. The claim exposes J.C. Penney to "imminent, irreparable harm," Bloomberg said, citing arguments raised by the Plano, Texas-based retailer in the complaint. The suggestion could put the company at risk of demands for payment on more than $2.8 billion in debt, increase borrowing costs and "impair its ability to effectively deploy capital to drive its strategic business plan," according to the legal filing. "We believe this notice of default is invalid, completely without merit and is intended to create self-interested trading opportunities in the market," J.C. Penney Chief Financial Officer Ken Hannah said in a statement, according to Bloomberg. "We will therefore vigorously defend the interests of J.C. Penney and all of our constituencies in all appropriate forums." According to Bloomberg, J.C. Penney has had its credit ratings slashed in the past year as Chief Executive Officer Ron Johnson tries to reverse three quarters of sales declines exceeding 20 percent. Johnson's plan is supported by activist investor Bill Ackman's Pershing Square Capital Management LP, the largest equity stakeholder in the company, with 18 percent of the shares outstanding. Ackman, who is on the board, recruited Johnson to J.C. Penney from Apple. Bond Yield J.C. Penney has $325.6 million of the 7.4 percent notes outstanding, according to data compiled by Bloomberg. The debt trades at 84.25 cents on the dollar to yield 9 percent, from 96.75 cents and a 7.7 percent yield about a year ago, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Last month, "market gossip" about a default prompted Covenant Review to issue a Jan. 24 research note, in which the independent credit research firm dismissed the rumors "as greatly exaggerated," the Bloomberg report said. "The bond market is shrugging off this lawsuit because over the past two weeks the bond market has realized it's not a good argument," Adam Cohen, founder of Covenant Review, said in an interview with Bloomberg. "Brown Rudnick came in with a long-shot argument, and now the market is realizing that it's really unlikely they'll win." J.C. Penney rose 2.4 percent to $19.81 at the close in New York, according to the Bloomberg report. The shares fell 44 percent in 2012, compared with a 25 percent gain for the Standard & Poor's 500 Retailing Index. The case is J.C. Penney Co. Inc. v. US Bank National Association as Indenture Trustee, 8276, Delaware Chancery Court (Wilmington). JAMES RIVER: Has Significant Default Risk, Says Fitch ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, relates Fitch Ratings said in a report that James River Coal Co. and Xinergy Corp. both have a "significant default risk" based on prices the coal producers' bonds are fetching in the market. There is hope on the horizon because Fitch believes "2013 will be the trough year for coal pricing." Fitch noted in its Feb. 5 report that bonds of the two companies are trading at distress levels, meaning the yields are 10 percentage points more than the yield on Treasury bonds of comparable duration. Xinergy is a small coal miner in Central Appalachia. On Feb. 6 purchasers were offering to buy the $195 million in 9.25 percent secured bonds due 2019 for 60.375 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. James River is an operator of coal mines mostly in central Appalachia. The $172.5 million in 4.5% senior unsecured convertible notes due 2015 traded on Feb. 5 for 36.6 cents on the dollar, to yield 47.638%, according to Trace. The $270 million in 7.875 percent senior unsecured notes traded at 10:37 a.m. Feb. 6 for 52.61 cents on the dollar, for a yield of 22.455%, Trace reported. Fitch noted that since 1994, there have been 11 mining company defaults among producers with assets of at least $25 million as of the bankruptcy filing date. Three of these defaults occurred in 2002, driven by the effects of rising operating costs compounded by fixed-price sales contracts at the time. Patriot Coal Corp., which filed for bankruptcy in 2012, was more than 11x the size (in terms of assets) of the next largest defaulted coal company. Fitch's report provides an update of recent developments in the on-going Patriot case. The full report 'U.S. Coal Bankruptcies: Future, Present, Past' is available at http://www.fitchratings.com/ K-V-PHARMACEUTICAL: Noteholders Say No Ambiguity in Makena Liens ---------------------------------------------------------------- Ad Hoc Senior Noteholders Group in the Chapter 11 cases of K-V Discovery Solutions, Inc., et al., objected to the motion of the Official Committee of Unsecured Creditors seeking for a declaratory judgment that the senior noteholders did not have a security interest in the Makena Assets as of the Petition Date. The Ad Hoc Group is comprised of Silver Point Finance, LLC, Whitebox Advisors, LLC, and Pioneer Investment Management, Inc., each as beneficial holders of in excess of 75% in principal amount of the Senior Secured Notes due 2015 issued in the aggregate principal amount of $225 million pursuant to that certain Indenture, dated March 17, 2011. According to the Noteholders Group, the Creditors Committee's motion must be denied because: 1. The pledge and security agreement and indenture unambiguously grant expansive security interests and lien rights to the senior secured noteholders; 2. the Creditors Committee's interpretation of the agreements is unreasonable and must be rejected; and 3. if the Court finds there to be an ambiguity in the agreement, then a reasonable opportunity to consider parol evidence must be allowed. Alternatively, if the Court determines that the relevant agreements are ambiguous, the Noteholders Group requests additional time to complete discovery and submit supplemental evidence to the Court at a hearing scheduled for the end of February. Wilmington Trust National Association, as senior indenture trustee and collateral agent, joined in the objection of the Noteholders' Group. About K-V Pharmaceutical K-V Pharmaceutical Company (NYSE: KVa/KVb) -- http://www.kvpharmaceutical.com/-- is a fully integrated specialty pharmaceutical company that develops, manufactures, markets, and acquires technology-distinguished branded and generic/non-branded prescription pharmaceutical products. The Company markets its technology distinguished products through ETHEX Corporation, a subsidiary that competes with branded products, and Ther-Rx Corporation, the company's branded drug subsidiary. K-V Pharmaceutical Company and certain domestic subsidiaries on Aug. 4, 2012, filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-13346, under K-V Discovery Solutions Inc.) to restructure their financial obligations. K-V employed Willkie Farr & Gallagher LLP as bankruptcy counsel, Williams & Connolly LLP as special litigation counsel, and SNR Denton as special litigation counsel. In addition, K-V tapped Jefferies & Co., Inc., as financial advisor and investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. The U.S. Trustee appointed five members to serve in the Official Committee of Unsecured Creditors. Kristopher M. Hansen, Esq., Erez E. Gilad, Esq., and Matthew G. Garofalo, Esq., at Stroock & Stroock & Lavan LLP, represent the Creditors Committee. Weil, Gotshal & Manges LLP's Robert J. Lemons, Esq., and Lori R. Fife, Esq., represent an Ad Hoc Senior Noteholders Group. The Plan provides that in full satisfaction, settlement, release. K-V PHARMACEUTICAL: Keeps Control of Bankruptcy Case ---------------------------------------------------- Patrick Fitzgerald at Daily Bankruptcy Review reports K-V Pharmaceutical Co. won an extension to keep exclusive control of its restructuring case, but a bankruptcy judge left the door open for creditors to file a rival proposal. The Debtor in January filed a Chapter 11 reorganization plan where first-lien lenders will receive 82% of the stock and a $50 million second-lien term loan. The plan is supported by holders of 78% of the $225 million in senior secured notes. A group of the lenders making a $85 million loan to finance the plan will receive 15% of the new stock. According to the report, holders of $200 million in convertible notes are to have 3% of the new stock along with the ability to purchase more stock in a $20 million rights offering at a price related to full payment of the senior notes. General unsecured creditors are being offered $1 million cash to divide among themselves. About K-V Pharmaceutical K-V Pharmaceutical Company (NYSE: KVa/KVb) -- http://www.kvpharmaceutical.com/-- is a fully integrated specialty pharmaceutical company that develops, manufactures, markets, and acquires technology-distinguished branded and generic/non-branded prescription pharmaceutical products. The Company markets its technology distinguished products through ETHEX Corporation, a subsidiary that competes with branded products, and Ther-Rx Corporation, the company's branded drug subsidiary. K-V Pharmaceutical Company and certain domestic subsidiaries on Aug. 4, 2012, filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-13346, under K-V Discovery Solutions Inc.) to restructure their financial obligations. K-V employed Willkie Farr & Gallagher LLP as bankruptcy counsel, Williams & Connolly LLP as special litigation counsel, and SNR Denton as special litigation counsel. In addition, K-V tapped Jefferies & Co., Inc., as financial advisor and investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. The U.S. Trustee appointed five members to serve in the Official Committee of Unsecured Creditors. Kristopher M. Hansen, Esq., Erez E. Gilad, Esq., and Matthew G. Garofalo, Esq., at Stroock & Stroock & Lavan LLP, represent the Creditors Committee. Weil, Gotshal & Manges LLP's Robert J. Lemons, Esq., and Lori R. Fife, Esq., represent an Ad Hoc Senior Noteholders Group. The Plan provides that in full satisfaction, settlement, release. KAIDANS INC: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Kaidans, Inc. dba University Inn 1101 Frontage Rd. Oxford, MS 38865 Bankruptcy Case No.: 13-10413 Chapter 11 Petition Date: February 5, 2013 Court: United States Bankruptcy Court Northern District of Mississippi (Aberdeen) Judge: Jason D. Woodard Debtor's Counsel: Adam B. Emerson, Esq. BRIDGFORTH & BUNTIN, PLLC P.O. Box 241 5293 Getwell Road Southaven, MS 38672 Tel: (662) 393-4450 E-mail: adam@bridgforthbuntin.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Rajendra Patel, owner. KB HOME: S&P Revises Outlook to Stable; Affirms 'B' CCR ------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on KB Home to stable from negative and affirmed its 'B' corporate credit rating on the company and issue-level ratings on $1.7 billion of debt. At the same time, S&P assigned a 'B' issue-level rating and a '3' recovery rating to KB Home's proposed $150 million convertible senior notes due 2019. S&P revised its recovery rating on the exisiting notes to '3' from '4', which indicates S&P's expectation that lenders would receive a meaningful (50%-70%) recovery in the event of default. KB Home plans to use the net proceeds from the convertible senior note sale, as well as a concurrent $100 million common equity sale for general corporate purposes. In S&P's view, the proceeds will bolster KB Home's cash liquidity, which the company could use to fund additional investments in land and possibly repay its 2014 debt maturity. "Our rating on KB Home primarily reflects the company's "highly leveraged" financial profile as evidenced by high book and EBITDA based leverage metrics," said credit analyst George Skoufis. "Our "fair" business risk assessment reflects our view that KB Home's market position in regions experiencing a sound recovery and investments in new product and communities should contribute to volume growth in fiscal 2013 and beyond and a return to consistent profitability." "Our return to stable outlook acknowledges improving operating fundamentals and KB Homes' good positions within some of the healthier housing markets that we expect will result in improved profitability and key credit metrics. Although we acknowledge that leverage will remain high in 2013, we expect steady EBITDA growth that will continue to support improvement in KB Home's debt-to-EBITDA metrics. The outlook also factors in adequate liquidity, which is supported by the equity raise and assumed execution of the revolving credit facility to bolster liquidity. We would lower the rating if KB Home does not maintain an adequate liquidity profile or if its operating results are weaker than what we have assumed in our base line forecast resulting in slower improvement to EBITDA and KB Home's leverage. An upgrade is unlikely in the near-term due to our expectation that leverage will remain high during the forecast period, however we would consider raising the rating if KB Home exceeds our forecast and debt/EBITDA declines to the 4x-5x range and debt/capital improves to 50%-60%. KILOWATT PARK: Case Summary & 13 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Kilowatt Park Land, LLC 999 East Basse Road #180-134 San Antonio, TX 78209 Bankruptcy Case No.: 13-50299 Chapter 11 Petition Date: February 5, 2013 Court: United States Bankruptcy Court Western District of Texas (San Antonio) Judge: Ronald B. King Debtor's Counsel: Robert P. Wilson, Esq. LAW OFFICES OF ROBERT P. WILSON 26545 IH-10 West, Suite 150 Boerne, TX 78006 Tel: (210) 698-1933 Fax: (210) 698-1944 E-mail: rwlawoffice@yahoo.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 13 largest unsecured creditors is available for free at http://bankrupt.com/misc/txwb13-50299.pdf The petition was signed by Saul Siegel, manager. LEED CORP: Wins Confirmation of Reorganization Plan --------------------------------------------------- Leed Corporation has obtained confirmation of its Fifth Amended Chapter 11 Plan after addressing feasibility concerns. Under the Plan, reorganizing the Debtor's operation consists of three components, namely (1) the landscaping operations, (2) the remaining eight rental properties, which will be liquidated, and (3) the winding down of construction operations, consisting of the Old School Project, Desert Rose and Riverview Subdivisions. The Debtor proposes to (i) return the Debtor's primary business operations back to its landscaping business which has proven to be profitable over the years; (ii) retain those rental properties that have a positive cash flow, during the term of the Plan until the Debtor and Unsecured Creditor Committee determine the rental properties must be liquidated; (iii) construction operations will be restricted to the completion of the Old School Project, which homes can be completed, in light of the settlement agreements proposed herein and related financing, and sold for a profit?which Net Sale Proceeds will be used to fund the Plan. A copy of the Fifth Amended Disclosure Statement is available for free at http://bankrupt.com/misc/LEED_CORP_ds_5amended.pdf About The Leed Corporation Twin Falls, Idaho-based The Leed Corporation -- dba Green Cut Sprinklers and Landscaping, Leed Corp., Quality Built Homes, Green Cut Construction, Shoshone Developers, Desert Green Sprinklers & Landscaping, Green Cut Lawn Care, and Desert Green -- is a real estate developer, including new construction and land development, as well as landscaping and related care and maintenance of existing real estate in southern Idaho, primarily based out of Shoshone, Idaho. The Company filed for Chapter 11 protection (Bankr. D. Idaho Case No. 10-40743) on April 29, 2010. Robert J. Maynes, Esq., who has an office in Idaho Falls, Idaho, assists the Debtor in its restructuring effort. The Debtor estimated $10 million to $50 million in assets and $1 million to $10 million in debts in its Chapter 11 petition. LEHMAN BROTHERS: Bankruptcy Court Blocks Taxes on Deals ------------------------------------------------------- Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York has blocked government agencies from taking taxes on any deals that Lehman Brothers Holdings Inc. strikes with buyers. Judge Peck issued a ruling on January 31 that would direct any government agency to accept any action or document tied to Lehman's Chapter 11 plan without seeking taxes of any kind. The decision would give buyers assurances that the company's transactions are free from government intervention. Bill Rochelle, the bankruptcy columnist for Bloomberg News, noted that Lehman Brothers fostered no opposition to its request, allowing Judge Peck to grant the request. Mr. Rochelle noted that the ruling isn't insignificant because it purports to clarify that no real estate transfer taxes need be paid in the future as Lehman sells billions of dollars of property for distribution to creditors. Although no one objected, it remains to be seen if taxing authorities in the future claim a right to payment of transfer taxes, contending they didn't receive notice before the judge ruled. According to the Bloomberg report, the judge also gave flexibility in the timing of distributions because Lehman intends on delaying the March 30 distribution by 30 days to insure creditors receive the more than $2.5 billion from completing the sale of apartment owner Archstone Inc., Lehman's largest asset. Lehman is selling assets to pay creditors another $32 billion by 2016. Among deals that will provide the company with additional funds to pay creditors is the sale of its biggest property holding, Archstone Enterprise LP. Under the $6.5 billion deal, Lehman will receive nearly $2.69 billion in cash plus 34.5 million shares of Equity Residential's stock and 14.9 million shares of AvalonBay Communities Inc.'s stock that are worth about $3.8 billion combined. The company will have a 13.2% stake in AvalonBay and 9.8% stake in Equity Residential after the deal. Since its bankruptcy filing in 2008, Lehman has paid creditors almost $33 billion or about 9 cents on the dollar. The company will make a third round of payments to creditors between March 25 and April 30. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. A third distribution is set for around March 30, 2013. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-700) LEHMAN BROTHERS: UK Watchdog Closes Case vs. Ernst & Young ---------------------------------------------------------- The Financial Reporting Council, a U.K. accounting watchdog, refused to take any action against Ernst & Young over its auditing of Lehman Brothers Holdings Inc. before its collapse in 2008, Reuters UK reported. The Financial Reporting Council's probe focused on how the accounting firm had audited Lehman's London-based European unit. "Following the conclusion of the investigation, the FRC's executive counsel, Gareth Rees, has decided that no action should be taken against E&Y or any individuals in connection with their conduct in this matter," the FRC said. The FRC decided not to take action against the firm despite finding that after Lehman's bankruptcy filing, its administrators identified a "significant shortfall in the pool of money held on trust for clients," Reuters UK reported. UK rules in force at the time of the Lehman collapse already required banks to segregate funds that could be handed back to customers in case of a failure. FRC said the accounting firm had signed off to the effect that Lehman had complied with these rules, according to the report. A key issue discussed in the case was whether money related to Lehman's "prime brokerage" or major clients, required segregation. The FRC called in an expert to further investigate the issue but decided to end the matter after concluding that there was no realistic prospect of proving a case in front of a tribunal, Reuters UK reported. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. A third distribution is set for around March 30, 2013. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-700) LEHMAN BROTHERS: Creditors Say No Conflict of Interest for Milbank ------------------------------------------------------------------ The Official Committee of Unsecured Creditors in Lehman Brothers Holdings Inc.'s cases responded to objections by the U.S. Trustee regarding Milbank Tweed Hadley & McCloy's representation of the individual members of the creditors committee who are asking for reimbursement of their fees. "It is a blatant conflict of interest for Milbank to both review the fees on behalf of the committee and simultaneously seek payment of those fees on behalf of the individual committee members," the U.S. Trustee said, pointing out that the committee and its counsel have a duty to all unsecured creditors and must review those fees. Pursuant to Lehman's Chapter 11 plan, the committee will continue to exist to perform all functions related to the review of fees incurred prior to the effective date of the plan. The retention of its counsel also continues in order for the counsel to assist the committee. The Creditors Committee explains that throughout the Debtors' chapter 11 cases, it has directed its counsel, Milbank, Tweed, Hadley & McCloy LLP, to act on its behalf in the myriad matters within its mandate. Among those matters is the implementation of all of the provisions of the Plan of Reorganization, including Section 6.7 thereof, which provides for the payment of professional fees incurred by Committee members in connection with their service on the Committee, the Committee says. Contrary to the U.S. Trustee's assertions, Milbank has not and does not represent any of the Committee members in their individual capacities, the Committee tells the Court. As with any other matter that falls within the scope of the Committee's mandate, Milbank has and continues to represent the Committee in connection with enforcing the Plan of Reorganization provision with respect to payments under the provision, the Committee adds. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. A third distribution is set for around March 30, 2013. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-700) LEHMAN BROTHERS: Files Retirees Benefit Plan Report --------------------------------------------------- Lehman Brothers Holdings Inc. filed a report with the U.S. Bankruptcy Court in Manhattan disclosing that no retired worker has vested benefits under the Lehman Brothers Group Benefit Plan. The report dated January 28 was prepared by Dechert LLP, a New York-based law firm hired by the company to provide an independent analysis of whether or not any Lehman retiree has vested medical benefits under the plan. Lehman maintained the plan to provide health benefits to employees of the company and its subsidiaries. Following its bankruptcy filing in 2008, the company arranged for Aetna Life Insurance Co. to offer substitute health care coverage to certain retirees on an individual basis. The company partially subsidized the health care coverage provided by Aetna for the past three years. Lehman's subsidization of the coverage will end on December 31, 2013, according to the report. A full-text copy of the report can be accessed for free at http://is.gd/vm9krI About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December 2011. Lehman made its first payment of $22.5 billion to creditors in April 2012 and a second payment of $10.2 billion on Oct. 1. A third distribution is set for around March 30, 2013. The brokerage is yet to make a first distribution to non-customers. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-700) LEHMAN BROTHERS: SunPower Gets $74.6-Mil. Cash From Claim Sale -------------------------------------------------------------- SunPower Corp. loaned 2.9 million shares of its class A common stock to Lehman Brothers International (Europe) Limited in 2007. On September 15, 2008, Lehman Brothers Holding Inc. filed bankruptcy and thus the Company recorded a $213.4 million non-cash loss in the third quarter of 2008. In the fourth quarter of 2010, the Company entered into an assignment agreement with Deutsche Bank AG - London Branch under which the Company assigned to Deutsche Bank its claims against LBIE in connection with the share lending arrangement for cash proceeds of $24.0 million. On July 3, 2012, pursuant to the February 2007 Share Lending Arrangement with LBIE and its 2010 assignment of claims to Deutsche Bank after the 2008 bankruptcy filing of Lehman, the Company received $50.6 million of claim settlement in cash from Deutsche Bank for the shares loaned to LBIE, which shares were not returned to the Company following the bankruptcy of Lehman. The Company had excluded the $213.4 million non-cash loss in the third quarter of 2008 from its non-GAAP results of operations. The Company has also excluded the $24.0 million and $50.6 million of cash received from the sale of its claim against LBIE to Deutsche Bank in the fourth quarter of 2010 and in the third quarter of 2012, respectively. Excluding the data related to the share lending arrangement provides investors with a basis to compare the Company's performance against the performance of other companies without such non-operational transactions. The disclosure was made in SunPower's earnings release for the fourth quarter ended Dec. 30, 2012, a copy of which is available for free at http://is.gd/CIGXez About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Additional units, Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC, sought for bankruptcy protection in December 2009 or more than a year after LBHI and its other affiliates filed their bankruptcy cases. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on Sept. 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MARTIN MIDSTREAM: S&P Rates Proposed $250MM Unsecured Notes 'B' --------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'B' issue-level rating to Martin Midstream Partners L.P.'s and Martin Midstream Finance Corp.'s proposed $250 million senior unsecured notes due 2021. S&P also assigned its '5' recovery rating to the debt, indicating modest (10% to 30%) recovery of principal if a payment default occurs. The partnership intends to use net proceeds to repay outstanding borrowings under its revolving credit facility, which had about $77 million outstanding as of Sept. 30, 2012. Martin is a midstream energy partnership active in the U.S. Gulf Coast area, specializing in terminalling and storage, pipeline transportation, and sulfur services. S&P's corporate credit rating on Martin is 'B+', and the outlook is negative. As of Sept. 30, 2012, Martin had about $256 million in debt. RATINGS LIST Martin Midstream Partners L.P. Corporate credit rating B+/Negative/-- New Rating Martin Midstream Partners L.P. Martin Midstream Finance Corp. $250 mil sr unsecd notes B Recovery rating 5 METALS USA: Moody's Reviews 'B1' CFR for Possible Upgrade --------------------------------------------------------- Moody's Investors Service placed the B1 corporate family rating, B1-PD probability of default rating and B2 senior secured term loan rating of Metals USA Inc. under review for upgrade. This rating action follows the announcement that Reliance Steel & Aluminum (Baa3) has reached an agreement to acquire Metals USA for approximately USD1.2 billion in cash. The company's speculative grade liquidity rating of SGL-3 was affirmed. On Review for Upgrade: Corporate Family Rating, Placed under Review for Upgrade, currently B1 Probability of Default Rating, Placed under Review for Upgrade, currently B1-PD USD225 million Senior Secured Term Loan due 2019, Placed under Review for Upgrade, currently B2 Outlook Actions: Outlook, Changed To Rating Under Review From Stable Ratings Rationale The review of Metals USA for upgrade reflects the likely benefit of the proposed merger with Reliance Steel & Aluminum. The review will focus on the financing structure and credit profile of the pro-forma combined company, its business prospects, ability to achieve synergies, and its ability to de-lever. The review will also evaluate the company's liquidity profile, debt capital structure and financial policies. The proposed transaction is likely to be a credit positive for Metals USA since Reliance Steel is a much larger, more diversified and better capitalized company with stronger credit metrics. The pro forma consolidated business profile and credit metrics are likely to be stronger than Metals USA on a standalone basis. The principal methodology used in this rating was the Global Distribution & Supply Chain Services Industry Methodology published in November 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Metals USA, Inc., headquartered in Fort Lauderdale, Florida is a leading U.S. distributor of carbon steel, stainless steel, aluminum, red metals, and manufactured metal components. The company conducts its operations through two metal service center segments, Plates and Shapes and Flat Rolled and Non-Ferrous, and a small Building Products division primarily servicing the residential remodeling market. The metal service center segment serves the aerospace and defense, automotive, marine transportation, heavy equipment, commercial construction, energy and oilfield services industries. Metals USA, Inc. generated approximately USD2.0 billion in revenues for the trailing twelve months ending September 30, 2012. The company is approximately 53% owned by Apollo Management. METALS USA: S&P Puts 'B+' Corp. Credit Rating on CreditWatch Pos. ----------------------------------------------------------------- Standard & Poor's Ratings Services said it placed its 'B+' corporate credit rating on Metals USA Holdings Corp. on CreditWatch with positive implications. This follows the announcement that the company has agreed to be acquired by Reliance Steel & Aluminum Co. "The rating action is based on Metals USA's potential acquisition by higher-rated Reliance, and S&P's expectation is that its existing debt will likely be refinanced by Reliance at the closing of the transaction," said Standard & Poor's credit analyst Chiza Vitta. Under the terms of the acquisition, Reliance will acquire all outstanding shares of Metals USA for $20.65 per share in cash or an enterprise value of about $1.2 billion. Reliance expects to fund the transaction and refinance Metals USA's existing debts from Reliance's existing $1.5 billion credit facility as well as adding new debt. The agreement includes a 30-day "go-shop" period that allows Metals USA to seek alternative bids from third parties. The rating on Metals USA reflects Standard & Poor's assessment of the company's business risk as "weak" and financial risk as "aggressive," highlighted by the significant volatility associated with the company's end markets and cash flows and its thin operating margins. Nevertheless, the company has an "adequate" liquidity position that benefits from a variable cost structure and its ability to generate cash flow from working capital during periods of soft end markets. In resolving the CreditWatch listing, S&P will monitor the progress that the companies make toward closing the transaction, which S&P expects to occur by the end of the second quarter. S&P expects to raise its corporate credit rating on Metals USA upon closing, aligning it with the rating on Reliance and, subsequently, to withdraw both S&P's corporate credit and issue- level ratings on the company once the existing debt has been refinanced. MF GLOBAL: Customer Funds Rules Get Another CFTC Hearing -------------------------------------------------------- Silla Brush (sbrush@bloomberg.net), writing for Bloomberg News, reported that the top U.S. derivatives regulator discussed proposals to bolster protections for customer funds after the collapse of MF Global Holdings Ltd. and Peregrine Financial Group Inc. spurred calls for an overhaul of rules. The Bloomberg report said the Commodity Futures Trading Commission held a roundtable meeting in Washington following a proposal last year to increase auditing standards and disclosure of brokerage risks to clients. Participants discussed efforts to oversee self- regulatory organizations, including the CME Group (CME) Inc., and their duties to monitor futures brokers. "We want to ensure we are doing anything and everything to protect customer funds," Bart Chilton, one of three Democrats on the commission, said at the meeting, according to Bloomberg. "We have implemented some things already and have proposals out for public comment." The meeting, the third roundtable in the last year on the topic, was scheduled 15 months after MF Global filed for bankruptcy and reported a $1.6-billion shortfall in customer funds, Bloomberg said. The shortfall and the collapse of Peregrine less than a year later prompted scrutiny of the CFTC and self-regulatory organizations in Congress and the futures industry. Bloomberg recalled that the CFTC on Oct. 23 proposed a series of disclosure requirements for futures brokers to give customers greater accounting of their funds. The proposals also would require heightened disclosure by brokers about how client collateral is held at custodial banks such as JPMorgan Chase & Co. (JPM), State Street Corp. (STT) and Bank of New York Mellon (BK) Corp. Standards for auditors of brokerages would also be increased under the rule. Daily Reports Futures brokerages should provide the public access to daily reports on the segregation of customer funds, reports on their balance sheet leverage, and other information, William Thum, principal at Valley Forge, Pennsylvania-based Vanguard Group Inc., said at the meeting, Bloomberg cited. "The information can't be withheld altogether or be withheld long after it is valuable," Thum said at the meeting. The reports should provide more frequent information about the leverage of brokers, James Koutoulas, chief executive officer of Typhon Capital Management LLC and president of the Commodity Customer Coalition that has advocated for stronger protections following MF Global, said. "Any sophisticated investor can look at monthly numbers and get somewhat of an idea but you really need to look at an intra-month basis," Koutoulas said. Prison Sentence Bloomberg related that Russell Wasendorf Sr., founder of now- bankrupt Peregrine, as sentenced on Jan. 31 to 50 years in prison for what prosecutors said was the theft of more than $215 million from the commodities firm's customers. James W. Giddens, the trustee overseeing the bankruptcy of the brokerage subsidiary of MF Global, has been working to narrow the shortfall in customer funds, according to Bloomberg. MF Global Inc., the U.S. brokerage subsidiary, won approval from a bankruptcy judge on Jan. 31 for a settlement with U.K. affiliate MF Global UK Ltd. Including a settlement with the broker's parent, MF Global Holdings Ltd. (MFGLQ), domestic futures customers can expect a 93 percent recovery of funds, Giddens said in a court filing. About MF Global New York-based MF Global -- http://www.mfglobal.com/-- was one of the world's leading brokers of commodities and listed derivatives. MF Global provides access to more than 70 exchanges around the world. The firm also was one of 22 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York. MF Global's roots go back nearly 230 years to a sugar brokerage on the banks of the Thames River in London. MF Global Holdings Ltd. and MF Global Finance USA Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059 and 11-5058) on Oct. 31, 2011, after a planned sale to Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF Global had $41,046,594,000 in total assets and $39,683,915,000 in total liabilities. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. Louis J. Freeh was named the Chapter 11 Trustee for the bankruptcy cases of MF Global Holdings Ltd. and its affiliates. The Chapter 11 Trustee tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel; (ii) FTI Consulting Inc., as restructuring advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper Hamilton as special counsel. An Official Committee of Unsecured Creditors has been appointed in the case. The Committee has retained Capstone Advisory Group LLC as financial advisor. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. MICRON TECHNOLOGY: S&P Affirms 'BB-' CCR; Outlook Negative ---------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' issue-level rating to U.S. memory semiconductor provider Micron Technology Inc.'s proposed senior unsecured convertible notes due 2033. The recovery rating is '3', reflecting S&P's expectation for meaningful (50% to 70%) recovery for senior unsecured debtholders in the event of default. The corporate credit rating on the company is 'BB-' with a negative outlook. The proposed notes will rank equally with all of Micron's existing and future senior unsecured debt. The company has earmarked the use of proceeds from this offering to redeem a portion of its outstanding convertible notes due 2014. Consequently, S&P considers these new notes as a prefunding transaction and not as an incremental increase to leverage. Over the coming year, S&P expects Micron to incur higher costs to integrate Elpida, which should consume a portion of cash balances. However, S&P expects EBITDA, which declined about 30% year over year for the 12 months ended November 2012, to recover much of the decline in 2013, supported by industry demand for wireless device flash memory, solid state drive (SSD) spending, and DRAM sector consolidation. Consequently, S&P expects Micron's ratio of debt to EBITDA, which represented 2.5x as of the November quarter, to improve over the coming year. In line with S&P's expectations for highly variable operating trends, S&P expects credit measures to vary widely over a cycle. The rating on Micron Technology Inc. reflects S&P's expectation that the semiconductor memory sector will remain highly volatile and the company will continue to incur significant capital spending to increase capacity. Consequently, S&P views Micron's business risk profile as "weak". The company's weak free cash flow characteristics contribute to S&P's view of the company's financial risk profile as "significant," despite its ratio of debt to EBITDA, which S&P expects to remain strong for the rating category. S&P views Micron's liquidity as "adequate". Cash and marketable investments amounted to about $2.7 billion as of Nov. 29, 2012, and S&P expects these amounts to decline over the coming year, considering its estimates for costs to acquire and integrate Elpida. The negative outlook reflects weak conditions in certain memory markets, as well as the possibility for increased costs and investment requirements for Micron to acquire and integrate Elpida Memory's business from court-appointed trustees. If revenue and earnings performance stabilize in Micron's fiscal 2013 and Elpida- related spending remains measured, such that leverage does not increase materially from current levels, S&P could revise the outlook to stable. Conversely, if Elpida spending or volatile market conditions result in a persistence of weak or negative free cash flow and leverage approaches 3x or more, S&P could lower the ratings. RATINGS LIST RATING CORRRECTED Micron Technology Inc. Corporate Credit Rating BB-/Negative/-- RATINGS UNAFFECTED New Rating Micron Technology Inc. Senior Unsecured $220 Mil. Conv. Notes Series E Due 2033 BB- Recovery Rating 3 $220 Mil. Conv. Notes Series F Due 2033 BB- Recovery Rating 3 MMRGLOBAL INC: NEHTA Possibly Infringing on Two Patents ------------------------------------------------------- MMRGlobal, Inc., was informed that the government, both at the state and federal level, in Australia, through the National E- Health Transition Authority (NEHTA), could possibly be infringing on patents belonging to the Company (including Australian patent numbers 2006202057 and 2008202401) and other Intellectual Property issued to MyMedicalRecords.com, Inc., a wholly owned subsidiary of the Company. NEHTA has reportedly spent an estimated one billion Australian dollars on a Personal Health Records Program which is the subject of the possible infringement, and which may incorporate numerous portions of the MMR IP. The Company is planning on retaining counsel in Australia to determine if any patent infringement of the MMR IP has occurred. At this time there can be no assurances as to the outcome of any potential infringement by any Australian Government or NEHTA. About MMRGlobal Los Angeles, Calif.-based MMR Global, Inc. (OTC BB: MMRF) -- http://www.mmrglobal.com/-- through its wholly-owned operating subsidiary, MyMedicalRecords, Inc., provides secure and easy-to- use online Personal Health Records (PHRs) and electronic safe deposit box storage solutions, serving consumers, healthcare professionals, employers, insurance companies, financial institutions, and professional organizations and affinity groups. In the auditors' report accompanying the financial statements for year ended Dec. 31, 2011, Rose, Snyder & Jacobs LLP, in Encino, California, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred significant operating losses and negative cash flows from operations during the years ended Dec. 31, 2011, and 2010. The Company reported a net loss of $8.88 million in 2011, compared with a net loss of $17.90 million in 2010. The Company reported a net loss of $10.3 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $2.02 million in total assets, $8.48 million in total liabilities, and a $6.45 million total stockholders' deficit. MOSS FAMILY: Court Approves Use of Banks' Cash Collateral --------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Indiana approved a stipulation authorizing Moss Family Limited Partnership and Beachwalk L.P. to use the cash collateral funds generated from Horizon Bank, N.A.'s collateral. On Oct. 23, 2012, the Debtors entered into a stipulation with Horizon Bank on the use of cash collateral to allow them to continue to operate, an in return, provide adequate protection payments to Horizon. The stipulation amends the original stipulation dated Oct. 9, 2012. The Court also approved stipulations and agreed orders extending interim orders that: 1. authorizes the use of First Bank's cash collateral until March 31, 2013, at 11:59 p.m.; 2. authorizes the use of Bank of America's cash collateral until June 30, 2013, at 11:59 p.m.; and 3. authorizes the use of Fifth Third Bank's cash collateral until March 31, 2013, at 11:59 p.m. Further hearings will be held on: (i) March 26, at 1:30 p.m., for further use of First Bank's cash collateral; (ii) June 18 at 1:30 p.m., for Bank of America's cash collateral; and (iii) March 26, at 1:30 p.m., for Fifth Third's cash collateral. The indebtedness owed to Fifth Third Bank under the loan documents as of the Petition Date is $2,101,587. As adequate protection from any diminution value of the lender's collateral, the Debtor will, among other things: -- grant the Bank replacement liens in all assets of the Debtors; -- make interest payments based upon 250 points over the 30-day LIBOR rate; and -- maintain insurance on the collateral. Moss Family Limited Partnership and Beachwalk, L.P., filed Chapter 11 petitions (Bankr. N.D. Ind. Case Nos. 12-32540 and 12-32541) on July 17, 2012. Judge Harry C. Dees, Jr., presides over the case. Daniel Freeland, Esq., at Daniel L. Freeland & Associates, P.C., represents the Debtors. The Debtor disclosed $6,609,576 in assets and $6,299,851 in liabilities as of the Chapter 11 filing. MUNICIPAL MORTGAGE: TE Bond Sub Plans to Issue $74MM Pref. Shares ----------------------------------------------------------------- MuniMae TE Bond Subsidiary, LLC, a subsidiary of Municipal Mortgage & Equity, LLC, executed a share purchase agreement in which TE Bond Sub agreed to issue $74 million of 5.0% Series A-5 Cumulative Mandatorily Redeemable Preferred Shares with a $2,000,000 liquidation preference per share in a private placement to qualified institutional buyers, which the Company anticipates to close on Feb. 5, 2013. The offering is exempt from the registration provisions of the Securities Act of 1933, as amended, by virtue of Section 4(2) of the Act as a transaction by an issuer not involving any public offering. The Series A-5 Preferred Shares will receive quarterly distributions beginning April 30, 2013, will receive partial liquidation preference payments of $25,000 per share per quarter beginning July 31, 2013, will be subject to remarketing on Jan. 31, 2018, and will mature and be subject to mandatory redemption on April 30, 2028. In the event of a failed remarketing on Jan. 31, 2018, or any subsequent remarketing date, the rate will reset to two times the 10-year MMD Yield under the heading "Baa"; provided, however, in no event will the failed remarketing rate be less than the 5.0% initial distribution rate. As of Jan. 31, 2013, the 10-year "Baa" MMD Yield was 3.27%. The net offering proceeds after deduction of the initial purchaser's discount of $740,000 and other offering expenses will primarily be used to redeem the existing Series A, A-3 and C preferred shares in full with an early redemption premium. Concurrently with the closing of the Series A-5 offering, TE Bond Sub expects to purchase and retire one share of the existing Series D preferred shares at 80% of par plus accrued interest. The aggregate liquidation preference of all preferred shares being redeemed or retired is currently $70.2 million. As a result of the transactions, the anticipates that its initial annualized distributions and partial liquidation preference payments due to the TE Bond Sub preferred shareholders will be reduced by approximately $1.9 million and $1.1 million, respectively, as compared to the quarter ended Dec. 31, 2012. About Municipal Mortgage Baltimore, Md.-based Municipal Mortgage & Equity, LLC (Pink Sheets: MMAB) -- http://www.munimae.com/-- was organized in 1996 as a Delaware limited liability company and is classified as a partnership for federal income tax purposes. When the Company became a publicly traded company in 1996, it was primarily engaged in originating, investing in and servicing tax- exempt mortgage revenue bonds issued by state and local government authorities to finance affordable multifamily housing developments. Since then, the Company made several acquisitions that significantly expanded its business. However, in 2008, due to the financial crisis, the Company began contracting its business. The Company has sold, liquidated or closed down all of its different businesses except for its bond investing activities and certain assets and residual interests related to the businesses and assets that the Company sold due to its liquidity issues. The Company has a majority position in International Housing Solutions S.a.r.l., a partnership that was formed to promote and invest in affordable housing in overseas markets. In addition, at Dec. 31, 2010, the Company has an unfunded equity commitment of $5.1 million, or 2.67% of total committed capital with respect to its role as the general partner to the South Africa Workforce Housing Fund SA I ("SA Fund"). The SA Fund was formed to invest directly or indirectly in housing development projects and housing sector companies in South Africa. A portion of the funding of SA Fund is participating debt provided by the United States Overseas Private Investment Corporation, a federal government entity, and the remainder is equity primarily invested by institutional and large private investors. The Company expects to continue this business. In the auditors' report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, KPMG LLP, in Baltimore, Maryland, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has been negatively impacted by the deterioration of the capital markets and has liquidity issues which have resulted in the Company having to sell assets and work with its creditors to restructure or extend its debt arrangements. The Company's balance sheet at Sept. 30, 2012, showed $1.85 billion in total assets, $1.12 billion in total liabilities and $723.23 million in total equity. MUSCLEPHARM CORP: Completes $12MM Offering of Series D Stock ------------------------------------------------------------ MusclePharm Corporation completed the final closing of a $12 million registered direct offering of its Series D Convertible Preferred Stock. The Frost Group, LLC, headed by Miami entrepreneur Dr. Phillip Frost, was the lead investor in the offering and elected to increase its previously announced investment in the offering to a total of $2.9 million. MusclePharm issued a total of 1,500,000 shares of its Series D Convertible Preferred Stock in a registered direct offering at a price of $8.00 per share. Each share of Series D Convertible Preferred Stock is convertible into two shares of common stock, subject to adjustment. The net proceeds to MusclePharm from the closings were approximately $10.8 million after deducting placement agent fees and offering expenses. GVC Capital LLC acted as the lead placement agent for this offering. Additional information about the transaction is available at: http://is.gd/TPV2Z1 About MusclePharm Headquartered in Denver, Colorado, MusclePharm Corporation (OTC BB: MSLP) -- http://www.muslepharm.com/-- is a healthy life- style company that develops and manufactures a full line of National Science Foundation approved nutritional supplements that are 100% free of banned substances. MusclePharm is sold in over 120 countries and available in over 5,000 U.S. retail outlets, including GNC and Vitamin Shoppe. MusclePharm products are also sold in over 100 online stores, including bodybuilding.com, Amazon.com and Vitacost.com. The Company reported a net loss of $23.28 million in 2011, compared with a net loss of $19.56 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $7.81 million in total assets, $15.10 million in total liabilities, and a $7.29 million total stockholders' deficit. In the auditors' report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, Berman & Company, P.A., in Boca Raton, Florida, 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 of $23,280,950 and net cash used in operations of $5,801,761 for the year ended Dec. 31, 2011; and has a working capital deficit of $13,693,267, and a stockholders' deficit of $12,971,212 at Dec. 31, 2011. NATIONAL MENTOR: $30-Mil. Debt Add-On No Impact on Moody's B3 CFR ----------------------------------------------------------------- Moody's Investors Service said that National Mentor Holdings, Inc.'s USD30 million add-on to its USD522 million term loan B-1 due February 2017 is credit-positive, but does not currently impact the B3 Corporate Family Rating, B1 rating for the senior secured credit facilities, or stable outlook. The principal methodologies used in this rating were Global Healthcare Service Providers Industry published in December 2011, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Boston, MA, National Mentor Holdings, Inc. (National Mentor) through its subsidiaries, provides home and community-based health and human services to (i) individuals with intellectual/developmental disabilities ("I/DD"); (ii) persons with acquired brain injury ("ABI") and other catastrophic injuries and illness; and (iii) at-risk youth with emotional, behavioral or medically complex needs and their families ("ARY"). Most of the company's services involve residential support, typically in small group homes, host homes, and small specialized community facilities. Non-residential services consist primarily of day programs and periodic services in various settings. National Mentor is privately-owned by private equity sponsor Vestar Capital Partners V, L.P. The company reported net revenue of approximately USD1.1 billion for the twelve months ended Sept. 30, 2012. NEENA HOSPITALITY: Case Summary & 27 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Neena Hospitality, Inc. dba Americas Best Value Inn fdba Best Western 1202 E. Ironwood CC Dr. Normal, IL 61761 Bankruptcy Case No.: 13-70175 Chapter 11 Petition Date: February 5, 2013 Court: United States Bankruptcy Court Central District of Illinois (Springfield) Judge: Mary P. Gorman Debtor's Counsel: Andrew Bourey, Esq. BOUREY LAW OFFICES 101 S Main St #501 Decatur, IL 62523 Tel: (217) 422-2400 E-mail: bkmail@boureylaw.com Scheduled Assets: $2,141,700 Scheduled Liabilities: $3,605,392 A copy of the Company's list of its 27 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/ilcb13-70175.pdf The petition was signed by Shivkumar Punjabi, president. NEW ENERGY CORP: Shuttered Ethanol Plant Sold for $2.5 Million -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the 100 million-gallon-a-year ethanol plant near South Bend, Indiana belonging to New Energy Corp. will be purchased for $2.5 million by a joint venture between Maynards Industries (1991) Inc. and Biditup Auctions Worldwide Inc. According to the report, the bankruptcy judge in South Bend, Indiana, approved the sale on Feb. 5 and in the process rejected a challenge to the auction by a bidder who argued there was collusive bidding by the two winners when they joined together. The report relates that the objection, from Natural Chem Holdings LLC, contended that the two winners initially bid separately and against everyone else. The judge said they received permission from New Energy to make a joint venture. Without the joint venture, the judge said the two winners would not have continued bidding and wouldn't have pushed the price higher. About New Energy Corp. New Energy Corp. filed a Chapter 11 petition (Bankr. N.D. Ind. Case No. 12-33866) in South Bend, Indiana, on Nov. 9, 2012. The Debtor's ethanol facility is the first large-scale Greenfield ethanol plant constructed in the U.S. and is capable of producing 100 million gallons of ethanol per year. The Debtors has operated continuously, without interruption since 1984. The Debtor's operations generated over $280 million in revenue in 2011. At historical production rates, the Company employs 85 to 90 people to run operations, power the plant and to administer the business operations of the Debtor. Jeffrey J. Graham, Esq., at Taft Stettinius & Hollister LLP, in Indianapolis, serves as counsel. The Debtor estimated assets of at least $10 million and liabilities of at least $50 million. NEWPORT LIQUORS: Case Summary & 11 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Newport Liquors, Inc. dba Richard's Market 243-247 Atlantic Street Quincy, MA 02169 Bankruptcy Case No.: 13-10690 Chapter 11 Petition Date: February 5, 2013 Court: United States Bankruptcy Court District of Massachusetts (Boston) Judge: Joan N. Feeney Debtor's Counsel: Matthew T. Desrochers, Esq. THE LAW OFFICES OF MATTHEW T. DESROCHERS 274 Main Street, Suite 208 Reading, MA 01867 Tel: (781) 279-1822 Fax: (781) 944-1599 E-mail: mssslaw@yahoo.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 11 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/mab13-10690.pdf The petition was signed by Stephen Racette, president. NII HOLDINGS: Moody's Lowers CFR to B2; Rates $400MM Notes B2 ------------------------------------------------------------- Moody's Investors Service downgraded the corporate family rating of NII Holdings Inc. to B2 from B1. The downgrade reflects Moody's expectations that the company's operating performance will remain weak for longer than originally expected due primarily to delays in deploying a 3G network. Increasing price competition and depreciating local currencies are exacerbating NII's challenges. Moody's has also rated NII International Telecom S.C.A.'s (a newly formed subsidiary holding company of the parent) proposed $400 million Senior Unsecured Notes B2. The proposed notes will be used for general corporate purposes. Moody's also downgraded all Senior Unsecured Notes held at NII Capital Corp. to Caa1 from B2. The lower rating for NII Capital Corp.'s notes are attributable to their subordinate ranking to NII International Telecom S.C.A.'s proposed note offering as well as local debt at the operating companies. NII's Speculative Grade Liquidity ("SGL") Rating was also affirmed at SGL-1. The outlook is negative. Moody's has taken the following rating actions: NII Holdings, Inc. Corporate Family Rating, downgraded to B2 from B1 Probability of Default Rating, downgraded to B2-PD from B1-PD Outlook, changed to Negative from Stable NII International Telecom S.C.A. Proposed Senior Unsecured Notes, assigned B2 (LGD3, 49%) NII Capital Corp. $800 Million Senior Unsecured Notes due 2016, downgraded to Caa1 (LGD5, 79%) from B2 (LGD5, 75%) $500 Million Senior Unsecured Notes due 2019, downgraded to Caa1 (LGD5, 79%) from B2 (LGD5, 75%) $1,450 Million Senior Unsecured Notes due 2021, downgraded to Caa1 (LGD5, 79%) from B2 (LGD5, 75%) Ratings Rationale The downgrade of NII's CFR reflects Moody's view that consolidated EBITDA will continue to decline through at least the first half of the year, due primarily to continuing subscriber losses in Brazil, NII's largest market. Increasing price competition and weak local currencies will exacerbate the margin pressure and weaken operating cash flow. Finally, significant capital spending on broadband deployment (3G) designed to improve the company's product offerings will lead to a fairly significant drain of the company's cash balances during 2013. Cash balances could continue to decline beyond the first half of 2014 if execution of the new business plan is less than flawless, a development Moody's does not expect since it believes that the new management team is strong with a proven record of success. A tower sale would improve the company's liquidity but would increase debt due to the leases NII would need to enter into. Without considering the impact of a tower sale and leaseback, Moody's expects NII's leverage (Debt to EBITDA, Moody's adjusted) will increase to above 7.0 times in 2013 from 4.5 times LTM to September 30, 2012. NII Holding's B2 corporate family rating reflects its small scale, the increasingly competitive environment in which it operates as well as the capital intensity of the wireless industry. The presence of substantially larger, better funded competitors capable of disrupting NII's niche market position together with the sovereign, financial, operating and event risk inherent in NII's Latin American markets also constrains the rating. The rating is supported by NII's still good liquidity and its base of recurring revenues. Operational missteps and delays in deploying the critical 3G network have exacerbated the impacts from a weak economic backdrop, weaker local currencies, and pressure on service pricing as a result of intense competition. Consequently, financial performance has been below expectations over the last several quarters. Nevertheless, exposure to the large and expanding markets in Mexico and Brazil offer an opportunity for healthy earnings and cash flow growth if the company is able to successfully transition to a premium wireless broadband provider. The company has taken steps to improve performance, including management changes, an enhanced handset lineup, expanded distribution and a culling of unprofitable customers in Brazil. This could lead to stronger operating and financial performance over the longer term. Moody's confidence is based on the solid performance that the company was able to generate previously and Moody's belief that a high quality broadband service offering combined with an enhanced push-to-talk product will appeal to a broad customer set in NII's markets. Under Moody's Loss Given Default Methodology, the Caa1 rating on NII Capital Corp.'s senior unsecured notes reflects both the overall probability of default of NII, to which Moody's assigns a Probability of Default of B2-PD, and the senior structured ranking of NII International Telecom S.C.A.'s proposed senior unsecured notes offering rated B2. The assessment also reflects the significant liabilities, both debt and non-debt, held at NII's operating companies and Moody's expectation that these liabilities will not increase materially (on a percentage basis) in the future even though they provide a currency hedge in addition to offering attractive economics. Moody's does note that it expects NII will continue to draw down on its equipment facilities located at Nextel Brazil, Nextel Mexico and Nextel Chile. NII's SGL-1 liquidity rating reflects the company's large cash balances and good cash generation capabilities. Moody's notes that the company had approximately $1.7 billion in cash and short-term investments as of September 30, 2012 (about 80% is in $USD) which exceeds the levels required to fund 2013 operations and meet upcoming maturities. NII does not maintain a revolving credit facility, but the company does utilize a wide array of local funding in the markets in which it operates, including over $600 million available through vendor financing facilities primarily based in Brazil and Mexico. There are no significant debt maturities scheduled until 2016, when $800 million of senior unsecured notes mature. Moody's has revised its outlook for NII to negative from stable reflecting the challenges and difficulty that it believes the company will continue to face in stabilizing its operating performance and maintaining credit metrics consistent with the B2 Corporate Family Rating (CFR). While an upgrade is unlikely in the near-term, positive rating pressure could develop if NII executes flawlessly, reestablishes a niche position (this time a premier wireless broadband operator) and undertakes an effort to reduce leverage. Specifically, if the company were likely to sustain Debt to EBITDA below 3.5 times while generating free cash flow as a percentage of debt in the low-to-mid-single digits, positive ratings pressure could develop. Moody's would likely lower the company's rating if its overall subscriber growth stalls, if churn increases materially or if EBITDA margin erosion is likely to persist throughout 2014. These developments, or a significant amount of new debt financing would likely result in Debt to EBITDA remaining above 6.0 times on a sustained basis, which would put additional pressure on the rating. The principal methodology used in this rating was the Global Telecommunications Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. NORTH AMERICAN BREWERIES: S&P Assigns 'B' CCR Following Merger -------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'B' corporate credit rating to Delaware-based North American Breweries Holdings LLC (NAB) following its merger with and into CCR Breweries Inc. at the completion of the acquisition of NAB by Cerveceria Costa Rica S.A. (CCR, not rated) for approximately $390 million. CCR is a majority owned subsidiary of Florida Ice And Farm Co. S.A. (not rated). The outlook is stable. At the same time, S&P affirmed its 'B+' issue level rating on NAB's $175 million senior secured term loan due 2018 following its merger with CCR Breweries, as initial borrower of the loan. The recovery rating remains '2', indicating S&P's expectation for substantial (70% to 90%) recovery for creditors in the event of a payment default. Net proceeds of the term loan along with approximately $200 million equity contribution from CCR, which CCR in turn financed with its own term loan (unrated), partially refinanced NAB's existing debt and funded the acquisition of NAB by CCR. In addition, S&P withdrew its 'B' corporate credit rating on CCR Breweries. Pro forma for the acquisition, S&P estimates NAB would have about $192 million in total debt outstanding as of Sept. 30, 2012. The corporate credit rating on NAB reflects Standard & Poor's assessment of the company's business risk profile as "vulnerable" and financial risk profile as "highly leveraged. "Key credit factors incorporated into our business risk profile assessment include the company's relatively small size and narrow focus within the mature and highly competitive U.S. beer industry, and exposure to volatile commodity costs," said Standard & Poor's credit analyst Jean Stout. S&P views NAB's management and governance to be "fair". S&P views the company's financial risk profile as "highly leveraged" despite credit measures closer to those indicative ratio ranges for an "aggressive" financial risk profile and "adequate" liquidity. This is in part due to S&P's view of the company's financial policy as aggressive following the acquisition. NORTHAMPTON GENERATING: Has Until March 15 to Use Cash Collateral ----------------------------------------------------------------- Northampton Generating Company, L.P., notified the U.S. Bankruptcy Court for the Western District of North Carolina of the ninth amendment of final order regarding use of cash collateral and adequate protection. The ninth amendment, filed with the written consent of the collateral agent, provides that Section 16(viii) of the final order is amended to provide a new date of March 15, 2013. As reported in the TCR, the Court on Jan. 13, 2012, entered a final order regarding use of cash collateral and adequate protection. U.S. Bank National Association, as successor collateral agent and successor senior bond trustee for the senior bonds and Law Debenture Trust Company of New York, not individually but as successor bond trustee has consented to the Debtor's access to the cash collateral to operate its business postpetition. As of the Petition Date, the Debtor has obligations associated with certain resource recovery revenue bonds issued for Debtor's benefit in 1994. The amounts due and owing by Debtor with respect to the Bonds and Bond Documents are: i) unpaid principal on the Senior Bonds in the amount of $71,400,000; ii) unpaid principal on the Junior Bonds in the amount of $19,100,000; iii) accrued but unpaid interest on the Senior Bonds in the amount of $2,011,496; iv) accrued but unpaid interest on the Junior Bonds in the amount of $2,688,749; and v) unliquidated, accrued and unpaid fees and expenses of the Bond Trustees and their counsel incurred through the Petition Date. As adequate protection from diminution in value of the lenders' collateral the Debtor will grant each Bond Trustee replacement lien and security interest (the Rollover Lien) in all assets of the Debtor existing on or after the Petition Date of the same type as the prepetition Bond Collateral, a superpriority administrative expense claim status, subject to carve out. Additionally, the Debtor will make adequate protection payments based on fees and expenses of (x) the Bond Trustees and their respective professionals and (y) certain specified professionals representing the holders of the Junior Bonds, incurred in connection with the Bonds, including the Prepetition Expense Claim. About Northampton Generating Northampton Generating Co. LP is the owner of a 112 megawatt electric generating plant in Northampton, Pennsylvania. The plant is fueled with waste products, including waste coal, fiber waste, and tires. The power is sold under a long-term agreement to an affiliate of FirstEnergy Corp. Northampton Generating filed for Chapter 11 bankruptcy (Bankr. W.D.N.C. Case No. 11-33095) on Dec. 5, 2011. Hillary B. Crabtree, Esq., and Luis Manuel Lluberas, Esq., at Moore & Van Allen PLLC, in Charlotte, N.C., serve as counsel to the Debtors. Houlihan Lokey Capital, Inc., is the financial advisor. The Debtor disclosed $205,049,256 in assets and $121,515,045 in liabilities as of the Chapter 11 filing. The Court on Jan. 29, 2013, entered a confirmation order approving the reorganization plan. Under the Plan, holders of $73.4 million in senior secured bonds are receiving $50 million in new bonds, for a predicted 68% recovery. The new $50 million in bonds accrue 5% interest and come due in December 2023. Interest will be paid in cash to the extent of available cash flow. There will be no payments of principal except for a portion of excess cash flow, if any. No request for the appointment of a trustee or examiner has been made, and no statutory committee or trustee has been appointed in the case. NPS PHARMACEUTICALS: BlackRock Discloses 6.1% Equity Stake ---------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, BlackRock, Inc., disclosed that, as of Dec. 31, 2012, it beneficially owns 5,319,682 shares of common stock of NPS Pharmaceuticals Inc. representing 6.14% of the shares outstanding. BlackRock previously reported beneficial ownership of 4,987,566 common shares or a 5.97% equity stake as of Dec. 30, 2011. A copy of the amended filing is available at: http://is.gd/3ltK6V About NPS Pharmaceuticals Based in Bedminster, New Jersey, NPS Pharmaceuticals Inc. (Nasdaq: NPSP) -- http://www.npsp.com/-- is developing new treatment options for patients with rare gastrointestinal and endocrine disorders. NPS reported a net loss of $36.26 million in 2011, a net loss of $31.44 million in 2010 and a net loss of $17.86 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $165.46 million in total assets, $212.20 million in total liabilities and a $46.74 million total stockholders' deficit. OHIO HOUSING: Moody's Cuts Rating on $5.4MM Debt to 'B2' -------------------------------------------------------- Moody's Investors Service has downgraded to B2 from Ba1 the rating of Ohio Housing Finance Agency, Multi-Family Housing Revenue Bonds (Sharon Green Townhomes) 2005G (the "Bonds"). This rating action affects USD5,490,000 in outstanding debt. This rating action removes the Bonds from review for downgrade following an analysis of the asset-to-debt ratio and cash flow projections, assuming 0% reinvestment rates, which demonstrated insufficiencies that were more consistent with a lower rating. Ratings Rationale The B2 rating is based on the current asset-to-debt ratio of 99.06%, given the 20 day notice of redemption period. The rating reflects the risk that if full payment was received on the loan from Fannie Mae upon a loan default and the Bonds were redeemed from that payment in accordance with the indenture then there would be insufficient funds to pay the Bonds in full. What Could Change The Rating: Up - An increase in the asset-to-debt ratio above 100% and to a level where cash flow shortfalls are not projected under stress scenarios. What Could Change The Rating: Down - Further deterioration of the asset-to-debt ratio or cash flow projection performance. The principal methodology used in this rating was US Stand-Alone Housing Bond Programs Secured by Credit Enhanced Mortgages published in December 2012. PARAMJEET MALHOTRA: Relators Didn't Uncover Trustee's Fraud ----------------------------------------------------------- Brian Mahoney of BankruptcyLaw360 reported that a Washington federal judge on Tuesday dismissed a qui tam False Claims Act suit brought by a couple alleging a former bankruptcy trustee defrauded the U.S. government through an illegal kickback scheme in connection with property sales in bankruptcy proceedings, saying the relators did not uncover the fraud. U.S. District Judge James L. Robart said that the court lacks subject matter jurisdiction to hear the FCA suit because individual plaintiffs Paramjeet and Sunita Malhotra did not have true knowledge of any fraudulent conduct against the trustee, the report related. PATRIOT COAL: Promotes Michael Day to EVP for Operations -------------------------------------------------------- Patriot Coal Corporation announced that Michael D. Day has been promoted to the new position of Executive Vice President - Operations. Previously, Mr. Day served as Senior Vice President overseeing Patriot's West Virginia Central and Kentucky operations, along with its centralized engineering group. In his expanded role, Mr. Day will assume responsibility for all of Patriot's operations, as well as the safety, engineering, purchasing, and maintenance functions. He will continue to report to Bennett K. Hatfield, President and Chief Executive Officer. "Mike is a proven and experienced leader with operations and engineering expertise. In his new position, he will oversee a number of operational cost reduction initiatives that are critical to achieving the results in our business plan," stated Patriot President and Chief Executive Officer Bennett K. Hatfield. "Mike will further strengthen our executive management team and support Patriot's ongoing reorganization efforts." Regional operations executives reporting to Mr. Day will be James N. Magro - Senior Vice President - West Virginia Northern Region; John R. Jones - Senior Vice President - West Virginia Southern Region; Matthew G. Cook - Vice President - West Virginia Central Region; and Robert W. Bosch - General Manager - Kentucky Operations. Also reporting to Mr. Day will be Terry G. Hudson - Vice President - Safety; Kent R. DesRocher - Vice President - Engineering; C. Wayne Elkins - Vice President - Materials Management; and James R. Clendenen - Director of Maintenance. Mr. Day has more than 20 years of mining experience and holds a Bachelor of Science degree in Mining Engineering from the University of Kentucky. Prior to joining Patriot, Mr. Day served in a variety of management positions from 1992 through 2008 at Magnum Coal Company, Arch Coal, Inc. and James River Coal Company. In his new position Mr. Day will receive an annual base salary of $450,000. Indemnification Agreement On Jan. 30, 2013, the Board authorized Patriot to enter into an Indemnification Agreement and Third Amendment to Employment Agreement with Bennett K. Hatfield, President and Chief Executive Officer and a Director of Patriot. Mr. Hatfield was named Patriot's President and Chief Executive Officer and elected to the Board, effective Oct. 23, 2012. Patriot has previously entered into indemnification agreements with its current and past directors and certain executive officers. Pursuant to the Indemnification Agreement and consistent with the indemnification rights provided to directors under Patriot's amended and restated certificate of incorporation, Patriot agrees, subject to the limitations contained in the Indemnification Agreement, to indemnify and hold harmless Mr. Hatfield to the fullest extent permitted or authorized by the General Corporation Law of the State of Delaware in effect on the date of the Indemnification Agreement or as such laws may be amended or replaced to increase the extent to which a corporation may indemnify its directors. The Indemnification Agreement does not cover matters which occurred prior to Patriot's Chapter 11 filing on July 9, 2012. The Amendment, which is effective Oct. 23, 2012, was entered into to reflect Mr. Hatfield's new role and reporting relationship as President and Chief Executive Officer of Patriot. About Patriot Coal St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The U.S. Trustee appointed a seven-member creditors committee. Kramer Levin Naftalis & Frankel LLP serves as its counsel. Houlihan Lokey Capital, Inc., serves as its financial advisor and investment banker. Epiq Bankruptcy Solutions, LLC, serves as its information agent. On Nov. 27, 2012, the New York bankruptcy judge moved Patriot's bankruptcy case to St. Louis. The order formally sending the reorganization to Missouri was signed December 19 by the bankruptcy judge. The New York Judge in a Jan. 23, 2013 order denied motions to transfer the venue to the U.S. Bankruptcy Court for the Southern District of West Virginia. PEDEVCO CORP: Files Amendment No. 3 to Form S-1 Prospectus ---------------------------------------------------------- Pedevco Corp filed with the U.S. Securities and Exchange Commission amendment no. 3 to the Form S-1 registration statement relating to the offering of undetermined amount of shares of common stock of the Company. The Company's common stock is quoted on the OTC Bulletin Board under the symbol "PEDO." On Feb. 1, 2013, the last reported bid price per share of the Company's common stock as quoted on the OTCBB was $1.90 ($5.70 assuming effectiveness of our pending 1 for 3 reserve stock split). The Company has applied to list its common stock on the NYSE MKT under the symbol "PED." A listing of the Company's common stock on the NYSE MKT is a condition to this offering. A copy of the amended prospectus is available at: http://is.gd/5cl4Pc About PEDEVCO Corp. PEDEVCO Corp., d/b/a Pacific Energy Development (OTCBB:PEDO) is a publicly-traded energy company engaged in the acquisition and development of strategic, high growth energy projects, including shale oil and gas assets in the United States and Pacific Rim countries. The company's producing assets include its Niobrara Asset located in the DJ Basin in Colorado, the Eagle Ford Asset in McMullen County, Texas, and the North Sugar Valley Field located in Matagorda County, Texas. The company was founded in early 2011 and has offices in Danville, California and Beijing, China. In the auditors' report accompanying the financial statements for year ended Dec. 31, 2011, GBH CPAs, PC, in Houston, Texas, expressed substantial doubt about Blast Energy Services' ability to continue as a going concern. The independent auditors noted that Blast incurred a loss from continuing operations for 2011, and has an accumulated deficit at Dec. 31, 2011. The Company reported a net loss of $4.14 million in 2011, compared with a net loss of $1.51 million in 2010. The Company's balance sheet at Sept. 30, 2012, showed $11.62 million in total assets, $3.96 million in total liabilities, $1.25 million in redeemable series A convertible preferred stock, and $6.41 million in total stockholders' equity. PENSON WORLDWIDE: March 14 Set for Disclosure Statement Hearing --------------------------------------------------------------- BankruptcyData reported that Penson Worldwide filed with the U.S. Bankruptcy Court a First Amended Chapter 11 Plan of Liquidation and related Disclosure Statement. According to the Disclosure Statement, "On the Effective Date of the Plan, all of the Debtors' assets will be transferred to PTL, a newly formed Delaware limited liability company, for the liquidation, administration, and distribution of the Debtors assets to creditors in accordance with the terms of the Plan and PTL LLC Agreement. PTL will be managed by a Board of Managers and the Chief Officer designated by the Board of Managers. The initial Board of Managers will consist of three members, two of whom will be appointed by the Second Lien Noteholders Committee and one of whom will be appointed by the Convertible Noteholders Committee," the report related. The Court scheduled a March 14, 2013 hearing to consider approval of the Disclosure Statement. About Penson Worldwide Plano, Texas-based Penson Worldwide Inc. and its affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Lead Case No. 13-10061) on Jan. 11, 2013. Founded in 1995, Penson Worldwide is provider of a range of critical securities and futures processing infrastructure products and services to the global financial services industry. The company's products and services include securities and futures clearing and execution, financing and cash management technology and other related offerings, and it provides tools and services to support trading in multiple markets, asset classes and currencies. Penson was one of the top two clearing brokers overall in the United States. Its foreign-based subsidiaries were some of the largest independent clearing brokers in Canada and Australia and the second largest independent clearing broker in the United Kingdom as of Dec. 31, 2010. In 2012, the company sold its futures division to Knight Capital Group Inc. and its broker-deal subsidiary to Apex Clearing Corp. But the company was unable to successfully streamline is business after the asset sales. Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Young, Conaway, Stargatt & Taylor serve as counsel to the Debtors. Kurtzman Carson Consultants LLC is the claims and notice agent. The company estimated $100 million to $500 million in assets and liabilities in its Chapter 11 petition. The last publicly filed financial statements as of June 30 showed assets of $1.17 billion and liabilities totaling $1.227 billion. PETTERS COMPANY: Withers Okayed for Virgin Islands Issues --------------------------------------------------------- The Hon. Gregory F. Kishel of the U.S. Bankruptcy Court for the District of Minnesota authorized Douglas A. Kelley, the duly appointed Chapter 11 trustee for Petters Company, Inc., et al., to employ Withers BVI as counsel effective as of Oct. 1, 2012. Withers is expected to advise the trustee with respect to British Virgin Islands law, the status of British Virgin Islands corporations, legal strategies and to represent the trustee in any resulting litigation in the British Virgin Islands, and related matters. Nikitas John Olympitis, a special counsel in the law firm of Withers BVI, tells the Court that the hourly rates of the firm's personnel are: Jon Wall, partner $700 Niki Olympitis, special counsel $700 Sara-Jane Knock, associate $380 Sharada Shaw, paralegal $255 To the best of the trustee's knowledge, Withers does not hold or represent an interest materially adverse to the Debtors, the estates, or any class of creditors or equity security holders. About Petters Company, Inc. Based in Minnetonka, Minn., Petters Group Worldwide LLC is a collection of some 20 companies, most of which make and market consumer products. It also works with existing brands through licensing agreements to further extend those brands into new product lines and markets. Holdings include Fingerhut (consumer products via its catalog and Web site), SoniqCast (maker of portable, WiFi MP3 devices), leading instant film and camera company Polaroid (purchased for $426 million in 2005), Sun Country Airlines (acquired in 2006), and Enable Holdings (online marketplace and auction for consumers and manufacturers' overstock inventory). Founder and chairman Tom Petters formed the company in 1988. Petters Company, Inc., is the financing and capital-raising unit of Petters Group Worldwide. Thomas Petters, the founder and former CEO of Petters Group, has been indicted and a criminal proceeding against him is proceeding in the U.S. District Court for the District of Minnesota. Petters Company, Petters Group Worldwide and eight other affiliates filed separate petitions for Chapter 11 protection (Bankr. D. Minn. Lead Case No. 08-45257) on Oct. 11, 2008. In its petition, Petters Company estimated its debts at $500 million and $1 billion. Parent Petters Group Worldwide estimated its debts at not more than $50,000. Fruth, Jamison & Elsass, PLLC, represents Douglas Kelley, the duly appointed Chapter 11 Trustee of Petters Company, Inc., et al. The trustee tapped Haynes and Boone, LLP as special counsel, and Martin J. McKinley as his financial advisor. Petters Aviation, LLC, and affiliates MN Airlines, LLC, doing business as Sun Country Airlines, Inc., and MN Airline Holdings, Inc., filed separate petitions for Chapter 11 bankruptcy protection (Bankr. D. Minn. Case Nos. 08-45136, 08-35197 and 08-35198) on Oct. 6, 2008. Petters Aviation is a wholly owned unit of Thomas Petters Inc. and owner of MN Airline Holdings, Sun Country's parent company. PINK TEA CUP: Greenwich Village Eatery Files for Bankruptcy ----------------------------------------------------------- Lisa Fickenscher, writing for Crain's New York Business, reports The Pink Tea Cup in Greenwich Village has filed for Chapter 11 bankruptcy protection. The report notes the eatery over the past few years has closed and moved twice. It transferred to its latest location, 538 Sixth Ave., last year. Its lawyer, David Biondi, Esq., said the restaurant needs time to pay off debts it ran up while it lacked a liquor license. Mr. Biondi said the restaurant recently secured a liquor license. The report relates The Pink Tea Cup disclosed in court papers it has between $50,000 and $100,000 in assets and between $100,000 and $500,000 in liabilities. The Pink Tea Cup was bought in 2010 by Lawrence Page. PINNACLE AIRLINES: New COO to Get $265,000 as Annual Salary ----------------------------------------------------------- Pinnacle Airlines Corp. has named Ryan Gumm as senior vice president and chief operating officer, effective Feb. 5, 2013. Upon the Company's emergence from bankruptcy, Mr. Gumm will become president and chief executive officer, and John Spanjers will retire. "We're excited to welcome Ryan to the executive leadership team," said Pinnacle Airlines President and CEO John Spanjers. "He brings vast experience in airline operations and will take on a central role in Pinnacle's providing safe and reliable services to its customers." Mr. Gumm was previously executive vice president and chief operating officer of Delta Private Jets. Prior to that, he was president of Comair. He also served in leadership positions at Freedom Airlines and Mesa Airlines. Mr. Gumm earned a Bachelor of Science degree in Professional Aeronautics from Embry-Riddle Aeronautical University. He holds an Airline Transport Pilot Certificate, a type rating on the EMB-145 regional jet and a Commercial Flight Instructor Certificate. Mr. Gumm will be paid a base salary of $265,000 per year. He will have an annual cash incentive opportunity with a target award level of 65% of his base salary. In addition, for the first two years of his employment, Mr. Gumm will have an additional annual cash incentive opportunity with a target award level of 30% of his base salary. Mr. Gumm will also be provided a long-term incentive opportunity with a target award level of $200,000. About Pinnacle Airlines Pinnacle Airlines Corp. (NASDAQ: PNCL) -- http://www.pncl.com/-- a $1 billion airline holding company with 7,800 employees, is the parent company of Pinnacle Airlines, Inc.; Mesaba Aviation, Inc.; and Colgan Air, Inc. Flying as Delta Connection, United Express and US Airways Express, Pinnacle Airlines Corp. operating subsidiaries operate 199 regional jets and 80 turboprops on more than 1,540 daily flights to 188 cities and towns in the United States, Canada, Mexico and Belize. Corporate offices are located in Memphis, Tenn., and hub operations are located at 11 major U.S. airports. Pinnacle Airlines Inc. and its affiliates, including Colgan Air, Mesaba Aviation Inc., Pinnacle Airlines Corp., and Pinnacle East Coast Operations Inc. filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Lead Case No. 12-11343) on April 1, 2012. Judge Robert E. Gerber presides over the case. Lawyers at Davis Polk & Wardwell LLP, and Akin Gump Strauss Hauer & Feld LLP serve as the Debtors' counsel. Barclays Capital and Seabury Group LLC serve as the Debtors' financial advisors. Epiq Systems Bankruptcy Solutions serves as the claims and noticing agent. The petition was signed by John Spanjers, executive vice president and chief operating officer. As of Oct. 31, 2012, the Company had total assets of $800.33 million, total liabilities of $912.77 million, and total stockholders' deficit of $112.44 million. Delta Air Lines, Inc., the Debtors' major customer and post- petition lender, is represented by David R. Seligman, Esq., at Kirkland & Ellis LLP. The official committee of unsecured creditors tapped Morrison & Foerster LLP as its counsel, and Imperial Capital, LLC, as financial advisors. POTOMAC SUPPLY: Consents to Chapter 7 After Assets Sold ------------------------------------------------------- The Hon. Douglas O. Tice, Jr. of the U.S. Bankruptcy Court for the Eastern District of Virginia converted the Chapter 11 case of Potomac Supply Corporation to one under Chapter 7 of the Bankruptcy Code. At a hearing held Jan. 16, 2013, the Debtor consented to the conversion of its case because it has sold substantially all of its business assets. Previously, the Debtor objected to Regions Bank's motion for conversion, dismissal, or in the alternative, for appointment of a liquidating trustee or relief from the automatic stay. About Potomac Supply Founded in 1948, Potomac Supply Corporation manufactures a diverse range of wood products, including treated lumber, wood pellets, decking, fencing and pallets, in its wood-processing and production facilities. The Kinsale, Virginia-based building- supply manufacturer filed for Chapter 11 bankruptcy (Bankr. E.D. Va. Case No. 12-30347) on Jan. 20, 2012, estimating assets and debts of $10 million to $50 million. Potomac in mid-January 2012 announced it was suspending manufacturing operations in Kinsale after its lender refused to provide financing without additional investment. Judge Douglas O. Tice, Jr., presides over the case. Patrick J. Potter, Esq., at Pillsbury Winthrop Shaw Pittman LLP, in Washington, D.C., serves as the Debtor's bankruptcy counsel. LeClairRyan P.C. is representing the Official Committee of Unsecured Creditors. PRIUM SPOKANE: To Present Plan for Confirmation on March 28 ----------------------------------------------------------- The Hon. Frank L. Kurtz of the U.S. Bankruptcy Court for the Eastern District of Washington will convene a hearing on March 28, 2013, at 9 a.m., to consider the confirmation of Prium Spokane Buildings, L.L.C.'s Second Amended Plan of Reorganization. Objections to confirmation, if any, are due March 1, 2013. The status hearing on confirmation is set for March 19, at 1:30 p.m. by telephone conference call. Written ballots accepting or rejecting the Plan are due Feb. 15. According to the Second Amended Disclosure Statement dated Jan. 15, 2013, on the effective date of the Plan, Prium Spokane will pay all allowed administrative expenses, and will establish a reserve for payment of administrative expenses that have accrued through the Confirmation Date, but remain subject to allowance. A dispute exists among creditor James F. Rigby, Trustee of the Bankruptcy Estate of Michael R. Mastro, and parties-in-interest Glenn Davis and Jeffrey Silesky regarding the interpretation, enforceability or implementation of the Settlement Agreement among those parties that was approved in the Mastro Bankruptcy Case. On the Effective Date, Prium Spokane will: (1) deposit the distribution payable with respect to the $11.4M Note under Class 7 of the Plan with the Clerk of the U.S. Bankruptcy Court for the Western District of Washington, and (2) commence an action in interpleader pursuant to FRBP 7022 in the Mastro Bankruptcy Case against Rigby, Davis and Silesky for those parties to adjudicate their claims arising and related to the Settlement Agreement and the $11.4M Note. A copy of the Second Amended Disclosure Statement is available for free at http://bankrupt.com/misc/PRIUM_SPOKANE_ds_2amended.pdf Glenn Davis and Jeffrey Silesky assert ownership of the Mastro Note, which is unpaid, and in default. The Debtor, in 2008, borrowed $11,477,757 from Michael R. Mastro, evidenced by a Promissory Note and secured by a second position Deed of Trust against Parcels 1 and 2 of the Wells Fargo Center. Mastro subsequently assigned the Mastro Note and the Mastro Deed of Trust to Wells Fargo Bank, National Association. However, James F. Rigby, trustee for the Bankruptcy estate of Michael R. Mastro filed a proof of claim on March 15, 2011, in the amount of $11,477,757 as a secured claim based on the Mastro Note and the Mastro Deed of Trust. About Prium Spokane Buildings Bellevue, Washington-based Prium Spokane Buildings, L.L.C., filed for Chapter 11 bankruptcy protection (Bankr. E.D. Wash. Case No. 10-06952) on Dec. 16, 2010. Davidson Backman Medeiros PLLC, represents the Debtor. Berreth, Lochmiller & Associates, PLLC, serves as accountants. The Debtor disclosed $17,042,743 in assets and $34,723,584 in liabilities as of the Chapter 11 filing. There was no creditors committee appointed in the case. REVEL AC: Inks Third Amendment to JPMorgan Credit Agreement ----------------------------------------------------------- Revel AC, Inc., entered into a third amendment to the Credit Agreement, dated as of May 3, 2012, among the Company, the guarantors, the lenders, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and the other parties. Certain lenders and agents under the Amended Revolving Credit Agreement, and certain of their respective affiliates, have performed investment banking, commercial lending and advisory services for the Company and its affiliates, from time to time, for which they have received customary fees and expenses. These parties may, from time to time, engage in transactions with, and perform services for, the Company and its affiliates in the ordinary course of their business. A copy of the Third Amendment is available for free at: http://is.gd/TlHtvi About Revel AC Atlantic City, N.J. Revel AC, Inc., owns and operates Revel, a Las Vegas-style, beachfront entertainment resort and casino located on the Boardwalk in the south inlet of Atlantic City, New Jersey. At Sept. 30, 2012, the Company had $1.14 billion in total assets, $1.39 billion in total liabilities and a $243.12 million total owners' deficit. * * * As reported by the TCR on Aug. 21, 2012, Standard & Poor's Ratings Services lowered its corporate credit rating on Atlantic City- based Revel AC Inc., the operator of the Revel Resort, to 'CCC' from 'B-'. "The downgrade reflects our view that a strong opening for the Revel Resort was critical to the company's ability to ramp up cash flow generation to a level sufficient to service its capital structure. In February 2011, Moody's Investors Service assigned Caa1 Corporate Family and Probability of Default ratings to Revel AC, LLC. The Caa1 Corporate Family Rating and Probability of Default Rating (PDR) reflect the considerable development and ramp-up risk associated with Revel AC. REVSTONE INDUSTRIES: Says Ch. 11 Trustee No Longer Necessary ------------------------------------------------------------ Lance Duroni of BankruptcyLaw360 reported that an attorney for Revstone Industries LLC told a Delaware bankruptcy judge Wednesday that the manufacturing conglomerate doesn't need a Chapter 11 trustee to take over its case, citing recent corporate governance changes at the company. At a court hearing in Wilmington, Revstone attorney Laura Davis Jones of Pachulski Stang Ziehl & Jones LLP responded to a trustee motion filed Monday by the company's unsecured creditors' committee -- which suspects Revstone's founder and chairman may be using family trusts to shield assets from creditors, the report related. About Revstone Industries, Greenwood Forgings, & US Tool & Engineering Lexington, Kentucky-based Revstone Industries LLC, a maker of truck parts, filed for Chapter 11 bankruptcy (Bankr. D. Del. Case No. 12-13262) on Dec. 3, 2012. Judge Brendan Linehan Shannon oversees the case. In its petition, Revstone estimated under $50 million in assets and debts. Affiliate Spara LLC filed its Chapter 11 petition (Bankr. D. Del. Case No. 12-13263) on Dec. 3, 2012. Lexington-based Greenwood Forgings, LLC (Bankr. D. Del. Case No. 13-10027) and US Tool & Engineering LLC (Bankr. D. Del. Case No. 13-10028) filed separate Chapter 11 petitions on Jan. 7, 2013. Judge Shannon also oversees the cases. A motion for joint administration of the cases has been filed. Duane David Werb, Esq., at Werb & Sullivan, serves as bankruptcy counsel to Greenwood and US Tool. Greenwood estimated $1 million to $10 million in assets and $10 million to $50 million in debts. US Tool & Engineering estimated under $1 million in assets and $1 million to $10 million in debts. The petitions were signed by George S. Homeister, chairman. ROCHA DAIRY: Required to File Amended Plan by Feb. 15 ----------------------------------------------------- The U.S. Bankruptcy Court for the District of Idaho continued until March 27, 2013, at 9:00 a.m., the hearing to consider confirmation of Rocha Dairy, LLC's Chapter 11 Plan. At a hearing on Jan. 16, the Court denied confirmation of the Third Amended Plan dated Nov. 30, 2012, and directed that the Debtor to file a Fourth Amended Plan by Feb. 15, and to the extent necessary, file a supplement to the Third Amended Disclosure Statement. Secured creditor D.L. Evans Bank has objected to the Disclosure Statement for the Third Amended Plan, stating, among other things: 1. the timeline failed to clarify or identify Jose C. Rocha Dairy or the interest that was acquired by the Debtor in Jose C. Rocha Dairy and whether or not it assumed obligations or what property it received from Jose C. Rocha Dairy; and 2. the Disclosure Statement contains claims that are speculative in nature based upon opinion and belief without accompanying facts or support, which has little or no basis in fact, and render the Disclosure Statement misleading. As reported in the TCR on Jan. 11, 2013, under the Third Amended Plan priority claims will be paid in full; secured debts will be paid to the extent of their values; unsecured debts will be paid (in a fair and equitable manner) to the extent the unsecured property of the estate reaches to those creditors or that the cash flow allows, and other properties will be disbursed and addressed as approved by the Court. A full-text copy of the Third Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/ROCHA_DAIRY_ds_3amended.pdf About Rocha Dairy Based in Wendell, Idaho, Rocha Dairy, LLC, aka Rocha Farms, filed for Chapter 11 bankruptcy (Bankr. D. Idaho Case No. Case No. 11-40836) on May 25, 2011. Judge Jim D. Pappas presides over the case. Lawyers at Robinson, Anthon & Tribe serve as bankruptcy counsel to the Debtor. In its petition, the Debtor estimated $10 million to $50 million in assets and $1 million to $10 million in debts. The petition was signed by Elcidio Rocha, member. ROLLING R GOLF: Case Summary & 15 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Rolling R Golf Cars, LLC 29813 South Route 50 Peotone, IL 60468 Bankruptcy Case No.: 13-04436 Chapter 11 Petition Date: February 5, 2013 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Donald R. Cassling Debtor's Counsel: Brian M. Graham, Esq. PEDERSEN & HOUPT 161 North Clark Street, Suite 3100 Chicago, IL 60601 Tel: (312) 261-2170 Fax: (312) 261-1170 E-mail: bgraham@pedersenhoupt.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 15 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/ilnb13-04436.pdf The petition was signed by Derek N. Nevinger, managing member. ROTHSTEIN ROSENFELDT: Trustee's Plan Hangs on $72M TD Bank Deal --------------------------------------------------------------- Carolina Bolado of BankruptcyLaw360 reported that the trustee overseeing the liquidation of Ponzi schemer Scott Rothstein's firm on Tuesday filed a Chapter 11 exit plan that includes a contentious $72 million settlement with TD Bank NA that extinguishes the rights of investors to sue the bank for its role in the $1.2 billion scheme. In a filing in the Southern District of Florida, U.S. Trustee Herbert Stettin detailed a plan that would pay out $182 million to investors swindled by Rothstein in the scheme he operated out of his law firm Rothstein Rosenfeldt Adler, PA, the report related. About Rothstein Rosenfeldt Scott Rothstein, co-founder of law firm Rothstein Rosenfeldt Adler PA -- http://www.rra-law.com/-- has been suspected of running a $1.2 billion Ponzi scheme. U.S. authorities claimed in a civil forfeiture lawsuit filed November 9, 2009, that Mr. Rothstein, the firm's former chief executive officer, sold investments in non- existent legal settlements. Mr. Rothstein pleaded guilty to five counts of conspiracy and wire fraud on January 27, 2010. Creditors of Rothstein Rosenfeldt Adler signed a petition sending the Florida law firm to bankruptcy (Bankr. S.D. Fla. Case No. 09-34791). The petitioners include Bonnie Barnett, who says she lost $500,000 in legal settlement investments; Aran Development, Inc., which said it lost $345,000 in investments; and trade creditor Universal Legal, identified as a recruitment firm, which said it is owed $7,800. The creditors alleged being owed money invested in lawsuit settlements. Herbert M. Stettin, the state-court appointed receiver for Rothstein Rosenfeldt, was officially carried over as the Chapter 11 trustee in the involuntary bankruptcy case. On June 10, 2010, Mr. Rothstein was sentenced to 50 years in prison. The official committee of unsecured creditors appointed in the case filed a bankruptcy plan and disclosure statement on Aug. 17. The plan was filed and signed by the Committee attorney, Michael Goldberg of Akerman Senterfitt, and not by the court-appointed trustee Herbert Stettin. The plan calls for the creation of a liquidating trust and four classes of claimants. A date for confirmation of the plan was left blank. SATCON TECHNOLOGY: Reorganization Becomes Chapter 7 Liquidation --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports the bankruptcy judge ruled the Chapter 11 reorganization of Satcon Technology Corp. will be converted, at the company's request, to liquidation in Chapter 7 where a trustee will be appointed. As reported in the TCR, Boston-based Satcon said there was no alternative to liquidation in Chapter 7 after bids were unacceptable to lender Silicon Valley Bank and the bank refused to allow further use of cash. For six months ended in June, Satcon reported a $20.2 million net loss on revenue of $48 million. In 2011, there was an $83.4 million net loss on revenue of $188.6 million. About SatCon Technology Based in Boston, SatCon Technology Corporation (NasdaqCM: SATC) -- http://www.satcon.com/-- and its wholly owned subsidiaries provide utility-grade power conversion solutions for the renewable energy market, primarily for large-scale commercial and utility- scale solar photovoltaic markets. Satcon Technology Corporation, along with six related entities, filed Chapter 11 petitions (Bankr. D. Del. Case No. 12-12869) on Oct. 17, 2012. Satcon disclosed assets of $92.3 million and liabilities totaling $121.9 million. Liabilities include $13.5 million in secured debt owing to Silicon Valley Bank. There is another $6.5 million in secured subordinated debt. Unsecured liabilities include $16 million on subordinated notes. The Hon. Kevin Gross presides over the case. Dennis A. Meloro, Esq., at Greenberg Traurig serves as the Debtors' counsel. Fraser Milner Casgrain LLP acts as the general Canadian counsel. Lazard Middle Market LLC serves as the Debtors' financial advisor and investment banker. Epiq Bankruptcy Solutions, LLC, serves as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors tapped to retain Holland & Knight LLP as its counsel, Sullivan Hazeltine Allinson LLC as its co-counsel. SCHOOL SPECIALTY: Stadium Capital No Longer Owns Common Shares -------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Stadium Capital Management, LLC, Alexander M. Seaver, Bradley R. Kent, and Stadium Capital Partners, L.P., disclosed that, as of Jan. 28, 2013, they do not beneficially own any shares of common stock of School Specialty, Inc. A copy of the filing is available at http://is.gd/cv8yd0 About School Specialty Based in Greenville, Wisconsin, School Specialty is a supplier of educational products for kindergarten through 12th grade. Revenue in 2012 was $731.9 million through sales to 70 percent of the country's 130,000 schools. School Specialty and certain of its subsidiaries filed voluntary petitions for reorganization under Chapter 11 (Bankr. D. Del. Lead Case No. 13-10125) on Jan. 28, 2013, to facilitate a sale to lenders led by Bayside Financial LLC, absent higher and better offers. Attorneys at Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. Alvarez & Marsal North America LLC is the restructuring advisor and Perella Weinberg Partners LP is the investment banker. Kurtzman Carson Consultants LLC is the claims and notice agent. The petition estimated assets of $494.5 million and debt of $394.6 million. SEMINOLE TRIBE: Moody's Changes Outlook on 'Ba1' CFR to Positive ---------------------------------------------------------------- Moody's Investors Service revised the Seminole Tribe of Florida's rating outlook to positive from stable. The Tribe's Ba1 Corporate Family Rating, Ba1-PD Probability of Default Rating, Ba1 Gaming Division bonds, and Ba2 Special Obligation Bonds remain unchanged. The rating outlook revision to positive from stable considers Moody's view that the Tribe has sustained the improvements it had made with respect to corporate governance and internal control practices, a previous concern that constrained the ratings. The positive rating outlook also reflects Moody's expectation that the Tribe will maintain its substantial market position and competitive advantage in Florida, and that its gaming division will continue to exhibit strong financial metrics as it has done for the past several years. Debt/EBITDA for the fiscal year ended September 30, 2012 was about 2 times and EBIT/Interest was close to 14 times. Ratings could be upgraded to investment grade if the Tribe refinances its March 2014 USD833 million term loan maturity in a timely manner, maintains strong credit metrics, and continues to maintain the improvements it had made with respect to corporate governance and internal control practices. The outlook could be revised back to stable if any corporate governance and internal control issues resurface that prompt regulatory and/or accounting scrutiny or result in consequences that Moody's believes can directly impact the Tribe's gaming operations -- the source of debt repayment for the Tribe's rated debt. Ratings could be lowered if debt/EBITDA rises above 3.5 times for an extended period of time, or if the Tribe does not address its March 2014 term loan maturity in a timely manner. Ratings Rationale The Ba1 Corporate Family Rating reflects the Tribe's strong market position in the Florida gaming market, the company's strong financial profile -- Moody's expects debt/EBITDA will remain at or near only 2.0 times -- and good liquidity profile. Additionally, the Tribe's Florida-based gaming operations have managed to prosper in unfavorable economic conditions, and in a state that was hit very hard by this past recession. Key concerns include the Tribe's gaming concentration in one state, significant dividend obligation, and risks common to Native American issuers including the high degree of uncertainty regarding the enforceability of claims and the effectiveness of a tribe's waiver of sovereign immunity, which, if held to be ineffective, could prevent creditors from enforcing their rights and remedies. The Seminole Tribe of Florida is a federally recognized Indian tribe that owns and operates seven gaming and resort facilities throughout southern and central Florida. The Tribe also owns Seminole Hard Rock Entertainment, Inc. (B2/stable). Seminole Hard Rock owns and operates Hard Rock cafes located throughout North America, Europe, Asia, Australia and the Caribbean. The Tribe does not publicly disclose financial information. The principal methodology used in this rating was the Global Gaming Industry Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. SEQUENOM INC: BlackRock Discloses 6.2% Equity Stake --------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, BlackRock, Inc., disclosed that, as of Dec. 31, 2012, it beneficially owns 7,128,418 shares of common stock of Sequenom, Inc., representing 6.21% of the shares outstanding. BlackRock previously reported beneficial ownership of 5,977,467 common shares or a 6.02% equity stake as of Dec. 30, 2011. A copy of the amended filing is available at: http://is.gd/8m8BRt 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. The Company reported a net loss of $74.15 million in 2011, a net loss of $120.84 million in 2010, and a net loss of $71.01 million in 2009. The Company's balance sheet at Sept. 30, 2012, showed $264.18 million in total assets, $188.60 million in total liabilities and $75.58 million in total stockholders' equity. SHERIDAN HOLDINGS: $75MM Debt Add-on No Impact on Moody's B2 CFR ---------------------------------------------------------------- Moody's Investors Service reports that Sheridan Holdings, Inc.'s USD75 million add-on to its first lien term loan due 2018 is a credit negative as it increases leverage. The last rating action on Sheridan was on June 15, 2012, when Moody's assigned ratings to the company's new credit facilities. Ratings assigned: USD100 million first lien revolver expiring 2017 at B1 (LGD 3, 40%) USD570 million first lien term loan due 2018 at B1 (LGD 3, 40%) USD140 million second lien term loan due 2019 at Caa1 (LGD 6, 91%) Ratings unchanged: Corporate Family Rating at B2 Probability of Default Rating at B2 Ratings to be withdrawn upon completion of the refinancing: First lien revolving credit facility at B1 (LGD 3, 40%) First lien term loan at B1 (LGD 3, 40%) Second lien PIK term loan at Caa1 (LGD 6, 91%) The principal methodologies used in rating Sheridan were Global Business & Consumer Service Industry published in October 2010, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Sunrise, Florida, Sheridan Healthcare, Inc. (a wholly owned subsidiary of Sheridan Holdings, Inc.) provides physician services to hospitals and ambulatory surgical facilities. The company provides outsourced physician staffing services for anesthesia, neonatology, radiology, pediatrics and emergency departments. Sheridan also provides a full complement of professional and administrative support services including physician billing. SHERIDAN HEALTHCARE: S&P Affirms 'B+' Corporate Credit Rating ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its existing ratings on Sunrise, Fla.-based physician outsourcing provider Sheridan Healthcare Inc., including the 'B+' corporate credit rating. The rating outlook is stable. At the same time, S&P revised the recovery rating on the $672 million (includes the $75 million add-on) first-lien senior secured term loan to '4', indicating S&P's expectation for average (30% to 50%) recovery for lenders in the event of a payment default, from '3' (50% to 70% recovery expectation). The 'B+' issue-level rating on this debt is affirmed. The corporate credit rating continues to reflect Standard & Poor's Ratings Services' expectation that Sheridan Healthcare Inc.'s financial risk profile will remain "aggressive," with leverage below 5x. While this transaction adds about half a turn of debt leverage, S&P expects that debt leverage will recede to below 5x by the end of 2013 or sooner depending on the timing of acquisitions; S&P estimates that adjusted debt leverage was about 4.7x at year-end 2012. S&P assess the company's business risk profile as "weak," given its geographic concentration and narrow operating focus in physician staffing with a concentration in anesthesia, which intensifies reimbursement risk. Sheridan is an outsource provider of physician staffing, focused primarily on anesthesia services. "Our base-case scenario assumes organic revenue growth in the mid- single-digit range, driven by commercial payor price increases and some increase in surgical volume; we expect EBITDA margins to be stable in the upper teens. EBITDA growth in the mid-single digits will drive leverage to be below 5x this year. Our base-case economic view is that there will be modest improvement in employment levels this year; higher levels of privately insured patients should indicate moderately higher surgical volume. In the year-to-date period ended Sept. 30, 2012, Sheridan generated very high single-digit revenue growth driven mostly by acquisitions that occurred in late 2011; the organic revenue growth rate was in the low-single digits and EBITDA margins were in the upper teens and flat compared with the prior year," S&P said. Sheridan has a large debt burden as a result of its $925 million leveraged buyout (LBO) in 2007 by private-equity firm Hellman & Friedman--Sheridan's third financial sponsor in the past decade. Still, Sheridan has reduced debt leverage significantly, mostly by growing EBITDA organically and through disciplined acquisitions. The rating considers S&P's expectation that management will use its cash flow for accretive acquisitions and that credit metrics will continue to improve over the next year, but remain commensurate with S&P's aggressive financial risk (i.e., debt leverage between 4x and 5x). S&P estimates that adjusted debt leverage was about 4.7x at Dec. 31, 2012, and that pro forma for the new debt, will be about 5.2x. Sheridan used a significant portion of its cash balance to make four acquisitions in the fourth quarter of 2012, which will help drive EBITDA growth in 2013. S&P expects that that company will deploy its excess cash balance, including the cash proceeds from this financing, for accretive acquisitions. Sheridan's limited diversity means any operating setbacks may present significant challenges and is the key consideration in S&P's assessment of the company's business profile as "weak." Given its highly focused position in anesthesia (about two-thirds of revenue), it is exposed to reimbursement risk from third-party payors for such services. Sheridan derives the vast majority of its revenue from commercial payors; in the near term, S&P expects rates to be slightly positive because of contractual relationships. Still, reimbursement cuts are a key credit risk over the medium and longer terms. In addition, anesthesia and radiology volumes depend on economically sensitive surgical volumes. In 2009 and 2010, the weak economy dampened growth because of lower surgical volume, with some patients deferring elective surgery. Volumes ceased declining in 2011, and S&P expects surgical volume to continue to improve modestly as employment levels and other macroeconomic trends improve, although surgical volumes remain flat in the south Florida market--one of Sheridan's largest markets. The remainder of Sheridan's revenue is from emergency room, neonatology, and radiology physician staffing, providing some diversity. More meaningful service diversity will require success in cross-selling these services to its existing client base, gaining new hospital contracts, and increasing its presence outside Florida. S&P's assessment of Sheridan's business risk also reflects some revenue concentration: Its top two customers account for a significant portion of its revenues. Because it has significant regional concentration in Florida, it is exposed to potential changes in the state's regulatory, legislative, and economic climate. Sheridan has a self-insurance captive to handle all medical malpractice claims, potential growth in malpractice claims--the result of future Florida judicial decisions or otherwise--could present a difficult operating hurdle and a potential call on liquidity, but is not in S&P's base case. SKY KING: Secures DIP Financing from Carson-Led Investors --------------------------------------------------------- Sky King, Inc. on Feb. 7 announced the successful negotiation of Debtor in Possession financing and intends to seek immediate court approval. The private investment consortium providing the financing is represented by Dr. Daniel Carson, an experienced aviation executive and entrepreneur. Sky King and the investment group have not announced plans for the company but are certain the airline will put forth a formal plan of reorganization in the near future. Sky King's President, Frank Visconti stated: "This is simply the next step in the long process of restructuring and preparing the Company for the future. We are proud of the work we have done and are excited to welcome Dr. Carson and his associates into the process as they bring not only capital but equally important expansion opportunities in new markets." Sky King began operating in 1995 under FAR Part 125 and in 2002, the Company was granted Part 121 operating authority by the Federal Aviation Administration. Operating a fleet of Boeing 737 aircraft, the Company serves the Tour Operator, Private Charter and Public Charter markets, serving numerous Casino operators, sports franchises and scheduled flight service providers. One specific market served by Sky King involves over 150 flights per month between the US and Cuba on behalf of several US Treasury Department licensed service providers. Sky King filed for Chapter 11 Bankruptcy protection on August 31st, 2012 after two of Sky King's largest clients in 2011 and 2012 ceased operations with substantial, unpaid debt to Sky King; these were among several factors ultimately contributing to the Company's decision to seek Chapter 11 reorganization protection. About Sky King Sky King, Inc., doing business as Sky King Airlines, filed a Chapter 11 petition (Bankr. E.D. Calif. Case No. 12-35905) on Aug. 31, 2012, estimating less than $50 million in assets and liabilities. The Debtor disclosed $2,944,561 in assets and $20,890,798 in liabilities as of the Chapter 11 filing. Sky King -- http://www.flyskyking.net/-- is a charter airline based in Sacramento, California. The airline provides charter service to sports teams and businesses using Boeing 737 aircraft. Sky King was founded by Gregg Lukenbill in July 1990, then the managing partner of the Sacramento Kings basketball club of the National Basketball Association. Sky King first filed for Chapter 11 bankruptcy protection (Bankr. E.D. Calif. Case No. 10-25657) on March 9, 2010. It emerged in June 11 with new owner Aviation Capital Partners Group. Bankruptcy Judge Christopher M. Klein oversees the 2012 case. Robert E. Opera, Esq., at Winthrop Couchot Professional Corporation, serves as the Debtor's counsel. The petition was signed by Dennis Steven Brown, secretary. The U.S. Trustee appointed a three member creditors committee. ST. PAUL HOUSING: Moody's Cuts Rating on $3.64MM Debt to 'B1' ------------------------------------------------------------- Moody's downgraded to B1 from Ba1 the rating of St Paul Housing & Redevelopment Auth., MN Multi-family (GNMA Collateralized -- Riverview Highland Project) 2002, affecting USD3,640,000 of outstanding debt. This rating action removes the Bonds from review for downgrade following an analysis of the asset-to-debt ratio and cash flow projections, assuming 0% reinvestment rates, which demonstrated insufficiencies that were more consistent with a lower rating. Ratings Rationale The B1 rating is based on the current asset-to-debt ratio of 99.96%, given the 15 day notice of redemption period. The rating reflects the risk that if full payment was received on the loan from Ginnie Mae due to a loan default and the Bonds were redeemed from that payment in accordance with the indenture then there would be insufficient funds to pay the Bonds in full. What Could Change The Rating: Up - An increase in the asset-to-debt ratio above 100%. What Could Change The Rating: Down - A decline in the asset-to-debt ratio. The principal methodology used in this rating was US Stand-Alone Housing Bond Programs Secured by Credit Enhanced Mortgages published in December 2012. STOCKTON, CA: Bankr. Judge Relegated to Hands-Off Role ------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that a bankruptcy judge can micromanage a business in reorganization under Chapter 11. For a municipality in Chapter 9 bankruptcy like Stockton, California, the near opposite is true because the judge is relegated to a hands-off role, according to a ruling by U.S. Bankruptcy Judge Christopher M. Klein in Sacramento, California. According to the report, Judge Klein decided that Stockton can settle a dispute or pay a claim without approval from the bankruptcy court. The judge warned that paying claims or making settlements willy-nilly may bar a municipality from confirming a Chapter 9 plan later. The report relates that Sacramento decided to settle a lawsuit for $55,000. Although bondholders didn't disagree with the virtue of the settlement, they contended court approval was required under Bankruptcy Rule 9019 governing settlements in bankruptcy cases. According to the report, Judge Klein ruled in 17-page opinion on Feb. 5 that court approval is not required under Section 904 of the U.S. Bankruptcy Code applicable only to municipal bankruptcies. Mandated by the U.S. Constitution, that provision bars the court from interference with state or local governmental powers or the use of revenue. Because court approval was explicitly not required under former Chapter IX, Judge Klein concluded it's not required under Chapter 9, which superseded Chapter IX in 1978. Unless a municipality consents to court scrutiny, he said the court "cannot prevent a Chapter 9 debtor from spending its money for any reason, even foolishly, or in a manner that disadvantages other creditors." He also said a municipality "can pay any debt in full without permission from this court." In a five-page conclusion to the decision that may be dicta, Judge Klein said that settlement without court approval "may make it difficult to confirm a plan." The judge, the report discloses, posited a hypothetical where a creditor class votes down the plan, requiring use of cramdown. If there were profligate settlements or payments of claims, Judge Klein said the city might fail cramdown tests because the plan wasn't in good faith or discriminated unfairly among similarly situated creditors. About Stockton, Calif. The City of Stockton, California, filed a Chapter 9 petition (Bankr. E.D. Calif. Case No. 12-32118) in Sacramento on June 28, 2012, becoming the largest city to seek creditor protection in U.S. history. The city was forced to file for bankruptcy after talks with bondholders and labor unions failed. Stockton estimated more than $1 billion in assets and in excess of $500 million in liabilities. The city, with a population of about 300,000, identified the California Public Employees Retirement System as the largest unsecured creditor with a claim of $147.5 million for unfunded pension costs. In second place is Wells Fargo Bank NA as trustee for $124.3 million in pension obligation bonds. The list of largest creditors includes $119.2 million owing on four other series of bonds. The city is being represented by Marc A. Levinson, Esq., and John W. Killeen, Esq., at Orrick, Herrington & Sutcliffe LLP. The petition was signed by Robert Deis, city manager. Mr. Levinson also represented the city of Vallejo, Calif. in its 2008 bankruptcy. Vallejo filed for protection under Chapter 9 (Bankr. E.D. Calif. Case No. 08-26813) on May 23, 2008, estimating $500 million to $1 billion in assets and $100 million to $500 million in debts in its petition. In August 2011, Vallejo was given green light to exit the municipal reorganization. The Vallejo Chapter 9 plan restructures $50 million of publicly held debt secured by leases on public buildings. Although the Plan doesn't affect pensions, it adjusts the claims and benefits of current and former city employees. Bankruptcy Judge Michael McManus released Vallejo from bankruptcy on Nov. 1, 2011. SUNY DOWNSTATE: LICH Complex Price Tag Could Reach $500MM --------------------------------------------------------- Daniel Geiger, writing for Crain's New York Business, reports that the sale of the Long Island College Hospital complex could reap hundreds of millions of dollars, according to brokers and real estate experts familiar with the campus. Brad Lander, a city councilman for Cobble Hill, Brooklyn, said estimates of the complex's worth have topped $500 million. Stephen Palmese, a broker at Massey Knakal Realty Services who specializes in selling properties in that part of Brooklyn, concurred with the estimate. The report notes the hospital is running deep in the red, prompting its owner, SUNY Downstate, which purchased the complex of medical buildings three years ago, to begin pursuing a closure and sale of the facility. According to the report, a sale would require approval from SUNY Downstate's board of directors and the state's Department of Health. The report relates Mr. Lander opposes the plan to sell the property because it would remove a key medical facility from the neighborhood. Mr. Lander is concerned SUNY Downstate is treating the medical center as a real estate investment and hasn't pursued efforts to integrate the facility into its system of hospitals in Brooklyn or find ways to improve its economics. The report also notes that unlike other recent hospital conversion deals, the City Council doesn't appear to have any say over LICH's sale. The site is zoned for residential, Mr. Lander said, and could be converted as of right by a developer. The report relates Long Island College Hospital's 200,000-square- foot Cobble Hill, Brooklyn, campus includes five principal buildings and a parking structure that could be converted to residential units in the tony brownstone neighborhood. Gale Scott, writing for Crain's New York Business, reported last month that the State University of New York Downstate Medical Center has been losing $3 million a week and could run out of cash by May, according to an audit released by State Comptroller Thomas DiNapoli. The report said the medical center's president, Dr. John Williams, and the auditors agreed that the financial problems are due in part to the system's acquisition of money-losing Long Island College Hospital, a drop in hospital-bed occupancy amid reductions in state and federal aid, and an increase in the cost of labor and pension plans. But the auditors blamed part of the problem on bad decisions by prior hospital management. THERAPEUTICSMD INC: Obtains $10MM Credit Commitment From Plato -------------------------------------------------------------- TherapeuticsMD, Inc., issued a Multiple Advance Revolving Credit Note to Plato and Associates, LLC, on Jan. 31, 2013. The Note allows the Company to draw down funding up to the $10 million maximum principal amount, at a stated interest rate of 6% per annum. Plato may make advances to the Company from time to time under the Note at the request of the Company, which advances will be of a revolving nature and may be made, repaid, and made from time to time. Interest payments will be due and payable on the tenth day following the end of each calendar quarter in which any interest is accrued and unpaid, commencing on April 10, 2013, and the principal balance outstanding under the Note, together with all accrued interest and other amounts payable under the Note, if any, will be due and payable on Feb. 24, 2014. The default interest rate under the Note will be a per annum rate equal to the Stated Interest Rate plus eight percentage points, and the principal amount outstanding under the Note will bear interest at the Default Interest Rate upon the occurrence of an event of default as specified in the Note, including, the Company's nonpayment of amounts due under the Note or its failure to comply with any provision of the Note, among others. As additional consideration for the Note, the Company issued to Plato a warrant to purchase 1,250,000 shares of the Company's common stock at an exercise price $3.20 per share. The Warrant will vest and become exercisable on Oct. 31, 2013, and may be exercised any time after that date prior to the Jan. 31, 2019, expiration date of the Warrant. A copy of the Multiple Advance Revolving Credit Note is available for free at http://is.gd/JvZyZg About TherapeuticsMD Boca Raton, Fla.-based TherapeuticsMD, Inc., is a specialty pharmaceutical company focused on the sales, marketing and development of branded and generic pharmaceutical and OTC products primarily for the women's healthcare market. The Company's products are designed to improve the health and well-being of women from pregnancy through menopause while using information technology to lower costs for the Patient, Physician and Payor. As reported in the TCR on April 2, 2012, Rosenberg Rich Baker Berman & Company, in Somerset, N.J., expressed substantial doubt about TherapeuticsMD, Inc.'s ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered a loss from operations of approximately $5.4 million and had negative cash flow from operations of approximately $5.0 million. The Company's balance sheet at Sept. 30, 2012, showed $3.51 million in total assets, $7.84 million in total liabilities and a $4.33 million total stockholders' deficit. THQ INC: Assets Sold, Terminates Top Executives ----------------------------------------------- THQ Inc. terminated the employment of Brian J. Farrell as Chief Executive Officer of the Company, Jason Rubin as President of the Company, and Jason Kay as Chief Strategy Officer of the Company, each without cause and effective Jan. 30, 2013. About THQ Inc. THQ Inc. (NASDAQ: THQI) -- http://www.thq.com/-- is a worldwide developer and publisher of interactive entertainment software. The Company develops its products for all popular game systems, personal computers, wireless devices and the Internet. Headquartered in Los Angeles County, California, THQ sells product through its network of offices located throughout North America and Europe. THQ Inc. and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-13398) on Dec. 19, 2012. Attorneys at Young Conaway Stargatt & Taylor, LLP and Gibson, Dunn & Crutcher LLP serve as counsel to the Debtors. FTI Consulting and Centerview Partners LLC are the financial advisors. Kurtzman Carson Consultants is the claims and notice agent. Before bankruptcy, Clearlake signed a contract to buy Agoura THQ for a price said to be worth $60 million. After a 22-hour auction with 10 bidders, the top offers brought a combined $72 million from several buyers who will split up the company. Judge Walrath approved the sales in January. Some of the assets didn't sell, including properties the company said could be worth about $29 million. THQ INC: Seeks Early Releases for Top Company Executives -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the reorganization of video-game developer THQ Inc. will give U.S. Bankruptcy Judge Mary F. Walrath an opportunity to decide whether company officers can be given a complete release in the middle of a Chapter 11 case, if the creditors' committee agrees. According to the report, the issue arose because the official creditors' committee said not long after the Chapter 11 filing in December that top executives were in cahoots with prospective buyer Clearlake Capital Group LP by engineering a sale where the assets would bring less than full value. The report relates that Clearlake said it would raise the bid at auction only if it could consult with top officers. The executives refused to help, for fear of being sued. Afraid Clearlake would drop out, the committee agreed the executives would have a release so long as Clearlake raised the bid, which it later did during the auction. THQ scheduled a hearing on Feb. 19 to ask Judge Walrath for a release in favor of the executives. If the judge agrees, the officers would be absolved not only for misdeeds in connection with the sale, they would also have releases from all claims arising before or during bankruptcy. THQ's unsecured notes last traded on Jan. 30 for 35 cents on the dollar, about double the price on Jan. 11, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The notes almost tripled in price since the date of bankruptcy. About THQ Inc. THQ Inc. (NASDAQ: THQI) -- http://www.thq.com/-- is a worldwide developer and publisher of interactive entertainment software. The Company develops its products for all popular game systems, personal computers, wireless devices and the Internet. Headquartered in Los Angeles County, California, THQ sells product through its network of offices located throughout North America and Europe. THQ Inc. and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-13398) on Dec. 19, 2012. Attorneys at Young Conaway Stargatt & Taylor, LLP and Gibson, Dunn & Crutcher LLP serve as counsel to the Debtors. FTI Consulting and Centerview Partners LLC are the financial advisors. Kurtzman Carson Consultants is the claims and notice agent. Before bankruptcy, Clearlake signed a contract to buy Agoura THQ for a price said to be worth $60 million. After a 22-hour auction with 10 bidders, the top offers brought a combined $72 million from several buyers who will split up the company. Judge Walrath approved the sales in January. Some of the assets didn't sell, including properties the company said could be worth about $29 million. TRAVELPORT LTD: Richard Buccarelli Resigns from Board ----------------------------------------------------- Richard Buccarelli has resigned from Travelport Limited's Board of Directors effective Jan. 31, 2013. There is no disagreement of Mr. Buccarelli with the Company's operations, policies or practices known to any executive officer of the Company. About Travelport Limited Travelport Limited, headquartered in Atlanta, Ga., is broad-based business services company and a leading provider of critical transaction processing solutions to companies operating in the global travel industry. At Sept. 30, 2012, the Company had total current assets of US$617.0 million and total current liabilities of US$728.0 million. Travelport Limited's working capital deficit was US$111 million as of Sept. 30, 2012. TWIN DEVELOPMENT: Case Summary & 11 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Twin Development LLC P.O. Box 230921 Encinitas, CA 92023 Bankruptcy Case No.: 13-01197 Chapter 11 Petition Date: February 5, 2013 Court: United States Bankruptcy Court Southern District of California (San Diego) Debtor's Counsel: Richard Dwyer, Esq. LAW OFFICE OF RICHARD DWYER 2828 Cochran St, #350 Simi Valley, CA 93065 Tel: (747) 224-7956 E-mail: attorneyricharddwyer@gmail.com Scheduled Assets: $5,100,900 Scheduled Liabilities: $41,902,575 A copy of the Company's list of its 11 largest unsecured creditors, filed together with the petition, is available for free at http://bankrupt.com/misc/casb13-01197.pdf The petition was signed by Wallace Benwart, manager. UNIVERSAL HEALTH CARE: Files for Ch. 11 as State Seeks Takeover --------------------------------------------------------------- Saint Petersburg, Florida-based insurer Universal Health Care Group, Inc., filed a Chapter 11 bankruptcy protection (Bankr. M.D. Fla. Case No. 13-01520) on Feb. 6, 2013, to obtain a breathing room after Florida regulators moved to put two of the company's subsidiaries in receivership. Universal was founded in 2002 by Dr. A.K. Desai and grew its operations of offering Medicare plans to more than 37,000 members to over 20 states. Universal Health Care, which has almost 1,000 employees, estimated assets of up to $100 million and debt of less than $50 million in bankruptcy court filings in Tampa, Florida. The Debtor is represented by Stichter, Riedel, Blain & Prosser. BankUnited, N.A. is administrative agent for the lenders who provided a $60 million credit line to the Debtor. Sale to America's 1st Choice Universal said it will continue to operate while it negotiates with its lenders on a reorganization plan. As widely reported, the company signed a letter of agreement to sell three of its Florida, Texas and Nevada health maintenance organizations and part of its insurance indemnity company to America's 1st Choice, owned by cardiologist and WellCare Health Plans (NYSE: WCG) founder Kiran Patel. Universal said it will seek authorization from the bankruptcy court to pursue the sale. State Action The Florida Department of Financial Services on Feb. 4 filed before the Circuit Court of the Second Judicial Circuit in Leon County, Florida, an application to initiate receivership for Universal Health Care Inc. and Universal Health Care Insurance Co. Inc. so that the companies can be liquidated. The Office of Insurance Regulation in Florida has determined that grounds for delinquency proceedings exist. It says that UHCIC has been subjected to "a pattern of mismanagement" and illegal financial conduct that rendered it "insolvent". Regulators cite, among other things, that American Managed Care, the third party administrator for UC and UHCIC, has filed multiple insolvent financial statements. Pattern of mismanagement allegedly include a frequent turnover of its CFOs, and certain deficiencies in internal controls pointed out by the company's auditors. Regulators in Georgia and Ohio have also issued consent orders stating that UHCIC will cease enrolling new customers due to the company's low reserves amid rising losses. At this point, the company has not consented to receivership, said Alexis Lambert, press secretary for DFS. "Once a hearing is set, which takes a few weeks, the company will have an opportunity to demonstrate in court why they should not be placed in receivership," she said, according to the report. Universal CEO Dr. Akshay Desai told the Tampa Bay Business Journal in an e-mail that the state action and the company's bankruptcy filing are two separate actions that have no impact on each other. Nonetheless, BankUnited, N.A., as administrative agent for the lenders, gave notice to the Bankruptcy Court of the Florida Department's state court filings. BankUnited is represented by: Steven J. Solomon, Esq. Frank P. Terzo, Esq. GRAY ROBINSON, P.A. 1221 Brickell Avenue, Suite 1600 Miami, FL 33131 Tel: 305-913-0380 Fax: 305-416-6887 UNIVERSAL HEALTH CARE: Sec. 341(a) Meeting Scheduled for March 11 ----------------------------------------------------------------- There's a meeting of creditors of Universal Health Care Group, Inc., on March 11, 2013 at 1:30 p.m. The meeting will be held at Room 100-B, Timberlake Annex, 501 E. Polk Street, in Tampa, Florida. The meeting, which is required under Section 341(a) of the Bankruptcy Code, offers creditors a one-time opportunity to examine a bankrupt company's representative under oath about its financial affairs and operations that would be of interest to the general body of creditors. Proofs of claim are due April 22, 2013. About Universal Health Care Universal Health Care Group, Inc., filed a Chapter 11 bankruptcy protection (Bankr. M.D. Fla. Case No. 13-01520) on Feb. 6, 2013, after Florida regulators moved to put two of the company's subsidiaries in receivership. Universal Health Care estimated assets of up to $100 million and debt of less than $50 million in court filings in Tampa, Florida. Harley E Riedel, Esq., at Stichter Riedel Blain & Prosser, in Tampa, serves as counsel to the Debtor. UNIVERSAL HEALTH CARE: Case Summary & 20 Top Unsecured Creditors ---------------------------------------------------------------- Chapter 11 Debtor: Universal Health Care Group, Inc. 100 Central Ave., Suite 200 Saint Petersburg, FL 33701 Bankruptcy Case No: 13-01520 Chapter 11 Petition Date: Feb. 6, 2013 Bankruptcy Court: United States Bankruptcy Court Middle District of Florida (Tampa) Bankruptcy Judge: Hon. K. Rodney May Debtor's Counsel: Harley E. Riedel, Esq. STICHTER RIEDEL BLAIN & PROSSER 110 East Madison Street, Suite 200 Tampa, FL 33602 Tel: (813) 229-0144 E-mail: hriedel.ecf@srbp.com Counsel to Creditor BankUnited, N.A., Administrative Agent: Frank P. Terzo, Esq. Steven J. Solomon, Esq. GRAYROBINSON, P.A. 1221 Brickell Avenue, Suite 1600 Miami, FL 33131 Tel: 305-416-6880 Fax: 305-416-6887 E-mail: frank.terzo@gray-robinson.com steven.solomon@gray-robinson.com Estimated Assets: $50,000,001 to $100,000,000 Estimated Debts: $10,000,001 to $50,000,000 The petition was signed by Deepak Desai, chief strategy officer and director. List of the Debtor's 20 Largest Unsecured Creditors: Creditor Claim Amount -------- ------------ HCA $6,000,000 31975 US Hwy 19 N (disputed) 2nd Floor Palm Harbor, FL 34684 Attn: Greg Allen Tel: 727-793-6084 Trizetto $4,000,000 6061 South Willow Drive (disputed) Suite 310 Englewood, CO 8011 Attn: Tony Bellamo O'Neills $641,708 12655 Beatrice Street Los Angeles, CA 90066 Tel: 440-256-3538 Emdeon $593,105 3055 Lebanon Pike Nashville, TN 37214 Attn: Kayla Wiley & John Scheffel Tel: 615-932-3188 Matton Law Offices $150,000 Jeff Ludy $150,000 Sandip Patel $141,666 Jason Mitchell $100,000 (disputed) Nirali Patel $100,000 (disputed) C-3 $71,848 Jennifer Hamway $65,000 Colodny Fass Talenfield $47,437 Karlinksy, Abate & Webb Greenberg Traurig LLP $24,169 Nicholas & Bell $21,753 Akerman Senterfitt LLP $18,500 MedHOK $17,071 Cole Scott & Kissane PA $17,054 Southern Strategy Group $15,000 Foley & Lardner LLP $6,500 Gorman Health Group LLC $5,500 VECTOR GROUP: Note Upsizing No Impact on Moody's 'B2' CFR --------------------------------------------------------- Moody's Investors Services reports that Vector Group Ltd.'s increase of its 7.75% senior secured note issuance to USD450 million from USD375 million does not impact the company's B2 Corporate Family Rating, B2-PD Probability of Default Rating or stable outlook. Further, the company's Speculative Grade Liquidity Rating of SGL-2 remains unchanged as the increased interest expense as a result of the upsize is not sufficiently material to the company's overall liquidity position. The last rating action on Vector Group Ltd. was an assignment of Ba3 to Vector's senior secured note offering and outlook revised to stable. The principal methodology used in this rating was the Global Tobacco published in November 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Vector Group Ltd. is a holding company with subsidiaries engaged in domestic cigarettes manufacturing, real estate development and brokerage. Vector's revenues during the twelve months ended September 30, 2012 were approximately USD580 million (net of excise taxes of USD520 million). VITESSE SEMICONDUCTOR: Incurs $5.03-Mil. Net Loss in Q1 2013 ------------------------------------------------------------ Vitesse Semiconductor Corporation filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $5.03 million on $25.72 million of net revenues for the three months ended Dec. 31, 2012, compared with a net loss of $844,000 on $29.99 million of net revenues for the same period during the prior year. The Company's balance sheet at Dec. 31, 2012, showed $70.73 million in total assets, $79.69 million in total liabilities and a $8.96 million total stockholders' deficit. "At Vitesse, we are focused on running operations as efficiently as possible while investing in our future. New product revenues in the first quarter fiscal year 2013 are in line with our expectations. We are driving revenue growth from our new products in 2013 and beyond," said Chris Gardner, CEO of Vitesse. "During the quarter, we made significant progress on our goal to manage our capital structure. We raised net proceeds of $17.1 million in a follow-on offering. This strengthened our balance sheet and provides us with additional options and flexibility to address our debt maturities due in 2014." A copy of the Form 10-Q is available for free at: http://is.gd/Ljihgj A copy of the press release is available for free at: http://is.gd/Fj7U3J About Vitesse Based in Camarillo, California, Vitesse Semiconductor Corporation (Pink Sheets: VTSS.PK) -- http://www.vitesse.com/-- designs, develops and markets a diverse portfolio of semiconductor solutions for Carrier and Enterprise networks worldwide. In October 2009, Vitesse completed a debt restructuring transaction that resulted in the conversion of 96.7% of the Company's 2024 Debentures into a combination of cash, common stock, Series B Preferred Stock and 2014 Debentures. With respect to the remaining 3.3% of the 2024 Debentures, Vitesse settled its obligations in cash. Additionally, Vitesse repaid $5.0 million of its $30.0 million Senior Term Loan, the terms of which were amended as part of the debt restructuring transactions. Vitesse incurred a net loss of $1.11 million in 2012, a net loss of $14.81 million in 2011, and a net loss of $20.05 million in 2010. VIVARO CORP: Committee Can Retain Arent Fox as Counsel ------------------------------------------------------ The Bankruptcy Court has authorized the Official Committee of Unsecured Creditors of Vivaro Corp., et al., to retain Arent Fox LLP as counsel for the Committee, nunc pro tunc to Oct. 4, 2012. George P. Angelich, Esq., will be primarily responsible for Arent Fox's representation of the Committee. Arent Fox will provide, among others, these services: (a) to assist, advise and represent the Committee in its consultation with the Debtors relative to the administration of the Chapter 11 cases; (b) to assist, advise and represent the Committee in analyzing the Debtors' assets and liabilities, investigating the extent and validity of liens and participating in and reviewing any proposed asset sales or dispositions; (c) to attend meetings and negotiate with the representatives of the Debtors and secured creditors; and (d) to assist and advise the Committee in its examination and analysis of the conduct of the Debtors' affairs. Arent Fox's current hourly rates are: Partners $475 - $840 Of Counsel $465 - $760 Associates $290 = $540 Paraprofessionals $150 - $270 To the best of the Committee's knowledge, Arent Fox is a ?disinterested person: as that phrase is defined in Section 101(14) of the Bankruptcy Code. About Vivaro Corp. Vivaro Corp., which specializes in the sale of international calling cards in the U.S., filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-13810) on Sept. 5, 2012, together with six other related companies, including Kare Distribution Inc. The Debtor is represented by Frederick E. Schmidt, Esq., at Hanh V. Huynh, Esq., at Herrick, Feinstein LLP. Garden City Group Inc. is the claims and notice agent. The Debtor will put its assets on the auction block next month. Tracy Hope Davis, the U.S. Trustee for Region 2, appointed five members to the official committee of unsecured creditors. Arent Fox LLP represents the Committee as counsel. VIVARO CORP: Has Interim OK to Obtain Carrier Services on Credit ---------------------------------------------------------------- The Bankruptcy Court has granted Vivaro Corp., et al., interim permission to enter into an agreement to obtain carrier services on credit terms with Next Communication, Inc., and Angel Telecom on a secured and superpriority administrative expense claim basis. According to papers filed with the court, without such credit, the Debtors will not be able to continue making payroll and pay other direct operating expenses, or obtain goods and services needed to carry on their businesses. The total amount of new credit from Next Communication and Angel Telecom at any one time during the term of the agreement will not exceed $2.3 million and $1.7 million, respectively. The obligation of Next and Angel to provide the services on credit will terminate on the earliest to occur of the following: (i) Feb. 15, 2013; (ii) the Services Termination Date; (iii) the date on which the Debtors close on the sale of all, or substantially all, of their assets pursuant to a transaction authorized by the Bankruptcy Court; (iv) the effective date of a plan, the terms of which are acceptable to the Service Provider, confirmed by the Court; and (v) the Cap Termination Date. Next and Angel will be entitled to a fee of 10% of their respective portion of the Credit Cap, payable as follows: (i) 5% to be paid over five weeks following entry of the interim order in equal weekly installments to each of Next and Angel; (ii) 5% to be paid to each within 3 business days of the termination date. In addition, the Debtors will pay to Next and Angel interest at the rate of 5% per annum on all outstanding amounts due on the earlier to occur of: (i) the sale date; (ii) the plan date; or (iii) an uncured Event of default. The Debtors will also reimburse each $25,000 for their reasonable attorneys' fees, to be paid at the earlier to occur of: (i) the Sale Date; (ii) the Plan Date; or (iii) an uncured Event of Default. A copy of the interim order is available at: http://bankrupt.com/misc/vivaro.doc220.pdf About Vivaro Corp. Vivaro Corp., which specializes in the sale of international calling cards in the U.S., filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-13810) on Sept. 5, 2012, together with six other related companies, including Kare Distribution Inc. The Debtor is represented by Frederick E. Schmidt, Esq., at Hanh V. Huynh, Esq., at Herrick, Feinstein LLP. Garden City Group Inc. is the claims and notice agent. The Debtor will put its assets on the auction block next month. Tracy Hope Davis, the U.S. Trustee for Region 2, appointed five members to the official committee of unsecured creditors. Arent Fox LLP represents the Committee as counsel. VIVARO CORP: Wants to Keep Control of Restructuring --------------------------------------------------- Vivaro Corp., et al., ask the Bankruptcy Court to extend their exclusive right to file a plan and their exclusive right to solicit acceptances for that plan until April 3, 2013, and June 3, 2013, respectively. In conjunction with the requested extension, the Debtors also propose that the Official Committee of Unsecured Creditors be permitted to file a Chapter 11 Plan and solicit acceptances thereof during the exclusive periods. According to papers filed with the Court, the Debtors have engaged in extensive negotiations with their DIP funders on a stand-alone plan, while continuing to conduct a comprehensive sale process in the event an agreement with their DIP funders cannot be reached. The Debtors relate that will need additional time to accomplish these dual objectives. This is the first extension request of the exclusive periods. About Vivaro Corp. Vivaro Corp., which specializes in the sale of international calling cards in the U.S., filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-13810) on Sept. 5, 2012, together with six other related companies, including Kare Distribution Inc. The Debtor is represented by Frederick E. Schmidt, Esq., at Hanh V. Huynh, Esq., at Herrick, Feinstein LLP. Garden City Group Inc. is the claims and notice agent. The Debtor will put its assets on the auction block next month. Tracy Hope Davis, the U.S. Trustee for Region 2, appointed five members to the official committee of unsecured creditors. Arent Fox LLP represents the Committee as counsel. W.R. GRACE: Seeks to Extend Terms of ART Credit Agreements ---------------------------------------------------------- W.R. Grace & Co. and its debtor affiliates asked Judge Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware to issue a ruling extending the terms of W.R. Grace & Co.-Conn.'s credit agreements with Advanced Refining Technologies LLC for another year. In a court filing, the company asked Judge Fitzgerald to extend the agreements' termination date from February 28, 2013, to February 28, 2014. The agreements provide $15 million revolving line of credit to Advanced Refining, a joint venture between W. R. Grace & Co.- Conn. and Chevron Products Co., which was formed in 2001 to manufacture and sell hydroprocessing catalysts. W. R. Grace & Co.-Conn. and Chevron provide financing to Advanced Refining for working capital requirements so that excess cash from its operations can be used to pay dividends to the companies, or to fund its growth without such cash having to be tied up to fund periodic working capital "spikes." Advanced Refining "expects to continue experiencing such spikes in working capital requirements and it, therefore, will continue to require the existing lines of credit," according to W.R. Grace's lawyer, Kathleen Makowski, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware. A court hearing is set for February 25. Objections are due by February 8. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. W.R. Grace obtained confirmation of a plan co-proposed with the Official Committee of Asbestos Personal Injury Claimants, the Official Committee of Equity Security Holders, and the Asbestos Future Claimants Representative. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Implementation of the Plan has been held up by appeals in District Court from various parties, including a group of prepetition bank lenders and the Official Committee of Unsecured Creditors. District Judge Ronald Buckwalter on Jan. 31, 2012, entered an order affirming the bankruptcy court's confirmation of the Plan. Bankruptcy Judge Judith Fitzgerald had approved the Plan on Jan. 31, 2011. On April 20, 2012, the company filed a motion with the Bankruptcy Court to approve definitive agreements among itself, co-proponents of the Plan, BNSF railroad, several insurance companies and the representatives of Libby asbestos personal injury claimants, to settle objections to the Plan. Pursuant to the agreements, the Libby claimants and BNSF would forego any further appeals to the Plan. Grace is still awaiting the effective date of the Plan. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) W.R. GRACE: Linn County BOC Approves Loan for Grace Facility ------------------------------------------------------------ The Linn County Board of Commissioners approved a $25,000 forgivable loan to assist with a $14.7 million expansion project by the W.R. Grace Co., according to a report by Albany Democrat Herald. The project included $14 million for machinery and equipment and $700,000 for facility improvements at 1437 Industrial Way, in Albany. Linn County agreed to provide $25,000 through its Investment Fund. The loan can be forgiven as a grant if the company creates at least 15 new jobs that pay at least 150% of the county's median wage, about $52,000, within 24 months, according to the report. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. W.R. Grace obtained confirmation of a plan co-proposed with the Official Committee of Asbestos Personal Injury Claimants, the Official Committee of Equity Security Holders, and the Asbestos Future Claimants Representative. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Implementation of the Plan has been held up by appeals in District Court from various parties, including a group of prepetition bank lenders and the Official Committee of Unsecured Creditors. District Judge Ronald Buckwalter on Jan. 31, 2012, entered an order affirming the bankruptcy court's confirmation of the Plan. Bankruptcy Judge Judith Fitzgerald had approved the Plan on Jan. 31, 2011. On April 20, 2012, the company filed a motion with the Bankruptcy Court to approve definitive agreements among itself, co-proponents of the Plan, BNSF railroad, several insurance companies and the representatives of Libby asbestos personal injury claimants, to settle objections to the Plan. Pursuant to the agreements, the Libby claimants and BNSF would forego any further appeals to the Plan. Grace is still awaiting the effective date of the Plan. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) WASH MULTIFAMILY: Moody's Rates Sr. Secured Debt Facilities 'B2' ---------------------------------------------------------------- Moody's Investors Service assigned a B3 Corporate Family Rating and B3-PD Probability of Default Rating to WASH Multifamily Laundry Systems, LLC, B2 rating to the company's first lien senior secured credit facilities due in 2018, consisting of USD50 million USD revolver, USD5 million Canadian revolver, USD365 million USD term loan, and USD60 million Canadian term loan. The rating outlook is stable. This is the first time Moody's has assigned public ratings to this company. The following rating actions were taken: Corporate Family Rating, B3 assigned; Probability of Default Rating, B3-PD assigned; USD50 million USD senior secured revolving credit facility due 2018, B2, LGD3-43% assigned; USD5 million CAD senior secured revolving credit facility due 2018, B2, LGD3-43% assigned; USD365 million USD senior secured term loan facility due 2018, B2, LGD3-43% assigned; USD60 million CAD senior secured term loan facility due 2018, B2, LGD3-43% assigned; The rating outlook is stable. Proceeds from the term loans will be used to refinance existing bank credit facilities and to finance the acquisition of a large Canadian laundry service company. The two revolvers are expected to be undrawn at closing. Ratings Rationale The B3 Corporate Family Rating reflects Moody's expectation for minimal free cash flow generation over the next 12 to 18 months; weak adjusted interest coverage, as measured by (EBITDA- capex)/ interest expense, that is expected to barely reach 1.0x over this period; and the company's elevated adjusted debt leverage, all of which make WASH weakly positioned in its rating category. Finally, the company's stated goal of expanding geographically via acquisitions implies further pressure on debt leverage metrics and introduces additional costs and integration risks. At the same time, the B3 Corporate Family Rating reflects the company's reasonably strong GAAP cash flow from operations, high EBITDA and gross profit margins, an expanded geographical footprint outside of California, and falling apartment rental vacancy rates, which give WASH the ability to continue servicing its large outstanding debt balance while it endeavors to restore bottom-line profitability. The stable outlook reflects the company's steady, recurring revenue stream as well as slowly improving unemployment rates that will eventually benefit WASH's machine usage and EBITDA generation. Due to the company's acquisitive nature and its propensity to finance these acquisitions with debt, an upgrade in the next 12 to 18 months would be challenging. However, the ratings could be upgraded if the company delevers to below 5.0x adjusted debt-to- EBITDA; and if adjusted interest coverage, as measured by (EBITDA- capex)/ interest expense, exceeds 1.75x, all on a sustained basis. The ratings could be downgraded if both the company's adjusted debt to EBITDA were to remain above 7.0x and adjusted interest coverage, as measured by (EBITDA- capex)/ interest expense, were to remain below 1.0x for a lengthy period of time. The first-lien senior secured bank credit facility is notched above the corporate family rating because it benefits from a) the collateral package, which consists of a first-lien on all assets; b) upstream guarantees from WASH's domestic operating subsidiaries and downstream guarantees from WASH's parent company; 3) and the support provided by the unrated junior debt (second-lien bank credit facilities). There is also a collateral allocation mechanism between the US and Canadian lending groups. Therefore, they will share any future losses pro rata with their participation. The principal methodology used in rating WASH was the Global Business and Consumer Service Industry Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Founded in 1947 and headquartered in El Segundo, California, WASH Multifamily Laundry Systems, LLC provides outsourced laundry equipment services for multi-family housing properties, including apartment buildings, condominiums, college and university residence halls, and military bases. WASH, the issuer of the rated debt, is wholly-owned by Web Service Holdings, Inc., a Delaware C-corporation that is itself wholly owned by Web Service Holdings, LLC. The company expanded into a five-state area in the Midwest during 2011 and 2012. Although the company shows book net worth of approximately USD121 million as of September 30, 2012, its tangible net worth is a negative USD228 million. Revenues for the trailing 12 months ended September 30, 2012 were approximately USD259 million. WASH MULTIFAMILY: S&P Assigns 'B-' Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'B-' corporate credit rating to El Segundo, Calif.-based WASH Multifamily Laundry Systems LLC. The rating outlook is stable. At the same time, S&P assigned WASH's proposed $365 million senior secured first-lien term loan B and $60 million senior secured first-lien term loan B (both due in 2019) issue-level ratings of 'B-' (the same level as the corporate credit rating). S&P also assigned the $55 million revolver (due 2019) a 'B-' issue-level rating. The recovery rating on each of these facilities is '3', reflecting S&P's expectation of meaningful (50%-70%) recovery for lenders in case of a payment default. The $78 million second-lien term loan (due 2020) is unrated. The ratings on WASH reflect what S&P considers to be a "highly leveraged" financial risk profile based on S&P's expectations for credit measures following the proposed transaction to be weak and financial policy to be very aggressive. "Our characterization of WASH's financial policy is based on the company's track record of very aggressive growth through acquisitions and its majority ownership by CHS Capital, which we believe influences financial governance, informing minimal debt repayment in favor of acquisitive growth," said Standard & Poor's credit analyst Nalini Saxena. S&P assess WASH's business risk profile as "weak", primarily based on S&P's view that its business focus will remain narrow in the highly competitive and fragmented outsourced laundry facilities management services industry. WENNER MEDIA: Debt Facility Changes No Impact on Moody's Ratings ---------------------------------------------------------------- Moody's Investors Service said Wenner Media LLC's B3 Corporate Family Rating, B3 senior secured credit facility rating, and stable rating outlook are not affected by the changes to the proposed credit facility including a reduction in the principal amount of the term loan to USD190 million from USD200 million, increase in facility pricing, and tighter limitations on restricted payments. The principal methodology used in rating Wenner is the Global Publishing Industry Methodology published in December 2011. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Wenner, headquartered in New York, NY, publishes entertainment and lifestyle magazines in the United States. Its three titles (Rolling Stone, Us Weekly and Men's Journal) generate combined weekly/bi-weekly circulation exceeding four million. The company is owned and controlled by the Wenner family. Revenue on a GAAP basis for the LTM ended 9/30/12 was approximately USD363 million and is split roughly 43% (advertising), 56% (circulation) and licensing (1%). XINERGY CORP: Has Significant Default Risk, Says Fitch ------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, relates Fitch Ratings said in a report that James River Coal Co. and Xinergy Corp. both have a "significant default risk" based on prices the coal producers' bonds are fetching in the market. There is hope on the horizon because Fitch believes "2013 will be the trough year for coal pricing." Fitch noted in its Feb. 5 report that bonds of the two companies are trading at distress levels, meaning the yields are 10 percentage points more than the yield on Treasury bonds of comparable duration. Xinergy is a small coal miner in Central Appalachia. On Feb. 6 purchasers were offering to buy the $195 million in 9.25 percent secured bonds due 2019 for 60.375 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. James River is an operator of coal mines mostly in central Appalachia. The $172.5 million in 4.5% senior unsecured convertible notes due 2015 traded on Feb. 5 for 36.6 cents on the dollar, to yield 47.638%, according to Trace. The $270 million in 7.875% senior unsecured notes traded at 10:37 a.m. Feb. 6 for 52.61 cents on the dollar, for a yield of 22.455%, Trace reported. Fitch noted that since 1994, there have been 11 mining company defaults among producers with assets of at least $25 million as of the bankruptcy filing date. Three of these defaults occurred in 2002, driven by the effects of rising operating costs compounded by fixed-price sales contracts at the time. Patriot Coal Corp., which filed for bankruptcy in 2012, was more than 11x the size (in terms of assets) of the next largest defaulted coal company. Fitch's report provides an update of recent developments in the on-going Patriot case. The full report 'U.S. Coal Bankruptcies: Future, Present, Past' is available at http://www.fitchratings.com/ XZERES CORP: William Hagler Replaces Ron Elvidge as Director ------------------------------------------------------------ Ron Elvidge resigned as a director of Xzeres Corp. effective Feb. 1, 2012. There was no known disagreement with Mr. Elvidge on any matter relating to the Company's operations, policies or practices. Effective Feb. 4, 2012, the Board of Directors of the Company appointed William N. Hagler as a new member of the Board of Directors to fill the vacancy created by Mr. Elvidge's resignation. The new Director was appointed for a 1-year term subject to re-election by the shareholders at their next annual meeting. None of the Company's directors currently receive any compensation for their services to the Company. There are no family relationships among the Company's directors or executive officers. About XZERES Corp. Headquartered in Wilsonville, Oregon, XZERES Corp. designs, develops, and markets distributed generation, wind power systems for the small wind (2.5kW-100kW) market as well as power management solutions. As reported by the Troubled Company Reporter on July 3, 2012, Silberstein Ungar, PLLC, in Bingham Farms, Michigan, expressed substantial doubt about XZERES' ability to continue as a going concern, following its audit of the Company's financial position and results of operations for the fiscal year ended Feb. 29, 2012. The independent auditors noted that the Company has incurred losses from operations, has negative working capital, and is in need of additional capital to grow its operations so that it can become profitable. The Company's balance sheet at Nov. 30, 2012, showed $4.11 million in total assets, $5.13 million in total liabilities and a $1.02 million total stockholders' deficit. YONKERS INDUSTRIAL: Moody's Affirms 'Ba1' Rating on Revenue Bonds ----------------------------------------------------------------- Moody's Investors Service confirmed the Ba1 rating of Yonkers Industrial Development Agency, NY Multi-Family Housing Revenue Bonds (Herriot Street Housing, L.P. Project) 2004. This rating action affects USD12,665,000 in outstanding debt. This rating action removes the Bonds from review for downgrade following an analysis of the asset-to-debt ratio and cash flow projections, assuming 0% reinvestment rates, which demonstrated insufficiencies that were more consistent with a lower rating. What Could Change The Rating: Up - A material improvement cash flow projections which demonstrate stronger bond program performance. What Could Change The Rating: Down - Further deterioration of the asset-to-debt ratio or cash flow projection performance. The principal methodology used in this rating was US Stand-Alone Housing Bond Programs Secured by Credit Enhanced Mortgages published in December 2012. * Fitch Sees Lackluster Outlook for U.S. Casino Operators --------------------------------------------------------- The 2% payroll tax cut expiration provides another headwind for an already lackluster outlook for U.S. casino operators, according to Fitch Ratings. Operators also face cannibalization from new openings in select markets against a difficult macroeconomic backdrop. The 4Q12 earnings season should give us a sense for how the tax cut expiration is affecting consumer behavior, which could also be affected on the positive side by an improving housing market and declining consumer debt levels. Penn National announced earnings last week and reduced full year 2013 revenue guidance by 1.6% from guidance announced in tandem with the company's proposed REIT spin-off. The revision is partially related to a slower than expected ramp up of the company's Ohio facilities but also captures the uncertainties surrounding consumer spending. "Taking into account new openings or expansions in Ohio, Maryland, and Louisiana, we project same-store revenues to be flat to slightly down for U.S. regional operators in 2013. Las Vegas should fare better but only marginally with 3% growth. With this backdrop and a limited number of available development opportunities and sound risk/return profiles coupled with the historically low interest rate environment, we expect operators will focus on mergers and acquisition activity and other engineering tactics in order to maximize returns for shareholders. We highlighted this in our "2013 Gaming Outlook" report released on Dec. 17, 2012. Subsequent to the release of this report, Pinnacle announced plans to acquire Ameristar and Scientific Games announced plans to acquire WMS. Prior to the report, Boyd acquired Peninsula in November 2012 and Penn announced a plan to spin-off its assets into a REIT (discussed in our last eNewsletter)," Fitch says. "Wynn and Las Vegas Sands paid sizable special dividends at the end of 2012, partially because of tax uncertainty heading into 2013 but also as a reflection of the lack of imminent need for funding growth. We expect focus on generating returns for shareholders will continue into 2013. "Conversely, our initial forecast calling for 8% gaming revenue growth in Macau, as noted in our Asia-Pacific gaming outlook report dated Dec. 17, 2012, driven by mass market growth of roughly 20% and mid-single digit growth in VIP, which has rebounded over the last couple of months. January revenue grew a solid 7.3%, given the partial smoking ban implemented at the beginning of the year in addition to an adverse calendar comparison with respect to Chinese Lunar New Year. We are not revising our revenue growth forecast at this point, as we have a cautious view of the sustainability of the VIP rebound. "Additional information can be found in Fitch's gaming, lodging, and leisure (GLL) electronic newsletter where we provide additional analysis on capital allocation policies (including a cheat sheet highlighting the potential impact on specific gaming operators from new openings or regulatory changes), other brief sector comments, recent/upcoming events, and links/summaries to rating actions and detailed reports." * Moody's Sees More Maturing Debt from Low-Rated Companies ---------------------------------------------------------- Strong bond issuance in 2012 has again extended the maturity wall for US speculative-grade, non-financial corporates, Moody's Investors Service says in a new report, "Maturity Wall Pushed to 2017, but Global Macro Issues Could Disrupt Market Access." Although the total amount of debt maturing in the next five years is down modestly from last year's number, the amount of maturing debt held by lower rated companies is now higher. "Yield-seeking investors have poured into speculative-grade debt, pushing maturities further into the future," says Senior Credit Officer Kevin Cassidy. "Some USD258 billion of speculative-grade bonds and credit facilities will now come due in 2017, while a year ago maturities were set to peak at USD246 billion in 2016." In addition, the so-called "pull-forward effect" could increase near-term maturities. The pull-forward effect refers to the accelerated financing of several maturities contained in the same bank credit agreement when the first debt comes due. This could double maturities of bank credit facilities alone, to USD243 billion from USD111 billion, over the next three years, says analyst and co-author Tiina Siilaberg. Nevertheless, Moody's new Refunding Index, which compares one- and three-year debt-issuance levels to the associated debt maturities, predicts a low speculative-grade default environment, she says. "This new index has foreshadowed movements in actual default levels based on our back testing," Siilaberg noted. US corporate debt issuance is expected to remain strong amid low interest rates and gradual economic recovery, but global economic concerns persist. Among the risks that could disrupt the markets and hinder companies' ability to address their maturities are the upcoming debates over the spending cuts and debt ceiling, rising interest rates and an increase in Treasury yields in the US, and a further flare-up in Europe's sovereign debt crisis, Cassidy says. Low-rated companies, in particular those with sizable near-term maturities, are more vulnerable to market disruptions, and they now comprise a higher proportion of maturing debt. Moody's list of the top 25 debt issuers rated B3 Negative or lower now accounts for some USD88 billion of debt, which includes USD17 billion due in 2012-2014. And overall credit quality has deteriorated. Of the speculative- grade debt maturing from 2012 to 2017, about 12%, or USD50 billion, of bank credit facilities are rated Caa or lower, up from 8%, or USD33 billion, last year. In the meantime, the refunding needs of US non-financial, investment-grade companies continue to rise, Siilaberg says in a second report. Roughly USD701 billion of bonds issued by these companies come due in 2013-2017, up 10% from the USD635 billion maturing in 2012-2016 identified in Moody's 2012 refunding study. "Bond issuance by investment-grade companies hit a record high last year, as companies with high credit ratings borrowed at rates near historical lows," Cassidy says in "Five-Year Maturities Rise to USD701 Billion Amid Strong Issuance." But risks outside companies' control remain, and these could reduce market access or increase credit spreads. * Media Services Bonds Weak on Restricted Payments, Says Moody's ---------------------------------------------------------------- High-yield bonds issued by North American broadcasters and media services companies provide investors with overall covenant protection in line with non-financial corporate averages, Moody's Investors Service says in a new report. But the sector offers weak protection against restricted payments. "Our review of 31 bonds issued by 22 North American broadcast and media services companies revealed an average Covenant Quality score of 3.34, compared with 3.40 for the bonds of other North American non-financial companies," says Vice President -- Senior Analyst, Carl Salas in "North American Broadcast, Media Services Offer Weak Restricted Payments Protection." The bonds were drawn from Moody's High-Yield Covenant Database, and on the rating agency's five-point scale, 1.0 denotes the strongest protection and 5.0, the weakest. For restricted payments, broadcast and media services companies' bonds scored 3.80, which reflect weaker protection compared with 3.34 for other non-financial companies, 3.60 for cable and 2.66 for newspaper/publishing. "The weaker restricted payments score reflects the prevalence of private equity sponsors in broadcast and media services company bond issues, and they favor the flexibility to make restricted payments to increase investment returns," Salas says. "Nevertheless, this weakness is offset by strong protection against debt incurrence and liens and structural subordination." Stronger protection against debt incurrence results from the sector's high leverage, in addition to the potential for elevated dividends payouts. And indeed these companies are much more likely to use a leverage ratio test to regulate debt incurrence than the looser fixed-charge coverage ratio test used in most other corporate bond deals. Overall, however, the covenant protections in broadcast and media services company bond issues have deteriorated more than those of other North American non-financial corporates in the past two years, particularly in terms of restricted payments. The average covenant quality score for bonds issued by broadcast and media services companies was 3.65 in 2012, compared with 2.99 in 2011, and for restricted payments the score declined to 4.19 in 2012 from 2.93 a year earlier. * Moody's Notes Negative Outlook for US Toll Road Sector in 2013 ---------------------------------------------------------------- Despite some stabilizing traffic and revenue trends, the outlook for the US toll road sector remains negative for the fifth consecutive year, says Moody's Investors Service in its sector outlook for 2013. "Negative credit factors continue to outweigh positive ones, which need to show greater sustainability," said Moody's Senior Vice President Maria Matesanz, author of the report, "US Toll Roads: Traffic and Revenue Stabilization Trends Emerging But Need to Show Sustainability." "This is made more difficult in the face of a continued weak pace of economic recovery and potential fiscal tightening by the US government," said Ms. Matesanz. An organized, long-term solution to the US government's various fiscal dilemmas could stabilize the economy and sustain traffic trends, which, according to Moody's, are flat but no longer declining. It could also lead the rating agency to change the sector's outlook to stable, perhaps by midyear. "An outlook change to stable would also be possible if toll roads achieve consistent traffic growth and stable financial metrics, including healthy debt service coverage ratios, over the next six months," said Matesanz. "We expect toll road traffic to grow only modestly in 2013 in tandem with GDP growth." Circumstances working against a change back to a stable outlook, according to Moody's include: the possibility of another recession; rising leverage and increasingly back-loaded debt structures; if gas prices go above USD4.50 a gallon; and if traffic rates are kept flat or decline. "The user-pay model for funding needed transportation construction projects is gaining acceptance but the unfettered ability to increase toll rates could also face pressure in a contracting economy," said Matesanz. "A prolonged period of persistently high unemployment, slow wage growth and declines in discretionary income could have the same effect." * Moody's Outlook on Utility/Power Industries Remains Negative -------------------------------------------------------------- The unregulated utility and power industry continues to have a negative outlook as low natural gas prices depress energy prices, says Moody's Investors Service. The same low natural gas prices keep fuel prices low and contribute to Moody's stable outlook on the regulated gas and electric utilities. Those are the conclusions offered by the rating agency in a pair of annual sector outlook reports. The main reason for the stable outlook for the regulated sector is the supportive regulatory environment for the utilities, says Moody's in "US Regulated Utilities: Regulatory support, low natural gas prices maintains stability." Recovery of incurred costs should generally be timely and regulators are likely to continue to approve 3%-5% annual price increases in rate cases. Moody's expects levels of capital expenditure to remain high, and that timely recovery of these expenditures through rate increases will be important to credit quality. "Large capital expenditures will contribute to rate base growth, but managements will have to carefully address the financing of corresponding negative free cash flow along with the increased rate pressure on customers," says Ryan Wobbrock, lead author of the regulated report. On the merchant power side, Moody's points to the low price for natural gas as an underlying cause of its negative outlook. "We expect a sustained period during which low natural gas prices keep a lid on power prices, and of weak demand growth, surplus supply and compressed margins," says Moody's Vice President and Senior Analyst Toby Shea, lead author of "Unregulated Utility & Power Companies: Still no sign of recovery." "Combined, these factors will weigh on credit metrics and liquidity availability, a credit negative," says Shea. The low natural gas prices make operating coal and nuclear power less competitive because their fixed costs are relatively high. Because of the low power prices, companies have been shifting business strategies. Actions they are taking include deleveraging, the sale of non-core assets, and expansion into upstream and downstream businesses. The industry has also been consolidating. Moody's industry outlooks reflect its expectations for fundamental business conditions over the next 12 to 18 months. An industry outlook is not an explicit signal of the likely direction of ratings in the industry. * Moody's Sees Higher Costs for Fertilizer Producers in 2013 ------------------------------------------------------------ Low water levels on the Mississippi River will lead to higher transportation costs for producers of fertilizer and other agricultural commodities in early 2013, Moody's Investors Service says in a new report. Nevertheless, strong demand and prices should more than offset their increased costs. "Constricted traffic on the Mississippi has forced many companies that normally ship their freight on barges to switch to rail, which is considerably more expensive," Moody's says in the report, "Low Mississippi Poses Little Risk for Producers of Fertilizer or Agricultural Commodities." "This includes fertilizer producers, which serve customers with tight deadlines, and grain processors and handlers, which must continually move large volumes of grain." But for fertilizer producers, unique industry dynamics and current supply/demand conditions should offset higher transportation costs, says Lori Harris, Associate Analyst and the author of the report. Makers of nitrogen fertilizers will see strong pricing this year, Moody's says. Among companies, CF Industries looks best positioned, since the close proximity of its plants to its customers means it frequently uses trucks for shipping. Agrium should likewise benefit from the spread of its operations and retail locations. Potash Corporation of Saskatchewan (PCS) will also perform well, but Moody's expects it to see higher transportation costs, since its sources of nitrogen are split between Louisiana and Trinidad. Meanwhile, a record planting season that demands significant amounts of potash and phosphate will help PCS and The Mosaic Company offset higher transportation costs. As the dominant phosphate producer, Mosaic is less protected from higher transportation costs since it sources all its phosphate in Florida. Agrium, a smaller presence, will also benefit from strong demand for both potash and phosphate, as will CF Industries' phosphate business. Among commodity merchandizing and processing companies, ADM, Cargill and the Gavilon Group will see the greatest pressure from higher transportation costs, while Bunge's extensive operations in Brazil give it some cushion. Nevertheless, reduced traffic on the Mississippi will not have a huge impact on any of the big gain processors. "While all four big grain producers rely on the Mississippi to transport grain, they have already altered their plans, running lighter barges and using rail," Harris says, noting that last year's reduced corn crop is of more concern to these companies. "Since most of the corn grown last year is being used within the country, state-to-state transportation routes have proved more important than the Mississippi for moving the harvest to processing facilities." * Moody's Assesses Hurricane Sandy's Impact on P&C Insurers ----------------------------------------------------------- Credit default swap spreads on P&C (re)insurers widened immediately following Superstorm Sandy, but recovered in December, supporting Moody's view that the storm has impacted earnings but not harmed capital adequacy, says Moody's in its special comment "Insurance CDS Spreads Tighten in Q4 2012; P&C/Reinsurance Companies Exposed to Sandy in Focus." "CDS five-year mid-spreads tightened across all insurance sectors during the fourth quarter of 2012, in line with the broader market," says Scott Robinson, a Moody's Senior Vice President and an author of the report. "The movement was consistent with the third quarter's trend, and spreads have continued to perform well so far in 2013, as we forecast gradual economic strengthening during the second half of 2013." The median CDS-implied ratings gap of the companies in the Index was negative 1.6 notches at the end of Q4 (compared with negative 1.7 notches at the end of Q3 2012), which implies that the CDS market continues to have a more negative view of the insurance sector than Moody's, the rating agency says. Moody's notes that U.S. P&C insurance is the only sector in the index with a positive CDS-implied ratings gap (positive 0.4), meaning that the median CDS-implied rating for the sector is higher than the comparable Moody's rating. * Carried Interest Thrust Again into Tax Debate ----------------------------------------------- Kim Dixon, writing for Reuters, reported that a big tax break that benefits U.S. private equity and venture capital executives is under threat again, and this time the chances of preserving it may have dimmed. President Barack Obama said at a news conference on Tuesday that he will pursue a short list of tax loophole closures to try and avert looming budget cuts, the Reuters report said. Obma's press secretary singled out the tax break known as "carried interest." "That should be closed," White House spokesman Jay Carney told reporters after the president spoke, according to Reuters. Reuters recalled that Obama on Sunday had mentioned carried interest in a CBS television interview in which he called for reducing the budget deficit by raising more tax revenue by closing tax breaks. Past attempts by some senior Democrats to roll back the provision have failed amid heavy lobbying by the private equity industry and other investment managers, according to Reuters. The tax break has been defended by lawmakers from both parties, but this time advocates of repeal say they may have the upper hand. Reuters said carried interest is an industry term that describes a large portion of the investment gains realized by private equity managers, as well as executives at some venture capital, real estate and hedge funds. The tax break allows these financiers -- many of whom are among the wealthiest people in the country -- to treat such income as capital gains, making it subject to a tax rate of only 20 percent, instead of the nearly 40 percent top rate on ordinary income paid by the highest earners, Reuters explained. Carried interest became a campaign issue last year when it emerged that Republican presidential hopeful Mitt Romney had paid an effective tax rate of about 15 percent in the past, thanks in part to the favored tax treatment. Romney, one of the wealthiest Americans to ever run for the White House, was a co-founder of private equity giant Bain Capital, the report noted. Sander Levin, the top Democrat on the tax-writing House of Representatives Ways and Means committee, has been pushing for years to end the tax break, and plans to soon introduce legislation again, according to Reuters. He said the tide is turning after Obama's campaign. "Elections matter. When issues are raised and the people speak, it matters," Levin said in an interview with Reuters. Closing the tax break could raise close to $20 billion over 10 years, Reuters said, citing congressional budget estimates. Defenders of the provision say it is proper because the risks taken by those who claim it are comparable to the risks of stock market investing, Reuters added. So carried interest gains, they say, should be taxed like investment income, not wage income. Opponents say carried interest is more akin to ordinary income, and that financiers should have to pay the same top income tax rate that other workers do. * Justice Department Faces Uphill Battle in Proving S&P Fraud ------------------------------------------------------------- Peter J. Henning and Steven M. Davidoff, writing for The New York Times, reported that while the 119-page civil complaint the U.S. Department of Justice filed against Standard & Poor's is chock- full of emails that paint a picture of shoddy practices and greed as S&P purportedly watered down its standards to generate more business, whether the company's practices equate to fraud will be difficult to prove. The New York Times noted that the government is bringing charges under a provision of the Financial Institutions Reform, Recovery and Enforcement Act, a statute adopted in 1989 during the savings and loan crisis to make it easier to pursue fraud cases in the banking business. The law allows for a penalty of up to $1 million for each violation of the mail, wire and bank fraud statutes for conduct "affecting" a federally insured financial institution. The benefit of using the Financial Institutions Reform, Recovery and Enforcement Act is that one only needs to meet the lower burden of proof in civil cases of a "preponderance of the evidence" while still being able to use the broad mail and wire fraud statutes, the New York Time said. This is in contrast to criminal charges, which require that prosecutors prove guilt beyond a reasonable doubt. The New York Times, however, said that despite the colorful e- mails, the Justice Department will face an uphill battle, even with the lower burden of proof. The first problem is that Justice Department will have to demonstrate that S&P acted inappropriately and the government will have to prove that ratings were in fact faulty, and published intentionally so as to deceive investors in the securities. In response, S&P could simply argue that the company was just as blinded by the financial crisis as anyone else, and that questionable e-mails are simply the work of lower- level employees who were not involved in the decision-making, the report noted. In its complaint, the government asserts that S&P's fraudulent scheme "caused" investors to buy the securities, but the ratings by other firms may well have contributed to that decision, the New York Times said. By only suing S&P, the Justice Department will have to show that the company's ratings played a major role in the investment decision, the report added. Even if a fraud claim is established, S&P is sure to raise an old defense: the First Amendment's protection for freedom of the press. * Royal Bank of Scotland to Settle Rate-Rigging Case ---------------------------------------------------- Mark Scott and Ben Protess, writing for The New York Times' DealBook blog, reported that a campaign to root out financial fraud secured a victory on Wednesday, as authorities took aim at the Royal Bank of Scotland for its role in an interest rate manipulation scheme that has emboldened prosecutors and consumed the banking industry. The DealBook said American and British authorities struck a combined $612 million settlement with the bank, the latest case to emerge from the global investigation into rate-rigging. The Justice Department dealt another blow to the bank, forcing its Japanese unit to plead guilty to criminal wrongdoing. The penalty for the subsidiary, a hub of rate manipulation, underscores a recent shift in the way federal authorities punish financial wrongdoing, according to Reuters. The R.B.S. case echoed an earlier action taken against a UBS subsidiary, which similarly pleaded guilty to felony wire fraud as part of a larger settlement. These cases represent the first units of a big bank to agree to criminal charges in more than a decade. "I want financial institutions to know that this department will absolutely hold them to account," Lanny Breuer, head of the Justice Department's criminal division, said in an interview Wednesday. The Royal Bank of Scotland Group plc (NYSE:RBS) -- http://www.rbs.com/- is a holding company of The Royal Bank of Scotland plc (Royal Bank) and National Westminster Bank Plc (NatWest), which are United Kingdom-based clearing banks. The company's activities are organized in six business divisions: Corporate Markets (comprising Global Banking and Markets and United Kingdom Corporate Banking), Retail Markets (comprising Retail and Wealth Management), Ulster Bank, Citizens, RBS Insurance and Manufacturing. On October 17, 2007, RFS Holdings B.V. (RFS Holdings), a company jointly owned by RBS, Fortis N.V., Fortis SA/NV and Banco Santander S.A. (the Consortium Banks) and controlled by RBS, completed the acquisition of ABN AMRO Holding N.V. (ABN AMRO). In July 2008, the company disposed of its entire interest in Global Voice Group Ltd. * BOOK REVIEW: Corporate Venturing -- Creating New Businesses ------------------------------------------------------------- Authors: Zenas Block and Ian C. MacMillan Publisher: Beard Books, Washington, D.C. 2003 (reprint of 1993 book published by the President and Fellows of Harvard College). List Price: 371 pages. $34.95 trade paper, ISBN 1-58798-211-0. Creating new businesses within a firm is a way for a company to try to tap into its potential while at the same time minimizing risks. A new business within a firm is like an entreprenuerial venture in that it would have greater flexibility to opportunistically pursue profits apart from the normal corporate structure and decision-making processes. Such a business is different from a true entrepreneurial venture however in that the business has corporate resources at its disposal. Such a company business venture has to answer to the company management too. Corporate venturing -- to use the authors' term -- offers innovative and stimulating business opportunities. Though venturing is in a somewhat symbiotic relationship with the parent firm, the venture would never threaten to ruin the parent firm as a entrepreneur might be financially devastated by failure. Block and MacMillan contrast an entreprenuerial enterprise with their subject of corporate venturing, "When a new entrepreneurial venture is created outside an existing organization, a wide variety of environmental factors determine the fledgling business's survival. Inside an organization . . . senior management is the most critical environmental factor." This circumstance is the basis for both the strengths and limitations of a corporate venture. In their book, the authors discuss how senior management working with the leadership of a corporate venture can work in consideration of these strengths and weaknesses to give the venture the best chances for success. If the venture succeeds beyond the prospects and goals going into its formation, it can always be integrated into the parent company as a new division or subsidiary modeled after the regular parts of a company with the open-ended commitment, regular hiring practices, and reporting and coordination, etc., going with this. As covered by the authors, done properly with the right commitment, sense of realism and practicality, and preliminary research and ongoing analysis, corporate venturing offers a firm new paths of growth and a way to reach out to new markets, engage in fruitful business research, and adapt to changing market and industry conditions. The principle of corporate venturing is the familiar adage, "nothing ventured, nothing gained." While it is improbable that a corporate venture can save a dying firm, a characteristic of every dying firm is a blindness about venturing. Just thinking about corporate ventures alone can bring to a firm a vibrancy and imagination needed for business longevity. Ideas, insights, and vision are the essence of corporate venturing. But these are not enough by themselves. Corporate venturing is based as much on the right personnel, especially the top leaders. The authors advise to select current employees of a firm to lead a corporate venture whenever feasible because they already have relationships with senior management who are the ultimate overseers of a venture and they understand the corporate culture. In one of their several references to the corporate consultant and motivational speaker Peter Drucker, the authors quote him as identifying only half jokingly the most promising employees to lead the corporate venture as "the troublemakers." These are the ones who will be given the "great freedom and a high level of empowerment" required to make the venture workable and who also are most suited to "adapt rapidly to new information." Such employees for top management of a venture are not entirely on their own. The other side of this, as Brock and MacMillan go into, is for such venture management to earn and hold the trust and confidence of the firm's top management and work within the framework and follow the guidelines set for the venture. Corporate venturing is an operation which is a hybrid of the standard corporate interests and operations and an independent business with entrepreneurial flexibility mainly from focus on one product or service or at most a few interrelated ones, simplified operations, and streamlined decision-making. From identifying opportunities and getting starting through the business plan and corporate politics, Brock and MacMillan guide the readers into all of the areas of corporate venturing. Zenas Block is a former adjunct professor with the Executive MBA Program at the NYU Stern School of Business. Ian C. MacMillan is associated with Wharton as a professor and a director of a center for entrepreneurial studies. ********* 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., Washington, D.C., USA. Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Howard C. Tolentino, Joseph Medel C. Martirez, Carmel Paderog, Meriam Fernandez, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2013. 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 $975 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 Peter A. Chapman at 215-945-7000 or Nina Novak at 202-241-8200. *** End of Transmission ***