/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/050802.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, August 2, 2005, Vol. 9, No. 181 Headlines A&A POTATO: Case Summary & 12 Largest Unsecured Creditors ACE AVIATION: British Columbia Investment Buys 5.04% Equity Stake ACTUANT CORP: S&P Rates $900 Million Universal Shelf at B+ ADAPTEC INC: Posts $36 Million Net Loss in First Quarter 2006 ADESA INC: S&P Rates $500 Million Credit Facility at BB ALLIED HOLDINGS: Files for Chapter 11 Protection in N.D. Georgia ALLIED HOLDINGS: Case Summary & 40 Largest Unsecured Creditors ALLIED HOLDINGS: Ch. 11 Filing Cues S&P's Ratings to Tumble to D AMERICAN MEDICAL: List of 20 Largest Unsecured Creditors AMERICAN NATURAL: Issues 4.2 Million Common Shares AMERUS GROUP: Fitch Holds BB+ Rating on Trust-Preferred Issue ARCAP: S&P Places Low-B Ratings on Four Certificate Classes AURA SYSTEMS: Court Approves $1.2 Million Interim Financing BEAR STEARNS: Fitch Assigns BB Rating on $13.29MM of Certificates BOSTON COMMS: Placing $41 Million in Escrow for Patent Lawsuit BOWNE & CO: Adopts Plan to Repurchase $35 Million of Common Stock BOWNE & CO: Earns $4 Million of Net Income in Second Quarter CANADIAN HOTEL: Debenture Redemption Cues S&P to Withdraw Ratings CEDAR PARK: Case Summary & 4 Largest Unsecured Creditors CITICORP MORTGAGE: Fitch Places B Rating on $541K Class B Certs. CITIGROUP MORTGAGE: Fitch Puts Low-B Rating on Two Cert. Classes COMDIAL CORP: Court Okays Platzer Swergold as Panel's Lead Counsel COMDIAL CORP: Jaspan Schlesinger Approved as Panel's Local Counsel COMM 2005-C6: S&P Puts Low-B Ratings on Six Certificate Classes CONGOLEUM CORP: Wants Plan Filing Period Extended to Nov. 1 CONSECO INC: Moody's Reviews Junk Preferred Securities Rating CREDIT SUISSE: Fitch Rates $900,000 Private Certificates at BB CWALT INC: Fitch Puts Low-B Rating on Two Mortgage Cert. Classes CWMBS INC: Fitch Places Low-B Rating on $1.8MM Class B Certs. DOLLARAMA GROUP: S&P Rates $200 Million Senior Notes at B- EAGLEPICHER INC: Secures Second Interim DIP Financing from Harris EDWARD COUVRETTE: Voluntary Chapter 11 Case Summary EMMIS COMMS: Inks Settlement Pact on Spanish Broadcasting Lawsuit EMPRESAS ICA: $44 Million Debt Payment Prompts S&P to Lift Ratings ENRON: Five Former EBS Officers Escape Conviction in Fraud Case FEDERAL-MOGUL: Gets Court Nod to Expand Scope of Hanly's Services FIRST HORIZON: Fitch Assigns Low-B Rating on Two Cert. Classes FIRSTFED CORP: High Losses Cue Fitch to Junk Two Cert. Classes GRUPO IUSACELL: June 30 Balance Sheet Upside-Down by Ps. 1.4 Bil. GRUPO IUSACELL: Creditor Talks on Restructuring Pact Continue INDYMAC MANUFACTURED: Fitch Holds Junk Rating on 3 Cert. Classes INSIGHT COMMS: Inks $2.1 Billion Merger with Carlyle-Led Group IPCS INC: Inks Forbearance Pact with Sprint on Del. & Ill. Suits J.P. MORGAN: Fitch Assigns Low-B Rating on Six Certificate Classes KAISER ALUMINUM: JPMorgan & CIT Offer $250 Million Exit Financing KELLWOOD CO: Weak Performance Prompts S&P to Pare Ratings KEVIN MAYER: Case Summary & 20 Largest Unsecured Creditors KMART CORP: Overview of Footstar-Kmart Settlement Agreement KULICKE & SOFFA: June 30 Balance Sheet Upside-Down by $44.3 Mil. LEAR CORP: Posts $44.4 Million Net Loss in Second Quarter LEAR CORP: Moody's Downgrades Senior Unsecured Debt Rating to Ba2 LONGVIEW FIBRE: S&P Rates $1 Billion Universal Shelf at B+ MAGELLAN HEALTH: Earns $22.7 Million of Net Income in 2nd Quarter MERIDIAN AUTOMOTIVE: Court Approves Lazard as Investment Banker MERIDIAN AUTOMOTIVE: Gets Court Nod to Resell Equipment MERRIL DEAN: List of Seven Largest Unsecured Creditors MIRANT CORP: Gets Court Nod to Cap Cascade's Claim at $592,709 MIRANT: Wants to Recover Payments from Salomon, Citibank & CSFB MIRANT CORP: Committee Wants $5M of Annuity Payments Recovered NATURADE INC: Inks Acquisition Pacts & Completes Financial Reorg. NOMURA CBO: Credit Enhancement Prompts S&P to Upgrade Ratings OAKWOOD PACKAGING: Case Summary & 20 Largest Unsecured Creditors OLD DIXIE: Case Summary & 20 Largest Unsecured Creditors ON TOP: Case Summary & 20 Largest Unsecured Creditors ONE TO ONE: Committee Hires Deloitte Financial as Advisor ONE TO ONE: Hires Triax Capital as Investment Banker ONE TO ONE: Exclusive Plan Filing Period Extended Until Sept. 30 OWENS CORNING: Gets Court Nod to Employ Sidley Austin as Counsel PACIFIC FINANCIAL: Case Summary & 3 Largest Unsecured Creditors PARK PLACE: Fitch Places Low-B Rating on Two Certificate Classes PETROHAWK ENERGY: Moody's Junks $130 Million Sr. Unsecured Notes QUIGLEY COMPANY: Wants Sept. 15 Bar Date to Include Silica Claims REMY INT'L: June 30 Balance Sheet Upside-Down by $233.7 Million REMY INTERNATIONAL: S&P Junks $125 Million Senior Secured Notes REPUBLIC ENGINEERED: Selling Assets to Mexico's Industrias CH SAMSON ORUSA: Case Summary & 9 Largest Unsecured Creditors SIGNAL SECURITIZATION: Fitch Affirms BB Rating on Class B Certs. STRUCTURED ASSET: Fitch Puts BB+ Rating on $4.4 Million Certs. TERWIN MORTGAGE: Fitch Puts Low-B Rating on Two Cert. Classes TOUCH AMERICA: Plan Trustee Has Until Oct. 1 to Decide on Leases UAL CORP: Wants Court Okay on Citigroup Cooperation Agreement UAL CORP: Terms of Machinists' Amended Tentative Labor Pact US AIRWAYS: Can Use ATSB Lenders' Cash Collateral Until Aug. 19 VARTEC TELECOM: Secures Extension of Exclusive Periods WASHINGTON NATIONAL: Moody's Reviews Ba1 Insurance Rating WEST CLIFF: List of Two Largest Unsecured Creditors WESTPOINT STEVENS: PBGC Says Disclosure Statement is Inadequate WINN-DIXIE: Gets Court Nod to Sell Assets Thru Liquidating Agents WRC MEDIA: Restructuring Cues Moody's to Withdraw All Debt Ratings * Large Companies with Insolvent Balance Sheets ********* A&A POTATO: Case Summary & 12 Largest Unsecured Creditors --------------------------------------------------------- Debtor: A&A Potato of Del Norte Colorado, LLC P.O. Box 23647 New Orleans, Louisiana 70183 Bankruptcy Case No.: 05-16392 Type of Business: The Debtor is an affiliate of Dixie Produce & Packaging, LLC, which filed for chapter 11 protection on Apr. 27, 2005 (Bankr. E.D. La. Case No. 05-13410) with Honorable Jerry A. Brown presiding. Dixie Produce & Packaging, LLC's chapter 11 filing was reported in the Troubled Company Reporter on April 28, 2005. Chapter 11 Petition Date: July 29, 2005 Court: Eastern District of Louisiana (New Orleans) Judge: Jerry A. Brown Debtor's Counsel: Tristan E. Manthey, Esq. Heller Draper Hayden Patrick & Horn 650 Poydras Street, Suite 2500 New Orleans, Louisiana 70130 Tel: (504) 568-1888 Fax: (504) 522-0949 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 12 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Hibernia National Bank $7,724,632 P.O. Box 61540 New Orleans, LA 70161-1540 Tonso Farms $234,000 1016 East Highway 112 Center, CO 81125 RM & SM Farms $73,547 3001 South Grant Englewood, CO 80110 Lonell Crowthen $63,655 Aspen Produce $31,582 Manual Virgil $26,573 Alan Vantrees $11,086 ECEL Energy $2,918 Colorado Property Tax $1,357 Laporte Sehrt Romig & Hand, CPA $1,068 IRS Department of Treasury $634 IRS Automated Collection System $619 ACE AVIATION: British Columbia Investment Buys 5.04% Equity Stake ----------------------------------------------------------------- British Columbia Investment Management Corporation is the beneficial owner of 963,600 Class B voting shares of ACE Aviation Holdings, Inc., the fund manager disclosed in a regulatory filing with the U.S. Securities and Exchange Commission. This represents 5.04% of the approximately 19,084,000 Class B shares outstanding at June 30, 2005. bcIMC has the sole power to dispose or direct the disposition of 929,000 shares. bcIMC provides investment advisory and management services. As of March 31, 2004, bcIMC is $62.6 billion in assets under administration. Chief Executive Officer Doug Pearce relates that bcIMC acquired the ACE securities solely for investment purposes on behalf of client accounts over which it has investment discretion. The ACE securities are held in accounts for the economic benefit of the beneficiaries of those accounts. bcIMC is based in Victoria, British Columbia. ACE Aviation is the parent holding company of Air Canada and ACE's other subsidiaries. Air Canada is Canada's largest domestic and international full-service airline and the largest provider of scheduled passenger services in the domestic market, the transborder market and each of the Canada-Europe, Canada-Pacific, Canada-Caribbean/Central America and Canada-South America markets. Air Canada is a founding member of the Star Alliance network, the world's largest airline alliance group. In addition, the Corporation owns Jazz Air LP, Aeroplan LP and Destina.ca, which is an on-line travel site. The Corporation also provides Technical Services through ACTS LP, Cargo Services through AC Cargo LP and Air Canada, Groundhandling Services through ACGHS LP and Air Canada and tour operator services and leisure vacation packages through Touram LP. * * * As reported in the Troubled Company Reporter on Oct. 5, 2004, Standard & Poor's Ratings Services assigned its 'B' long-term corporate credit rating to Montreal, Quebec-based ACE Aviation Holdings Inc. and its wholly owned subsidiary, Air Canada. S&P says the outlook is stable. ACTUANT CORP: S&P Rates $900 Million Universal Shelf at B+ ---------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'B+' subordinated debt rating to Actuant Corp.'s $900 million universal 415 shelf registration. At the same time, Standard & Poor's affirmed its 'BB' corporate credit rating on the Milwaukee, Wisconsin-based company. The outlook is stable. "The ratings on Actuant Corp. reflect the company's satisfactory business position and aggressive financial profile, which is characterized by high leverage," said Standard & Poor's credit analyst Natalia Bruslanova. Actuant is a diversified manufacturer of branded standard and customized products for relatively small automotive, industrial, and retail end markets. The company had total balance sheet debt of about $480 million as of May 31, 2005, (this takes into account funding for the $315 million acquisition of Key Components Inc., or KCI, in December 2004). The challenges in Actuant's business segments include competitive market conditions and cyclical demand in certain end markets, including heavy-duty truck, RV, automotive, and construction. With this product mix, Actuant is largely dependent on business from original equipment manufacturers, and lacks significant aftermarket service revenues that could provide stability in a down cycle. These risks are mitigated by certain business strengths, including Actuant's leading shares in differing markets -- nearly 80% of the company's sales are generated by products holding No. 1 positions in niche markets. Actuant's relatively good geographic, customer, product, and end-market diversity should mitigate future earnings and cash flow volatility. Still, many of the various markets the company serves are relatively small, so Actuant's longer term expansion will be driven by its acquisition of well-positioned companies serving new niches. ADAPTEC INC: Posts $36 Million Net Loss in First Quarter 2006 ------------------------------------------------------------- Adaptec, Inc. (NASDAQ: ADPT), a global leader in storage solutions, reported its financial results for the first quarter of its fiscal year 2006 ended June 30, 2005. Net revenue on a generally accepted accounting principles basis for the first quarter of fiscal 2006 was $98.4 million, compared with $115.5 million for the first quarter of fiscal 2005 and $111.2 million for the fourth quarter of fiscal 2005. Non-GAAP net revenue for the first quarter of fiscal 2006 was $105.9 million, compared with $115.5 million for the first quarter of fiscal 2005 and $111.2 million for the fourth quarter of fiscal 2005. The GAAP results for the first quarter of fiscal 2006 included asset impairment charges totaling $15.5 million related to the IBM I/P Series RAID business, of which $7.5 million reduced GAAP net revenue and $8.0 million was included in GAAP operating expenses. The GAAP net loss for the first quarter of fiscal 2006 was $36 million, compared with net income of $10,000 for the first quarter of fiscal 2005 and net loss of $159.5 million for the fourth quarter of fiscal 2005. The non-GAAP net loss for the first quarter of fiscal 2006 was $14.3 million, compared with net income of $6.4 million for the first quarter of fiscal 2005 and net loss of $4.5 million for the fourth quarter of fiscal 2005. "Adaptec President Sundi Sundaresh and I are working to restore Adaptec to a position where it is delivering shareholder value," said Adaptec Interim Chief Executive Officer, D. Scott Mercer. "Currently, we are engaged in a thorough analysis of all of Adaptec's businesses and operations. While the company has some significant challenges that we need to overcome, it also has many strengths and a great foundation that we will leverage as we move forward in the coming months." Adaptec, Inc. (NASDAQ: ADPT) -- http://www.adaptec.com/-- provides trusted storage solutions that reliably move, manage, and protect critical data and digital content. Adaptec's software and hardware-based solutions are delivered through leading Original Equipment Manufacturers (OEMs) and channel partners to provide storage connectivity, data protection, and networked storage to enterprises, government organizations, medium and small businesses, and consumers worldwide. Adaptec is an S&P Small Cap 600 Index member. * * * As reported in the Troubled Company Reporter on May 9, 2005, Standard & Poor's Ratings Services revised its outlook on Milpitas, California-based Adaptec Inc. to negative from stable, and affirmed the corporate credit rating at 'B+'. The outlook revision follows the company's earnings announcement for the quarter ended March 31, 2005, and the expectation that current weakened profitability trends will continue. Adaptec had $285 million of rated debt outstanding as of March 31, 2004. "The ratings on Adaptec Inc. reflect the challenges the company faces in fortifying and transitioning its business profile in the face of commoditization and deterioration in the core small computer systems interface (SCSI) business, which has resulted in recent quarters weakened profitability and debt protection metrics," said Standard & Poor's credit analyst Joshua Davis. These factors partially are offset by financial flexibility provided by a net cash position on the balance sheet. Adaptec has a dominant share of the mature market for SCSI chips and adapter cards, used to connect high-performance peripherals to computer servers. ADESA INC: S&P Rates $500 Million Credit Facility at BB ------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on wholesale vehicle auctioneer ADESA Inc. to positive from stable. The revision reflects the potential for an upgrade during the next two years if the company is able to sustain its recent solid operating performance. The 'BB' corporate credit rating was affirmed, and a 'BB' senior secured rating and a '2' recovery rating were assigned to ADESA's $500 million credit facility, indicating a strong likelihood of substantial recovery of principal (80%-100%) in the event of payment default. Carmel, Indiana-based ADESA has total lease- adjusted debt of about $590 million. "The ratings on ADESA reflect its weak business profile," said Standard & Poor's credit analyst Martin King. "The company's operating environment is competitive, and ADESA has risky financing operations and a limited track record as an independent. It also serves large customers with considerable leverage. These factors are somewhat offset by ADESA's solid No. 2 U.S. market position, its growing market share with key accounts, and its good geographic scope in the U.S." The ratings also take into account ADESA's moderately aggressive financial policy and its heavy debt load, which hamper its solid cash flow generation and good liquidity. ADESA conducts used-vehicle wholesale and salvage auctions and performs various ancillary pre-auction and post-auction services at 83 locations in North America. The company's financing subsidiary, Automotive Finance Corp., provides inventory financing to independent used-vehicle dealers who purchase vehicles from auctions and other sources. Despite the flat or declining volume of vehicles entering the auction market in recent quarters, ADESA's performance has improved modestly because of management's cost-reduction efforts, because of higher revenues per vehicle, and because of the company's more efficient asset management. For the 2005 second quarter, revenue increased 7% and EBIT margins increased 70 basis points from the same period in 2004. Still, the company remains positioned behind a much larger competitor with superior scale and strong institutional accounts. The company also faces competition from local and regional independent auctioneers, wholesalers, and auto dealers. The growth of Internet auctions conducted by institutional sellers remains a competitive threat as well. ALLIED HOLDINGS: Files for Chapter 11 Protection in N.D. Georgia ---------------------------------------------------------------- Allied Holdings, Inc., along with 22 of its affiliates, filed for chapter 11 protection in the U.S. Bankruptcy Court for the Northern District of Georgia, in order to effect a financial restructuring. The Company and its subsidiaries are operating at all of its locations and anticipates that its various distribution and transportation services for the automotive industry will continue to operate in the normal course of business during the reorganization process. The Company will pay its vendors under normal terms for goods and services provided after Sunday's filing. DIP Financing To help fund its continuing operations during the reorganization, Allied has secured up to $230 million in debtor-in-possession financing from: -- GE Commercial Finance; -- Morgan Stanley Senior Funding, Inc.; and -- Marathon Asset Management. Subject to court approval, these funds will be available to help satisfy obligations associated with conducting the Company's business, including the payment of wages and benefits to active employees and retirees. "We have made significant progress during the last few years in our efforts to restructure and streamline our operations, including measures to lower overhead expenditures, as well as reduce costs across our non-bargaining employee base," Hugh E. Sawyer, Allied Holdings' President and Chief Executive Officer, said. "Our more efficient, focused organization has facilitated improvements in damage free deliveries, organic growth through new business with our customers, and reinforced the underlying potential of our core transportation services businesses at our operating subsidiaries. However, these positive developments have been significantly offset by automotive industry dynamics that continue to hamper our financial performance, including a sharp decline in new vehicle production, rising fuel costs, and increasing wage and benefit obligations under the Allied Automotive Group's master agreement with its Teamster-represented employees. "Reorganization under Chapter 11 will provide Allied with an opportunity and the forum to address these financial challenges, and we are committed to working cooperatively throughout the process to implement a plan of recovery that serves the Company, as well as the interests of its creditors, employees, customers, and suppliers. Our objective is to use this process to redesign our capital structure in order to lower our debt, reduce the multi-year cost increases associated with our contract with our Teamster-represented employees, address certain customer pricing issues, and take steps to improve our financial performance. "During this process, we will continue to provide quality service to our loyal customers," Mr. Sawyer continued. "We believe that the new $230 million credit facility will provide the opportunity for the Company to continue to operate in a reliable and stable manner. In addition, our vendors will be paid in full for all goods and services which are provided to the Company and our subsidiaries after the filing date. "We appreciate the ongoing efforts of our employees who have, over the past four years, made personal sacrifices and maintained their focus through a most challenging period. We will once again rely upon the dedication and support of our employees as we work together to build a more promising future for Allied Holdings." Allied Holdings' legal advisor is Troutman Sanders, LLP. The Company's financial advisor is Miller Buckfire & Co., LLC. Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. ALLIED HOLDINGS: Case Summary & 40 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Allied Holdings, Inc. aka Allied Holdings 160 Clairemont Decatur, Georgia 30030-2557 Bankruptcy Case No.: 05-12515 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Allied Automotive Group, Inc. 05-12516 Allied Systems, Ltd. (L.P.) 05-12517 Allied Systems (Canada) Company 05-12518 QAT, Inc. 05-12519 RMX LLC 05-12520 Transport Support LLC 05-12521 F.J. Boutell Driveway LLC 05-12522 Allied Freight Broker LLC 05-12523 GACS Incorporated 05-12524 Commercial Carriers, Inc. 05-12525 Axis Group, Inc. 05-12526 Kar-Tainer International LLC 05-12527 Axis Netherlands, LLC 05-12528 Axis Areta, LLC 05-12529 Logistic Technology, LLC 05-12530 Logistic Systems, LLC 05-12531 CT Services, Inc. 05-12532 Cordin Transport LLC 05-12533 Terminal Services LLC 05-12534 Axis Canada Company 05-12535 Ace Operations, LLC 05-12536 AH Industries Inc. 05-12537 Type of Business: The Debtor serves as the parent for Allied and Axis entities, which provide short-haul services for original equipment manufacturers and provide logistical services. Chapter 11 Petition Date: July 31, 2005 Court: Northern District of Georgia (Newnan) Debtors' Counsel: Jeffrey W. Kelley, Esq. Troutman Sanders, LLP Suite 5200, 600 Peachtree Street, Northeast Atlanta, Georgia 30308-2216 Tel: (404) 885-3383 Financial Condition of Allied Holdings, Inc., as of March 2005: Total Assets: $132,225,000 Total Debts: $179,895,000 Estimated Assets Estimated Debts ---------------- --------------- Allied Automotive Group, $10 Million to $50 Million to Inc. $50 Million $100 Million Allied Systems, Ltd. More than More than (L.P.) $100 Million $100 Million Allied Systems (Canada) $50 Million to More than Company $100 Million $100 Million QAT, Inc. $1 Million to $1 Million to $10 Million $10 Million RMX LLC $50,000 to $500,000 to $100,000 $1 Million Transport Support LLC $1 Million to $10 Million to $10 Million $50 Million F.J. Boutell Driveway LLC $1 Million to $10 Million to $10 Million $50 Million Allied Freight Broker LLC $1 Million to $50,000 to $10 Million $100,000 GACS Incorporated $1 Million to Less than $10 Million $50,000 Commercial Carriers, Inc. $1 Million to $1 Million to $10 Million $10 Million Axis Group, Inc. $10 Million to $10 Million to $50 Million $50 Million Kar-Tainer International $100,000 to $1 Million to LLC $500,000 $10 Million Axis Netherlands, LLC Less than Less than $50,000 $50,000 Axis Areta, LLC $1 Million to Less than $10 Million $50,000 Logistic Technology, LLC $100,000 to Less than $500,000 $50,000 Logistic Systems, LLC $500,000 to Less than $1 Million $50,000 CT Services, Inc. $10 Million to $500,000 to $50 Million $1 Million Cordin Transport LLC $500,000 to Less than $1 Million $50,000 Terminal Services LLC $1 Million to $100,000 to $10 Million $500,000 Axis Canada Company $500,000 to $1 Million $1 Million $10 Million Ace Operations, LLC Less than Less than $50,000 $50,000 AH Industries Inc. $500,000 to Less than $1 Million $50,000 Debtors' Consolidated List of 40 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Thomas M. Korsman Indenture Trustee $150,000,000 Vice President Wells Fargo Bank MAC N9303-120 Sixth and Marquette Minneapolis, MN 55479 Central State/H&W 3500 Benefits $2,468,019 Mellon Financial Services A/C Central States Pension Fund 5503 North Cumberland Road Chicago, IL 60656 Michelin Tire N.A./Atlanta Trade debt $827,625 P.O. Box 100860 Atlanta, GA 30384-0860 Volvo Action Service Trade debt $666,781 P.O. Box 26113 Greensboro, NC 27402-6113 Ford Motor Company/Claims Damage claims $605,293 Body and Assembly P.O. Box 651311 Charlotte, NC 28265-1311 IBM Corp. Trade debt $477,554 PNC Bank-ATL Lockbox IBM Corp-Lock Box 534151 1669 Phoenix Parkway Atlanta, GA 30349 SGS Automotive Service- Trade debt $419,652 Philadelphia P.O. Box 2505 Carol Stream, IL 60132-2502 GM of Canada Ltd.-ALZS Damage Claim $410,924 1908 Colonel Sam Drive Attn: Cashier 007002 Oshawa, ON L1H8P7 Cummins South, Inc. Trade debt $407,376 P.O. Box 116595 Atlanta, GA 30368-6595 Delavan Industries Inc. Trade debt $395,947 Buffalo P.O. Box 1715 Buffalo, NY 14240 Exotic Auto Transport Trip lease $341,081 P.O. Box 72 Lebanon, MO 65536 U.S. Security Associates Trade debt $333,651 Inc. P.O. Box 931703 Atlanta, GA 31193 Michelin North America/ Trade debt $301,322 Canada - Accounts Receivable P.O. Box 11291 Station Centreville Montreal, Quebec H3C 5G9 Canada Bandag Incorporated Trade debt $284,484 P.O. Box 92090 Chicago, IL 60675-2090 Servi-Flotte Inc. Trade debt $264,179 225, Chemin Des Iles Levis, Quebec G6V7M5 Canada Fleet Charge Trade debt $257,956 P.O. Box 930895 Kansas City, MO 64193-0895 Excel Transporting & Towing Trip lease $242,016 Fleet Charge Trade debt $210,079 Delavan Industries Inc. Trade debt $193,800 Buffalo Delavan Industries Inc. Trade debt $191,678 St. Catherines Daimler Chrysler ALZS Damage claims $163,562 American Express Trade debt $162,755 Bandag Canada Ltd. Trade debt $152,796 Deloitte & Touche- Atlanta Professional $152,353 Cottrell, Inc. Fixed assets $139,569 Sterling Truck & Trailer Trade debt $139,190 Sales Champion Auto Carriers, Inc. Trip lease $131,122 Brothers Auto Transport Inc. Trip lease $128,916 Hunt Enterprises Landlord $123,142 Truck Service of Virginia Trade debt $123,019 Inc. - Disputan B&D Management, Inc. Trade debt $122,304 W W Williams Fixed assets $116,997 Corporate Lodging Trade debt $109,149 P.A.T. Auto Transport, Inc. Trip lease $103,846 Goodyear Tire & Rubber Trade debt $100,997 Company - ATL Cintas/National Rental A/R Trade debt $100,257 State of Michigan/Treasury Taxes $100,000 Weller Truck Parts Trade payables $96,713 Clarke Power Services Inc. Trade payables $95,362 GM of Canada Ltd. - CANG Damage claims $91,475 ALLIED HOLDINGS: Ch. 11 Filing Cues S&P's Ratings to Tumble to D ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Allied Holdings Inc. to 'D' from 'CCC-' following the car hauling company's Chapter 11 bankruptcy filing. In addition, Standard & Poor's lowered its rating on Allied's senior unsecured debt to 'D' from 'CC'. The bankruptcy filing was precipitated by: * very difficult industry conditions, including reduced vehicle production, * weak financial performance, and * constrained liquidity that led to losses, reduced cash flow generation, and limited liquidity. Decatur, Georgia-based Allied had total debt (including the present value of operating leases) of about $290 million as of March 31, 2005. Industry conditions for automotive suppliers including Allied Holdings have deteriorated during the past year, as the North American car market remains soft. Despite some recent price increases, the car-hauling industry faced significant pricing pressure from the large auto manufacturers, which represent a majority of the company's revenues, and increasing labor costs. Additionally, high fuel prices hurt Allied's performance, despite implementation of fuel surcharges. As a result the company's earnings and cash flow measures were extremely weak with EBITDA interest coverage of about 1x and funds from operations to debt at around 6% as of March 31, 2005. "Although the most recent company financial report dates back to the first quarter of 2005 [March 2005], we believe Allied's earnings and cash are substantially short of the company's business plan," said Standard & Poor's credit analyst Eric Ballantine. Liquidity was believed to be very thin, because of poor cash flow generation, and the company recently filed its eighth bank amendment to cure certain bank covenant violations. AMERICAN MEDICAL: List of 20 Largest Unsecured Creditors -------------------------------------------------------- American Medical Enterprises, Inc., dba AME Laboratories, released a list of its 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Judy Rowley Duncan Judgment $1,500,662 c/o Kay Davenport 115 West Ferguson Street Tyler, TX 75702-7203 AME ESOP Loan $1,288,000 4321 Brownfield Highway Lubbock, TX 79407 Abbot Laboratories Goods & Services $87,420 P.O. Box 100997 Atlanta, GA 30384-0997 Biomerieux Goods & Services $67,740 DRL Labs Goods & Services $60,055 Kay Davenport Attorney fees $50,000 Bayer Healthcare LLC Goods & Services $40,760 Beckman Coulter, Inc. Goods & Services $37,317 Baylor All Saints Goods & Services $31,379 Labsco Goods & Services $27,711 Wadley Regional Medical Goods & Services $23,176 Center Citicorp Vendor Finance Goods & Services $22,558 Medical Center of Plano Goods & Services $22,419 Biorad Laboratories Goods & Services $21,010 Specialty Laboratories Goods & Services $20,962 Presbyterian Hospitals Goods & Services $16,072 ETMC Jacksonville Goods & Services $14,966 Mesquite Medical Center Goods & Services $14,268 Hillcrest Baptist Goods & Services $13,796 Longview Regional Medical Goods & Services $13,638 Headquartered in Houston, Texas, American Medical Enterprises, Inc., dba AME Laboratories, -- http://www.amelaboratories.com/-- owns and operated medical laboratories in Lubbock and Tyler, Texas. The Company filed for chapter 11 protection on June 6, 2005 (Bankr. S.D. Tex. Case No. 05-38729). Barbara Mincey Rogers, Esq., at Waldron & Schneider, L.L.P., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $2,281,949 and total debts of $4,660,838. AMERICAN NATURAL: Issues 4.2 Million Common Shares -------------------------------------------------- American Natural Energy Corporation (TSX Venture: ANR.U) has sold an aggregate of 4,202,636 shares of its common stock for an aggregate cash consideration of $504,316 through July 29, 2005. The securities were issued in reliance upon the exemption from the registration requirements of the US Securities Act of 1933, as amended, afforded by Regulation D and Section 4(2) and pursuant to Regulation S under the Act. The shares sold may not be reoffered or resold by the purchasers absent registration under the Act or an applicable exemption from the registration requirements of the Act. In addition, the shares are subject to a hold period and, subject to compliance with the requirements of the Act, may not be traded until Nov. 30, 2005, except as permitted by Canadian securities legislation and the TSX Venture Exchange. The proposed sale of the shares was previously announced on May 18, 2005. The Company proposed to use the proceeds to fund drilling activities and for working capital purposes. American Natural Energy Corporation is engaged in the acquisition, development, exploitation and production of oil and natural gas. The company operates in St. Charles Parish, Louisiana. Since December 31, 2001, the Company has engaged in several transactions, which it believes will enhance its oil and natural gas development, exploitation and production activities and our ability to finance further activities. ANEC is publicly traded on the TSX Venture Exchange as ANR.U. At Mar. 31, 2005, American Natural Energy Corporation's balance sheet showed a $10,991,124 stockholders' deficit, compared to a $9,596,356 deficit at Dec. 31, 2004. Going Concern Doubt PricewaterhouseCoopers, LLP, expressed substantial doubt about American Natural Energy Corporation's ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. The auditing firm points to the Company's accumulated deficit and working capital deficiencies. The Company experienced a net loss of $1.5 million in the three month period ended March 31, 2005, and has a working capital deficiency and an accumulated deficit at March 31, 2005, all of which lead to questions concerning its ability to meet its obligations as they come due. The Company also has a need for substantial funds to develop oil and gas properties and repay borrowings. Historically the Company has financed its activities using private debt and equity financing. American Natural Energy has no line of credit or other financing agreement providing borrowing availability. As a result of the losses incurred and current negative working capital and other matters described, there is no assurance that the carrying amounts of its assets will be realized or that liabilities will be liquidated or settled for the amounts recorded. AMERUS GROUP: Fitch Holds BB+ Rating on Trust-Preferred Issue ------------------------------------------------------------- Fitch Ratings assigned a 'BBB' rating to the $250 million AmerUs Group Co. senior debt issuance maturing in 2015. The Rating Outlook is Stable. The proceeds from the debt offering will be used to redeem the optionally convertible equity-linked accreting notes, which became callable after AmerUs stock closed above $47.85 for 20 of 30 consecutive trading days. The balance of the proceeds will be used to repay the outstanding balance on a revolving line of credit, which was drawn down to retire $125 million in maturing senior debt in June. The three notch gap between AmerUs's insurer financial strength and long-term issuer ratings reflects the level of financial leverage, as well as pretax earning's ability to cover interest payments. According to Fitch's calculations, pro forma June 30, 2005 equity- adjusted debt-to-total capital at AmerUs was 20%. The financial leverage calculation eliminated the OCEANs and the bank debt outstanding at the time. AmerUs Group Co.'s fixed-charge coverage was 7.5 times (x) in 2004, eliminating realized/unrealized investment gains from the earnings figure. This level of fixed-charge coverage is considered solid and remains an important component in AmerUs Group Co.'s debt ratings. Fitch expects AmerUs to meet management's guidance for profitability as measured by GAAP ROE of 12%, adjusted debt-to- total capital below 25%, and NAIC risk-based capital in excess of 300% of the company action level. AmerUs Group Co., an insurance holding company, is headquartered in Des Moines, Iowa and reported total assets of $24 billion and stockholders' equity of $1.7 billion at June 30, 2005. These debts have Stable Rating Outlooks by Fitch: AmerUs Group Co. -- Senior notes assigned 'BBB'; -- OCEANs remain 'BBB-'; -- PRIDES remain 'BBB'. AmerUs Capital I -- Trust-preferred remains 'BB+'. AmerUs Life Insurance Co. -- Surplus note remains 'BBB+'; -- Insurer financial strength remains 'A'. Indianapolis Life Insurance Co -- Surplus note remains 'BBB+'; -- Insurer financial strength remains 'A'. American Investors Life Insurance Co. -- Insurer financial strength remains 'A'. Bankers Life Insurance Co. of New York -- Insurer financial strength remains 'A'. ARCAP: S&P Places Low-B Ratings on Four Certificate Classes ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to ARCap 2005-RR5 Resecuritization Inc.'s $313.4 million CMBS pass-through certificates series 2005-RR5. The preliminary ratings are based on information as of July 29, 2005. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of securities and the geographic and property type diversity of the mortgaged properties securing the underlying CMBS collateral. The collateral pool consists of 26 classes of pass-through certificates from 17 CMBS transactions and one Re- REMIC transaction. Of the 26 classes of certificates, 21 (76.5% of the collateral) are conduit CMBS certificates and five (23.5% of the collateral) are Re-REMIC certificates. All of the Re-REMIC certificates in the transaction were previously retained by ARCap REIT Inc. from its prior ARCap 2004-RR3 transaction. Of the 17 underlying CMBS deals represented in the current transaction, 13 of the same deals were included in the ARCap 2004-RR3 transaction. A copy of Standard & Poor's complete presale report for this transaction can be found on RatingsDirect, Standard & Poor's Web- based credit analysis system, at http://www.ratingsdirect.com/ The presale can also be found on the Standard & Poor's Web site at http://www.standardandpoors.com/ Preliminary Ratings Assigned ARCap 2005-RR5 Resecuritization Inc. Class Rating Preliminary Recommended amount credit support(%) ----- ------ ----------- ----------------- A-1 AAA $26,100,000 91.670 A-2 AAA $26,100,000 83.340 A-3 AAA $26,150,000 75.000 B AAA $21,938,000 68.000 C AA $21,938,000 61.000 D AA $3,134,000 60.000 E A+ $12,536,000 56.000 F A- $9,402,000 53.000 G BBB+ $9,402,000 50.000 H BBB $15,670,000 45.000 J BBB- $6,268,000 43.000 K BB+ $9,402,000 40.000 L BB+ $9,402,000 37.000 M BB $9,402,000 34.000 N BB $9,402,000 31.000 O N.R. $97,155,127 N/A X* N.R. $78,350,000 N/A * Interest-only class with a notional amount. N.R. -- Not rated. N/A -- Not applicable. AURA SYSTEMS: Court Approves $1.2 Million Interim Financing ----------------------------------------------------------- Aura Systems, Inc. (OTCBB: AURA) secured approval from the U.S. Bankruptcy Court for the Central District of California of a $1.2 million interim financing from an undisclosed lender. The company has resumed normal day-to-day operations subject to supervision by the bankruptcy court and will continue to deliver product to customers. The Court will convene a hearing on Aug. 30, 2005, to consider approval of a final DIP financing. Headquartered in El Segundo, California, Aura Systems, Inc., -- http://www.aurasystems.com/-- develops and sells AuraGen(R) mobile induction power systems to the industrial, commercial and defense mobile power generation markets. The Company filed for chapter 11 protection on June 24, 2005 (Bankr. C.D. Calif. Case No. 05-24550). Ron Bender, Esq., Levene Neale Bender Rankin & Brill LLP represent the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it reported $18,036,502 in assets and $28,919,987 in debts. BEAR STEARNS: Fitch Assigns BB Rating on $13.29MM of Certificates ----------------------------------------------------------------- SACO I Trust asset-backed certificates, series 2005-5, composed of 2 groups, are rated by Fitch Ratings: Group I -- $391.45 million class I-A 'AAA'; -- $56.57 million class I-M-1 'AA'; -- $12.45 million class I-M-2 'AA-'; -- $13.01 million class I-M-3 'A+'; -- $10.75 million class I-M-4 'A'; -- $9.05 million class I-M-5 'A-'; -- $10.18 million class I-B-1 'BBB+'; -- $8.49 million class I-B-2 'BBB'; -- $7.07 million class I-B-3 'BBB'; -- $13.29 million class I-B-4 'BB'. Group II -- $129.19 million class II-A 'AAA'; -- $13.81 million class II-M-1, II-M-2, II-M-3 'AA+'; -- $2.86 million class II-M-4 'AA'; -- $2.61 million class II-M-5 'AA-'; -- $2.53 million class II-M-6 'A+'; -- $2.04 million class II-M-7 'A'; -- $1.96 million class II-M-8 'A-'; -- $1.63 million class II-M-9 'BBB+'; -- $1.55 million class II-B-1 'BBB'; -- $1.55 million class II-B-2 'BBB-'. Group I mortgage loans consist of fixed-rate, conventional, closed-end subprime mortgage loans that are secured by second liens on one-to-four-family residential properties. Group II loans consist of home equity lines of credit loans made under certain home equity revolving credit loan agreements secured by first- and second-lien mortgages on one- to four-family residential properties with initial five-year, 10-year or 15-year draw periods limited to interest-only payments, generally followed by a 20-year amortized repayment period. The Group I 'AAA' rating on the senior certificates reflects the 30.80% credit enhancement provided by the 10.00% class I-M-1, 2.20% class I-M-2, 2.30% class I-M-3, 1.90% class I-M-4, 1.60% class I-M-5, 1.80% class I-B-1, 1.50% class I-B-2, 1.25% class I- B-3, and 2.35% privately held class I-B-4, as well as 5.90% over- collateralization. The Group II 'AAA' rating on the senior certificates reflects the 20.94% credit enhancement provided by the 3.45% class II-M-1, 3.05% class II-M-2, 1.95% class II-M-3, 1.75% class II-M-4, 1.60% class II-M-5, 1.55% class II-M-6, 1.25% class II-M-7, 1.20% class II-M-8, 1.00% class II-M-9, 0.95% class II-B-1, and 0.95% class II-B-2, as well as 2.24% OC. Additionally, all classes have the benefit of monthly excess cash flow to absorb losses. The ratings also reflect the quality of the mortgage collateral, strength of the legal and financial structures, and EMC Mortgage Corporation's servicing capabilities as master servicer. As of the cut-off date, the Group I mortgage loans have an aggregate balance of $565,680,964. The weighted average mortgage rate is approximately 10.532% and the weighted average remaining term to maturity is 210 months. The average cut-off date principal balance of the mortgage loans is $44,388. The weighted average original loan-to-value is 97.95%. The properties are primarily located in California (22.30%), Florida (9.56%), Georgia (8.40%), Arizona (8.08%), and Texas (5.78%). As of the cut-off date, the Group II HELOC mortgage loans have an aggregate balance of $163,413,106. The weighted average current coupon is 7.677% and the weighted average remaining term to maturity is 307 months. The average drawn balance is $49,806. The average credit limit is $57,474. The weighted average credit limit utilization rate is 89.52% and the weighted average current credit score is 718. The principal originators of the Group I loans are: SouthStar Funding, LLC, with respect to 15.67% of the group I loans, and Finance America, LLC, with respect to 13.11% of the group I loans. The remainder of the group I loans were originated by various originators. The principal originators of the Group II HELOC loans are: Quicken Loans Inc, with respect to approximately 61.37% of the Group II HELOC loans; Impac Funding Corporation, with respect to approximately 12.40% of the group II loans, Plaza Home Mortgage Inc., with respect to approximately 12.19% of the group II HELOC loans; and GreenPoint Mortgage Funding, Inc., with respect to approximately 10.91% of the group II HELOC loans. The remainder of the group II HELOC loans were originated by various originators. BOSTON COMMS: Placing $41 Million in Escrow for Patent Lawsuit -------------------------------------------------------------- Boston Communications Group, Inc. (Nasdaq: BCGI) entered into a Funding of Security for Appeal Agreement with Cingular Wireless LLC, a co-defendant in a patent infringement action currently pending before the U.S. District Court for the District of Massachusetts. The lawsuit was filed by Freedom Wireless, Inc., against: -- Boston Communications, -- AT&T Wireless PCS -- Airtouch Communications, Inc. -- Alltel Communications Products, Inc. -- Bell Atlantic Mobile -- Bellsouth Cellular, Corp. -- Bellsouth Mobility, Inc. -- CMT Partners -- Primeco Personal Communications, L.P. -- Rogers Wireless, Inc. -- Southwestern Bell Mobile Systems, Inc. -- Western Wireless Corporation -- Cingular Wireless LLC on Oct. 30, 2000 (Case No. 00-12234). This agreement is subject to mutual acceptance of an escrow agent and related escrow terms. Terms of the Agreement Under the terms of the Agreement, the Company has agreed to place $41 million into escrow as security in the event that a bond or other security must be posted for more than $41 million. If a final judgment in the lawsuit is rendered against the Company and its co-defendants, and the joint and several damages exceed $41 million, Cingular has agreed to post security through an appeal bond in exchange for placing the funds into escrow. Cingular has also agreed to dismiss, without prejudice, the action filed by Cingular against bcgi in May 2005. Cingular originally filed this action in an effort to enforce Cingular's indemnity rights against bcgi as a result of the Freedom Wireless verdict. The agreement is expected to allow bcgi to proceed with an appeal and potentially avoid exposure to bankruptcy while the appeal is pending, in the event that a final judgment against bcgi is rendered for damages of more than $41 million, without any requirement for bcgi to post additional security. The agreement may be terminated by either party and all or a portion of the $41 million in escrow may be disbursed back to bcgi, prior to the filing of a bond or other security if: -- the Freedom lawsuit is settled, dismissed or satisfied; -- the final judgment ruling in the lawsuit is against the defendants but damages are awarded for less than $41 million; or -- bcgi commences bankruptcy, receivership or a similar insolvency proceeding. Cingular is not obligated to provide the security for the payment of any portion of the damages for which Cingular is not jointly and severally liable. Freedom Wireless Litigation The non-jury trial on inequitable conduct concluded on July 26, 2005, and the Court has ordered the parties to file findings and conclusions with the Court on Aug. 15, 2005. The Company intends to file motions for judgment as a matter of law and a motion for a new trial or, in the alternative, a reduction in the damages awarded by the jury. The Company expects that the Court will rule on each of these matters in addition to determining the final judgment on the case in due course, sometime after Aug. 15, 2005. If the Court rules in favor of bcgi and its co-defendants in the non-trial, the patents held by Freedom Wireless would become unenforceable, a decision that Freedom Wireless may choose to appeal. If the Court rules against bcgi and the co-defendants in the non- jury trial: -- the Court could reduce the amount of the $128 million jury verdict based on the Company's expected motion for a reduction in the damages. However, the Court could also increase the damages, up to three times the award plus attorneys' fees. Interest as well as damages from Jan. 1, 2005 to the date of the judgment could also be applied to the damages award. The Court could also enter an injunction against use of the allegedly infringing technology. The entry of such an injunction could substantially impair bcgi's business and its ability to continue to provide its prepaid wireless or Real-Time Billing service bureau as currently offered in the United States. -- the Company expects to appeal the Court's decision to the Court of Appeals for the Federal Circuit. The Company has engaged the law firm of Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P to represent the Company in the appeal. -- the Court may require the Company to provide collateral or post a bond to stay execution of the Court's judgment and any injunction that the Court may enter, pending resolution of the appeal. The bond required to stay execution of the money judgment is ordinarily 110% of the final judgment, unless otherwise ordered by the Court. Depending on the amount of the final judgment, this could exceed bcgi's ability to pay. If the Company is unable to provide adequate collateral or to post a sufficient bond or is enjoined during the appeals process, or if the Company is unable to get an adverse judgment reversed and is unable to negotiate a commercially acceptable license with Freedom Wireless to allow bcgi to continue to provide its products and services, then it will not be possible for the Company to provide the prepaid wireless or Real-Time Billing service bureau as currently offered in the United States. In that event, the Company may not be able to continue its ongoing operations or may need to seek protections under Chapter 11 of the Bankruptcy Code. The parties have not been able to reach a settlement, even through court-ordered mediation. While the Company does not believe that it infringes these patents and believes that the patents are invalid in light of prior art and other reasons, in light of the adverse jury verdict, the Company believes it is probable that a loss contingency exists. Boston Communications Group, Inc. (Nasdaq: BCGI) -- http://www.bcgi.net/-- develops products and services that enable wireless operators to fully realize the potential of their networks. bcgi's access management, billing, payment and network solutions help operators rapidly deploy and manage innovative voice and data services for subscribers. Available as licensed products and fully managed services, bcgi's solutions power carriers and enable MVNOs with market-leading implementations of prepaid wireless, postpaid billing, wireless account funding and m-commerce. bcgi was founded in 1988 and is listed on the Russell 2000 index. BOWNE & CO: Adopts Plan to Repurchase $35 Million of Common Stock ----------------------------------------------------------------- Bowne & Co., Inc. (NYSE: BNE) entered into a Rule 10b5-1 trading plan with a broker to facilitate the repurchase of up to $35 million of its shares of common stock under its previously announced stock repurchase program. Rule 10b5-1 allows a company to purchase its shares at times when it otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods. The shares to be repurchased under the company's 10b5-1 plan would be part of the stock repurchase program approved by the Bowne Board of Directors in December 2004 to repurchase up to $75 million of its common stock over a two-year period. Under the company's authorized $75 million stock repurchase program, 2,696,161 shares of its common stock were repurchased pursuant to an overnight share repurchase plan entered into with Banc of America in the fourth quarter 2004 for $40 million. Final settlement under the overnight share repurchase plan occurred on May 24, 2005, and the company has made no further share repurchases since such date. The 10b5-1 share purchase period commenced yesterday, Aug. 1, 2005. Purchases will be effected by a broker and will be based upon the guidelines and parameters of the 10b5-1 plan. The aggregate amount of shares purchased pursuant to the plan will not exceed $35 million (excluding commissions, taxes and other charges and expenses). There is no guarantee as to the exact number of shares that will be repurchased under the stock repurchase program, and the company may discontinue purchases at any time. Repurchased shares would be returned to the status of authorized but un-issued shares of common stock. Founded in 1775, Bowne & Co., Inc. -- http://www.bowne.com/-- is a global leader in providing high-value solutions that empower its clients' communications. Bowne & Co. combines its capabilities with superior customer service, new technologies, confidentiality and integrity to manage, repurpose and distribute a client's information to any audience, through any medium, in any language, anywhere in the world. * * * Bowne & Co.'s 5% convertible subordinated notes due Oct. 1, 2033, carry Moody's Investors Service's and Standard & Poor's single-B ratings. BOWNE & CO: Earns $4 Million of Net Income in Second Quarter ------------------------------------------------------------ Bowne & Co., Inc. (NYSE: BNE) reported 2005 second quarter earnings from continuing operations of $7.8 million, compared to earnings of $9.7 million for the second quarter of 2004. Revenue was $205 million in the second quarter, compared to $204 million in the comparable quarter of 2004. Financial Print revenue for the second quarter of 2005 increased $3.1 million quarter-over-quarter, the result of increased compliance reporting and mutual fund revenue. The 2005 and 2004 results from continuing operations exclude Bowne Global Solutions, which is to be sold to Lionbridge Technologies, and the 2004 results exclude Bowne Business Solutions. For the six months ended June 30, 2005, income from continuing operations was $12.0 million, versus $12.9 million for the same period last year. Revenue for the six months ended June 30, 2005 was $373.2 million, down 2% from $382.3 million reported in 2004, the result of a 16% decline in transactional financial print, which was offset by a 7% increase in non-transactional revenue. "The second quarter was an important time for us in terms of our strategic direction as a company," said Bowne Chairman and Chief Executive Officer Philip E. Kucera. "With the pending sale of Bowne Global Solutions, we will sharpen our focus on growing our financial print and digital print businesses, which are core to our strategy." David J. Shea, Bowne President and Chief Operating Officer, added, "We're pleased that our non-transactional business continues to perform well. However, in light of the continuing decline in overall transactional filings, we are cautious about the remainder of the year." Bowne Financial Print For the second quarter, Financial Print reported revenue of $197.6 million, compared to $194.5 million for the same period last year. Offsetting a transactional revenue decrease of 10%, non-transactional revenue, which includes mutual fund and compliance revenue, increased 8% over 2004. Segment profit for the quarter, as a percentage of revenue, was 14.7%, compared to 16.1% for the same period in 2004. Litigation Solutions Litigation Solutions' second quarter and year-to-date revenue decreased $2.1 and $2.6 million, respectively, from last year; however, segment profit increased $0.3 million as compared to the first quarter of 2005 and $0.5 million year-over-year. Bowne Global Solutions The 2005 and 2004 results from continuing operations exclude Bowne Global Solutions, which the Company has agreed to sell, and is reported as a discontinued operation. In addition, the 2004 results from continuing operations exclude Bowne Business Solutions, which is also reported as a discontinued operation. Including the discontinued operations, net income for the 2005 second quarter was $4 million, compared to $11.2 million in the same period in 2004. The results of discontinued operations in 2005 include numerous expenses specifically related to the sale of BGS, including certain transaction costs and tax expenses. Segment profit for BGS for the three and six-month periods ended June 30, 2005 was $5.8 million and $8.1 million, respectively, compared to $3.4 million and $5.4 million for the three and six- month periods ended June 30, 2004. Overnight Share Repurchase Program Bank of America Securities completed the Overnight Share Repurchase program on May 24, 2005, and after giving effect to the final settlement and a price adjustment in the form of additional shares, the Company had effected the purchase of a total of 2,696,161 shares at an average price of $14.85. To date, the Company has not made any purchases under its previously announced $35 million open market purchase program. Days sales outstanding increased to 66 days at June 30, 2005 from 64 days at June 30, 2004. Net cash used in operations for the period ended June 30, 2005 was $41.3 million versus net cash used in operations of $17.6 million in 2004. Net debt at June 30, 2005 was $47.8 million compared to net debt of $143.6 million in June 2004. Financial Print work-in-process inventory was $29.0 million at June 30, 2005, compared to $20.8 million at June 30, 2004 and $16.8 million at December 31, 2004. Corporate spending decreased $0.6 million from 2004. Founded in 1775, Bowne & Co., Inc. -- http://www.bowne.com/-- is a global leader in providing high-value solutions that empower its clients' communications. Bowne & Co. combines its capabilities with superior customer service, new technologies, confidentiality and integrity to manage, repurpose and distribute a client's information to any audience, through any medium, in any language, anywhere in the world. * * * Bowne & Co.'s 5% convertible subordinated notes due Oct. 1, 2033, carry Moody's Investors Service's and Standard & Poor's single-B ratings. CANADIAN HOTEL: Debenture Redemption Cues S&P to Withdraw Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services withdrew all its ratings, including the 'BB-' long-term issuer credit rating, on Canadian Hotel Income Properties Real Estate Investment Trust by agreement with the issuer. CHIP's Series B unsecured debenture (C$50 million, 7.79% senior unsecured) was redeemed on June 10, 2005, and refinanced with secured mortgage debt. CHIP currently has one remaining series of debentures with C$4.8 million outstanding (Series A, 7.70% senior unsecured due Feb. 4, 2008). At the time of withdrawal, the credit profile of the issue outstanding continues to perform within the range of expectations and assumptions incorporated into the current rating. The ratings have been withdrawn at the request of management. CEDAR PARK: Case Summary & 4 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Cedar Park Properties, L.L.C. 1490 East Whitestone Boulevard, Suite 200 Cedar Park, Texas 78613 Bankruptcy Case No.: 05-14359 Chapter 11 Petition Date: July 29, 2005 Court: Western District of Texas (Austin) Judge: Frank R. Monroe Debtor's Counsel: Joseph D. Martinec, Esq. Martinec, Winn, Vickers & McElroy, P.C. 919 Congress Avenue, Suite 1500 Austin, Texas 78701 Tel: (512) 476-0750 Fax: (512) 476-0753 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 4 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Stoker Management, Inc. $6,699 dba Jani-King of Austin 11940 Jollyville Road, #220 South Austin, TX 78759 Pedernales Electric Cooperative $3,312 P.O. Box 1 Johnson City, TX 78636 K.I.S.S., Inc. $2,270 13498 Pond Springs Road, Building A Austin, TX 78729 Otis Elevator $524 P.O. Box 730400 Dallas, TX 75373 CITICORP MORTGAGE: Fitch Places B Rating on $541K Class B Certs. ---------------------------------------------------------------- Fitch Ratings rates these Citicorp Mortgage Securities, Inc.'s REMIC pass-through certificates, series 2005-4: -- $527,185,494 classes IA-1 through IA-8, IIA-1, IIIA-1 through IIIA-4 and A-PO certificates (senior certificates) 'AAA'; -- $7,570,000 class B-1 'AA'; -- $2,163,000 class B-2 'A' -- $1,352,000 class B-3 'BBB'; -- $1,081,000 class B-4 'BB'; -- $541,000 class B-5 'B'. The $811,512 class B-6 is not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 2.50% subordination provided by the 1.40% class B-1, the 0.40% class B- 2, the 0.25% class B-3, the 0.20% privately offered class B-4, the 0.10% privately offered class B-5, and the 0.15% privately offered class B-6. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and CitiMortgage, Inc.'s servicing capabilities (rated 'RPS1' by Fitch) as primary servicer. The mortgage loans have been divided into three pools of mortgage loans. Pool I, with an unpaid aggregate principal balance of $363,006,457, consists of 677 recently originated, 25-30 year fixed-rate mortgage loans secured by one- to four-family residential properties located primarily in California (39.78%) and New York (14.29%). The weighted average current loan to value ratio of the mortgage loans is 67.58%. Condo properties account for 7.45% of the total pool and co-ops account for 4.84%. Cash-out refinance loans represent 24.8% of the pool and there are no investor properties. The average balance of the mortgage loans in the pool is approximately $536,199. The weighted average coupon of the loans is 5.922% and the weighted average remaining term to maturity is 358 months. Pool II, with an unpaid aggregate principal balance of $94,471,655, consists of 176 recently originated, 12-15 year fixed-rate mortgage loans secured by one- to four-family residential properties located primarily in California (25.17%) and New York (8.30%). The weighted average CLTV of the mortgage loans is 57.15%. Condo properties account for 6.18% of the total pool and co-ops account for 2.69%. Cash-out refinance loans represent 30.02% and there are no investor properties. The average balance of the mortgage loans in the pool is approximately $536,771. The WAC of the loans is 5.442% and the WAM is 177 months. Pool III, with an unpaid aggregate principal balance of $83,225,894, consists of 159 recently originated, 30 year fixed- rate relocation mortgage loans secured by one- to four-family residential properties located primarily in California (19.04%) and New York (8.02%). The weighted average CLTV of the mortgage loans is 73.57%. Condo properties account for 5.0% of the total pool. There are no co-op, cash-out refinance loans or investor properties. The average balance of the mortgage loans in the pool is approximately $523,433. The WAC of the loans is 5.532% and the WAM is 356 months. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation', available on the Fitch Ratings web site at http://www.fitchratings.com/ The mortgage loans were originated or acquired by CMI and in turn sold to CMSI. A special purpose corporation, CMSI, deposited the loans into the trust, which then issued the certificates. U.S. Bank National Association will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. CITIGROUP MORTGAGE: Fitch Puts Low-B Rating on Two Cert. Classes ---------------------------------------------------------------- Fitch rates Citigroup Mortgage Loan Trust Inc., mortgage pass- through certificates, series 2005-3: Loan Group II -- $791,898,100 classes II-A1, II-A2, II-A2A, II-A2B, II-A3, II-A4, II-A4A-1, II-A4A-2, II-A4B-1, II-A4B-2 and II-R (senior certificates) 'AAA'; -- $19,022,000 class II-B1 'AA'; -- $5,789,000 class II-B2 'A'; -- $3,722,000 class II-B3 'BBB'; -- $2,068,000 privately offered class II-B4 'BB'; -- $2,068,000 privately offered II-B5 'B'. The privately offered II-B6 ($2,481,324) is not rated by Fitch. The 'AAA' rating on the senior certificates on loan group II reflects the 4.25% enhancement provided by the 2.30% class II-B1, 0.70% class II-B2, 0.45% class II-B3, 0.25% class II-B4, 0.25% class II-B5 and 0.30% class II-B6. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures, the primary servicing capabilities of Countrywide Home Loans Servicing LP (rated 'RPS1' by Fitch), GMAC, (rated 'RPS1' by Fitch) and Wells Fargo Bank, N.A. (rated 'RPS1' by Fitch), National City (rated 'RPS2-' by Fitch) and the master servicing capabilities of CitiMortgage, Inc., (rated 'RMS1-' by Fitch). Group II will contain 1887 conventional, adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties with an aggregate principal balance of $827,048,424. The mortgage loans will be divided into four additional subgroups, loan group II-1, loan group II-2, loan group II-3 and loan group II-4. All the mortgage loans were originated by Countrywide Home Loans, Inc. Wells Fargo, National City and Quicken Loans, Inc and were then acquired directly by Citigroup Global Markets Realty Corp. Group II-1 consists of 149 conventional, fully amortizing, adjustable-rate mortgage loans secured by first liens on single- family residential properties with an aggregate principal of $66,178,050. The mortgage rates adjust every six months or 12 months commencing at the end of an initial fixed-rate period of three years following origination. Approximately 5.14% of the group II-1 mortgage loans have interest only periods of two years, following the date of origination. The average principal balance of the loans in this pool is approximately $444,147. The mortgage pool has a weighted average original loan-to-value ratio of 68.1%. Rate/Term and cash-out refinance loans account for 32.72% and 14.47% of the pool, respectively. The weighted average FICO score is 727. The states with the largest concentrations are California (23.14%), Illinois (8.37%) and Massachusetts (8.36%). Group II-2 consists of 785 conventional, fully amortizing, adjustable-rate mortgage loans secured by first liens on single- family residential properties with an aggregate principal of $434,052,991. The mortgage rates adjust every six months or 12 months commencing at the end of an initial fixed-rate period of five years following origination. Approximately 89.49% and 0.16% of the group II-2 mortgage loans have interest only periods of one year or two years, respectively, following the date of origination. The average principal balance of the loans in this pool is approximately $552,933. The mortgage pool has a weighted average OLTV of 73.9%. Rate/Term and cash-out refinance loans account for 12.91% and 5.15% of the pool, respectively. The weighted average FICO score is 742. The states with the largest concentrations are California (37.44%), Virginia (7.68%) and Florida (6.94%). Group II-3 consists of 392 conventional, fully amortizing, adjustable-rate mortgage loans secured by first liens on single- family residential properties with an aggregate principal of $89,980,894. The mortgage rates adjust every six months or 12 months commencing at the end of an initial fixed-rate period of five years following origination. Approximately 88.15% and 1.45% of the group II-3 mortgage loans have interest only periods of one year or two years, respectively, following the date of origination. The average principal balance of the loans in this pool is approximately $229,543. The mortgage pool has a weighted average OLTV of 78.2%. Rate/Term and cash-out refinance loans account for 5.68% and 3.72% of the pool, respectively. The weighted average FICO score is 740. The states with the largest concentrations are California (15.73%), Florida (11.93%) and Virginia (7.53%). Group II-4 consists of 561 conventional, fully amortizing, adjustable-rate mortgage loans secured by first liens on single- family residential properties with an aggregate principal of $236,836,487. The mortgage rates adjust every six months or 12 months commencing at the end of an initial fixed-rate period of seven years following origination. Approximately 78.62% and 10.62%of the group II-4 mortgage loans have interest only periods of seven years or 10 years, respectively, following the date of origination. The average principal balance of the loans in this pool is approximately $422,168. The mortgage pool has a weighted average OLTV of 74.4%. Rate/Term and cash-out refinance loans account for 16.44% and 13.09% of the pool, respectively. The weighted average FICO score is 738. The states with the largest concentrations are California (27.98%), Florida (6.75%) and Virginia (6.68%). None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation', available on the Fitch Ratings web site at http://www.fitchratings.com/ U.S. Bank National Association will serve as trustee. Citigroup Mortgage Loan Trust Inc., a special purpose corporation, deposited the loans in the trust which issued the certificates. For federal income tax purposes, an election will be made to treat the trust as multiple real estate mortgage investment conduits. COMDIAL CORP: Court Okays Platzer Swergold as Panel's Lead Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware gave the Official Committee of Unsecured Creditors of Comdial Corporation and its debtor-affiliates permission to employ Platzer, Swergold, Karlin, Levine, Goldberg & Jaslow, LLP as its lead counsel. Platzer Swergold will: a) advise and represent the Committee with respect to proposals and pleadings submitted by the Debtors or other parties-in- interest to the Court or the Committee; b) represent the Committee with respect to plan or plans of reorganization and disposition of the Debtors' assets proposed in the chapter 11 cases; c) assist the Committee in examination of the Debtors' affairs and a review of their operations; d) attend hearings, drafting pleadings and advocate the positions that further the interests of the creditors represented by the Committee; and e) perform all other legal services that are in the best interests of the Committee, including the services delineated in Section 1103 of the Bankruptcy Code. Sydney G. Platzer, Esq., a Partner of Platzer Swergold, is one of the lead attorneys for the Committee. Mr. Platzer reports Platzer Swergold's professionals bill: Designation Hourly Rate ----------- ----------- Partners $395 - $595 Associates $150 - $395 Paralegals $125 Platzer Swergold assures the Court that it does not represent any interest materially adverse to the Committee, the Debtors or their estates. Headquartered in Sarasota, Florida, Comdial Corporation -- http://www.comdial.com/-- and its affiliates develop and market sophisticated communications products and advanced phone systems for small and medium-sized enterprises. The Company and its debtor-affiliates filed for chapter 11 protection on May 26, 2005 (Bankr. D. Del. Case No. 05-11492). Jason M. Madron, Esq., and John Henry Knight, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $30,379,000 and total debts of $35,420,000. COMDIAL CORP: Jaspan Schlesinger Approved as Panel's Local Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware gave the Official Committee of Unsecured Creditors of Comdial Corporation and its debtor-affiliates permission to employ Jaspan Schlesinger Hoffman LLP as its local counsel. Jaspan Schlesinger will: a) advise and represent the Committee in connection with proposals and pleadings submitted by the Debtors or other parties-in-interest to the Committee or the Court; b) assist the Committee in the examination and review of the Debtors' affairs and operations, and advise the Committee in the progress of the Debtors' chapter 11 cases; c) represent the Committee with respect to any plan or plan of reorganization and any sale or disposition of the Debtors' assets; d) attend hearings, drafting pleadings and advocate the positions taken by the Committee to further its interests in the Debtors' chapter 11 cases; and e) perform all other legal services that are consistent with its role as the Committee's local counsel. Frederick B. Rosner, Esq., a Partner of Jaspan Schlesinger, reports the Firm's professionals bill: Designation Hourly Rate ----------- ----------- Partners $250 Associates $180 - $250 Paralegals $140 Jaspan Schlesinger assures the Court that it does not represent any interest materially adverse to the Committee, the Debtors or their estates. Headquartered in Sarasota, Florida, Comdial Corporation -- http://www.comdial.com/-- and its affiliates develop and market sophisticated communications products and advanced phone systems for small and medium-sized enterprises. The Company and its debtor-affiliates filed for chapter 11 protection on May 26, 2005 (Bankr. D. Del. Case No. 05-11492). Jason M. Madron, Esq., and John Henry Knight, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $30,379,000 and total debts of $35,420,000. COMM 2005-C6: S&P Puts Low-B Ratings on Six Certificate Classes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to COMM 2005-C6's $2.3 billion commercial mortgage pass- through certificates series 2005-C6. The preliminary ratings are based on information as of July 29, 2005. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying loans, and the geographic and property type diversity of the loans. Classes A-1, A-2, A-3, A-4, A-AB, A-5A, A-5B, A-1A, A-J, B, C, D, and X-P are currently being offered publicly. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage of 1.54x, a beginning LTV of 95.4%, and an ending LTV of 86.9%. A copy of Standard & Poor's complete presale report for this transaction can be found on RatingsDirect, Standard & Poor's Web- based credit analysis system, at http://www.ratingsdirect.com/ The presale can also be found on the Standard & Poor's Web site at http://www.standardandpoors.com/ Preliminary Ratings Assigned COMM 2005-C6 Class Rating Preliminary Recommended amount credit support(%) ----- ------ ----------- ----------------- A-1 AAA $48,000,000 20.000 A-2 AAA $185,500,000 20.000 A-3 AAA $59,600,000 20.000 A-4 AAA $35,500,000 20.000 A-AB AAA $71,900,000 20.000 A-5A AAA $800,596,000 30.000 A-5B AAA $114,371,000 20.000 A-1A AAA $513,040,000 20.000 A-J AAA $171,422,000 12.500 B AA $45,712,000 10.500 C AA- $20,000,000 9.625 D A $37,141,000 8.000 E A- $28,570,000 6.750 F BBB+ $25,714,000 5.625 G BBB $25,713,000 4.500 H BBB- $22,857,000 3.500 J BB+ $14,285,000 2.875 K BB $11,428,000 2.375 L BB- $5,714,000 2.125 M B+ $14,285,000 1.500 N B $2,857,000 1.375 O B- $5,714,000 1.125 P N.R. $25,715,267 0.000 X-P* AAA TBD N/A X-C* AAA $2,285,634,267 N/A * Interest-only class with a notional amount. N.R. -- Not rated. TBD -- To be determined. N/A -- Not applicable. CONGOLEUM CORP: Wants Plan Filing Period Extended to Nov. 1 ----------------------------------------------------------- Congoleum Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of New Jersey to further extend their exclusive periods to: 1) file a plan through November 1, 2005; and 2) solicit acceptances of that plan through December 1, 2005. As previously reported, the Debtors filed a modified plan of reorganization and disclosure statement to incorporate certain technical modifications to the plan filed in June. The extension will allow the Debtors to have ample time to review any objections to the plan and make any further modifications that may be necessary to accommodate any objections. In addition, it will provide them stability in their operations and allow them to maintain control of their reorganization efforts. Headquartered in Mercerville, New Jersey, Congoleum Corporation -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The Company filed for chapter 11 protection on December 31, 2003 (Bankr. N.J. Case No. 03-51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Domenic Pacitti, Esq., at Saul Ewing, LLP, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $187,126,000 in total assets and $205,940,000 in total debts. CONSECO INC: Moody's Reviews Junk Preferred Securities Rating ------------------------------------------------------------- Moody's Investors Service placed the ratings on the bank debt and mandatory convertible preferred securities of Conseco, Inc. (Conseco, B2 bank debt rating) as well as the Ba1 insurance financial strength ratings of Conseco, Inc.'s insurance subsidiaries on review for possible upgrade. Conseco Senior Health Insurance Company was affirmed at Caa1 with a developing outlook. According to the rating agency, the review will focus on the positive impact of the proposed refinancing on the company's holding company financial flexibility as well as the company's improved financial performance in terms of statutory earnings, fixed charge coverage, and capital adequacy. Moody's has indicated that a ratings upgrade could result if Conseco achieved the following financial metrics on a consistent basis: * Adjusted financial leverage of no greater than 30%; * Projected fixed charge coverage at the holding company of at least 2.25x; * RBC ratio on a consolidated basis of at least 300%, and RBC ratio of each statutory operating entity, excluding CSHIC, of at least 200%; RBC ratio of companies actively marketing insurance products of at least 250%. * 2005 combined statutory operating EBIT in the range of $180 to $230 million Longer term, in addition to meeting rating expectations, financial metrics that could potentially drive the ratings upward include an actual and projected cash coverage ratio greater than 2.5x. Under the proposed refinancing, Conseco will raise approximately $300 million from the issuance of a convertible debenture and use the proceeds to reduce the current bank facility. It is the company's intention to amend the current $767 million senior bank facility and reduce the principal amount outstanding to $475 million, as well as to add an $80 million revolving credit facility. In addition to attaining less restrictive financial covenants under the company's amended $475 million credit facility, Moody's noted that the proposed refinancing activities will reduce the company's financing costs. The company's financial leverage is not expected to change materially as a result of these proposed refinancing activities. As part of its review, Moody's said that it will also evaluate the notching between the subsidiary insurance financial strength ratings (Ba1), the bank debt (B2), and the mandatory convertible preferred stock (Caa2), given the possible ratings upgrade and the planned issuance of convertible senior debt which represents a new seniority level between this secured senior debt and the mandatory convertible preferred securities. According to Moody's, its decision to affirm CSHIC's Caa1 insurance financial strength rating with a developing outlook reflects the continued uncertainty surrounding the company's future earnings and operations, as well as its relatively low capitalization levels. These ratings were placed on review for upgrade: Conseco Insurance Company (formerly Conseco Annuity Assurance Company): * Ba1 insurance financial strength rating Bankers Life and Casualty Company: * Ba1 insurance financial strength rating at Ba1 Conseco Health Insurance Company: * Ba1 insurance financial strength rating Colonial Penn Life Insurance Company: * Ba1 insurance financial strength rating: Conseco Life Insurance Company: * Ba1 insurance financial strength rating Washington National Insurance Company: * Ba1 insurance financial strength rating Conseco Inc.: * B2 bank credit facility * Caa2 mandatory convertible preferred securities These rating was affirmed with a developing outlook: Conseco Senior Health Insurance Company: * Caa1 insurance financial strength rating. Conseco is a specialized financial services holding company that operates primarily in the life and health insurance sectors through its subsidiaries. As of March 31, 2005, the company reported total GAAP assets of approximately $30.7 billion and shareholders' equity of $3.8 billion. CREDIT SUISSE: Fitch Rates $900,000 Private Certificates at BB -------------------------------------------------------------- Credit Suisse First Boston Mortgage Securities Corp. mortgage pass-through certificates, series 2005-7, are rated by Fitch Ratings: -- $784.9 million classes I-A-1 through I-A-12, II-A-1 through II-A-6, III-A-1, IV-A-1 through IV-A-3, V-A-1, VI-A-1, AR, AR-L, I-X, II-X, C-X, PP, A-P, and C-P (senior certificates) 'AAA'; -- $3.6 million class C-B-1 certificates 'AA'; -- $2.1 million classes I-B-2 and C-B-2 certificates 'A'; -- $1.5 million classes I-B-3 and C-B-3 certificates 'BBB'; -- $0.9 million privately offered classes I-B-4 and C-B-4 certificates 'BB'. The mortgage loans are separated into six loan groups. Loan group I generates cash flows for the class I-B certificates that support the class I-A-1 through I-A-12, AR, AR-L, PP, a portion of A-P, and I-X certificates. Loan groups II and III are cross- collateralized with the class D-B certificates that support the class II-A-1 through II-A-6, III-A-1, a portion of A-P, a portion of C-P, II-X, and a portion of C-X certificates. Loan groups IV, V, and VI are cross-collateralized with the class C-B certificates that support the class IV-A-1 through IV-A-3, V-A-1, VI-A-1, a portion of C-P, and a portion of C-X certificates. The certificates generally receive distributions based on collections on the mortgage loans in the corresponding loan group or loan groups. The 'AAA' rating on the group I senior certificates reflects the 2.60% subordination provided by the 1.30% class I-B-1 (not rated by Fitch), the 0.50% class I-B-2, the 0.30% class I-B-3, the 0.20% privately offered class I-B-4, the 0.20% privately offered class I-B-5 (not rated by Fitch), and the 0.10% privately offered class I-B-6 (not rated by Fitch) certificates. The 'AAA' rating on the group II and III senior certificates reflects the 4.60% subordination provided by these classes, which Fitch does not rate, including the 2.20% class D-B-1, the 0.80% class D-B-2, the 0.50% class D-B-3, the 0.50% privately offered class D-B-4, the 0.35% privately offered class D-B-5, and the 0.25% privately offered class D-B-6 certificates. The 'AAA' rating on the group IV, V, and VI senior certificates reflects the 1.94% subordination provided by the 1.20% class C-B- 1, the 0.20% class C-B-2, the 0.20% class C-B-3, the 0.10% privately offered class C-B-4, the 0.15% privately offered class C-B-5 (not rated by Fitch), and the 0.05% privately offered class C-B-6 (not rated by Fitch) certificates. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults, as well as bankruptcy, fraud, and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures, and the master servicing capabilities of Wells Fargo Bank, N.A., which is rated 'RMS1' by Fitch. The trust will contain six groups of fixed-rate mortgage loans secured by first liens on one- to four-family residential properties with an approximate aggregate principal balance of $807,692,680. The mortgage loans in group I consist of 570 fixed-rate mortgage loans with an aggregate principal balance of $315,464,409 as of the cut-off date, July 1, 2005. The mortgage pool has a weighted average loan-to-value ratio of 64.7% with a weighted average mortgage rate of 5.70%. Cash-out refinance loans account for 39.4% and second homes 3.7%. The average loan balance is $553,446 and the loans are primarily concentrated in California (46.6%), Florida (6.0%), and New York (4.5%). The mortgage loans in groups II and III consist of 792 fixed-rate mortgage loans with an aggregate principal balance of $190,674,659 as of the cut-off date. The mortgage pool has a weighted average LTV of 66.3% with a weighted average mortgage rate of 6.06%. Cash-out refinance loans account for 44.3% and second homes 1.6%. The average loan balance is $311,979, and the loans are primarily concentrated in California (28.9%), New York (9.4%), and Florida (9.2%). The mortgage loans in groups IV, V, and VI consist of 539 fixed- rate mortgage loans with an aggregate principal balance of $301,553,611 as of the cut-off date. The mortgage pool has a weighted average LTV of 63.3% with a weighted average mortgage rate of 5.52%. Cash-out refinance loans account for 27.9% and second homes 1.4%. The average loan balance is $559,776, and the loans are primarily concentrated in California (26.4%), New York (8.4%), and Florida (6.5%). U.S. Bank National Association will serve as trustee. Credit Suisse First Boston Mortgage Securities Corp., a special purpose corporation, deposited the loans in the trust that issued the certificates. For federal income tax purposes, an election will be made to treat the trust as multiple real estate mortgage investment conduits. CWALT INC: Fitch Puts Low-B Rating on Two Mortgage Cert. Classes ---------------------------------------------------------------- Fitch rates CWALT, Inc.'s mortgage pass-through certificates, Alternative Loan Trust 2005-35CB: -- $703.2 million classes 1-A-1, 1-A-2, 2-A-1, 2-A-2, PO and A-R certificates (senior certificates) 'AAA'; -- $13.6 million class M certificates 'AA'; -- $5.9 million class B-1 certificates 'A'; -- $4.0 million class B-2 certificates 'BBB'; -- $2.9 million class B-3 certificates 'BB'; -- $2.6 million class B-4 certificates 'B'. The 'AAA' rating on the senior certificates reflects the 4.20% subordination provided by the 1.85% class M, the 0.80% class B-1, the 0.55% class B-2, the 0.40% privately offered class B-3, the 0.35% privately offered class B-4 and the 0.25% privately offered class B-5 (not rated by Fitch). Classes M, B-1, B-2, B-3 and B-4 are rated 'AA', 'A', 'BBB', 'BB' and 'B' based on their respective subordination only. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Countrywide Home Loans Servicing LP, rated 'RMS2+' by Fitch, a direct wholly owned subsidiary of Countrywide Home Loans, Inc. The certificates represent an ownership interest in two groups of conventional mortgage loans. Loan group 1 consists of 30-year fixed-rate mortgage loans totaling $492,662,132, as of the cut-off date, July 1, 2005, secured by first liens on one- to four-family residential properties. The mortgage pool demonstrates an approximate weighted-average original loan-to-value ratio of 72.02%. Approximately 43.99% of the loans were originated under a reduced documentation program. The weighted average FICO credit score is approximately 717. Cash-out refinance loans represent 42.42% of the mortgage pool and second homes 1.93%. The average loan balance is $167,743. The three states that represent the largest portion of mortgage loans are California (23.45%), Florida (7.48%) and Arizona (4.97%). Loan group 2 consists of 30-year fixed-rate interest only mortgage loans totaling $208,999,561, as of the cut-off date, secured by first liens on one- to four-family residential properties. The mortgage pool demonstrates an approximate weighted-average OLTV of 74.49%. Approximately 31.25% of the loans were originated under a reduced documentation program. The weighted average FICO credit score is approximately 722. Cash-out refinance loans represent 32.76% of the mortgage pool and second homes 3.95%. The average loan balance is $207,135. The three states that represent the largest portion of mortgage loans are California (16.08%), Florida (8.94%) and Arizona (7.23%). None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation' available at http://www.fitchratings.com/ Approximately 76.37% and 23.63% of the mortgage loans were originated under CHL's Standard Underwriting Guidelines and Expanded Underwriting Guidelines, respectively. Mortgage loans underwritten pursuant to the Expanded Underwriting Guidelines may have higher loan-to-value ratios, higher loan amounts, higher debt-to-income ratios and different documentation requirements than those associated with the Standard Underwriting Guidelines. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for the presence of these attributes. CWALT purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The Bank of New York will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. CWMBS INC: Fitch Places Low-B Rating on $1.8MM Class B Certs. ------------------------------------------------------------- Fitch rates CWMBS, Inc.'s mortgage pass-through certificates, CHL Mortgage Pass-Through Trust 2005-J3: -- $367.7 million classes 1-A-1 through 1-A-7, 2-A-1 through 2-A-7, PO, X, and A-R certificates (senior certificates) 'AAA'; -- $9.6 million class M certificates 'AA'; -- $2.5 million class B-1 certificates 'A'; -- $1.5 million class B-2 certificates 'BBB'; -- $960,000 class B-3 certificates 'BB'; -- $768,000 class B-4 certificates 'B'. The 'AAA' rating on the senior certificates reflects the 4.25% subordination provided by the 2.50% class M, the 0.65% class B-1, the 0.40% class B-2, the 0.25% privately offered class B-3, the 0.20% privately offered class B-4 and the 0.25% privately offered class B-5 (not rated by Fitch). Classes M, B-1, B-2, B-3 and B-4 are rated 'AA', 'A', 'BBB', 'BB' and 'B' based on their respective subordination only. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Countrywide Home Loans Servicing LP, rated 'RMS2+' by Fitch, a direct wholly owned subsidiary of Countrywide Home Loans, Inc. The certificates represent an ownership interest in two groups of conventional mortgage loans. Loan group 1 consists of 30-year fixed-rate mortgage loans totaling $209,395,407, as of the cut-off date, July 1, 2005, secured by first liens on one- to four-family residential properties. The mortgage pool demonstrates an approximate weighted-average loan-to-value ratio of 74.24%. Approximately 25.52% of the loans were originated under a reduced documentation program. The weighted average FICO credit score is approximately 738. Cash-out refinance loans represent 33.26% of the mortgage pool and second homes 6.26%. The average loan balance is $496,198. The three states that represent the largest portion of mortgage loans are California (42.43%), Florida (8.20%) and New York (7.17%). Loan group 2 consists of 30-year fixed-rate interest only mortgage loans totaling $108,308,071, as of the cut-off date, secured by first liens on one- to four-family residential properties. The mortgage pool demonstrates an approximate weighted-average OLTV of 73.89%. Approximately 35.31% of the loans were originated under a reduced documentation program. The weighted average FICO credit score is approximately 735. Cash-out refinance loans represent 34.42% of the mortgage pool and second homes 5.86%. The average loan balance is $508,489. The three states that represent the largest portion of mortgage loans are California (49.48%), New York (7.19%) and Florida (5.97%). None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation' available at http://www.fitchratings.com/ CWMBS purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The Bank of New York will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. DOLLARAMA GROUP: S&P Rates $200 Million Senior Notes at B- ---------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' long-term corporate credit and senior secured ratings on Dollarama Group L.P. At the same time, Standard & Poor's rated Dollarama's $200 million senior subordinated notes 'B-'. The outlook is negative. "The ratings on Dollarama Group L.P. reflect its very high leverage and dependence on the Rossy family to continue to expand the company," said Standard & Poor's credit analyst Don Povilaitis. These factors are partially mitigated by leading market shares in the provinces of Ontario, Quebec, and in the Maritimes, and a very competitive corporate store model with consistent operating results. Dollarama is Canada's largest chain of dollar stores, with 364 stores representing about 3.3 million square feet in total (9,000 square feet average), all corporate-owned and leased under the Dollarama banner. The company's market share of the dollar store segment in Canada is about 41%, with leading shares in Quebec, Ontario, and the Maritimes. Dollarama has a leading position in the dollar store segment in Canada, with a 41% national market share and a dominant position in its home province of Quebec, where its 170-store network outnumbers its nearest rival by more than 15 times. The company also has leading shares in Ontario and the Maritime provinces and has begun to expand into western Canada. Competition from the mass channel is limited as companies such as Wal-Mart Stores Inc. and Zellers are less willing to deal with dollar-store type inventory, which is very labor intensive and is too cumbersome to work well with traditional point-of-sale systems. Consumers that frequent dollar stores do so for reasons such as very low prices and convenience, while those who shop the mass channel in stores do so for competitive pricing across a more comprehensive range of household staples. In October 2004, Bain Capital purchased the Dollarama assets from the Rossy family for C$1.015 billion, assuming an 80% equity interest. The purchase price represented about 10x unadjusted EBITDA (last 12 months ended July 31, 2004) and almost 1.7x sales (last 12 months ended July 31, 2004). The equity is held at Dollarama Capital Corp., while all debt is issued at Dollarama Group L.P. All operating assets reside at operating subsidiaries below Dollarama Group L.P. Dollarama's profitability metrics have historically been very consistent, and are a reflection of the company's successful corporate store model. Lease-adjusted operating margin of about 22% in fiscal 2005 (year ending Jan. 31) is strong for the current rating and reflects the company's powerful procurement and corporate store model. Company founder Mr. Larry Rossy and his family still hold a 20% equity interest in, and actively manage, the company. Mr. Rossy is under contract for five years, as the company remains dependent on him for continued growth. The company has recently filled its CFO position on a permanent basis. The negative outlook reflects the very high leverage under which the company must now operate in the context of a competitive retailing landscape and the company's covenant restriction on capital expenditures. Although credit protection measures are stable, any shortfall in cash flow could lead to a downgrade. The outlook could be revised to stable when material debt reduction occurs, assuming operational consistency is maintained. EAGLEPICHER INC: Secures Second Interim DIP Financing from Harris ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Ohio extended EaglePicher Incorporated and its debtor-affiliates' access to cash collateral and debtor-in-possession financing provided by Harris N.A. The second interim financing increases the Company's credit from $50 million to $65 million and extends the maturity to Aug. 1, 2006. The funds will be used to meet operating needs during the Debtors' restructuring process. "This DIP financing agreement should provide adequate financial resources to fund our post-petition supplier and employee obligations and other operating requirements as EaglePicher moves forward in its restructuring," said Bert Iedema, president and chief executive officer for EaglePicher. The Court will convene a final DIP hearing on Aug. 23, 2005, at 10:00 a.m. Headquartered in Phoenix, Arizona, EaglePicher Incorporated -- http://www.eaglepicher.com/-- is a diversified manufacturer and marketer of innovative advanced technology and industrial products for space, defense, automotive, filtration, pharmaceutical, environmental and commercial applications worldwide. The company along with its affiliates and parent company, EaglePicher Holdings, Inc., filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Ohio Case No. 05-12601). When the Debtors filed for protection from their creditors, they listed $535 million in consolidated assets and $730 in consolidated debts. EDWARD COUVRETTE: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Edward F. Couvrette 565 Electric Road Salem, Virginia 24153 Bankruptcy Case No.: 05-72872 Chapter 11 Petition Date: July 29, 2005 Court: Western District of Virginia (Roanoke) Judge: Ross W. Krumm Debtor's Counsel: Richard E.B. Foster, Esq. Magee Foster Goldstein & Sayers P.O. Box 404 Roanoke, Virginia 24003 Tel: (540) 343-9800 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. EMMIS COMMS: Inks Settlement Pact on Spanish Broadcasting Lawsuit ----------------------------------------------------------------- Emmis Communications Corporation (Nasdaq: EMMS) agreed to settle its lawsuit against Spanish Broadcasting System. As part of the settlement agreement, SBS's KXOL-FM has vacated Emmis' broadcast tower at Flint Peak (Glendale, California). Emmis will dismiss its lawsuit against SBS filed in California's U.S. District Court, and SBS will withdraw its letter of complaint to the Federal Communications Commission. No further details were released by the company. Emmis Communications Corporation -- http://www.emmis.com/-- an Indianapolis-based diversified media firm with radio broadcasting, television broadcasting and magazine publishing operations. Emmis owns 23 FM and 2 AM domestic radio stations serving the nation's largest markets of New York, Los Angeles and Chicago as well as Phoenix, St. Louis, Austin, Indianapolis and Terre Haute, IN. Emmis has recently announced its intent to seek strategic alternatives for its 16 television stations, which could result in the sale of all or a portion of its television assets. In addition, Emmis owns a radio network, international radio stations, regional and specialty magazines and ancillary businesses in broadcast sales and book publishing. * * * As reported in the Troubled Company Reporter on May 26, 2005, Standard & Poor's Ratings Services assigned its 'B-' rating to Emmis Communications Corp.'s proposed $300 million senior unsecured floating-rate notes due 2012. The rating was also placed on CreditWatch with negative implications. Proceeds from the proposed transaction are expected to be used to fund share repurchases. The radio and television broadcasting company had approximately $1.2 billion in debt outstanding at Feb. 28, 2005. "The notes are rated two notches below the current 'B+' corporate credit rating, recognizing that this holding company obligation is judged to be junior and to have relatively worse recovery prospects than operating company debt," said Standard & Poor's credit analyst Alyse Michaelson Kelly. EMPRESAS ICA: $44 Million Debt Payment Prompts S&P to Lift Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its long-term corporate credit rating on Empresas ICA S.A. de C.V. to 'B' from 'B-'. The ratings have been removed from CreditWatch, where they were placed with positive implications on July 22, 2005. Standard & Poor's also raised its long-term national scale rating on ICA to 'mxBBB-' from 'mxBB+'. The outlook for all ratings is stable. The rating action follows a review of ICA's operating and financial prospects by Standard & Poor's. The rating action also follows the recent approval by ICA's shareholders of a $230 million capital increase and the payment of the group's corporate debt, which totaled around $44 million, in May 2005. "The ratings assigned to ICA consider the company's position as the largest engineering, construction, and procurement concern in Mexico," said Standard & Poor's credit analyst Jose Coballasi. The ratings also reflect a more favorable operating and financial performance and the improvements in ICA's capital structure and maturity schedule. Standard & Poor's expects that key financial measures and liquidity will remain relatively weak as a result of the group's investment program and working capital needs, particularly in El Cajon. The ratings are also constrained by the risk of operating losses and swings in working capital associated with cost overruns that have hurt the company's financial performance and liquidity in the past. The ratings also reflect the inherent cyclicality of the construction industry and the company's dependence on government spending in infrastructure to sustain its backlog. ICA is the largest engineering, procurement, and construction company in Mexico. The company is engaged in a full range of construction and related activities, involving the construction of infrastructure facilities, as well as industrial, urban, and housing construction. In addition, the company is engaged in the development and marketing of affordable housing and real estate; the construction, maintenance, and operation of airports, highways, bridges, and tunnels; and the management and operation of water supply systems and solid waste disposal systems under concessions granted by the governmental authorities. Standard & Poor's believes that, in addition to the presence of larger projects that allow the group to take advantage of economies of scale, the steady improvement in ICA's financial performance also reflects its: * efforts to improve profitability through significant workforce reductions, * more advanced risk management systems, and * investments in IT. Nevertheless, * competition, mainly from foreign firms; * the increased use of fixed price contracts, which represent the bulk of ICA's backlog; * and thin margins, relative to other issuers, continue to pose important challenges for the company. Cost overruns, write-offs, provisions, and a number of extraordinary charges underscore the difficulties experienced by ICA in the past. The risks associated with the inherent cyclicality of the construction business and the dependence on government spending are evident in the backlog for Mexico's electric utilities and national oil company. The ratings and stable outlook are predicated on the expectation that ICA will complete the proposed equity issuance and will move forward with its investment program. The ratings also anticipate that the group's investment program will be paired down if the equity issuance falls short of the proposed amount. The stable outlook also reflects our expectations that ICA's leverage will remain relatively high until 2007, when the El Cajon project will be delivered. A positive rating action would have to be preceded by continued improvement in ICA's financial and operating performance. Standard & Poor's anticipates that during the next two years, ICA's key financial measures will be comparable to those posted by other issuers in the same rating category. ENRON: Five Former EBS Officers Escape Conviction in Fraud Case --------------------------------------------------------------- Three former officers of Enron Broadband Services, Inc., were acquitted by a federal court jury. According to The Associated Press, former EBS Chief Executive Officer Joseph Hirko was acquitted of insider trading and money laundering charges; former EBS Senior Vice President for Business Development Scott Yeager was acquitted of conspiracy and security and wire fraud charges; and former EBS Senior Vice President for Engineering & Operations Rex Shelby was acquitted of insider trading. The jury was not able to reach a verdict on any counts involving former EBS Vice President for Finance, Kevin Howard, and Senior Accounting Director Michael Krautz. The former executives were accused of deceiving investors about Enron Broadband and making millions of dollars from their scam. Bloomberg News reports that Judge Vanessa Gilmore of the U.S. District Court for the Southern District of Texas declared mistrials on those charges. Headquartered in Houston, Texas, Enron Corporation -- http://www.enron.com/-- is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 152; Bankruptcy Creditors' Service, Inc., 15/945-7000) FEDERAL-MOGUL: Gets Court Nod to Expand Scope of Hanly's Services ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Federal-Mogul Corporation and its debtor-affiliates permission to expand Hanly Conroy Bierstein & Sheridan LLP's scope of employment in order to litigate claims against certain entities engaged in the management of pharmacy benefits. Hanly Conroy will perform the additional services pursuant to a contingency fee arrangement. The firm will receive a 33-1/3% recovery of the gross amount, if any, recovered by the U.S. Debtors, whether by litigation or otherwise, in connection with their pursuit of PBM-related claims against Medco. The Atlanta firm of Herman Mathis Casey Kitchens & Gerel, LLP, and other members of the Herman Mathis Group will serve as co- counsel to Hanly Conroy. Hanly Conroy and Herman Mathis will share the 33-1/3% contingency fee, which is the limit of the Debtors' fee obligation in the event of success. Hanly Conroy and Herman Mathis will advance to the Debtors: -- all costs and disbursements associated with the additional services, including expenses in its own retention of highly specialized PBM auditors and other professionals in connection with the services; and -- cost of a professional audit of the Debtors' Medco relationship, estimated to range between $50,000 to $100,000. Hanly Conroy will only recover its costs from the Debtors, in addition to the contingency fees, in the event that the Debtors' pursuit of the PBM claims against Medco is successful. Hanly Conroy will then share those fees and reimbursed costs with the Herman Mathis Group and any other co-counsel that may be associated by Hanly Conroy. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some US$6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed US$10.15 billion in assets and US$8.86 billion in liabilities. At Dec. 31, 2004, Federal-Mogul's balance sheet showed a US$1.925 billion stockholders' deficit. At Mar. 31, 2005, Federal-Mogul's balance sheet showed a US$2.048 billion stockholders' deficit, compared to a US$1.926 billion deficit at Dec. 31, 2004. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. (Federal-Mogul Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., 215/945-7000) FIRST HORIZON: Fitch Assigns Low-B Rating on Two Cert. Classes -------------------------------------------------------------- Fitch rates First Horizon Alternative Mortgage Securities mortgage pass-through certificates, series 2005-AA7: -- $571.8 million classes I-A-1, I-A-2, I-A-R, II-A-1, and II-A-2 certificates (senior certificates) 'AAA'; -- $14.2 million class B-1 certificates 'AA'; -- $6.3 million class B-2 certificates 'A'; -- $4.8 million class B-3 certificates 'BBB'; -- $3 million class B-4 certificates 'BB'; -- $2.7 million class B-5 certificates 'B'. The 'AAA' rating on the senior certificates reflects the 5.5% subordination provided by the 2.35% class B-1 , the 1.05% class B-2, the 0.80% class B-3, the 0.50% privately offered class B-4, the 0.45% privately offered class B-5, and the 0.35% privately offered class B-6 (not rated by Fitch). The classes B-1, B-2, B-3, B-4, and B-5 are rated 'AA', 'A', 'BBB', 'BB', and 'B', based on their respective subordination only. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and the servicing capabilities of First Horizon Home Loan Corporation, currently rated 'RPS2' by Fitch. The certificates represent ownership interests in a trust fund that consists of two pools of mortgage loans. The senior certificates whose class designations begin with I and II correspond to Pools I and II, respectively. Each of the senior certificates generally receives distributions based on principal and interest collected from mortgage loans in its corresponding mortgage pool. If on any distribution date a pool is undercollateralized and borrower payments from the underlying loans are insufficient to pay senior certificate principal and interest, borrower payments from the other pool that would have been distributed to the subordinate certificates will instead be distributed as principal and interest to the undercollateralized group's senior certificates. The subordinate certificates will only receive principal and/or interest distributions after all the senior certificates receive all their required principal and interest distributions. Pool I consists of conventional, fully amortizing, adjustable-rate mortgage loans secured by first liens on single-family residential properties, substantially all of which have original terms to maturity of 30 years. The loans have an initial fixed interest rate period of three years. Thereafter, the interest rate will adjust semi-annually based on the sum of Six-Month LIBOR index and a gross margin specified in the applicable mortgage note. Approximately 87.04% of the mortgage loans in Pool I have interest-only payments scheduled for a period of 10 years following the origination date of the mortgage loan. Thereafter, monthly payments will be increased to include principal and interest payments to sufficiently amortize the loan over the remaining term. The aggregate principal balance of this pool is $80,006,354 and the average principal balance is approximately $252,386. The mortgage pool has a weighted average original loan-to-value ratio of 75.04% and the weighted average FICO is 721. Rate/Term and cash-out refinance loans account for 8.08% and 22.95% of the pool, respectively. Second homes represent 7.65% of the pool, and investor occupancies represent 20.29% of the pool. The states with the largest concentrations are California (18.83%), Arizona (13.98%), Virginia (8.94%), Florida (6.36%), Nevada (6.21%) and Maryland (5.68%). All other states represent less than 5% of the pool as of cut-off date. Pool II consists of conventional, fully amortizing, adjustable- rate mortgage loans secured by first liens on single-family residential properties, substantially all of which have original terms to maturity of 30 years. The loans have an initial fixed interest rate period of five years. Thereafter, the interest rate will adjust semi-annually based on the sum of Six-Month LIBOR index and a gross margin specified in the applicable mortgage note. Approximately 86.87% of the mortgage loans in Pool II have interest-only payments scheduled for a period of 10 years following the origination date of the mortgage loan. Thereafter, monthly payments will be increased to include principal and interest payments to sufficiently amortize the loan over the remaining term. The aggregate principal balance of this pool is $525,064,897 and consists of conventional, fully amortizing, adjustable-rate mortgage loans secured by first liens on single- family residential properties, substantially all of which have original terms to maturity of 30 years. The average principal balance is approximately $239,865. The mortgage pool has a weighted average OLTV of 74.85% and the weighted average FICO is 724. Rate/Term and cash-out refinance loans account for 8.77% and 25.08% of the pool, respectively. Second homes represent 5.31%, and investor occupancies represent 20.96% of the pool. The states with the largest concentration are California (15.39), Virginia (12.10%), Arizona (10.67%), Maryland (7.78%), Florida (6.18%) and Washington (5.88%). All other states represent less than 5% of the pool as of cut-off date. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation', available on the Fitch Ratings web site at http://www.fitchratings.com/ All the mortgage loans were originated or acquired in accordance with First Horizon Home Loan Corporation's underwriting guidelines. The trust, First Horizon Mortgage Pass-Through Trust 2005-AA7, was created for the sole purpose of issuing the certificates. For federal income tax purposes, an election will be held to treat the trust as multiple real estate mortgage investment conduits. The Bank of New York will act as trustee. FIRSTFED CORP: High Losses Cue Fitch to Junk Two Cert. Classes -------------------------------------------------------------- Fitch Ratings has performed a review of the First Federal Corporation Manufactured Housing Transactions. First Federal Savings and Loans Association converted its charter to a national bank charter and changed its name to Signal Bank, N.A. To achieve consistency among affiliated companies, the name of FirstFed Corp. (the special purpose corporation used to facilitate the securitization of manufactured housing contracts) was changed to Signal Securitization Corp. In December 2003, Clayton Homes Inc. assumed the servicing responsibilities for the FirstFed portfolio. The transactions reviewed pay principal due to senior bonds prior to paying interest due to subordinate bonds. Higher-than-expected losses have caused significant interest shortfalls to various subordinate bonds in the transactions. While the structures allow for interest shortfalls to be recovered in the future in the event of sufficient excess spread, Fitch assessed the likelihood of the bondholder receiving all interest due when determining the bond's credit rating. Based on the review, these rating actions have been taken: -- Series 1996-1 class A is affirmed at 'AA-'; -- Series 1996-1 class B is downgraded to 'CC' from 'B'; -- Series 1997-1 class A is affirmed at 'AA-'; -- Series 1997-1 class B is affirmed at 'BB+'; -- Series 1997-2 class A is affirmed at 'AA'; -- Series 1997-2 class B is downgraded to 'CCC' from 'B'. GRUPO IUSACELL: June 30 Balance Sheet Upside-Down by Ps. 1.4 Bil. ----------------------------------------------------------------- Grupo Iusacell, S.A. de C.V. (NYSE: CEL; BMV: CEL) recorded a 26.2% increase in net revenues, from Ps. 1.1 billion in the second quarter of 2004 to Ps. 1.4 billion in the second quarter of 2005. For the first six months, Iusacell recorded a 24.0% increase from Ps. 2.2 billion in the first half of 2004 to Ps. 2.8 billion in the first half of 2005. Operating income before depreciation and amortization increased 50.2% to Ps. 300 million in the second quarter of 2005, in comparison with the Ps. 200 million recorded in the same period the year before. For the first six months, Iusacell recorded a 67.7% increase in operating income before depreciation and amortization from Ps. 338 million in the first half 2004 to Ps. 567 million in the first half of 2005. Revenues Revenues increased 26.2% to Ps. 1,423 million in the second quarter of 2005, from Ps. 1,128 million in the same period of 2004, driven mainly by an increase in service revenue as a result of a larger subscriber base, higher consumption per user and revenues derived from exchange of capacity services provided to Unefon. The Grupo Iusacell subscriber base at the end of the second quarter of 2005 was 1.62 million. Costs and Operating Expenses Total cost and operating expenses increased by 16.3% and 31.3% to Ps.743 million and Ps.380 million, respectively, compared to Ps. 639 million and Ps. 289 million for the same quarter last year. The increase in total cost is mainly due to higher interconnection cost and technical expenses, offset by a reduction in handset subsidies. The increase in operating expenses is primarily due to advertising costs related to the launching of new products and special promotions and the increase in personnel expenses and salaries due to the establishment of regional sales and customer service structures in line with our strategy of providing the best service to our clients. Operating income before depreciation and amortization: Iusacell recorded an operating income before depreciation and amortization in the second quarter of 2005 of Ps. 300 million, representing a 50.2% increase compared to the Ps. 200 million recorded in the second quarter of 2004. Net Loss The net loss of Ps. 34 million recorded in the second quarter of 2005 represented a 96.6% decrease compared to the net loss of Ps. 984 million recorded in the same period the year before. This decrease was primarily due to a lower depreciation and amortization and a foreign exchange gain of Ps. 414 million. Grupo Iusacell, S.A. de C.V. (NYSE: CEL; BMV: CEL) is a wireless cellular and PCS service provider in Mexico with a national footprint. Independent of the negotiations towards the restructuring of its debt, Iusacell reinforces its commitment with customers, employees and suppliers and guarantees the highest quality standards in its daily operations offering more and better voice communication and data services through state-of-the-art technology, such as its new 3G network, throughout all of the regions in which it operates. At June 30, 2005, Grupo Iusacell's balance sheet showed a Ps. 1.4 billion stockholders' deficit, compared to a Ps. 435.2 million deficit at June 30, 2004. GRUPO IUSACELL: Creditor Talks on Restructuring Pact Continue ------------------------------------------------------------- Grupo Iusacell, S.A. de C.V. (NYSE: CEL; BMV: CEL) continues negotiations with several of its creditors, seeking to obtain a comprehensive restructuring agreement as soon as possible. As reported in the Troubled Company Reporter on May 10, 2005, the Company received a notice dated March 21, 2005, from The Bank of New York, acting as trustee for the $350 million 14-1/4% notes due December 2006, informing that, due to Grupo Iusacell's non-payment of interest since June 1, 2003, an unspecified percentage of noteholders have requested the acceleration of principal and accrued interest on the notes. Going Concern Doubt Despacho Freyssinier Morin, S.C., completed its audit of Grupo Iusacell, S.A. de C.V.'s financial statements as of Dec. 31, 2004. In their audit opinion, the auditors express substantial doubt about the company's ability to continue as a going concern. The auditors point to two items: (A) The Company incurred in certain events of default related to its debt originally issued at long-term, which entitled the creditors with the right to request the immediate payment of the principal and interest; also, one subsidiary of the Company was sued before a New York Court. Under these circumstances, the Company classified its debt, originally issued at long-term, as short-term liabilities, and as a result, current liabilities exceeded current assets by Ps.10,300.9 millions (constant Mexican pesos of Dec. 31, 2004); and (B) The Company reported accumulated losses representing more than two thirds of its capital stock, which, in accordance with Mexican law is a cause of dissolution, and could be among the assumptions provided by the Concurso Mercantil Law in Mexico. Events of Default The Company has incurred in events of default under the agreements and/or instruments governing the loans which conform the Company's debt. Such events relate, mainly, to the failure in the payment of the principal and the corresponding interest, to technical defaults and non compliance of financial ratios, and to the change of control of the Company that occurred when the former shareholders, Verizon Communications, Inc. (Verizon) and Vodafone Group Plc. (Vodafone), sold the majority equity shares to Movil Access, S.A. de C.V., as well as other defaults detailed in such notes. These defaults entitled the creditors of most of the Company's debt to request the immediate payment of principal and corresponding accessories, in accordance with the executed agreements. As a result of the above, and in conformity with accounting principles generally accepted in Mexico, long-term debt, as described has been classified as short-term and, consequently, as of December 31, 2004, current liabilities exceed current assets by Ps.11,068.6 million approximately. On Jan. 14, 2004, a group of holders of the Secured Senior Notes Due 2004, issued by the Company's main subsidiary, filed a lawsuit in a New York Court against that subsidiary, for the immediate payment of principal and interest. The Company has incurred accumulated losses as of December 31, 2004, which have originated the total loss of the Company's capital stock, and a deficit in its stockholders' equity at that date. The loss of capital stock, in accordance with Mexican General Corporate Law, is cause of a possible dissolution of the Company; furthermore, the Company might be instituted in a reorganization proceeding under the Concurso Mercantil Law in Mexico. These circumstances raise substantial doubt about the Company's ability to continue as a going concern, which will depend, among other factors, on its debt restructure and/or, as the case may be, on obtaining or generating the additional resources necessary to settle its obligations and to cover its operating needs. Extraordinary meeting of Shareholders The Extraordinary Shareholders' Meeting held on June 1, 2005 approved, by the vote of 96.70% of the Company's shares, the termination of the American Depositary Receipts program that the Company has in the United States, which ADRs are listed in the New York Stock Exchange. The New York Stock Exchange is expected to suspend trading of the ADRs on or about Sept. 19, 2005, which is the date when the ADR program will be terminated. ADR holders then will have 60 days to exchange their ADRs for shares that are traded on the BMV. Upon the expiration of the 60-day period, The Bank of New York, which is acting as ADR depositary bank, will have the right to sell the shares underlying the ADRs that were not surrendered and distribute the proceeds of the sale to holders. Grupo Iusacell, S.A. de C.V. (NYSE: CEL; BMV: CEL) is a wireless cellular and PCS service provider in Mexico with a national footprint. Independent of the negotiations towards the restructuring of its debt, Iusacell reinforces its commitment with customers, employees and suppliers and guarantees the highest quality standards in its daily operations offering more and better voice communication and data services through state-of-the-art technology, such as its new 3G network, throughout all of the regions in which it operates. At June 30, 2005, Grupo Iusacell's balance sheet showed a Ps. 1.4 billion stockholders' deficit, compared to a Ps. 435.2 million deficit at June 30, 2004. INDYMAC MANUFACTURED: Fitch Holds Junk Rating on 3 Cert. Classes ---------------------------------------------------------------- Fitch Ratings takes action on 17 classes of IndyMac Manufactured Housing Contract pass-through certificates, including twelve classes which have been downgraded. The negative rating actions are a result of the continued poor performance on the underlying collateral. IndyMac continues to service the loans with its Alt-A and Subprime portfolio in Pasadena. IndyMac is rated 'RPS2+' as a servicer by Fitch. Delinquency and repossession rates as a percentage of the outstanding balance have remained stable and have not improved as much as expected. The rating actions reflect Fitch's adjusted expectation that performance will remain relatively stable and improvement will be limited. Series 1997-1: -- Classes A-2 - A-6 are downgraded to 'B+' from 'A'; -- Class M remains at 'C'. Series 1998-1: -- Classes A-3 - A-5 are downgraded to 'B' from 'BBB+'; -- Class M remains at 'C'; -- Class B-1 remains at 'C'. Series 1998-2: -- Classes A-2 - A-4 downgraded to 'BB' from 'A'; -- Class M-1 is downgraded to 'C' from 'CC'; -- Class M-2 remains at 'C'. INSIGHT COMMS: Inks $2.1 Billion Merger with Carlyle-Led Group -------------------------------------------------------------- Insight Communications Company, Inc. (NASDAQ: ICCI) and Insight Acquisition Corp. entered into a definitive merger agreement providing for Insight Acquisition Corp. to acquire all of the publicly held shares of Insight Communications. Under the terms of the agreement, which was unanimously approved by the board of directors of Insight Communications, public shareholders of Insight Communications would receive $11.75 per share in cash. The terms of the agreement value the total equity of Insight Communications at approximately $710 million and implies an enterprise value of approximately $2.1 billion (based on Insight Communications' attributable share of indebtedness). Insight Acquisition Corp., the acquiring entity, is led by Insight Communications co-founders Sidney R. Knafel and Michael S. Willner and affiliates of The Carlyle Group. Mr. Knafel, Mr. Willner and their related parties collectively own shares of Insight Communications representing approximately 14% of the equity and 62% of the aggregate voting power. The board of directors of Insight Communications acted upon the unanimous recommendation of a special committee of independent directors and has recommended that shareholders of Insight Communications vote to approve the acquisition. After careful consideration and a thorough review with its independent advisors, the special committee determined that the transaction is in the best interests of the Class A shareholders. The special committee's independent financial advisors have delivered written opinions to the effect that as of July 28, 2005, the merger consideration is fair from a financial point of view to the shareholders of Insight Communications (other than the buyer group). This determination by the special committee's financial advisors was based on, and subject to, assumptions and limitations set forth in these written opinions. Consummation of the transaction is subject to certain conditions, including: (i) approval of the merger agreement and merger by holders of a majority of the outstanding shares of Insight Communications' Class A common stock not held by Insight Acquisition Corp., its affiliates or the officers and directors of Insight Communications; and (ii) termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is not subject to any financing conditions. The $11.75 per share price represents a 21.4% premium over the closing price ($9.68) of Insight Communications' stock on March 4, 2005, the last day of trading before the announcement of Insight Acquisition Corp.'s original proposal on March 7, 2005, and a 28.7% premium over the six-month average closing price ($9.13) before the original proposal was announced. Mr. Knafel, chairman of Insight Communications, stated, "We are pleased that we have reached an agreement that will provide substantial benefits to our shareholders, customers and employees." Mr. Willner, president and chief executive officer of Insight Communications, added, "Our current management team looks forward to continuing to lead this great business in the future, while building on our tradition of providing outstanding service and innovative solutions to our customers." Michael J. Connelly, Carlyle managing director, said, "We are pleased to have the opportunity to support Insight Communications' management team and employees and to invest in the U.S. cable television business." The parties also announced an agreement in principle to settle pending shareholder litigation challenging the transaction. Morgan Stanley and Stephens are serving as Insight Acquisition Corp.'s financial advisors in the transaction, and Dow, Lohnes & Albertson PLLC and Debevoise & Plimpton LLP are providing legal counsel to Insight Acquisition Corp. Citigroup Global Markets, Inc. and Evercore Partners are serving as financial advisors to the special committee, and Skadden, Arps, Slate, Meagher & Flom LLP is providing legal counsel to the special committee. Sonnenschein Nath & Rosenthal LLP is providing legal counsel to Insight Communications. The Carlyle Group is a global private equity firm with nearly $30 billion under management. Carlyle invests in buyouts, venture capital, real estate and leveraged finance in North America, Europe and Asia, focusing on aerospace & defense, automotive & transportation, consumer & retail, energy & power, healthcare, industrial, technology & business services and telecommunications & media. Since 1987, the firm has invested $13.4 billion of equity in 396 transactions. The Carlyle Group employs more than 560 people in 14 countries. Insight Communications (NASDAQ: ICCI) is the 9th largest cable operator in the United States, serving approximately 1.3 million customers in the four contiguous states of Illinois, Indiana, Ohio, and Kentucky. Insight specializes in offering bundled, state-of-the-art services in mid-sized communities, delivering analog and digital video, high-speed Internet, and voice telephony in selected markets to its customers. * * * As reported in the Troubled Company Reporter on July 12, 2005, Standard & Poor's Ratings Services revised its outlook on New York City, New York-based cable TV operator Insight Midwest L.P. to stable from negative. At the same time, Standard & Poor's affirmed its ratings on Insight Midwest, including the 'BB-' corporate credit rating. Standard & Poor's also assigned its 'BB-' rating to intermediate holding company Insight Midwest Holdings LLC's new $1.108 billion term loan C due December 2009. Proceeds from the new bank loan will be used to repay the previous term loan B facility. "The outlook was revised to stable to reflect the company's receipt of looser financial covenants under accompanying bank loan amendments," said Standard & Poor's credit analyst Catherine Cosentino. "We had been concerned that the company could be out of compliance with the borrower total debt to EBITDA limitation in the latter half of 2006, when the maximum allowed leverage reduced to 3.25x," she continued. Under bank amendments, this threshold has been reset to 4.5x through mid-2006, and drops to only 4.25x through June 2007. This provides the company some near-term cushion to weather potential downturns in the business. IPCS INC: Inks Forbearance Pact with Sprint on Del. & Ill. Suits ---------------------------------------------------------------- iPCS, Inc. and its subsidiaries iPCS Wireless, Inc., Horizon Personal Communications, Inc. and Bright Personal Communications Services, L.L.C., entered into a Forbearance Agreement with Sprint Corporation and certain of its subsidiaries relating to ongoing litigation in Delaware and Illinois among the iPCS Plaintiffs, the Sprint Parties and others. The Agreement sets forth the iPCS Plaintiffs' agreement not to seek certain injunctive relief in the ongoing litigation under certain circumstances and contemplates the parties proceeding directly to a trial relating to the iPCS Plaintiffs' request for a permanent injunction and other equitable relief. The Agreement also sets forth the Sprint Parties' agreement as to certain parameters for the operation of the Sprint Parties' wireless business in the territories operated by the iPCS Plaintiffs following the merger involving Sprint Corporation and Nextel Communications, Inc., in each case during the period of time that the Agreement remains in effect. A full text copy of the Forbearance Agreement is available for free at http://ResearchArchives.com/t/s?9d iPCS Inc. -- http://www.ipcswirelessinc.com/-- is the PCS Affiliate of Sprint with the exclusive right to sell wireless mobility communications, network products and services under the Sprint brand in 40 markets in Illinois, Michigan, Iowa and eastern Nebraska with approximately 7.8 million residents. The territory includes key markets such as Grand Rapids, Michigan, Champaign- Urbana and Springfield, Illinois, and the Quad Cities of Illinois and Iowa. iPCS is headquartered in Schaumburg, Illinois. On Feb. 23, 2003, iPCS and its wholly owned subsidiaries filed voluntary petitions seeking relief from creditors pursuant to Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Georgia. iPCS filed its plan of reorganization with the Bankruptcy Court on March 31, 2004. On April 30, 2004, iPCS Escrow Company, a newly formed, wholly owned indirect subsidiary of iPCS, completed an offering of $165.0 million aggregate principal amount of 11.50% senior notes due 2012. The Company's plan of reorganization was confirmed on July 9, 2004 and declared effective on July 20, 2004. With the effectiveness of the plan of reorganization, iPCS Escrow Company was merged with and into iPCS and the senior notes became senior unsecured obligations of iPCS. Other significant items of the reorganization that occurred on July 20, 2004, included the repayment and cancellation of iPCS' senior credit facility from the proceeds of the $165.0 million senior notes offering, the cancellation of its common stock held by a liquidating trust, the cancellation of its $300.0 million 14% senior notes along with other unsecured claims in exchange for the Company's new common stock, the assumption of its amended Sprint affiliation agreements and the settlement of its previously stayed litigation against Sprint. * * * As reported in the Troubled Company Reporter on July 22, 2005, Standard & Poor's Ratings Services affirmed its ratings on Schaumburg, Illinois-based Sprint PCS affiliate iPCS Inc., including its 'CCC+' corporate credit rating and 'CCC' senior unsecured debt rating. The outlook is developing. Standard & Poor's also affirmed its 'CCC' rating on the senior unsecured debt of another Sprint PCS affiliate, Horizon PCS Inc. These affirmations follow the recently completed merger of Horizon into iPCS Inc. Under the terms of the merger agreement, iPCS became the obligor of Horizon PCS's $125 million senior notes. Pro forma for the merger, total debt outstanding is about $290 million. J.P. MORGAN: Fitch Assigns Low-B Rating on Six Certificate Classes ------------------------------------------------------------------ Fitch Ratings affirms J.P. Morgan Chase Commercial Mortgage Securities Corp., commercial mortgage pass-through certificates, series 2004-PNC1: -- $30.6 million class A-1 'AAA'; -- $128.3 million class A-2 'AAA'; -- $98 class A-3 'AAA'; -- $426.2 million class A-4 'AAA'; -- $244.0 million class A-1A 'AAA'; -- Interest-only class X 'AAA'; -- $28.8 million class B 'AA'; -- $13.7 million class C 'AA-'; -- $17.8 million class D 'A'; -- $11 million class E 'A-'; -- $16.5 million class F 'BBB+'; -- $11 million class G 'BBB'; -- $21 million class H 'BBB-'; -- $2.7 million class J 'BB+'; -- $6.9 million class K 'BB'; -- $4.1 million class L 'BB-'; -- $5.5 million class M 'B+'; -- $2.7 million class N 'B'; -- $2.7 million class P 'B-'. Fitch does not rate the $15.1 million class NR certificates. The rating affirmations reflect the minimal reduction of the pool collateral balance since issuance. As of the July 2005 distribution date, the pool has paid down 1.0%, to $1.09 billion from $1.10 billion at issuance. There are no delinquent or specially serviced loans. The largest loan in the pool, Centro Retail Portfolio (12.5%), has investment grade credit assessment. The loan is secured by seven anchored retail properties - six in and around Los Angeles and one north of San Francisco. The 2004 Fitch stressed debt service coverage ratio (DSCR), based on six months normalized, was 1.24 times (x) compared to 1.34x at issuance. As of year-end 2004, occupancy was 93%, down from 96% at issuance. Although the 2004 DSCR was based on normalized figures, given the occupancy/DSCR decline, Fitch will continue to monitor the loan's performance. KAISER ALUMINUM: JPMorgan & CIT Offer $250 Million Exit Financing ----------------------------------------------------------------- JPMorgan Chase & Co. and CIT Group Inc. have proposed terms on a $250 million exit financing facility for Kaiser Aluminum Corporation, Scott Lamb, Kaiser's vice president for investor relations and corporate communications, told Bloomberg News. The Exit Facility includes: (a) $200 million in revolving credit with interest at 2.25 percentage points above the London interbank offered rate; and (b) a $50 million second-lien term loan at LIBOR plus 5.5 percentage points interest. The Exit Facility will replace an existing $200-million credit facility with interest at LIBOR plus 2.25 percentage points. Kaiser plans to emerge from Chapter 11 bankruptcy protection in the fourth quarter 2005. Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 73; Bankruptcy Creditors' Service, Inc., 215/945-7000) KELLWOOD CO: Weak Performance Prompts S&P to Pare Ratings --------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on women's apparel designer and marketer Kellwood Co. to 'BB' from 'BBB-'. The senior unsecured debt rating was also lowered to 'BB' from 'BBB-'. The ratings were removed from CreditWatch, where they were placed with negative implications on July 14, 2005. The outlook is stable. Total debt outstanding at April 30, 2005, was about $470 million. "The downgrade follows the company's downward revision of its full-year results for fiscal 2005, its weaker-than-expected operating performance in recent periods, including the first quarter, which ended in April, and uncertainty as to when credit protection measures will recover," said Standard & Poor's credit analyst Susan H. Ding. The ratings on St. Louis, Missouri-based Kellwood reflect: * its participation in the highly competitive apparel industry, * its exposure to changing consumer preferences, * its below-average operating margins, and * its acquisitiveness. Mitigating factors include the company's position as a major supplier of branded and private-label apparel, and its diverse distribution channels. The ratings also incorporate the company's inability to produce trend-right merchandise for its key brands in recent periods, and the disappointing results from some of its new product introductions, including the Calvin Klein sportswear and O Oscar lines, resulting in higher-than-normal markdowns and allowances. Although the company has announced the exit of several noncore businesses and related restructuring initiatives that should benefit results in the intermediate term, it is still challenged to revitalize its various product assortments. KEVIN MAYER: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Kevin Andrew & Katherine Hope Mayer 6421 Pennell Court Elkridge, Maryland 21075 Bankruptcy Case No.: 05-26981 Chapter 11 Petition Date: July 29, 2005 Court: District of Maryland (Baltimore) Judge: E. Stephen Derby Debtor's Counsel: Marc Robert Kivitz 201 North Charles Street, Suite 1330 Baltimore, Maryland 21201 Tel: (410) 625-2300 Total Assets: $486,066 Total Debts: $1,744,692 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ American Southern Insurance Co. $301,551 3715 Northside Parkway, Northwest Building 400, Suite 800 Atlanta, GA 30327 Hartford Insurance $164,000 P.O. Box 620 New Hartford, NY 13413 Hardesty $134,931 10620 Riggs Hill Road Jessup, MD 20794 Star Buildings $95,181 Dominion Electrical Supply Co. $94,987 Virginia Sprinkler Co. $74,000 Sun Belt Rentals, Inc. $62,998 United Rental $53,120 Airolite Company, LLC $39,185 Matrix Service Ind. Contractors, Inc. $28,700 Ford Motor Credit $28,007 C & P Plumbing, Inc. $26,279 Vitro America, Inc., t/a Binswnager Glass $18,530 Overhead Door Company of Baltimore $17,300 Contractor's Services, Inc. $15,972 Republic Storage Systems Co., Inc. $15,972 Active Crane $15,225 Dell Financial $13,729 Kinloch & Assoc., PC $12,225 First Insurance Funding Corp. $11,588 KMART CORP: Overview of Footstar-Kmart Settlement Agreement ----------------------------------------------------------- As previously reported, Kmart Corporation and Footstar, Inc., have entered into a settlement agreement that resolves the ongoing litigation and the disputes in connection with the assumption, interpretation and amendment of the Master Agreement, dated June 9, 1995. Specifically, the Settlement: (a) eliminates litigation and fixes Footstar's cure obligation to Kmart at $45 million; (b) establishes a minimum "footprint" of stores in which Footstar will continue to operate a footwear department and requires Kmart to compensate Footstar for closures or conversions if the number of stores falls below the minimum; (c) eliminates uncertainties relating to Footstar's staffing obligations by allowing it to reduce staffing as sales decline; (d) eliminates the Performance Standards in favor of a minimum sales test, which eliminates a key possible termination right for Kmart; (e) eliminates Kmart's equity interests in the Shoemart Corporations; (f) eliminates profit sharing and all other fees in favor of Footstar paying Kmart, as of January 2, 2005, 14.625% of Gross Sales, other than the Miscellaneous Expense Fee, which is fixed at $23,500 per store; (g) reduces Footstar's liquidation costs by requiring Kmart to buy out Footstar's inventory at book value on any store closure or conversion; (h) provides that the Master Agreement will terminate at the end of 2008, requires Kmart to buy out Footstar's inventory at book value upon any store closure or conversion, which allows for an orderly wind down of the business without the need for a complex liquidation and the costs attendant thereto; and (i) requires Kmart to allocate a minimum of 52 weekend Roto advertising pages per year to Footstar products. The Settlement is subject to the approval of the United States Bankruptcy Court for the Southern District of New York and each company's board of directors. Paul M. Basta, Esq., at Weil, Gotshal & Manges LLP, in New York, tells the New York Bankruptcy Court that the Settlement repairs the parties' business relationship, enabling Footstar to operate profitably throughout the remaining term of the Master Agreement. The Settlement will facilitate Footstar's reorganization, ensure a complete recovery to its creditors, and provide a return to equity. Mr. Basta assures the Court that the Settlement falls well within the range of reasonableness, required under Rule 9019 of the Federal Rules of Bankruptcy Procedure. The Settlement eliminates the risks inherent in numerous litigations between the parties, the appellate risks facing Footstar, the overarching risks attendant to the litigations, and the high cost of the whole proceeding. The Statutory Committee of Unsecured Claim Holders and the Statutory Committee of Equity Security Holders of Footstar support the Settlement. A full-text copy of the Settlement is available at no cost at: http://bankrupt.com/misc/kmart_footstar_settlement.pdf Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 99; Bankruptcy Creditors' Service, Inc., 215/945-7000) KULICKE & SOFFA: June 30 Balance Sheet Upside-Down by $44.3 Mil. ---------------------------------------------------------------- Kulicke & Soffa Industries, Inc. (NASDAQ: KLIC) reported financial results for its third fiscal quarter ended June 30, 2005. Net revenue for the third fiscal quarter ended June 30, 2005 was $138.2 million compared to $124.8 million for the previous quarter and $194.6 million in the comparable year-ago quarter. The net loss was $101.8 million for the year-ago quarter of $22.7 million. Included in the loss for the third fiscal quarter are non-cash goodwill and intangible asset impairment charges of $100.6 million associated with the Company's Test segment and $2.2 million for factory consolidation and relocation. Also included is the recognition of a $1.6 million gain from the previous sale of the Company's wedge bonding technology, and a tax benefit of $1.8 million resulting from the expected repatriation of foreign earnings. Scott Kulicke, chairman and chief executive officer, stated, "We achieved sequentially increasing equipment revenue for the second and third fiscal quarters and we believe revenue for the fourth fiscal quarter will also increase sequentially. We believe that this pattern of growing demand for our equipment is indicative of the early stages of a semiconductor assembly recovery." Third Quarter Highlights Technology & Manufacturing -- K&S shipped its newest automatic ball bonders, the Maxum Ultra and Maxum Elite models, to key customers for evaluation and qualification at their sites. We believe that the first production quantity shipments of these new machines will begin during the fourth fiscal quarter. -- The K&S Quatrix test socket was successfully tested at a customer location. This new technology replaces traditional spring pins with a unique, long-life torsion spring contact that is expected to significantly reduce customers' cost of testing. -- K&S completed its plan to migrate the majority of its cantilever probe card manufacturing to Asia. In the month of June, China accounted for 59% of K&S's cantilever probe card production, while Taiwan accounted for 20% and San Jose 21%. Key Product Trends -- K&S wire bonder sales for the third fiscal quarter were split approximately 66% to subcontractors and 34% to IDM's, while the second fiscal quarter was split approximately 42% to the subcontractors and 58% to IDM's. -- K&S gold bonding wire received record order quantities for a single quarter. Orders for the third fiscal quarter totaled more than 1 billion feet of bonding wire. The 14% increase in volume over the second fiscal quarter represents market share gains at key customers. -- Losses in the Test segment continued to be greater than expected as cantilever and package test revenue eroded from the second fiscal quarter. The lower revenue was from a change in customer/product mix, which also resulted in lower gross margins for the test business segment in the third fiscal quarter. Financial Highlights -- K&S revenue rose 10.8% from the second fiscal quarter to the third fiscal quarter, which followed the 7.3% rise from the first fiscal quarter to the second fiscal quarter. The increase over the second fiscal quarter was a result of stronger demand for our equipment and wire products. -- K&S equipment revenue for the third fiscal quarter was $48.4 million, which produced income from operations for the equipment group of $8.5 million. This represents a 24% increase in revenue and a 158% increase in income from operations over the second fiscal quarter. -- The Company recognized a gain of $1.6 million on the previous sale of its wedge bonder technology, which included both the design of wedge bonding machines and the licensing of intellectual property. -- Expenses associated with the relocation and restructuring of production to low cost regions was $2.2 million during the June quarter, which tracked K&S's plan. The costs associated with these factory moves are included in S.G. & A. expenses. "We expect continued incremental revenue growth in the fourth fiscal quarter, which is consistent with our opinion that the semiconductor assembly industry is in a recovery mode," Scott Kulicke concluded. "We expect revenue for the September quarter to be in the $160 to $175 million range." Kulicke & Soffa (NASDAQ: KLIC) -- http://www.kns.com/-- is the world's leading supplier of semiconductor wire bonding assembly equipment. The Company provides customers with semiconductor wire bonding equipment along with the complementing packaging materials and test interconnect products that actually contact the surface of the customer's semiconductor devices. At June 30, 2005, Kulicke & Soffa's balance sheet showed a $44,302,000 stockholders' deficit, compared to $67,020,000 of positive equity at Sept. 30, 2004. LEAR CORP: Posts $44.4 Million Net Loss in Second Quarter --------------------------------------------------------- Lear Corporation (NYSE: LEA), one of the world's largest automotive interior systems suppliers, reported financial results for the second quarter of 2005 and updated 2005 financial guidance. Second-Quarter Highlights: * Net sales of $4.4 billion versus $4.3 billion a year ago * Doug DelGrosso named President and Chief Operating Officer * Announced global restructuring to improve long-term competitiveness For the second quarter of 2005, Lear posted net sales of $4.4 billion and a net loss of $44.4 million, including costs related to restructuring actions of $0.33 per share, litigation charges of $0.40 per share and an impairment of an equity investment that was subsequently divested of $0.25 per share. These items had an unfavorable impact of $0.98 on second quarter net income per share. The results for the second quarter of 2005 compare to net sales of $4.3 billion and net income of $116.1 million for the second quarter of 2004. Net sales were up from the prior year, primarily reflecting the addition of new business globally, offset in part by lower production on key Lear platforms in North America. Operating performance in the quarter declined sharply from the year earlier period, primarily due to lower production on key Lear platforms in North America and continuing cost pressures throughout the supply chain. "Despite the tough operating environment, the Lear team remains focused on delivering superior quality and service to our customers, ensuring that key new products are launched flawlessly and taking aggressive steps to improve our competitiveness going forward," said Bob Rossiter, Lear Chairman and Chief Executive Officer. During the quarter, Doug DelGrosso was named President and Chief Operating Officer, and the Company's overall organizational structure was realigned on a more global basis. Lear was named Supplier of the Year by General Motors, was awarded two World Excellence awards from Ford and was recognized by Toyota for excellence in quality and supplier diversity. Also during the quarter, the Company announced the framework for a global restructuring to improve long-term competitiveness. Free cash flow was negative $9.4 million for the second quarter of 2005. Third-Quarter and Full-Year 2005 Outlook For the third quarter of 2005, net sales are expected to be approximately $3.9 billion, about flat compared to a year ago. This reflects the addition of new business globally, offset by lower production on key Lear platforms. Net loss is expected to be in the range of $0.70 to $0.90 per share, including costs related to restructuring actions of approximately $0.55 per share. Actual restructuring costs will be dependent on various factors, including the timing of certain actions, and could vary from current estimates. The net loss compares to net income of $1.26 per share in the third quarter of 2004. For the full year of 2005, net sales are expected to be approximately $17 billion, reflecting primarily the addition of new business globally, offset by lower production on key Lear platforms. Lear's 2005 industry production planning assumptions are approximately 15.5 million units in North America and approximately 18.6 million units in Europe. Net (loss) income is expected to be in the range of ($0.25) to $0.15 per share, including costs related to restructuring actions of approximately $1.35 per share, the second-quarter litigation and impairment charges of $0.65 per share and the first-quarter tax benefit of $0.25 per share. These items are expected to have a net unfavorable impact of approximately $1.75 on full-year 2005 net income per share. Full-year capital spending is forecasted to be approximately $550 million. Depreciation is expected to be about $400 million. Free cash flow is expected to be approximately negative $375 million, which includes a one-time negative net impact of changes in customer payment terms of approximately $200 million, as well as cash payments of about $120 million related to restructuring actions. Interest expense is expected to be about $190 million. Lear Corporation, a Fortune 500 company headquartered in Southfield, Mich., USA, focuses on integrating complete automotive interiors, including seat systems, interior trim and electrical systems. With annual net sales of $17 billion in 2004, Lear is one of the world's largest automotive interior systems suppliers. The Company's world-class products are designed, engineered and manufactured by more than 110,000 employees in 34 countries. * * * Moody's Investors Service has downgraded the senior unsecured debt rating of Lear Corporation to Ba2 from Baa3. At the same time the rating agency assigned a Corporate Family rating (previously called senior implied) of Ba2, and a Speculative Grade Liquidity rating of SGL-2, representing good liquidity over the next twelve months. LEAR CORP: Moody's Downgrades Senior Unsecured Debt Rating to Ba2 ----------------------------------------------------------------- Moody's Investors Service has downgraded the senior unsecured debt rating of Lear Corporation to Ba2 from Baa3. At the same time the rating agency assigned a Corporate Family rating (previously called senior implied) of Ba2, and a Speculative Grade Liquidity rating of SGL-2, representing good liquidity over the next twelve months. The actions conclude a review initiated on June 27, 2005 and incorporate: 1) reduced expectations for the company's near term profitability and cash flow; 2) the increase in indebtedness associated with funding requirements arising from negative operating cash flow, higher capital expenditures and disbursements under restructuring programs; and 3) the resultant lower debt protection ratios over the intermediate term. The actions further reflect the challenging operating environment and structural issues facing the North American automotive supplier industry. Among the structural concerns are lower production volumes and adverse vehicle mix trends from the Big 3 North American OEMs who still account for about half of Lear's revenue. In addition, Lear faces the need to increase its capital expenditures that will support the launch of new business awards, and fund restructuring programs that will improve its cost position, accelerate a transition to lower cost countries, and rationalize its capacity. Lear continues with an experienced operating team, profitable operations outside of North America, and has sufficient liquidity to finance its cash needs over the next 18 months. In addition, Lear has received an underwritten commitment for a $300 million term loan to provide further liquidity cushion. This facility is currently being syndicated and is expected to close in August. In addition it is expected to obtain greater flexibility under its $1.7 billion bank revolving credit through covenant amendments. A stable outlook flows from expectations that upon completion of its restructuring initiatives and higher capital expenditures in support of new business, Lear ought to emerge in 2006 with a more diverse geographic and customer base that will support stronger margins and renewed free cash flow generation. Ratings Lowered are: * Senior Unsecured, Ba2 from Baa3 * Shelf registration for senior unsecured, subordinated, and preferred to (P)Ba2 from (P)Baa3, (P)Ba3 from (P)Ba1, and (P)B1 from (P)Ba2 respectively Ratings assigned: * Corporate Family Ba2 * Speculative Grade Liquidity Rating, SGL-2 The rating for the company's previous bank credit facility, which was replaced with a new facility in March 2005, has been withdrawn. Moody's has not been requested to rate the new bank credit facility. Lear has recently revised its guidance on free cash flow for fiscal 2005 to approximately negative $375 million (inclusive of estimated restructuring disbursements but prior to dividends), and lowered its estimated net income for the year to $100-$125 million (before unusual items) from a previous mid-point of $200 million. Principal factors affecting the downward revision include: * higher commodity costs for resin, steel, and chemicals; * lower production volumes in its high content top 15 programs many of which face model change-overs in the second half of 2005; * lower market share of the Big 3 OEMs in North America; * a distressed supply base; * stepped-up capital expenditures in support of strong launch activity; and * the need for restructuring actions involving up-front cash expenditures. The negative cash flow is expected to be funded by higher levels of external financing, primarily its existing five year credit facility. In addition, Lear has received an underwritten commitment for a $300 million term loan to provide further liquidity cushion. As a result, at year end 2005 Lear's Debt/EBITDA ratio (using Moody's standard adjustments) is expected to exceed three times with EBIT/Interest cover under 2.0 times. While these ratios and Lear's free cash flow would be expected to improve in 2006, debt protection measures will no longer be representative of investment grade stature. Lear's pension plan was under-funded at year-end 2004 by $200 million with projected contributions in 2005 of $53-$58 million. Moody's believes that these payment levels are manageable and roughly level with annual periodic benefit cost. Although Lear's book of new business is expected to improve its customer diversification on a global basis, the company will continue with significant exposure to GM and Ford (collectively 55% of 2004 global revenues) in its critical North American market (44% of 2004 revenues were from the U.S. and Canada) in what remains a cyclical industry. Consequently, a corporate family rating of Ba2 has been assigned. While Lear is expected to maintain adequate cushion relative to the financial covenants in its bank credit facility, the company is currently seeking amendments that would provide greater cushion should the business environment weaken. Lear is seeking to amend its $1.7 billion revolving credit which has an expiration date in March 2010. Under the terms of the proposed amendment the company's maximum permissible defined net debt will be set at 3.75 times defined Consolidated Operating Profit (approximately equal to EBITDA) for the balance of 2005, stepping down through the first half of 2006. In addition clarification will be added that certain restructuring charges and legal settlements will be excluded from the definition of Consolidated Operating Profit. The company will reinstate a pledge of shares of certain subsidiaries that had been released earlier this year. The subsidiary shares pledged will primarily consist of Lear's wholly owned domestic subsidiaries, and 65% of the stock of certain first tier non-domestic subsidiaries. The pledge will not be shared with the unsecured notes. However, both the banks and the notes have up-stream guarantees. The rating agency believes this structure does not afford a sufficient difference in the degrees of protection to warrant a rating distinction at this time, as the value of pledged shares would be net of the liabilities inclusive of the guarantees at the respective subsidiaries. As a result, the unsecured notes have been assigned a Ba2 rating, level with the corporate family rating. The amended bank facility and new term loan are not rated. A speculative grade liquidity rating of SGL-2 has been assigned representing good liquidity over the next 12 months. Lear's liquidity profile consists of modest amounts of balance sheet cash, prospectively weak cash flows for 2005 and early 2006, substantial amounts of committed liquidity under its term revolver, and adequate headroom under its financial covenants. Following the repayment of $600 million of maturing notes in June, Lear is not expected to maintain large amounts of surplus cash as short term debt reduction would represent a higher return. Funding requirements arising from negative free cash flow will substantially be covered under Lear's revolving credit facility. Lear does not face any significant amounts of maturing debt until early 2007 when the new bank term loan would mature and the first put date on its convertible issue arrives. However, its $150 million accounts receivable securitization facility has a renewal date in November 2005. Lear maintains a $1.7 billion revolver whose current maturity is in March 2010. At June 30, 2005 there were no outstandings under the facility, but roughly $58 million of letters of credit had been issued against the commitment. While Lear is expected to maintain adequate cushion relative to the financial covenants in its bank credit facility, the company is currently seeking amendments that would provide greater cushion should the business environment weaken. Lear has a portfolio of business units, investments in affiliates and un-pledged tangible assets which could facilitate sources of alternative liquidity. Factors that could lead to higher ratings include: * improved penetration of non-Big-3 automakers that would provide greater business stability; * achieving and sustaining free cash flow to debt greater than 10%; * EBIT/Interest coverage returning to 4 times or higher; and * debt/EBITDA reverting to under 2.5 times. Developments that could result in lower ratings include: * evidence that anticipated improvements in profitability and renewed free cash flow generation would be delayed; * debt/EBITDA deteriorating beyond 3.5 times, EBIT/Interest coverage consistently below 2 times; or * pursuit of shareholder return actions in advance of stabilization of the business. Lear Corporation, headquartered in Southfield, Michigan, is an integrator of automotive interiors, including seat systems, interior trim and electrical systems. The company had revenues of $17 billion in 2004 and has more than 110,000 employees in 34 countries. LONGVIEW FIBRE: S&P Rates $1 Billion Universal Shelf at B+ ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' corporate credit and its other ratings on Longview Fibre Co., following the company's announcement that it plans to convert to a real estate investment trust (REIT) effective Jan. 1, 2006. At the same time, Standard & Poor's assigned its preliminary 'BB' senior unsecured and 'B+' subordinated debt ratings to Longview Fibre's $1.0 billion Rule 415 universal shelf registration. The outlook on the Longview, Washington-based forest products company is stable. Debt was $453 million at April 30, 2005. "We believe the conversion to a REIT should not have a material effect on the company's overall credit profile despite higher cash distributions to shareholders," said Standard & Poor's credit analyst Kenneth L. Farer. In connection with the conversion, Longview Fibre will be required to pay a special dividend to shareholders equal to its undistributed earnings and profits, totaling $350 million-$400 million, with the cash portion capped at approximately 20%. The company will use the proceeds from the issuance of various securities under its new shelf registration, including at least $150 million of equity, and a new credit facility to refinance its existing debt and fund the cash portion of its earnings and profits distribution. Although Longview Fibre's federal tax payments and interest expense should be lower because of its status as a REIT and its refinancing, its expected annual dividend of approximately $50 million will be substantially higher than the current payout, which has averaged $2 million for the past few years. However, Longview Fibre has established the dividend at a level that should be sustainable, even during cyclical downturns. In addition, the company should have some flexibility to reduce the dividend amount if necessary, because, unlike many REITs, it will not have to distribute most of its income under current tax regulations, as the majority of its income will consist of capital gains instead of ordinary income. "Our ratings also incorporate expectations that Longview Fibre will acquire additional timberlands and further reduce its debt burden with discretionary cash flow," Mr. Farer said. "Despite achievement of credit measures that are now in line with ratings expectations, Longview's business profile could only support a higher rating if the company had a much more conservative capital structure. The outlook could be revised to negative if the company's financial policy becomes more aggressive with regard to dividends, timberland purchases, and/or leverage." MAGELLAN HEALTH: Earns $22.7 Million of Net Income in 2nd Quarter ----------------------------------------------------------------- Magellan Health Services, Inc. (Nasdaq: MGLN) reported operating results for the second quarter of fiscal year 2005. The Company also reaffirmed its guidance of $220 million to $240 million in segment profit for 2005. For the quarter ended June 30, 2005, the Company reported net revenue of $464.5 million and net income of $22.7 million. For the prior year quarter, net revenue was $452.1 million and net income was $28.4 million. Segment profit (net revenue less cost of care, and direct service costs and other operating expenses plus equity in earnings of unconsolidated subsidiaries) for the current year quarter was $58.9 million, compared with $60.1 million in the prior year. For the six months ended June 30, 2005, the Company reported net revenue of $917.3 million and net income of $46.3 million. For the prior year period, the Company reported net revenue of $892.3 million and net income of $41.4 million. Segment profit for the first six months of 2005 was $120.2 million versus $108.2 million for the prior year period. The Company ended the quarter with unrestricted cash and investments of $443.7 million. Cash flow from operations for the six months ended June 30, 2005 was $90.3 million compared with $30.3 million for the prior year period. Cash flow from operations for the prior year six-month period included payments of $64.9 million for liabilities related to the Company's Chapter 11 proceedings. The Company has not drawn on its $50.0 million revolving credit facility. "As expected, Magellan turned in another strong financial performance in the second quarter," said Steven J. Shulman, chairman and chief executive officer. "Results for the quarter and the first six months of the year reflect our continued rigorous management of administrative expenses coupled with conscientious management of care. We expect consistent positive effects from these efforts and therefore remain comfortable with our guidance of $220 million to $240 million in segment profit for 2005. "We also are very pleased to announce that, in addition to the two-year extension of our Anthem/WellPoint contract that we signed during the quarter, we have recently been notified that our agreements with the State of Tennessee to manage behavioral health care for the TennCare program have been extended through June 30, 2006," Mr. Shulman said. "In addition, our continued pursuit of new business opportunities has produced new sales of approximately $60 million of annualized revenue, of which we expect approximately $40 million to impact revenue in 2006. Included in this new business is an estimate for revenue related to subcontracts with companies that have been awarded Medicaid contracts. At this time, we are negotiating subcontract terms with these companies and they are negotiating contract terms with the states. "I am also pleased with the early results related to our new product offerings. Our ongoing marketing and sales effort is generating increasing marketplace interest and has resulted in numerous discussions with prospective customers. Overall, our new business pipeline remains robust and we are in various stages of pursuing these opportunities," Mr. Shulman concluded. Commenting on the Company's cash flow, Mark S. Demilio, chief financial officer, noted, "Again this quarter Magellan generated excellent cash flow and our unrestricted cash and investments now exceed our debt by over $77 million. This cash position affords a number of opportunities to further the Company's strategic objectives. We continue to carefully consider acquisitions designed to further strengthen our position in our core behavioral market or enhance our ability to offer new products, including disease management. We also are exploring alternative uses of cash such as repaying our senior notes or effecting a share repurchase." Headquartered in Farmington, Conn., Magellan Health Services (Nasdaq:MGLN) is the country's leading behavioral health disease management organization. Its customers include health plans, corporations and government agencies. The Company filed for chapter 11 protection on March 11, 2003 (Bankr. S.D.N.Y. Case No. 03-40515). The Court confirmed the Debtors' Third Amended Plan on Oct. 8, 2003, allowing the Company to emerge from bankruptcy protection on Jan. 5, 2004. * * * As reported in the Troubled Company Reporter on May 5, 2005, Standard & Poor's Ratings Services revised its outlook on Magellan Health Services Inc. to positive from stable. At the same time, Standard & Poor's affirmed its 'B+' counterparty credit rating on Magellan and its 'B+' issue credit ratings assigned to Magellan's $241 million 9.375% senior notes due November 2008 and its $185 million credit facility due August 2008. "The revised outlook reflects Magellan's better than expected profitability and cash flow since emergence from bankruptcy in January 2004 and the potential for the company to achieve sustained improvement in its underlying financial condition by year-end 2005," explained Standard & Poor's credit analyst Joseph Marinucci. MERIDIAN AUTOMOTIVE: Court Approves Lazard as Investment Banker --------------------------------------------------------------- As reported in the Troubled Company Reporter on June 14, 2005, Meridian Automotive Systems, Inc., and its debtor-affiliates sought authority from the U.S. Bankruptcy Court for the District of Delaware to employ Lazard Freres & Co. LLC as their investment banker, nunc pro tunc, to May 23, 2005. U.S. Trustee Objects Kelly Beaudin Stapleton, the United States Trustee for Region 3, objects to the proposed employment of Lazard on the ground that the indemnity rider to the firm's May 23, 2005 engagement letter indemnifies the firm from breach of contract claims. According to the U.S. Trustee, Lazard's indemnity for breach of contract claims runs counter to the holding of the United States Court of Appeals for the Third Circuit in "United Artists Theatre Co. v. Walton (In re United Artists Theatre Co.)," 315 F.3d 217, 234 (3d Cir. 2003), where the Court condemned a particular retention agreement for requiring indemnification of a firm for contractual disputes with debtors. Thus, the U.S. Trustee asks Judge Walrath of the U.S. Bankruptcy Court for the District of Delaware to deny Meridian Automotive Systems, Inc., and its debtor-affiliates' application. * * * Judge Walrath approves the Debtors' application. However, the indemnification provisions set forth in the indemnity rider to Lazard's Engagement Letter are modified to include these terms: (1) The Debtors are authorized to indemnify the firm for any claim in connection with its services, but not for any claim arising from the firm's postpetition performance of other services unless the Court approves those postpetition services and indemnification; and (2) The Debtors will have no obligation to indemnify or provide contribution or reimbursement to the firm for: (i) any claim or expense that is judicially determined to have arisen from the firm's bad faith, self- dealing, breach of fiduciary duty, bad faith, gross negligence or willful misconduct; (ii) a contractual dispute in which the Debtors allege the breach of the firm's contractual obligations unless the Court determines that indemnification would be permissible; or (iii) any claim or expense that is settled prior to a judicial determination, but determined by the Court to be a claim or expense for which the firm should not receive indemnity, contribution or reimbursement. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000). MERIDIAN AUTOMOTIVE: Gets Court Nod to Resell Equipment ------------------------------------------------------- On Sept. 9, 2003, Equipment Resale, Inc., brought an action against Meridian Automotive Systems, Inc., before the Superior Court in Allen County, Indiana, for breach of contract, defamation, and other causes of action. After a trial on the issues, Judge Daniel G. Heath entered judgment in Equipment Resale's favor. The Superior Court also ordered Equipment Resale to sell the equipment and apply any amounts recovered to the judgment entered against Meridian, all as provided under the terms of the original contract. The Superior Court issued a $68,256 judgment against Meridian on the breach of contract claim. Equipment Resale believes that the value of the equipment is between $8,000 to $15,000. The final value would be determined by the sale of the equipment. Equipment Resale asks Judge Walrath to modify the automatic stay so it may proceed "in rem" to sell the equipment pursuant to the Superior Court Order. Debtors Respond The Debtors do not object to a limited modification of the automatic stay solely to permit Equipment Resale, Inc., to sell equipment it removed from the Debtors' facility, provided that the sale is conducted in a commercially reasonable manner and the proceeds are applied to reduce any prepetition claim Equipment Resale might have against the Debtors. While the Debtors disagree with Equipment's Resale assertion that the Equipment no longer constitutes property of the Debtors' Chapter 11 estates, the Debtors, according to Robert S. Brady Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, have no use for the Equipment. The Debtors believe that a prompt sale of the Equipment, before it losses any additional value, is in the best interest of their estates. However, the Debtors note that Equipment Resale waited more than six months to attempt to sell the Equipment. Thus, the Debtors reserve their rights with respect to any prepetition claim held by Equipment Resale, including the right to object to any claim on grounds that Equipment Resale's delay ins selling the Equipment resulted in a further decline in its resale value. * * * Judge Walrath grants Equipment Resale's request. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000). MERRIL DEAN: List of Seven Largest Unsecured Creditors ------------------------------------------------------ Merril Clark and Tamara Tisdale Dean released a list of their seven Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Citicards $20,000 P.O. Box 6413 The Lakes, NV 88901 Bank One $14,000 United Airlines Visa P.O. Box 9001950 Louisville, KY 40190 Diners Club Card $9,400 P.O. Box 6003 The Lakes, NV 88901 American Express Centurion Bank $8,461 American Express $8,073 Chase Manhattan Bank USA, N.A. $1,400 Discover Card $1,400 Residing in Scottsdale, Arizona, Merril Clark & Tamara Tisdale Dean filed for chapter 11 protection on June 17, 2005 (Bankr. D. Ariz. Case No. 05-10985). Donald W. Powell, Esq., at Carmichael & Powell, P.C., represents the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets between $500,000 to $1 Million and estimated debts between $1 Million to $10 Million. MIRANT CORP: Gets Court Nod to Cap Cascade's Claim at $592,709 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas approved the stipulation inked between the Mirant Corporation Debtors and Cascade Natural Gas Corporation capping any of Cascade's prepetition claim at $592,709. Cascade Natural Gas Corporation used to provide natural gas to Mint Farm Generation, LLC -- a Mirant Corporation debtor- affiliate, in Mint Farm generation facility located in Longview, Washington. As of January 7, 2005, the Debtors have not assumed or rejected the Contract. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 70; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT: Wants to Recover Payments from Salomon, Citibank & CSFB --------------------------------------------------------------- Pursuant to Sections 502, 510, 541, 544 and 550 of the Bankruptcy Code and applicable non-bankruptcy law, Mirant Corp. and certain of its affiliates seek to: a. recover certain fraudulent conveyances of corporate assets, from: 1. Salomon Smith Barney, formerly known as Smith Barney, a division of Citigroup Global Markets, Inc.; 2. Citibank, N.A.; and 3. Credit Suisse First Boston; b. avoid certain obligations incurred to the Banks; and c. equitably invalidate or subordinate the Banks' claims to those of all other creditors in Mirant's bankruptcy cases. Mirant also seeks to hold the Banks liable for: -- aiding and abetting The Southern Company's breach of its fiduciary duties to Mirant at a time when Mirant was in the vicinity of insolvency or insolvent; -- aiding and abetting Southern's waste of Mirant's corporate assets; -- improvident lending; and -- unjust enrichment. Jeff P. Prostok, Esq., at Forshey & Prostok, LLP, in Fort Worth, Texas, relates that Mirant's causes of action against the Banks arise out of obligations incurred under a Purchase Agreement dated as of July 21, 1999, by and between the Banks and Southern Energy, Inc., predecessor to Mirant, in connection with the issuance of: * $200,000,000 7.40% Senior Notes due 2004; and * $500,000,000 7.90% Senior Notes due 2009. Bankers Trust Company, as Agent, and Mirant entered into a Fiscal Agency Agreement and related agreements in connection with the 144A Notes. According to the Fiscal Agency Agreement, the Notes were unsecured obligations of Mirant and ranked pari passu with all other unsecured and unsubordinated obligations of Mirant. On July 26, 1999, Southern caused Mirant to borrow $700 million through issuance of the 144A Notes. In exchange for substantially assisting Southern in issuance of the 144A Notes, the Banks earned substantial transaction fees. Even though Southern's public reports stated that its Advances to Mirant were corporate contributions, Southern caused itself to receive $289.5 million of the proceeds from the 144A Notes, $192.5 million of which "reduced" the Advances and $97 million of which Southern deemed to be "interest" on the Advances. Mr. Prostok notes that even though the Banks entered into the Purchase Agreement with Mirant, they knew or should have known that a substantial portion of the proceeds from the 144A Notes would go to benefit Southern. The Banks received transaction transfers from Mirant in connection with the Purchase Agreement. According to Mr. Prostok, the Banks had personal knowledge of the issuance of the 144A Notes, which was a single integrated scheme. Furthermore, the Banks were in possession of documentary and financial evidence as part of their due diligence for the transactions, as well as the economic and financial analyses they produced or that were produced on their behalf. Additionally, Mr. Prostok continues, the Bank Defendants also knew or should have known that the intent of the transactions was, in part, to serve as a vehicle for Southern to upstream cash from the Banks through Mirant. Southern required additional funding to continue its expansion through the transactions, but could not record additional long-term debt on its books without a negative effect on its investment credit rating. Each of the transactions and the various transaction transfers may be and should be collapsed and treated a single integrated transaction, Mr. Prostok asserts. The overall intent of Southern and the Banks in each transaction was to use debt incurred by Mirant, the proceeds from which, in substantial part, was given to Southern, Mr. Prostok relates. The improper "payments" to Southern were not funds for Mirant's corporate business purposes but, instead, improper payments to a Mirant insider while Mirant was insolvent or which caused Mirant to become insolvent, Mr. Prostok contends. "In sum, the Proceeds upstreamed to Southern had no legitimate business purpose to Mirant or any Mirant Affiliate, but merely improperly infused Southern with cash to which Southern had no lawful or legitimate right or entitlement." As a result of the Transactions, Mirant's general unsecured creditors were harmed, Mr. Prostok contends. "Even though the [Banks] entered into agreements with Mirant, [they] acted in concert with Southern in structuring the Transactions to benefit Southern. The [Banks] knew that a substantial portion of the proceeds from the Transactions would flow through Mirant directly to Southern. The [Banks] knew or should have known that Southern's objective in causing Mirant to enter into [the] Transaction[s] would be that a substantial portion of the amounts 'borrowed' by Mirant would pass directly to Southern." According to Mr. Prostok, certain of the proceeds from the transactions went directly to Southern either under the guise of "repaying" note obligations which Southern previously had publicly reported to be capital contributions to Mirant, or to make improper cash dividends to Southern. "The [Banks] knew or should have known that, while Proceeds from the Obligations would go directly to Southern, the Obligations arising from the Transactions would and, in fact, did remain with Mirant and the direct and indirect subsidiaries of Mirant." Mr. Prostok contends that the Banks knew or should have known that the transfers of proceeds from Mirant to Southern would and, in fact, did serve to provide improper cash distributions to Southern. "Indeed, the [Banks] funded the Transactions disregarding their contractual requirements with Mirant and in direct violation of their obligations to Mirant." "In exchange for helping Southern accomplish its scheme to infuse itself with billions in cash at the expense of Mirant, the Bank Defendants not only received repayment of the Obligations, but also earned millions of dollars in fees, interest and expenses for these Transactions. Further, the Bank Defendants knew or should have known that the Repayment Transfers and the Transaction Fees paid to the Bank Defendants provided no benefit to Mirant or Mirant affiliates to the extent the Proceeds were distributed to Southern." Mirant therefore asks the Court to: a. permit it to avoid the repayment transfers and the payment of the transaction fees conveyed and the obligations that it incurred to the detriment of its creditors; and b. permit it to recover the transaction transfers from Banks. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 71; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Committee Wants $5M of Annuity Payments Recovered -------------------------------------------------------------- In December 2002 and early 2003, Mirant Corporation and certain of its affiliates purchased $17 million of individual annuity contracts for their 25 active and non-active directors, officers and employees. The Official Committee of Unsecured Creditors of Mirant Corporation, et al., on behalf of the estates of Mirant Corporation, et al., seeks to avoid over $5 million in preferences and fraudulent conveyances made in connection with the purchase of annuities, from: 1. Thomas J. Allen, III; 2. Dianne Davenport; 3. John Edward Dorsett, Jr.; 4. David T. Gallaspy; 5. George P. Henefeld; 6. Richard J. Koch; 7. Frederick D. Kuester; 8. John J. Robinson; 9. Richard F. Owen; and 10. James Arthur Ward. According to Jason S. Brookner, Esq., at Andrews Kurth LLP, in Dallas, Texas, the purchase of the annuities is a fraudulent transfer under Section 548 of the Bankruptcy Code. Mirant's purchase of the annuities, Mr. Brookner alleges, was made with actual intent to hinder, delay or defraud an entity to which Mirant was, after the date that the transfer was made, indebted. Mr. Brookner points out that the purchase of the annuities constituted a preference with respect to each former officers, directors or employees. The Mirant Committee, pursuant to Section 550 of the Bankruptcy Code, contends it is entitled to recover all amounts paid by the Debtors to or for the benefit of those individuals in connection with the annuities. The Mirant Committee asks the Court for a judgment against the Defendants: (A) in an amount equal to all amounts paid by the Debtors to or for the benefit of those individuals in connection with the Annuities, (B) prejudgment interest, and (C) attorneys' fees. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 71; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATURADE INC: Inks Acquisition Pacts & Completes Financial Reorg. ----------------------------------------------------------------- Naturade, Inc. (OTCBB:NRDC) agreed to acquire two leading nutraceutical companies and completed its financial reorganization. Bill Stewart, Naturade CEO, and the existing Naturade management team has assumed full responsibility for the sales and marketing of The Ageless Foundation, Inc., brands including Ultra-Max HGH anti-aging products, and Symbiotics, Inc. New Life Colostrum products sold through retailer, direct, international and professional channels. Acquisitions The Company agreed to purchase certain assets of Ageless, wherein the Company will: (a) assume accounts payable subject to a final working capital calculation; (b) assume an obligation to an employee of Ageless in the amount of $600,000; and (c) issue a promissory note in the amount of $700,000 subject to working capital adjustments. The Company also agreed to purchase certain assets of Symbiotics, wherein the Company will: (a) assume accounts payable subject to a final working capital calculation and the obligations of certain contracts; (b) pay all outstanding amounts owed under certain credit facilities; (c) issue a promissory note in the amount of $2 million less the amount necessary to repay the credit facilities and subject to working capital adjustments; (d) pay $60,000 in cash in fifteen days from closing date and an additional $60,000 thereafter until the note is paid in full; and (e) pay 10% of the amount of the increase in contribution margin over a baseline amount of $2 million on the sales of products for each 12 month period during a three year period from closing date. The Company agreed to enter into consulting agreements with certain key employees of Symbiotics and Ageless. Naomi Balcombe, President and Founder of Ageless, and Douglas Wyatt, President and Founder of Symbiotics will continue with Naturade to facilitate the continued quality and success of these brands. Reorganization Key elements of the Company's reorganization are: -- Quincy Investments Corp. negotiated, and arranged the financing for, the acquisition by the Company of selected assets of The Ageless Foundation, Inc., Symco, Inc. and Symbiotics, Inc. collectively; -- Quincy will remain a co-obligor on, and a principal of Quincy will guarantee, the payment of a portion of the purchase price of each such acquisition; -- The Company established the rights of a new Series C Convertible Preferred Stock; -- The Company issued to Quincy: (i) 30,972,345 shares of Common Stock, (ii) warrants to purchase 14,000,000 shares of Common Stock, and (iii) 4,200,000 shares of Series C; -- Health Holdings & Botanicals, LLC surrendered the 41,054,267 shares of Common Stock held by it for conversion into: (i) 12,600,000 shares of Series C and (ii) a warrant to purchase 10,000,000 shares of Common Stock; -- Westgate Equity Partners, L.P. surrendered the 13,540,723 shares of Series B Convertible Preferred Stock held by it, including any accrued and unpaid dividends, for conversion into 4,200,000 shares of Series C; -- HHB, Bill D. Stewart and David A. Weil extended the term of the Secured Promissory Notes issued to them pursuant to that certain Loan Agreement dated April 23, 2003, from Dec. 31, 2005, to December 31, 2006; -- The Company granted to HHB, Westgate and Quincy certain registration rights with respect to the Common Stock issuable upon conversion of the Series C or exercise of the HHB Warrant or the Quincy Warrants; and -- Quincy granted to HHB and Westgate certain co-sale rights. As a result of the reorganization, Quincy owns 30,972,345 shares of Common Stock and 4,200,000 shares of Series C, or 78.9% of the voting power of the Common Stock, 20.0% of the voting power of the Series C, and 58.4% of the combined voting power of the Common Stock and the Series C. "We expect to quickly integrate the acquired brands into Naturade, realizing a significant increase in contribution margin," said Bill Stewart, Naturade CEO. "We see significant potential to expand Ageless and Symbiotics products from the approximately 2,000 health food stores where they currently hold distribution into the much broader network of over 20,000 outlets where Naturade products are currently authorized." Peter H. Pocklington, the principal stockholder of Quincy and Naturade said, "My goal is to make Naturade a much larger company in time through the acquisition of consumer brands sold in the natural channels in which the company operates. I decided to focus on this industry because of my personal belief in the potential of natural solutions and because there are so many small companies who would be able to prosper as part of a larger organization that could provide the financial support they need." Mr. Pocklington added, "We've already started the search for the next group of acquisitions that we hope to accomplish. I have great confidence in Bill Stewart and the talented management team that he has assembled to be able to quickly integrate these businesses as part of my vision of Naturade as a powerhouse of natural brands." Financing In conjunction with the reorganization, the Company entered into a $4,000,000 convertible financing facility with Laurus Master Fund, Ltd. replacing its current credit facility and providing additional working capital for operations and future acquisitions. Naturade Inc. -- http://www.naturade.com/-- is a branded natural products marketing company focused on growth through innovative, scientifically supported products designed to nourish the health and well being of consumers. The Company primarily competes in the overall market for natural, nutritional supplements. Going Concern Doubt At December 31, 2004, Naturade Inc. had a $22,023,470 accumulated deficit, a $1,859,320 net working capital deficit and a $3,031,547 stockholders' capital deficiency. The Company anticipates that it will incur net losses for the foreseeable future and will need access to additional financing for working capital and to expand its business. If unsuccessful in those efforts, Naturade could be forced to cease operations and investors in Naturade's common Stock could lose their entire investment. Based on this situation, the Company's independent registered public accounting firm qualified their opinion on the Company's December 31, 2004, financial statements by including an explanatory paragraph in which they expressed substantial doubt about the Company's ability to continue as a going concern. At Mar. 31, 2005, Naturade Inc.'s balance sheet showed a $3,486,739 stockholders' deficit, compared to a $3,031,548 deficit at Dec. 31, 2004. NOMURA CBO: Credit Enhancement Prompts S&P to Upgrade Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on the class A-2 notes issued by Nomura CBO 1997-1 Ltd., a high-yield arbitrage CBO, and removed it from CreditWatch with positive implications, where it was placed May 19, 2005. The upgrade reflects factors that have positively affected the credit enhancement available to support the class A-2 notes since the rating on the notes was raised on Feb. 1, 2005. The primary factor was an increase in the level of overcollateralization available to support the A-2 notes. Since the Feb. 1, 2005 upgrade, the transaction has paid down $30.745 million (approximately 33.10%) to the class A-2 notes, thereby increasing the class A-2 overcollateralization ratio test. Rating Raised And Removed From Creditwatch Positive Nomura CBO 1997-1 Ltd. Rating ------ Class To From ----- -- ---- A-2 BB- B+/Watch Pos Transaction Information Issuer: Nomura CBO 1997-1 Ltd. Co-issuer: Nomura CBO 1997-1 Corp. Collateral manager: Nomura Corporate Research and Management Underwriter: Bear Stearns Cos. Inc. Trustee: JPMorganChase Bank N.A. Transaction type: Arbitrage corporate high-yield CBO Tranche Initial Prior Current Information Report Upgrade Action ----------- ------- ------- ------- Date (MM/YYYY) 6/1997 2/2005 7/2005 Class A-2 note rating A- B+ BB- Class A-2 OC ratio (%) 120 122.23 130.36 Class A-2 OC ratio min. (%) 114 150 150 Class A-2 note bal. (Mil. $) 291.50 92.879 62.133 Portfolio Benchmarks Current -------------------- ------- S&P Wtd. Avg. Rtg. (excl. defaulted) B S&P Default Measure (excl. defaulted) (%) 5.47 S&P Variability Measure (excl. defaulted) (%) 3.83 S&P Correlation Measure (excl. defaulted) 1.07 Oblig. Rtd. 'BBB-' and above (%) 7.12 Oblig. Rtd. 'BB-' and above (%) 33.77 Oblig. Rtd. 'B-' and above (%) 62.53 Oblig. Rtd. in 'CCC' range (%) 11.38 Oblig. Rtd. 'CC', 'SD' or 'D' (%) 26.09 S&P Rated Current OC (ROC) Rating Action --------- ------------- Class A-2 notes (%) 107.40 ('BB-') For information on Standard & Poor's CDO Portfolio Benchmarks and Rated Overcollateralization (ROC) Statistic, see "ROC Report July 2005," published on RatingsDirect, Standard & Poor's Web-based credit analysis system, and on the Standard & Poor's Web site at http://www.standardandpoors.com/. Go to "Fixed Income," under "Browse by Sector" choose "Structured Finance," and under Commentary & News click on "More" and scroll down to the desired articles. OAKWOOD PACKAGING: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Oakwood Packaging Company, LLC 400 Technology Drive Coal Center, Pennsylvania 15423 Bankruptcy Case No.: 05-29818 Chapter 11 Petition Date: July 29, 2005 Court: Western District of Pennsylvania (Pittsburgh) Debtor's Counsel: John M. Steiner, Esq. Leech Tishman Fuscaldo & Lampl, LLC Citizens Bank Building, 30th Floor 525 William Penn Place Pittsburgh, Pennsylvania 15219 Tel: (412) 261-1600 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Ohio Realty Advisors $76,757 4199 Kinross Lakes Parkway, Suite 275 Richfield, OH 44286 Combined Containerboard, Inc. $70,129 7741 School Road Cincinnati, OH 45249 International Paper $54,817 1851 Tamarack Road Newark, OH 43055 Weyerhaeuser $53,039 Viking Paper Corporation $39,866 Georgia Pacific $30,230 Precision Fab Products $27,197 Halliday Lumber $21,503 Kline, Kepple & Koryak $17,620 Sunoco $16,588 Preferred Staffing $16,415 Pratt Industries $15,797 Dynamic Dies $11,468 Penske Truck Leasing $9,136 Allstrap Steel & Poly $7,739 NAL Company $7,583 Jet Corr $7,248 Willis Insurance Agency $6,304 Breckenridge Paper $5,824 ODJFS $5,429 OLD DIXIE: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Old Dixie Produce & Packaging, Inc. 5801 G. Street New Orleans, Louisiana 70123 Bankruptcy Case No.: 05-16397 Type of Business: The Debtor is an affiliate of Dixie Produce & Packaging, LLC, which filed for chapter 11 protection on Apr. 27, 2005 (Bankr. E.D. La. Case No. 05-13410) with Honorable Jerry A. Brown presiding. Dixie Produce & Packaging, LLC's chapter 11 filing was reported in the Troubled Company Reporter on April 28, 2005. Chapter 11 Petition Date: July 29, 2005 Court: Eastern District of Louisiana (New Orleans) Judge: Jerry A. Brown Debtor's Counsel: William H. Patrick, III, Esq. Heller Draper Hayden Patrick & Horn 650 Poydras Street, Suite 2500 New Orleans, Louisiana 70130 Tel: (504) 568-1888 Fax: (504) 522-0949 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ East Coast Brokers $840,522 P.O. Box 2636 Plant City, FL 33564 Carolina Tomato $703,731 P.O. Box 13581 Colombia, SC 29201 Pacific International Marketing $637,643 P.O. Box 3737 Salinas, CA 93912 Village Farms $377,192 P.O. Box 18523 Newark, NY 07191 Ryder Transportation Srv $235,803 Rocky Mtn Brokerage Co. $230,826 Temple-Inland $191,043 Seminole Produce Dist $174,596 Russet Potato Exchange $135,691 Burlington Northern & Sante Fe Railroad Co $118,762 West Coast Tomato Inc., FL $104,448 Harry Lee Sheriff & Tax Collector $93,110 Gonzalez Packing Co. $81,327 Charles Jones Produce LLC $73,957 Debruyn Produce Co. $71,572 MCC Electric, LLC $66,996 Northeast Packaging Co. $66,817 Meyer Tomato LLC $66,105 Keith Connell Inc. $65,610 Entergy $64,936 ON TOP: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------- Lead Debtor: On Top Communications, LLC 4601 Presidents Drive, Suite 150 Lanham, Maryland 20706 Bankruptcy Case No.: 05-27037 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- On Top Communications of Louisiana, LLC 05-27040 On Top Communications of Georgia, LLC 05-27042 On Top Communications of Mississippi, LLC 05-27043 On Top Communications of Virginia, LLC 05-27044 On Top Communications of Louisiana II, LLC 05-27047 Type of Business: The Debtor and its affiliates acquire, own and operate FM radio stations located in the Southeastern United States. Chapter 11 Petition Date: July 29, 2005 Court: District of Maryland (Greenbelt) Debtors' Counsel: Thomas L. Lackey, Esq. 4201 Northview Drive, Suite 407 Bowie, Maryland 20716 Tel: (301) 390-6400 Estimated Assets Estimated Debts ---------------- --------------- On Top Communications, LLC $10 Million to $10 Million to $50 Million $50 Million On Top Communications of $10 Million to $10 Million to Louisiana, LLC $50 Million $50 Million On Top Communications of $10 Million to $10 Million to Georgia, LLC $50 Million $50 Million On Top Communications of $10 Million to $10 Million to Mississippi, LLC $50 Million $50 Million On Top Communications of $10 Million to $10 Million to Virginia, LLC $50 Million $50 Million On Top Communications of $10 Million to $10 Million to Louisiana II, LLC $50 Million $50 Million List of 20 Largest Unsecured Creditors of: --- On Top Communications, LLC --- On Top Communications of Louisiana, LLC --- On Top Communications of Georgia, LLC --- On Top Communications of Mississippi, LLC --- On Top Communications of Virginia, LLC --- On Top Communications of Louisiana II, LLC Entity Nature of Claim Claim Amount ------ --------------- ------------ Opportunity Capital Value of security: $5,210,681 2201 Walnut Ave., Suite 210 $18,200,000 Fremont, CA 94538 MMG Ventures Value of security: $4,528,640 826 East Baltimore St., $18,200,000 Baltimore, MD 21202-4702 Virginia Faith Broadcasting Value of security: $2,281,793 645 Chruch St., Suite 400 $18,200,000 Norfolk, VA 23510 Opportunity Capital Corp. Value of security: $1,500,304 SBIC $18,200,000 2201 Walnut Ave., Suite 210 Fremont, CA 94538 Broadcast Capital Fund, Inc. Value of security: $422,938 1001 Connecticut Avenue, $18,200,000 Northwest, Suite 705 Washington, DC 20036 Steve Hegwood Value of security: $407,230 4922 Rees Lane $18,200,000 Bowie, MD 20720 Internal Revenue Service Federal withholding $350,000 11601 Roosevelt Boulevard, tax Drop Point 869 Philadelphia, PA 19154 Leonard Rayford Value of security: $252,437 1436 North Carolina Ave., $18,200,000 Northeast Washington, DC 20002 Compendia Songs Lawsuit $213,950 Community Development Value of security: $140,964 Ventures $18,200,000 Thomas Kennedy Lawsuit $103,000 Marketron $77,228 Arbitron Lawsuit $75,201 Flinn Broadcasting Lawsuit $74,144 Flinn Broadcasting $62,372 Leventhal, Senter & Lerman $48,000 Broadcast Music Lawsuit $46,894 Winner Broadcasting $39,424 Citidel Broadcasting Company $38,966 United Healthcare of $36,133 Mid-Atlan. ONE TO ONE: Committee Hires Deloitte Financial as Advisor --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, gave the Official Committee of Unsecured Creditors of One to One Interactive, LLC, permission to employ Deloitte Financial Advisory Services LLP as its Financial Advisory Services Provider, nunc pro tunc to May 29, 2005. Deloitte Financial provides comprehensive financial, economic and strategic advice for clients in four separate but integrated transaction-oriented service lines: Forensic & Dispute Services; Reorganization Services; Valuation and Corporate Finance. The functional expertise, deep industry knowledge and unique skill sets of its 800 professionals across the U.S., combined with the unparalleled resources of the Deloitte & Touche USA LLP network, enable the Firm to expertly address its clients' complex business problems. In this engagement, Deloitte Financial will: a) assist the Committee in Connection with its assessment of the Debtor's cash and liquidity requirements, as well as the Debtor's financing requirements; b) assist the Committee in connection with its monitoring of the Debtor's financial and operating performance, including the Debtor's current operations, monthly operating reports and other financial and operating analyses or periodic reports as provided by management or Debtor's financial advisors; c) assist the Committee in connection with its evaluation of the Debtor's key employee retention plans, compensation and benefit plans or other incentive plans; d) assist the Committee in connection with its evaluation of the Debtor's business, operational and financial plans, both short-term and long-term including with respect to actual results versus forecast, capital expenditure requirements, and cost reduction opportunities; e) assist the Committee in connection with its evaluation of the Debtor's statements of financial affairs and supporting schedules, executory contracts and claims; f) assist the Committee in connection with its evaluation of the Debtor's operating structure, business configuration and strategic alternatives; g) assist the Committee in connection with its evaluation of restructuring-related alternatives; h) assist the Committee in connection with the Committee's restructuring or reorganization-related negotiations including analysis, preparation or evaluation of any plans of reorganization proposed by the Debtor, the Committee or a third party; i) assist the committee in connection with its analysis of issues related to claims filed against the Debtor including reclamation issues, administrative, priority or unsecured claims, case litigation and contract rejection damages; j) assist the Committee on its evaluation of auction procedures or sale transactions that may take place, including with respect to the Committee's evaluation of bids, establishment of bid procedures, identification of additional potentially interested parties for the Debtor's assets, negotiation of Asset Purchase Agreement provisions including working capital adjustments, valuation issues and other related matters; k) attend and participate in hearings before the Bankruptcy Court; l) assist the Committee in its analysis of the books and records of the Debtor in connection with potential recovery of funds to the estate from voidable transactions including related party transactions, preference payments and unenforceable claims; and m) provide other related services as may be requested in writing by the Committee and as agreed to by the Firm. Deloitte Financial's applicable hourly rates are: Designation Hourly Rates ----------- ------------ Partner, Principal and Director $600 - $750 Senior Manager $500 - $580 Manager $400 - $500 Senior Consultant $250 - $375 Staff $180 - $275 The Firm has agreed to bill the Debtor at the lesser amount of 70% of its applicable hourly rates or a blended rate of $310 per hour for the professional s and support staff involved. Sheila T. Smith, a principal at Deloitte Financial, assures the Court that the Firm does not hold any interest adverse to the Debtor of the Committee and that it is a "disinterested person" as that term is defined in section 101(14) of the Bankruptcy Code. Headquartered in Boston, Massachusetts, One to One Interactive, LLC -- http://www.onetooneinteractive.com/-- provides Internet marketing services and offers marketing, creative and technology services to companies in industries like financial services, life sciences, media, telecommunications and technology. The Debtor filed for chapter 11 protection on March 18, 2005 (Bankr. D. Mass. Case No. 05-12083). A. Davis Whitesell, Esq., at Cohn & Whitesell, LLP, represents the Debtor in its restructuring process. When the Debtor filed for protection from its creditors, it estimated assets and debts from $1 million to $10 million. ONE TO ONE: Hires Triax Capital as Investment Banker ---------------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, gave One to One Interactive, LLC, permission to employ Triax Capital Advisors, LLC, as its Investment Banker. Triax Capital will provide financial and restructuring advisory services on behalf of the Debtor. These services include: a) analyzing, assisting and developing a financial restructuring plan; b) assisting the Debtor in developing and negotiating a plan of reorganization with its creditors; and c) selling the Debtor's assets or raising additional debt or equity capital for the Debtor. In this engagement, Triax Capital will receive as compensation: a) a monthly fee of $20,000; b) a transaction fee payable upon consummation of a sale of the Company's business or assets, or other restructuring transaction, equal to 10% of the aggregate gross proceeds above $1 million generated from the transaction. Triax will receive no transaction fees for gross proceeds less than $1 million. Joseph E. Sarachek, a managing partner at Triax Capital, assures the Court that he and the other members of his Firm are "disinterested persons" as the term is defined in section 101(14) of the Bankruptcy Court. Triax Capital is a specialty investment banking firm with substantial expertise in the areas of Financial Restructuring, Operational Restructuring, Forensic Accounting and Litigation Support. The Firm provides advisory services to parties involved with highly leveraged companies and special situation investments. A copy of Triax Capital's engagement agreement is available for a fee at: http://www.researcharchives.com/bin/download?id=050801033041 Headquartered in Boston, Massachusetts, One to One Interactive, LLC -- http://www.onetooneinteractive.com/-- provides Internet marketing services and offers marketing, creative and technology services to companies in industries like financial services, life sciences, media, telecommunications and technology. The Debtor filed for chapter 11 protection on March 18, 2005 (Bankr. D. Mass. Case No. 05-12083). A. Davis Whitesell, Esq., at Cohn & Whitesell, LLP, represents the Debtor in its restructuring process. When the Debtor filed for protection from its creditors, it estimated assets and debts from $1 million to $10 million. ONE TO ONE: Exclusive Plan Filing Period Extended Until Sept. 30 ---------------------------------------------------------------- The Honorable Joan N. Feeney of the U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, extended until Sept. 30, 2005, the time within which One to One Interactive, LLC, has the exclusive right to file a plan of reorganization and disclosure statement. The Debtor's exclusive period to solicit plan acceptances is extended through November 29, 2005. The Debtor says it needs the exclusivity extensions so it can continue efforts to sell its business without the potential distraction of a third-party plan that might otherwise interfere with the sale process and create unnecessary costs to the estate. The Debtor expects to make more meaningful progress in the proposed sale with the retention of Triax Capital Advisors, LLC, as its investment banker. With Triax Capital's assistance, the Debtor anticipates attracting a stalking horse bid for its business that will be subjected to higher or better competing offers through a court-approved sale process. A focused sales effort, the Debtor says, will permit plan formulation and negotiations to occur at a time when the parameters of an acceptable, consensual plan are more likely to be in focus. Headquartered in Boston, Massachusetts, One to One Interactive, LLC -- http://www.onetooneinteractive.com/-- provides Internet marketing services and offers marketing, creative and technology services to companies in industries like financial services, life sciences, media, telecommunications and technology. The Debtor filed for chapter 11 protection on March 18, 2005 (Bankr. D. Mass. Case No. 05-12083). A. Davis Whitesell, Esq., at Cohn & Whitesell, LLP, represents the Debtor in its restructuring process. When the Debtor filed for protection from its creditors, it estimated assets and debts from $1 million to $10 million. OWENS CORNING: Gets Court Nod to Employ Sidley Austin as Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Owens Corning and its debtor-affiliates permission to employ Sidley Austin Brown & Wood, LLP, as their general reorganization and bankruptcy co-counsel pursuant to Section 327(a) of the Bankruptcy Code, nunc pro tunc to April 28, 2005. According to Owens Corning's Senior Vice President, General Counsel and Secretary, Stephen K. Krull, Sidley Austin has extensive familiarity with the issues that the Debtors face in asbestos-related cases. Sidley Austin also has extensive corporate and securities, tax, finance and regulatory practices. Mr. Krull reminded the Court that the Debtors initially wanted to employ Saul Ewing LLP and Skadden, Arps, Slate, Meagher & Flom, LLP as their general bankruptcy co-counsel. However, the United States Trustee objected to the Debtors' request to employ Skadden Arps. The U.S. Trustee believed that Skadden Arps did not meet the requirements under Section 327(a). So since the Petition Date, Saul Ewing acted as the Debtors' sole general bankruptcy counsel. Skadden Arps was retained as special counsel. Skadden's employment was limited to an enumerated list of non-bankruptcy-related services, principally corporate and tax-related matters. Mr. Krull noted that in light of the substantial complexities of the Debtors' cases and the interwoven nature of bankruptcy, corporate, tax, securities and other substantive issues -- particularly in the context of plan formulation and confirmation, the agreed restrictions on the scope of Skadden's services has impaired the ability of the Company, Saul Ewing and Skadden to function in an optimal manner. Sidley's hourly rates for U.S.-based professionals are subject to periodic adjustment. The current hourly rates are: Professional Hourly Rate ------------ ----------- Partners & Senior Counsel $425 - $800 Associates $180 - $465 Para-professionals $80 - $200 Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the Debtors in their restructuring efforts. At Sept. 30, 2004, the Company's balance sheet shows $7.5 billion in assets and a $4.2 billion stockholders' deficit. The company reported $132 million of net income in the nine-month period ending Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No. 112; Bankruptcy Creditors' Service, Inc., 215/945-7000) PACIFIC FINANCIAL: Case Summary & 3 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Pacific Financial Leasing 17371 Mount Wynne Circle Fountain Valley, California 92708 Bankruptcy Case No.: 05-15216 Chapter 11 Petition Date: July 28,2005 Court: Central District of California (Santa Ana) Judge: James N. Barr Debtor's Counsel: Marc A. Zimmerman, Esq. 13102 Marcy Ranch Road Santa Ana, California 92705 Tel: (714) 669-5780 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 3 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Charles F. McGarry $35,000 17371 Mount Wynne Circle Fountain Valley, CA 92708 Robert L. Walker $15,000 23925 Copenhagen Street Mission Viejo, CA 92691 Alan Emmons $500 12529 Springsnow Circle Cerritos, CA 90703 PARK PLACE: Fitch Places Low-B Rating on Two Certificate Classes ---------------------------------------------------------------- Park Place Securities Inc.'s asset-backed pass-through certificates, series 2005-WCW3, are rated by Fitch Ratings: -- $698.61 million privately offered classes A-1A and A-1B 'AAA'; -- $484.89 million publicly offered classes A-2A, A-2B, and A-2C 'AAA'; -- $68.25 million class M-1 'AA+'; -- $38.25 million class M-2 'AA+'; -- $25.50 million class M-3 'AA'; -- $23.25 million class M-4 'AA-'; -- $24.75 million class M-5 'A+'; -- $22.50 million class M-6 'A'; -- $21.75 million class M-7 'A-'; -- $16.50 million class M-8 'BBB+'; -- $12.00 million class M-9 'BBB'; -- $9.00 million class M-10 'BBB'; -- $15.00 million privately offered class M-11 'BB+'; -- $11.25 million privately offered class M-12 'BB+'. Credit enhancement for the 'AAA' rated class A certificates reflects the 21.10% credit enhancement provided by classes M-1 through M-12 certificates, monthly excess interest, and initial overcollateralization of 1.90%. Credit enhancement for the 'AA+' rated class M-1 certificates reflects the 16.55% credit enhancement provided by classes M-2 through M-12 certificates, monthly excess interest, and initial OC. Credit enhancement for the 'AA+' rated class M-2 certificates reflects the 14.00% credit enhancement provided by classes M-3 through M-12 certificates, monthly excess interest, and initial OC. Credit enhancement for the 'AA' rated class M-3 certificates reflects the 12.30% credit enhancement provided by classes M-4 through M-12 certificates, monthly excess interest, and initial OC. Credit enhancement for the 'AA-' rated class M-4 certificates reflects the 10.75% credit enhancement provided by classes M-5 through M-12 certificates, monthly excess interest, and initial OC. Credit enhancement for the 'A+' rated class M-5 certificates reflects the 9.10% credit enhancement provided by classes M-6 through M-12 certificates, monthly excess interest, and initial OC. Credit enhancement for the 'A' rated class M-6 certificates reflects 7.60% credit enhancement provided by classes M-7 through M-12 certificates, monthly excess interest, and initial OC. Credit enhancement for the 'A-' rated class M-7 certificates reflects the 6.15% credit enhancement provided by classes M-8 through M-12 certificates, monthly excess interest, and initial OC. Credit enhancement for the 'BBB+' rated class M-8 certificates reflects the 5.05% credit enhancement provided by classes M-9 through M-12 certificates, monthly excess interest, and initial OC. Credit enhancement for the 'BBB' rated class M-9 certificates reflects the 4.25% credit enhancement provided by classes M-10 through M-12 certificates, monthly excess interest, and initial OC. Credit enhancement for the 'BBB' rated class M-10 certificates reflects the 3.65% credit enhancement provided by the class M-11 and M-12 certificates, monthly excess interest, and initial OC. Credit enhancement for the non-offered 'BB+' class M-11 certificates reflects the 2.65% credit enhancement provided by class M-12 certificates, monthly excess interest, and initial OC. Credit enhancement for the non-offered 'BB+' class M-12 certificates reflects monthly excess interest and initial OC. In addition, the ratings reflect the integrity of the transaction's legal structure as well as the capabilities of Countrywide Home Loans Servicing LP as master servicer. Wells Fargo Bank, N.A. will act as trustee. As of the cut-off date, July 1, 2005, the group I mortgage loans have an aggregate balance of $885,436,393. The average principal balance of the mortgage loans is approximately $151,954. The weighted average loan rate is approximately 7.575% . The weighted average remaining term to maturity is 356 months. The weighted average original loan-to-value ratio is 80.55%, and the weighted average Fair, Isaac & Co. score is 601. T he properties are primarily located in California (14.70%), Florida (14.37%), Illinois (8.41%), Arizona (7.65%), Michigan (5.10%), and Texas (5.08%). All other states represent less than 5% of the group I pool balance as of the cut-off date. As of the cut-off date, the group II mortgage loans have an aggregate balance of $614,564,337. The average principal balance of the mortgage loans is approximately $236,280. The weighted average loan rate is approximately 7.471%. The WAM is 357 months. The weighted average OLTV ratio is 82.76%, and the weighted average FICO score is 617. The properties are primarily located in California (27.88%), Florida (15.40%), New York (10.15%), and Illinois (8.85%). All other states represent less than 5% of the group II pool balance as of the cut-off date. The loans were originated or acquired by Argent Mortgage Company, LLC, an affiliate of Ameriquest Mortgage Company, a specialty finance company engaged in the business of originating, purchasing, and selling retail and wholesale subprime mortgage loans. PETROHAWK ENERGY: Moody's Junks $130 Million Sr. Unsecured Notes ---------------------------------------------------------------- Moody's Investors Service assigned a first time Corporate Family Rating (formerly the senior implied rating) of B3 to Petrohawk Energy Corp., assigned a Caa1 rating to the senior unsecured notes assumed by Petrohawk Energy Corp. following its acquisition of Mission Resources, and a Speculative Grade Liquidity rating of SGL-3. At the same time, Moody's is upgrading Mission's Corporate Family Rating to B3 from Caa1 and the senior notes rating to Caa1 from Caa2, with a stable outlook, completing the ratings review. Since Mission will no longer remain a legal entity as Petrohawk will become the obligor of the notes, Moody's will withdraw its ratings on Mission. The new ratings for Petrohawk reflect: * the very high pro forma leverage on the proven developed reserve base; * the company's acquisitive nature which may lead to sustained elevated debt levels; * the relatively small scale of reserves which results in concentrations within the asset portfolio; * the need to demonstrate that it can successfully develop its existing core properties at competitive costs given the limited history of ownership of the reserve base and show sustained organic production growth; * a significant proportion of its reserve and production base in shorter-lived properties; * a rising reserve replacement cost driven by nearly $1.0 billion in acquisitions completed at upcycle prices; and * a lower than average percent of operated properties that could limit financial flexibility. The ratings are supported by: * a total reserve and production base that is fairly durable and contains basin diversification; * a supportive commodity price outlook; * a seasoned management team that has built and sold other exploration and production companies in the past; and * the combined property base of the two companies contains regional overlap, thus creating greater basin intensity in some cases and reduces overall integration risk. The SGL-3 ratings is reflective of: * the current production and commodity price outlooks over the next twelve months which should provide sufficient cash flow cover of planned capex, interest expense and working capital needs; * the expectation that availability under the revolver will be improved with additional funding under the second lien term loan; and * the projected covenant cushion under the credit agreement, ensuring availability over the ensuing four quarters. However, the rating is tempered by the exposure of the revolver's borrowing base to commodity price declines; the expectation that the company will spend essentially all of its cash flow and the limited alternate sources of liquidity. The stable outlook assumes that the company will reduce debt and leverage on the PD reserve base to within $8.00/boe by year-end 2005. While the company is expected to spend the majority of its cash flow, material debt reduction will likely come in the form of asset divestitures as management continues to shape its property portfolio. The stable outlook also considers continued supportive commodity prices; that material acquisitions are largely funded with equity; and that the company funds its capital spending program with internal cash flow as it focuses on developing the properties it acquired less than a year ago. However, the outlook and/or ratings could face downward pressure if: * leverage is not reduced to within $7.00/boe of PD reserves (assuming commodity prices remain supportive) over the next twelve months; * if the company reports declining sequential quarterly production trends; or * if the company does not replace production with a balance of PD and PUD reserves at competitive, sustainable costs. A positive outlook would be considered if: * Petrohawk reduces and sustains debt/PD reserves to within $6.00/boe; * if the company demonstrates that it's mounting sustainable quarterly production gains; or * if a material acquisitions are viewed to add sufficient scale and further diversification to the existing property base without adding leverage. The senior unsecured notes are currently notched from the Corporate Family Rating, reflecting their structural subordination to the significant amount of funded senior secured debt. At acquisition close, Petrohawk has approximately $236 million funded under the company's $280 million first lien senior secured revolving credit facility. The company will also have $75 million funded under the 2nd lien term loan B facility (which has another $75million available under a delayed draw provision), putting a total of $310 million of senior secured debt ahead of the bonds. With a stable outlook, Moody's assigned these ratings to Petrohawk: * B3 -- Corporate Family Rating * Caa1 -- $130 million of 9.875% Senior unsecured notes Pro forma leverage on the PD reserve base will be a very high $8.49/boe, which ranks among the high end of the peer group. The high leverage is the result of Petrohawk completing significantly debt funded acquisitions over the past year. At close of the Mission acquisition, the company has approximately $441 million of debt outstanding, which is comprised of $311 million drawn under the revolver and term loan B, and the $130 million of notes assumed from Mission. Given the company's growth acquisitions and the expectation that as the company's portfolio continues to evolve and it plans to spend significant capital on developing prospects, Moody's does not expect material debt reduction in the near term to come from cash flow and thus would be driven by asset divestitures or potential equity offerings. The combined company will have approximately 70 mmboe (approximately 421 Bcfe) of proven reserves (pro forma for 12/31/04 reserves and subsequent acquisitions and divestitures) with about 74% of that (about 51.9 mmboe) proven developed reserves. The reserves are located in the Anadarko basin, E Texas/N. Louisiana, the Gulf Coast/Gulf of Mexico, South Texas and the Permian Basin and offer a degree of diversification. However, Moody's notes that the company has owned the large majority of its properties less than year and thus has not demonstrated a track record successfully driving organic production growth with them. In November 2004, it acquired the Wynn-Crosby properties which consisted of 33.3 mmboe (200 Bcfe), in February, 2005 4.7 mmboe (28 Bcfe) were acquired from Proton Energy, and the Mission reserves are approximately 33.5 mmboe (201 Bcfe). The company also completed asset divestitures during that time, getting to the pro forma reserve total. In addition, concentrations and significant reinvestment risk exists within the portfolio as approximately 55% of the production and more than 35% of the proved reserves are located in the Gulf Coast/Gulf of Mexico and S. Texas areas, which have a PD reserve life of less than 4 years. On the cost side, pro forma for the acquisition, the company's pro forma full cycle costs are approximately $29.00/boe. These costs include over $9.00/boe of lease operating expense of around $4.00/boe of G&A and about $4.00/boe of estimated interest expense. The three year all-sources finding and development figure used in these costs are $12.05/boe, which is just a pro forma for Mission and Petrohawk's actual 2004 performance. However, Moody's realizes this is may not be a very good proxy for F&D as Petrohawk's F&D numbers reflect the Wynn-Crosby acquisition in late 2004. Moody's expects FYE 2005 F&D numbers to be a better indication after having Wynn-Crosby in the fold for a full year, though it will also have Mission being acquired 8 months into the year, thus making FYE 2006 an even better measure for F&D. A mitigant to Petrohawk's significant growth through acquisitions is the track record of the current management team and their demonstrated ability to build up E&P companies to become attractive targets for larger companies. As the management team continues to mold the Petrohawk portfolio, commodity prices, at least in the near term, are likely to remain supportive for the company's capital program targeted to develop the property base and to pursue some exploration opportunities. The SGL-3 rating reflects Moody's view that the company Petrohawk's EBITDA will range between $175 million and $225 million over the next four quarters. Even at the low end of these estimates, the company is expected to be able to cover estimated capital spending plan of between $120 million and $135 million, pro forma interest expense of about $24 million, and working capital needs. The SGL-3 rating also considers the availability under the revolver, which Moody's expects will increase from about $44 million at closing to nearly $119 million upon funding the remaining $75 million of the term loan B and repay revolver borrowings. However, in the event the company doesn't draw the $75 million from the term loan before the 45 day expiration period, the SGL-3 rating could be pressured downward. Moody's also expects the company to be able to meet the maintenance covenants under the credit agreement. The covenants for the revolver include a minimum current ratio of 1.0x, an EBITDA to interest expense ratio of 2.5x and net total debt to EBITDA of less than 4.0x. The second lien facility also contains an asset coverage requirement of greater than 1.5x. Petrohawk Energy, Corporation is headquartered in Houston, Texas. QUIGLEY COMPANY: Wants Sept. 15 Bar Date to Include Silica Claims ----------------------------------------------------------------- Quigley Company, Inc., asks the U.S. Bankruptcy Court for the Southern District of New York to fix Sept. 15, 2005, as the deadline for all creditors owed money on account of claims arising prior to Sept. 3, 2004, to file written proofs of claim. The Official Committee of Unsecured Creditors have requested that Silica-related PI claims be subject to the proposed Sept. 15 Claims Bar Date in order to facilitate the progress of the Debtor's case and avoid unnecessary disputes. As a result, the Debtor has agreed to amend the motion to include Silica-related PI claims among the claims subject to the General Claims bar date and omit it from the Excluded claims. Headquartered in Manhattan, Quigley Company is a subsidiary of Pfizer, Inc., which used to produce and market a broad range of refractories and related products to customers in the iron, steel, glass and other industries. The Company filed for chapter 11 protection on Sept. 3, 2004 (Bankr. S.D.N.Y. Case No. 04-15739) to resolve legacy asbestos-related liability. When the Debtor filed for protection from its creditors, it listed $155,187,000 in total assets and $141,933,000 in total debts. Michael L. Cook, Esq., at Schulte Roth & Zabel LLP, represents the Company in its restructuring efforts. Albert Togut, Esq., at Togut Segal & Segal serves as the Futures Representative. REMY INT'L: June 30 Balance Sheet Upside-Down by $233.7 Million --------------------------------------------------------------- Remy International, Inc., reported net sales of $312.3 million and Adjusted EBITDA of $6.2 million for the quarter ending June 30, 2005. Net sales increased $40.3 million, or 14.8%, and Adjusted EBITDA decreased $24.7 million, or 80.0%, compared with the second quarter of 2004. An operating loss of $3.1 million in the second quarter of 2005 compares with operating income of $24.4 million in the same period of 2004. The net sales increase of $40.3 million in the second quarter mainly reflects a full quarter of results from our recent acquisition of Unit Parts Company in March 2005 and continued strong Powertrain Diesel Product sales. In the second quarter of 2005, the Company notified U.S. Customs of a probable underpayment of a U.S. duty and recorded a charge of $6.0 million for the periods 2000-2004 on remanufactured starters and alternators imported into the U.S. The Company intends to appeal any assessment. Additionally in the quarter, the Company incurred significant costs in its Mexican operations arising from the insourcing of components for its Original Equipment Manufacturing operations, the implementation of a new ERP system and the integration costs relating to the UPC acquisition. Costs in the quarter were substantially higher than anticipated. "Market softness in our North American automotive and electrical aftermarket businesses continue to adversely impact our results," Commenting on the second quarter results, Tom Snyder, President and CEO, said. "As we have previously indicated, commodity price pressures and the weak dollar have reduced our gross margins. Moreover, the second quarter performance was impacted by the startup and integration cost discussed above. We do believe, however, that the majority of issues we faced, particularly with respect to the systems implementation, are behind us and the majority of insourcing projects are now complete." Adjusted EBITDA in the second quarter of 2005 decreased over the same period in 2004 mainly due to lower gross margins as discussed above and higher selling, general and administrative costs as previously announced. Net sales of $593.9 million in the first six months of 2005 increased $52.8 million, or 9.8%, over the comparable period in 2004. Adjusted EBITDA for the six months ended June 30, 2005 of $26.8 million declined $32.8 million and operating income of $11.8 million declined $35.2 million compared with the same period of 2004. Cash used in operating activities of $38.0 million in the first six months of 2005 represents a $27.6 million increase over the comparable period in 2004, reflecting lower earnings and the discontinuance of one of our accelerated receivable programs. At June 30, 2005, the Company had approximately $66 million of availability on its senior credit facility in addition to $21.7 million in cash on the balance sheet. Management Realignment The Company disclosed a realignment of management responsibilities. This realignment will enable the Company to increase its focus on improving operational and financial performance. Additionally, the Company has commenced new actions to reduce overhead and other costs and expects to record a restructuring charge related to these actions of approximately $4.0 million in the third quarter of 2005. Future Outlook Commenting on 2005, Mr. Snyder said, "Clearly we are disappointed with our second quarter results. We continue to be affected by the difficult conditions in the automotive industry. We believe that the actions taken in the second and early third quarter combined with the synergies from the UPC integration will generate significant improvements in the third quarter compared with our second quarter results." Remy International, Inc., headquartered in Anderson, Indiana, is a leading manufacturer, remanufacturer and distributor of Delco Remy brand heavy-duty systems and Remy brand starters and alternators, diesel engines, locomotive products and hybrid power technology. The Company also provides a worldwide components core-exchange service for automobiles, light trucks, medium and heavy-duty trucks and other heavy-duty, off-road and industrial applications. Remy was formed in 1994 as a partial divestiture by General Motors Corporation of the former Delco Remy Division, which traces its roots to Remy Electric, founded in 1896. At June 30, 2005, Remy International's balance sheet showed a $233,727,000 stockholders' deficit, compared to a $202,600,000 deficit at Dec. 31, 2004. REMY INTERNATIONAL: S&P Junks $125 Million Senior Secured Notes --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Anderson, Indiana-based Remy International Inc. to 'B-' from 'B'. At the same time, the $160 million first-priority senior secured bank facility rating was lowered to 'B' (the recovery rating remains '1'), while the $125 million second- priority senior secured floating rate notes were lowered to 'CCC+', and the senior subordinated notes were lowered to 'CCC'. Remy is a large manufacturer, and remanufacturer, of aftermarket and original equipment electrical components (primarily starter motors and alternators) and aftermarket powertrain components for heavy- and light-duty trucks. Citigroup Venture Capital Equity Partners LP controls privately held Remy, which had $708 million of total balance sheet debt at June 30, 2005. The outlook is negative. "The downgrade reflects Remy's significantly weaker-than-expected second-quarter EBITDA, which raises concerns about the company's ability to sustain EBITDA growth in the intermediate term," said Standard & Poor's credit analyst Nancy C. Messer. "As a result of this earnings announcement, 2005 EBITDA will fall meaningfully below prior estimates, and credit protection measures will not reach the levels that Standard & Poor's had expected by year-end 2005. As of June 30, 2005, Remy's lease-adjusted total debt to EBITDA was very aggressive at nearly 9x and EBITDA interest coverage fell to less than 1.5x." Remy's liquidity position eroded in the second quarter but is still adequate. Remy had $66 million of availability, at June 30, 2005, on its $160 million senior secured revolving credit facility which, fortunately, does not contain financial covenants that could restrict access. The company also has $22 million of cash. The company could enhance its liquidity in the second half of 2005 because of seasonal working capital improvements and planned inventory reduction. Material improvement in the credit ratios depends on longer-term cost-side benefits from ongoing restructuring efforts, the company's completion of the Unit Parts Co. integration, improved market demand, and the consistent generation of free cash flow. Remy's second-quarter EBITDA was $6.2 million, an 80% decline, year over year. The company attributed the serious discrepancy from anticipated EBITDA levels to a variety of unusual items and operating issues. The unusual costs, totaling $13 million, resulted primarily from accruals for back-dated custom duties on remanufacturing business and from the company's timing when it integrated certain UPC business into a facility in Mexico. The operating shortfalls, also totaling about $13 million, were primarily related to weak demand in the North American retail electrical aftermarket and to the negative impact of the strong Korean currency relative to the dollar (Remy sources materials from that country). Aftermarket demand should experience seasonal improvement in the third quarter, and restructuring, insourcing, and UPC integration activities should provide cost savings and efficiencies that could support improved second-half EBITDA. Nonetheless, 2005 EBITDA will be considerably less than planned. The ratings also reflect Remy's very aggressive leverage and weak business profile. REPUBLIC ENGINEERED: Selling Assets to Mexico's Industrias CH ------------------------------------------------------------- Industrias CH, S.A. de C.V., a rapidly growing steel producer and processor based in Mexico City, acquired Republic Engineered Products, Inc., from Perry Strategic Capital. "This combination will create an international strategic alliance," said Joseph F. Lapinsky, Republic's president and chief executive officer. "Republic will continue to operate as a stand- alone business but will have a very strong resource in Mexico as we strengthen our relationships with customers expanding in Mexico and South America." Under the agreement, ICH will acquire 100% of Republic's shares, including those owned by the majority shareholder, Perry Capital, New York. Republic will become a subsidiary of Grupo Simec, Guadalajara, Mexico, of which ICH is the majority owner. ICH paid $229 million in cash and assumed $166 million of the Company's debts, Mike Sakal of the Morning Journal reports. "This transaction will preserve our ability to continue our capital investment program," Mr. Lapinsky says. "ICH intends to put Republic in a debt-free position by the end of 2006. The previously announced installation of the new caster at our Canton plant remains on schedule, and additional capital investments will be considered after that project is complete," he continues. Kirkland and Ellis was legal advisor, and UBS Securities LLC acted as financial advisor to Republic. Sergio Vigil, director and chief financial officer of ICH, added, "The addition of Republic to our family of companies will give us a presence in the United States for the first time. Republic has a bright future, and our commitment to the business will make it even stronger. Republic also will be a valuable resource as we pursue additional U.S. business for our other lines of steel products." Perry Capital had purchased Republic's assets in December 2003. A registration statement was filed in November 2004 to sell a portion of Republic in an initial public stock offering. The opportunity to sell Republic to ICH presented itself during the registration process. As reported in the Troubled Company Reporter on Jan. 5, 2005, the sale of the Debtors' assets to Perry Capital generated substantially less than the $375 million that the Debtors owed to its creditors. In fact, the sale did not generate enough to pay the secured creditors, who were owed $330 million and who were entitled under the Bankruptcy Code to be paid first. The Debtors and their advisors, working with the Official Committee of Unsecured Creditors and its advisors, agreed with the secured creditors that $1 million would be set aside to pay for the wind down of the Debtors and their bankruptcy estates. The funds will be paid to holders of administrative claims. Holders of unsecured claims will not get anything. Industrias CH, S.A. de C.V. -- http://www.industriasch.com.mx/-- operates four electric furnace steelmaking centers and four processing plants, focusing on specialty steel long products, welded pipe, structurals and rebar. Customers include auto parts makers, oil and gas companies, industrial equipment builders, construction materials suppliers and steel distributors. ICH employs about 3,300 people and has steelmaking capacity of approximately 1.9 million tons. ICH has grown rapidly through acquisitions. Most recently, it purchased Grupo Simec in 2001 and the Mexican steel assets of Corporacion Sidenor (Spain) in 2004. ICH stock is traded on the Mexico Stock Exchange under the symbol ICHB. Grupo Simec is traded on the American Stock Exchange under the symbol SIM. Headquartered in Fairlawn, Ohio, Republic Engineered Products Holdings LLC were leading suppliers of special bar quality steel, a highly engineered product used in axles, drive trains, suspensions and other critical components of automobiles, off-highway vehicles and industrial equipment. The Company and its debtor-affiliates filed for chapter 11 protection on October 6, 2003 (Bankr. N.D. Ohio Case No. 03-55118). Shawn M Riley, Esq., at McDonald, Hopkins, Burke & Haber Co LPA and Martin J. Bienenstock, Esq., at Weil, Gotshal & Manges LLP represented the Debtors in their chapter 11 case. As of June 30, 2003, the Debtors listed $481,000,000 total assets and $467,939,000 total debts. The Court dismissed the Debtors' chapter 11 cases on Feb. 14, 2005, after it became apparent that the Debtors' businesses could not be rehabilitated. After the Debtors sold all of their assets, they didn't have enough funds to pay the fees and expenses to continue in chapter 11. Additionally, the Debtors' lack of resources makes it impossible to confirm a chapter 11 plan. SAMSON ORUSA: Case Summary & 9 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Samson Kanla Orusa aka Samson K. Orusa, MD dba Dr. Samson K. Orusa 411 Rushton Lane Clarksville, Tennessee 37043 Bankruptcy Case No.: 05-08966 Type of Business: The Debtor is a medical doctor. Chapter 11 Petition Date: July 29, 2005 Court: Middle District of Tennessee (Nashville) Judge: Keith M. Lundin Debtor's Counsel: Steven L. Lefkovitz, Esq. Law Offices Lefkovitz & Lefkovitz 618 Church Street, Suite 410 Nashville, Tennessee 37219 Tel: (615) 256-8300 Fax: (615) 250-4926 Total Assets: $2,323,950 Total Debts: $1,768,735 Debtor's 9 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $278,531 MDP 146 801 Broadway Nashville, TN 37203 Tom Dundon, Esq. $50,000 Neal & Harwell, PLC 150 4th Avenue, North, Suite 2000 Nashville, TN 372192498 GMAC $25,887 P.O. BOX 105677 Atlanta, GA 30348 BB&T $18,000 RAI Credit Corporation $12,360 Professional Fee Financing Association $11,565 Montgomery County Trustee $9,817 MBNA America $8,499 City of Clarksville $5,444 SIGNAL SECURITIZATION: Fitch Affirms BB Rating on Class B Certs. ---------------------------------------------------------------- Fitch Ratings has performed a review of the Signal Securitization Corporation manufactured housing transactions. Signal Bank, N.A purchased manufactured housing contracts through Mobile Consultants, Inc., who originated and sub-serviced manufactured housing contracts for Signal Bank and a group of 25 other lenders. MCI, in the manufactured housing business for over 20 years, was acquired by Signal Bank's parent, First Federal Savings Financial Services, in April 1996. In December 2003, Clayton Homes Inc. assumed the servicing responsibilities for the Signal portfolio. The transactions reviewed pay principal due to senior bonds prior to paying interest due to subordinate bonds. Higher than expected losses have caused significant interest shortfalls to various subordinate bonds in the transactions. While the structures allow for interest shortfalls to be recovered in the future in the event of sufficient excess spread, Fitch assessed the likelihood of the bondholder receiving all interest due when determining the bond's credit rating. Based on the review, the following rating actions have been taken: -- Series 1997-3 class A is affirmed at 'AA'; -- Series 1997-3 class B is affirmed at 'BB' -- Series 1998-1 class A is affirmed at 'A'; -- Series 1998-2 class A is downgraded to 'BBB-' from 'A'. STRUCTURED ASSET: Fitch Puts BB+ Rating on $4.4 Million Certs. -------------------------------------------------------------- Fitch has rated the Structured Asset Securities Corporation Trust 2005-WF3 mortgage pass-through certificates: -- $764.3 million classes A1, A2, and A3 'AAA'; -- $30.3 million class M1 'AA+'; -- $19.3 million class M2 'AA'; -- $9.7 million class M3 'AA-'; -- $9.7 million class M4 'A+'; -- $9.2 million class M5 'A'; -- $5.7 million class M6 'A-'; -- $4.8 million class M7 'BBB+'; -- $4.4 million class M8 'BBB'; -- $4.4 million class M9 'BBB-'; -- $4.4 million class B1 'BB+'. The 'AAA' rating on the senior certificates reflects the 13.00% total credit enhancement provided by the 3.45% class M1, the 2.20% class M2, the 1.10% class M3, the 1.10% class M4, the 1.05% class M5, the 0.65% class M6, the 0.55% class M7, the 0.50% class M8, the 0.50% class M9, the 0.50% class B1, the unrated 0.90% class B2, and the 0.50% initial over-collateralization. All certificates have the benefit of monthly excess cash flow to absorb losses. In addition, the ratings reflect the quality of the loans, the integrity of the transaction's legal structure, as well as the capabilities of Wells Fargo Bank, N.A., as servicer, rated 'RPS1' by Fitch. U.S. Bank National Association is the trustee. The certificates are supported by one collateral group. The mortgage loans consist of 5,229 first-lien adjustable-rate and fixed-rate, fully amortizing and balloon, mortgage loans. The mortgage balance as of the cut-off date (July 1, 2005) was $878,484,852. Approximately 17.24% of the mortgage loans are fixed-rate mortgage loans and 82.76% are adjustable-rate mortgage loans. The weighted average loan rate is approximately 6.765%. The weighted average remaining term to maturity is 350 months. The average principal balance of the loans is approximately $168,002. The weighted average original loan-to-value ratio is 79.21%. The properties are primarily located in California (17.83%), Maryland (9.13%), and Florida (6.96 %). None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press releases issued May 1, 2003 titled, 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' and Feb. 23, 2005 titled, 'Fitch Revises RMBS Guidelines for Antipredatory Lending Laws', available on the Fitch Ratings web site at http://www.fitchratings.com/ The depositor, Structured Asset Securities Corporation, assigned to the trust fund loan-level primary mortgage insurance policies provided by Mortgage Guaranty Insurance Corporation, PMI Mortgage Insurance Co., Republic Mortgage Insurance Corp., Radian Guaranty Inc., Triad Guaranty, and United Guaranty Residential Insurance Company. Approximately 99.91% of the mortgage loans with OLTVs greater than 80% are covered. All of the mortgage loans were purchased by the depositor from Lehman Brothers Holdings Inc. The trust fund will make elections to treat some of its assets as one or more real estate mortgage investment conduits for federal income tax purposes. TERWIN MORTGAGE: Fitch Puts Low-B Rating on Two Cert. Classes ------------------------------------------------------------- Terwin Mortgage Trust, asset-backed certificates, TMTS series 2005-7SL, is rated by Fitch Ratings: -- $336.6 million class A-1 and the class A-X Interest-Only certificate 'AAA'; -- $29.3 million class M-1 'AA'; -- $9.2 million class M-2 'AA'; -- $17.3 million class M-3 'A+'; -- $9.2 million class B-1 'A'; -- $7.7 million class B-2 'A-'; -- $7.7 million class B-3 'BBB+'; -- $6.8 million class B-4 'BBB'; -- $6.8 million class B-5 'BBB-'; -- $5.9 million class B-6 'BB+'; -- $6.3 million class B-7PI 'BB'. The 'AAA' rating on the senior certificates reflects the 27.55% initial credit enhancement provided by the 6.50% class M-1, the 2.05% class M-2, the 3.85% class M-3, the 2.05% class B-1, the 1.70% class B-2, the 1.70% class B-3, the 1.50% class B-4, the 1.50% class B-5, the 1.30% class B-6, the 1.40% class B-7PI and the overcollateralization. The initial OC is 1.65% and the target OC is 4.00%. All certificates have the benefit of excess interest. The collateral pool consists of 8,107 fixed-rate mortgage loans and totals $450,003,417 as of the cut-off date. The weighted average original loan to value ratio is 95.79%. The average outstanding principal balance is $55,508 the weighted average coupon is 10.510% and the weighted average remaining term to maturity is 236 months. The loans are geographically concentrated in CA (37.35%), NV (9.21%) and FL (6.93%). Approximately 16.84% and 10.53% of the mortgage loans were originated by Ameriquest Mortgage Company and Impac Funding Corporation, respectively. Ameriquest Mortgage Company is a specialty finance company engaged in the business of originating, purchasing and selling retail and wholesale subprime mortgage loans. Impac primarily sources production through its correspondent operations and obtains loans using its wholesale ending group. TOUCH AMERICA: Plan Trustee Has Until Oct. 1 to Decide on Leases ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware further extended, until Oct. 1, 2005, the period within which Brent C. Williams can elect to assume, assume and assign, or reject the unexpired nonresidential real property leases of Touch America Holdings, Inc., and its debtor-affiliates. Mr. Williams is the Plan Trustee appointed under the Liquidating Trust established pursuant to the confirmed Amended Liquidating Plan of Reorganization of the Debtors. Although Mr. Williams does not believe the Debtor has any remaining unexpired nonresidential real property leases, he requested the extension out of abundance of caution. The extension will also ensure that Mr. Williams is able to comply with any outstanding obligation to assume and assign any executory contract that a third-party may seek to characterize as unexpired leases. Headquartered in Butte, Montana, Touch America Holdings, Inc., through its principal operating subsidiary, Touch America, Inc., developed, owned, and operated data transport and Internet services to commercial customers. The Company filed for chapter 11 protection on June 19, 2003 (Bankr. D. Del. Case No. 03-11915). Maureen D. Luke, Esq. and Robert S. Brady, Esq. at Young Conaway Stargatt & Taylor, LLP represent the Debtors. When the Company filed for bankruptcy protection, it listed $631,408,000 in total assets and $554,200,000 in total debts. The Court confirmed the Debtors' Plan on Oct. 6, 2004, and the Plan took effect on Oct. 19, 2004. Brent Williams is the Plan Trustee under the confirmed Plan. David Neir, Esq., at Winston & Strawn LLP represents the Plan Trustee. UAL CORP: Wants Court Okay on Citigroup Cooperation Agreement ------------------------------------------------------------- UAL Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Illinois for permission to enter into a cooperation agreement with Citigroup Global Markets, Inc., and Citigroup North America, Inc., with respect to a proposed restructuring of the 1997-1 EETC Transaction. EETC Transactions In the EETC Transactions, holders in the largest senior tranche have the power to direct the indenture trustee to exercise remedies, including the seizure of aircraft or entry into a consensual restructuring. These decisions do not require the consent of lower tranche holders. In a default situation, all funds received by the EETC go through a payment waterfall pursuant to a cross-subordination agreement between the pass- through trustees of the various senior and subordinate tranches. In other words, upon default, an absolute priority rule becomes effective within the EETC so that proceeds pay the senior tranche first. When the senior tranche holders and the lower tranche holders are unrelated, senior tranche holders are indifferent to the economic fate of the lower tranche investors. When there are substantial cross-holdings between the senior and lower tranche holdings, the senior tranche holders have a financial interest in maximizing lower tranche recoveries. Essentially, the senior tranche must look after its own interests on multiple levels. If the junior tranche holders do not like the decisions of the senior tranche holders, the junior tranche has the right to buy the senior tranche out at par. Cross-holdings allow the holders to negotiate higher payments and better recoveries for the junior tranches, says James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, Illinois. In many cases, the Debtors' lack of leverage has forced them to accept debt service equal to the fair market value of aircraft and in some instances, service debt in excess of fair market value. "This is clearly a function of the Debtors' lack of leverage given its need for the aircraft as well as the presence of significant cross-holdings," Mr. Sprayregen explains. The 1997-1 EETC Transaction The 1997-1 EETC is a multiple tranche enhanced equipment pass through trust certificate financing. The Series 1997-1A Pass Through Trust issued certificates in the public debt market that were backed by mortgages and leases on 14 aircraft. The Senior Tranche had an original principal of $445,826,000 that matured on December 2, 2002, and was entitled to interest on the underlying equipment notes at LIBOR plus 22 basis points. The Senior Tranche is controlled by active constituents of the Aircraft Trustees. Below the Senior Tranche are three junior tranches. The Series B and Series C Tranches with principal of $106,607,000 and $110,000,000, respectively, are owned by one party that is not aligned with the Trustees. The Debtors own the Series D Tranche, which has an outstanding principal of $11,423,182. Mr. Sprayregen explains that to date, the divergence of ownership between the Senior Tranche and the B and C Tranches have been beneficial for the Debtors. The recoveries offered to the B and C Tranches in the 1997-1 EETC have been in line with the underlying values of the aircraft, reflective of the lower tranches' lack of control over their disposition. The Debtors' adequate protection payments on the 1997-1 EETC are greater than the contract rate of interest on the underlying A Equipment Notes. Therefore, a significant amount of the principal of the Senior Tranche has been paid off. The underlying aircraft have held their value, so the B Tranche is well in the money. In other words, the Junior Tranche Holder believes its interests have substantial value. In light of these favorable conditions, the Junior Tranche Holder has recently decided to sell its interest in the B and C Tranches. The Junior Tranche Holder has received several bids and is prepared to consummate a sale. The Junior Tranche Holder has indicated a willingness to sell the B and C Tranches to a third party acting in concert with the Debtors for less than face value, if a deal can be completed quickly. The Debtors have negotiated a Cooperation Agreement with Citigroup to purchase the B and C Tranches and simultaneously buy out the Senior Tranche to take control of the 1997-1 EETC. Under the Cooperation Agreement: a) the Junior Tranche Holder will exercise its right to purchase the Senior Tranche; b) Citigroup will purchase the Senior, B and C Tranches from the Junior Tranche Holder; c) the Debtors and Citigroup will amend the interim adequate protection stipulation governing the 1997-1 EETC, and restructure and refinance the obligations under the Senior, B and C Tranches, as set forth in the Cooperation Agreement; d) the funds expended by Citigroup in the Cooperation Agreement will be syndicated in the private market or refinanced through a public market transaction; and e) the Debtors will pay Citigroup an accommodation fee. Mr. Sprayregen relates that under the Cooperation Agreement, the total indebtedness of the Senior, B and C Tranches will be substantially reduced. Under the Cooperation Agreement, the cash flows required to service the restructured debt will be lower than if the B and C Tranches were acquired by an unfriendly third party, perhaps affiliated with the Trustees. The 14 aircraft in the 1997-1 EETC would no longer be at risk for repossession. If the Debtors do not move quickly, profit-minded investors may attempt to maneuver within the 1997-EETC's tranches to gain leverage to extract enhanced financial returns from the Debtors. Since the Cooperation Agreement contains confidential commercial information, it will be filed with the Court under seal. The Debtors have provided copies of the Cooperation Agreement to the Creditors Committee's professionals, the Committee -- other than indenture trustees with aircraft holdings -- and the DIP Lenders. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 95; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Terms of Machinists' Amended Tentative Labor Pact ----------------------------------------------------------- UAL Corporation sought and obtained Judge Wedoff's permission to enter into a tentative agreement modifying their collective bargaining agreements with the International Association of Machinists and Aerospace Workers. On July 21, 2005, the IAM disclosed that its membership ratified the Tentative Agreement. Pursuant to the Tentative Agreement, the Debtors will modify IAM-represented employees' wages and benefits, which will provide the necessary long-term cost savings to satisfy DIP financing covenants, obtain exit financing and cope with the difficult industry environment. The pay of most IAM-represented employees will be reduced by 5.5%, effective for the payroll period July 1, 2005. Pay rates for IAM-represented workers will not increase until 2007. IAM-represented employees will be subject to modified holiday time, vacation time and sick leave. More specifically, the base wage rates for IAM-represented employees will increase within these parameters: Date Amount ---- ------ 05/01/07 1.5% 05/01/08 1.5% 05/01/09 2.5% Company paid holidays will be reduced from 10 to eight through the elimination of Good Friday and the day after Thanksgiving. Vacation Accrual will follow new guidelines: Years of Service Weeks of Vacation ---------------- ----------------- 0-1 1 1 2 9 3 16 4 24 5 29 6 The Tentative Agreement will modify existing terms for sick leave. Effective July 1, 2005, each hour of occupational or non- occupational sick leave charged to the employee's bank will be paid at 80% of the employee's hourly rate for the first 56 consecutive hours and 100% for consecutive hours thereafter. The IAM will withdraw with prejudice its opposition to the termination of two defined benefit pension plans in which IAM members participate: a) the Ground Employees' Retirement Plan; and b) the Management, Administrative and Public Contact Defined Benefit Pension Plan. In exchange, all IAM-represented employees will be eligible to participate in the IAM National Plan effective March 1, 2006, or on the first day of employment, if later. Contributions for new hires will be made retroactively after 60 days of service. The Debtors will make no contribution prior to March 1, 2006. The Debtors will contribute: 4.0% of "Considered Earnings" and Success Sharing Payments effective March 1, 2006; 5.0% effective March 1, 2007; 6.0% effective March 1, 2008; and 6.5% effective March 1, 2009. IAM-represented employees will have three ways to share in the Debtors' future recovery: 1) A revised profit-sharing program that pays out to employees if the Debtors' profits exceed a certain amount; 2) Under the plan of reorganization, the Debtors will issue $60,000,000 of Convertible Notes for IAM-represented employees; and 3) After the effective date of a Plan, the IAM will receive a percentage distribution of equity or other consideration provided to general unsecured creditors under the Plan, as calculated by a formula in the Tentative Agreement. The Convertible Notes are 15-year securities due 2021. Interest will be paid semi-annually in arrears, in cash at an interest rate to be agreed by the parties so that the Convertible Notes trade at par value or better upon issuance. Failing agreement on the interest rate, the parties will solicit rate recommendations from two national trading firms and adopt the average. The Conversion Price will be the product of 125% and the average closing price of the Debtors' common stock for the 60 consecutive trading days after exit. The Debtors will reimburse IAM for the reasonable, actual fees and out-of-pocket expenses, including: (1) base wages lost by IAM Negotiating Committee members in connection with the Tentative Agreement; and (2) reasonable, actual fees and expenses of IAM's outside legal, pension, and other professional advisors up to $2,500,000. Of the reimbursement, $1,250,000 will be paid on the Plan Effective Date and the remaining $1,250,000 will be paid when the Debtors emerge from bankruptcy. The Debtors sought Court approval of the Tentative Agreement only. The Debtors did not seek to assume the modified IAM collective bargaining agreements. Therefore, neither the order approving the request nor the Debtors' execution of the Tentative Agreement will create administrative expense or priority claims. The Tentative Agreement will have the same meaning and effect as the judicial approval of the restructuring agreements approved on April 30, 2003. A full-text copy of the Tentative Agreement is available for free at: http://bankrupt.com/misc/tentative_agreement.pdf Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 95; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Can Use ATSB Lenders' Cash Collateral Until Aug. 19 --------------------------------------------------------------- In a stipulation approved by the U.S. Bankruptcy Court for the Eastern District of Virginia, US Airways, Inc., and its debtor- affiliates and five ATSB Lender Parties: * Govco Incorporated, * Citibank, N.A., * AFS Investments XII, Inc., and * International Lease Finance Corporation, and * Air Transportation and Stabilization Board agree to modify the Supplemental Cash Collateral Order to allow the Debtors to use the Lenders' Cash Collateral until Aug. 19, 2005, at 11:59 p.m. (New York time). The Debtors covenant with the Lenders that minimum cumulative Consolidated EBITDAR for each of the four-month rolling periods will not be less than: Minimum Cumulative Period Consolidated EBITDAR ------ -------------------- Sept 2004 - Dec. 2004 ($171,400,000) Oct. 2004 - Jan. 2005 ($192,700,000) Nov. 2004 - Feb. 2005 ($242,900,000) Dec. 2004 - Mar. 2005 ($238,500,000) Jan. 2005 - Apr. 2005 ($84,700,000) Feb. 2005 - May 2005 $103,100,000 Mar. 2005 - Jun. 2005 $200,000,000 The Debtors may not make any Capital Expenditures if all Capital Expenditures during the four-month rolling period exceed: Period Maximum CapEx ------ ------------- 09/01/04 - 12/31/04 $25,000,000 10/01/04 - 01/31/05 $30,000,000 11/01/04 - 02/28/05 $32,500,000 12/01/04 - 03/31/05 $32,500,000 01/01/05 - 04/30/05 $32,500,000 02/01/05 - 05/31/05 $32,500,000 03/01/05 - 06/30/05 $32,500,000 04/01/05 - 07/31/05 $32,500,000 05/01/05 - 08/31/05 $32,500,000 The Debtors will maintain minimum Unrestricted Cash at each week ending: For the Week Ending Weekly Minimum Unrestricted Cash ------------------- -------------------------------- 06/03/05 $332,000,000 06/10/05 $362,000,000 06/17/05 $381,000,000 06/24/05 $374,000,000 07/01/05 $341,000,000 07/08/05 $325,000,000 07/15/05 $325,000,000 07/22/05 $325,000,000 07/29/05 $325,000,000 08/05/05 $325,000,000 08/12/05 $325,000,000 08/19/05 $325,000,000 08/26/05 $325,000,000 The Lenders require the Debtors' Disclosure Statement to be approved by August 22, 2005. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 99; Bankruptcy Creditors' Service, Inc., 215/945-7000) VARTEC TELECOM: Secures Extension of Exclusive Periods ------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, gave its stamp of approval to VarTec Telecom, Inc., and its debtor-affiliates' request to extend their exclusive periods to file and solicit acceptances of a chapter 11 plan. The Court gave the Debtors until September 7, 2005, to file a plan and until November 7 to solicit acceptances of that plan. The Debtors will use the additional time to finalize ongoing negotiations for a global settlement of claims asserted by independent representatives and complete the sale of some of its assets. The Debtors recently completed the auction of their assets. ComTel Investment, LLC, won the auction with an $82.1 million bid for the Debtors' assets. The Debtors anticipate securing Federal Communications Commission approval of the sale by October 1, 2005. Once the sale process is completed, the Debtors will have the information and time needed to analyze the likely distribution to their unsecured creditors and formulate a plan of reorganization. The Debtors assure the Court that the extension will not prejudice its creditors and other parties-in-interest in this chapter 11 case. Headquartered in Dallas, Texas, VarTec Telecom Inc. -- http://www.vartec.com/-- provides local and long distance service and is considered a pioneer in promoting 10-10 calling plans. The Company and its affiliates filed for chapter 11 protection on November 1, 2004 (Bankr. N.D. Tex. Case No. 04-81694. Daniel C. Stewart, Esq., William L. Wallander, Esq., and Richard H. London, Esq., at Vinson & Elkins, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed more than $100 million in assets and debts. WASHINGTON NATIONAL: Moody's Reviews Ba1 Insurance Rating --------------------------------------------------------- Moody's Investors Service placed the ratings on the bank debt and mandatory convertible preferred securities of Conseco, Inc. (Conseco, B2 bank debt rating) as well as the Ba1 insurance financial strength ratings of Conseco, Inc.'s insurance subsidiaries on review for possible upgrade. Conseco Senior Health Insurance Company was affirmed at Caa1 with a developing outlook. According to the rating agency, the review will focus on the positive impact of the proposed refinancing on the company's holding company financial flexibility as well as the company's improved financial performance in terms of statutory earnings, fixed charge coverage, and capital adequacy. Moody's has indicated that a ratings upgrade could result if Conseco achieved the following financial metrics on a consistent basis: * Adjusted financial leverage of no greater than 30%; * Projected fixed charge coverage at the holding company of at least 2.25x; * RBC ratio on a consolidated basis of at least 300%, and RBC ratio of each statutory operating entity, excluding CSHIC, of at least 200%; RBC ratio of companies actively marketing insurance products of at least 250%. * 2005 combined statutory operating EBIT in the range of $180 to $230 million Longer term, in addition to meeting rating expectations, financial metrics that could potentially drive the ratings upward include an actual and projected cash coverage ratio greater than 2.5x. Under the proposed refinancing, Conseco will raise approximately $300 million from the issuance of a convertible debenture and use the proceeds to reduce the current bank facility. It is the company's intention to amend the current $767 million senior bank facility and reduce the principal amount outstanding to $475 million, as well as to add an $80 million revolving credit facility. In addition to attaining less restrictive financial covenants under the company's amended $475 million credit facility, Moody's noted that the proposed refinancing activities will reduce the company's financing costs. The company's financial leverage is not expected to change materially as a result of these proposed refinancing activities. As part of its review, Moody's said that it will also evaluate the notching between the subsidiary insurance financial strength ratings (Ba1), the bank debt (B2), and the mandatory convertible preferred stock (Caa2), given the possible ratings upgrade and the planned issuance of convertible senior debt which represents a new seniority level between this secured senior debt and the mandatory convertible preferred securities. According to Moody's, its decision to affirm CSHIC's Caa1 insurance financial strength rating with a developing outlook reflects the continued uncertainty surrounding the company's future earnings and operations, as well as its relatively low capitalization levels. These ratings were placed on review for upgrade: Conseco Insurance Company (formerly Conseco Annuity Assurance Company): * Ba1 insurance financial strength rating Bankers Life and Casualty Company: * Ba1 insurance financial strength rating at Ba1 Conseco Health Insurance Company: * Ba1 insurance financial strength rating Colonial Penn Life Insurance Company: * Ba1 insurance financial strength rating: Conseco Life Insurance Company: * Ba1 insurance financial strength rating Washington National Insurance Company: * Ba1 insurance financial strength rating Conseco Inc.: * B2 bank credit facility * Caa2 mandatory convertible preferred securities These rating was affirmed with a developing outlook: Conseco Senior Health Insurance Company: * Caa1 insurance financial strength rating. Conseco is a specialized financial services holding company that operates primarily in the life and health insurance sectors through its subsidiaries. As of March 31, 2005, the company reported total GAAP assets of approximately $30.7 billion and shareholders' equity of $3.8 billion. WEST CLIFF: List of Two Largest Unsecured Creditors --------------------------------------------------- West Cliff Shopping Plaza I, Limited Partnership, released a list of its 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ The Retail Initiative $1,700,000 733 Third Avenue New York, NY 10017 West Cliff Shopping Plaza, Inc. $1,000,000 P.O. Box 763773 Dallas, TX 75376 Headquartered in Dalls, Texas, West Cliff Shopping Plaza I, Limited Partnership, owns and operated a shopping mall. The Company filed for chapter 11 protection on June 8, 2005 (Bankr. N.D. Tex. Case No. 05-36555). Eric A. Liepins, Esq., at Eric A. Liepins, P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts between $1 Million to $10 Million. WESTPOINT STEVENS: PBGC Says Disclosure Statement is Inadequate --------------------------------------------------------------- The Pension Benefit Guaranty Corporation contends that WestPoint Stevens, Inc. and its debtor-affiliates' Amended Disclosure Statement fails to inform creditors of facts that may affect the value of their claims. Thus, the PBGC believes that the Disclosure Statement does not provide adequate information as required by Section 1125 of the Bankruptcy Code. The PBGC filed claims against each of the Debtors for liabilities arising under the Employee Retirement Income Security Act. Those claims included amounts entitled to priority status under Sections 507(a) and 503 of the Bankruptcy Code. The Disclosure Statement generally classifies the claims filed by the PBGC in Class G, but does not indicate how the Debtors' Amended Plan of Reorganization will treat the priority portions of these claims. Since the amounts involved may be significant, the PBGC asserts that the Disclosure Statement should explain the intended treatment of its priority claims so that it can make an informed judgment on the Plan. Joan Segal, Esq., in Washington D.C., relates that as part of the confirmation of the Plan, the Debtors intend to seek substantive consolidation, which is an extraordinary remedy that should be considered with extreme caution. Yet, Ms. Segal notes, the Disclosure Statement provides no explanation to support substantive consolidation. The Debtors must demonstrate by a preponderance of evidence that consolidation is warranted and that the benefit to be gained from applying the doctrine will outweigh the harm to creditors. Ms. Segal points out that the Disclosure Statement fails to explain the legal and factual grounds for substantive consolidation and how the Debtors intend to satisfy this burden. In addition, the Debtors should not be permitted to use substantive consolidation to abrogate the PBGC's statutory joint and several claims, Ms. Segal argues. The joint and several liability provisions under the ERISA apply with full force in bankruptcy. Therefore, even if substantive consolidation is approved, an equitable exception for the joint and several claims of the PBGC should be created to ensure that these claims will not be prejudiced by substantive consolidation of the Debtors' cases. The Disclosure Statement should be amended to describe the potential impact of an exception on the amounts creditors will receive. Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Service, Inc., 215/945-7000) WINN-DIXIE: Gets Court Nod to Sell Assets Thru Liquidating Agents ----------------------------------------------------------------- Winn-Dixie Stores, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Middle District of Florida to employ Hilco Merchandise Resources, LLC, and Gordon Brothers Retail Partners, LLC, to assist them in liquidating merchandise at the closing stores. The Debtors also ask the Court to: a. approve an Agency Agreement and authorize them and the Liquidating Agent to take all actions contemplated by the Agreement; b. discontinue operations at the Closing Stores; and c. sell the Merchandise and furniture, fixtures and equipment at the Closing Stores, free and clear of liens, claims and interests, exempt from stamp or similar tax. The Debtors further ask the Court to restrain and enjoin all parties from: (a) charging advertising rates in excess of the rates charged pursuant to the Debtors' prepetition advertising agreements or, if no agreements exist, charging advertising rates in excess of rates regularly charged to non-bankrupt customers in the ordinary course; (b) in any way interfering with or otherwise impeding the conduct of the Store Closing Sales, or the Liquidating Agent's rights to use the Stores, and all services, furniture, fixtures, equipment and other assets of the Debtors which the Agent is granted the right to use in the Agency Agreement; or (c) instituting any action or proceeding in any court or other administrative body to obtain an order or judgment that might in any way directly or indirectly obstruct or otherwise interfere with or adversely affect the conduct of the Store Closing Sales, the operation of the Stores, or the performance by the Debtors of their obligations under the Agency Agreement. Merchandise Sale Should be Exempt from Taxes Section 1146(c) of the Bankruptcy Code provides that "[t]he issuance, transfer, or exchange of a security, or the making or delivery of an instrument of transfer under a plan confirmed under section 1129 of this title, may not be taxed under any law imposing a stamp tax or similar tax." D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, explains that this language has been construed to include transfers pursuant to a sale outside of, but in furtherance of effectuating, a reorganization plan. Although the Debtors have not yet filed a Chapter 11 plan of reorganization, an integral part of any plan will be the Debtors' ability to cease operations at many of the Targeted Stores and liquidate the Merchandise and FF&E. The Debtors believe that the sale of the Merchandise and FF&E is an integral part of, and a necessary predicate toward, the Debtors' Chapter 11 reorganization plan. Accordingly, the sales should be exempt under Section 1146(c) from any stamp, transfer, sales, recording or similar taxes, Mr. Baker asserts. Objections (1) Florida Tax Collectors The tax collectors for 19 Florida counties demand adequate protection in the form of an order directing the payment of the 2005 property taxes in accordance with state law. Brian T. Fitzgerald, Esq., in Tampa, Florida, asserts that the Court should not allow the Florida Tax Collectors' collateral to be sold and used to pay administrative fees and junior lien holders without first paying their property taxes. Efficient estate administration is best served if the Court ensures the compliance with state property tax laws during the liquidation of the Debtors' estates, Mr. Fitzgerald says. The Florida Tax Collectors also request the suspension of the claims bar date for any Florida ad valorem property taxes until further Court order. According to Mr. Fitzgerald, the extension makes sense given the nature of the Florida property tax law, which provides for the collection of taxes in arrears. The Debtors will be receiving their 2005 Truth in Millage from Florida property appraisers this month and will have an opportunity to contest or clarify valuation issues with the various property appraisers within the Value Adjustment Board process. The Florida Tax Collectors sought to work closely with the Debtors and their tax staff. However, all attempts to begin the process of a joint, cooperative, and efficient procedure have failed. Accordingly, the Florida Tax Collectors ask the Court to: a. compel the Liquidating Agent to pay all prepetition real estate and tangible personal property taxes in accordance with Florida state law, and proceed under Florida state law in regard to the administration and the contest, if any, of those taxes; b. compel the creation and maintenance of a segregated, interest-bearing account in sufficient amount to ensure payment, in full, of outstanding ad valorem taxes for both real estate and tangible personal property due to the Florida Tax Collectors; and c. compel the Debtors, the Liquidation Agent and any other parties to ensure direct and prompt compliance with the notification and transfer procedures relating to the County's occupational license procedures administered by the various Tax Collectors as appropriate. (2) Allied Capital Allied Capital Corporation, CWCapital Asset Management LLC, CRIIMI MAE Services Limited Partnership, and ORIX Capital Markets, LLC, point out that it is impossible to tell from the Motion what the Debtors intend to include in the sale of FF&E. The Motion only describes the FF&E in the most general terms. The Agency Agreement does not identify the FF&E to be sold at any given store, but rather states that at the Debtors' sole discretion an election can be made on a store by store basis to sell the FF&E. Each of the Winn-Dixie Stores includes fixtures and equipment that do not belong to the Debtors, but instead belong to the Landlords and not the proper subject of the Motion. Gregory A. Cross, Esq., at Venable LLP, in Baltimore, Maryland, argues that to the extent that any of the FF&E items that the Debtors are proposing to sell were not part of the Winn-Dixie Stores when the Leases were executed, those items would be Alterations and consequently the property of the Landlords, not the Debtors. The Debtors do not have the right to remove Alterations under the Lease, Mr. Cross asserts. (3) Tennessee Attorney General The Tennessee Attorney General, Paul G. Summers, objects to the Motion to the extent that the Motion, the Agency Agreement and the Store Closing Guidelines propose to: -- authorize the Debtors or the Liquidating Agents to conduct store closing sales without heeding state consumer protection laws; and -- immunize the Debtors or the Liquidating Agents from any damages or restitutions caused by violations of state consumer protection laws. In the Motion, the Debtors concede that they and their agents are bound to comply with state and local laws of general applicability and laws concerning public health and safety. Nevertheless, the Debtors plainly seek authorization to exempt themselves and their agents from any state or local laws governing liquidation or "going out-of-business" sales. Tennessee has consumer protection statutes that apply to all "going out-of-business" sales, regardless of whether the retailer is in bankruptcy or not. Mr. Summers notes that the Debtors make no specific mention of which state laws will unduly burden the store closing sales. Instead, the Debtors propose to nullify with a broad brush all state and local laws governing liquidation or "going out of business" sales. Mr. Summers asks the Court to deny the Debtors' Motion. In the alternative, the Court should include in the order granting the Motion a provision specifically stating that the Debtors and their agents must comply with state and local laws concerning consumer protection. (4) Tower Center Tower Center Associates, Ltd., and the Debtors entered into a lease of a certain commercial real property in Gainesville, Florida. The Lease imposes several obligations on the Debtors, including, to: a. occupy and pay rent; b. operate the Property in adherence to a certain reciprocal easement; c. adhere to local statutes and ordinances pertaining to cleanliness and other facets of operation of the Property; d. keep and maintain the Property in good condition and repair; e. indemnify Tower from any claim or loss resulting from an accident or damage to persons or properties; and f. yield the Property, and certain additions, to Tower upon termination of the Debtors tenancy. Tower asks the Court to compel the Debtors and the Liquidating Agent to conduct any contemplated liquidation or store closing in accordance with the Lease and preserve its rights to allowance and payment with administrative priority of any Lease Obligations, which the Debtors fail to meet. (5) Webber Webber Commercial Properties, LLC, leases to the Debtors a store located at 18011 South Tamiami Trail, Fort Myers, in Lee County, Florida. Webber asks the Court to direct the Debtors to satisfy tangible personal property taxes with respect to any permanent structural improvements in the San Carlos Store. Webber further asks the Court to direct the Debtors or the Liquidating Agent to refrain from any attempt to sell permanent structural improvements on the San Carlos Store. (6) Heritage Heritage SPE, LLC, objects to the Motion to the extent that the Debtors are seeking to sell any FF&E, or other property, that is not owned by the Debtors. The Motion only describes the FF&E in the most general of terms and leaves the decision to sell any FF&E, potentially including various fixtures and property owned by Heritage or other non-debtor parties, to the Debtors' discretion. Heritage cannot determine from the Motion whether the Debtors or their Agent intend to sell any FF&E that are actually fixtures or property that is not owned by the Debtors. Moreover, the determination as to whether any item or items of FF&E are fixtures or property actually owned by Heritage or other non-debtor parties must be determined pursuant to the terms of the Lease and applicable law. Moreover, Heritage asserts, any store closing sale contemplated in the Motion cannot impede or otherwise limit its rights to the allowance and immediate payment, on an administrative priority basis, of any claims, including but not limited to any claims arising from damage to the Premises, resulting from the Debtors' or their Liquidating Agent's conduct of any store closing sale. * * * Judge Funk approves the Debtors' Amended Motion. The Court authorizes the Debtors to cease retail operations at the Stores and take related actions. The Debtors are further authorized to sell the furniture, fixtures, and equipment at the stores through the Liquidating Agent. If lessors have any issues regarding the Store Closing Sales, they may contact: Eric Kaup Hilco Merchant Resources, LLC One Northbrook Place 5 Revere Drive, Suite 206 Northbrook, Illinois 60062 Tel No. (847) 849-2966 Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000). WRC MEDIA: Restructuring Cues Moody's to Withdraw All Debt Ratings ------------------------------------------------------------------ Moody's Investors Service has withdrawn all ratings of WRC Media Inc., including: Weekly Reader Corporation: * $30 million senior secured revolving credit facility -- B1 * $145 million secured second lien facility -- B3 WRC Media Inc.'s: * Corporate Family Rating (formerly Senior Implied rating) -- B2 * $152 million 12 3/4% Senior subordinated Notes, due 2009 -- Caa2 The ratings withdrawal follows the company's July 22, 2005 announcement that it has concluded a capital restructuring which has retired/refinanced all of the above rated debt issues. WRC Media, a publisher of supplemental school learning materials and learning assessment tools, is headquartered in New York City, New York. The company's sales for 2004 totaled $209 million. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Abraxas Petro ABP (43) 99 (10) Alliance Imaging AIQ (54) 608 14 Amazon.com Inc. AMZN (64) 2,601 782 AMR Corp. AMR (615) 29,494 (2,230) Atherogenics Inc. AGIX (76) 234 213 Biomarin Pharmac BMRN (90) 181 3 Blount International BLT (238) 434 115 Builders Firstso BLDR (9) 709 245 CableVision System CVC (2,035) 11,141 410 CCC Information CCCG (113) 93 12 Centennial Comm CYCL (486) 1,467 124 Choice Hotels CHH (185) 283 (36) Cincinnati Bell CBB (593) 1,919 (8) Clorox Co. CLX (346) 3,756 (158) Compass Minerals CMP (69) 707 139 Conjuchem Inc. CJC (22) 32 28 Delphi Corp. DPH (3,880) 16,998 588 Deluxe Corp DLX (124) 1,533 (280) Denny's Corporation DENN (263) 496 (82) Domino's Pizza DPZ (526) 450 26 Echostar Comm-A DISH (1,830) 6,579 148 Emeritus Corp. ESC (133) 716 (106) Flow Intl. Corp. FLOW (9) 136 (3) Foster Wheeler FWLT (520) 2,140 (213) Freightcar Amer. RAIL (23) 208 8 Graftech International GTI (35) 1,029 265 I2 Technologies ITWO (199) 377 76 ICOS Corp ICOS (38) 285 170 IMAX Corp IMAX (40) 235 24 Investools Inc. IED (16) 56 (36) Isis Pharm. ISIS (104) 176 61 Jorgensen (Earle) JOR (186) 659 186 Knoll Inc. KNL (3) 570 67 Kulicke & Soffa KLIC (44) 365 182 Lodgenet Entertainment LNET (72) 287 22 Maxxam Inc. MXM (671) 1,000 95 Maytag Corp. MYG (77) 3,019 398 McDermott Int'l MDR (232) 1,450 34 McMoran Exploration MMR (24) 405 143 Nexstar Broadc - A NXST (30) 700 16 Northwest Airline NWAC (3,273) 13,821 (1,204) NPS Pharm Inc. NPSP (98) 310 215 ON Semiconductor ONNN (346) 1,132 270 Owens Corning OWENQ (8,271) 7,671 1,250 Primedia Inc. PRM (777) 1,883 164 Quality Distrib. QLTY (29) 386 15 Qwest Communication Q (2,564) 24,129 469 Revlon Inc. - A REV (1,065) 1,155 99 RH Donnelley RHD (186) 3,972 (57) Riviera Holdings RIV (27) 223 5 Rural/Metro Corp. RURL (184) 221 18 SBA Comm. Corp. A SBAC (104) 854 9 Sepracor Inc. SEPR (201) 1,175 835 St. John Knits Inc. SJKI (52) 213 80 Tivo Inc. TIVO (1) 151 48 US Unwired Inc. UNWR (84) 413 45 Valence Tech. VLNC (46) 10 (2) Vector Group Ltd. VGR (31) 505 152 Verifone Holding PAY (120) 267 30 Vertrue Inc. VTRU (50) 451 (81) Viropharma Inc. VPHM (6) 190 58 Warner Music Group WMG (137) 4,742 (506) WR Grace & Co. GRA (629) 3,464 876 ********* 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. 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For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Junior M. Pinili, and Peter A. Chapman, Editors. Copyright 2005. 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. 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