T R O U B L E D C O M P A N Y R E P O R T E R Monday, December 6, 2004, Vol. 8, No. 268 Headlines ADVANCED MEDICAL: VISX Acquisition Cues Moody's to Affirm Ratings ACA ABS: Fitch Affirms BB Rating on $3 Million Class C Notes AMCAST INDUSTRIAL: Hires Thompson Hine as Bankruptcy Counsel ANDROSCOGGIN ENERGY: Wants to Employ Osler as Canadian Counsel ANIXTER INTL: Moody's Puts Ba3 Rating on $125M Convertible Notes APPLIED EXTRUSION: Wants to Pay Prepetition Unsecured Claims ATA AIRLINES: Committee Balks at Baker & Daniels as Lead Counsel ATRIUM COS: S&P Cuts Credit Rating to B & Junks Senior Notes BALLY TOTAL: Increases Initial Consent Fee to Sr. Noteholders CANBRAS COMMUNICATIONS: Releases Third Quarter Financial Results CATHOLIC: Portland Wants Tort Committee's Complaint Dismissed CATHOLIC CHURCH: Court Rejects Portland Claimants' Ad Campaign CLEMROSE PROPERTIES: Case Summary & Largest Unsecured Creditor COOPER-STANDARD: Moody's Assigns Low-B Ratings to Debts CSFB MORTGAGE: S&P Places Low-B Ratings on 12 Certificate Classes CSFB MORTGAGE: S&P Holds Single-B Ratings on Cert. Classes F & G DII/KBR: Judge Fitzgerald Approves AIG & Lehman Settlement Pacts DII/KBR: Halliburton Says Plan Ready to Take Effect Dec. 31 DLJ COMMERCIAL: Moody's Holds Ba2 Rating on $31M Class B-4 Certs. ENDURANCE SPECIALTY: Aon Sells 9.8 Million Shares to Goldman Sachs ENRON: Bankr. Court Assumes Jurisdiction in Sierra Dispute EXECUTIVE JET: Case Summary & 20 Largest Unsecured Creditors EXIDE TECHNOLOGIES: George Soros Discloses 6.3% Equity Stake FINE NUTRACEUTICALS: Case Summary & 11 Largest Unsecured Creditors GRAHAM HOUSING: Moody's Slices Rating on Revenue Bonds to Ba3 GEO SPECIALTY: Judge Stern Approves Disclosure Statement GORE MUTUAL: S&P Downgrades Ratings to BB based on Public Info GROUPE BOCENOR: Discloses $3 Million Investment Program HAIGHTS CROSS: Moody's Junks Proposed $20M Senior Unsecured Notes HAIGHTS CROSS: S&P Junks $30 Million Rule 144A Senior Notes HI-RISE RECYCLING: U.S. Trustee Appoints Four-Member Committee HI-RISE: Has Until Dec. 14 to Make Lease-Related Decisions IMPAC FUNDING: Fitch Puts Low-B & Junk Ratings to 7 Cert. Classes INTEGRATED ELECTRICAL: Completes $4 Million Business Unit Sale INTERSTATE BAKERIES: Wants More Time to Remove Actions & Lawsuits ITSV INC: iPayment Counsel Removed Due to Conflict of Interest IVACO INC: Closes Sale of Three Businesses to Heico Subsidiary JACK RABBIT LINES: Case Summary & 20 Largest Unsecured Creditors JACUZZI BRANDS: Donald Devine to Become CEO Effective Oct. 2005 JEUNIQUE INTERNATIONAL: Confirmation Hearing Continues on Dec. 9 METRIS MASTER: S&P Raises Secured Notes' Rating to AAA from B+ NORTHWOODS CAPITAL: Fitch Affirms BB Rating on Class VI Notes OCWEN FEDERAL: Fitch Comments on Voluntary Dissolution Plans ONSOURCE CORP: Sept. 30 Balance Sheet Upside-Down by $1.6 Million OPBIZ LLC: S&P Assigns B- Rating to $496M Senior Secured Facility OREGON ARENA: Judge Perris Confirms Fourth Amended Plan PARK PLACE: Fitch Rates $64.5 Million Class M-10 Certificates BB+ PAYLESS SHOESOURCE: November Same-Store Sales Tumble 2.3% PG&E NATIONAL: Noteholders Committee Dissolved as of Oct. 29 PRESTIGE BRANDS: Moody's Reviewing Ratings & May Upgrade PRICELINE.COM: Purchases 100% Equity Stake in Travelweb LLC QUIGLEY COMPANY: Dist. Ct. Frowns on Smorgasbord-Style Litigation RELIANCE GROUP: Still Unable to File Financial Reports with SEC RELIANCE GROUP: Taps Deloitte Tax as Tax Advisor REMOTE DYNAMICS: Auditors Express Going Concern Doubt SALTIRE INDUSTRIAL: Creditors Must File Proofs of Claim by Dec. 10 SALTIRE INDUSTRIAL: Committee Hires Lowenstein Sandler as Counsel SCHENECTADY: Moody's Revises Outlook on Ba3 Rating to Positive SCIENTIFIC GAMES: S&P Puts B Rating on $250M Sr. Sub. Debentures SFBC INTL: Moody's Rates Proposed $160M Sr. Secured Facilities B2 SOUTHWEST HOSPITAL: Committee Hires Kilpatrick Stockton as Counsel TECHNOLOGY SCIENCES: Case Summary & 8 Largest Unsecured Creditors TECO ENERGY: Fitch Revises Outlook on Ratings to Stable TECO ENERGY: S&P Says Frontera Sale Plan Won't Affect Ratings THE GERMINSKY GROUP: Case Summary & 20 Largest Unsecured Creditors UAL CORP: Wants Court to Decide on "Disguised" Financing Pact UNIVERSAL CITY: S&P Assigns B Rating to $450 Million Senior Notes US AIRWAYS: Reaches Tentative Pact with Communications Workers VAIL RESORTS: S&P Revises Outlook on Low-B Ratings to Stable VOUGHT AIRCRAFT: S&P Rates Proposed $650 Mil. Senior Facility B+ WEIRTON STEEL: Court Extends Claims Objection Deadline to Dec. 13 WESTPOINT STEVENS: Extends Lease Decision Deadline to June 30 WESTPOINT STEVENS: Has Until Jan. 20 to File a Chapter 11 Plan * Mintz Levin Welcomes John R. Higham in Boston Office * Moody's Names Andrew Huddart New President for KMV Unit * Ropes & Gray Adds Nine New Partners * BOND PRICING: For the week of December 6 - December 10, 2004 ********* ADVANCED MEDICAL: VISX Acquisition Cues Moody's to Affirm Ratings ----------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Advanced Medical Optics, Inc. -- AMO. Moody's affirmed the B1 Senior Implied Rating, the B1 ratings for the senior secured credit facilities, the B2 Senior Unsecured Issuer Rating, and the B3 convertible notes rating. The rating outlook for the company is stable. The rating affirmation follows the company's announcement on Nov. 9, 2004, that it had entered into an agreement to acquire VISX, Incorporated for approximately $1.27 billion. The purchase price will consist of 0.552 shares of AMO stock and $3.50 in cash for every share of VISX stock. Moody's believes that the combination will be a good complementary and strategic fit for AMO. It will enable the company to establish a strong position in the refractive surgery market, with a leading worldwide installed base of lasers, and solidify refractive offerings that include the company's existing microkeratome and phakic intraocular lens products. The combination will also diversify the company's business mix, enabling the company to expand into a leadership position in a third ophthalmic/eye care segment. In addition, the company will continue to gain scale and scope and will further strengthen its position as a leading competitor, along with larger rivals Alcon and Bausch & Lomb, in the ophthalmic surgical and eye care markets. AMO will finance the transaction conservatively, with only $184 million of the $1.27 billion purchase price to be paid in cash. As a result, the company's leverage will actually decline. Based on the quarter ended September 30, 2004, the annualized adjusted free cash flow to adjusted debt (adjustments made for operating leases) ratio was approximately 6%. Coverage will improve to approximately 10% pro forma for the transaction (based on AMO's quarter ended September 30, 2004 annualized results and VISX's twelve months ended September 30, 2004 results). The calculation assumes that the cash portion of the transaction will be funded with additional debt. However, as of September 30, 2004, the two companies had a combined cash balance of $155 million. Partly offsetting the positive credit consideration is Moody's concern about the aggressive pace of the company's acquisition program and integration risks. VISX will be the second material transaction AMO will be completing within a relatively short time frame. Moody's also notes the unsteady historical performance of VISX as a credit concern. VISX's recent performance trends have been strong, and fundamentals for the refractive laser industry have turned around. However, due to the significant operating leverage of the company's business, profitability can be significantly impacted by an adverse change in economic conditions or a decline in procedure volumes. The potential impact on the combined entity, however, should be more limited given its more diversified business mix as compared to VISX as a stand-alone company. The outlook for the company is stable. If the company makes significant progress in successfully integrating VISX, continues to improve VISX's profitability and continues to reduce debt, Moody's will consider upgrading the ratings. Prior to taking any action, Moody's will assess the potential for near term acquisition activity and the likely effect such activity may have on the company's credit profile. Advanced Medical Optics, headquartered in Santa Ana, California, is a global leader in the development, manufacturing and marketing of ophthalmic surgical and contact lens care products. ACA ABS: Fitch Affirms BB Rating on $3 Million Class C Notes ------------------------------------------------------------ Fitch Ratings affirms nine classes of notes issued by ACA ABS 2003-2 Ltd. These affirmations are the result of Fitch's review process and are effective immediately: -- $10,000,000 class A-1SW notes at 'AAA'; -- $315,000,000 class A-1SU notes at 'AAA'; -- $146,500,000 class A-1SD notes at 'AAA'; -- $108,000,000 class A-1J notes at 'AAA'; -- $51,000,000 class A2 notes at 'AA'; -- $36,000,000 class A3 notes at 'A'; -- $7,000,000 class BF notes at 'BBB'; -- $15,000,000 class BV notes at 'BBB'; -- $3,000,000 class C notes at 'BB'. ACA 2003-2 is a collateralized debt obligation managed by ACA Management, L.L.C., which closed Nov. 6, 2003. ACA 2003-2 is composed of residential mortgage-backed securities, consumer asset-backed securities, commercial mortgage-backed securities, and collateralized debt obligations. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and the portfolio management strategy. Since closing, the collateral has continued to perform. The weighted average rating factor has stayed the same at 'BBB+/BBB'. The senior overcollateralization, class A3 OC, class B OC, and class C OC ratios have stayed the same since closing at 115.2%, 109.0%, 105.5%, and 105.1%, respectively. As of the Oct. 29, 2004, trustee report, ACA 2003-2 $725 million portfolio contained no defaulted assets or assets rated 'BB+' or below. The rating of the class A-1SW, class A-1SU, class A-1SD, class A-1J, and class A2 notes addresses the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class A3, class BF, class BV, and class D notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. In addition, the class A-1SW notes also benefit from a financial guaranty insurance policy issued by CDC IXIS Financial Guaranty North America. Fitch will continue to monitor and review this transaction for future rating adjustments. AMCAST INDUSTRIAL: Hires Thompson Hine as Bankruptcy Counsel ------------------------------------------------------------ Amcast Industrial Corporation and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the Southern District of Ohio, Dayton Division, to employ Thompson Hine, LLP, as their counsel in their restructuring. Thompson Hine will: a) advise the Debtors of their rights, powers and duties as debtors-in-possession in the continued operation of their businesses; b) advise and assist the Debtors in the preparation of all necessary applications, motions, pleadings, reports and other legal papers required in connection with the administration of the chapter 11 estates; c) represent the Debtors in certain contested matters or adversary proceedings commenced by or against the Debtors; d) assist the Debtors in negotiating a plan of reorganization with their creditors and to perform all legal services necessary to obtain creditor approval, confirmation and plan implementation; and e) perform other legal services for the Debtors, as debtors-in-possession which may be necessary herein. The Firm's professionals will bill the Debtors at their current hourly rates: Professional Billing Rate ------------ ------------ Alan R. Lepene $475 Katherine D. Brandt $400 Joseph M. Rigot $330 Louis F. Solimine $325 David A. Neuhardt $325 J. Wray Blattner $295 Lawrence T. Burick $285 Jeremy M. Campana $160 Jennifer L. Maffett $150 Other Partners $275 to $500 Other Associates $150 to $250 Paralegals $100 to $150 Alan R. Lepene, Esq., at Thompson Hine, discloses that the Debtors paid the Firm a $100,000 retainer, and $23,107 of that amount remains. To the best of the Debtors' knowledge, Thompson Hine is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Dayton, Ohio, Amcast Industrial Corporation -- http://www.amcast.com/-- is a manufacturer and distributor of technology-intensive metal products to end-users and supplier in the automotive and plumbing industry. The Company and its debtor- affiliates filed for chapter 11 protection on Nov. 30, 2004 (Bankr. S.D. Ohio Case No. 04-40504). When the Debtors filed for protection from their creditors, they listed total assets of $104,968,000 and total debts of $165,221,000. ANDROSCOGGIN ENERGY: Wants to Employ Osler as Canadian Counsel -------------------------------------------------------------- Androscoggin Energy LLC seeks authority from the U.S. Bankruptcy Court for the District of Maine, Bangor Division, to retain Osler, Hoskin & Harcourt, LLP, as its special counsel. The Debtor selects Osler Hoskin because of the Firm's experience in complex matters involving Canadian commercial law and contracts with Canadian counterparties since the Debtor's primary gas suppliers and two of its three gas transporters are Canadian entities. Osler is expected to: a) provide insolvency, restructuring and other legal advice in relation to the Debtor's CCAA proceeding; and b) provide legal advice on other issues involving Canadian law, including but not limited to those concerning the Debtor's long-term, fixed-price gas supply contracts and its transportation contracts. Steven Golick, Esq., at Osler Hoskin, discloses that his Firm received an approximate US$50,000 retainer. Osler Hoskin's professionals will bill the Debtor at their current hourly rates: Hourly Billing Rate Professional Cdn$ US$ ------------- --------------------- Joseph Steiner $700 $595 Steven Golick $625 $532 Nancy Roberts $525 $446 Natasha MacParland $450 $382 Law Clerks $75 to $375 $63 to $318 Students $175 $118 To the best of the Debtors' knowledge, Osler Hoskin is a disinterested" party as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Boston, Massachusetts, Androscoggin Energy LLC, owns, operates, and maintains an approximately 150-megawatt, natural gas-fired cogeneration facility in Jay, Maine. The Company filed for chapter 11 protection on November 26, 2004 (Bankr. D. Me. Case No. 04-12221). Michael A. Fagone, Esq., at Bernstein, Shur, Sawyer & Nelson represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed total assets of $207,000,000 and total debts of $157,000,000. ANIXTER INTL: Moody's Puts Ba3 Rating on $125M Convertible Notes ---------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Anixter International Inc.'s $125 million zero coupon convertible notes, due 2033. Moody's also affirmed the Ba3 rating on Anixter's 7% LYON's notes and 3.25% LYON's notes, and its Ba1 senior implied rating. The outlook is stable. The zero coupon convertible notes will be exchanged for Anixter's existing 3.25% LYON's notes and the rating on the 3.25% notes will be withdrawn when the offer is complete and all the 3.25% notes are exchanged. The ratings assignment and affirmation recognize Anixter's thin margins, relatively high-adjusted leverage, history of acquisitions and share repurchases, and current share repurchase program. However, the ratings also incorporate the company's large and diversified customer base, good supplier relationships, and geographic reach, as well as its relatively low leverage, strong interest coverage, reasonable liquidity, and good asset coverage. The ratings reflect the recent improvement in operating performance over the past couple of quarters but also recognize that operating margins remain relatively thin and below historic levels. In addition, over the last 12 months debt levels have moved slightly higher in order to fund negative free cash flows. The ratings are supported by the breadth of Anixter's revenue base in which no single customer accounts for more than 3% of total sales, the geographic reach of its distribution network that reaches over 42 countries, and diverse list of suppliers. The ratings also reflect Anixter's low leverage and good coverage as the company has reduced debt by approximately $200 million since the end of the first quarter 2001. In early 2001, Anixter's revenues began to decline considerably due in large part to the decline in customer capital spending, particularly in the telecommunication sector. By the end of 2002, revenues had fallen by approximately $1.0 billion from a high of $3.5 billion in 2000 and operating margins declined to 3.5% from 5.4% in 2000 due in part to increased competition and a decline in overall capital spending by customers. However, since early 2004, revenue and operating margins, excluding the impact of acquisitions, have been steadily improving. When acquisitions are incorporated, revenues almost matched year 2000 levels based on a run rate for the second and third quarters of 2004. Operating margins also improved to approximately 4.1% on an LTM basis as of October 1, 2004, although operating profits still remained below previous levels, due in part to business mix. Anixter's free cash flow was also negative for the twelve month period ended October 1, 2004, due to additional working capital requirements associated with higher sales levels, the acquisition of Distribution Dynamics, Inc. -- DDI, and a one-time special dividend to shareholders. As a result, adjusted debt has increased to approximately $436 million, including the accounts receivables financing (A/R), producing adjusted leverage of about 2.93x. Conversely, interest costs actually declined even though debt increased due to a higher mix of lower cost A/R and bank debt, resulting in EBITDA coverage of gross interest of about 12x. However, after incorporating average annual rent expense of approximately $50 million, on an eight-time basis, leverage on an adjusted basis was about 4.2x and coverage was approximately 3.2x. Despite these increased borrowing needs over the last twelve months, Moody's views the company's current liquidity as adequate. As of October 1, 2004, approximately $196 million was available under the revolver at Anixter, Inc., after incorporating covenant restrictions, of which $42 million was available to pay inter- company liabilities and $179 million that could be used to pay dividends to Anixter. There was also approximately $42 million available under the accounts receivable securitization program -- A/R facility. With limited balance sheet cash the bank facility will remain the company's primary source of liquidity. The stable ratings outlook reflects our expectation that operating performance will steadily improve over the near term, operating margins will at least remain at current levels, leverage will remain low, and liquidity will stay reasonable. Going forward we also believe that share repurchases will be minimal and acquisitions, if they occur, will be small "tuck-ins". Factors that could negatively impact the ratings and outlook would be deterioration in credit metrics or liquidity caused by a decline in revenues or operating margins, or a sizeable debt financed acquisition. However, a sustained improvement in sales and improved operating margins that resulted in stronger credit metrics and liquidity would likely result in an improved rating and outlook. Moody's also moved the senior unsecured issuer rating to Ba3, the same rating as the senior unsecured zero coupon notes, in order to re-align the issuer rating with the appropriate class of securities. Anixter International, Inc., located in Glenview, Illinois, is a leading global distributor of data, voice, video and security network communication products. APPLIED EXTRUSION: Wants to Pay Prepetition Unsecured Claims ------------------------------------------------------------ Applied Extrusion Technologies, Inc., and its debtor-affiliate ask the U.S. Bankruptcy Court for the District of Delaware for authority to pay prepetition general unsecured claims in the ordinary course of their businesses. The Debtors estimate they owe these creditors $20,000,000. The Debtors believe that a smooth transition into and through the chapter 11 process will preserve the value of their businesses. They stress that payment in full of all non-contingent, liquidated, undisputed unsecured prepetition claims are critical to the continued operation of their estates. Headquartered in New Castle, Delaware, Applied Extrusion Technologies, Inc. -- http://www.aetfilms.com/ -- develops & manufactures specialized oriented polypropylene films used primarily in consumer products labeling and flexible packaging application. The Company and its debtor-affiliate filed for chapter 11 protection on Dec. 1, 2004 (Bankr. D. Del. Case No. 04-13388). Edward J. Kosmowski, Esq., and Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor, and Sheldon K. Rennie, Esq., at Fox Rothschild O'Brien & Frankel LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $407,912,000 in total assets and $414,957,000 in total debts. ATA AIRLINES: Committee Balks at Baker & Daniels as Lead Counsel ---------------------------------------------------------------- To recall, ATA Airlines and its debtor-affiliates seek the United States Bankruptcy Court for the Southern District of Indiana's authority to employ Baker & Daniels as their lead attorneys. ATA Holdings Corp. Executive Vice-President and Chief Restructuring Officer Gilbert F. Viets relates that the Debtors selected Baker & Daniels as counsel because of its considerable experience in bankruptcy matters. Moreover, Baker & Daniels has represented the Debtors in the ordinary course of their businesses on a wide variety of matters for several years before the Petition Date. Creditors Committee Objects The Official Committee of Unsecured Creditors has reviewed the Application and supporting documentation filed by Baker & Daniels, Sommer Barnard Attorneys PC, Ponader & Associates, LLP, Paul, Hastings, Janofsky & Walker, LLP, and Huron Consulting Group, LLC, However, the Creditors Committee lacked sufficient information to determine whether payment made by the Debtors to the Professionals prior to the Petition Date resulted in preferential transfers pursuant to Section 547(b) of the Bankruptcy Code. The Creditors Committee, therefore, drafted and delivered letters to each of the Professionals, seeking more specific information concerning services rendered and fees and expenses incurred by each of the Professionals on behalf of the Debtors during the one- year period prepetition. The Creditors Committee received substantive responses to the Letters from Baker & Daniels, Sommer Barnard, Ponader and Paul, Hastings, and upon review, the Committee has determined that it has no objection to the retention of Sommer Barnard, Ponader and Paul, Hastings. Although Baker & Daniels responded to the Letter initially, the Committee requested additional information from Baker & Daniels with respect to invoices submitted by Baker & Daniels to the Debtors and payments made by the Debtors during September and October 2004, which the Committee has not yet received. According to Daniel H. Golden, Esq., at Akin Gump Strauss Hauer & Feld, LLP, in New York, without the additional information, the Creditors Committee is unable to determine whether Baker & Daniels may have received preferential payments from the Debtors. Section 327(a) disqualifies a professional employed by a debtor if the professional hold or represent an interest adverse to the estate. Mr. Golden reminds the Court that the Third Circuit has held that a "preferential transfer to [counsel] would constitute an actual conflict of interest between counsel and the debtor, and would require the firm's disqualification." Hence, until the Creditors Committee has been provided with sufficient information to determine whether the Debtors made preferential payments to Baker & Daniels, the Creditors Committee reserves its right to object to the employment of Baker & Daniels by the Debtors. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case No. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATRIUM COS: S&P Cuts Credit Rating to B & Junks Senior Notes ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Dallas, Texas-based Atrium Cos., Inc., to 'B' from 'B+'. The outlook is stable. At the same time, Standard & Poor's assigned its 'B' bank loan rating and '4' recovery rating to Atrium's proposed first-lien $50 million revolving credit facility and $325 million term loan B, based on preliminary terms and conditions. The 'B' rating is the same as the corporate credit rating; this and the '4' recovery rating indicate that bank lenders can expect marginal (25% to 50%) recovery of principal in the event of default. Standard & Poor's also assigned its 'CCC+' rating to the company's proposed $125 million holding company senior unsecured discount notes due 2012. The notes are expected to accrue interest until 2008 when the interest will become payable in cash. The notes will be issued under rule 144a without registration rights. "The rating downgrade reflects expectations that Atrium's very aggressive debt leverage, combined with its acquisitive growth strategy, will prevent credit measures from reaching, and being sustained, at levels appropriate for the prior ratings, said Standard & Poor's credit analyst Lisa Wright. In addition, Standard & Poor's believes that raw-material cost pressures and potentially weaker housing markets could present greater risks for Atrium's future profitability. Despite robust construction and remodeling markets, Atrium has not reduced debt as expected, keeping total debt to EBITDA, including capitalized operating leases, above the mid-5x level. With the proposed refinancing, Atrium's total debt to EBITDA will initially increase to above 6x. The ratings on Atrium reflect the company's very high debt leverage and aggressive acquisition strategy, which overshadow its position as a leading low-cost manufacturer of aluminum and vinyl windows and its substantial sales (about 40%) to the less-cyclical replacement market. Atrium plans to use the proceeds of the proposed bank loans and notes to refinance its $200 million term loan B and $225 million of senior subordinated notes as well as to pay related fees and expenses. BALLY TOTAL: Increases Initial Consent Fee to Sr. Noteholders ------------------------------------------------------------- Bally Total Fitness Holding Corporation (NYSE: BFT) has increased the fee payable to holders of its: -- 10-1/2% Senior Notes due 2011 and -- 9-7/8% Senior Subordinated Notes due 2007 who consent to waivers of defaults under the indentures governing the notes in accordance with the requirements set forth in Bally's Consent Solicitation Statements dated Nov. 15, 2004, and the related Letters of Consent. The Initial Consent Fee has been increased to $5.00 (from $2.50) per $1,000 in principal amount of 10-1/2% Senior Notes due 2011 and 9-7/8% Senior Subordinated Notes due 2007 with respect to which consents are timely received and not revoked. Any Additional Consent Fees payable in accordance with Bally's Consent Solicitation Statements will remain at $2.50 per $1,000 in principal amount of notes with respect to which consents are timely received and not revoked. Bally has extended the Consent Date (as defined in Bally's Consent Solicitation Statements) to 5:00 p.m., New York City time, on Dec. 7, 2004. The record date for determining noteholders eligible to submit consents remains Nov. 18, 2004. Noteholders who have previously submitted Letters of Consent are not required to take any further action in order to receive payment of the increased Initial Consent Fee in the event the Requisite Consents are received and the Initial Consent Fee becomes payable in accordance with the terms of Bally's Consent Solicitation Statements. Noteholders who have not yet consented are asked to submit the previously distributed Letters of Consent in order to consent and receive any consent fees that may be paid by the Company, including the increased Initial Consent Fee. As previously announced, Bally has retained Deutsche Bank Securities Inc. to serve as its solicitation agent and MacKenzie Partners, Inc. to serve as the information agent and tabulation agent for the consent solicitation. Questions concerning the terms of the consent solicitation should be directed to: Deutsche Bank Securities Inc. 60 Wall Street 2nd Floor New York, New York 10005 Attn: Christopher White The solicitation agent may be reached by telephone at (212) 250- 6008. Requests for documents may be directed to: MacKenzie Partners, Inc. 105 Madison Avenue New York, New York 10016 Attn: Jeanne Carr or Simon Coope The information agent and tabulation agent may be reached by telephone at (212) 929-5500 (call collect) or (800) 322-2885 (toll-free). This announcement is not an offer to purchase or sell, a solicitation of an offer to purchase or sell or a solicitation of consents with respect to any securities. The solicitation is being made solely pursuant to Bally's Consent Solicitation Statements and the related Letters of Consent, as amended hereby. Other than as expressly set forth herein, this announcement is not a waiver of any of the terms and conditions set forth in Bally's Consent Solicitation Statements and the related Letters of Consent and is subject thereto in all respects. Notwithstanding Bally's solicitation of waivers, no assurance can be given that an event of default under the indentures will not occur in the future. About the Company Bally Total Fitness is the largest and only nationwide commercial operator of fitness centers, with approximately four million members and 440 facilities located in 29 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. With an estimated 150 million annual visits to its clubs, Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter on Nov. 8, 2004, Moody's Investors Service placed the ratings of Bally Total Fitness Holding Corporation on review for possible downgrade following Bally's announcement that the trustee under its senior and subordinated note indentures informed the company that it will send default notices to the company unless Bally commences consent solicitations by November 15, 2004, and has either cured the defaults or obtained the necessary waivers from the holders of a majority of each series of notes by December 15, 2004. The trustee has advised the company that it would begin notifying noteholders of default in accordance with the indentures. Moody's is concerned that an event of default under the indentures may be triggered if Bally is unable to obtain the necessary waivers or cure the default. Moody's placed these ratings on review for possible downgrade: * $175 million Senior Secured Term Loan B Facility, due 2009, rated B2; * $100 million Senior Secured Revolving Credit Facility, due 2008, rated B2; * $235 million 10.5% Senior Unsecured Notes, due 2011, rated B3; * $300 million 9.875% Senior Subordinated Notes, due 2007, rated Caa2; * Senior Implied, rated B3; * Senior Unsecured Issuer, rated Caa1. As reported in the Troubled Company Reporter on Nov. 17, 2004, Bally Total Fitness Holding Corporation (NYSE: BFT) commenced the solicitation of consents to waivers of defaults from holders of its 10-1/2% Senior Notes due 2011 and 9-7/8% Senior Subordinated Notes due 2007 under the indentures governing the notes. As reported in the Troubled Company Reporter on Nov. 5, 2004, Standard & Poor's Ratings Services lowered its ratings on Chicago, Illinois-based Bally Total Fitness Holding Corp., including its corporate credit rating to 'CCC+' from 'B'. In addition, Standard & Poor's revised the CreditWatch implications to developing from negative. The fitness club operator's total debt outstanding at March 31, 2004, was $731.8 million. CANBRAS COMMUNICATIONS: Releases Third Quarter Financial Results ---------------------------------------------------------------- Canbras Communications Corp. (NEX.CBC.H) released unaudited results for the third quarter of 2004. As the Corporation completed the sale of all of its operations in December 2003 to Horizon Cablevision do Brasil, S.A. pursuant to a share purchase agreement, the Corporation's unaudited consolidated statements of earnings for the third quarter of 2004 reflect only the winding up activities of the Corporation. On August 23, 2004, the Corporation made an initial distribution to common shareholders, in the amount of $0.21 per common share (or $11.6 million in the aggregate), of the proceeds received by Canbras from the Sale Transaction. Canbras had previously estimated that the final distribution of net proceeds of the Sale Transaction to shareholders would aggregate approximately $0.30 per share (or $16.5 million) assuming no unforeseen claims were asserted against the Corporation. On November 16, 2004, Canbras announced that it had received a written notice from Horizon asserting previously unforeseen claims for indemnification by Canbras under the SPA. The aggregate amount of claims asserted by Horizon is Reais $57.6 million, or approximately $24.7 million. Under the terms of the SPA, if Horizon desires to seek indemnification from the Corporation, it is required to send written notice thereof to the Corporation prior to December 19, 2004, describing the facts giving rise to the claim, the amount (or a reasonable estimate of the likely amount) of the claim and the provision of the SPA (or the schedules thereto) alleged to have been breached. Under the SPA, the Corporation's indemnification obligations are limited to the balance of the purchase price due under the SPA, which balance is represented by the one-year promissory note due on December 19, 2004 in the principal amount of $10.432 million, plus accrued interest thereon at 10% per annum. The Horizon notice states that it is a preliminary list of claims, and that it is reserving its rights to supplement, review, adjust and otherwise modify its list of claims in accordance with the SPA. As at this date, Canbras has not received sufficient information to enable it to assess the validity of the claims nor the propriety of any subsequent demand for indemnification under the SPA in respect of such claims. As a result, the Note and accrued interest thereon are recorded on Canbras' interim consolidated balance sheet at September 30, 2004 at their face value of $11.223 million and no provision for loss has been included in Canbras' interim consolidated financial statements. Although Canbras intends to examine all such claims and, where appropriate, to contest their validity or propriety or amount, at this time there can be no assurance that the Corporation will not ultimately be held to be contractually responsible for an amount of indemnification that equals the entire amount of the Note and all accrued interest due thereon. If the Corporation is ultimately contractually responsible for some or all of the indemnity claims asserted to date by Horizon (or for future indemnity claims which may be validly asserted by Horizon), then the amount of the final distribution of net proceeds to shareholders will be reduced, and it is possible that the amount of the final distribution to shareholders will not include any amounts previously expected to be received by the Corporation under the Note, representing approximately $0.21 per share of the originally estimated final distribution of $0.30 per share, and will be limited to cash on hand ($7.4 million at September 30, 2004) less expenses incurred to the time of the making of the final distribution, including overhead expenses, expenses related to contesting and/or defending the claims for indemnification asserted by Horizon and expenses associated with collecting amounts due, if any, under the Note. Canbras had also previously stated that the final distribution to shareholders would be made in one or more instalments after the receipt of the balance of the purchase price payable pursuant to the Note, the satisfaction of all remaining liabilities of the Corporation and the receipt by the Corporation of up-dated tax clearance certificates. Such distributions, together with all aspects of the process of winding up Canbras, were expected to have been completed by year-end 2005. As a result of the receipt of the notice from Horizon, the Corporation cannot at this time predict the length of time that may be required to finally settle any issues surrounding the asserted indemnity claims nor to finally settle any of the lawsuits underlying any valid claims for indemnification. As a result, the Corporation cannot at this time predict when the final distribution will be made nor when the process of winding up Canbras will be completed but estimates that these events will occur no sooner than year-end 2005. Third Quarter Results As at September 30, 2004, Canbras' shareholders' equity was $17.9 million, down from $29.3 million at June 30, 2004. This decrease reflects the initial distribution to shareholders of $11.6 million, partially offset by the third quarter earnings of $183 thousand (comprised of accrued interest income of $330 thousand, foreign exchange gains and other income of $38 thousand offset by $185 thousand of administrative expenses). Canbras' cash and cash equivalents and the Note (including accrued interest) as at September 30, 2004 were $7.4 million and $11.2 million respectively. Cash and cash equivalents held by the Corporation are being invested in high-grade money market instruments. Accounts payable and accrued liabilities of $779 thousand at the end of the third quarter of 2004 represent mainly the provision for estimated remaining costs of completing the Sale Transaction. During the third quarter of 2004, accrued liabilities declined by $75 thousand principally due to a previously foreseen and accrued remaining cost of completing the Sale Transaction being realized and paid in cash. The earnings for the third quarter were $183 thousand. Estimated Remaining Future Net Assets Following the initial distribution to shareholders and assuming that the Note and accrued interest will be collected in full and that no unforeseen claims will be asserted against the Corporation, the currently estimated remaining future net assets of Canbras at December 31, 2005 are $16.5 million. The currently estimated remaining future net assets at December 31, 2005 have not changed from the estimate made in connection with the Corporation's second quarter results. The difference between shareholders' equity on the consolidated balance sheet at September 30, 2004 and the estimated remaining future net assets at December 31, 2005 is the deduction of estimated future net costs from October 1, 2004 to December 31, 2005. Such future net costs are estimated at approximately $1.4 million comprised of wind-up costs of approximately $1.8 million net of interest income of approximately $0.4 million. However, these estimated future net costs exclude any amounts that may be required to contest and/or defend the claims for indemnification asserted by Horizon or to contest and/or defend and/or settle unforeseen claims against the Corporation. To the extent that the Corporation is not wound-up by December 31, 2005, then it will continue to incur overhead expenses at a rate estimated to be approximately $200 to $250 thousand per quarter, excluding amounts that maybe required to contest and/or defend and/or settle the claims for indemnification asserted by Horizon or in relation to unforeseen claims that may be asserted by others. Interest income may not be sufficient to cover all such expenses. About the Company Canbras, through the Canbras Group of companies, is a leading broadband communications services provider in Brazil, offering cable television, high speed Internet access and data transmission services in Greater Sao Paulo and surrounding areas and the State of Paran . Canbras Communications Corp.'s common shares are listed on the Toronto Stock Exchange under the trading symbol CBC. CATHOLIC: Portland Wants Tort Committee's Complaint Dismissed ------------------------------------------------------------- The Archdiocese of Portland in Oregon asks the U.S. Bankruptcy Court for the District of Oregon to dismiss, with prejudice, the Complaint to determine the Archdiocese's interests in parish property filed by the Tort Claimants Committee appointed in its chapter 11 case. Portland asserts that: -- the Tort Committee failed to join necessary parties or parties whose presence is required for just adjudication pursuant to Rules 7012(b)(7) and 7019 of the Federal Rules of Bankruptcy Procedure; -- the Tort Committee fails to state a claim upon which relief can be granted; -- the Court lacks subject matter jurisdiction over the Tort Committee's claims; -- the issue the Tort Committee raises is not ripe and is not of a sufficient immediacy and reality to warrant issuance of a declaratory judgment; and -- the adjudication of the Complaint could potentially entangle the Court in the interpretation of religious law in violation of the First Amendment and its Oregon counterpart, ORS 65.042, and other applicable non- bankruptcy law. Portland insists that it holds the Disputed Property for others under, among other things, the Code of Canon Law, restrictions by and for others, and other applicable non-bankruptcy law. Portland also seeks judgment against the Tort Committee for costs and disbursements it incurred. Court Delays Deposition of Fr. Brown The Tort Committee contacted Portland's counsel to say it wants take a deposition of Fr. D. Bruce Brown with respect to the proposed sale of a real property located at the Northwest corner of S.E. Milwaukie Avenue and S.E. Center Street, in Portland. Portland's counsel advised the Tort Committee that they weren't aware of any issues related to the sale for which discovery would be required. Portland's counsel explained that the ownership of the property was already an issue in the Adversary Proceeding and there was no reason to begin to address that issue in connection with the sale. Portland offered to stipulate to a reasonable provision in any order approving the sale, which would preserve all of the Tort Committee's rights and Portland's defenses with respect to the Property. The proceeds of the sale will be held in trust until the Court orders payment. The parties weren't able to resolve their disagreement regarding the deposition. Howard M. Levine, Esq., at Sussman Shank, LLP, asserts that there is no emergency requiring the deposition of Fr. Brown prior to the sale of the Property. According to Mr. Levine, the Tort Committee's attempt to conduct piecemeal, repetitive discovery on a property-by-property basis is inefficient, expensive and burdensome. The Tort Committee is anticipated to explore issues in the deposition relating to Canon Law, the First Amendment, church governance, matters subject to one or more privileges, and other issues which are complex, fundamental to Portland's rights and defenses and which should and will be addressed in an orderly and measured fashion in the Adversary Proceeding. Mr. Levine also notes that Portland is already the focus of discovery on numerous fronts, including requests for production of documents regarding almost every asset of Portland or 124 parishes going back to 1842. At Portland's request, Judge Perris issues a protective order delaying the Tort Committee's deposition of Fr. Brown. "The Debtor is not seeking to deny discovery to the Tort Claimants Committee with respect to the Property," Mr. Levine clarifies. Portland wants the discovery with respect to the Property to occur "in an orderly, efficient, and cost effective manner, rather than on a piecemeal 'emergency,' limited time notice and urgent basis." Judge Perris directs Portland to file an affidavit stating that after reasonable injury, it knows of no other person or entity with an interest in the Property. Judge Perris notes that any sale of the Property will be free and clear of only the liens and interest specified in the notice of the sale. The sale proceeds will be impressed with all rights and claims under Section 544(a)(3) of the Bankruptcy Code. All defenses with respect to the rights and claims are preserved. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., and Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Court Rejects Portland Claimants' Ad Campaign -------------------------------------------------------------- The Official Committee of Tort Claimants appointed in the Archdiocese of Portland in Oregon's Chapter 11 case proposed a claims bar date noticing program, dubbed a Victim Outreach Plan, targeting Oregon and Southwest Washington to directly or indirectly reach majority of the victims through family members with the critical information of a pending claims bar date. The Tort Committee believes its Outreach Plan is the best opportunity to serve meaningful notice to silent victims and would facilitate the establishment of a bar date for all future claimants that reside in Oregon and Southwest Washington. Alternatively, the Tort Committee asserts that the U.S. Bankruptcy Court for the District of Oregon could use the Outreach Plan as the first phase of an ongoing campaign. Based on the results, the campaign could be used to determine the level of outreach required in additional regional markets previously identified by Portland. Victim Outreach Plan The Tort Committee's proposed broad-based Victim Outreach Plan involves print, television, and Internet media as well as direct mail and collateral support materials directed at the primary and secondary target audiences residing in Oregon and Southwest Washington. It also includes a comprehensive earned media campaign that targets the four-state area of Oregon, Washington, Idaho and California. Earned media provides a relatively low cost approach to reaching silent victims residing outside the geographical scope of the paid media plan. The goal of the Victim Outreach Plan is to reach out to those silent victims to provide them with notice of their legal rights, and to inform them that they must come forward before the Bar Date or face discharge. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, in Portland, Oregon, explains that the Victim Outreach Plan represents a thorough evaluation of the situation and an understanding that there exist other tort claimants who were sexually abused by Portland clergy who have yet to come forward. The Tort Committee believes this is a reasonable and realistic approach to satisfying the needs of all parties involved, and would allow consideration of a Bar Date for all Oregon-based claimants. The salient terms of the Victim Outreach Plan are: (A) Communication Strategy Creative Materials have been developed to accomplish the goal of the Plan: (a) Three victim testimonial television spot concepts; (b) Three priest identification television spot concepts; (c) Three full-pledge priest identification newspaper ad concepts; (d) One informational brochure; and (e) One informational Web site. (B) Target Audiences The Victim Outreach Plan targets: (a) Primary Audience -- Victims * Men ages 25 to 75; * Women ages 25 to 75; * Those who attended any institution that provided contact with Catholic clergy, including churches, hospitals, schools, residential care facilities, emergency shelters and penal institutions in Western Oregon; and * Those who currently reside in Oregon and Southwest Washington, based on information provided by Portland or have left the area but have family or friends that still reside in Oregon and Southwest Washington; and (b) Secondary Audience -- Victims' Families * Relatives of victims, defined as adults 18 and up; and * Currently reside in Oregon and Southwest Washington. (C) Paid Media Strategy & Tactics Both television and newspaper coverage will be used throughout Oregon and Southwest Washington markets where victims currently reside, including Albany, Ashland, Astoria, Baker City, Bend, Coos Bay, Corvallis, Eugene, Grants Pass, Klamath Falls, La Grande, Medford, Ontario, Pendleton, Portland, Roseburg, Salem, The Dalles, and Vancouver. The advertising will run for 12 months. (D) Direct Mail Direct mail will complement the paid media campaign by allowing the Tort Committee to select exactly the audience with whom it wants to communicate, and to send its message directly, using the audiences' own language and addressing their individual needs. The direct mail piece will be sent to members of a list provide by Portland through three separate mail flights, thereby increasing the reach of the overall paid media campaign. (E) Collateral & Website Requests for additional information will come through either a confidential toll-free hotline or through a Web site. The site http://www.startthehealing.org[registered to Brad J. Wilkus & Associates, Inc., at 1440 Coral Ridge Drive, #365, Coral Springs, Florida 33071] will provide clear and explicit language in helping sexual abuse survivors confront the nature of these crimes. The Web site will reinforce the television and print campaigns, and will provide information and options for victims who are contemplating coming forward. The Tort Committee puts a $5.1 million price tag on the Victim Outreach Plan. The Archdiocese thinks the price tag is higher, by orders of magnitude. A full-text copy of the Tort Committee's Victim Outreach Plan, including three storyboards for emotional television ads, is available for free at: http://bankrupt.com/misc/victim_outreach_plan.pdf Parties Object (1) Mount Angel Abbey Mount Angel Abbey asks Judge Perris to defer any ruling on the proposed Victim Outreach Plan until thorough review and evaluation of the statements contained in the Plan have been made. Although the Victim Outreach Plan is designed to generate proofs of claim against the Archdiocese of Portland in Oregon, Richard J. Whittemore, Esq., at Bullivant Houser Bailey, PC, in Portland, Oregon, points out that in reality, the proposal could also result in the generation of a number of claims against Mount Angel Abbey. Mr. Whittemore points out that the proposal references either directly or indirectly, a number of priests who were, or continue to be, associated with Mount Angel abbey. The proposal contains numerous inaccurate and inflammatory statements regarding the priests. Mount Angel Abbey asks the Court for opportunity to formally comment on the proposal and to seal the Victim Outreach Plan for inflammatory content and potential prejudice to all defendants. (2) The Archdiocese of Portland in Oregon Portland contends that the Tort Committee's Victim Outreach Plan is unreasonable and unnecessary. Portland believes that the Plan is based on a misrepresentation of bankruptcy law concerning bar date requirements. Thomas W. Stilley, Esq., at Sussman Shank, LLP, in Portland, Oregon, asserts that the Plan fails to recognize the substantial efforts made by Portland to reach out to victims of child abuse by its personnel. The safety of children entrusted to its care has long been an important priority for Portland. Portland has taken significant measures in preventing, reporting, and responding to concerns of child abuse and to victims of child abuse by its personnel. Judge Perris Rejects Tort Committee's Plan Judge Perris reviewed the Tort Committee's Plan and says that it will not be implemented. Judge Perris Seals Tort Committee's Plan Mount Angel Abbey represented by Richard J. Whittemore, Esq., at Bullivant Houser Bailey PC, in Portland, Oregon, obtained an order from Judge Perris directing that: "[T]he Tort Claimants Committee's Victim Outreach Plan be SEALED consistent with the provisions of [Local Bankruptcy Rule] 9037-1 [of the Local Bankruptcy Rules of the U.S. Bankruptcy Court for the District of Oregon]. "The Court notes that although media were present in the courtroom and a member of the Associated Press voiced opposition, no counsel for media was present. The Court may reconsider the ruling if the media formally presents its opposition. "Pursuant to LBR 9037-1(B), no person may review or reproduce any sealed documents without obtaining an appropriate Court Order. "Pursuant to LBR 9037-1(C), not later than 60 days after the Chapter 11 case has closed or within 60 days after the conclusion of any appeal, any party may serve and file a request, which will have a copy of the Original Order attached, to have the Clerk return a document Order to be sealed." CLEMROSE PROPERTIES: Case Summary & Largest Unsecured Creditor -------------------------------------------------------------- Debtor: Clemrose Properties, Inc. PO Box 131 Chester, New Jersey 07930 Bankruptcy Case No.: 04-47852 Chapter 11 Petition Date: December 2, 2004 Court: District of New Jersey (Newark) General Counsel: Jeffrey A. Cooper, Esq. Carella, Bryne, Bain, Gilfillan, Cecchi, Stewart & Olstein, P.C. 5 Becker Farm Road Roseland, New Jersey 07068-1735 Tel: (973) 994-1700 Bankruptcy Counsel: Ramp & Pisani Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Fleet National Bank $1,060,000 c/o William F. Saldutti III, Esq. Dembo & Saldutti 102 Browning Lane, Building B Cherry Hill, New Jersey 08003 COOPER-STANDARD: Moody's Assigns Low-B Ratings to Debts ------------------------------------------------------- Moody's assigned first-time ratings to the obligations of Cooper- Standard Automotive, Inc., and to its wholly owned Canadian subsidiary Cooper-Standard Automotive Canada Limited. A newly formed holding company named CSA Acquisition Corp. will be established as the direct parent of Cooper-Standard. The rating outlook is stable. Cooper-Standard Holdings proposes to acquire the stock of certain automotive division subsidiaries for sale by Cooper Tire and Rubber Company in accordance with a stock purchase agreement dated September 16, 2004. The aggregate cash purchase price will approximate $1.165 billion, equivalent to 4.7x trailing-twelve- month September 30, 2004 adjusted EBITDA. The intended investors are affiliates of the private equity firms The Cypress Group L.L.C. and GS Capital Partners 2000 L.P. Both firms will contribute $159 million of cash common equity to Cooper-Standard Holdings in order to obtain their respective 46.5% pro rata stakes on a fully diluted basis. No individual investor will own a majority of the shares. The remaining 7% of the fully diluted common shares can be obtained by management as part of a stock option plan. Cooper-Standard's operations historically contributed about half of Cooper Tire's consolidated revenues and more than seventy percent of Cooper Tire's consolidated operating earnings. These specific first-time ratings were assigned: -- B1 rating assigned for all facilities under the proposed $475 million equivalent guaranteed first-lien senior secured credit agreement for borrowers Cooper-Standard and Cooper- Standard Canada, to consist of: * $100 million ($ denominated) guaranteed senior secured revolving credit facility at Cooper-Standard, maturing December 2010; * $25 million equivalent ($ or C$ denominated) guaranteed senior secured revolving credit facility at Cooper- Standard Canada, maturing December 2010; * $50 million equivalent (C$ denominated) guaranteed senior secured term loan A at Cooper-Standard Canada, maturing December 2010; * $115 million ($ denominated) guaranteed senior secured term loan B at Cooper-Standard Canada, maturing December 2011; * $185 million ($ denominated) guaranteed senior secured term loan C at Cooper-Standard, maturing December 2011; -- B2 rating assigned for Cooper-Standard's proposed $200 million guaranteed senior unsecured notes maturing December 2012, to be initially issued under Rule 144A with registration rights; -- B3 rating assigned for Cooper-Standard's proposed $350 million guaranteed senior subordinated unsecured notes maturing December 2014, to be initially issued under Rule 144A with registration rights; -- B1 senior implied rating for Cooper-Standard; -- B2 senior unsecured issuer rating for Cooper-Standard; -- SGL-2 speculative grade liquidity rating for Cooper-Standard The rating assignments reflect Cooper-Standard's high pro forma leverage, coupled with the company's exposure to weakening North American production levels (given a greater than 70% current concentration of revenues with the Big 3 OEM's) and to rising raw materials commodity prices (for steel, manufactured components, carbon black, crude oil, and synthetic and natural rubber). Cooper-Standard is additionally characterized by a nearly complete focus on the more volatile and competitive original equipment market (with 90% of the customer base comprised of OEM's), a concentration of more than 70% of revenue generation within North America (predominantly for the Big 3), and by content per vehicle currently averaging below $150. Cooper-Standard's business would be materially and adversely affected in the event it suffered the loss of a significant portion of business from any of its largest customers, or if any of these customers were to lose market share at a faster pace than the company is able to replace lost volume with new transplant and foreign business. The company's top ten platforms accounted for 40% of net sales in 2003. Moody's is also concerned that several assumptions incorporated within management's base case financial plan are aggressive. This plan assumes that Cooper-Standard will have an ongoing ability to impose surcharges for certain rising raw materials costs and additionally to generate sufficient annual incremental lean manufacturing savings to offset customer price concessions, economic and wage increases and other increased operating costs. The base case plan also assumes that anticipated annualized restructuring savings approximating $16 million in 2005 will be fully realized, while raw materials costs will remain at the historically high levels experienced in 2004. While Cooper-Standard provides significant added value to customers by having the flexibility to accommodate late-stage design changes, Moody's has some concern that the company is not always fully compensated for the cost of these changes (particularly when recovery is realized through increases to the piece price). Moody's believes that Cooper-Standard's Sealing Systems product line, which presently accounts for about 45% of total revenues, is the company's most challenging. This product line has the most commodity-like characteristics and the shortest life cycle duration within the company's portfolio. The company faces a highly fragmented competitive landscape across all product lines. The rating assignments and stable outlook more favorably reflect Cooper-Standard's good liquidity and approximately 2x pro forma EBIT coverage of cash interest under the proposed capital structure. Moody's additionally notes the significant $318 million cash common equity investment to be made into Cooper-Standard Holdings by the sponsors, which cash will then be downstreamed in the form of common equity to the primary borrower and main operating subsidiary Cooper-Standard. The facilities comprising the proposed credit agreement are well matched with regard to the company's cash generation patterns within both the US and Canada, provide natural currency hedges, and are additionally expected to maximize the company's realization of tax benefits. The ratings and stable outlook furthermore reflect that Cooper Standard has: (1) successfully right-sized production capacity, (2) achieved substantial lean manufacturing savings, (3) moved production to low-cost countries, (4) integrated prior acquisitions, and (5) won substantial new business awards with a broadened customer base while still operating as a subsidiary of Cooper Tire. The benefits of recent restructuring actions are expected to be more fully evident in the company's cash flow performance during 2005. The company now has three facilities in China, with two wholly owned and one a joint venture. Cooper Tire does not appear to have constricted spending on capital equipment or research and development for subsidiary Cooper-Standard's business. Cooper-Standard's long-standing and effective management team will be staying on to run the business as a stand-alone company. In excess of 80% of the company's projected revenues (excluding estimated volumes from the rollover of existing platforms) reflect booked business through 2008 based upon the production volumes assumed. Cooper-Standard has #1, #2, or #3 leading market positions within each of its fragmented niche markets, in both North America and globally. The company has content on all 20 of the top-selling platforms in North America, and on 17 of the 20 top-selling platforms in Europe. As evidenced by Cooper-Standard's success with selling a broad range of product for the F150, the company's management is increasingly focused on a cross-functional customer approach, which is expected to drive the average content per vehicle steadily higher. Corporate overhead is expected to actually decline slightly to about $10 million, due primarily to reduced shared services charges (for legal, finance, and corporate jet services) as well as the elimination of charges for certain senior management bonuses at Cooper Tire. Cooper-Standard historically operated as a reportable business segment of Cooper-Tire and already has complete systems in place. Cooper-Standard's SGL-2 speculative grade liquidity rating reflects Moody's belief that the company has a good liquidity profile over the next year. While the stand-alone company will start out with zero cash under the terms of the purchase agreement, the company projects that it will generate positive free cash flow during the first year. Even if Cooper-Standard were to fall well short of expectations and only break even from a cash flow perspective over the next 12 months, the full $125 million revolving credit facility is expected to be available after accounting for financial covenants. The pro forma sources and uses and first full year of quarterly base case projections indicate that the company's only usage of the revolving credit will be about $10 million of letters of credit. The company will likely experience some intra period usage of the facility due to the relative timing of receipt of trade receivables and of reimbursable tooling, versus payment of trade payables. Future events that would potentially drive Cooper-Standard's ratings or outlook lower include: (1) a failure of the company to realize material lean manufacturing and restructuring savings sufficient to offset customer price concessions and other operating cost increases, stepped-up levels of customer price compression, (2) steadily rising raw materials prices which cannot be offset by customer surcharges and price increases, (3) troubled launches, (4) lost market share, (5) rising debt levels depleting effective unused availability under the revolving credit facility, (6) announcement of a material acquisition (particularly if debt-financed), or (7) plans for buybacks of common stock or a dividend payment to the common shareholders. Future events that would potentially drive Cooper-Standard's ratings or outlook higher include generation of positive cash flow and debt reduction at a faster pace than projected, realization of a series of incremental new business awards from both domestic transplants and foreign OEM's that will serve to diversify and globalize the customer base, evidence of technological superiority and increased market share relative to key competitors, rising average content per vehicle resulting from stepped-up cross- selling of products and the introduction of higher dollar-value- products, seamless new program launches, and full recovery of reimbursables. The B1 ratings of the $475 million of proposed guaranteed senior secured credit facilities reflect the benefits and limitations of the collateral and guarantee package. All US loans under the credit agreement will be secured by a first-priority pledge of all assets and stock of Cooper-Standard Holdings and the US subsidiaries and by up to 65% of the stock of foreign subsidiaries. The US loans will be guaranteed by Cooper-Standard Holdings and by all direct and indirect US subsidiaries. All Canadian loans under the credit agreement will be secured by a pledge of all Canadian assets to the extent of the Canadian loans, and by all of the stock of Cooper-Standard Holdings and all domestic and foreign subsidiaries. The Canadian loans will be guaranteed by Cooper-Standard Holdings, by all direct and indirect Canadian subsidiaries, and by all US subsidiaries to the extent there are not adverse tax consequences. Notably, all of the credit facilities are effectively pari passu regardless of the existence of multiple borrowers in different countries country with varying collateral and guarantee protection. This is due to sharing provisions within the credit agreement requiring reallocation of lenders' interests into pro rata interests in all loans in the event of specified circumstances constituting a defined "sharing event." Approximately 30% of Cooper-Standard's operations are outside of the US and Canada and thereby excluded from the pool of assets pledged. Excess cash flow recapture requirements will begin at 50%, and eventually reduce to 25% based upon a leverage test. The term loan A is expected to have scheduled amortization of 10%, 10%, 15%, 15%, 25%, 25% respectively over the six years, while the other term loans will amortize only 1% during each year until the year of maturity. No penalties will be imposed for voluntary prepayments. The B2 rating of the proposed $200 million of guaranteed senior unsecured notes reflects their effective subordination to the senior secured debt of Cooper-Standard to the extent of the collateral protection provided, and will be structurally subordinated to the obligations of any subsidiary which does not guarantee the notes. The senior notes will be guaranteed by all wholly owned US subsidiaries on a senior unsecured basis. The senior notes will be non-call for four years, and will contain an IPO clawback provision for up to 35% of the notes at par plus the coupon. The senior notes will also have change of control provisions at 101%. The B3 rating of the proposed $350 million of guaranteed senior subordinated unsecured notes reflects their contractual subordination to all senior obligations of Cooper-Standard and structural subordination to the obligations of any subsidiary, which does not guarantee the notes. The senior subordinated notes will be guaranteed by all wholly owned US subsidiaries on a senior subordinated basis. The senior subordinated notes will be non- call for five years, and will contain an IPO clawback provision for up to 35% of the notes at par plus the coupon. The senior subordinated notes will also have change of control provisions at 101%. Cooper-Standard's pro forma total debt/EBITDAR leverage for the year ended December 31, 2004 is approximately 4.3x, with no meaningful reductions in leverage anticipated until 2006. Total debt incorporates off-balance sheet obligations including letters of credit, the present value of operating leases, and guarantees of joint venture obligations. EBITDAR is adjusted to add back certain excess stand-alone costs and future restructuring benefits. Pro forma EBIT coverage of interest is favorable at approximately 2.1x. Cooper-Standard, headquartered in Novi, Michigan, is a leading global manufacturer of fluid handling, body sealing, and noise, vibration and harshness control systems for automotive vehicles. As a percentage of revenues, these business lines currently respectively contribute approximately 34%, 45%, and 21% of the total. The company sells about 90% of its products to automotive original equipment manufacturers. Annual revenues currently approximate $1.8 billion. CSFB MORTGAGE: S&P Places Low-B Ratings on 12 Certificate Classes ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on 15 classes from three series of CSFB Mortgage-Backed Trust pass-through certificates. Concurrently, ratings are affirmed on 191 classes from eight series from the same issuer. The raised ratings reflect the increase in the credit support percentages to the respective classes due to the strong performance of the respective loan groups. Credit support percentages for each of the classes with raised ratings increased by at least 100% over their respective original credit support percentages. As of the end of October 2004, these loan groups had no delinquencies or realized losses to date. In addition, the outstanding pool balances for these loan groups were: * 19.83% (series 2002-34 loan groups three and four), * 26.47% (series 2003-1 loan group three), and * 37.51% (series 2003-7 loan group one). The classes with affirmed ratings reflect adequate actual and projected credit support percentages. As of the October 2004 remittance period, the transactions with delinquencies were: * series 2002-34 loan groups one and two (19.78%), * series 2003-1 loan groups one and two (16.21%), * series 2003-29 (1.88%), series 2004-1 (1.59%), and * series 2004-1 loan groups three and four (2.82%). Loan groups one and two from series 2002-34 and series 2003-1 were the only loan groups with losses so far, incurring 0.08% and 0.05%, respectively. The collateral contained in the loan groups consists primarily of conventional, 15- or 30-year, fixed- or adjustable-rate, first- or second-lien mortgage loans secured by one- to four-family residential properties. Credit support is provided by subordination. Ratings Raised CSFB Mortgage-Backed Trust Pass-thru certs Rating Series Class To From ------ ----- -- ---- 2002-34 C-B-1 AAA AA 2002-34 C-B-2 AA+ A- 2002-34 C-B-3 AA- BBB 2002-34 C-B-4 BBB+ BB- 2002-34 C-B-5 BB B 2003-1 III-B-1 AA+ AA 2003-1 III-B-2 AA A- 2003-1 III-B-3 A BBB- 2003-1 III-B-4 BBB BB 2003-1 III-B-5 BB B 2003-7 I-B-1 AA+ AA 2003-7 I-B-2 AA- A 2003-7 I-B-3 A- BBB 2003-7 I-B-4 BBB- BB 2003-7 I-B-5 B+ B Ratings Affirmed CSFB Mortgage-Backed Trust Pass-thru certs Series Class Rating ------ ----- ------ 2002-34 II-A-1, II-A-2, II-A-3, II-A-4, II-A-5 AAA 2002-34 A-X, II-P, III-A-2, III-A-3, III-A-4 AAA 2002-34 III-A-6, III-A-8, III-A-9, III-A-10, I-P AAA 2002-34 III-A-11, III-A-12, III-A-13, III-A-14 AAA 2002-34 III-P, IV-X, IV-A-1, IV-P, I-A-1, I-X AAA 2002-34 D-B-1 AA 2002-34 D-B-2 A- 2002-34 D-B-3 BBB- 2002-34 D-B-4 BB 2002-34 D-B-5 B- 2003-1 I-A-1, I-X, II-A-1, II-A-2, II-A-3, II-A-4 AAA 2003-1 II-A-5, II-P, III-A-2, III-A-3, III-A-4 AAA 2003-1 III-A-6, III-A-7, III-A-8, III-A-10, I-P AAA 2003-1 A-X, III-P AAA 2003-1 D-B-1 AA 2003-1 D-B-2 A- 2003-1 D-B-5 B- 2003-7 I-A-1, I-A-2, I-A-3, I-A-4, I-A-21, I-A-23 AAA 2003-7 I-A-24, I-A-25, I-A-26, I-A-27, I-A-28 AAA 2003-7 I-X, I-P AAA 2003-11 I-A-1, I-A-2, I-A-3, I-A-4, I-A-5, I-A-6 AAA 2003-11 I-A-25, I-A-26, I-A-27, I-A-28, I-A-29 AAA 2003-11 I-A-30, I-A-31, I-A-32, I-A-33, I-A-34 AAA 2003-11 I-A-35, I-A-36, I-A-37, I-A-38, I-A-39 AAA 2003-11 I-A-40, I-X, I-P AAA 2003-11 I-B-1 AA 2003-11 I-B-2 A- 2003-11 I-B-3 BBB- 2003-11 I-B-4 BB 2003-11 I-B-5 B 2003-25 I-A-1, I-A-2, I-A-3, I-A-4, 1-A-5, I-A-6 AAA 2003-25 I-A-7, I-A-8, I-A-9, I-A-10, I-A-II, I-X AAA 2003-25 II-X, I-P, II-P, II-A-1 AAA 2003-25 C-B-1 AA 2003-25 C-B-2 A 2003-25 C-B-3 BBB- 2003-25 C-B-4 BB 2003-25 C-B-5 B- 2003-29 I-A-1, II-A-1, II-A-2, II-A-3, II-A-4 AAA 2003-29 III-A-1, IV-A-1, V-A-1, VI-A-1, VII-A-1 AAA 2003-29 VIII-A-1, D-P-1, D-P-2, D-P-3, D-X-1 AAA 2003-29 D-X-2, D-X-3 AAA 2003-29 D-B-1 AA 2003-29 D-B-2 A 2003-29 D-B-3 BBB 2003-29 D-B-4 BBB- 2003-29 D-B-5 BB- 2003-29 D-B-6 B- 2004-1 I-A-1, I-A-2, I-A-3, II-A-1, II-A-2 AAA 2004-1 III-A-1, IV-A-1, V-A-1, I-P, D-P-I AAA 2004-1 D-P-2, I-X, D-X-1, D-X-2 AAA 2004-1 D-B-1 AA 2004-1 D-B-2 A+ 2004-1 D-B-3 BBB+ 2004-1 D-B-4 BB 2004-1 D-B-5 B- 2004-3 I-A-1, I-A-2, I-A-3, I-A-4, I-A-5, I-A-6 AAA 2004-3 I-A-7, I-A-8, I-A-9, I-A-10, I-X, A-P AAA 2004-3 II-A-1, II-P, II-X, III-A-1, III-A-2 AAA 2004-3 III-A-3, III-A-4, III-A-5, III-X AAA 2004-3 IV-A-1, IV-P, IV-X AAA 2004-3 C-B-1, D-B-1 AA 2004-3 C-B-2, D-B-2 A 2004-3 C-B-3, D-B-3 BBB 2004-3 C-B-4 BB 2004-3 D-B-4 BB- 2004-3 C-B-5 B CSFB MORTGAGE: S&P Holds Single-B Ratings on Cert. Classes F & G ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on classes B, C, D, and E of Credit Suisse First Boston Mortgage Securities Corp.'s commercial mortgage pass-through certificates series 1998-C1. Concurrently, all other outstanding ratings from this transaction are affirmed. The raised and affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. The affirmed speculative-grade ratings reflect loss expectations on the specially serviced assets. As of November 2004, the trust collateral consisted of 291 commercial mortgages with an outstanding balance of $2.039 billion, down from 324 loans totaling $2.483 billion at issuance. The pool has paid down by 17.8%. The master servicer, ORIX Capital Markets LLC, reported partial or full year 2003 net cash flow debt service coverage ratios -- DSCR -- for 78.7% of the pool. Fifty-nine credit tenant leases -- CTLs, totaling $311 million, account for 15.2% of the pool. Sixteen loans totaling $59.6 million, or 2.92% of the pool, have been defeased. Based on this information and excluding defeasance and CTLs, Standard & Poor's calculated a pool DSCR of 1.47x, down slightly from 1.51x at issuance. The current weighted average DSCR for the top 10 loans, which comprise 29.5% of the pool, improved to 1.74x, from 1.52x at issuance. Nine of the top 10 loans have improved DSCRs from issuance. There are 13 loans, with a combined balance of $88.2 million, or 4.3% of the pool, that are with the special servicer, Lennar Partners, Inc. Five are secured by lodging properties, three are secured by retail properties, two are secured by multifamily properties, and one each by an office building and a nursing home. In addition, the largest specially serviced asset, American Restaurant Group -- ARG -- is a CTL loan secured by eight Stuart Anderson's Black Angus restaurants located in California. Five of the loans are current, five are REO, two are in foreclosure, and one is 30 days delinquent. The largest specially serviced asset, ARG, has a current balance of $16.8 million (0.82% of the pool). The tenant, Stuart Anderson's Black Angus Restaurants, is undergoing reorganization in bankruptcy court. It is not known if leases at the collateral properties will be rejected. The borrower, ARG Enterprises, Inc., has kept the loan current. Each location is approximately 10,000 sq. ft. in size and loan maturity matches lease expiration in May 2023. The locations are distributed throughout California with five locations in southern California and three locations in northern California. A review of the property inspections noted good locations near heavily traveled thoroughfares. The second largest specially serviced loan, the Smith Hotel portfolio, has a balance of $16.2 million (0.79%) and is secured by three lodging properties totaling 388 rooms, which are all located in Louisiana. The borrower has brought the loan current but is disputing a required reserve. The third largest specially serviced loan, Kew Gardens Hills Apartments, has a balance of $8.9 million (0.44%) and is secured by a 429-unit cooperative apartment building. The loan is current. The loan was placed in special servicing due to a dispute over funding of capital repairs. The fourth largest, University Heights Apartments, has a balance of $8.8 million (0.43%) and is secured by a 362-unit student housing multifamily property located in Austin, Texas. The asset is REO. Lennar has completed some capital improvements, and intends to market the property for sale next quarter. Current occupancy is 94% and a recent appraisal valued the asset as is at $7.6 million. The fifth largest, Glenmont Shopping Plaza, has a balance of $8.2 million (0.40%) and is secured by a retail property located near Albany, New York. The asset is REO. Lennar has the property listed for sale. A loss is expected upon disposition. The servicer's watchlist includes 80 loans totaling $420.4 million (20.6%). The loans on the watchlist appear due to low occupancies, DSC, or upcoming lease expirations, and were stressed accordingly by Standard & Poor's. The pool has significant geographic concentrations in: * California (15.2%), * New York (9.8%), * New Jersey (6.5%), * Texas (6.5%), * Virginia (5.9%), and * Puerto Rico (4.7%). Significant property type concentrations include: * retail (42.6%), * multifamily (21.7%), * lodging (15.4%), * office (13.4%), and * industrial (2.6%). Standard & Poor's stressed various loans in the mortgage pool, paying closer attention to the specially serviced and watchlisted loans. The expected losses and resultant credit enhancement levels adequately support the current rating actions. Ratings Raised Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-thru certs series 1998-C1 Rating Class To From Credit Enhancement ----- -- ---- ------------------- B AAA AA+ 26.93% C AA A+ 20.23% D BBB+ BBB 13.53% E BBB BBB- 11.70% Ratings Affirmed Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-thru certs series 1998-C1 Class Rating Credit Enhancement ----- ------ ------------------ A-1A AAA 33.63% A-1B AAA 33.63% A-2MF AAA 33.63% A-X AAA NA F B+ 4.70% G B 3.79% H CCC 1.35% DII/KBR: Judge Fitzgerald Approves AIG & Lehman Settlement Pacts ---------------------------------------------------------------- By this motion, DII Industries, LLC and its debtor-affiliates ask the United States Bankruptcy Court for the Western District of Pennsylvania to approve their settlement agreement with Halliburton Company and the AIG Companies: * AIU Insurance Company; * American Home Assurance Company; * Birmingham Fire Insurance Company; * Granite State Insurance Company; * Insurance Company of the State of Pennsylvania; * Landmark Insurance Company; * Lexington Insurance Company; * National Union Fire Insurance Company of Pittsburgh, PA; * New Hampshire Insurance Company; and * L'Union Atlantique D'Assurances S.A. The AIG Settlement Agreement effectuates a full and final settlement of: (1) all Coverage Disputes among the parties under certain insurance policies issued or allegedly issued for policy periods incepting prior to or on December 31, 1992 -- AIG Buyback Policies; (2) all asbestos and silica-related disputes of the parties under certain insurance policies incepting after December 31, 1992 -- AIG Post-1992 Policies; (3) all Coverage Actions; and (4) certain other disputes between the AIG Companies, and the Debtors and Halliburton as Policyholders, including the disputes that have arisen postpetition. Under the AIG Settlement Agreement, the AIG Companies are obligated to make a stream of payments in amounts and at times undisclosed. A full-text copy of the AIG Settlement Agreement is available at no charge at: http://bankrupt.com/misc/AIG_Companies_Settlement_Agreement.pdf Lehman Settlement Agreement DII Industries, LLC, Kellogg, Brown & Root, Inc., and each of the other Releasing Policyholders as Sellers, Halliburton Company, and HDK Purchaser Trust as Purchaser entered into an assignment agreement -- Lehman Settlement Agreement. The Sellers and the AIG Companies agreed to enter into a transaction which, subject to the terms and conditions of the AIG Companies' Settlement Agreement, includes a simultaneous payment by HDK Purchaser Trust to DII of the payment amount, which is subject to confidentiality restrictions, and an assignment to HDK Purchaser Trust of all of the Sellers' right, title, and interest in and to the AIG Settlement Payments. The sale and purchase of the right, title, and interest in and to the AIG Settlement Payments is unencumbered by any security interests, liens or other encumbrances, claims or interests of any nature. The salient terms of the Lehman Settlement Agreement include: (a) Closing On the Assignment Agreement Effective Date, which will in no event occur before January 4, 2005, in a series of transactions that will be deemed to take place simultaneously: (i) the Sellers and HDK Purchaser Trust will execute and deliver the assignment of the AIG Settlement Payments; (ii) HDK Purchaser Trust and the AIG Companies will execute and deliver a consent and agreement, which will be made by the AIG Companies in HDK Purchaser Trust's favor; (iii) HDK Purchaser Trust will pay DII, in immediately available funds, the Payment Amount; and (iv) the AIG Companies and HDK Purchaser Trust will agree to the amount and timing of the AIG Settlement Payments. (b) Security Interest Although the parties intend that the purchase and sale of the AIG Settlement Payments will be "a true sale" and not a loan, in the event that the purchase and sale is deemed to be a loan by a court of competent jurisdiction, each Seller will be deemed to have pledged to HDK Purchaser Trust, as security, its obligations w