/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/051201.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, December 1, 2005, Vol. 9, No. 285 Headlines 5G WIRELESS: Equity Deficit Widens to $877,288 at Sept. 30 ABLE LABORATORIES: Court Okays $23.1-Mil Asset Sale to Sun Pharma ALOHA AIRLINES: Bankruptcy Court Confirms Reorganization Plan ALOHA AIRLINES: Reaches Tentative Agreement with Pilots' Union ANCHOR GLASS: Rental Service Says No to $4-Million Vendor Payments ANCHOR GLASS: Court Defers Decision on GGC's Lift Stay Request ANCHOR GLASS: Court Approves Acclaris as Claims Agent ANY MOUNTAIN: Disclosure Statement Hearing Set for December 9 APRIA HEALTHCARE: Streamlines Operations with Management Changes ARMSTRONG WORLD: Gets Court Okay to Pay $1.38M Womble Carlyle Fee ARGENT SECURITIES: S&P Lifts Rating on Class M-5 Certificates B/E AEROSPACE: Offering 13 Million Shares via Public Placement BALLY TOTAL: Retains J.P. Morgan to Explore Strategic Alternatives BANC OF AMERICA: Fitch Rates $2.7 Mil. Class Certificates at Low-B BANC OF AMERICA: Fitch Places Low-B Ratings on $2.1MM Class Certs. BELIZE MORTGAGE: Moody's Downgrades Class B Bonds' Rating to Caa3 BOUNDLESS CORP: Confirmation Hearing Set for December 13 BRICE ROAD: Judge Preston Denies GE Credit's Motion to Lift Stay C-BASS: S&P Affirms BB+ Rating on Class B-2 Certificates CAPITAL AUTOMOTIVE: Moody's Rates Planned $500MM Notes at (P)Ba2 CATHOLIC CHURCH: Parties Balk at Spokane's Motion to Sell Property CATHOLIC CHURCH: Spokane FCR Wants to Hire Daniel Brown as Expert CELL WIRELESS: Releases Third Quarter 2005 Financial Results CENTILLION INDUSTRIES: Lender Issues Default Notice to MPC Unit CHL MORTGAGE: S&P Raises Low-B Ratings on Three Cert. Classes CITIGROUP MORTGAGE: S&P Affirms BB+ Rating on Class M-7 Certs. CLEARLY CANADIAN: Sept. 30 Equity Deficit Narrows to $196,000 COLLINS & AIKMAN: Union Won't Object To, But Doesn't Endorse, KERP COLUMN CANADA: S&P Raises Low-B Ratings on Two Certificate Classes COMM 2005-FL11: Fitch Rates $77.7 Mil. Class Certificates at Low-B COMPASS MINERALS: S&P Rates Proposed $450MM Sr. Sec. Loan at BB- CONSTELLATION BRANDS: Regulators Approve Vincor Acquisition CONSTELLATION BRANDS: Ups Vincor Buy-Out Offer to C$33 Per Share CONTECH CONSTRUCTION: Apax Offers $1 Billion for Majority Interest CONTECH CONSTRUCTION: Apax Equity Buy Spurs S&P to Review Ratings COUNTRYWIDE HOME: S&P Affirms Junk Rating on Class B-4 Certs. CURON MEDICAL: Has Six Months to Regain Compliance, Nasdaq Says CVF TECHNOLOGIES: Equity Deficit Widens to $2.1 Mil. at Sept. 30 CWMBS INC: Fitch Puts Low-B Ratings on $1.3 Million Class B Certs. CWMBS INC: Fitch Places Low-B Ratings on $1.8 Mil. Class B Certs. DELTA AIR: Retirees Want Townsend & Townsend as Special Counsel DELTA MILLS: Posts $6.6-Mil Net Loss in Quarter Ended Oct. 1 DIRECTED ELECTRONICS: Financial Policy Cues S&P to Review Ratings DIRECTVIEW INC: Sept. 30 Balance Sheet Upside-Down by $1.51 Mil. DRESSER-RAND: Improved Performance Spurs S&P's Positive Outlook EAGLEPICHER HOLDINGS: Wants Until June 5 to Decide on Leases ERXSYS INC: Posts $2.8 Mil. Net Loss in Third Quarter 2005 FEDERAL-MOGUL: Can Perform Obligations Under U.K. Settlement Pact FEDERAL-MOGUL: Can Top Deutsche Bank's $421 Mil. T&N Debt Offer FORD MOTOR: Turnaround Concerns Prompt S&P to Review Ratings FORTUNE OIL: Sept. 30 Balance Sheet Upside-Down by $11.7 Million GRAY TELEVISION: Increases Senior Credit Facility to $600 Million GREENPOINT MORTGAGE: Moody's Rates Class B-4 Sub. Certs. at Ba2 HARVEST ENERGY: Inks $4-Billion Merger Pact with Viking Energy HARVEST ENERGY: Viking Energy Merger Prompts S&P to Review Ratings HERTZ CORP: S&P Places Low-B Ratings on $6.05 Billion Senior Debts HUDSON BAY: Weak Financial Metrics Spur S&P to Lower Debt Ratings INTERDENT INC: Revenue Concerns Prompt S&P's Negative Outlook ISLETON DEVELOPMENT: Section 341(a) Meeting Slated for Dec. 6 ISLETON DEVELOPMENT: David Jones Approved as Responsible Person IVOW INC: Incurs $504,000 Net Loss in Third Quarter 2005 JAMES FALASCA: Case Summary & 8 Largest Unsecured Creditors JB OXFORD: Incurs $2.2 Mil. Net Loss in Quarter Ended Sept. 30 JP MORGAN: Fitch Puts Low-B Ratings on $61.2 Million Class Certs. JP MORGAN: Fitch Places Low-B Ratings on $27.9 Mil. Class Certs. KAISER ALUMINUM: Wants to Enter Into Settlement with 8 Insurers KEYSTONE AUTOMOTIVE: Moody's Lowers $175MM Notes' Rating to Caa1 KMART CORP: Files Revised Status Report on Avoidance Actions KMART CORP: Gets Okay to Settle Wallace's Certification Issues LARGE SCALE: Files Financial Results for Quarter Ending Sept. 30 LB-UBS: S&P Downgrades Rating on Class P Certificates to D LEVITZ HOME: Wants Court to Approve HSBC Bank Nevada Agreements LEVITZ HOME: Court Approves Blackstone Amended Letter Agreement LEVITZ HOME: Wants Court to Approve Key Employee Retention Plan LPL HOLDINGS: Moody's Rates $400 Million Sr. Sub. Notes at Caa1 MARSH SUPERMARKETS: Posts $3.4 Million Net Loss in Second Quarter MARSH SUPERMARKETS: S&P Reviews Ratings Over Possible Sale Plan MASTR ASSET: Fitch Puts BB+ Rating on $8.4 Mil. Class M-10 Certs. MERCURY INTERACTIVE: Nasdaq Extends Filing Deadline to January 3 MERRILL LYNCH: Fitch Upgrades Low-B Ratings on 6 Cert. Classes MERRILL LYNCH: Fitch Rates $8.5 Million Cert. Classes at Low-B MESABA AVIATION: Wants to Assign Kenton County Ground Lease MESABA AVIATION: Court Okays Qwest Settlement Agreement MIRANT CORP: Underwood Perkins Okayed as Ch. 11 Examiner's Counsel MIRANT CORP: Equity Panel Wants Directors' Equity Stake Cancelled MIRANT CORP: Asks Court to Approve Wyandotte Settlement Agreement NATIONAL HEALTH: Moody's Upgrades Sub. Debentures' Rating to B1 NEBRASKA BOOK: Business Competition Spurs S&P's Negative Outlook NORMURA ASSET: S&P Lifts Low-B Ratings on Two Class B Certificates NORTHWEST AIRLINES: Wants to Assume AMEX Credit Card Agreements NORTHWEST AIRLINES: Wants to Defease NWA Trust No. 1 Secured Debt NUTECH DIGITAL: Sept. 30 Working Capital Deficit Tops $2 Million OPTION ONE: Moody's Rates Class M-11 Sub. Certificates at Ba2 POLYPORE INTERNATIONAL: Moody's Lowers $300MM Bond Rating to Ca PORTOLA PACKAGING: Aug. 31 Balance Sheet Upside-Down by $57.8 Mil. PROLONG INTERNATIONAL: AMEX Delisting Prompts OTCBB Move PROTOCOL SERVICES: Can Walk Away from Poway and Los Angeles Leases PROXIM CORP: Court Sets December 20 as Claims Bar Date PURADYN FILTER: Sept. 30 Balance Sheet Upside-Down by $3.9 Million REFCO INC: A. Togut Gets Court OK to Operate Refco LLC's Business REFCO INC: Refco LLC's Ch. 7 Trustee Can Assume Acquisition Pact REFCO INC: Gets Court OK to Continue Cash Management System Use RESIDENTIAL ACCREDIT: S&P Affirms Low-B Ratings on 6 Cert. Classes RESIDENTIAL ACCREDIT: Fitch Rates $3.9 Mil. Sub. Certs. at Low-B RFMSI: S&P Raises Low-B Ratings on Five Certificate Classes ROO GROUP: $3.5 Million 3rd Quarter Loss Fuels Going Concern Doubt SAXON ASSET: Moody's Reviews Class BF-1 Certificates' B3 Rating SG MORTGAGE: Moody's Rates Class M-11 Sub. Certificates at Ba2 SWISS MEDICA: Posts $1.5-Mil Net Loss in Quarter Ended Sept. 30 TCW LINC: Fitch Keeps Junk Ratings on $121 Million CBO Tranches TELOGY INC: Voluntary Chapter 11 Case Summary ULTRASTRIP SYSTEMS: Posts $2 Million Net Loss in Third Quarter URBAN HOTELS: Case Summary & 20 Largest Unsecured Creditors WELLS FARGO: Fitch Rates $448,000 Class B Certificates at Low-B WELLS FARGO: Fitch Places Low-B Ratings on $3.7 Mil. Cert. Classes WESTLIN CORP: Court Sets Plan Confirmation Hearing for Dec. 19 ZOND-PANAERO WINDSYSTEM: Defaults on $2.4 Million Interest Payment ********* 5G WIRELESS: Equity Deficit Widens to $877,288 at Sept. 30 ---------------------------------------------------------- 5G Wireless Communications, Inc., fka Tesmark, Inc. (OTCBB: FGWC) delivered its financial statements for the quarter ended Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 14, 2005. The company reported a $353,208 net loss on $0 revenue for the quarter ended Sept. 30, 2005. At Sept. 30, 2005, the company's balance sheet showed $1,303,958 in total assets and $2,181,246 in total liabilities resulting in an $877,288 stockholders' equity deficit. 5G Wireless' Sept. 30 balance sheet shows strained liquidity with $384 in cash available to satisfy $517,383 of accounts payable coming due within the next 12 months. A full-text copy of 5G Wireless Communications' financial statements for the quarter ended Sept. 30, 2005, is available at no charge at http://ResearchArchives.com/t/s?366 Going Concern Doubt Squar, Milner, Reehl & Williamson, LLP, in Newport Beach, California, the company's external auditor, raised substantial doubt about 5G Wireless' ability to continue as a going concern. Squar Milner points to recurring losses, negative working capital, negative retained earnings and unable to obtain additional financing. 5G Wireless Communications, Inc., fka Tesmark, Inc. (OTCBB: FGWC) -- http://www.5gwireless.com/-- develops and markets broadband wireless networks for university and municipal campuses and provides Wi-Fi networking equipment for a select group of VARs and WISPs. ABLE LABORATORIES: Court Okays $23.1-Mil Asset Sale to Sun Pharma ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey, Trenton Division, approved the sale of Able Laboratories, Inc.'s assets to Sun Pharmaceutical Industries Limited for $23,145,0000. The sale is expected to close by Dec. 31, 2005. Aurobindo Pharma USA, the stalking horse bidder, emerged as the second highest bidder in an auction held Nov. 1, 2005. The Court also approved the assumption and assignment of contracts, associated with the sold assets, under Sections 363 and 365 of the Bankruptcy Code. Headquartered in Cranbury, New Jersey, Able Laboratories, Inc. -- http://www.ablelabs.com/-- develops and manufactures generic pharmaceutical products in tablet, capsule, liquid and suppository dosage forms. The Company filed for chapter 11 protection on July 18, 2005 (Bankr. D. N.J. Case No. 05-33129) after it halted manufacturing operations and recalled all of its products not meeting FDA regulatory standards. Deborah Piazza, Esq., and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $59.5 million in total assets and $9.5 million in total debts. ALOHA AIRLINES: Bankruptcy Court Confirms Reorganization Plan ------------------------------------------------------------- The Hon. Robert J. Faris of the U.S. Bankruptcy Court for the District of Hawaii has confirmed Aloha Airlines' plan of reorganization, setting a course for the Hawaii-based airline to exit from Chapter 11 as early as Dec. 15, 2005 -- less than a year after Aloha filed for bankruptcy relief. Pending ratification of a new labor agreement by Aloha's pilots and resolution of certain issues, the Court gave its approval on Tuesday, Nov. 29, to the reorganization plan that will enable the Yucaipa Companies, Aloha Aviation Investment Group and the Ching and Ing families to recapitalize the Company with a combination of $50 million in equity and up to $50 million in debt financing. "This is a significant moment in the 60-year history of Aloha Airlines," said David A. Banmiller, Aloha Airlines president and chief executive officer. "Thanks to our dedicated, hard-working employees and the local shareholders of this Company, all of whom have made sacrifices, Aloha Airlines will continue to serve Hawaii's people. And thanks to the financial commitment and enthusiastic support of Yucaipa and AAIG, Aloha is positioned to prosper and grow. I must also thank our elected officials for their support and our customers, who remained loyal and provided the hope we needed to get through each day." Headquartered in Honolulu, Hawaii, Aloha Airgroup, Inc. -- http://www.alohaairlines.com/-- provides air carrier service connecting the five major airports in the State of Hawaii. Aloha Airgroup and its subsidiary Aloha Airlines, Inc., filed for chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063). Alika L. Piper, Esq., Don Jeffrey Gelber, Esq., and Simon Klevansky, Esq., at Gelber Gelber Ingersoll & Klevansky represent the Debtors in their restructuring efforts. As of Dec. 30, 2004, Aloha Airgroup reported $333,901 in assets and $24,124,069 in liabilities, while Aloha Airlines reported $9,134,873.23 in assets, and $543,709,698.75 in liabilities. ALOHA AIRLINES: Reaches Tentative Agreement with Pilots' Union -------------------------------------------------------------- Aloha Airlines and the Air Line Pilots Association Council 80 reached a tentative agreement on a new contract, bringing Aloha Airlines one step closer to emerging from bankruptcy by the end of the year. Upon ratification by the ALPA membership and approval of the U.S. Bankruptcy Court for the District of Hawaii, the agreement covering 270 Aloha pilots would become effective and run through April 30, 2009. The tentative agreement was unanimously endorsed by ALPA Council 80's Master Executive Committee, who also announced their support of Aloha's Plan of Reorganization. The MEC will be recommending ratification of the agreement to its members who will be voting over the next several days. "We congratulate our pilots for working round the clock to reach a consensual agreement and to advance our reorganization plan another step forward," said David A. Banmiller, Aloha's president and chief executive officer. "This brings the pilots together with the more than 3,000 other employees who support what we are doing at the new Aloha and are moving in step with our shareholders, the Yucaipa Companies, Aloha Aviation Investment Group and the Ching and Ing families." "We look forward to working with Aloha's new investors who bring renewed energy and enthusiasm and the promise of growth for Aloha Airlines and for the benefit of the traveling public," said David Bird, chairman of ALPA Council 80 Master Executive Committee. Although details were not disclosed, Mr. Banmiller said the agreement between Aloha and ALPA provides for the possible termination of the pilot's defined-benefit plan. However, the agreement also contains a unique provision whereby the plan could be permanently frozen, or restored to frozen status, in the event that Congress enacts legislation to allow the nation's airlines to amortize their funding liabilities over a 20-year period. "Aloha's agreement with ALPA could well set a pattern for other airlines pursuing reorganization," said Aloha's Mr. Banmiller. "We will work closely with ALPA to actively urge Congress to pass this legislation to help Aloha's pilots and their colleagues throughout the industry." With the tentative agreement, ALPA becomes the fifth and final of Aloha's bargaining units to reach new agreements and support the company's Plan of Reorganization. The Association of Flight Attendants ratified a new contract on Nov. 29. International Association of Machinists and Aerospace Workers Lodge 141 and Lodge 142, and a unit of the Transport Workers Union earlier ratified new contracts. All of the contracts will take effect upon approval of the Bankruptcy Court and run through April 30, 2009. Headquartered in Honolulu, Hawaii, Aloha Airgroup, Inc. -- http://www.alohaairlines.com/-- provides air carrier service connecting the five major airports in the State of Hawaii. Aloha Airgroup and its subsidiary Aloha Airlines, Inc., filed for chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063). Alika L. Piper, Esq., Don Jeffrey Gelber, Esq., and Simon Klevansky, Esq., at Gelber Gelber Ingersoll & Klevansky represent the Debtors in their restructuring efforts. As of Dec. 30, 2004, Aloha Airgroup reported $333,901 in assets and $24,124,069 in liabilities, while Aloha Airlines reported $9,134,873.23 in assets, and $543,709,698.75 in liabilities. ANCHOR GLASS: Rental Service Says No to $4-Million Vendor Payments ------------------------------------------------------------------ Rental Service Corporation USA, an unsecured creditor of Anchor Glass Container Corporation, argues that the Debtor's motion to pay up to $4 million in prepetition claims of certain critical vendors fails to provide creditors and the U.S. Bankruptcy Court for the Middle District of Florida with adequate and fair notice of the identity of the purported "critical vendors". Daniel L. Moody, Esq., at Moody & Shea, PA, in Largo, Florida, notes that if the identity of the proposed Critical Vendors and the aggregate total of the prepetition claims at issue are not known, Rental Service and other creditors won't be able to determine how, and to what extent, the estate or their individual claims are, or could potentially be, impacted by the Motion. Rental Service also complains that the Motion fails to address the issue of potential subsequent preference actions against critical vendors. Mr. Moody tells the Court that the incentive for a Critical Vendor to enter into a Trade Agreement with the Debtor is not only the anticipated profit on postpetition transactions, but also the ability to receive payment of prepetition debts outside of the terms of the Debtor's plan of reorganization. The Motion as well as the proposed language of the Order and letter to creditors, Mr. Moody notes, is silent as to the issue of prepetition payments made by the Debtor to the Critical Vendors. While it would be both incongruous and illogical for the Debtor to be allowed to make postpetition payments to a Critical Vendor of all or a portion of the Critical Vendor's prepetition claim, outside of the Debtor's plan of reorganization pursuant to the Trade Agreement, and to subsequently seek to recover prepetition payments made to the same Critical Vendor, neither the Motion nor the Proposed Order addresses the issue or prohibits the potential action, Mr. Moody adds. Rental Service asserts that the procedure advocated by the Debtor's Motion impermissibly affords excessive and unfettered discretion to the Debtor as to the selection of Critical Vendors and the treatment of Critical Vendors' prepetition claims. In essence, Mr. Moody says, the Debtor seeks authority to potentially deprive the unsecured creditors of $4,000,000 to distribute to those undisclosed creditors it deems critical, with or without a Trade Agreement. The Debtor seeks unfettered discretion to pay those creditors it deems critical with little or no Court approval, input or recommendations and seeks to only disclose those it deems critical at or after payment has made to the preferred creditor, he adds. Accordingly, Rental Service asks the Court to: -- direct the Debtor to disclose each creditor it deems to be a Critical Vendor; -- rule that the Debtor should demonstrate that each proposed Critical Vendor is absolutely necessary to reorganization and that other creditors will ultimately be in as good of a position if a critical vendor order is entered; and -- require that the Critical Vendor's agreement be based on the Customary Trade Terms. In the alternative, if the Court does not provide this protection to the Critical Vendors, Rental Service asks Judge Paskay to provide in the Order and in the proposed letter to Critical Vendors that the Debtor's rights to seek recovery of prepetition payments to the Critical Vendors is unaffected by the Court's Order and the Trade Agreement. Rental Service also asks the Court to require the Debtor to list each creditor it deems critical and demonstrate why the creditor must receive preferential treatment to the detriment of other creditors. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Court Defers Decision on GGC's Lift Stay Request -------------------------------------------------------------- As reported in the Troubled Company Reporter, GGC LLC, fka Glenshaw Glass Company, asked the U.S. Bankruptcy Court for the Middle District of Florida to lift the automatic stay so it can enforce a judgment, handed by the U.S. Bankruptcy Court for the Western District of Pennsylvania, directing Anchor Glass Container Corporation to immediately cease using glass molds owned by GCC. GGC argued that the Florida Court must modify the automatic stay because: 1. the molds do not belong to Anchor Glass and are therefore not property of Anchor Glass' estate; and 2. Anchor Glass has no equity in the molds, inasmuch as the molds do not belong to Anchor Glass, and, accordingly, the molds are not necessary to any effective reorganization. The Debtor's Official Committee of Unsecured Creditors opposed GGC's bid to lift the automatic stay, saying that GGC has not shown that cause exists to lift the stay in the Debtor's bankruptcy case. The Committee said that lifting the stay to allow GGC to recover and sell property on which no debt is owed and that is currently used by the Debtor in its operations is not appropriate. Court Ruling Judge Paskay rules that the automatic stay will continue in full force and effect until the earlier of: (a) the entry of an order setting aside the Judgment and Order entered in the adversary proceeding between GGC, LLC, also known as Glenshaw Glass Company v. Anchor Glass Container Corporation, pending in the U.S. Bankruptcy Court for the Western District of Pennsylvania; or (b) until November 23, 2005, at 9:00 a.m., the continuation of the preliminary hearing. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Court Approves Acclaris as Claims Agent ----------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida authorized Anchor Glass Container Corporation to employ Acclaris, LLC, as its noticing, claims and balloting agent. Judge Paskay makes it clear that by accepting appointment in the Debtor's Chapter 11 case, Acclaris waives any right to receive compensation from the government and will look solely to the Debtor and its estate for compensation. Furthermore, Judge Paskay clarifies that Acclaris is not an official representative of the United States, is not acting on behalf of the United States, and will not misrepresent that fact to the public. As official Noticing Claims and Balloting Agent, Acclaris will: (a) notify all potential claimants, as established by the Debtor's records, of the case and provide them with an appropriate proof of claim; (b) docket all claims received by the Clerk's Office and by Agent, maintain the official claims register on behalf of the Clerk of the Court and provide to the Clerk an exact duplicate thereof on a monthly basis; (c) upon completion of the docketing process for all claims received to date by the Clerk's Office, turn over to the Clerk a copy of the claims register for the Clerk's review; (d) specify in the claims register for each claim docketed: * the claim number assigned, * the date received, * the name and address of the claimant or agent, * the amount and classification of the claim asserted by each claimant; and * the applicable Debtor. (e) maintain the mailing list of all entities that have filed proofs of claim, proofs of interest, or notices of appearance, which list will be available upon request of any party-in-interest or the Clerk; (f) prepare and serve required notices, motions and orders, and documents in these cases, including: * notice of the claims bar date; * notice of objections to claims; * notice of any hearings on a Disclosure Statement and confirmation of a plan; * other miscellaneous notices to any entities, as the Debtors or the Court may deem necessary or appropriate for an orderly administration of the chapter 11 case; * motions prepared by Debtor; * plans of reorganization, disclosure statements, and ballots; and * orders entered by the Court for which the Debtor is responsible for service. (g) implement necessary security measures to ensure the completeness and integrity of the claims registers; (h) maintain copies of all proofs of claim and proofs of interest; (i) maintain an up-to-date mailing list for all entities that have filed a proof of claim or proof of interest, which list will be available upon request of a party-in-interest or the Clerk's Office; (j) other services as may be requested by the Clerk's Office or the Debtor in connection with processing claims and providing notice to known creditors; and (k) collect, process and tabulate ballots cast in the Debtor's case. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts.(Anchor Glass Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANY MOUNTAIN: Disclosure Statement Hearing Set for December 9 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California will convene a hearing on Dec. 9 to consider approval of the Disclosure Statement for the Third Amended Plan of Reorganization filed by Any Mountain, Ltd., on June 10, 2005. Terms of the Third Amended Plan The Plan calls for the reorganization of Any Mountain's operations and a partial liquidation of its assets. The Debtor will choose three stores to close among these locations: * Shattuck Ave store in Berkeley, * Hacienda Crossings in Dublin, * Westgate Mall in San Jose, and * The Willows in Concord. The leases for the closed stores will be assigned at the best price obtainable and the stores' inventory will be sold at a going-out-of-business sale. Half of the $3 million estimated net proceeds from the lease assignment and proceeds of the inventory sale will be used to settle Cardinal Financial Services' more than $1.13 million allowed secured claim. The remaining half of the proceeds from the lease assignment will be used to replenish the Debtor's inventory. The Debtor will continue operations in its Corte Madera and Redwood City stores. Avoidance actions will be initiated by the Debtor against: * Belzer, Hulchly & Murray; * Benchmark; * San Francisco Chronicle; * SBC Yellow Pages; * The Mercury News; * Columbia Sportswear; * Osprey Packs; * Hi Tec Sports; * Spy Optic; * Red Wing Brands; * CSI Outdoors; * Crazy Creek; * Cerf Bros. Bag Co.; * Pur/Katadyn; * Johnson Camping; * Stansport; * Eldon "Bud" Hoffman; and * Cardinal Financial. The company's founder Bud Hoffman, will continue as chief executive officer of Reorganized Any Mountain with a salary of $225,000. Steven Ferguson will also continue as the company's COO with a salary of $140,000. Treatment of Claims Cardinal Financial Services' secured claim, plus interest, will be paid in 18 monthly installments. The payments will begin one month after the effective date of the Plan. Marker Ltd., Marmot, Rossignol, Nordica USA and Performance Sports Apparel's secured claims will be paid in six semi-annual installments of principal and interest. Payments are due and payable every December 30th and February 28th, beginning on December 30, 2005. Unsecured Creditors will be paid through a Disbursing Account set up by the Debtor. The Disbursing Account will be funded with ten semi-annual deposits of $300,000. These deposits will come from the balance of the proceeds from the inventory and lease sales after payments to the secured creditors are satisfied. Any litigation recoveries will also be deposited to the Disbursing Account. Payment will be made on an Annual Disbursement Date. A copy of the Debtor's Third Amended Plan or Reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=050617042120 Headquartered in Corte Madera, California, Any Mountain Ltd, operates ten specialty outdoor stores throughout the San Francisco Bay Area. The Company filed for chapter 11 protection on Dec. 23, 2004 (Bankr. N.D. Calif. Case No. 04-12989). Michael C. Fallon, Esq., of Santa Rosa, California represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed below $50,000 in assets and more than $10 million in debts. APRIA HEALTHCARE: Streamlines Operations with Management Changes ---------------------------------------------------------------- Apria Healthcare Group Inc. (NYSE:AHG) reported several management changes designed to enhance the company's ability to increase revenue growth and streamline operations. Jeff Ingram, who most recently served as the Company's Senior Vice President, National Accounts and in prior sales management leadership positions within Apria, has been named Executive Vice President of Sales, with responsibility for both sales and marketing. In his National Accounts role, Mr. Ingram was responsible for the group that won or renewed significant national managed care contracts with CIGNA, Kaiser Permanente, Aetna, United Healthcare and Humana. Daniel J. Starck, who has been Apria's Executive Vice President, Business Operations for the past several years, has been named to the newly-created position of Executive Vice President of Customer Services, with expanded responsibility for all logistics, customer service, billing and collection functions. Starck and Ingram will both report to Lawrence A. Mastrovich, Apria's President and Chief Operating Officer. Anthony S. Domenico, formerly Executive Vice President, Sales and John J. McDowell, formerly Executive Vice President, Logistics, are resigning from the company to pursue other interests. The company reorganized its field operations and sales organizations, realigning its four geographic divisions into three, each with five regions covering the eastern, central and western portions of the United States. "We believe that the senior management changes will significantly strengthen our organization as we move into 2006," Chief Executive Officer Lawrence M. Higby said. "Accelerating sales growth is our number one priority going into the new year, and with Jeff Ingram's proven track record of driving both traditional and managed care sales, we believe that he is the right person to lead our sales organization." Headquartered in Lake Forest, California, Apria Healthcare Group Inc. -- http://www.apria.com/-- provides home respiratory therapy, home infusion therapy and home medical equipment through approximately 500 branches serving patients in 50 states. With $1.5 billion in annual revenues, it is the nation's leading homecare company. * * * As reported in the Troubled Company Reporter on Nov. 24, 2005, Standard & Poor's Ratings Services lowered its ratings on Lake Forest, California-based home respiratory care, durable medical equipment, and infusion therapy services provider Apria Healthcare Group Inc. The corporate credit rating was lowered to 'BB+' from 'BBB-'. All ratings on the company were removed from CreditWatch, where they were originally placed with negative implications Oct. 26, 2005. S&P said the outlook is stable. ARMSTRONG WORLD: Gets Court Okay to Pay $1.38M Womble Carlyle Fee ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Armstrong World Industries, Inc., and its debtor-affiliates permission to pay Womble Carlyle Sandridge & Rice PLLC $1,375,000 contingency fee for the firm's work with litigation related to tort and breach claims that AWI asserted against EFP Floor Products Fussboeden GmbH St. Johann and its affiliates. As reported in the Troubled Company Reporter on Oct. 4, 2005, AWI agreed to remit to Womble Carlyle 25% of any net settlement or arbitration award over $250,000 received by AWI in connection with the EFP Litigation. The amount payable to Womble Carlyle in connection with its efforts to resolve the EFP Litigation Claims is equal to 25% of the Revised Arbitration Settlement Sum minus $250,000, Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior finishings, most notably floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, 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 $4,032,200,000 in total assets and $3,296,900,000 in liabilities. As of March 31, 2005, the Debtors' balance sheet reflected a $1.42 billion stockholders' deficit. (Armstrong Bankruptcy News, Issue No. 83; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARGENT SECURITIES: S&P Lifts Rating on Class M-5 Certificates ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on five classes of certificates from Argent Securities Inc.'s series 2003-W4. At the same time, ratings are affirmed on the two remaining classes from this transaction. The raised ratings are the result of an updated loan-by-loan analysis performed on the mortgage pool. The loss coverage levels derived from the new analysis are lower than the original levels at issuance, primarily due to loan seasoning, updated FICO scores, and lower loan-to-value ratios resulting from property value appreciation. Standard & Poor's raised certain ratings to reflect the credit support provided at the new, lower loss coverage levels. The affirmations are based on loss coverage percentages that are sufficient to maintain the current ratings. Standard & Poor's will continue to monitor this transaction to ensure that the assigned ratings accurately reflect the associated risks. Ratings Raised Argent Securities Inc. Asset-Backed Pass-Through Certificates Series 2003-W4 Rating ------ Class To From ----- -- ---- M-1 AAA AA M-2 AA A M-3 A BBB M-4 BBB BBB- M-5 BBB- BB+ Ratings Affirmed Argent Securities Inc. Asset-Backed Pass-Through Certificates Series 2003-W4 Class Rating ----- ------ A-1, A-2 AAA B/E AEROSPACE: Offering 13 Million Shares via Public Placement -------------------------------------------------------------- B/E Aerospace, Inc. (Nasdaq:BEAV) plans to make a public offering of 13,000,000 shares of its common stock. The offering will be made under B/E's effective shelf registration statement filed with the Securities and Exchange Commission. Credit Suisse First Boston and UBS Investment Bank will be the joint book-running managers for the offering and Friedman Billings Ramsey and Stephens Inc. will be co-managers for the offering. B/E will grant the underwriters an option to purchase up to an additional 1,950,000 shares of common stock to cover over- allotments, if any. B/E intends to use the aggregate net proceeds from the offering to redeem, at par, its $250 million aggregate principal amount 8% Senior Subordinated Notes due 2008. B/E Aerospace, Inc., manufactures aircraft cabin interior products, and distributes aerospace fasteners. B/E designs, develops and manufactures a broad range of products for both commercial aircraft and business jets. B/E manufactured products include seating, lighting, oxygen, and food and beverage preparation and storage equipment. The company also provides cabin interior design, reconfiguration and passenger-to-freighter conversion services. Products for the existing aircraft fleet - the aftermarket - generate about 60 percent of sales. B/E sells its products through its own global direct sales organization. * * * Moody's Rating Services assigned a B3 rating on the Company's corporate family rating and junked the ratings on its senior subordinate securities. BALLY TOTAL: Retains J.P. Morgan to Explore Strategic Alternatives ------------------------------------------------------------------ The Board of Directors for Bally Total Fitness Holding Corporation (NYSE:BFT) has retained J.P. Morgan Securities Inc. to explore a range of strategic alternatives to enhance shareholder value. These alternatives may include, but are not limited to: -- a recapitalization; -- the sale of securities or assets of the Company; or -- the sale or merger of Bally Total Fitness with another entity or strategic partner. J.P. Morgan will work in collaboration with The Blackstone Group, which has been advising Bally for the past ten months, in providing strategic advisory services to the company. Bally Total Fitness said there can be no assurance that any transaction will occur or, if one is undertaken, its terms or timing. Bally Total Fitness is the largest and only nationwide commercial operator of fitness centers, with approximately four million members and 440 facilities located in 29 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. With an estimated 150 million annual visits to its clubs, Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter on Aug. 11, 2005, Moody's Investors Service affirmed the Caa1 corporate family (formerly senior implied) rating and debt ratings of Bally Total Fitness Holding Corporation. The affirmation reflects continued high risk of default and Moody's estimate of recovery values of the various classes of debt in a default scenario. Moody's said the ratings outlook remains negative. Moody's affirmed these ratings: * $175 million senior secured term loan B facility due 2009, rated B3 * $100 million senior secured revolving credit facility due 2008, rated B3 * $235 million 10.5% senior unsecured notes (guaranteed) due 2011, rated Caa1 * $300 million 9.875% senior subordinated notes due 2007, rated Ca * Corporate family rating, rated Caa1. BANC OF AMERICA: Fitch Rates $2.7 Mil. Class Certificates at Low-B ------------------------------------------------------------------ Banc of America Alternative Loan Trust 2005-11 mortgage pass-through certificates are rated by Fitch Ratings: -- $424,180,220 classes 1-CB-1 through 1-CB-8, 1-CB-R, 2-CB-1, 3-CB-1, CB-IO, CB-PO, 4-A-1 through 4-A-6, 4-IO, 4-PO 'AAA'; -- $7,518,000 class B-1, 'AA'; -- $3,757,000 class B-2, 'A'; -- $2,653,000 class B-3, 'BBB'; -- $1,326,000 class B-4, 'BB'; -- $1,327,000 class B-5, 'B'. The 'AAA' ratings on the senior certificates reflect the 4.05% subordination provided by the 1.70% class B-1, 0.85% class B-2, 0.60% class B-3, 0.30% privately offered class B-4, 0.30% privately offered class B-5 and 0.30% privately offered class B-6. Classes B-1, B-2, B-3, and the privately offered classes B-4 and B-5 are rated 'AA', 'A', 'BBB', 'BB', and 'B', respectively, based on their respective subordination. Class B-6 is not rated by Fitch. The ratings also reflect: * the quality of the underlying collateral, the primary servicing capabilities of Bank of America Mortgage, Inc., and * Fitch's confidence in the integrity of the legal and financial structure of the transaction. The transaction is secured by four pools of mortgage loans. Loan groups 1, 2, 3, and 4 are cross-collateralized and supported by the B-1 through B-6 subordinate certificates. All mortgage loans in all four groups were underwritten using Bank of America's 'Alternative A' guidelines. These guidelines are less stringent than Bank of America's general underwriting guidelines and could include limited documentation or higher maximum loan-to-value ratios. Mortgage loans underwritten to 'Alternative A' guidelines could experience higher rates of default and losses than loans underwritten using Bank of America's general underwriting guidelines. Loan groups 1, 2, 3, and 4 in the aggregate consist of 2,411 recently originated, conventional, fixed-rate, fully amortizing, first lien, one- to four-family residential mortgage loans with original terms to stated maturity ranging from 240 to 360 months. The aggregate outstanding balance of the pool as of Nov. 1, 2005 is $442,087,512.76, with an average balance of $183,362.72 and a weighted average coupon of 6.124%. The weighted average original loan-to-value ratio for the mortgage loans in the pool is approximately 72.37%. The weighted average FICO credit score is 737. Second homes and investor-occupied properties comprise 4.43% and 40.55% of the loans in the group, respectively. Rate/Term and cash-out refinances account for 12.54% and 28.82% of the loans in the group, respectively. The states that represent the largest geographic concentration of mortgaged properties are California, Florida, and Texas. All other states represent less than 5% of the aggregate pool balance as of the 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/ Banc of America Mortgage Securities, Inc. deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, elections will be made to treat the trust as three separate real estate mortgage investment conduits. Wells Fargo Bank, National Association will act as trustee. BANC OF AMERICA: Fitch Places Low-B Ratings on $2.1MM Class Certs. ------------------------------------------------------------------ Banc of America Funding Corporation mortgage pass-through certificates, series 2005-7, are rated by Fitch Ratings: Crossed Loan Group (Groups 1, 3, & 4) -- $587,511,937 senior certificates classes 1-A-1 through 1-A-5, 3-A-1 through 3-A-17, 4-A-1 through 4-A-8, 30-IO, 30-PO 'AAA'; -- $11,246,000 class X-B-1 'AA'; -- $3,647,000 class X-B-2 'A'; -- $2,127,000 class X-B-3 'BBB'; -- $1,216,000 class X-B-4 'BB'; -- $912,000 class X-B-5 'B'; Group 2 -- $132,085,650 senior certificates classes 2-A-1 through 2-A-7, and 2-A-R 'AAA'. The 'AAA' rating on the senior certificates of Groups 1,3 &4 reflects the 3.35% subordination provided by the 1.85% class X-B- 1, the 0.60% class X-B-2, the 0.35% class X-B-3, the 0.20% privately offered class X-B-4, the 0.15% privately offered class X-B-5, and the 0.20% privately offered class X-B-6. The ratings on classes X-B-1, X-B-2, X-B-3, X-B-4, and X-B-5 reflect each certificate's respective level of subordination. Class X-B-6 is not rated by Fitch. The 'AAA' rating on the senior certificates of Group 2 reflects the 5.35% subordination provided by the 2.95% class 2-B-1, the 0.85% class 2-B-2, the 0.55% class 2-B-3, the 0.30% privately offered class 2-B-4, the 0.20% privately offered class 2-B-5, and the 0.50% privately offered class 2-B-6. Classes 2-B-1, 2-B-2, 2- B-3, 2-B-4, 2-B-5, and 2-B-6 are not rated by Fitch. Fitch believes the amount of credit enhancement will be sufficient to cover credit losses. The ratings also reflect: * the high quality of the underlying collateral purchased by Banc of America Funding Corporation, * the integrity of the legal and financial structures, and * the master servicing capabilities of Wells Fargo Bank, N.A. The collateral for Groups 1, 3, & 4 consists of 1,141 fully amortizing, fixed interest rate, first lien mortgage loans, with original terms to maturity of 360 months. The aggregate unpaid principal balance of the pool is $607,876,189.14 as of Nov. 1, 2005 and the average principal balance is $532,757.40. The weighted average original loan-to-value ratio of the loan pool is approximately 67.71%. The weighted average coupon of the mortgage loans is 5.846% and the weighted average FICO score is 746. Cash-out and rate/term refinance loans represent 31.22% and 19.39% of the loan pool, respectively. The states that represent the largest geographic concentration are California, New York, New Jersey, and Maryland. All other states represent less than 5% of the outstanding balance of the pool. The collateral for Group 2 consists of 1,002 fully amortizing, fixed interest rate, first lien mortgage loans, with original WAM of 359 months. The aggregate unpaid principal balance of the pool is $139,552,562.24 as of Nov. 1, 2005 and the average principal balance is $139,274.01. The weighted average OLTV of the loan pool is approximately 72.58%. The WAC of the mortgage loans is 6.166% and the weighted average FICO score is 737. Cash-out and rate/term refinance loans represent 31.22% and 19.39% of the loan pool, respectively. The states that represent the largest geographic concentration are California, Florida, New York, Virginia, Maryland, Washington, and Pennsylvania. All other states represent less than 5% of the outstanding balance of the pool. 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/ BAFC, a special purpose corporation, purchased the mortgage loans from JP Morgan & Co., PHH Mortgage Corporation, Residential Funding Corporation, SunTrust Mortgage Corporation, and Wells Fargo Bank, N.A., and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. Wells Fargo Bank, N.A. will serve as master servicer and as securities administrator. Wachovia Bank, N.A. will serve as trustee and custodian. For federal income tax purposes, an election will be made to treat the trust as three separate real estate mortgage investment conduits. BELIZE MORTGAGE: Moody's Downgrades Class B Bonds' Rating to Caa3 ----------------------------------------------------------------- Moody's Investors Service downgraded the rating of the Class A bonds issued by Belize Mortgage Company 2002-1 to Ba1 from Baa1 and the rating of the Class B bonds to Caa3 from B3. This downgrade follows the downgrade of the government of Belize's foreign currency country ceiling to Caa3 from B3. The ratings of the Class A and Class B bonds had been downgraded to Baa1 and B3 and placed on review for further downgrade on June 20, 2005. The ratings of Class A and Class B bonds are based upon the guarantees provided by the Development Finance Corporation of Belize and by the government of Belize. In addition, Class A bonds benefit from a non-honoring insurance policy provided by Steadfast Insurance Company which, subject to certain conditions and limitations, insures Class A bondholders against a failure by the government of Belize to make payments as required by the guarantee. According to Alonso Sanchez, analyst at Moody's, the rating of Class A bonds reflects: * the high risk of default of the underlying obligor; * the government of Belize; and * the benefits added by the Steadfast non-honoring insurance policy. BOUNDLESS CORP: Confirmation Hearing Set for December 13 -------------------------------------------------------- The Honorable Dorothy Eisenberg of the U.S. Bankruptcy Court for the Eastern District of New York will convene a hearing at 10:00 a.m. on Dec. 13, 2005, to discuss the merits of the Third Amended Joint Plan of Reorganization filed by Boundless Technologies, Inc., and its debtor-affiliates. Under the Joint Plan, all distributions to be made to holders of allowed claims, whether through the issuance of its capital stock or payment of monies, will be made by the Debtors, Vision Technologies, Inc., or by Oscar Smith, the President of Vision Technologies. Payments and distributions to be made by the Debtors to Plan claimants will consist of cash or new issue of Boundless Common Stock of the Reorganized Debtors. Any cash to be disbursed will be distributed only by the Debtors, while Boundless Common Stock will be distributed directly by the Debtors or their transfer agent. The Plan groups claims and interests into nine classes, with unimpaired claims consisting of: a) allowed administrative claims to be paid 100% of their claims on the Effective Date; b) the secured Valtee claims will be paid in full over a period of 30 to 34 months subsequent to the Effective Date; c) the secured Vision claims will be paid 100% with shares of Boundless Common Stock; d) the partially secured Norstan claim will be paid in 72 monthly $5,000 installments beginning on the Effective Date; and e) allowed priority claims and allowed priority tax claims will be paid 100% of their claims in Cash on the Effective Date. Impaired claims consisting of: a) allowed unsecured claims will receive their pro rata share of cash payments equal to 2% of the first $7 million of annual revenues derived from the sale of text terminals, plus 4% of annual revenues derived from text terminal sales exceeding $7 million; and b) holders of Mandatorily Redeemable Preferred Stock and holders of existing stock will not receive any cash or property under the Plan and their stock will be cancelled on the record date. Full-text copies of the Amended Disclosure Statement and Amended Joint Plan are available for a fee at: http://www.researcharchives.com/download?id=040812020022 Headquartered in Hauppauge, New York, Boundless Corp., is a global technology company and is composed of two subsidiaries: Boundless Technologies, Inc., a desktop display products company, and Boundless Manufacturing Services, Inc., an emerging EMS company providing build-to-order(BTO) systems manufacturing, printed circuit board assembly. The Company and its debtor- affiliates filed for chapter 11 protection on March 12, 2003 (Bankr. E.D.N.Y. Case No. 03-81558). Jeffrey A Wurst, Esq., at Ruskin Moscou Faltischek PC, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $19,442,850 and total debts of $19,417,517. BRICE ROAD: Judge Preston Denies GE Credit's Motion to Lift Stay ---------------------------------------------------------------- The Honorable C. Kathryn Preston of the U.S. Bankruptcy Court for the Southern District of Ohio denied General Electric Credit Equities, Inc.'s request to lift the automatic stay in Brice Road Developments, LLC's chapter 11 case. As reported in the Troubled Company on Nov. 10, 2005, GE Credit wanted the automatic stay lifted so that it could proceed with the foreclosure of the Kensington Commons apartments. The Kensington Commons was financed through a $14.4 million prepetition mortgage from Armstrong Mortgage Company. GE Credit is the successor-in- interest to the Armstrong mortgage. GE Credit says that, as of Sept. 23, the Debtor owed it $14.2 million and that the full amount of the loan was due and payable due to a default. GE Credit alleges that the filing was done in bad faith and there was lack of adequate protection, which warrants a lifting of the automatic stay. The Debtor however told the Court that the case was not filed in bad faith because it did not attempt to isolate the heavily encumbered property from its other assets. The Debtor also said that GE Credit was not entitled to adequate protection since GE Credit was an unsecured creditor. Judge Preston denied GE Credit's motion citing: * the Debtor did not file its bankruptcy petition in bad faith; * GE Credit was an unsecured creditor and it had failed to establish cause for relief from stay due to lack of adequate protection; * the Debtor has maintained and continues to maintain the status quo; * although the Debtor lacks equity in the Kensington Commons, the property is necessary to an effective reorganization; and * the Debtor has shown that a reorganization is possible within a reasonable period of time. Judge Preston also ordered that the Debtor file a plan or reorganization and disclosure statement by Dec. 9, 2005, unless the Debtor can show good cause to extend. Headquartered in Dublin, Ohio, Brice Road Developments, L.L.C., owns Kensington Commons, a 264-unit apartment complex located outside of Columbus, Ohio. The Company filed for chapter 11 protection on Sept. 2, 2005 (Bankr. S.D. Ohio Case No. 05-66007). Yvette A Cox, Esq., at Bailey Cavalieri LLC represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. C-BASS: S&P Affirms BB+ Rating on Class B-2 Certificates -------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on 11 classes of certificates from three C-Bass-related transactions. At the same time, ratings are affirmed on the remaining classes from these transactions. The raised ratings are the result of updated loan-by-loan analyses performed on the mortgage pools. The loss coverage levels derived from the new analyses are significantly lower than the original levels at issuance, primarily due to loan seasoning, updated FICO scores, and lower loan-to-value ratios resulting from property value appreciation. Standard & Poor's raised certain ratings to reflect the credit support provided at the new, lower loss coverage levels. The affirmations are based on loss coverage percentages that are sufficient to maintain the current ratings. Standard & Poor's will continue to monitor these transactions to ensure that the assigned ratings accurately reflect the associated risks. Ratings Raised 2002-CB2 Trust C-Bass Mortgage Loan Asset-Backed Certificates Series 2002-CB2 Rating ------ Class To From ----- -- ---- M-1 AAA AA M-2 AA A 2003-CB4 Trust C-Bass Mortgage Loan Asset-Backed Certificates Series 2003-CB4 Rating ------ Class To From ----- -- ---- M-1 AAA AA M-2 AA A B-1 A BBB B-2 BBB BBB- Citigroup Mortgage Loan Trust Series 2003-CB5 C-Bass Mortgage Loan Asset-Backed Certificates Series 2003-CB5 Rating Class To From ----- -- ---- M-1 AAA AA M-2 AA+ A M-3 AA A- B-1 A+ BBB+ B-2 A- BBB Ratings Affirmed 2002-CB2 Trust C-Bass Mortgage Loan Asset-Backed Certificates Series 2002-CB2 Class Rating ----- ------ A-1, A-2 AAA B-1 BBB B-2 BB+ 2003-CB4 Trust C-Bass Mortgage Loan Asset-Backed Certificates Series 2003-CB4 Class Rating ----- ------ AF-1, AV-1, AV-2, A-IO AAA Citigroup Mortgage Loan Trust Series 2003-CB5 C-Bass Mortgage Loan Asset-Backed Certificates Series 2003-CB5 Class Rating ----- ------ AV-1, AF AAA B-3 BBB- CAPITAL AUTOMOTIVE: Moody's Rates Planned $500MM Notes at (P)Ba2 ---------------------------------------------------------------- Moody's Investors Service assigned provisional ratings of (P)Ba1 and (P)Ba2 to the proposed senior secured credit facility ($1.42 billion term loan and companion $250 million revolver) and $500 million senior unsecured note issue, respectively, that Capital Automotive plans to issue before the end of 2005. The issuer of the credit facility will be Capital Automotive's operating partnership, Capital Automotive LP, whereas the REIT will be the issuer of the new notes, which will be guaranteed by the partnership. The facility will enjoy a collateral pool of perfected first mortgages on the REIT's highest performing auto dealership group properties, which will be diversified in terms of location and franchise. However, the emerging capital structure does retain a meaningful unencumbered asset pool, which provides some indirect support for the unsecured debt. The outlook on the proposed debt issues is stable. In addition, the rating agency expects to lower its ratings on the senior unsecured debt and preferred stock of Capital Automotive REIT to Ba2 and B1, respectively, upon the closure of the acquisition of the REIT by investors advised by DRA Advisors LLC. The ratings remain under review for downgrade. Moody's indicated the rating downgrade will result from the increased leverage, including higher secured debt, that will be part of Capital Automotive's new capital structure. The total transaction value is approximately $3.6 billion, including the assumption of Capital Automotive's indebtedness and preferred shares. The REIT and DRA have successfully tendered for over 95% of the $125 million senior notes rated by Moody's, the protective covenants of which will be eliminated upon the deal's close. New preferred stock of $315 million will be issued privately, a portion of which will be used to tender for the existing preferred stock. The new securities issues are designed to match fund assets and liabilities, with the unamortizing senior note issue paired with fixed rate leases, and the floating-rate term loan paired against variable rate leases. Leases are long-term and have escalations, which provide increasing coverage. There are no significant lease expirations until 2008 (6.4% of revenue). In addition to lease escalations, there are commitments from the equity investors to fund Capital Automotive's acquisition pipeline through 2010. The current management of Capital Automotive will remain for at least three years, and no change is contemplated in the company's business or strategy. The transaction should close in mid-December 2005. Capital Automotive maintains strong relationships with a diverse number of auto dealer groups that operate under franchise agreements. The dealers benefit from state franchise and zoning laws which create monopolies for store sites and use. The REIT receives stable and predictable cash flows from a portfolio of long term triple-net leases. Tenant rent coverage has been more than 3X, and historical occupancies have been 100%. The new capital structure contemplates significant use of leverage and secured debt, in addition to private ownership which could result in limited transparency and reduced capital market access. Furthermore, Capital Automotive does have a concentration with speculatively rated tenants: the top ten tenants account for 70% of NOI. Moody's notes that Capital Automotive remains a young company with little experience with managing lease expirations or tenant issues. Finding value-protecting alternative uses or tenants for leased properties should they go dark could be a challenge. However, DRA has meaningful experience in repositioning commercially-zoned properties. The stable rating outlook on the proposed debt issues reflects Moody's expectation that the REIT will continue to grow steadily while maintaining stable credit metrics. The rating outlook also includes the expectation that the company will maintain its leadership in the auto dealer net-lease sector without any reduction in occupancies or rent coverages. Moody's would consider an upgrade if: * Capital Automotive improved fixed charge coverages to 2X (with unencumbered NOI interest coverage well above 2X); * reduced effective leverage to the mid-60% range; and * secured debt around 50% of gross assets. Any deterioration in fixed charge coverages, especially in the unencumbered pool, would create negative ratings pressure. Additional negative pressure will likely result should portfolio rent coverages drop below 2X, or should the REIT suffer a decline in leadership causing a 15% decline in NOI. These provisional ratings have been assigned with a stable outlook: Capital Automotive REIT: * (P)Ba2 the $500 million proposed senior notes. These notes will be guaranteed by Capital Automotive LP. Capital Automotive LP: * (P)Ba1 proposed $1.7 billion senior secured credit facility. Moody's also expects to downgrade to Ba2 and B1, respectively, the ratings on the outstanding senior unsecured and preferred stock of Capital Automotive should the transaction close as planned. As of now, the respective ratings are affirmed at Baa3 and Ba1, and remain under review for downgrade. In its last rating action, Moody's placed Capital Automotive's ratings under review for possible downgrade on September 6, 2005. Capital Automotive REIT [NASDAQ: CARS] is a real estate investment trust headquartered in McLean, Virginia, USA. The REIT's strategy is to acquire real property and improvements used by operators of multi-site, multi-franchised automotive dealerships and related businesses. As of June 30, 2005, the REIT had real estate investments primarily consisting of interests in 345 properties, representing 509 automotive franchises in 32 states. The properties are leased under long-term, triple-net leases with a weighted average initial lease term of approximately 15 years. Approximately 76% of the REIT's real estate portfolio is located in the top 50 metropolitan areas in the USA in terms of population, and 73% of the REIT's real estate portfolio is invested in properties leased to the "Top 100" dealer groups as published by "Automotive News." The REIT reported assets of $2.4 billion and equity of more than $1 billion at September 30, 2005. DRA Advisors LLC, founded in 1986, is a New York-based registered investment advisor specializing in real estate investment management services for institutional and private investors, including: * pension funds, * university endowments, * foundations, and * insurance companies. CATHOLIC CHURCH: Parties Balk at Spokane's Motion to Sell Property ------------------------------------------------------------------ As previously reported in the Troubled Company Reporter on November 9, 2005, The Diocese of Spokane sought the U.S. Bankruptcy Court for the Eastern District of Washington for authority to sell a real property located at 707 N. Cedar Street, in Spokane, Washington. The Property formerly housed the St. Anne's Children's Home. The Property is legally described as the South 20' of Lot 4 and all of Lots 5 and 6 of Chandler Second Addition. According to Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, in Spokane, Washington, the Property has been professionally marketed since September 2003. Just recently, the Diocese received an offer from Ronnie Rae and Frank Cikutovich to purchase the Property for $318,000. Objections (a) Catholic Charities Catholic Charities of the Diocese of Spokane is a Washington non- profit corporation and a potential creditor of the Diocese of Spokane's estate. Catholic Charities occupied the Cedar Street Property from World War II to 2004. Catholic Charities, Inc., as its sole expense, improved and maintained the Property with the understanding that it was the beneficial and equitable owner of all interest in the Property to the exclusion of all others including the Diocese. Among other things, Catholic Charities remodeled the premises on three different occasions and significantly expanded and improved the structures on the Property. Christopher J. Kerley, Esq., at Keefe, King & Bowman, P.S., in Spokane, Washington, tells Judge Williams of the U.S. Bankruptcy Court for the Eastern District of Washington that Catholic Charities, Inc., has a claim to, and an interest in, the Property, which is not addressed in the Diocese's Sale Request. Catholic Charities, Inc., objects to the sale to the extent that any money derived from the Sale is used to pay for administrative expenses. The money from the Sale should be sequestered to pay creditors including Catholic Charities, Mr. Kerley says. (b) The Official Committee of Tort Litigants James Stang, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub PC, in Los Angeles, California, states that the Official Committee of Tort Litigants disapproves the use of the net sale proceeds without restriction. The Litigants Committee asks Judge Williams to direct the Diocese to deposit the net proceeds of the sale into a segregated interest bearing account pending further Court order. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Spokane FCR Wants to Hire Daniel Brown as Expert ----------------------------------------------------------------- Gayle E. Bush, the Future Claims Representative appointed in the Diocese of Spokane's case, requires the assistance of an expert to advise him with respect to trauma resulting from childhood sexual abuse and the issues relating to the abuse. This is particularly important in light of the Diocese of Spokane's attempt to bar the claims of a certain class of individuals represented by the FCR. Hence, Mr. Bush seeks authority from the U.S. Bankruptcy Court for the Eastern District of Washington to retain Daniel Brown, Ph.D., as his consultant. Dr. Brown is a licensed psychologist with extensive experience in the areas of trauma treatment, psychiatry, and the law. Dr. Brown is an Assistant Clinical Professor in Psychology at Harvard Medical School. As the FCR's consultant, Dr. Brown will provide advice and consultation services with respect to childhood sexual abuse issues and consequences experienced by victims. Dr. Brown will be retained going forward on an hourly basis. The FCR did not disclose Mr. Brown's fee. Devra D. Featheringill, Esq., at Bush Strout & Kornfeld, discloses that Dr. Brown has provided services to certain counsel for tort claimants in Spokane's Chapter 11 case. However, Ms. Featheringill assures Judge Williams that Dr. Brown is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code as modified by Section 1107, and does not hold any interest adverse to Spokane's case. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) CELL WIRELESS: Releases Third Quarter 2005 Financial Results ------------------------------------------------------------ Cell Wireless Corporation delivered its quarterly report on Form 10-QSB for the quarter ending Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 17, 2005. During the three-month period ended September 30, 2005, the company generated $717,818 of revenues compared to $2,125,656 during the same period in 2004, a $1,407,838, or a 66% decrease. Net loss for the 2005 period totaled $377,792, compared to $518,184 net income for the three-month period ended September 30, 2004. As of September 30, 2005, the company had current assets of $142,156 and current liabilities of $1,550,875, which resulted in a negative working capital position of $1,408,720. A full-text copy of the regulatory filing is available at no charge at http://researcharchives.com/t/s?368 Going Concern Doubt David L. Shorey, CPA, has expressed substantial doubt about Cell Wireless' ability to continue as a going concern after it audited the company's financial statements for the fiscal year ended Dec. 31, 2004. The auditors pointed to the company's difficulties in generating sufficient cash flows to meet its obligations and the Company's dependence upon management's ability to develop profitable operations. Nine months after this report, the Company is continuing to finance its operations out of its business cash flow. Cell Wireless Corporation -- http://www.cellwireless.com/-- is an international telecommunications company with innovative, proprietary software, operating on one of the U.S.'s largest communication platforms serving 14 million residential customers and more than 1 million coveted corporate customers. Cell Wireless Corporation operates a dynamic network marketing and cell phone time distribution program worldwide. CENTILLION INDUSTRIES: Lender Issues Default Notice to MPC Unit --------------------------------------------------------------- MPC Circuits Ltd., a wholly owned subsidiary of Centillion Industries Inc. (TSX VENTURE:CID), received notice from its long- term lender that it is in default under the terms of its long-term debt. The lender has called the loan as payable immediately, failing which it has the right to exercise remedies available to it to recover payment of the indebtedness. The debt owing is $445,000 plus interest. MPC is actively investigating alternatives to this financing. At the same time, Centillion is considering its longer-term involvement in the electronics fabrication industry. Centillion has been actively pursuing a combination of acquisition, manufacturing and marketing agreement with a US-based company, Estari Inc. Estari has developed a dual-screen computer and software package which provides enhanced workspace, multi-tasking and mobile capabilities. Centillion expects these agreements with Estari will provide revenue and margin growth. "Centillion's focus as a manufacturing and integration company is well served by the Estari product line" said Wray Hodgson, President of Centillion. "The corporation's narrowing focus continues to be on increasing it's long term growth and profitability, and this involves moving towards a more product based offering such as our new Estari product line", Mr. Hodgson added. Centillion Industries Inc. -- http://www.centillionindustries.com/ -- is a marketing, distribution and manufacturer of purpose- designed components and manufacturing services for use in a broad range of commercial, consumer and industrial products. Centillion Industries is listed for trading on the TSX Venture Exchange. CHL MORTGAGE: S&P Raises Low-B Ratings on Three Cert. Classes ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on nine classes from two CHL Mortgage Pass-Through Trust transactions. At the same time, ratings are affirmed on the remaining classes from these transactions. The raised ratings are the result of updated loan-by-loan analyses performed on the mortgage pools. The loss coverage levels derived from the new analyses are significantly lower than the original levels at issuance, primarily due to loan seasoning, performance-based updated borrower quality scores, and lower LTV ratios resulting from property value appreciation. Standard & Poor's raised certain ratings to reflect the credit support provided at the new, lower loss coverage levels. The affirmations are based on loss coverage percentages that are sufficient to maintain the current ratings. Standard & Poor's will continue to monitor these transactions to ensure that the assigned ratings accurately reflect the associated risks. Ratings Raised CHL Mortgage Pass-Through Trust Rating ------ Series Class To From ------ ----- -- ---- 2003-J7 M AA+ AA 2003-J7 B-1 AA A 2003-J7 B-2 A BBB 2003-J7 B-3 BBB BB 2003-J7 B-4 BB+ B 2003-J8 M AA+ AA 2003-J8 B-1 AA A 2003-J8 B-2 A- BBB 2003-J8 B-3 BBB BB Ratings Affirmed CHL Mortgage Pass-Through Trust Series Class Rating ------ ----- ------ 2003-J7 1-A-1, 1-A-2, 1-A-3, 1-X, 2-A-1, 2-A-2 AAA 2003-J7 2-A-3, 2-A-5, 2-A-6, 2-A-7, 2-A-8 AAA 2003-J7 2-A-9, 2-A-10, 2-A-11, 2-A-12, 2-A-13 AAA 2003-J7 2-A-14, 2-X, 3-A-1, 3-A-2, 3-A-3, 3-X AAA 2003-J7 4-A-1, 4-A-2, 4-A-3, 4-X, PO AAA 2003-J8 1-A-1, 1-A-2, 1-A-3, 1-A-4, 1-X, 2-A-1 AAA 2003-J8 2-X, PO AAA 2003-J8 B-4 B CITIGROUP MORTGAGE: S&P Affirms BB+ Rating on Class M-7 Certs. -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on six classes of certificates from Citigroup Mortgage Loan Trust Inc.'s series 2003-HE2. At the same time, the ratings are affirmed on the remaining classes from this transaction. The raised ratings are the result of an updated loan-by-loan analysis performed on the mortgage pool. The loss coverage levels derived from the new analysis are lower than the original levels at issuance, primarily due to loan seasoning, updated FICO scores, and lower loan-to-value ratios resulting from property value appreciation. Standard & Poor's raised certain ratings to reflect the credit support provided at the new, lower loss coverage levels. The affirmations are based on loss coverage percentages that are sufficient to maintain the current ratings. Standard & Poor's will continue to monitor this transaction to ensure that the assigned ratings accurately reflect the associated risks. Ratings Raised Citigroup Mortgage Loan Trust Inc. Asset Backed Pass-Through Certificates Series 2003-HE2 Rating ------ Class To From ----- -- ---- M-1 AAA AA- M-2 AA+ A M-3 AA A- M-4 A+ BBB+ M-5 A BBB M-6 BBB+ BBB- Ratings Affirmed Citigroup Mortgage Loan Trust Inc. Asset Backed Pass-Through Certificates Series 2003-HE2 Class Rating ----- ------ A AAA M-7 BB+ CLEARLY CANADIAN: Sept. 30 Equity Deficit Narrows to $196,000 ------------------------------------------------------------- Clearly Canadian Beverage Corporation (OTCBB:CCBEF) reported unaudited consolidated financial results for its third fiscal quarter ended Sept. 30, 2005. Sales were $2,897,000 for Q3-2005 compared with $3,273,000 for Q3- 2004, a decrease of 11%. This decline in sales is attributable to the cumulative impact of significantly reduced sales and marketing activities in recent years. This has been a direct result of working capital constraints which the company has attempted to address, in part, through the Company's recently completed financings with BG Capital Group Ltd. There were no significant changes in the company's cost of sales and gross margin percentages. Cost of sales percentage was 69% for Q3-2005 compared with 67% for Q3-2004 while gross margin percentage was 31% for Q3-2005, versus 33% for Q3-2004. General and administrative expenses were $15,000 lower in Q3-2005 compared with Q3-2004, as a result of ongoing cost control measures. Selling expenses of $926,000 in Q3-2005 were approximately 32% of sales, compared with $822,000 or approximately 25% of sales in Q3- 2004. The increase in the percentage of sales expended on selling expenses is a reflection of the increased cost associated with attempting to maintain market share in a competitive business throughout North America. In the third quarter, the company increased its selling expenses in the South Central region of the United States, coinciding with its increased distribution efforts with Dr Pepper Seven Up Bottling Group in the region. These efforts resulted in sales growth in the region in the third quarter of 2005, as compared with the same period in 2004, however, the Company's sales declined in the third quarter in the Northeast and Pacific Northwest regions of the United States which offset the gains from the South Central region. The loss for the period for Q3-2005 was $1,462,000 compared with a Q3-2004 loss of $645,000. The loss for the current quarter includes one-time expenses of: a) $231,000 stock compensation expense in Q3-2005 (Q3-2004: $9,000) which represents the non-cash value attributed to certain stock options granted during Q3-2005 in connection with the Company's recent financing with BG Capital; b) $567,000 restructuring cost in connection with the amendment of certain consulting contracts and lease obligations. "These one-time expenses are part of the Company's restructuring plan and will further our goal of obtaining profitability. In the third quarter, we saw a positive increase in sales in key selling regions, attributable to the appointment of new distributors and new account initiatives in the South Central, Northern California and Nevada regions of the United States. While these signs of growth are encouraging, we have experienced a drop in sales in the Northeast and Pacific Northwest regions of the United States. We are addressing these concerns in those areas through new distribution partnerships and direct to retail selling," said Brent Lokash, President of Clearly Canadian Beverage Corporation. "In the remainder of 2005, we will continue in our efforts to expand availability of the Clearly Canadian brand and to develop exciting new product and sales initiatives that will focus on growth, innovation and profitability in the future," said Mr. Lokash. Sales were $7,186,000 for YTD-2005 compared with $9,338,000 for YTD-2004, a decrease of 23%. In addition to the cumulative impact of reduced sales and marketing activities in recent years, the company's financial condition in the first six months of 2005 did not allow for planned sales initiatives to support the spring and summer selling period. In the third quarter, the Company increased its selling expenses in the South Central region of the United States, coinciding with its increased distribution efforts with the Dr Pepper Seven Up Bottling Group in that region. These efforts resulted in growth in the South Central region in the third quarter as compared with the same period in 2004, however, the Company's sales declined in the third quarter in the Northeast and Pacific Northwest regions of the United States which offset those gains. There was no significant change in the Company's cost of sales and gross margin percentages in YTD-2005 compared with YTD-2004. Selling expenses of $2,392,000 in YTD-2005 were approximately 33% of sales, compared with $2,409,000 or approximately 26% of sales in YTD-2004. The increase in the percentage of sales expended on selling expenses is a reflection of the increased cost associated with attempting to maintain market share in a competitive business throughout North America. During the balance of 2005, the Company will continue to monitor its selling expenses, and plan for its new brand initiatives in 2006. The loss for the nine months ended September 30, 2005 was $4,021,000, as compared with $1,935,000 for the nine months ended September 30, 2004. The loss in the period was higher by $1,675,000 due the impact of one-time charges of: a) $220,000 gain on settlement of debt in YTD-2005 (YTD-2004: $Nil) which was realized on obtaining reductions in certain accounts owing to creditors concurrent with the Company's recent restructuring; b) $1,328,000 stock compensation expense in YTD-2005 (YTD- 2004: $9,000) which represents the non-cash value attributed to certain stock options granted in connection with the Company's recent financing with BG Capital; and c) $567,000 one-time restructuring cost in YTD-2005 (YTD-2004: Nil) in connection with the amendment of certain consulting contracts and lease obligations. Based in Vancouver, B.C., Clearly Canadian Beverage Corporation -- http://www.clearly.ca/-- markets premium alternative beverages and products, including Clearly Canadian(R) sparkling flavoured water and Clearly Canadian O+2(R) oxygen enhanced water beverage, which are distributed in the United States, Canada and various other countries. Since its inception, the Clearly Canadian brand has sold over 90 million cases equating to over 2 billion bottles worldwide. At Sept. 30, 2005, Clearly Canadian Beverage Corporation's balance sheet showed a $196,000 stockholders' deficit compared to a $3,515,000 deficit at Dec. 31, 2004. COLLINS & AIKMAN: Union Won't Object To, But Doesn't Endorse, KERP ------------------------------------------------------------------ The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union does not object to the Key Employee Retention Program proposed by Collins & Aikman Corporation and its debtor-affiliates. But it doesn't mean that it is endorsing the KERP. As reported in the Troubled Company Reporter on Nov. 14, 2005, the Debtors sought authority from the U.S. Bankruptcy Court for the Eastern District of Michigan to implement a Key Employee Retention Program. The Debtors developed a key employee retention program to stem attrition and retain the valuable knowledge and experience of the remaining officers and key employees, and assist the Debtors with retaining certain employees during plant consolidations. The KERP contains provisions to authorize the Debtors to provide limited severance and retention bonuses to salaried and hourly employees in connection with plant closings. Union Comments The United Steelworkers union is the bargaining agent of approximately 2,800 production and maintenance employees employed by the Debtors and its non-debtor affiliate Collins & Aikman Canada, Incorporated. "While the KERP may today represent the product of the Debtors' business judgment, the KERP may ultimately prove to be an impediment to reorganization if hourly employees and retirees are asked to accept concessions even though management has opted to deal itself generous retention and severance payments. Management should bear this in mind as it develops its labor strategy and considers the relationship that it wishes to pursue with the United Steelworkers and the other labor organizations that represent its employees," Bruce Miller, Esq., at Detroit, Michigan, says. According to Mr. Miller, the KERP likely would not pass muster had the Debtors' cases been filed after October 17, 2005, the date on which the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 took effect. "Indeed, the KERP is precisely the sort of program that Congress sought to limit." Section 331 of the BAPCPA forbids a debtor from establishing a retention program for insiders unless the debtor is able to establish that the transfer is "essential to the retention of the person because the individual has a bona fide job offer from another business at the same or greater rate of compensation," that the insider's "services . . . are essential to the survival of the business," and the program meets certain financial limits that compare the program to similar benefits offered either prepetition or to non-management employees. Section 331 also forbids the creation of a new severance payments unless "the payment is part of a program that is generally applicable to all full-time employees" and is not greater than 10 times "the amount of the mean severance pay given to non- management employees during the calendar year in which the payment is made." Section 331 further forbids transfers made outside the ordinary course of business that "are not justified by the facts and circumstances of the case." Mr. Miller notes that the Company's executives and managers appear to have benefited from the serendipity of the petition date of the Debtors' cases. The Union hopes that the KERP is the "first and last cash grab by management" in the Debtors' cases, Mr. Miller says. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLUMN CANADA: S&P Raises Low-B Ratings on Two Certificate Classes ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on six classes of Column Canada Issuer Corp.'s commercial mortgage pass-through certificates from series 2002-CCL1. Concurrently, ratings are affirmed on five other classes from the same transaction. The raised and affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios, as well as the stable performance of the seasoned pool. As of Nov. 14, 2005, the collateral pool consisted of 53 loans with an aggregate principal balance of CDN$289.8 million, down from C$310.1 million at issuance. The master servicer, GMAC Commercial Mortgage Corp., provided interim-period and year-end 2004 net cash flow debt service coverage figures for 90.5% of the pool. Based on this information, Standard & Poor's calculated a weighted average NCF DSC of 1.67x, up from 1.50x at issuance. The trust has experienced no losses to date, and one loan has been defeased. There are no delinquent loans, and no loans are with the special servicer. The top 10 loans have an aggregate outstanding balance of CDN$130.4 million. The weighted average DSC for the top 10 loans is 1.56x, up from 1.49x at issuance. Only one of these loans appears on the watchlist and is discussed below. Standard & Poor's reviewed recent property inspections for all of the assets underlying the top 10 loans, and all the properties were characterized as either "excellent," "good," or "fair." GMACCM's watchlist consists of four loans with an aggregate outstanding balance of CDN$19.2 million. The fifth-largest loan in the pool, Travelodge Airport, has a balance of CDN$13.2 million. A 283-unit hotel in Toronto, Ontario, secures this loan, which appears on the watchlist due to a low DSC. The loan reported a 2004 DSC of 1.10x, down from 1.54x at issuance. A slight drop in revenue and an increase in expenses since issuance have contributed to the decline in the DSC. The remaining loans appear on the watchlist due to low DSC levels. The trust collateral is located across four provinces. Ontario and Quebec account for the majority of the pool balance. Property concentrations greater than 10% of the pool balance are found in retail, office, and health care. Ratings Raised Column Canada Issuer Corp. Commercial Mortgage Pass-Through Certificates Series 2002-CCL1 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ B AAA AA 13.91% C AA+ A 10.97% D A- BBB 6.96% E BBB+ BBB- 6.15% F BB+ BB 4.28% G BB BB- 3.48% Ratings Affirmed Column Canada Issuer Corp. Commercial Mortgage Pass-through Certificates Series 2002-CCL1 Class Rating Credit enhancement ----- ------ ------------------ A-1 AAA 16.85% A-2 AAA 16.85% H B 2.14% J B- 1.71% A-X AAA N/A N/A - Not applicable. COMM 2005-FL11: Fitch Rates $77.7 Mil. Class Certificates at Low-B ------------------------------------------------------------------ COMM 2005-FL11 commercial mortgage pass-through certificates are rated by Fitch Ratings: -- $960,136,000 class A-1 'AAA'; -- $320,046,000 class A-J 'AAA'; -- $1,673,440,972 class X-1 (1) 'AAA'; -- $41,500,000 class X-2-CB (1) 'AAA'; -- $1,420,422,500 class X-2-DB (1) 'AAA' -- $211,518,472 class X-2-SG (1) 'AAA'; -- $41,500,000 class X-3-CB (1) 'AAA'; -- $1,420,422,500 class X-3-DB (1) 'AAA'; -- $211,518,472 class X-3-SG (1) 'AAA'; -- $46,019,000 class B 'AA+'; -- $52,296,000 class C 'AA'; -- $35,560,000 class D 'AA-'; -- $46,020,000 class E 'A+'; -- $41,836,000 class F 'A'; -- $35,560,000 class G 'A-'; -- $31,377,000 class H 'BBB+'; -- $35,561,000 class J 'BBB'; -- $37,652,000 class K 'BBB-'; -- $31,377,972 class L 'BBB-'; -- $5,000,000 class M-SHI 'BBB-'; -- $5,000,000 class M-COP 'BBB-'; -- $12,700,000 class M-GP 'AA+'; -- $18,800,000 class N-GP 'AA-'; -- $22,200,000 class O-GP 'A+'; -- $28,500,000 class P-GP 'A-'; -- $15,400,000 class Q-GP 'BBB+' -- $21,100,000 class R-GP 'BBB'; -- $28,600,000 class S-GP 'BBB-'; -- $31,900,000 class T-GP 'BB+'; -- $32,400,000 class U-GP 'BB'; -- $13,400,000 class V-GP 'B+'. (1) Notional amount and interest only. All classes are privately placed pursuant to Rule 144A of the Securities Act of 1933. With the exception of the M-SHI and M-COP certificates, which represent an interest in a subordinate note secured by the SHC REIT-Intercontinental Portfolio Loan and the Crescent Office Portfolio Loan, respectively, the certificates represent beneficial ownership interest in the trust, primary assets of which are 17 floating-rate loans having an aggregate principal balance of approximately $1,683,440,972, as of the cutoff date. For a detailed description of Fitch's rating analysis, see the report 'COMM 2005-FL11' dated Nov. 9, 2005 and available on the Fitch Ratings Web site at http://www.fitchratings.com/ COMPASS MINERALS: S&P Rates Proposed $450MM Sr. Sec. Loan at BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Compass Minerals International Inc. and its operating subsidiary and rating identity Compass Minerals Group Inc. At the same time, Standard & Poor's assigned a 'BB-' rating and a recovery rating of '1' to Compass Minerals' proposed $450 million senior secured bank credit facility, indicating the expectation of full recovery of principal in the event of a payment default. Standard & Poor's also affirmed its 'B-' rating on the company's discount notes. The outlook is positive. Compass Minerals International had approximately $590 million in total debt as of Sept. 30, 2005. The Overland Park, Kansas-based company expects to use borrowings under its proposed $450 million credit facility to tender for its $325 million senior subordinated notes due 2011 and repay some borrowings under its existing bank credit facility. The rating on the proposed $450 million bank loan is based on preliminary terms and conditions and is subject to review once full documentation is received. The rating on the $325 million subordinated notes due 2011 will be withdrawn upon successful completion of the proposed refinancing. "Ratings on Compass Minerals may be raised in the next couple of years if the company successfully refinances its high-coupon discount notes at significantly lower rates, maintains currently higher levels of performance, and improves its credit metrics in the face of higher capital spending, possible negative discretionary cash flow and its accreting discount notes," said Standard & Poor's credit analyst Paul Vastola. "The outlook could be revised to stable if the company's debt levels rise as a result of increased margin pressures and greater-than-expected spending levels that weaken its overall performance." Compass Minerals is the third-largest producer of salt in North America and the largest producer of salt in the U.K. It is also the largest North American producer of sulfate of potash fertilizer, a niche market that generates about 15% of revenues. Compass Minerals produces salt for highway de-icing, food-grade applications, water conditioning, and other industrial uses. Although salt production is highly seasonal, it is not cyclical. CONSTELLATION BRANDS: Regulators Approve Vincor Acquisition ----------------------------------------------------------- Constellation Brands, Inc., (NYSE: STZ, ASX: CBR) received approval from the Investment Review Division of Industry Canada to acquire Vincor International Inc. In addition, Constellation Brands also received a "no action" letter from Canada's Competition Bureau, further clearing the way for the acquisition. The statutory waiting period in the United States under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 has expired so that the Act poses no barrier to Constellation Brands proceeding with the acquisition. Constellation Brands does not expect to encounter any regulatory barriers to close the transaction to acquire Vincor. During its review, under the Investment Canada Act, Constellation Brands agreed to a number of negotiated enforceable commitments consistent with its intentions to grow Vincor's business. These commitments assisted the Minister of Industry in determining that the investment is of net benefit to Canada. As reported in the Troubled Company Reporter on Oct. 20, 2005, the Company offered to buy all of Vincor's outstanding common shares. Citigroup Global Markets Inc. is Constellation's financial advisor for the offer. Osler, Hoskin & Harcourt LLP, Wachtell, Lipton, Rosen & Katz and Nixon Peabody LLP are the Company's legal counsel. Constellation Brands intends to support the growth of Vincor's Canadian business domestically and internationally. Its management has also provided commitments regarding the maintenance of all Vincor's wineries, warehouses and vineyards in Canada, as well as to maintain virtually the same management teams at those facilities. Upon successful completion of the transaction, Constellation Brands plans to integrate Vincor into its international wine business as expeditiously as possible. Constellation Brands, Inc. -- http://www.cbrands.com/-- is a leading international producer and marketer of beverage alcohol brands with a broad portfolio across the wine, spirits and imported beer categories. Well-known brands in Constellation's portfolio include: Corona Extra, Corona Light, Pacifico, Modelo Especial, Negra Modelo, St. Pauli Girl, Tsingtao, Black Velvet, Fleischmann's, Mr. Boston, Paul Masson Grande Amber Brandy, Chi- Chi's, 99 Schnapps, Ridgemont Reserve 1792, Effen Vodka, Stowells, Blackthorn, Almaden, Arbor Mist, Vendange, Woodbridge by Robert Mondavi, Hardys, Nobilo, Alice White, Ruffino, Robert Mondavi Private Selection, Blackstone, Ravenswood, Estancia, Franciscan Oakville Estate, Simi and Robert Mondavi Winery brands. * * * As reported in the Troubled Company Reporter on Nov. 17, 2005, Standard & Poor's Ratings Services assigned its 'BB' rating to Constellation Brands Inc.'s proposed $4.1 billion senior secured credit facilities. As reported in the Troubled Company Reporter on Nov. 16, 2005, Moody's Investors Service assigned a (P)Ba2 rating to Constellation Brands, Inc.'s proposed $1.2 billion senior secured credit facility, proceeds of which are to be used to finance the potential purchase of Vincor International Inc. -- no debt rated by Moody's -- for approximately $1.2 billion. Moody's assigned these ratings: * (P)Ba2 for the proposed $1.2 billion incremental senior secured credit facility consisting of: -- a $300 million tranche A2 term loan, maturing in 2010, and -- a $900 million tranche C term loan, maturing in 2012 These ratings were confirmed: * Ba2 Corporate Family Rating * $2.9 billion senior secured credit facility consisting of a: -- $500 million revolver, -- $600 million tranche A1 term loans, and -- $1.8 billion tranche B term loans, Ba2 * $200 million 8.625% senior unsecured notes, due 2006, Ba2 * $200 million 8% senior unsecured notes, due 2008, Ba2 * GBP 80 million 8.5% senior unsecured notes, due 2009, Ba2 * GBP 75 million 8.5% senior unsecured notes, due 2009, Ba2 * $250 million 8.125% senior subordinated notes, due 2012, Ba3 The ratings outlook is changed to negative from stable. The Speculative Grade Liquidity rating is SGL-2. CONSTELLATION BRANDS: Ups Vincor Buy-Out Offer to C$33 Per Share ---------------------------------------------------------------- Constellation Brands, Inc., reported its best and final offer of C$33.00 cash per share for all of the common shares of Vincor International Inc. (TSX: VN). This enhanced offer provides a 48 percent premium above the closing price of Vincor's common shares on the Toronto Stock Exchange on Sept. 8, 2005, the day before Constellation first proposed a transaction to Vincor. "In the absence of cooperation by Vincor, C$33 is Constellation's best and final offer," stated Richard Sands, Constellation Brand's chairman and chief executive officer. "Vincor's board has had more than enough time to surface any other alternatives and the time has come for the shareholders of Vincor to decide. We do not need any additional information from Vincor to offer this price and are prepared to complete this transaction successfully on December 8, or let our offer expire". As required by securities regulations, the enhanced offer price extends the expiration date for tendering shares under the offer until midnight, Dec. 8, 2005. Upon receipt of the 66-2/3 percent of Vincor's shares by the expiration date, as required by the offer, Constellation expects to take up and pay for all Vincor shares tendered by Dec. 13, 2005. Constellation does not expect that any remaining conditions will impede the closing of this transaction. As previously announced, Vincor's board waived the application of its shareholder rights plan to Constellation's offer, which it adopted in September with the stated purpose of allowing Vincor time to pursue value-maximizing alternatives. No other "superior" transaction has been announced in this time. Despite repeated attempts since early September, Constellation has been unable to negotiate a transaction with the Vincor board of directors. As recently as November 25, Constellation communicated to Vincor's board that following confirmatory due diligence Constellation would be prepared to offer shareholders C$35 per share in a board-supported transaction pursuant to which Vincor would provide customary cooperation. That proposal was rejected by Vincor's board. "We remain hopeful that Vincor's board will reconsider its position and offer its support and cooperation, in addition to confirmatory due diligence, so that a C$35 per share cash offer can be made," stated Sands. "If the Vincor board does not do so prior to December 8, Constellation's C$33 per share cash offer stands as our best and final." Constellation Brands, Inc. -- http://www.cbrands.com/-- is a leading international producer and marketer of beverage alcohol brands with a broad portfolio across the wine, spirits and imported beer categories. Well-known brands in Constellation's portfolio include: Corona Extra, Corona Light, Pacifico, Modelo Especial, Negra Modelo, St. Pauli Girl, Tsingtao, Black Velvet, Fleischmann's, Mr. Boston, Paul Masson Grande Amber Brandy, Chi- Chi's, 99 Schnapps, Ridgemont Reserve 1792, Effen Vodka, Stowells, Blackthorn, Almaden, Arbor Mist, Vendange, Woodbridge by Robert Mondavi, Hardys, Nobilo, Alice White, Ruffino, Robert Mondavi Private Selection, Blackstone, Ravenswood, Estancia, Franciscan Oakville Estate, Simi and Robert Mondavi Winery brands. * * * As reported in the Troubled Company Reporter on Nov. 17, 2005, Standard & Poor's Ratings Services assigned its 'BB' rating to Constellation Brands Inc.'s proposed $4.1 billion senior secured credit facilities. As reported in the Troubled Company Reporter on Nov. 16, 2005, Moody's Investors Service assigned a (P)Ba2 rating to Constellation Brands, Inc.'s proposed $1.2 billion senior secured credit facility, proceeds of which are to be used to finance the potential purchase of Vincor International Inc. -- no debt rated by Moody's -- for approximately $1.2 billion. Moody's assigned these ratings: * (P)Ba2 for the proposed $1.2 billion incremental senior secured credit facility consisting of: -- a $300 million tranche A2 term loan, maturing in 2010, and -- a $900 million tranche C term loan, maturing in 2012 These ratings were confirmed: * Ba2 Corporate Family Rating * $2.9 billion senior secured credit facility consisting of a: -- $500 million revolver, -- $600 million tranche A1 term loans, and -- $1.8 billion tranche B term loans, Ba2 * $200 million 8.625% senior unsecured notes, due 2006, Ba2 * $200 million 8% senior unsecured notes, due 2008, Ba2 * GBP 80 million 8.5% senior unsecured notes, due 2009, Ba2 * GBP 75 million 8.5% senior unsecured notes, due 2009, Ba2 * $250 million 8.125% senior subordinated notes, due 2012, Ba3 The ratings outlook is changed to negative from stable. The Speculative Grade Liquidity rating is SGL-2. CONTECH CONSTRUCTION: Apax Offers $1 Billion for Majority Interest ------------------------------------------------------------------ CONTECH Construction Products Inc. disclosed that funds advised by Apax Partners, L.P., will acquire a majority ownership interest in the company. The transaction, which is expected to close in January 2006, has a total enterprise valuation of in excess of $1 billion. Members of CONTECH management will invest in the recapitalized company, giving them a significant minority ownership interest. "The CONTECH management team selected Apax Partners as our partner because they share our vision for CONTECH's future growth," Patrick Harlow, Chairman and chief executive officer of CONTECH Construction Products Inc., said. "Apax Partners brings strong financial resources and well-established international presence that will help CONTECH develop into a multi-billion dollar global leader in construction products. CONTECH's attractive growth has been driven by high-growth construction markets such as environmental stormwater management, engineered spans, and earth stabilization and erosion control. CONTECH's national sales and marketing organization of more than 450 people and the quality and breadth of services they provide has been a key factor in the company's success. Mr. Harlow and the rest of the CONTECH executive management team will continue to serve in their current capacities upon completion of the transaction. "This is an important transaction for Apax Partners, as it further strengthens our focus on relationship investing in an industry sector where we have deep experience," Apax Partners, L.P. co-CEO, John Megrue commented. David Kim, partner, Apax Partners, added, "CONTECH is an outstanding company that, under the leadership of Pat Harlow and a very talented management team, has achieved exceptional results in sales and profitability through both acquisitions and organic growth. I've known Pat for a long time, and I have an incredible level of respect and admiration for him. We are fortunate to have the opportunity to partner with Pat and his team." Wachovia Securities is providing advisory services to Apax Partners as well as leading the senior financing for the transaction. Goldman Sachs Mezzanine Partners will be leading the mezzanine financing for the transaction. Ropes & Gray LLP is serving as legal counsel to both Apax Partners and CONTECH. CONTECH Construction Products Inc. -- http://www.contech-cpi.com/ -- Ohio-based CONTECH designs, manufactures and distributes specialty construction products sold to the civil engineering infrastructure sector of the heavy construction industry. The company provides stormwater management and treatment systems, bridge structures, earth stabilization and erosion control solutions and corrugated metal and plastic pipe. Its product portfolio is based on more than a century of research and practical field experience serving both the public sector and private development site- improvement markets. CONTECH-owned companies include Armortec, BridgeTek, CON/SPAN, Continental, Keystone Retaining Walls, Steadfast, and Stormwater360. * * * As reported in the Troubled Company Reporter on June 27, 2005, Moody's Investors Service rated CONTECH Construction Products Inc.'s $450 million senior secured credit facilities Ba3. The affirmation of the rating considers: * the company's strong operating performance; * competitive market position; and * the expectation for continued strong demand in the company's end markets. The affirmation also considers the company's high debt balances, and generally weak balance sheet. These ratings have been affirmed: * $125 million senior secured revolver, due 2009, rated Ba3; * $325 million senior secured term loan B, due 2010, rated Ba3; * Corporate Family Rating (previously called the Senior Implied rating), rated Ba3; * Senior Unsecured Issuer, rated B1. Moody's said the ratings outlook remains stable. CONTECH CONSTRUCTION: Apax Equity Buy Spurs S&P to Review Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB' corporate credit and other ratings on West Chester, Ohio-based Contech Construction Products Inc. on CreditWatch with negative implications. The CreditWatch placement followed the company's Nov. 28, 2005, announcement that Apax Partners L.P. will acquire a majority interest in Contech from Butler Capital Corp. for more than $1 billion. "The rating action reflects our expectations that the company is likely to be more aggressively leveraged under the ownership of the new equity sponsors," said Standard & Poor's credit analyst Lisa Wright. "We will evaluate the ratings when Contech's new capital structure is known. Our review will also consider any change in business or financial strategies, including growth objectives, financial policies, or liquidity that may occur because of the change in ownership." The transaction is expected to close in January 2006. Contech, which manufactures and distributes specialty construction products, had total debt of $311 million and debt to pro forma last-12-months EBITDA of 2.9x at Sept. 30, 2005. COUNTRYWIDE HOME: S&P Affirms Junk Rating on Class B-4 Certs. ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on three classes of mortgage pass-through certificates from two Alternative Loan Trust transactions originated by Countrywide Home Loans Inc. At the same time, the ratings are affirmed on the remaining classes from these transactions and from two other Alternative Loan Trust transactions. The raised ratings are the result of updated loan-by-loan analyses performed on the mortgage pools. The loss coverage levels derived from the new analyses are significantly lower than the original levels at issuance, primarily due to: * loan seasoning, * performance-based updated borrower quality scores, and * lower LTV ratios resulting from property value appreciation. Standard & Poor's raised certain ratings to reflect the credit support provided at the new, lower loss coverage levels. The affirmations are based on loss coverage percentages that are sufficient to maintain the current ratings. Standard & Poor's will continue to monitor these transactions to ensure that the assigned ratings accurately reflect the associated risks. Ratings Raised Alternative Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2003-J1 B-1 A+ A 2003-17T2 M AAA AA 2003-17T2 B-1 AA A Ratings Affirmed Alternative Loan Trust Series Class Rating ------ ----- ------ 2003-J1 1-A-1, 1-A-2, 1-A-3, 1-A-4 AAA 2003-J1 1-A-5, 1-A-6, 1-A-7, 1-A-8 AAA 2003-J1 1-A-9, 2-A-1, 2-A-2, 2-A-3 AAA 2003-J1 2-X, 3-A-1, 3-A-2, 3-A-3 AAA 2003-J1 3-X, 4-A-1, 4-X, PO AAA 2003-J1 M AA 2003-J1 B-2 BBB 2003-J1 B-3 BB 2003-J1 B-4 B 2003-5T2 A-1, A-2, A-3, A-4, A-6 AAA 2003-5T2 A-8, PO, M AAA 2003-5T2 B-1 AA 2003-5T2 B-2 BBB 2003-5T2 B-3 BB 2003-5T2 B-4 CCC 2003-17T2 A-1, PO AAA 2003-17T2 B-2 BBB 2003-17T2 B-3 B 2003-19CB 1-A-1, 2-A-1, 3-A-1, 3-A-2 AAA 2003-19CB 3-A-3, PO AAA 2003-19CB M AA 2003-19CB B-1 A 2003-19CB B-2 BBB 2003-19CB B-3 BB 2003-19CB B-4 B CURON MEDICAL: Has Six Months to Regain Compliance, Nasdaq Says --------------------------------------------------------------- Curon Medical, Inc. (Nasdaq: CURN) received a six-month extension of its Nasdaq listing on Nov. 22, 2005. By May 11, 2006, the Company will have to maintain a closing bid price of at least $1.00 for a minimum of 10 consecutive trading days to avoid delisting. Reverse Stock Split At its 2005 Annual Stockholders' Meeting, the Company received approval to implement up to a one-for-four reverse stock split, which the Company maintains as an option for establishing compliance with the Nasdaq listing requirement. Alistair McLaren, Vice President and Chief Financial Officer of Curon Medical, said, "We are pleased to have received this extension from Nasdaq as it affords our stockholders continued access to our shares on the Nasdaq market." The Company also announced that with the filing of its third quarter 2005 Form 10-Q on Nov. 10, 2005, it had satisfied the remaining requirement from Nasdaq's October 2004 continued listing determination that it file its periodic SEC reports in a timely manner for at least 12 consecutive months. Curon Medical, Inc., -- http://www.curonmedical.com/-- develops, manufactures and markets innovative proprietary products for the treatment of gastrointestinal disorders. The Company's products and products under development consist of radiofrequency generators and single use disposable devices. Its first product, the Stretta System, received U.S. Food and Drug Administration clearance in April 2000 for the treatment of gastroesophageal reflux disease, commonly referred to as GERD. The Company's Secca System for the treatment of bowel incontinence received clearance from the FDA in March 2002. * * * Going Concern Doubt In its Form 10-K for the fiscal year ended Dec. 31, 2004, filed with the Securities and Exchange Commission, Curon Medical's auditors, PriceWaterhouseCoopers LLP, raised substantial doubt about the Company's ability to continue as a going concern due to Curon's recurring losses and negative cash flows from operations. "As of December 31, 2004, we had cash and cash equivalents on hand of $5.9 million and working capital of $6.6 million," the Company disclosed in its Annual Report. "We intend to finance our operations primarily through our cash and cash equivalents, marketable securities, future financing and future revenues. Although we recognize the need to raise funds in the near future, there can be no assurance that we will be successful in consummating any such transaction, or, if we did consummate such a transaction, that the terms and conditions of such financing will be favorable to us. We believe that our cash balances will not be sufficient to fund planned expenditures in the third quarter of 2005." CVF TECHNOLOGIES: Equity Deficit Widens to $2.1 Mil. at Sept. 30 ---------------------------------------------------------------- CVF Technologies Corporation (OTC Bulletin Board: CNVT) delivered its financial statements for the quarter ended Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 14, 2005. The company reported a $86,071 net loss on $92,916 of sales for the quarter ended Sept. 30, 2005. At Sept. 30, 2005, the company's balance sheet showed $2,415,885 in total assets and $4,453,303 in total liabilities, resulting in a $2,100,873 stockholders' deficit. CVF Technologies' Sept. 30 balance sheet also showed strained liquidity with $320,860 in current assets available to satisfy $3,705,628 of liabilities coming due within the next 12 months. Since CVF no longer consolidates Biorem's and SRE's revenues, CVF's revenue for the nine months ended Sept. 30, 2005, was $340,900 compared to revenues of $7,027,400 for the prior year's period. As a result of Biorem going public on Jan. 21, 2005, CVF's 28% ownership position in Biorem is valued at approximately $6.9 million as of Nov. 11, 2005. A full-text copy of CVF Technologies Corporation's financial statements for the quarter ended Sept. 30, 2005, is available at no charge at http://ResearchArchives.com/t/s?35a Going Concern Doubt Sherb & Co., LLP, in Manhattan, the company's external auditor, raised substantial doubt about CVF Technologies Corporation's ability to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2004. Sherb & Co., pointed to CVF's recurring losses and working capital deficiency. Headquartered in Williamsville, New York, CVF Technologies Corporation -- http://www.cvfcorp.com/-- is a technology development company, whose principal business is sourcing, funding and managing emerging pre-public technology companies with significant market potential. Founded in 1989, CVF's holdings include five companies involved primarily in environmental technology products and services and information technology. CWMBS INC: Fitch Puts Low-B Ratings on $1.3 Million Class B Certs. ------------------------------------------------------------------ Fitch rates CWMBS, Inc.'s mortgage pass-through certificates, CHL Mortgage Pass-Through Trust 2005-29: -- $286.1 million classes A-1, A-2, X, PO and A-R senior certificates 'AAA'; -- $6.9 million class M certificates 'AA'; -- $1.9 million class B-1 certificates 'A'; -- $1.0 million class B-2 certificates 'BBB'; -- $894,000 class B-3 certificates 'BB'; -- $447,000 class B-4 certificates 'B'; The 'AAA' rating on the senior certificates reflects the 4.00% subordination provided by the 2.30% class M, the 0.65% class B-1, the 0.35% class B-2, the 0.30% privately offered class B-3, the 0.15% privately offered class B-4 and the 0.25% privately offered class B-5. 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, * the 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 a group of 30-year conventional, fully amortizing mortgage loans. The pool consists of 30-year fixed-rate mortgage loans totaling $298,011,016 as of the cut-off date, Nov. 1, 2005, secured by first liens on one-to four-family residential properties. The mortgage pool, as of the cut-off date, demonstrates an approximate weighted-average original loan-to-value ratio of 72.99%. The weighted average FICO credit score is approximately 741. Cash-out refinance loans represent 28.25% of the mortgage pool and second homes 3.84%. The average loan balance is $614,456. The states that represent the largest portion of mortgage loans are California and Virginia. 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 99.85% and 0.15% 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. 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. CWMBS INC: Fitch Places Low-B Ratings on $1.8 Mil. Class B Certs. ----------------------------------------------------------------- Fitch rates CWMBS, Inc.'s mortgage pass-through certificates, CHL Mortgage Pass-Through Trust 2005-30: -- $496.5 million classes A-1 through A-9, X, PO and A-R senior certificates 'AAA'; -- $13.4 million class M certificates 'AA'; -- $3.1 million class B-1 certificates 'A'; -- $1.6 million class B-2 certificates 'BBB'; -- $1 million class B-3 certificates 'BB'; -- $775,700 class B-4 certificates 'B'. The 'AAA' rating on the senior certificates reflects the 4.00% subordination provided by the 2.60% class M, the 0.60% class B-1, the 0.30% class B-2, the 0.20% privately offered class B-3, the 0.15% privately offered class B-4 and the 0.15% privately offered class B-5. 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 a group of 30-year conventional, fully amortizing mortgage loans. The pool consists of 30-year fixed-rate mortgage loans totaling $517,141,199 as of the cut-off date, Nov. 1, 2005, secured by first liens on one-to four-family residential properties. The mortgage pool, as of the cut-off date, demonstrates an approximate weighted-average original loan-to-value ratio of 71.94%. The weighted average FICO credit score is approximately 740. Cash-out refinance loans represent 31.78% of the mortgage pool and second homes 7.26%. The average loan balance is $581,058. The states that represent the largest portion of mortgage loans are California and New Jersey. Subsequent to the cut-off date, additional loans were purchased prior to the closing date, Aug. 30, 2005. 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 99.91% and 0.09% 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. 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. DELTA AIR: Retirees Want Townsend & Townsend as Special Counsel --------------------------------------------------------------- The Delta Air Lines Retirement Committee asks the U.S. Bankruptcy Court for the Southern District of New York to authorize the retention of Townsend and Townsend and Crew LLP as special litigation counsel for the Official Committee of Non-Pilot Retired Employees of Delta Air Lines, Inc. The Retiree Committee is currently composed of members of the DALRC. The attorneys at Townsend have extensive experience, knowledge, and resources in commercial litigation, and the Firm has the ability to commit substantial resources to the representation of the Retiree Committee. Townsend's attorneys have provided services to the DALRC since August 27, 2004. Townsend will: a. represent a sub-group of retired executives within the Retirees in connection with the termination of insurance programs protected by Section 1114 of the Bankruptcy Code; b. prosecute and defend litigation matters and other matters concerning any proposed modification of the retired executives' medical benefits, or the retired executives' benefits in general, that might arise; and c. upon any distress termination of the Delta Family Care Retirement Plan, investigate and, with appropriate court authorization, pursue appropriate litigation against trustees and other fiduciaries or actuaries, including violation of fiduciary duties of prudent investment, etc., and unreasonable actuarial assumptions regarding rate of return. The DALRC also requests permission to retain Townsend in other matters without further Court order should the Firm agree to the retention. The DALRC explains that it has selected Townsend as special counsel to represent sub-groups within the Retirees because the interests of these sub-groups may diverge from the interests of other Retiree Committee members. Delta recently terminated a group of retired executives' non-qualified pensions and their company-paid life insurance, which is expressly covered by Section 1114. As a result of Delta's actions, a conflict of interest may arise between the retired executives who were affected by Delta's action and other members of the Retiree Committee. Neil A. Goteiner, Esq., at Farella Braun & Martel LLP, in San Francisco, California, asserts that a separate counsel will afford all members adequate representation under Section 1114, as appointment of counsel is required for Delta to make benefit changes, and would obviate the need to create numerous separate committees with separate counsel. Townsend's hourly rates are: Professional Hourly Rate ------------ ----------- Partners $380 to $625 Counsel $380 to $485 Associates $215 to $385 Paralegals $80 to $225 The professionals who will primarily provide services to the Retiree Committee are: Attorney Rates -------- ----- Guy W. Chambers, Esq. $475 Peter H. Goldsmith, Esq. $500 Gregory Gilchrist, Esq. $500 Holly Gaudreau, Esq. $295 Raffi V. Zerounian, Esq. $255 Paralegal Rates --------- ----- Elizabeth Barnette $200 Townsend will also charge for all disbursements and expenses incurred in the rendition of services. Guy W. Chambers, Esq., partner at Townsend, assures the Court that the Firm is a "disinterested person," as that phrase is defined in Section 101(14) of the Bankruptcy Code. Mr. Chambers discloses that Philip Albert, a Townsend partner, oversees prosecution of patent applications before the United States Patent and Trademark Office on behalf of The Boeing Company; and Mr. Chambers adds that John Hughes, a Townsend partner, oversees prosecution of trademark and copyright applications before the U.S. Patent and Trademark Office on behalf of Charles Schwab & Company, Inc. Schwab is the parent company of U.S. Trust Corporation and Mr. Hughes has also done miscellaneous copyright application work for U.S. Trust Corporation. Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA MILLS: Posts $6.6-Mil Net Loss in Quarter Ended Oct. 1 ------------------------------------------------------------ Delta Mills, Inc., delivered its financial results for the quarter ended Oct. 1, 2005, to the Securities and Exchange Commission on Nov. 15, 2005. For the three months ended Oct. 1, 2005, Delta Mills incurred a $6.6 million net loss on $30.8 million of net sales, versus a $2.3 million net loss on $35.4 million of net sales for the three months ended Oct. 2, 2004. The increase in net loss for the first quarter of fiscal year 2006 compared to the comparable 2005 period was primarily due to the increase in impairment and restructuring expenses and the reduction in income tax benefits. Delta Mills' balance sheet showed $108.2 million in total assets at Oct. 1, 2005, and liabilities of $94 million. Going Concern Doubt KPMG LLP expressed substantial doubt about Delta Mills' ability to continue as a going concern after it audited the Company's financial statements for the fiscal years ended July 2, 2005 and 2004. The auditing firm pointed to the Company's recurring losses and uncertainty over its ability to operate within the covenants established under a revolving credit facility with GMAC Commercial Finance LLC. Covenant Waiver As reported in the Troubled Company Reporter on Oct. 17, 2005, the Company entered into a waiver and amendment to its revolving credit agreement with GMAC. The amendment includes: -- a waiver with respect to the Company's noncompliance with the minimum Earnings before interest, taxes, depreciation and amortization covenant for the fourth quarter ended July 2, 2005; -- a stipulation allowing for the payment of the deferred compensation participant account balances, due to termination of the program on Aug. 8, 2005; -- minimum EBITDA levels for each quarter of fiscal year 2006 and provides that it will be an event of default if the Company and GMAC do not enter into a written amendment setting EBITDA requirements for the remainder of the term of the credit facility. -- an increase in the applicable margin on Eurodollar loans from 3% to 4%. The GMAC amendment also provides for a $3 million supplement to the allowed asset-based availability. The supplement is available through February of 2006, and the Company will owe a $30,000 fee for any calendar month in which The Company uses, on more than three days, all or part of this supplemental amount. Delta Mills must also meet the August 2007 outstanding $30,941,000 principal balance of Delta Mills' 9.625% Senior Notes. The Company will need to refinance both of these obligations prior to March 2007 in order to be able to continue operations. About Delta Mills, Inc. Delta Mills, Inc., a wholly owned subsidiary of Delta Woodside Industries, Inc. (OTCBB:DLWI) -- http://www.deltawoodside.com/-- produces a broad range of finished apparel fabrics in four manufacturing plants in South Carolina. Delta Mills sells and distributes its fabrics through a marketing office in New York City, with sales agents also operating from Atlanta, Chicago, Dallas, Los Angeles, San Francisco and Mexico. DIRECTED ELECTRONICS: Financial Policy Cues S&P to Review Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' corporate credit and senior secured credit facility ratings on Directed Electronics Inc. on CreditWatch with positive implications. The CreditWatch listing reflects our expectation that the company will maintain a more conservative financial policy, including a stronger balance sheet, and have greater financial flexibility following a planned IPO of common shares. In addition, a third amendment to the company's senior credit facility that became effective on Sept. 21, 2005, enhanced DEI's liquidity by increasing the revolving credit facility commitment and the term loan size. Also, the financial management team has been enhanced by the addition of a new CFO in preparation for the IPO. Standard & Poor's also affirmed the recovery rating of '3' on DEI's bank loan, since the recovery rating will be unchanged by the IPO. "We will resolve the CreditWatch listing when the IPO is completed," said Standard & Poor's credit analyst Nancy C. Messer. "We expect the corporate credit and bank loan ratings to be raised by one notch, to 'BB-', if the stock offering is completed as planned and if the proceeds are used to fully prepay both the company's unrated $37 million senior subordinated notes and its unrated $37 million junior subordinated notes." Additional funds from the offering will be used to terminate a management agreement with unrated Trivest Partners LP. Trivest, which bought a controlling stake in DEI in 1999, will remain a shareholder. Vista, California-based Directed Electronics had total balance sheet debt of $241 million at Sept. 30, 2005. DEI's credit protection measures should greatly improve following the proposed IPO. Pro forma lease-adjusted total debt to EBITDA is expected to decline to 3.9x from more than 5x at Sept. 30, 2005. In 2006, DEI's leverage should further decline because of expanding EBITDA generated by existing product lines. Cash interest expense will be reduced because the company's most expensive subordinated debt will be extinguished, which will also allow DEI to increase working capital to support business expansion. However, DEI will still be characterized by a weak financial profile and vulnerable business profile. DEI is the world's largest designer and marketer of consumer-branded, professionally installed electronic automotive vehicle security and convenience systems. The company also makes and markets premium home audio equipment and certain SIRIUS-branded satellite radio products marketed to consumers. Auto security and convenience products are the largest contributors to DEI's revenues, followed by SIRIUS-branded products, mobile audio and video products, and home audio products. DIRECTVIEW INC: Sept. 30 Balance Sheet Upside-Down by $1.51 Mil. ---------------------------------------------------------------- DirectView, Inc., delivered its quarterly report on Form 10-Q for the quarterly period ending Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 22, 2005. DirectView reports that its liabilities exceed its assets by $1,511,578 at September 30, 2005, and the company's balance sheet shows a working capital deficit of $1,736,212 at Sept. 30, 2005. While the Company is attempting to increase sales, the growth has not been significant enough to support the Company's daily operations. In order to raise funds, on April 1, 2005, the Company entered into a Standby Equity Distribution Agreement and a Securities Purchase Agreement for the issuance and sale of $1,000,000 of 7% secured convertible debentures. Management may attempt to raise additional funds by way of a public or private offering. While the Company believes in the viability of its strategy to improve sales volume and in its ability to raise additional funds, there can be no assurances it will be successful in raising additional funds. Going Concern Doubts Sherb & Co., LLP expressed substantial doubt about DirectView's ability to continue as a going concern after it audited the company's financial statements for the fiscal year ended Dec. 31, 2004. The Company's limited financial resources have prevented the Company from aggressively advertising its products and services to achieve consumer recognition. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan and generate increased revenues. The Company stated that it currently has working capital to sustain its core operations for approximately four to six months, but these funds are not sufficient to satisfy its short-term debt obligations in the aggregate amount of approximately $1,460,000. The Company has begun conversations with a view towards restructuring the terms of the short-term debt due Dec. 31, 2005, as well as the debentures. But there are no assurances that those discussions will lead to any debt restructuring, in which event, the Company may be unable to pay those obligations as they become due. DirectView, Inc., is a full-service provider of teleconferencing products and services to businesses and organizations. Effective February 23, 2004, the Company completed its acquisition of all of the issued and outstanding shares of Meeting Technologies, Inc., a Delaware corporation, from its sole stockholder, Michael Perry. Meeting Technologies, Inc., was a privately held provider of video conferencing equipment and related services. The Company's results of operations for the six months ended June 30, 2004 include the results of Meeting Technologies, Inc., from the date of acquisition of February 23, 2004. DRESSER-RAND: Improved Performance Spurs S&P's Positive Outlook --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on compression equipment maker Dresser-Rand Group Inc. and revised the outlook on the company to positive. As of Sept. 30, 2005, the Olean, New York-based company had about $600 million of debt. "The positive outlook reflects the company's improved financial risk profile mainly as a result of its debt reduction through the use of cash flow and a portion of IPO proceeds," said Standard & Poor's credit analyst Ben Tsocanos. "Ratings improvement is contingent on continued financial performance and a strategy and targeted capital structure that is consistent with a higher rating," said Mr. Tsocanos. The ratings on Dresser-Rand reflect an aggressive financial profile, tempered by a fair business profile. Previously a unit of Ingersoll-Rand Co., Dresser-Rand was bought by First Reserve Corp., a private equity firm, in a leveraged buyout transaction in October 2004. Dresser-Rand completed an IPO of stock in August 2005. EAGLEPICHER HOLDINGS: Wants Until June 5 to Decide on Leases ------------------------------------------------------------ EaglePicher Holdings, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Ohio, Western Division, to extend until June 5, 2005, the time within which it may elect to assume, assume and assign, and reject unexpired nonresidential real property leases. The Debtors currently has until Dec. 7, 2005, to decide on their leases. The Debtors tell the Court that the 180-day extension is necessary to evaluate and determine which leases to assume or reject given the number of leases and the size and complexity of their chapter 11 cases. A list of those leases is available at no charge at http://ResearchArchives.com/t/s?364 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). Stephen D. Lerner, Esq., at Squire, Sanders & Dempsey L.L.P. represents the Debtors. When the Debtors filed for protection from their creditors, they listed $585 million in consolidated assets and $730 in consolidated debts. ERXSYS INC: Posts $2.8 Mil. Net Loss in Third Quarter 2005 ---------------------------------------------------------- eRXSYS, Inc., nka Assured Pharmacy, Inc., delivered its financial statements for the quarter ended Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 14, 2005. The company reported a $2,835,877 net loss on $980,181 of gross sales for the quarter ended Sept. 30, 2005. At Sept. 30, 2005, the company's balance sheet showed $1,055,456 in total assets and $2,258,828 in total liabilities, resulting in a $1,203,372 stockholders' equity deficit. eRXSYS, Inc.'s Sept. 30 balance sheet also shows strained liquidity with $576,130 in current assets available to satisfy $1,816,050 of liabilities coming due within the next 12 months. A full-text copy of eRXSYS, Inc.'s financial statements for the quarter ended Sept. 30, 2005, is available at no charge at http://ResearchArchives.com/t/s?361 Going Concern Doubt Squar, Milner, Reehl & Williamson, LLP, in Newport Beach, California, the company's external auditor, raised substantial doubt about the Company's ability to continue as a going concern after it audited eRXSYS, Inc.'s financial statements for the year ended Dec. 31, 2004. Squar Milner points to recurring losses, equity deficit and negative retained earnings. eRXSYS, Inc., nka Assured Pharmacy, Inc. -- http://www.erxsys.com/ -- operates pharmacies that specialize in the dispensing of highly regulated pain medication by utilizing technology that allows physicians to transmit prescriptions from a wireless hand-held device or desktop computer directly to its pharmacies, thus eliminating or reducing the need for paper prescriptions. The com technology is web-based and we do not provide physicians with any equipment. Physicians are able to electronically transmit prescriptions to our pharmacies simply by accessing our web portal. There is no software required by the physicians. We do provide physicians with training on how to utilize our web portal to electronically transmit prescriptions to our pharmacies. Physicians are not charged any fees or costs for transmitting prescriptions to our pharmacies or for any training they may receive on how to utilize our web portal. FEDERAL-MOGUL: Can Perform Obligations Under U.K. Settlement Pact ----------------------------------------------------------------- The Honorable Robert Lyons of the U.S. Bankruptcy Court for the District of Delaware authorizes: (a) Federal-Mogul Corporation and its U.S.-based debtor-affiliates to enter into the U.K. Global Settlement Agreement as a transaction outside the ordinary course of business; and (b) Federal-Mogul's U.K.-based debtor-affiliates to yield their position that the Administrators require the Bankruptcy Court's approval to pursue schemes of arrangement or CVAs as provided in the U.K. Global Settlement Agreement or to fulfill other obligations under the Settlement Agreement, including the payment of the Break Fee to Deutsche Bank AG, London. The Court authorizes Federal-Mogul to: -- grant the indemnities specified in the Settlement Agreement and make any payment stipulated by the U.K. Settlement Agreement to rank as an administrative expense in Federal- Mogul's Chapter 1l case; and -- grant indemnities to the Plan Proponents and High River Limited Partnership for any claims that may be asserted against them by Deutsche Bank relating to the Settlement Agreement or the Top Up Offer. Judge Lyons denies the parties' request that the Bankruptcy Court defer to the U.K. process as a matter of comity or abstain from adjudicating Asbestos PD claims. A full-text copy of the U.K. Global Settlement is available at no cost at http://bankrupt.com/misc/UKGlobalSettlement.pdf As reported in the Troubled Company Reporter on Oct. 26, 2005, the Debtors and their U.K.-based debtor-affiliates asked Judge Lyons to authorize, but not require, the Debtors to enter into and perform their obligations under the U.K. Global Settlement Agreement. On Sept. 26, 2005, the Debtors reached an agreement with the administrators of the U.K. Debtors, which would allow Federal- Mogul to retain the businesses and other assets of its UK affiliates in exchange for certain monetary amounts and reserves. The U.K. Global Settlement Agreement The U.K. Global Settlement Agreement, according to James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, in Wilmington, Delaware, is a comprehensive resolution of disputes between the Plan Proponents and the Administrators as to the reorganization of the U.K. Debtors. Those disputes, which have centered on the valuation of and the law applicable to asbestos personal injury claims and pensions-related claims against the U.K. Debtors, have been a primary obstacle to confirmation of the Plan and the successful conclusion of cross- border plenary insolvency proceedings. As a result of those disputes, the Administrators have for some time been engaged in efforts to market and sell the assets and businesses of the U.K. Debtors pursuant to U.K. insolvency laws. In the view of all parties, the non-consensual liquidation of the U.K. Debtors was less desirable than a coordinated and consensual reorganization of the U.K. Debtors pursuant to the U.S. and U.K. insolvency laws. The U.K. Global Settlement Agreement resolves the parties' disputes and thereby avoids the liquidation of the U.K. Debtors and a clash of U.S. and U.K. jurisdictions, Mr. O'Neill says. The U.K. Global Settlement Agreement thus removes a principal obstacle to confirmation of the Plan and opens the path towards the successful conclusion of the cross-border insolvency proceedings. The U.K. Global Settlement Agreement, in sum, provides for the prompt and coordinated resolution of the U.K. administration proceedings. Specifically, the Administrators have agreed to propose and recommend schemes of arrangement or company voluntary arrangements for the U.K. Debtors in accordance with the terms of the U.K. Global Settlement Agreement. The CVAs or Schemes, if approved by the requisite vote of creditors in accordance with U.K. insolvency laws, will provide for the resolution and treatment of most claims against the U.K. Debtors with the notable exception of U.S., Canadian and certain other "rest of world" current and future asbestos personal injury claims against the U.K. Debtors and Intercompany Claims. The resolution and treatment of the U.S. APICs will instead be dealt with pursuant to the Plan and, specifically, the Section 524(g) asbestos trust to be created pursuant to the Plan, Mr. O'Neill explains. For all other claimants against the U.K. Debtors, the U.K. Global Settlement Agreement provides that they will be entitled to the distributions they are to receive pursuant to the CVAs or Schemes. The U.K. Global Settlement Agreement provides for certain reserves and payments to be established and made pursuant to the CVAs or Schemes. These reserves and payments will be funded by: (a) the substantial cash owned by the U.K. Debtors and controlled, under the laws of the United Kingdom, by the Administrators; and (b) the proceeds of certain intercompany loan notes held by T&N Limited. 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 Oct. 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. 98; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDERAL-MOGUL: Can Top Deutsche Bank's $421 Mil. T&N Debt Offer --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorizes Federal-Mogul Corporation and its debtor-affiliates to top Deutsche Bank AG London offer to purchase the intercompany loan notes owed to T&N Limited by these three non-Debtor subsidiaries: (1) Federal Mogul S.A., a French entity; (2) Federal Mogul Holding Deutschland GmbH, a German entity; and (3) Federal Mogul SPA, an Italian entity. The Loan Notes aggregate $898,000,000. Specifically, the Loan Notes consist of: (a) three separate notes of F-M France, two of which were made on Aug. 31, 1998, and the third of which was made on June 11, 1999, in the original aggregate amount of 1,540,000,000 French francs; (b) two separate notes of F-M Germany, both of which were made on July 7, 1998, in the original aggregate amount of 738,000,000 Deutschemarks; and (c) one note of F-M Italy in the amount of EUR111,600,000, which was made on May 22, 2001. Deutsche Bank offered to buy the Loan Notes for a base purchase price of $421,000,000, minus $65,000,000 on account of the interest payment due to be made on those notes on Dec. 31, 2005, for a net purchase price of $356,000,000. The Top Up Offer equals the difference between: (a) the aggregate amount necessary to fund the payments and reserves specified in a global settlement agreement between the Plan Proponents and the Administrators as to the reorganization of the U.K. Debtors; and (b) the cash held by the U.K. Debtors, less GBP20,000,000 reserved for the U.K. Debtors' working capital needs. In connection with the making of the Top Up Offer, the Court authorizes the Debtors to: -- either enter into and implement ancillary transactions or arrangements as may be necessary or desirable to structure and implement the Top Up Offer and retention of the Loan Notes by the Federal-Mogul group of companies pursuant to the Top Up Offer; or -- in the case of the U.K. Debtors, yield to the Administrators' exercise of their powers under U.K. laws in respect of all those actions to be taken by the Administrators under and pursuant to the terms of the Settlement Agreement to structure and implement the Top Up Offer and retention of the Loan Notes by the Federal-Mogul group of companies pursuant to the Top Up Offer. In the event Federal-Mogul elects not to make the Top Up Offer, the Court approves the sale of the Loan Notes by T&N, acting through the Administrators, to Deutsche Bank or other entity that may submit a more advantageous bid to T&N on the terms set forth in the Sale Agreement. In the event Federal-Mogul do not make the Top Up Offer, the Court authorizes it to release its charge over the Loan Notes in exchange for the $9,100,000 payment provided in the Settlement Agreement. 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 Oct. 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. 98; Bankruptcy Creditors' Service, Inc., 215/945-7000) FORD MOTOR: Turnaround Concerns Prompt S&P to Review Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services said that its 'BB+' long-term and 'B-1' short-term ratings on Ford Motor Co., Ford Motor Credit Co., and all related entities will remain on CreditWatch with negative implications, where they were placed on Oct. 3. Hertz Corp.'s ratings had already been placed on CreditWatch negative on Sept. 13, 2005, pending completion of Ford's plan to divest it. Consolidated debt outstanding totaled $142 billion at Sept. 30, 2005. S&P currently plans to resolve this review by January, following Ford's announcement of its fourth-quarter results. The ratings could be lowered by more than one notch. The CreditWatch listing on Ford reflects concerns mainly about the automaker's ability to turn around its troubled North American automotive operations, given the following factors: * The recent precipitous deterioration in Ford's product mix in North America and the ongoing decline in its market share in the important SUV segment; * More broadly, the sales and pricing outlook for Ford's products, given the current market--General Motors Corp. has lowered list prices on many of its models in the hopes of curtailing incentives, but has also announced a new incentive program. Moreover, full-size pickups, Ford's only other major source of automotive earnings, may face challenges in 2006; and * The potential inadequacy of Ford's strategies for improving its cost position, despite cost-cutting actions -- including steps to reduce manpower and curtail excess production capacity -- that management now expects to disclose in January. S&P expects Ford to eventually reach an agreement with the United Auto Workers union similar to that announced by GM that could result in a substantial reduction of Ford's burdensome health care costs in the long term. As with GM, however, near-term cash cost savings could be offset if Ford committed to funding a newly created VEBA trust. The remainder of Ford's automotive operations, as well as Ford Credit, are performing roughly in line with our expectations and so are not central factors in this review. However, the performance of these units is not sufficient to offset the problems the company faces in its North American operations. Given the intense competitive pressures the company faces, Ford has little leeway to curtail capital expenditures, which are budgeted at about $7 billion for 2005. Ford is monetizing its investment in Hertz through a sale to financial buyers. Some cash could be saved by cutting the common dividend, but management has not indicated that it is considering this -- and announcing a dividend cut could further fuel negative capital market sentiments. The key element of Ford Credit's financial flexibility is its ongoing ability to use securitization and whole-loan sales as funding channels. Despite increasing reliance on securitization as an alternative funding source, S&P does not believe any material disadvantage for unsecured creditors will result merely from extending the use of securitization in its present forms. Consistent with the practices of its finance company peers, Ford Credit is heavily reliant on short-term debt, albeit less so than historically. As of Sept. 30, 2005, short-term debt, including current maturities of long-term debt, but not including maturing off-balance-sheet securitizations, totaled $49.1 billion, including on-balance-sheet securitizations. Ford Credit's unsecured bond spreads have been extraordinarily volatile. The company has issued unsecured term debt since the May 5 downgrades, but between likely persisting market jitters and the size limitations of the high-yield market, it is uncertain whether and to what extent Ford Credit will be able to consistently access the public unsecured debt market economically. FORTUNE OIL: Sept. 30 Balance Sheet Upside-Down by $11.7 Million ---------------------------------------------------------------- Fortune Oil & Gas, Inc., delivered its financial statements for the quarter ended Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 16, 2005. For the three months ended Sept. 30, 2005, the company reported a $1,225,428 net loss, compared to a $1,018,847 net loss for the same period in 2004. At Sept. 30, 2005, Fortune Oil's balance sheet showed an $11,739,235 stockholders' deficit, compared to a $22,503,436 deficit at Dec. 31, 2004. Going Concern Doubt Although the Company realized non-recurring gains on the sale of a 70% interest in its oil rights and settlement of vendor payables totaling $12,602,702 during the nine months ended Sept. 30, 2005, the Company had a $12,543,868 working capital deficit and a $22,580,820 accumulated deficit at Sept. 30, 2005. James B. Wensveen, the company's Chief Executive Officer, disclosed that the company requires additional capital to finance operations, current operating losses and to settle current debts in order to recommence oil production in Indonesia. The financing may be in the form of a sale of securities, the assumption of debt, or a combination of both. Since inception, the Company has satisfied its capital needs primarily by issuing equity securities, by incurring short and long term debt and the sale of a 70% interest in its oil and gas property for $10.5 million. Management's current plans are to ensure that sufficient capital will be available to provide for its capital needs with minimal borrowings and may issue equity securities to raise additional capital if available. These factors, management believes, raise substantial doubt about the company's ability to continue as a going concern. A full-text copy of the company's Form 10QSB for the period ended Sept. 30, 2005, is available at no charge at http://ResearchArchives.com/t/s?365 Fortune Oil & Gas, Inc., explores, develops, exploits and produces oil and natural gas. Its operations are focused in the North Java Sea, Indonesia. GRAY TELEVISION: Increases Senior Credit Facility to $600 Million ----------------------------------------------------------------- Gray Television, Inc. (NYSE: GTN; GTN.A) amended its existing senior credit facility. The amendment increases the total amount available under the amended senior credit facility from $400 million to $600 million. The amended agreement has a maximum term of seven years and consists of: * a $100 million revolving facility, * a $150 million term loan A facility, and * a $350 million term loan B facility. In addition, an incremental loan facility is also made available under the senior credit facility in the maximum amount of $400 million. Gray may use the proceeds from the credit facilities: * to finance the previously announced acquisition of WSAZ-TV, * to refinance the indebtedness under the previous senior credit facility, * working capital needs, * investments, * acquisitions, and * other general corporate purposes as permitted under the facility. Certain loan covenants and other terms of the senior credit facility were also modified by the amendment. Gray's interest rate is based on the lender's base rate (generally reflecting the lender's prime rate) plus the specified margin or a London Interbank Offered Rate ("LIBOR") plus a specified margin. The specified margin for revolving and term loan A advances is determined by Gray's debt leverage ratio as defined in the agreement. Margin Range for Margin Range for Base Rate Advances LIBOR Rate Advances ------------------ ------------------- Revolving and 0% to 0.25% 0.625% to 1.5% term A advances Term B advances 0% to 0.25% 1.25% to 1.5% Gray has elected to borrow these funds under its LIBOR option. The interest rate under this option is LIBOR plus the current margin of 1.25% for revolving and term loan A advances and a margin of 1.5% for term loan B advances. The amount outstanding under the senior credit facility as of Nov. 29, 2005 is $380 million and is allocated as: * revolving loan of $30 million and * term loan B of $350 million. Gray intends to use the currently un-drawn $150 million term loan A commitment and additional borrowings under the revolving loan to fund the $186 million acquisition of WSAZ-TV. Wachovia Bank, National Association served as administrative agent and as a lender, Wachovia Capital Markets, LLC served as sole lead arranger and as sole book runner, Bank of America, NA served as syndication agent and as a lender, Deutsche Bank Trust Company Americas, Allied Irish Banks PLC, KeyBank National Association and Goldman Sachs Credit Partners L.P. served as documentation agents and as lenders. Gray Television, Inc. is a television broadcast company headquartered in Atlanta, Georgia. Including the pending acquisitions of WSAZ-TV and WNDU-TV, Gray operates 36 television stations serving 30 markets. Each of the stations are affiliated with either CBS, NBC, ABC or FOX. In addition Gray currently operates seven digital multi-cast television channels which are affiliated with either UPN or FOX. * * * As reported in the Troubled Company Reporter on Oct. 10, 2005, Moody's Investors Service assigned Ba2 ratings to Gray Television, Inc.'s $600 million in new senior secured credit facilities ($100 million revolving credit facility, $150 million senior secured term loan A, $350 million senior secured term loan B). Additionally, Moody's affirmed the existing ratings, including the Ba2 corporate family rating, and changed the outlook to stable. The proceeds from the transaction will be used to refinance the company's existing $400 million in senior secured credit facilities and to finance the acquisition of WSAZ-TV in Charleston-Huntington, WV from Emmis Communications Corporation for $186 million in cash. GREENPOINT MORTGAGE: Moody's Rates Class B-4 Sub. Certs. at Ba2 --------------------------------------------------------------- Moody's Investors Service assigned Aaa ratings to the senior certificates issued by GreenPoint Mortgage Funding Trust 2005-AR5 and ratings ranging from Aa1 to Ba2 to the subordinate certificates in the securitization. The securitization is backed by first lien, adjustable-rate, negative amortization mortgage loans originated by GreenPoint Mortgage Funding, Inc. The ratings are based primarily on the credit quality of the loans and the credit enhancement in the transaction. Moody's expects collateral losses to range from 1.30% to 1.50%. The mortgage loans in the securitized pool will be serviced by EMC Mortgage Corporation. The complete rating actions are: GreenPoint Mortgage Funding Trust 2005-AR5 Mortgage Pass-Through Certificates, Series 2005-AR5 * Class I-A-1, rated Aaa * Class I-X-1, rated Aaa * Class I-A-2, rated Aaa * Class I-X-2, rated Aaa * Class II-A-1, rated Aaa * Class II-A-2, rated Aaa * Class II-X-1, rated Aaa * Class II-X-2, rated Aaa * Class II-X-3, rated Aaa * Class III-A-1, rated Aaa * Class III-A-2, rated Aaa * Class III-X-1, rated Aaa * Class IV-A-1, rated Aaa * Class IV-X-1, rated Aaa * Class IV-A-2, rated Aaa * Class IV-X-2, rated Aaa * Class M-X, rated Aa1 * Class M-1, rated Aa1 * Class M-2, rated Aa2 * Class M-3, rated Aa3 * Class M-4, rated Aa3 * Class M-5, rated A1 * Class M-6, rated A2 * Class B-1, rated A3 * Class B-2, rated Baa1 * Class B-3, rated Baa2 * Class B-4, rated Ba2 HARVEST ENERGY: Inks $4-Billion Merger Pact with Viking Energy -------------------------------------------------------------- The respective Board of Directors for Harvest Energy Trust (TSX:HTE.UN) (NYSE:HTE) and Viking Energy Royalty Trust (TSX:VKR.UN) have unanimously approved a merger agreement with the two companies. The combined trust, which will retain the Harvest name, will have an initial enterprise value in excess of $4 billion and will be managed by an experienced senior management team which will include key personnel from both Harvest and Viking. The merger will be accomplished by the exchange of 4 Viking units for 1 Harvest unit on a tax-deferred basis in Canada. The transaction exchange ratio reflects an "at-market" merger based on an average of the trust units' recent trading prices. Upon completion of the merger, Harvest unitholders will own approximately 55% of the combined trust and Viking unitholders will own approximately 45%. Subject to stable commodity pricing, new Harvest has established a distribution policy which will result in a distribution of $0.38 per unit per month, effective for the first distribution following the merger closing. The Combination Agreement: -- prohibits both Harvest and Viking from soliciting or initiating any discussions concerning the sale of material assets or any other business combination; -- provides each trust with the right to match any competing proposal in the event such an unsolicited proposal is made; and, -- provides for a $65 million termination fee subject to certain conditions. Successful completion of the transaction is subject to stock exchange and regulatory approvals and the approval by at least two-thirds of the unitholders. It is expected that the unitholder meetings required to approve this transaction will be held, and the transaction will close, prior to the end of March 2006. An information circular is expected to be mailed to unitholders in January 2006. The combination of these two trusts will create Canada's fourth largest conventional oil and natural gas royalty trust with production of approximately 64,000 boe/d comprised of 50% light/medium oil, 25% natural gas and 25% heavy oil. With an estimated 215 Mmboe of proved plus probable reserves, the combined trust will have a reserve life index of approximately 9.2. At current commodity prices, annual funds flows are expected to be approximately $650 million enabling annual capital spending of approximately $250 million. Pro forma debt to cash flow (including convertible debentures) will be approximately 1.1 times. New Harvest will operate approximately 85% of its production. On a pro forma basis, foreign ownership of new Harvest is approximately 32%. Executive Team The combined trust will retain key personnel from both entities and will be led by John Zahary, who has an excellent track record of building high performance technical teams that create value for investors by efficiently operating established assets and selectively acquiring incremental assets with low risk upside potential. The executive team will also include: * Bob Fotheringham as Vice President, Finance and CFO; * Rob Morgan as Vice President, Engineering and COO; * Al Ralston as Vice President, Production; * James Campbell as Vice President, Geosciences; and * Jacob Roorda as Vice President, Corporate. The Harvest Board of Directors, including chairman Bruce Chernoff, will remain in place and will be supplemented by Dale Blue, David Boone and William Friley from the Viking board. "The combined trust will capitalize on its size and production base with a consistent and significant capital development program," comments John Zahary, President and Chief Executive Officer of Viking. "With our extensive combined technical operating experience and ability to reduce costs, I expect our exploitation of this enhanced portfolio of assets to be very rewarding for unitholders of new Harvest." "We anticipate that the timing of the combination of these two trusts will enhance the financial uplift from the inclusion of energy trusts in the TSX/S&P Composite Index as well as provide increased liquidity with the near doubling of market capitalization," added Jacob Roorda, President of Harvest. "Further, the combined trust will have improved access to capital markets to finance a much wider range of opportunities than either organization currently has on a stand-alone basis." Distributions New Harvest has established a distribution policy which will result in a distribution of $0.38 per unit per month, commencing with the first distribution payable following closing of the transaction. It is expected that this level of distribution would represent a payout ratio of approximately 65% for new Harvest based on current commodity prices. In 2006, retained cash flows after distributions will be used to fund a planned $250 million capital program focused on exploitation and development opportunities within the existing asset base. It is expected that the combined trust has sufficient internal opportunities to allow for spending at the same level for at least three years. We currently estimate that for Canadian unitholders, distributions paid from the combined trust in 2006 will be 100 percent taxable which is unchanged from the tax status for each of Harvest and Viking prior to the combination. The Combination Agreement provides that the Harvest and Viking unitholders will continue to receive monthly distributions of $0.35 and $0.12 per trust unit, respectively, through to closing of the transaction. These distribution levels represent payout ratios of approximately 55% and 85%, respectively. Financial Advisors National Bank Financial is acting as financial advisor to Harvest with respect to this transaction. It has advised Harvest's Board of Directors that, subject to review of definitive legal agreements, it is of the opinion, as of the date hereof, that the consideration to be provided to the Viking unitholders is fair, from a financial point of view, to Harvest unitholders. CIBC World Markets is acting as financial advisor to Viking with respect to this transaction and has advised the Board of Directors of Viking that, subject to review of definitive legal agreements, it is of the opinion, as of the date hereof, that the consideration to be received by the Viking unitholders is fair, from a financial point of view, to Viking unitholders. TD Securities Inc. is acting as mergers and acquisitions advisor, and BMO Nesbitt Burns Inc., GMP Securities Ltd. and Tristone Capital Inc. are acting as strategic advisors to Harvest. Scotia Capital Inc. is acting as mergers and acquisitions advisor, and RBC Capital Markets, Canaccord Capital Corporation and FirstEnergy Capital Corp. are acting as strategic advisors to Viking. Viking Energy Royalty Trust is Calgary based energy trust that generates income from long life oil and natural gas producing properties in Alberta and Saskatchewan. Viking's units currently trade on the Toronto Stock Exchange (TSX) under the symbol VKR.UN. Harvest Energy Trust -- http://www.harvestenergy.ca/-- is a Calgary-based energy trust actively managed to deliver stable monthly cash distributions to its Unitholders through its strategy of acquiring, enhancing and producing crude oil, natural gas and natural gas liquids. Harvest trust units are traded on the Toronto Stock Exchange (TSX) under the symbol "HTE.UN" and on the New York Stock Exchange (NYSE) under the symbol "HTE". HARVEST ENERGY: Viking Energy Merger Prompts S&P to Review Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'B+' long-term corporate credit rating on Harvest Energy Trust and 'B-' senior unsecured debt rating on Harvest Operations Corp., a wholly owned subsidiary of Harvest Energy, on CreditWatch with positive implications, following the announcement that Viking Energy Royalty Trust and Harvest Energy have agreed to merge. Standard & Poor's intends to resolve the CreditWatch status after meeting with Harvest Energy's management and completing a thorough review of the trust's prospective operating and financial forecasts and the successful completion of the proposed merger. "The CreditWatch placement reflects the potential for an upgrade as a result of a material improvement in Harvest Energy's business profile, which is a consequence of the increase in proved reserves and production levels, as well as the improved internal replacement opportunities," said Standard & Poor's credit analyst Jamie Koutsoukis. "Though Harvest Energy's debt per barrels of oil equivalent will remain high when compared with that of its U.S. rated peers at CDN$4.45 per boe, cash flow from operations is expected to cover the combined trust's capital spending and distribution programs for 2006 and coverage ratios should improve, providing potential benefits to Harvest Energy's financial profile as well," Ms. Koutsoukis added. Harvest Energy is a regional oil and gas producer, with existing operations in five core areas in the Western Canadian Sedimentary Basin: southern Alberta, east-central Alberta, north-central Alberta, southeastern Saskatchewan, and northeastern British Columbia. The Viking asset portfolio is largely contiguous with Harvest's existing operations. As a result, the new Harvest trust will continue to operate in the same primary regions, have total proved reserves of 161 million boe, and an average daily production of about 64,000 boe per day. Furthermore, there will be greater diversification in the prospective product mix, which will comprise 50% light/medium oil, 25% natural gas, and 25% heavy oil. Cash flow from operations of the combined entities has been projected to be CDN$650 million, which should fund the preliminary CDN$250 million capital spending program and unit distributions of 38 Canadian cents per month. HERTZ CORP: S&P Places Low-B Ratings on $6.05 Billion Senior Debts ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' rating to Hertz Corp.'s proposed $2.2 billion of senior notes due 2013 and $600 million of subordinated notes due 2015. At the same time, a 'BB+' rating was assigned to the car rental company's proposed $1.6 billion senior ABL facility, and a 'BB' rating to its proposed $2.250 billion senior term facility. Both facilities are assigned recovery ratings of '1', indicating high expectations of full recovery of principal in the event of a payment default. Upon completion of these transactions, the 'BBB-' corporate credit rating on Hertz would be lowered to 'BB-', the 'BBB-' senior unsecured debt rating lowered to 'B', and the 'A-3' commercial paper rating withdrawn. All ratings would be removed from CreditWatch with negative implications; ratings were initially placed on CreditWatch developing on April 21, 2005, with implications revised to negative on Sept. 13, 2005. Standard & Poor's would assign a stable outlook. "The ratings on Hertz reflect a weakened financial profile after its proposed approximately $15 billion acquisition, reduced financial flexibility, and the price-competitive nature of on-airport car rentals and equipment rentals," said Standard & Poor's credit analyst Betsy Snyder. "Ratings also incorporate the company's position as the largest global car rental company and the strong cash flow its businesses generate," she continued. Park Ridge, New Jersey-based Hertz is being acquired from Ford Motor Co. by Clayton, Dubilier & Rice Inc., The Carlyle Group, and Merrill Lynch Global Private Equity. The acquisition will add over $3 billion of debt to Hertz's balance sheet and increase its borrowing costs. Pro forma for the acquisition, credit ratios will weaken from their previous relatively healthy levels. In addition, the company's historically strong financial flexibility will decline somewhat, with over two-thirds of its tangible assets secured. Hertz, the largest global car rental company, participates primarily in the on-airport segment of the car rental industry. This segment, which generates approximately 80% of Hertz's consolidated revenues, is heavily reliant on airline traffic. Demand tends to be cyclical, and can also be affected by global events. Hertz has also grown its off-airport business, the segment of the car rental business that is less cyclical and more profitable, but which is dominated by 'BBB+' rated Enterprise Rent-A-Car Co. Through its Hertz Equipment Rental Corp. subsidiary, Hertz also operates one of the larger industrial and construction equipment renters in the U.S., along with some European locations. This market had been depressed for several years due to the weak economy and overexpansion by several market participants, but has experienced improving trends since 2004 as market participants reduced their capacity growth and demand strengthened. HUDSON BAY: Weak Financial Metrics Spur S&P to Lower Debt Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured ratings on Hudson's Bay Co. one notch from 'BB' to 'BB-' on the company's very weak profitability metrics in the context of a very challenging competitive environment. The ratings on the company's subordinated debentures were also lowered one notch to 'B' from 'B+'. At the same time, the CreditWatch has been revised to negative from developing implications. The ratings were originally placed on CreditWatch on Oct. 7, 2005, following the company's announcement that it was exploring alternatives for its financial services division. "Standard & Poor's believes that HBC will be very challenged to improve its operating performance. In addition, there is increasing uncertainty as to who will ultimately purchase HBC, how it will be financed, and what the capital structure will be after a potential sale," said Standard & Poor's analyst Don Povilaitis. "The company has stated that it is aggressively pursuing a number of alternatives to maximize value for shareholders," Mr. Povilaitis added. The ratings on HBC reflect: * the company's continued weak profitability metrics, * challenging competitive environment leading to continued market share erosion, and * an over reliance on HBC's financial services for EBIT contribution. These factors are partially offset by the diversification provided by a full-line department store and mass merchant formats. In addition to broadly based demand weakness, HBC's problems include the implementation of a new operating system relating to the company's new big-ticket IT platform for furniture, appliances, and mattresses. Poor execution in terms of systems conversion, coupled with continuing merchandise delivery issues resulted in foregone sales in the third quarter. Prospects for the remainder of the year are muted; HBC's major appliance issues are not expected to be resolved until at least mid-2006. Standard & Poor's believes that the company will continue to experience pressure on its margins given the constant pricing pressures and diversity of competition the department store and mass channels are now confronting and that HBC's strategies may not be sufficient to increase revenues meaningfully in the near term. In resolving its CreditWatch listing, Standard & Poor's will meet with HBC's management and review the company's ultimate capital structure on completion of the company's proposed financial services transaction, while also taking into consideration HBC's ultimate ownership structure. Therefore, the ratings on HBC may be affirmed, lowered, or withdrawn, depending on the outcome of Standard & Poor's review. INTERDENT INC: Revenue Concerns Prompt S&P's Negative Outlook ------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on El Segundo, California-based dental practice management services provider InterDent Inc., the parent company of InterDent Service Corp., to negative from stable. Ratings on the company, including the 'B' corporate credit rating, were affirmed. "The outlook revision reflects concerns regarding dentist turnover and lower-than-expected sales because of the unanticipated appointment cancellations and reduced elective procedures through the third quarter of 2005," explained Standard & Poor's credit analyst Jesse Juliano. "As a result, planned de novo capital expenditures will likely be affected in 2006. Liquidity also remains a concern, as the company is likely to have $2 million-$3 million outstanding under its $10 million revolving credit facility at the end of the 2005 fourth quarter." The ratings continue to reflect InterDent's challenge to sustain operating improvements after emerging from bankruptcy protection in 2003, as well as its relatively weak financial profile. These concerns are only partially alleviated by the revenue diversity from the company's 126 affiliated practices and its recent improvement in operating performance. InterDent operates in the extremely fragmented dental industry and provides management services to 126 affiliated dental practices in eight states. About 90 of the practices operate under the Gentle Dental brand. InterDent provides a variety of services to its affiliates, including those related to staffing, patient scheduling, accounting, purchasing, marketing, and information systems. Generally, InterDent owns and operates all of the assets of its affiliated practices. Dentists are employees of the practices and do not hold equity stakes in the company. ISLETON DEVELOPMENT: Section 341(a) Meeting Slated for Dec. 6 ------------------------------------------------------------- The U.S. Trustee for Region 5 will convene a meeting of Isleton Development Company LLC's creditors at 1:00 p.m., on Dec. 6, 2005, at the Office of the U.S. Trustee, Suite 850, 235 Pine Street, San Francisco, California 94104. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in San Francisco, California, Isleton Development Company LLC, filed for chapter 11 protection on Nov. 1, 2005, (Bankr. N.D. Calif. Case No. 05-35360). K. Keith McAllister, Esq., at Law Offices of K. Keith McAllister represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of $1 million to $10 million. ISLETON DEVELOPMENT: David Jones Approved as Responsible Person --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California, San Francisco Division, approved Isleton Development Company LLC's request to appoint: David P. Jones c/o Isleton Development Company, LLC 150 Lombard Street, #608 San Francisco, California 94111 Telephone (415) 439-3961 as the natural person responsible for all administrative duties and obligations of the Debtor during the company's chapter 11 restructuring. The Court approved Mr. Jones' appointment on Nov. 8, 2005. Mr. Jones' duties include the filing of the Debtor's schedules, statement of financial affairs, monthly operating reports and quarterly disbursal reports. Mr. Jones will also perform on behalf of the Debtor all other matters that are appropriate and necessary to perform his duties and obligations as the Debtor's responsible person. Headquartered in San Francisco, California, Isleton Development Company LLC, filed for chapter 11 protection on Nov. 1, 2005, (Bankr. N.D. Calif. Case No. 05-35360). K. Keith McAllister, Esq., at Law Offices of K. Keith McAllister represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of $1 million to $10 million. IVOW INC: Incurs $504,000 Net Loss in Third Quarter 2005 -------------------------------------------------------- iVOW, Inc. (Nasdaq: IVOW) reported a $504,000 net loss on revenues of $320,000 for the quarter ended Sept. 30, 2005, versus a $837,000 net loss on revenues of $375,000, for the corresponding quarter of 2004. The $333,000 lower net loss for the quarter ended Sept. 30, 2005, was the result of cost reduction efforts in product development, sales and marketing and general and administrative costs. For the nine months ended Sept. 30, 2005, iVOW reported a net loss of $1,947,000 on revenues of $812,000, compared with a net loss of $2,535,000 on revenues of $1,277,000 for the same period of 2004. "Our VOW center model continues to trend in a positive direction, as our revenues increased 26% over the previous quarter," Dr. Michael Owens, President and CEO of iVOW, said. "This is attributable to increased contributions from our consulting products on top of the management fees from our iVOW Centers." "Shortly after the quarter, we also took an important step in the evolution of iVOW with the acquisition of Sound Health Solutions. With this acquisition, we have added a highly respected medical treatment model to our bariatric surgical model, and better aligned our company with the emerging treatment approaches for obesity. We now have a more comprehensive service approach that will allow our long-term growth opportunities to be considerably less constrained by the reimbursement environment for bariatric surgery," said Dr. Owens. At Sept. 30, 2005, iVOW's balance sheet showed $3.7 million in total assets and $741,759 in total liabilities. The Company has incurred net losses and negative net cash flows from operating activities in 2004, 2003, 2002, and in the first three quarters of 2005, and at Sept. 30, 2005, had an accumulated deficit of $73.9 million. Sound Health Acquisition On Nov. 1, 2005, the Company completed its acquisition of Sound Health Solutions, Inc., a Seattle-based healthcare provider specializing in the medical treatment of obesity. The purchase price for the acquisition was $125,500 in cash, the assumption of notes payable of approximately $317,000 to be secured by a bank certificate of deposit and up to a maximum of 294,278 shares of common stock contingently issuable based upon SHS achieving certain revenue and net income targets in 2006 and 2007. At closing, there were 184,477 shares of common stock issued. Going Concern Doubt JH Cohn LLP has expressed substantial doubt about iVOW's ability to continue as a going concern after auditing the Company's financial statements for the fiscal year ended Dec. 31, 2004. The auditing firm pointed to the Company's continuing losses from operations and need for additional financing to fund its operations through January 2005. iVOW, Inc. -- http://www.ivow.com/-- fka Vista Medical Technologies, Inc., is focused exclusively on the disease state management of chronic and morbid obesity. They provide program management, operational consulting and clinical training services to physicians and hospitals involved in the medical and surgical treatment of morbidly obese patients. They also provide specialized vitamins to patients who have undergone obesity surgery. JAMES FALASCA: Case Summary & 8 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: James Stanley Falasca 26 Garden Road Harrison, New York 10528 Bankruptcy Case No.: 05-27025 Type of Business: The Debtor works for Creative Construction of New York Inc. as a construction manager. Chapter 11 Petition Date: November 29, 2005 Court: Southern District of New York (White Plains) Judge: Adlai S. Hardin Jr. Debtor's Counsel: Nathan Horowitz, Esq. 175 Main Street, Suite 307 White Plains, New York 10601 Tel: (914) 684-0551 Fax: (914) 684-0646 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 8 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $1,619,000 P.O. Box 21126 Philadelphia, PA 19114 New York State $300,000 Department of Taxation and Finance P.O. Box 5300 Albany, NY 12205 Jason Halpem $230,639 2 Manhattanville Road Purchase, NY 10577 Lighting Energy Controls Inc. $200,027 Patdo Electrical Supply Co. $37,421 Ford Motor Credit $5,591 Canyon Club Inc. $2,539 Comprehensive Dental Group $195 JB OXFORD: Incurs $2.2 Mil. Net Loss in Quarter Ended Sept. 30 -------------------------------------------------------------- JB Oxford Holdings, Inc., reported $248,000 of revenues from continuing operations for the three-months ended Sept. 30, 2005, compared with revenues of $196,000 a year earlier. Revenues from continuing operations totaled $971,000 in the fist nine months of 2005, compared with $288,000 for the same period in 2004. The Company incurred a $2.2 million net loss from continuing operations for the quarter ended Sept. 30, 2005 versus a $1.1 million loss for the comparable period last year. Third quarter net loss was $2.2 million versus a net loss of $3 million in the third quarter of 2004. For the nine months ended Sept. 30, 2005, the Company reported a $4 million net loss, in contrast to a $6.9 million net loss in the first nine months of 2004. JB Oxford's balance sheet showed $28.9 million in total assets at Sept. 30,. 2005, and liabilities of $8,705,721. During the year ended December 31, 2004, JB Oxford sold substantially all of its revenue producing operations. These transactions have added liquidity to the Company's current financial position, however the Company currently has no significant operations that generate cash. As of Sept. 30, 2005, it had $7.1 million in available cash, and $4 million in U.S. Government securities that are readily marketable. The Company received an additional $8.4 million in Jan. 2005 from the sale of retail accounts to Ameritrade and expects to receive an additional $3.5 million in April 2006. New Business Plan As a consequence of the Company's deteriorating financial condition, JB Oxford's Board of Directors approved a new business plan for the Company and its subsidiaries in May 2005. Under the new business plan, the Company will focus primarily on the acquisition of real estate for investment and development. In the fourth quarter of 2004, the Company made its first investment in real estate, through the purchase of raw land in Destin, Florida. Going Concern Doubt JB Oxford's recurring operating losses and significant pending litigation raise doubt as to the Company's ability to raise enough revenues in order to continue operating as a viable going concern. Due to these factors, BDO Seidman, LLP, the Company's independent registered certified public accounting firm, expressed substantial doubt about the Company's ability to continuing as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. Bankruptcy Warning JB Oxford Holdings warns that if the judgment against the Company from the pending Securities and Exchange Commission lawsuit related to the ongoing mutual fund investigations is significant, the demand for payment coupled with the Company's deteriorating financial results, will likely affect the its ability to meet its obligations as they become due in the normal course of business. Should JB Oxford Holdings be unable to meet its obligations as they become due, the Company has indicated it would be forced to immediately file for protection under chapter 11 of the United States Bankruptcy Code. SEC Mutual Fund Lawsuit In Aug. 2004, the SEC's Los Angeles office commenced a civil lawsuit against the Company, National Clearing Corp and three of its former officers and employees, alleging violations of section 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 22(c) of the Investment Company Act of 1940 and Rule 22c-1 thereunder. The suit contends that the Company wrongfully allowed customers to place mutual fund trades after 4:00 p.m. EST, and wrongfully assisted clients in "market timing" of mutual funds. While the Company admits no wrongdoing and intends to vigorously defend itself. The Company has not accrued any specific amount related to this matter, as no amount of loss in the Company's estimated range of loss of zero to $20 million is more likely than another. In Jan. 2005, the Court, with prejudice, dismissed all claims under Section 17(a) of the Securities Act of 1933. The remaining claims are pending. The suit seeks unspecified monetary damages and penalties, as well as other remedies against the individual defendants. Headquartered in Los Angeles, California, JB Oxford Holdings, Inc., offers market making and institutional trading services through its National Clearing Corp subsidiary. The Company also purchases and sells real estate for investment and/or development through its FiCorp, Inc., subsidiary. Through its wholly owned subsidiaries, the Company was previously engaged in the business of providing brokerage and related financial services to retail customers and broker-dealers nationwide. With the completion of the transactions with Ameritrade, Inc. and North American Clearing, its brokerage operations are now limited to providing market making and institutional trading services only. JP MORGAN: Fitch Puts Low-B Ratings on $61.2 Million Class Certs. ----------------------------------------------------------------- J.P. Morgan Chase Commercial Mortgage Securities Corp., series 2005-CIBC13, commercial mortgage pass-through certificates are rated by Fitch: -- $81,674,000 class A-1 'AAA'; -- $324,282,000 class A-1A 'AAA'; -- $130,193,000 class A-2 'AAA'; -- $250,000,000 class A-2FL 'AAA'; -- $206,403,000 class A-3A1 'AAA'; -- $25,000,000 class A-3A2 'AAA'; -- $751,702,000 class A-4 'AAA'; -- $135,140,000 class A-SB 'AAA'; -- $272,056,000 class A-M 'AAA'; -- $187,039,000 class A-J 'AAA'; -- $2,720,563,694 class X-1 'AAA'; -- $2,653,464,000 class X-2 'AAA'; -- $54,411,000 class B 'AA'; -- $23,805,000 class C 'AA-'; -- $44,210,000 class D 'A'; -- $34,007,000 class E 'A-'; -- $37,407,000 class F 'BBB+'; -- $30,607,000 class G 'BBB'; -- $34,007,000 class H 'BBB-'; -- $10,202,000 class J 'BB+' -- $17,003,000 class K 'BB'; -- $10,203,000 class L 'BB-'; -- $6,801,000 class M 'B+'; -- $10,202,000 class N 'B'; -- $6,801,000 class P 'B-'; -- $37,408,694 class NR 'NR'. Class NR is not rated by Fitch. Classes A-1, A-2, A-2FL, A-3A1, A-3A2, A-4, A-SB, A-M, A-J, X-2, B, C, and D are offered publicly, while classes A-1A, X-1, E, F, G, H, J, K, L, M, N, and P are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 230 fixed-rate loans having an aggregate principal balance of approximately $2,720,563,695, as of the cutoff date. For a detailed description of Fitch's rating analysis, please see the report titled 'J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CIBC13,' dated Nov. 8, 2005 and available on the Fitch Ratings Web site at http://www.fitchratings.com/ JP MORGAN: Fitch Places Low-B Ratings on $27.9 Mil. Class Certs. ---------------------------------------------------------------- J.P. Morgan Mortgage Acquisition Corp., asset-backed pass-through certificates, series 2005-FRE1, are rated by Fitch Ratings: These senior certificates are rated 'AAA': -- $732,595,000 classes AI, AII-F-1 through AII-F-4, and AII-V-1 through AII-V-3. In addition, Fitch rates: -- $32,207,000 class M-1 'AA+'; -- $31,246,000 class M-2 'AA'; -- $22,112,000 class M-3 'AA-'; -- $17,305,000 class M-4 'A+'; -- $16,825,000 class M-5 'A'; -- $14,902,000 class M-6 'A-'; -- $15,383,000 class M-7 'BBB+'; -- $11,537,000 class M-8 'BBB'; -- $12,018,000 privately offered class M-9 'BBB-'; -- $15,863,000 privately offered class M-10 'BB+'; -- $12,018,000 privately offered class M-11 'BB'. The 'AAA' rating on the senior certificates reflects the 23.80% total credit enhancement provided by the 3.35% class M-1, the 3.25% class M-2, the 2.30% class M-3, the 1.80% class M-4, the 1.75% class M-5, the 1.55% class M-6, the 1.60% class M-7, the 1.20% class M-8, the 1.25% privately offered class M-9, the 1.65% privately offered class M-10, the 1.25% privately offered class M-11, and overcollateralization. The initial and target OC is 2.85%. All certificates have the benefit of excess interest. In addition, the ratings also reflect the quality of the loans, the soundness of the legal and financial structures, and the capabilities of Litton Loan Servicing LP as servicer and U.S. Bank National Association as trustee. The collateral pool consists of 4,597 fixed- and adjustable-rate mortgage loans and totals $961.4 million as of the cut-off date. Approximately 11.49% of the mortgage loans have fixed interest rates, and approximately 88.51% of the mortgage loans have adjustable interest rates. The weighted average original loan-to-value ratio is 82.38%. The average outstanding principal balance is $209,139, the weighted average coupon is 7.310%, and the weighted average remaining term to maturity is 356 months. The weighted average credit score is 624. The loans are geographically concentrated in California, Florida, and New York. All of the mortgage loans were originated or acquired by Fremont Investment and Loan, a California state-chartered industrial bank headquartered in Brea, California. Fremont conducts business in 45 states and the District of Columbia. KAISER ALUMINUM: Wants to Enter Into Settlement with 8 Insurers --------------------------------------------------------------- Kaiser Aluminum & Chemical Corporation seeks Judge Fitzgerald's authority to enter into settlement agreements with: -- Associated International Insurance Company, -- Affiliated FM Insurance Company, -- Evanston Insurance Company, -- Employers Mutual Casualty Company, -- Federal Insurance Company, -- New York Marine Parties, -- Allstate Insurance Company, and -- St. Paul Surplus Lines Insurance Company. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, recounts that in May 2000, KACC instituted an insurance coverage action against certain insurer-defendants, including the eight Settling Insurers, in the Superior Court of California for the County of San Francisco. The insurance coverage at issue in the Products Coverage Action spans the period from 1959 to 1985, and involves more than 300 insurance policies. In the Products Coverage Action, Mr. DeFranceschi explains, KACC seeks a declaratory judgment that the Insurer-Defendants are obligated to cover the asbestos-related bodily injury products liability claims that have been asserted against it. The Products Coverage Action also seeks damages for breach of contract and breach of the covenant of good faith and fair dealing against several of the Insurers. The Products Coverage Action, if successful, would establish KACC's rights and the Insurer- Defendants' obligations, with respect to the Asbestos Products Claims and would allow KACC to recover its costs from the insurers in connection with the defense and settlement of the Asbestos Products Claims. Mr. DeFranceschi relates that KACC has also sued a more limited number of insurers on premises claims in a companion action, which is also pending in San Francisco Superior Court. In the Premises Coverage Action, KACC seeks a declaratory judgment that certain insurers are obligated to cover the asbestos-related bodily injury premises liability claims that have been asserted against KACC. Mr. DeFranceschi explains that, in general, an Asbestos Products Claim is a claim for injury resulting from a product manufactured or sold by KACC while an Asbestos Premises Claim is a claim for injury resulting from exposure to an allegedly hazardous product or condition at a facility owned and operated by KACC. Subsequently, KACC has negotiated with the Settling Insurers and reached an agreement to resolve the asbestos and other liability insurance coverage disputes with them. The Settlement Agreements provide for: Settling Insurer Settlement Amount Payment Terms ---------------- ----------------- ------------- Associated Int'l $24,750,000 The Settlement Amount Evanston $5,000,000 will be paid to a Employers Mutual $21,100,000 Settlement Account Agent, Allstate $65,750,000 unless the Trigger Date has occurred, in which case, to an Insurance Escrow Agent for distribution to the Funding Vehicle Trust. Upon the payment of the Settlement Amount to an Insurance Escrow Account, legal and equitable title to the Settlement Amount will pass irrevocably to the Insurance Escrow Agent to be distributed pursuant to the Debtors' Plan of Reorganization. Affiliated FM $8,500,000 No later than 30 days after the Trigger Date, Affiliated FM will pay the Amount to the Funding Vehicle Trust. FM's payment of the Settlement Amount is in addition to any and all payments made to KACC prior to the Execution Date. Federal Insurance $8,500,000 The Settlement Fund will be paid by Federal into the Insurance Escrow Account shortly after the Trigger Date. NY Marine $18,000,000 The Settlement Fund will be paid so that: * $2,000,000 will be paid, shortly after the Settlement is approved, into a Settlement Account, which will be established pursuant to the Settlement Account Agreement; * $8,000,000 will be paid on March 31, 2006, into the Settlement Account, or into the Insurance Escrow Account if the Trigger Date has occurred; and * $8,000,000 will be paid on March 31, 2007, into the Settlement Account, or into the Insurance Escrow Account if the Trigger Date has occurred. On the Trigger Date, the Settlement Fund will be transferred from the Settlement Account to the Insurance Escrow Account. St. Paul $3,000,000 No later than 10 days after the Settlement is approved, St. Paul will pay the first $1,500,000 of the Settlement Amount to the Settlement Account Agent, unless the Trigger Date has occurred. If the Trigger Date has occurred, St. Paul will pay to the Insurance Escrow Agent for distribution to the Funding Vehicle Trust. On the later of January 31, 2007, and the Trigger Date, St. Paul will pay the remainder of the Settlement Amount to the Insurance Escrow Agent. After the Trigger Date, payments to the Settlement Account Agent will be disbursed to the Insurance Escrow Agent for distribution to the Funding Vehicle Trust. The Settlement Account was created through the Settlement Account Agreement and will either be substantially in the form of a bank trust agreement or escrow agreement, Mr. DeFranceschi explains. Mr. DeFranceschi further relates that under the Insurance Escrow Agreement, KACC and Wells Fargo Bank, NA, as escrow agent, established the Tort Claims Settlement Fund pursuant to the Court's order dated December 29, 2004. The Insurance Escrow Account is the account established pursuant to the Escrow Agreement. According to Mr. DeFranceschi, the Trigger Date will be the last to occur of: (i) the approval order becomes a final order; (ii) the confirmation order becomes a final order; and (iii) the occurrence of the Effective Date of the Plan. Moreover, KACC agrees to release all of its rights under its insurance policies with the Settling Insurers and to dismiss the Insurers from the Products Coverage Action. Pursuant to the Settlement Agreements, KACC will sell the Insurance Policies back to the significant Settling Insurer, and the Insurer will buy back the Insurance Policies pursuant to the Bankruptcy Code free and clear of all liens and claims. The Settlement Agreement also provides that Associated International, Allstate, Evanston, Affiliated FM, and St. Paul are protected under the Plan's Personal Injury Channeling Injunction. Furthermore, the Settlement Agreement contains certain rights of termination for Associated International, Affiliated FM, Evanston, Employers Mutual, and NY Marine, as well as certain rights to adjustment of the Settlement Fund, including if any legislation that (i) regulates, limits or controls the prosecution of asbestos claims and (ii) creates an obligation on the Settling Insurers to pay money pursuant to the legislation for the benefit of asbestos claims, is enacted into law by March 31, 2006. The Settlement Agreement with Federal contains termination rights, including if Asbestos Legislation is enacted into law by March 15, 2006. The Settlement Agreement with Allstate provides for termination rights, including if Asbestos Legislation were to be enacted into law prior to the earlier of January 1, 2007, or the Trigger Date. Mr. DeFranceschi believes that the Settlement Agreements will eliminate KACC's continuing costs of prosecuting the Products Action against the Insurers and eliminate uncertainty regarding future insurance payments. The Settlement Agreements secure the payment of a total fixed amount from the Insurers without further delay and cost to KACC. 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. 83; Bankruptcy Creditors' Service, Inc., 215/945-7000) KEYSTONE AUTOMOTIVE: Moody's Lowers $175MM Notes' Rating to Caa1 ---------------------------------------------------------------- Moody's Investors Service lowered the ratings for Keystone Automotive Operations, Inc. in response to the company's announcement that it has agreed to purchase 100% of the equity of Reliable Investments, Inc. and assigned a B2 rating to the new senior secured term loan C of the bank credit facility that will be used to help fund the transaction. The ratings lowered were: * Corporate Family Rating, to B2 from B1; * guaranteed senior secured bank credit facilities, to B2 from B1; and * guaranteed senior subordinated unsecured notes, to Caa1 from B3. The downgrade reflects the expected weakness in Keystone's leverage and credit metrics as a result of the acquisition, and Moody's expectation that the debt reduction benefits from the anticipated synergies will not be meaningful until 2007. The rating outlook is stable and reflects Moody's expectation that Keystone's credit metrics will remain stable as the acquisition is integrated. Keystone has agreed to purchase all the outstanding equity of Reliable Investments, Inc. for $63 million. Reliable is Keystone's largest competitor in the specialty accessories and equipment market. Keystone will seek to amend the covenants in the existing senior secured bank credit facility in order to facilitate the transaction. The contemplated amendments will permit the acquisition to be undertaken and will allow for a $90 million incremental term loan facility. This term loan will provide the proceeds necessary to fund the acquisition, refinance certain existing borrowings of Keystone, and provide enough balance sheet cash to cover the restructuring initiatives that are expected to be undertaken. In addition the amendment will revise certain financial covenants to reflect debt added with the transaction. The lowered ratings are: * guaranteed senior secured bank credit facilities to B2 from B1, consisting of: -- $50 million revolving credit facility due 2008; and -- $115 million term loan due 2009 ($95.5 million remaining amount). * $175 million guaranteed senior subordinated unsecured notes due 2013 to Caa1 from B3 * Corporate Family to B2 from B1 Assigned Ratings: * B2 for the incremental $90 million guaranteed senior secured term loan due 2010 within the bank credit facilities The ratings reflect the expected high pro forma leverage Keystone will have subsequent to the acquisition and the challenges Keystone will face in integrating the combined companies. Keystone has historically maintained stable profit margins. Moody's expects that Keystone's acquisitive nature is likely to continue, albeit on a smaller scale as Reliable was the company's next largest competitor. In May 2005 Keystone purchased Blacksmith, an Indianan regional distributor of truck and automotive aftermarket accessories for $30MM. The acquisition was funded under the existing senior secured credit facilities. Keystone also has grown organically through its expansion of operations on the west coast, increasing the customer base served. However, total debt has not reduced from the elevated levels reached as a result of the Bain Acquisition in 2003. Moody's believes that Keystone's liquidity subsequent to the acquisition will be adequate with an estimated $16 million of cash and $30 million of availability under the senior secured revolving credit facility. Revenue growth for the combined companies is expected to be in line with the organic growth history of Keystone. Profit margin improvement will primarily reflect attainment of the proposed net synergies. The B2 ratings for the proposed incremental $90 million term loan component of the guaranteed senior secured bank credit facilities reflect the collateral and guarantee package. The proposed incremental $90 million term loan facility will have the same guarantors, security, covenants and mandatory prepayments as the existing senior secured credit facilities and will mature one year after the exiting term loan. Future events that have the potential to weaken Keystone's outlook or ratings include: * any material deterioration in the company's operating margins; * an erosion in the inventory and working capital management systems; or * higher leverage resulting from additional acquisitions. Future events that have the potential to improve Keystone's ratings or outlook include successful integration of the Reliable acquisition combined with improved margins. These factors could result in a material de-leveraging of the company's balance sheet over the intermediate term. Keystone, headquartered in Exeter, Pennsylvania, competes as a leading distributor in the specialty accessories and equipment segment of the broader automotive aftermarket equipment industry. Keystone's specialty products are used by consumers to improve the performance, functionality, and appearance of their vehicles. The company sells only a nominal dollar amount of commodity replacement parts. Keystone is presently the dominant player in the Northeast, with a strong presence as well in the Midwest, the Southeast, and Canada. Keystone's LTM October 1, 2005 revenues approximate $499 million. KMART CORP: Files Revised Status Report on Avoidance Actions ------------------------------------------------------------ As previously reported, on August 5, 2005, Kmart Corporation submitted a status report on the remaining critical vendor adversary proceeding defendants that joined in or filed a request to dismiss complaints that have general applicability to all other defendants. On November 18, 2005, Kmart filed a revised status report indicating which of the adversary cases remain pending since the last status report. The revised report also indicates those defendants who filed joinders to, or similar requests as the Dismissal Requests filed by: -- Chicago Sun Times, Inc., -- Washington Post Company, -- Great Lakes Media, -- Consumer Communication Services, Inc., -- Marigold Foods LLC, -- Dean Foods Company, and -- Vertis, Inc. A full text copy of the revised status report is available for free at: http://bankrupt.com/misc/Kmart_remaining_crit_vendors2.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. 104; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART CORP: Gets Okay to Settle Wallace's Certification Issues -------------------------------------------------------------- On September 28, 2001, Martin Wallace filed a lawsuit against Kmart Corporation in the Superior Court of California for the County of Los Angeles. The lawsuit sought certification of a putative class of Kmart assistant store managers who were misclassified as exempt from California wage and hour laws and overtime requirements. The California Lawsuit alleged three causes of action seeking: (1) recovery for unpaid wages, penalties, pre-judgment interest, and waiting time penalties, and attorney's fees and costs; (2) an order enjoining Kmart from engaging in the alleged unlawful practices, restitution of all money due to the putative class members, an order declaring that Kmart's actions were unlawful, an accounting to determine the amount of money owed to each affected employee, and an order requiring Kmart to identify each employee who worked for the company for four years prior to the filing of the lawsuit through time of judgment; and (3) amounts converted by Kmart, plus interest, and punitive and exemplary damages. Kmart has denied the allegations. Due to Kmart's bankruptcy filing, the California Lawsuit was dismissed. Mr. Wallace subsequently filed a prepetition claim asserting the same allegations against Kmart and seeking $55,315,740 in damages for the period from September 28, 1997, through January 22, 2002. Mr. Wallace also filed an administrative claim seeking $19,905,030 in damages for the period from January 22, 2003, through May 6, 2003. Brian A. Sher, Esq., at Bryan Cave LLP, in Chicago, Illinois, says that the parties are now prepared to litigate the dispute before the Bankruptcy Court. An early meeting of counsel under Rule 26(f) of the Federal Rules of Civil Procedure has been held. The Parties have agreed to bifurcate the class certification issues from the litigation on the merits of Mr. Wallace's claims. Under an Agreed Case Management Order between Mr. Wallace and Kmart, the Parties agree to follow guidelines for the conduct of discovery and proceedings related to certification issues, and to require the parties to further confer regarding management of the matter through trial after the class certification issue is decided. Pursuant to a separate confidentiality agreement, the Parties agree to protect sensitive information that they may exchange throughout the course of the discovery process. The Bankruptcy Court approves the Agreements signed by the Parties. 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. 104; Bankruptcy Creditors' Service, Inc., 215/945-7000) LARGE SCALE: Files Financial Results for Quarter Ending Sept. 30 ---------------------------------------------------------------- Large Scale Biology Corporation delivered its quarterly report on Form 10-QSB for the quarter ending Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 18, 2005. As of Sept. 30, 2005, the company incurred a $11,589,000 net loss, compared to $17,425,000 net loss for the year ended Dec. 31, 2004. The company reported $7,406,000 in negative operating cash flows during the first nine months of 2005 and $14,566,000 during the year ended December 31, 2004. At September 30, 2005, the company's balance sheet showed $10,267,000 in total assets and $9,331,000 in total liabilities. As of September 30, 2005, the company had accumulated deficit of $203.2 million. Going Concern Doubt The company's management believes that its history of negative cash flows and cash balance of $85,000 at September 30, 2005, raise substantial doubt about its ability to continue as a going concern, absent any new sources of significant cash flows. In an effort to mitigate this near-term concern, on October 24, 2005, the company received $500,000 under a short-term secured loan. On August 5, 2005, the company has secured $1,000,000 in short-term debt financing and a private equity agreement, under which the company may put to investors up to $15,000,000 of its common stock. As previously reported in the Troubled Company Reporter, Deloitte & Touche LLP expressed substantial doubt about the company's ability to continue as a going concern after it audited the Company's Form 10-K for the fiscal year ended 2004 due to the Company's history of negative cash flows and its current cash balance. Large Scale Biology Corporation is a product-focused biotechnology company using proprietary technologies to develop and manufacture recombinant biologics. The Company's biomanufacturing opportunities include vaccines, complex proteins and follow-on off-patent therapeutics. The Company's proprietary systems are supported by patents and patent applications. The Company's corporate offices, research and development and its subsidiary company, Predictive Diagnostics, Inc., are headquartered in Vacaville, California. The Company's biomanufacturing operation is located in Owensboro, Kentucky. LB-UBS: S&P Downgrades Rating on Class P Certificates to D ---------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on six classes of commercial mortgage pass-through certificates from LB-UBS Commercial Mortgage Trust 2001-C3. Concurrently, ratings are lowered on four classes from the same transaction, and the ratings on the remaining six classes are affirmed. The raised and affirmed ratings reflect credit enhancement levels that adequately support the ratings through various stress scenarios, as well as the defeasance of 9.5% of the pool. The lowered ratings reflect expected losses on the specially serviced assets, as well as interest shortfalls. As of Nov. 18, 2005, the collateral pool consisted of 132 loans with an aggregate balance of $1.3 billion, compared with 134 loans with a balance of $1.38 billion at issuance. The master servicer, Wachovia Bank N.A., provided year-end 2004 net cash flow debt service coverage figures for 96% of the pool. Based on this information and excluding defeased loans, Standard & Poor's calculated a weighted average DSC of 1.51x for the pool, the same as at issuance. All of the loans in the pool are current, with the exception of one loan totaling $11.5 million that is 90-plus-days delinquent and one asset totaling $23.6 million that is real estate owned. Two appraisal reduction amounts totaling $15.5 million are in effect related to the delinquent and REO loans. To date, the trust has experienced no losses. The current top 10 exposures have an aggregate outstanding balance of $623.8 million. Eight of the top 10 exposures are loans secured by single properties. Five of these eight loans continue to have credit characteristics consistent with investment-grade loans. The largest loan in the pool is structured as an A/B note, with only the senior note included in the trust. The subordinate B note, with a current balance of $40 million, was securitized in the stand-alone Chrysler Building Mortgage Trust series 2001-C3A transaction and is discussed in a separate press release dated Nov. 29, 2005. Based on Standard & Poor's current valuation assumptions, the senior component exhibits credit characteristics consistent with those of high-investment-grade obligations. The weighted average DSC for the top 10 exposures was 1.72x for year-end 2004, compared with 1.71x at issuance. This excludes the 10th-largest exposure, which is with the special servicer and is discussed below. Standard & Poor's reviewed property inspections provided by Wachovia for all of the assets underlying the top 10 exposures, and all were characterized as "good" or "excellent." Wachovia reported a watchlist of 44 loans with an aggregate outstanding balance of $270.4 million. The seventh-largest loan, Park Central, is secured by a 343,419-sq.-ft. mixed-used office and retail property built in 1996 in Phoenix, Arizona. The exposure was placed on the watchlist due to low DSC resulting from low occupancy and rent concessions. DSC and occupancy were 0.70x and 84%, respectively, for year-end 2004. The exposure was previously with the special servicer and was returned to the master servicer in February 2005. The watchlist contains one other loan with a balance exceeding $20 million. Nexus-Canyon Park Laboratory is secured by a 152,050-sq.-ft. office property in Bothell, Washington, 21 miles north of Seattle. The loan was placed on the watchlist due to low DSC, which resulted from tenant vacancies and decreased rents. The borrower is actively marketing the space. DSC for year-end 2004 was 0.68x. Reported occupancy for June 2005 was 98%, compared with 45% at year-end 2004. There are three assets with the special servicer, LNR Partners Inc. The largest asset with the special servicer, the Houston Galleria/Fairfield Inn portfolio, is secured by four cross-collateralized, cross-defaulted full-service hotel properties with a total of 947 rooms. The two Galleria properties are both located in Houston, Texas, and the two Fairfield Inn properties are located in Dallas, Texas, and Scottsdale, Arizona. The loan was transferred to the special servicer due to payment default. The asset is REO, and an ARA of $9.8 million is in effect. The ARA is based on the most recent appraisal, which indicates a substantial loss to the trust upon the eventual disposition of the properties. The Wichita Apartments portfolio is secured by six cross-collateralized, cross-defaulted multifamily properties with a total of 1,328 units. All the properties were built in Wichita, Kansas, between 1948 and 1979. The loan was transferred to LNR due to payment delinquency. For year-end 2004, the combined DSC was 0.57x, and occupancy was 50%. The special servicer is pursuing a potential sale of the loan or the collateral. An ARA of $5.7 million is in effect, which indicates that the ultimate resolution of the assets could result in a substantial loss. The Park Plaza Shopping Center loan is secured by a 71,331-sq.-ft. retail shopping center in Roanoke Rapids, North Carolina. The loan was transferred to the special servicer after Winn-Dixie, which occupied 68% of the gross leaseable area, identified this location for closure in June 2005. Winn-Dixie rejected the lease as of September 2005. The borrower is currently under lease negotiations with a new tenant that would occupy the entire Winn-Dixie space. Year-end 2004 DSC for the loan was 1.22x. Standard & Poor's stressed the loans on the watchlist, along with other loans with credit issues, as part of its pool analysis. Two loans are secured by properties in and around Lake Charles, Louisiana that were damaged by Hurricane Rita. The potential damage to the respective properties was considered in the pool analysis. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised LB-UBS Commercial Mortgage Trust 2001-C3 Commercial Mortgage Pass-through Certificates Series 2001-C3 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ B AAA AA 14.70% C AA A 11.30% D A+ A- 10.09% E A- BBB+ 8.72% F BBB+ BBB 7.35% G BBB BBB- 6.43% Ratings Lowered LB-UBS Commercial Mortgage Trust 2001-C3 Commercial Mortgage Pass-through Certificates Series 2001-C3 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ L B B+ 2.36% M B- B 2.10% N CCC B- 1.58% P D CCC 1.31% Ratings Affirmed LB-UBS Commercial Mortgage Trust 2001-C3 Commercial Mortgage Pass-through Certificates Series 2001-C3 Class Rating Credit enhancement ----- ------ ------------------ A-1 AAA 18.90% A-2 AAA 18.90% H BB+ 5.25% J BB 3.68% K BB- 3.15% X AAA N/A N/A - Not applicable. LEVITZ HOME: Wants Court to Approve HSBC Bank Nevada Agreements --------------------------------------------------------------- Pursuant to Sections 362 and 363 of the Bankruptcy Code and Rule 4001 of the Federal Rules of Bankruptcy Procedure, Levitz Home Furnishings, Inc., and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's consent to enter into stipulations and modify various prepetition agreements with HSBC Bank Nevada, N.A., formerly known as Household Bank (SB), N.A. To the extent necessary, the Debtors also ask the Court to modify the automatic stay to effectuate the terms of the Stipulations. Amended Merchant Agreement Richard H. Engman, Esq., at Jones Day, in New York, relates that the parties' Merchant Agreement, dated December 20, 2002, as amended, provides the Debtors with a private-level, revolving credit card program that allows them to facilitate sales to certain qualified customers. The holders of private-level "LHFI" credit cards are permitted to purchase goods and services upon presentment of their cards at each of the Debtors' retail locations. After a credit card purchase by a customer, the Debtors forward to HSBC the transaction data documenting the Card Sale. After it receives the transaction data, HSBC remits to the Debtors the amount of each valid sale, less certain fees, charges, and discounts, chargebacks, reimbursements, refunds and customer credits, and any other amounts owed to HSBC by the Debtors under the Merchant Agreement. After making payment to the Debtors, HSBC bills the Cardholder directly for purchases charged to his or her credit account. When the Cardholder pays on the Account, HSBC retains the payment, as HSBC already has paid the Debtors all amounts owed with respect to the Card Sale. In the event any Adjustments are warranted, HSBC is entitled to satisfy the Debtor' debit balance by deducting the amount of the Adjustments from the amounts owed to the Debtors on account of subsequent Card Sales. HSBC pays the Debtors for each of the Card Sales before HSBC receives payment from the respective Cardholders-purchasers and before HSBC becomes aware of the existence of any Adjustments. On October 10, 2005, HSBC delivered a notice to the Debtors terminating the Amended Merchant Agreement, to be effective, via a further notice, on January 23, 2006. Pursuant to the Termination Notice, HSBC exercised its purported rights under the Merchant Agreement to establish a cash reserve to secure all of the Debtors' obligations and liabilities to HSBC under the Agreement and to cover Chargeback amounts and other amounts owing to HSBC. HSBC withheld $633,000 from the Debtors as a cash reserve. On October 12 and 13, 2005, HSBC withheld $453,368 from the Debtors in relation to an administrative freeze of the Debtors' account with HSBC. Since the Petition Date, the Debtors have not assumed the Merchant Agreement, but have continued to accept Card Sales and present sales slips to HSBC for payment. Pursuant to a Stipulation, dated October 28, 2005, the parties agree that: (a) they will perform all of their duties and obligations under the Merchant Agreement until it expires on March 31, 2006, rather than until January 23, 2006; (b) the Debtors waive any right to cure the defaults set forth in the Termination Notice; (c) the automatic stay imposed in the Debtors' Chapter 11 cases will be modified to the extent necessary to permit HSBC to exercise its rights under the Merchant Agreement; (d) HSBC will release the Administrative Freeze and any additional amounts HSBC may have held pursuant to any further administrative freeze of the Debtors' account after the Petition Date; (e) HSBC will retain the Reserve to secure the Debtors' obligations and liabilities to HSBC; (f) HSBC will receive an allowed administrative claim in the amount of any deficiency to the extent that all Chargebacks are not satisfied in full; (g) they each reserve all remaining rights under the Merchant Agreement; and (h) they will meet prior to January 31, 2006, to discuss, without obligation, the execution of a new agreement to replace the Merchant Agreement. Sales Tax Agreement In connection with the Merchant Agreement, the parties entered into a related Sales Tax Agreement, dated June 18, 2003. Under the Sales Tax Agreement, the parties agreed to pursue any (i) sales tax refunds, and (ii) deductions, credits or audit offsets, through amended returns or otherwise, that may arise when a Cardholder who has purchased goods and services at one of the Debtors' retail locations on his or her Accounts subsequently defaults on that account. In the event of default, HSBC charges off the unpaid balance of the defaulted Accounts if it is unsuccessful in attempting to collect any balances due on the Accounts. After HSBC provides the Debtors with a list of the Accounts written off by HSBC in each of the calendar quarter, the Debtors provide HSBC with all information necessary for HSBC to prepare and file claims for Refunds or Credits. If a Refund or Credit is obtained, the Debtors are obligated to reimburse HSBC for legal and other expenses incurred by HSBC in the pursuit of the Refund or Credit. After HSBC is reimbursed, the parties share equally in the net amount of the Refund or Credit obtained. The Sales Tax Agreement remains in full force and effect until the effective date of the termination of the Merchant Agreement. Since the Petition Date, the Debtors have not assumed or rejected the Sales Tax Agreement. Pursuant to a Stipulation, dated November 21, 2005, the parties agree that: (a) they will perform all duties and obligations under the Sales Tax Agreement until the expiration of the term of the Merchant Agreement on March 31, 2006, rather than until January 23, 2006; (b) the automatic stay imposed in the Debtors' Chapter 11 cases will be modified to the extent necessary to permit HSBC to exercise its rights under the Sales Tax Agreement; (c) they reserve all remaining rights under the Sales Tax Agreement; and (d) they will meet prior to January 31, 2006 to discuss, without obligation, the execution of a new agreement to replace the Sales Tax Agreement. Stipulations Must Be Approved Mr. Engman tells the Court that the Stipulations promote the Debtors' near-term, financial health and, by implication, their ultimate reorganization efforts. The extension of the effective date of the cessation of business under the Agreements enables the Debtors to continue (i) processing private-label customer credit transactions and (ii) receiving refunds and taking credits uninterrupted through the modified effective date. In addition, the release of the administrative on the Debtors' accounts at HSBC increases their liquidity. Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- is a leading specialty retailer of furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. (Levitz Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) LEVITZ HOME: Court Approves Blackstone Amended Letter Agreement --------------------------------------------------------------- As previously reported in the Troubled Company Reporter, Levitz Home Furnishings, Inc., and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's authority to employ The Blackstone Group L.P. to provide financial advisory and investment banking services in connection with their Chapter 11 cases. Pursuant to a Letter Agreement dated September 29, 2005, Blackstone will: (a) assist in the evaluation of the Debtors' business and prospects; (b) assist in the development of the Debtors' long-term business plan and related financial projections; (c) assist in the development of financial data and presentations to the Debtors' Board of Directors, various creditors, and other third parties; (d) analyze the Debtors' financial liquidity and evaluating alternatives to improve the liquidity; (e) analyze various restructuring scenarios and the potential impact of the scenarios on the recoveries of the stakeholders impacted by the Debtors' reorganization; (f) provide strategic advice with regard to restructuring or refinancing the Debtors' various obligations; (g) evaluate the Debtors' debt capacity and alternative capital structures; (h) participate in negotiations among the Debtors and their creditors, suppliers, lessors, and other parties in interest; (i) prepare all necessary valuation analyses in connection with the confirmation of the Debtors' plan of reorganization, including valuing securities offered by the Debtors; (j) advise the Debtors and negotiating with their lenders with respect to potential waivers or amendments of various credit facilities; (k) assist in arranging debtor-in-possession financing for the Debtors, as requested; (l) provide expert witness testimony concerning any of the subjects encompassed by the other financial advisory services; (m) assist the Debtors in preparing marketing materials in conjunction with a possible sale as part of the Debtors' reorganization or any possible Transaction; (n) assist the Debtors in identifying potential buyers or parties in interest to a sale as part of the Debtors' reorganization or a Transaction and assisting in the due diligence process; (o) assist and advising the Debtors concerning the terms, conditions, and impact of any proposed reorganization or Transaction; and (p) provide other advisory services as are customarily provided in connection with the analysis and negotiation of a reorganization under Chapter 11 or a Transaction, as requested and mutually agreed. * * * The Court approves the Debtors' application to employ The Blackstone Group on a final basis, subject to amendments in the Letter Agreement. Blackstone will provide financial advisory services to the Debtors in connection with a possible Restructuring and the possible sale, merger or other disposition of any portion of the Debtors or their assets including the sale or other disposition of all, or substantially all, of the Debtors, and will assist the Debtors in analyzing, structuring, negotiating and effecting the Restructuring or the Transaction. The Debtors will pay Blackstone: (i) a $150,000 monthly advisory fee; (ii) a capital raising fee equal to 4.0% of the aggregate amount of capital raised in the form of secured debt junior to the existing senior secured notes, unsecured debt, and common or preferred equity capital, payable upon raising of the capital; and (iii) upon the consummation of a Transaction, a Transaction fee payable in cash directly out of the gross proceeds of the Transaction, calculated as a percentage of the Consideration provided to the Debtors' estates in excess of all obligations owed under the Debtors' Senior Secured, Superpriority DIP Credit Agreement on the closing date: Consideration Applicable Percentage ------------------------ ---------- less than $75.0 million 0% at least $75.0 million 2.0% at least $85.0 million 2.5% at least $90.0 million 3.0% Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- is a leading specialty retailer of furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. (Levitz Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) LEVITZ HOME: Wants Court to Approve Key Employee Retention Plan --------------------------------------------------------------- Pursuant to Sections 363 and 105 of the Bankruptcy Code, Levitz Home Furnishings, Inc., and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's consent to implement a retention plan and a modified severance program for certain executives and key employees. The Debtors are conducting a very rapid auction for substantially all of their assets and are also engaged in a program of stringent cost savings measures. The ongoing cost savings efforts, when combined with the already significant reduction in the size of the Debtors' workforce, affect overall employee morale and heighten the anxiety that already pervades the employee ranks, Richard H. Engman, Esq., at Jones Day, in New York, relates. The Debtors' Chapter 11 cases have imposed particularly high burdens on senior management, Mr. Engman continues. In addition to their normal operational responsibilities and the critical importance of their leadership through any sale process, senior management is also responsible for insuring that the Debtors comply with the numerous duties imposed on a debtor-in-possession by the Bankruptcy Code. Senior management has also negotiated with potential bidders for the Debtors' assets and assisting these bidders with conducting due diligence. Because these talented employees and executives now face the very real prospect of having no future employment with the Debtors -- even if they forego employment opportunities with other employers -- a key employee retention plan and a severance plan are necessary, Mr. Engman maintains. The Debtors have been discussing the terms of the severance program with all of their significant stakeholders for several weeks. In recognition of the urgent liquidity and other issues being faced by the Debtors in their Chapter 11 cases, the Key Employee Participants have patiently agreed to postpone requesting approval of the Retention Plan and the Severance Plan so as to allow all parties to focus their attention on postpetition financing and the development of a value maximizing sale process. Retention Plan The Retention Plan provides that certain of the Key Employee Participants will be entitled to a retention bonus payment only upon the earlier of the Debtors' emergence from bankruptcy or upon the closing of a sale of substantially all the Debtors' assets. The total pool available for Retention Bonus Payments is $1,500,000. The Retention Plan contemplates that seven key executives will receive 70% of the pool established under the Retention Plan. The Non-Discretionary Retention Payments are calculated as a percentage of the total of each of the relevant Key Employee Participant's annual salary. The remaining 30% of the pool is allocated, in the Debtors' management's discretion, either to retain key performers who would otherwise leave the Debtors or reward key performers for their individual contributions to the Debtors' emergence. Key Employee Participants will surrender all rights to a Retention Bonus Payment if they: (a) voluntarily terminate their employment prior to the Payment Date; or (b) are terminated for cause. The Debtors have provided the counsel to their secured lenders, counsel to Official Committee of Unsecured Creditors, and counsel to the ad hoc committee of noteholders a confidential document identifying the recipients of the Non-Discretionary Retention Payments and the amount of each payment. Modifications to Existing Severance Arrangements On October 12, 2005, the Honorable Burton R. Lifland of the Southern District of New York Bankruptcy Court authorized the Debtors to implement a severance program for their rank-and-file employees. Specifically, the Debtors were authorized to provide their rank-and-file employees with severance pay equal to one week's pay for each year of service, with a two-week minimum and a twelve-week maximum. Although most of the Key Employee Participants are not beneficiaries of the severance previously authorized by the Court, many of them have been promised severance benefits under written severance agreements or other employment agreements. The prepetition contractual severance benefits for executives were: (a) 18 months of salary for the Debtors' chief executive officer and chief operating officer; (b) either 9 or 12 months of salary for some of the Debtors' senior vice presidents; and (c) between 6 and 9 months of salary for the remaining senior vice presidents and vice presidents of the Debtors. Consistent with their request for rank-and-file employees, the Debtors propose to modify and continue both contractual severance and other severance obligations to the Key Employee Participants. The Severance Program would cover 23 individuals and would provide severance payments ranging from three months to 12 months if the Key Employee Participant is terminated for any reason other than cause. The aggregate potential cost of the Severance Program is approximately $4,080,000 -- compared to prepetition severance of about $4,200,000. "This reduction in cost compared with the prepetition program comes because the Chief Executive Officer and the Chief Financial Officer of the Debtors have voluntarily agreed to reduce their benefits under the Severance Program from 18 months to 12 months so as to provide funds for increased severance benefits for other Key Employee Participants," Mr. Engman explains. The Debtors have provided a confidential document identifying the proposed 23 Key Employee Participants in the Severance Program, their salary, and the number of months and cost of their proposed severance to the Court's Chambers, counsel to the Debtors' secured lenders, counsel to the Committee, and counsel to the ad hoc committee of noteholders. Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- is a leading specialty retailer of furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. (Levitz Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) LPL HOLDINGS: Moody's Rates $400 Million Sr. Sub. Notes at Caa1 --------------------------------------------------------------- Moody's assigned a B2 rating to $1,050 million in senior secured bank facilities and a Caa1 rating to $400 million of senior subordinated debt for LPL Holdings, Inc. (LPL). A corporate family rating of B2 was also assigned. LPL is the parent company that owns 100% of Linsco/Private Ledger Corp., a registered clearing broker-dealer. The outlook on all ratings is stable. LPL is a leading provider of infrastructure and support services to approximately 6,400 financial advisors. LPL recently announced plans to raise $1,450 million of bank facilities and subordinated debt to partially finance the $2,500 million leveraged buyout of a majority stake in the company with two private equity firms -- Hellman & Friedman LLC and Texas Pacific Group. After the sale, LPL's current management and financial advisors will retain roughly 30% of the common equity of the company. Moody's said the leveraged buyout introduces substantial financial leverage into the capital structure of LPL and reduces the firm's financial flexibility. These are the primary factors driving the B2 rating. At the outset of the transaction, the ratio of Debt to adjusted 2005 EBITDA (excluding stock option compensation and certain one-time charges) is expected to be approximately 6.9x. This is an elevated Debt/EBITDA ratio, even for a B2 rated company, and leaves the company with little margin for error. The transaction is also priced at a rich multiple of 13.1x adjusted 2005 EBITDA. This substantial premium reduces the recovery that could be expected by debt holders should LPL not achieve growth targets and experience financial distress. Management intends to reduce debt in coming years, and the senior debt is expected to contain covenants to capture proceeds of asset sales and excess cash flow. Nonetheless, required debt amortization is minimal, and exit opportunities for the private equity sponsors will depend on market conditions outside their control. This introduces an element of event risk, particularly for the subordinated note holders. Substantial improvement in debt service ratios and debt reduction will be the principal driving factor behind the potential for future upgrades. LPL's business model provides a comprehensive support platform for experienced financial advisors who want to establish their own money management practice. LPL provides these services to financial advisors in approximately 2,800 offices throughout the United States. LPL engages advisors as independent contractors, not as employees. LPL advisors typically brand themselves as independent money managers and are responsible for the costs of setting up their local offices and for gathering clients and assets. On behalf of LPL, advisors solicit mutual fund or securities transactions or money management relationships from their local clientele. This activity generates revenues for LPL, and LPL then pays its advisors commissions on these transactions based on a pre-agreed schedule. LPL also generates fee revenue by providing comprehensive support to the advisor in the form of: * technology, * clearing, * research, and * regulatory compliance. LPL remains exposed to the regulatory and compliance risks of the activities of its advisors, a key risk. As the advisor base grows, LPL will need to maintain vigilant and robust controls to ensure the compliance of its branches and advisors. Moody's said regulatory scrutiny of all brokerage firms has increased in recent years, and the avoidance of serious regulatory infractions is a prerequisite to future upgrades. Alternatively, a spate of serious regulatory issues could lead to downgrades. Moody's noted that LPL has steadily grown its advisor base, its revenues and its operating earnings over the past several years in both rising and declining equity markets. These financial results demonstrate the operating leverage in the firm's business model as well as the appeal of the LPL value proposition to a segment of experienced financial advisors with established mass affluent clientele. LPL does not make upfront payments to recruit advisors, and has had a relatively clean compliance record over the past several years. Moody's expects that LPL can continue to steadily add financial advisors to its operating platform in the next couple of years at minimal additional cost; this should produce expanding operating margins. Moody's commented that LPL's pretax margins and financial advisor productivity are weaker than leading full service brokerage firms with substantially greater client assets under management and with a greater emphasis on high-net-worth clients. Steady, controlled growth of advisors and client assets will be an important driver of operating performance and may drive LPL's performance on these metrics. Improvements on these metrics could contribute to future upgrades the rating agency said. These ratings were assigned to LPL Holdings Inc: * Corporate Family Rating -- B2 * $100 million six-year senior secured revolving bank credit facility -- B2 * $50 million one-year senior secured bank Term Loan A -- B2 * $900 million 7.5 year senior secured bank Term Loan B -- B2 * $400 million 10 year Senior Subordinated Notes -- Caa1 LPL is a leading provider of infrastructure and support services to independent financial advisors. LPL reported earnings of $35 million for the year ended December 31, 2004. MARSH SUPERMARKETS: Posts $3.4 Million Net Loss in Second Quarter ----------------------------------------------------------------- Marsh Supermarkets, Inc. (Nasdaq: MARSA, MARSB) reported financial results for the second fiscal quarter ended Oct. 15, 2005. The company reported a net loss of $3.4 million compared to net income of $1.3 million for the same period last year. The company attributed the losses to: * lower contribution from comparable stores (stores open during both quarters), * startup and operating losses of new stores, and * higher general and administrative expenses. Total revenues for the quarter increased to $549.6 million from $524.9 million for the prior year quarter. Sales in comparable supermarkets and convenience stores increased 3.6% in the second quarter of 2006 from the same period in 2005, but comparable store merchandise sales, which exclude gasoline sales, declined 0.7%. The company excludes gasoline sales from its analysis of comparable store merchandise sales because retail gasoline prices fluctuate widely and frequently, making analytical comparisons difficult. Financial Advisor Engagement The company has retained Merrill Lynch & Co. to explore strategic alternatives for the enhancement of shareholder value, including a possible sale of the company. The company has authorized Merrill Lynch to contact a limited number of prospective strategic and financial purchasers and provide such information as determined to be necessary or appropriate. However, there can be no assurance that the company will consummate a sale or other strategic alternative. The company stated that it does not expect to update its progress or disclose developments with respect to the exploration of strategic alternatives unless and until the Board of Directors has approved a definitive transaction. Suspension of Dividends The company also reported that the Board of Directors had determined to suspend the payment of future cash quarterly dividends on company common stock until the company improves its financial performance and its credit ratios on a sustainable basis. New Credit Agreement On Nov. 9, 2005, the company and its subsidiaries entered into a new five-year $95 million revolving credit facility with a group of lenders led by Bank of America, N.A. The new credit facility is secured by eligible receivables, inventory, certain real estate and other fixed assets. The company borrowed approximately $51 million to repay the previous credit facility that was scheduled to expire in February 2006. The agreement for the new credit facility contains covenants and events of default that are customary for a credit facility of this kind. "We are clearly disappointed with the loss reported for the quarter," stated Don E. Marsh, Chairman and Chief Executive Officer. "The positive developments of recording our sixth consecutive quarter of increases in sales from comparable stores and the new credit facility were outweighed by a number of negative factors." "During the past several months, management has been working diligently to reduce costs during a time of increasing competition, and while we believe our initiatives will improve profitability, our responsibility is to consider the best interests of our employees, the communities we serve and, above all, our shareholders. One of the strategic alternatives that we believe should be considered would be the possible sale of the company to the right party. For this reason, we have authorized Merrill Lynch to investigate the potential of such a transaction as an integral part of our considerations." Marsh Supermarkets, Inc. is a leading regional chain, operating 70 Marsh(R) supermarkets, 38 LoBill(R) Foods stores, 8 O'Malia(R) Food Markets, 160 Village Pantry(R) convenience stores, 2 Arthur's Fresh Market(R) stores, and 1 Savin*$(SM), in Indiana and Western Ohio. The Company also operates Crystal Food Services(SM), which provides upscale catering, cafeteria management, office coffee, coffee roasting, vending and concessions, and restaurant management and Primo Banquet Catering and Conference Centers; Floral Fashions(R), McNamara(R) Florist and Enflora(R) -- Flowers for Business. * * * As reported in the Troubled Company Reporter on Aug. 17, 2005, Moody's Investors Service placed the ratings of Marsh Supermarkets, Inc. on review for possible downgrade based on: 1) Moody's concerns about the operational and financial pressures (as measured by cash flow from operations and comparable store sales) that are expected to continue to face the company; 2) Moody's belief that the company's market position has weakened because of the many new competitive stores in and around Indianapolis; and 3) Moody's opinion that debt protection measure improvements will prove challenging as long as the company continues to run free cash flow deficits (after capital investment, shareholder enhancement, and cash pension contributions). Ratings placed under review for possible downgrade: * Corporate Family Rating at B1 * Senior subordinated 8.875% notes due in 2007, guaranteed by operating subsidiaries, at B3 Moody's does not rate the company's $82.5 million senior revolving credit agreement, expiring in February 2006, which is secured by a pledge of real estate. MARSH SUPERMARKETS: S&P Reviews Ratings Over Possible Sale Plan --------------------------------------------------------------- Standard & Poor's Ratings Services placed the ratings for Indianapolis, Indiana-based Marsh Supermarkets Inc., including the 'B-' corporate credit rating, on CreditWatch with developing implications. The placement followed the company's announcement that it has retained Merrill Lynch & Co. to explore strategic alternatives for the enhancement of shareholder value, including a possible sale of the company to a strategic or financial buyer. Marsh stated that it does not expect to update its progress or disclose developments with respect to the exploration of strategic alternatives unless and until its board of directors has approved a definitive transaction. "Standard & Poor's will monitor developments associated with this process to assess the implications for the ratings," said Standard & Poor's credit analyst Stella Kapur. MASTR ASSET: Fitch Puts BB+ Rating on $8.4 Mil. Class M-10 Certs. ----------------------------------------------------------------- MASTR Asset Backed Securities Trust 2005-FRE1, mortgage pass-through certificates are rated by Fitch: The senior certificates are rated 'AAA': -- $908,042,000 classes A-1 through A-5. In addition, Fitch rates: -- $110,266,000 class M-1 'AA+'; -- $41,575,000 class M-2 'AA'; -- $21,691,000 class M-3 'AA-'; -- $21,691,000 class M-4 'A+'; -- $19,884,000 class M-5 'A'; -- $14,461,000 class M-6 'A-'; -- $13,858,000 class M-7 'BBB+'; -- $13,858,000 class M-8 'BBB'; -- $10,243,000 class M-9 'BBB-'; -- $8,435,000 privately offered class M-10 'BB+'. The 'AAA' rating on the senior certificates reflects the 24.65% total credit enhancement provided by the 9.15% class M-1, the 3.45% class M-2, the 1.80% class M-3, the 1.80% class M-4, the 1.65% class M-5, the 1.20% class M-6, the 1.15% class M-7, the 1.15% class M-8, the 0.85% class M-9, the 0.70% privately offered class M-10, and overcollateralization. The initial and target OC is 1.75%. All certificates have the benefit of excess interest. In addition, the ratings also reflect the quality of the loans, the soundness of the legal and financial structures, and the capabilities of HomEq Servicing Corporation as servicer and U.S. Bank National Association as trustee. The collateral pool consists of 5,684 fixed- and adjustable-rate mortgage loans and totals $1.205 billion as of the cut-off date. Approximately 11.40% of the mortgage loans have fixed interest rates, and approximately 88.60% of the mortgage loans have adjustable interest rates. The weighted average original loan-to-value ratio is 81.22%. The average outstanding principal balance is $212,016, the weighted average coupon is 7.336%, and the weighted average remaining term to maturity is 357 months. The weighted average credit score is 626. The loans are geographically concentrated in California, Florida, and New York. All of the mortgage loans were originated or acquired by Fremont Investment and Loan, a California state-chartered industrial bank headquartered in Brea, California. Fremont conducts business in 45 states and the District of Columbia. MERCURY INTERACTIVE: Nasdaq Extends Filing Deadline to January 3 ---------------------------------------------------------------- Mercury Interactive Corporation (Nasdaq: MERQE) obtained an extension until Jan. 3, 2006, from the NASDAQ Listing Qualifications Panel in which to file its quarterly reports on Form 10-Q for the periods ended June 30, 2005 and Sept. 30, 2005, all required restated and other financial statements for previous periods, and to otherwise meet all necessary listing standards of The NASDAQ National Market. The latest extension was granted as a result of a revised plan of compliance submitted by the company to the Panel on Nov. 15, 2005. It is a requirement of the Panel's decision that through Jan. 3, 2006, the company provide prompt notification to the Panel of any significant events that occur during this time, including any event that may call into question the company's historical financial information or that may impact the company's ability to maintain compliance with any NASDAQ listing requirement or the Jan. 3, 2006 deadline. In addition, any compliance document prepared by the company will be subject to review by the Panel, which may, in its discretion, request additional information before determining that the company has complied with the terms of the Panel's decision. There can be no assurance that the company will be able to meet the Jan. 3, 2006 deadline established by the Panel. In granting the company's request, the Panel noted that it would not entertain further extension requests should the company be unable to make its filings by the Jan. 3, 2006 deadline. If the company is unable to comply with the conditions for continued listing required by the Panel, the company's shares of common stock are subject to immediate delisting from The NASDAQ National Market. The company would have the option to request that the NASDAQ Listing and Review Council review any decision to delist its shares from The NASDAQ National Market, but cannot provide any assurance that its request would be successful. Any such request would not stay a decision to delist the company's shares. During the extension period, the company's common stock will continue to be listed on The NASDAQ National Market under the trading symbol: MERQE. Mercury Interactive Corporation -- http://www.mercury.com/-- the global leader in business technology optimization software, is committed to helping customers optimize the business value of information technology. Founded in 1989, Mercury conducts business worldwide and is one of the largest enterprise software companies today. Mercury provides software and services for IT Governance, Application Delivery, and Application Management. Customers worldwide rely on Mercury offerings to govern the priorities, processes and people of IT and test and manage the quality and performance of business-critical applications. Mercury BTO offerings are complemented by technologies and services from global business partners. * * * As reported in the Troubled company Reporter on Oct. 28, 2005, Mercury Interactive Corporation was soliciting consents from the holders of its: -- $300 million aggregate principal amount of 4.75% Convertible Subordinated Notes due 2007; and -- $500 million aggregate principal amount of Zero Coupon Senior Convertible Notes due 2008. In each case, Mercury is requesting a limited waiver, until March 31, 2006, of any default or event of default arising from Mercury's failure to file with the Securities and Exchange Commission and furnish to the holders of notes, those reports required to be filed under the Securities Exchange Act of 1934. The company reports that upon the expiration of the consent solicitations at 5:00 p.m., Eastern Standard Time, on October 25, 2005, holders of over 94% of the outstanding aggregate principal amount of 2007 Notes and over 93% of the outstanding aggregate principal amount of 2008 Notes submitted consents and therefore the Report Defaults were waived. In consideration of the waiver, Mercury will: (i) pay to each holder of 2007 Notes from whom a properly executed, unrevoked and completed letter of consent was received on or prior to the Expiration Time a consent fee of $25.00 for each $1,000 principal amount of 2007 Notes and (ii) enter into an amendment to the Indenture governing the 2008 Notes pursuant to which Mercury shall be required to repurchase the 2008 Notes, at the option of the holder, on November 30, 2006 at a repurchase price equal to 107.25% of the principal amount. MERRILL LYNCH: Fitch Upgrades Low-B Ratings on 6 Cert. Classes -------------------------------------------------------------- Fitch Ratings has taken ratings actions on these Merrill Lynch Mortgage Loans, Inc. mortgage pass-through certificates: MLMI series 2003-A -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA+'; -- Class B-2 upgraded to 'AA' from 'A+'; -- Class B-3A upgraded to 'A+' from 'A'; -- Class B-3B upgraded to 'A' from 'BBB+'; -- Class B-4 upgraded to 'BBB+' from 'BBB-'; -- Class B-5 upgraded to 'BB' from 'B+'. MLMI series 2003-A3 -- Class A affirmed at 'AAA'; -- Class M-1 upgraded to 'AA+' from 'AA'; -- Class M-2 upgraded to 'A+' from 'A'; -- Class M-3 upgraded to 'A' from 'BBB'; -- Class B-1 upgraded to 'BBB' from 'BB'; -- Class B-2 upgraded to 'BB' from 'B'. MLMI series 2003-B -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA+'; -- Class B-2 upgraded to 'AA' from 'A+'; -- Class B-3 upgraded to 'A+' from 'BBB+'; -- Class B-4 upgraded to 'BBB+' from 'BBB-'; -- Class B-5 upgraded to 'BB' from 'B+'. MLMI 2003-G -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA+'; -- Class B-2 upgraded to 'AA+' from 'A+'; -- Class B-3 upgraded to 'AA-' from 'BBB+'; -- Class B-4 upgraded to 'BBB+' from 'BB+'; -- Class B-5 upgraded to 'BB+' from 'B+'. The collateral in the aforementioned transactions consists of 15- to 30-year adjustable-rate mortgages extended to prime borrowers that are primarily secured by first liens on one- to four-family residential properties. As of the October 2005 distribution date, these transactions are seasoned from a range of 22 to 32 months and the pool factors range from approximately 43% to 55%. The servicers for the 2003-A3 and 2003-G transactions are Wells Fargo Home Mortgage, Inc. and PHH Mortgage Corporation, respectively. Both are rated 'RPS1' by Fitch. Transactions 2003-A and 2003-B are serviced by Capstead Mortgage Corporation which is not currently rated by Fitch. The affirmations reflect satisfactory credit enhancement relationships to future loss expectations and affect approximately $1.84 billion in outstanding certificates. The upgrades reflect an improvement in the relationship of CE and future loss expectations and affect approximately $124.06 million in outstanding certificates. The CE levels for all classes are 2 times their original levels. Cumulative losses and the non-performing loans are very low for all transactions. MERRILL LYNCH: Fitch Rates $8.5 Million Cert. Classes at Low-B -------------------------------------------------------------- Fitch has rated the Merrill Lynch Mortgage Investors Trust 2005-NCB, which closed on Nov. 29, 2005: -- $167.2 million classes A-1A, A-1B, and R 'AAA' -- $21.8 million class M-1 'AA'; -- $18.5 million class M-2 'A'; -- $10.7 million class B-1 'BBB+'; -- $4.6 million class B-2 'BBB'; -- $4.2 million class B-3 'BBB-'; -- $4.3 million class B-4 'BB+'; -- $4.2 million class B-5 'BB. The 'AAA' rating on the senior certificates reflects the 36.20% initial credit enhancement provided by 8.80% class M-1, the 7.45% class M-2, the 4.30% class B-1, the 1.85% class B-2, the 1.70% class B-3, the 1.75% class B-4, the 1.70% class B-5, along with an initial OC of 5.00% with a target OC of 8.65%. All certificates have the benefit of excess interest. In addition, the ratings reflect: * the quality of the loans, * the soundness of the legal and financial structures, and * the capabilities of Wilshire Credit Corporation as servicer. Deutsche Bank National Trust Company will act as trustee. The collateral pool consists of fixed, second lien mortgage loans and totals $247,934,336 million as of the cut-off date. The weighted average original loan to value ratio is 99.87%. The average outstanding principal balance is $53,335, the weighted average coupon is 10.173%, and the weighted average remaining term to maturity is 347 months. The loans are geographically concentrated in California and Florida. MESABA AVIATION: Wants to Assign Kenton County Ground Lease ----------------------------------------------------------- As reported in the Troubled Company Reporter on Nov. 3, 2005, Mesaba Aviation Inc., doing business as Mesaba Airlines, sought the U.S. Bankruptcy Court for the District of Minnesota's authority to reject, effective Nov. 1, 2005, a ground lease with the Kenton County Airport Board pursuant to Section 365 of the Bankruptcy Code. Since filing the request, the Debtor has learned that certain parties are interested in potentially taking an assignment of the Kenton County Ground Lease, Will R. Tansey, Esq., at Ravich Meyer Kirkman McGrath & Nauman, P.A., in Minneapolis, Minnesota, relates. The Debtor believes the assignment may create a benefit to its estate. The Debtor reserves its rights to seek to reject the Lease. Mesaba Aviation, Inc., d/b/a Mesaba Airlines,-- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000). MESABA AVIATION: Court Okays Qwest Settlement Agreement ------------------------------------------------------- Mesaba Aviation, Inc., doing business as Mesaba Airlines, utilizes telecommunications and related services and facilities provided by Qwest Corporation. On Oct. 25, 2005, Qwest requested adequate assurance of payment for its services and facilities utilized by the Debtor, pursuant to Section 366 of the Bankruptcy Code. Qwest and the Debtor want to resolve the Adequate Assurance Demand. In a stipulation, Qwest and the Debtor agree that: 1. the Debtor will pay Qwest for the invoiced amounts due for services Qwest rendered between Oct. 13, 2005, and November 21, 2005; 2. the Debtor will pay each postpetition invoice that it receives for services rendered by Qwest in accordance with the terms of the invoice; 3. the Debtor will provide Qwest a $23,410 security deposit to secure their payment obligations for postpetition services being rendered to them; 4. Qwest will apply the Deposit to reduce any postpetition payment default by the Debtor; 5. if the Debtor disputes a portion of any invoice issued by Qwest, the Debtor will raise that dispute in accordance with its agreements with Qwest; 6. all postpetition amounts owing by the Debtor to Qwest will constitute administrative expenses of the Debtor's estate pursuant to Sections 503(b) and 507(b) of the Bankruptcy Code; 7. the Stipulation will not affect any of the parties' rights under Section 365, or deem an assumption of any agreements between them; 8. in the event that the Debtor fails to timely make any payment required by the Stipulation and does not immediately cure the default, Qwest may apply the Deposit and file a request to terminate services to the Debtor; and 9. for any new services requested by the Debtor from Qwest, provided that the Debtor is currently in compliance with all obligations as agreed, the Debtor will forward an additional security deposit to Qwest in an amount to be determined by the parties commensurate with the particular services or products that are requested. Will R. Tansey, Esq., at Ravich Meyer Kirkman McGrath & Nauman, P.A., in Minneapolis, Minnesota, asserts that entry into the Stipulation will minimize disruption of the Debtor's operation as a "going concern," and will increase the possibilities for a successful reorganization. At the Debtor's request, the U.S. Bankruptcy Court for the District of Minnesota approves the Stipulation. Mesaba Aviation, Inc., d/b/a Mesaba Airlines,-- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000). MIRANT CORP: Underwood Perkins Okayed as Ch. 11 Examiner's Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Texas gave William K. Snyder, the Chapter 11 Examiner in Mirant Corp.'s bankruptcy proceeding, permission to retain Underwood, Perkins & Ralston, P.C., as his supplemental counsel, nunc pro tunc to October 3, 2005. Underwood will supplement the services of Gardere Wynne Sewell, LLP, the Examiner's attorney of record in the Debtors' bankruptcy cases. The Examiner wants to retain Underwood Perkins because Arthur A. Stewart, a former partner at Gardere, transferred to become senior counsel at Underwood on September 26, 2005. Michael P. Cooley, Esq., at Gardere Wynne Sewell LLP, in Dallas, Texas, relates that Mr. Stewart has extensive experience and knowledge of the issues involved in the Debtors' cases and the matters within the scope of the Examiner's powers and duties. Mr. Stewart spent significant time over the last year working with the other attorneys at Gardere in representing the Examiner. Mr. Stewart was instrumental in: * reviewing and monitoring the operation and observance of the "Continued Trading Order;" and * analyzing various issues relating to: -- the adequacy of the proposed disclosure statement; -- the confirmability of the Debtors' proposed plan of reorganization; -- the valuation; and -- certain creditors' entitlement to postpetition interest. Mr. Stewart also provided additional support for the Gardere core team by covering depositions and analyzing various other legal issues arising in the case, Mr. Cooley points out. The Examiner wants to retain Mr. Stewart on an as-needed basis to provide services necessary to enable him to fully discharge his duties and obligations in the Mirant cases. Specifically, Mr. Stewart will: (a) assist Gardere in matters he was working on while he was a a Gardere partner; (b) represent or assist the Examiner at any meeting or hearing as the Examiner deems appropriate; (c) advise the Examiner with respect to his powers and duties; and (d) provide other services to the Examiner as are necessary and appropriate to enable the Examiner to discharge his obligations to the Court. The Examiner says that Underwood will be paid for its services at its standard hourly rates, plus reimbursement of actual and necessary expenses. "The only attorney who will work on this representation is [Mr.] Stewart, whose hourly rate is $250." 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. 82 Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Equity Panel Wants Directors' Equity Stake Cancelled ----------------------------------------------------------------- The Official Committee of Equity Security Holders appointed in the chapter 11 cases of Mirant Corporation and its debtor-affiliates tells the U.S. Bankruptcy Court for the Northern District of Texas that throughout the Debtors' Chapter 11 cases, some directors and officers of Mirant Corporation have failed to act consistently with their fiduciary duty to shareholders and have failed to properly manage the Debtors' estates. The Directors and Officers hold approximately 180,000 shares of common stock in Mirant: A.D. Correll Director 33,736 A.W. Dahlberg Director 90,851 David J. Lesar Director 5,000 Robert F. McCullough Director 1,000 James F. McDonald Director 29,540 Ray M. Robinson Director 2,500 Vance N. Booker Senior Vice President 4,641 John W. Holden III Senior Vice President 2,444 Douglas L. Miller Senior Vice President 10,014 John W. Ragan Senior Vice President 2,361 Specifically, the Equity Committee alleges that the Debtors, at the direction of Mirant's Directors and Officers, have deliberately sided with the creditor constituencies represented by the Official Committee of Unsecured Creditors of Mirant Corporation, while turning their backs to the concerns of shareholders. "In doing so, they have abdicated entirely their fiduciary obligations to shareholders." According to the Equity Committee, the Debtors' alliance with the Corp. Committee was highlighted by Management's decision not only to align the Debtors with the Corp. Committee at the Valuation Hearing, but in fact to take the lead role in advocating for a valuation that would leave equity holders with no recovery or ownership interest in the reorganized entities. Aside from failing to position the Debtors as an "honest broker," the Equity Committee says, Management has failed to ensure that the Debtors' cases proceed in an efficient and productive manner for the benefit of all constituencies. The Equity Committee notes that: -- considerable time, effort and resources have been spent litigating over issues arising out of the conduct of the Debtors and their management; -- Management has demonstrated incompetence in overseeing a process whereby claims and causes of action held by the Debtors were filed on the eve of the deadline for commencing those actions, which reduced the chances of favorable settlement -- to which equity holders are beneficiaries; -- the Debtors have consistently failed to provide important information to the statutory committees and the Examiner, thus prompting numerous discovery disputes and multiple Rule 2004 motions; and -- the fees in the Debtors' cases have reached extraordinary proportions because Management enabled counsel to the Debtors to take an uncompromising position on virtually every issue in the Debtors' cases, without meaningful efforts at settlement. As a result, the Equity Committee asserts, the shareholders of Mirant have been harmed, including with respect to the recoveries they will receive in the Debtors' cases. Thus, the Equity Committee asks the Court to equitably subordinate and cancel the Mirant equity interests held by Mirant's Directors and Officers. 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. 83 Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Asks Court to Approve Wyandotte Settlement Agreement ----------------------------------------------------------------- Jason D. Schauer, Esq., at White & Case LLP, in Miami, Florida, relates that Mirant Wyandotte, LLC, a Mirant Corporation debtor-affiliate and the City of Wyandotte are parties to these agreements: a. the Lease Agreement dated December 21, 2000, pursuant to which Mirant Wyandotte leased from the City 24 acres of land to develop and operate an electrical generating facility; b. the Environmental Indemnity Agreement dated December 21, 2000, along with BASF Corporation; and c. the Development Agreement and the Project Output Agreement, all dated December 21, 2000, along with the Municipal Services Commission of Wyandotte. According to Mr. Schauer, out of these agreements, disputes arose among the parties including those that involve tax obligations, which Mirant Wyandotte allegedly owes to the City. On August 9, 2004, Mirant Wyandotte sought a third extension of its time to assume or reject certain executory contracts and leases, including the Lease with the City. The City objected and argued that Mirant Wyandotte should not be permitted additional time to assume or reject the Lease because Mirant Wyandotte had failed to pay property taxes attributable to the Property for the 2003 and 2004 tax years. Nevertheless, the Court granted the extension. The City asked the U.S. Bankruptcy Court for the Northern District of Texas to compel Mirant Wyandotte to pay for the property taxes but the Court denied its request. The City filed five proofs of claim based on unpaid ad valorem taxes -- Claim Nos. 8013, 5867, 6041, 5868 and 5855. Claim Nos. 5855, 5868 and 6041 were expunged and disallowed, while the Court adjourned the Debtors' objection with respect to Claim No. 8013. To resolve all outstanding issues between Mirant Wyandotte and the City relating to the leased premises and the Agreements, the parties entered into a Settlement Agreement and Release. The important terms of the Settlement Agreement are: A. Lease Agreement a. The City and Mirant Wyandotte have agreed to amend the Lease Agreement. Under the Lease Amendment, the Lease will terminate automatically on June 30, 2006; b. In the event that Mirant Wyandotte will terminate the Lease prior to June 30, it must notify and pay the City these amounts for the rent due: Month and Year Rent Payment -------------- ------------ November 2005 $5,000 December 2005 5,000 January 2006 6,000 February 2006 7,000 March 2006 8,000 April 2006 10,000 May 2006 12,000 June 2006 14,000 c. Mirant Wyandotte may also extend the term of the Lease beyond June 30, 2006, upon written notice to the City; d. The Lease Amendment also provides a list of specific activities or Restoration Obligations that Mirant Wyandotte must perform to comply with Section 4.7 of the Lease; and e. Mirant Wyandotte will assume the Lease, as amended. The parties have agreed that the cure obligation is $10,000. B. The Environmental Indemnity Agreement a. The City, Mirant Wyandotte, and BASF have agreed to an amendment to the Environmental Indemnity Agreement. The Environmental Indemnity Amendment provides that, if Mirant Wyandotte terminates the Lease pursuant to the Lease Amendment, Mirant Wyandotte's obligations under the Environmental Indemnity Agreement will be limited to: * performing certain Restoration Obligations; and * responding to any future indemnification claims; and b. Mirant Wyandotte will assume the Environmental Indemnification Agreement, as amended, with $0 as cure amount. C. Tax Stipulation a. The City and Mirant Wyandotte have entered into a Stipulation to Entry of Consent Judgment. The Tax Stipulation provides for the assessed value of Mirant Wyandotte's 2005 taxes, which will result in a reduction of the taxes on the Wyandotte Facility for 2005 totaling $150,000 to $250,000; and b. The tax reduction for 2006 is estimated to be even greater. The Debtors have agreed that current and future taxes may be paid without further Court order. D. Other Principal Terms a. The City and Mirant Wyandotte agree and acknowledge that: * the Project Output Agreement and the Development Agreement have terminated pursuant to their own terms; and * Claim Nos. 5855, 5868, and 6041 have been disallowed and expunged, and the City is not entitled to vote on any plan of reorganization of the Debtors or receive any distributions in relation to the those Claims; b. Claim No. 5867 and 8013 will be disallowed and expunged in their entirety and the City will not be entitled to vote those claims in connection with any plan of reorganization of the Debtors or receive any distributions in relation to those Claims; and c. Each of the City and Mirant Wyandotte has agreed to release and forever discharge the other of, and from, claims, demands, actions, or causes of action arising from Agreements prior to the date of the Settlement Agreement as well as from any obligation for the property taxes, except as provided in the Settlement Agreement. Mirant Wyandotte asks the Court to: a. approve the Settlement Agreement; b. approve the Lease Amendment, the Environmental Indemnity Amendment, and the Tax Stipulation; c. permit Mirant Wyandotte to assume the Lease, as amended, and the Environmental Indemnity Agreement, as amended, pursuant to Section 365 of the Bankruptcy Code; and d. expunge and disallow the Claims in their entirety. 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. 84 Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL HEALTH: Moody's Upgrades Sub. Debentures' Rating to B1 --------------------------------------------------------------- Moody's Investors Service affirmed the Ba3 senior unsecured rating of National Health Investors (NHI) and raised the REIT's rating outlook to positive. The rating agency also upgraded the rating on the REIT's convertible subordinated debentures to B1, from B2. According to Moody's, the positive rating outlook reflects NHI's progress in strengthening its balance sheet with lower leverage, sound liquidity and improved fixed charge coverage. These positives, however, are counterbalanced by: * the REIT's weak asset quality, * lack of growth, * modest size, and * operator concentration. Corporate governance also presents a potential challenge for NHI. Over the past few years, NHI has continued to focus on improving the return on existing assets and strengthening its balance sheet. The REIT has taken some large write downs on challenged facilities, which have lowered its taxable income and allowed for greater retained cash flow as opposed to higher common dividend payments. NHI has used this additional cash flow to pay down debt, as investment opportunities have been slim given the competitive acquisition environment. According to Moody's, effective leverage (debt plus preferred stock relative to gross assets) has declined to 17% as of 3Q05, down from 22% at YE03 and 21% at YE04. Moreover, cash and marketable securities balances have exceeded total debt for the past several quarters, and NHI maintains a low FFO payout ratio of around 78%. Moody's expects that the REIT's sound liquidity will be sufficient to manage its only large remaining debt maturity -- a $100 million senior unsecured bond due in 2007. Finally, fixed charge coverage (including all asset write-offs and recoveries) remains very high at 8.5X for the nine months ended September 30, 2005, up from 6.1X in 2004. NHI's ratings continue to reflect the REIT's concentration in skilled nursing facilities, as well as its exposure to National Healthcare Corporation (NHC), its largest tenant, and reliance on government reimbursement. Approximately two-thirds of NHI's facility operating revenues are derived from Medicare, Medicaid and other government programs, which are volatile payment streams. Although the overall operating performance of NHI's tenants has been improving, Moody's believes that the REIT retains exposure to many weaker properties that are particularly susceptible to any negative change in government reimbursement. Moody's notes that the outlook for reimbursement is stable through 2006, but the longer term outlook remains uncertain given state and federal budget deficits. Furthermore, NHI has a large tenant concentration, with about 45% of its operating revenues derived from its affiliate, NHC. Moody's also believes that NHI's corporate governance is an important credit challenge. The rating agency perceives there to be a potential conflict of interest between NHI, NHC and another affiliate, National Health Realty (NHR). NHC originally formed both NHI and NHR as wholly-owned subsidiaries into which it transferred certain facilities and distributed their shares as separately-traded public entities. For several years, NHI and NHR were externally managed by NHC, and all three companies shared substantially the same executive management teams. In November 2004, NHI's advisory agreement was assigned to a new company formed by its President and Chairman, W. Andrew Adams, who resigned as CEO of NHC and NHR. However, Moody's believes there is still a strong potential for conflict of interest as this executive remains Chairman of NHC and NHR, and retains a substantial equity stake in all three companies. Furthermore, his brother is CEO of NHC and NHR. Moody's also notes that NHI's corporate governance is weakened by the low level of independence for the REIT's Board of Directors, using Moody's criteria. Moody's indicated that a ratings upgrade would likely result from: * NHI maintaining its modest leverage and strong fixed charge coverage; * a stable-to-growing portfolio size; and * further strengthening operating performance with improvement in property-level coverage ratios. A return to a stable rating outlook would occur from: * material asset write-downs or losses from the mortgage portfolio; * effective leverage above 40%; * operating difficulties at NHC; or * a negative change in government reimbursement. These ratings were affirmed with a positive outlook: National Health Investors, Inc.: * Senior unsecured at Ba3 These ratings were raised with a positive outlook: National Health Investors, Inc.: * Senior subordinate from B2 to B1 In its previous rating action with respect to NHI, Moody's raised the REIT's ratings in March 2004. National Health Investors, Inc. [NYSE: NHI] is a long-term healthcare real estate investment trust that specializes in the financing of healthcare real estate through purchase and leaseback transactions, and in the making of mortgage loans, to healthcare operators. NHI owns or mortgages 167 properties in 20 states, mostly skilled nursing facilities. NEBRASKA BOOK: Business Competition Spurs S&P's Negative Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on college textbook wholesaler Nebraska Book Co. Inc. and parent NBC Acquisition Corp. to negative from stable. Ratings on the company, including the 'B' corporate credit rating, were affirmed. Total debt outstanding as of Sept. 30, 2005, was $415 million. "The outlook revision is based on increased competition from student-to-student transactions and alternative media," said Standard & Poor's credit analyst Robert Lichtenstein. Standard & Poor's is concerned that competition from these sources will continue to rise. Same-store sales decreased by 0.5% in the quarter ended Sept. 30, 2005, primarily because of a 1% decrease in revenues from sales of used textbooks. As a result, profitability and progress toward improving the company's capital structure were below Standard & Poor's expectations. The ratings on Nebraska Book Co. Inc. and parent NBC Acquisition Corp. reflect: * the company's relatively small size, * lack of business diversification, and * high leverage. Nebraska Book maintains a leading position, along with Follett Campus Resources and MBS Textbook Exchange Inc., among used college textbook wholesalers; each has about a 30% market share. However, the company's lack of scale and business diversification leave it vulnerable to changes in the market environment, including challenges from alternative media. NORMURA ASSET: S&P Lifts Low-B Ratings on Two Class B Certificates ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on six classes from Normura Asset Acceptance Corp. Alternative Loan Trust Series 2003-A2. At the same time, the ratings are affirmed on the remaining classes from this transaction. The raised ratings are the result of an updated loan-by-loan analysis performed on the mortgage pool. The loss coverage levels derived from the analysis are significantly lower than the levels at issuance, primarily due to loan seasoning, updated FICO scores, and lower loan-to-value ratios resulting from property value appreciation. As a result, Standard & Poor's raised certain ratings to reflect the credit support provided at the new, lower loss coverage levels. The affirmations are based on loss coverage percentages that are sufficient to maintain the current ratings. Standard & Poor's will continue to monitor this transaction to ensure the assigned ratings accurately reflect the associated risks. Ratings Raised Nomura Asset Acceptance Corp. Alternative Loan Trust Series 2003-A2 Rating ------ Class To From ----- -- ---- B-1 AAA AA B-2 AAA A+ B-3 AAA A B-4 AA+ BBB+ B-5 AA BB+ B-6 A B Ratings Affirmed Nomura Asset Acceptance Corp. Alternative Loan Trust Series 2003-A2 Class Rating ----- ------ A-1, A-3, M-1, M-2, AIO-1, AIO-2 AAA NORTHWEST AIRLINES: Wants to Assume AMEX Credit Card Agreements --------------------------------------------------------------- Pursuant to Section 365(a) of the Bankruptcy Code, Northwest Airlines, Inc., and MLT Inc. ask the U.S. Bankruptcy Court for the Southern District of New York for permission to assume certain agreements with American Express Travel Related Services Company, Inc. The Debtors propose to assume the Amended and Restated Airline Card Service Agreement, dated as of January 1, 2004, as amended by the Addendum, dated October 7, 2005, as well as various other agreements relating to: * travel agency or tour operation services by AMEX or any of its subsidiaries, affiliates, or franchisees; * the acceptance of AMEX cards by any subsidiary or affiliate of the Debtors as a tour operator; * the issuance by AMEX of commercial card products to the Debtors' employees to charge business-related travel and entertainment expenses as well as procurement of supplies; and * access by AMEX premium cardmembers to the Debtors' WorldClubs; and As previously reported, on September 26, 2005, Northwest Airlines filed a complaint seeking to prohibit AMEX from withholding funds it collected on behalf of the Debtor. After extensive negotiations, on October 7, 2005, the parties amended the Card Service Agreement to resolve the Adversary Proceeding. The parties agree that: (a) the AMEX Agreements will continue in full force; (b) Northwest Airlines will pay any amounts outstanding under the AMEX Agreements as of the Petition Dates; (c) AMEX will be entitled to establish a Reserve Amount and will not be entitled to increase the Reserve Amount unless, among other things, Northwest Airlines' liquidity falls below a specified threshold, it ceases operations, undertakes to sell substantially all of its assets, or fails to achieve certain specified labor cost savings; (d) Northwest Airlines will provide AMEX with various notices and information concerning its business operations and reorganization efforts; and (e) AMEX is granted a continuing first priority security interest in the Reserve Amount, certain other amounts to be paid to the Debtors through the AMEX Agreements, and refunds identified in the Addendum, and is granted set-off and recoupment rights against the Reserve Amount for any amounts due and unpaid from the Debtors under the AMEX Agreements. Approximately 30% of the Debtors' revenues from credit card transactions, or $3,000,000,000 annually, are derived from purchases made on AMEX cards. The Debtors' ability to continue to process their customer charges through AMEX is critical to their continuation of providing service to their customers, Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, asserts. Pursuant to the Court's September 15, 2005 Order authorizing the Debtors to pay, inter alia, travel agents, the Debtors paid AMEX $15,000,000 for prepetition amounts owed under certain travel agency agreements. The Debtors currently have $5,000,000 in prepetition debts to AMEX pursuant to one of the credit card agreements. The Debtors will pay the amount upon the approval of their Request. Pursuant to Section 107(b) of the Bankruptcy Code, the Debtors propose to file the AMEX Agreements under seal. Mr. Petrick explains that giving the Debtors' competitors access to highly confidential and proprietary information, including the rates contained in the Agreements, will harm the Debtors and AMEX. Northwest Airlines Corporation -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05- 17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. (Northwest Airlines Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) NORTHWEST AIRLINES: Wants to Defease NWA Trust No. 1 Secured Debt ----------------------------------------------------------------- NWA Aircraft Finance, Inc., is a wholly owned subsidiary of NWA Inc. formed to purchase 10 aircraft in a structured finance transaction from Northwest Airlines, Inc. Aircraft Finance deposited the aircraft into NWA Trust No. 1, a common law trust, which issued, through an indenture trustee, two classes of debt to the public, secured by the aircraft. The proceeds of the debt financing were used by Aircraft Finance to pay Northwest Airlines for the three Boeing 747-251B aircraft, three Boeing 747-227B aircraft and four Boeing 757-251 aircraft. Pursuant to an Amended and Restated Trust Agreement, dated as of March 10, 1994, between Aircraft Finance, as owner participant and Wilmington Trust Company, as owner trustee, Aircraft Finance formed Trust 1, which holds title to the Aircraft. Trust 1 leases the Aircraft to Northwest Airlines. The lease payments from Northwest are used, in part, to service the secured debt issued by Trust 1. More specifically, pursuant to an Amended and Restated Master Lease Agreement, dated as of March 10, 1994, Northwest Airlines leased the Trust 1 Aircraft from Wilmington Trust. Wilmington Trust has rights under Section 1110 of the Bankruptcy Code with respect to the Trust 1 lease. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, relates that, as of the Petition Date, there remained two more payments on the outstanding debt. The first payment was due, but not paid, on September 12, 2005. The second, and last, remaining payment is due on March 10, 2006. The two remaining payments, with interest, total $42,441,326. As of the Petition Date, Aircraft Finance owned, in addition to its interest in Trust 1, $5,506,747 in retained cash. According to Mr. Petrick, Wilmington Trust and U.S. Bank, the indenture trustee representing noteholders for the debt, have indicated that they would permit Trust 1 to defease the remaining debt, release the lien on the Trust 1 Aircraft, terminate the lease and the trust, and transfer the trust assets to Northwest Airlines, provided that the Court authorize the necessary payments and related transactions. Against this backdrop, pursuant to Sections 105(a), 363(b) and 1110(a) of the Bankruptcy Code, the Debtors ask the U.S. Bankruptcy Court for the Southern District of New York to authorize: (a) Northwest Airlines to purchase from Aircraft Finance the sole beneficial interest in Trust 1 for $36,934,579, an amount sufficient, in combination with Aircraft Finance's retained cash, to satisfy Trust 1's missed September 12 Payment and to defease the trust's future obligations; (b) Aircraft Finance to transmit the funds received from Northwest Airlines to Trust 1, along with all sums held by Aircraft Finance; (c) Trust 1 to use the funds to defease the remaining debt obligations; (d) Northwest Airlines and Trust 1 to terminate the lease agreement pursuant to which Northwest Airlines currently leases the Trust 1 Aircraft from Trust 1; and (e) Northwest Airlines to terminate Trust 1 and take title, free and clear of liens or encumbrances, of the Trust 1 Aircraft owned by the trust and any other trust assets. Alternatively, the Debtors ask the Court to authorize Northwest Airlines to purchase the Trust 1 assets, free and clear of all liens or encumbrances, on account of the $36,934,579 payment. The Debtors' continued use of the Trust 1 Aircraft is beneficial and necessary to the operation of their businesses, Mr. Petrick tells Judge Gropper. Although the payments present a substantial call on their cash flow, the Debtors, and their financial advisor, Seabury Group LLC, believe that by defeasing the debt obligations and securing a release of the aircraft collateral, the Debtors should be in the position, once having succeeded in reducing their labor costs, to refinance the Trust 1 Aircraft under a postpetition financing, thereby restoring critically needed funding for their reorganization. As a consequence of the non-payment of the September 12 obligation, Trust 1 may be liable for additional amounts, including liquidity provider fees and attorneys' fees. These amounts should total less than $300,000, Mr. Petrick says. The Debtors propose to pay the expenses as part of the defeasance transaction. Northwest Airlines Corporation -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05- 17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. (Northwest Airlines Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) NUTECH DIGITAL: Sept. 30 Working Capital Deficit Tops $2 Million ---------------------------------------------------------------- NuTech Digital, Inc., delivered its financial statements for the quarter ended Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 14, 2005. Third Quarter Results The Company reported a $329,978 net loss on $1,240,406 of net sales for the three months ending Sept. 30, 2005. At Sept. 30, 2005, the company's balance sheet showed $6,727,425 in total assets, $4,580,418 in total liabilities, resulting in $2,147,007 of positive stockholders' equity. NuTech Digital's Sept. 30 balance sheet shows strained liquidity with $1,504,542 in current assets available to satisfy $3,677,021 of liabilities coming due within the next 12 months. A full-text copy of NuTech Digital's financial statements for the quarter ended Sept. 30, 2005, is available at no charge at http://ResearchArchives.com/t/s?32a Ken Groove's Complaint On May 20, 2005 Ken Groove, a supplier of animated motion pictures, filed a complaint against NuTech Digital in the Los Angeles County Superior Court. The dispute relates to some distribution agreements allegedly entered into by NuTech Digital and Mr. Groove for the purchase of licenses to distribute the home video, television and pay per view rights for various animated motion pictures provided by the plaintiff. Mr. Groove sought recovery of $292,000. Mr. Groove filed an Application for a Right to Attach Order and Writ of Attachment seeking to attach assets in the amount of $292,000. On Nov. 16, 2005, the Los Angeles County Superior Court granted Mr. Groove's request. Going Concern Doubt Farber & Hass, LLP, in Camarillo, California, the company's external auditor, raised substantial doubt about NuTech Digital's ability to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2004. NuTech Digital, Inc. -- http://www.nutechdvd.com/-- is a leader in the home entertainment arena offering original and licensed content via a worldwide network of distributors, retailers and Internet entities. The Company recently launched its Platinum Concert Series with plans to produce and distribute 12 or more concert DVDs annually featuring the biggest names in music today. The Company also enjoys a significant competitive advantage with its proprietary DRM technology, which enables the secure distribution of high-resolution digital content via the Internet. NuTech's DRM platform allows its feature films, concerts, children's animated films, video games, karaoke software, Japanese animation and late night programming to be accessed via secure downloads, rented through pre-delivered DVDs, and included in online subscription services. The Company also facilitates authoring services and production to content providers in the entertainment industry. OPTION ONE: Moody's Rates Class M-11 Sub. Certificates at Ba2 ------------------------------------------------------------- Moody's Investors Service assigned a Aaa rating to the senior certificates issued by Option One Mortgage Loan Trust 2005-5, and ratings ranging from Aa1 to Ba2 to the subordinate certificates issued in the securitization. The securitization is backed by Option One Mortgage Corporation originated or acquired adjustable-rate (79%) and fixed-rate (21%) subprime mortgage loans. The ratings are based primarily on: * the credit quality of loans; * subordination; * overcollateralization; * excess spread; and * an interest rate swap agreement. The credit quality of the loans backing the securitization is in line with Option One's most recent securitization, Option One Mortgage Loan Trust 2005-4. Moody's expects collateral losses to range from 5.50% to 6.00%. Option One Mortgage Corporation will service the loans. Moody's has assigned Option One its top servicer quality rating (SQ1) as a primary servicer of subprime loans. The complete rating actions: Issuer: Option One Mortgage Loan Trust 2005-5 Securities: Asset-Backed Certificates, Series 2005-5 * Class A-1, rated Aaa * Class A-2, rated Aaa * Class A-3, rated Aaa * Class A-4, rated Aaa * Class M-1, rated Aa1 * Class M-2, rated Aa2 * Class M-3, rated Aa3 * Class M-4, rated A1 * Class M-5, rated A2 * Class M-6, rated A3 * Class M-7, rated Baa1 * Class M-8, rated Baa2 * Class M-9, rated Baa3 * Class M-10, rated Ba1 * Class M-11, rated Ba2 POLYPORE INTERNATIONAL: Moody's Lowers $300MM Bond Rating to Ca --------------------------------------------------------------- Moody's Investors Service lowered the ratings of Polypore International, Inc., and the ratings of Polypore, Inc. -- corporate family rating to B3; guaranteed senior secured credit facilities to B2; guaranteed senior subordinated notes to Caa2, and unguaranteed senior discount notes to Ca. These rating actions reflect the erosion in the company's operating performance and credit metrics due to setbacks in the healthcare sector of its separations media business, and pricing pressure and lower demand in the electronics portion of the company's energy storage business. The negative rating outlook reflects Moody's concerns that unless Polypore can successfully replace lost revenue in its healthcare and electronics segments, the company's rating could be vulnerable to a further downgrade. These ratings were downgraded: Polypore International, Inc.: -- $300 million (fully accreted value) of 10.5% unguaranteed senior discount notes due October 2012 to Ca from Caa2 -- Corporate Family rating to B3 from B2 Polypore, Inc.: -- guaranteed senior secured credit facilities rating to B2 from B1, consisting of: * $90 million revolving credit facility due May 2010; * US$ guaranteed senior secured term loan due November 2011; * Euro guaranteed senior secured term loan due November 2011 * US$ guaranteed senior subordinated notes due May 2012 rating to Caa2 from Caa1 * Euro guaranteed senior subordinated notes due May 2012 rating to Caa2 from Caa1 Polypore has experienced setbacks in its business segments which have negatively affected the company's performance. First, there has been a decrease in demand in the electronics segment of the energy storage business as a result of higher customer inventories of rechargeable lithium batteries accumulated in the first half of 2004. In addition, pricing came under pressure due to increased capacity in Asia. However, while demand has not recovered to first-half 2004 levels, the company began to experience higher year over year volumes in the third quarter of 2005. The electronics segment is also experiencing weakness in disposable lithium batteries due to slowing demand in military applications. These factors have contributed to an approximate 9% decrease in revenues for the energy storage business for the first nine months of 2005. Second, Polypore lost a significant cellulosic membrane customer in the healthcare segment of the separations media business in the second half of 2004 due to the customer's exit from the dialyzer production business. Concurrently, demand for cellulosic membranes has declined more rapidly than management expectations as the market is shifting to synthetic membranes. While management expects to grow Polypore's existing synthetic membrane business, the increase is not expected to offset declining demand for the company's cellulosic membranes in the near term. These factors have contributed to an approximately 24% decrease in revenues for the separations media business for the first nine months of 2005. The lower volumes across the company's business segment has decreased profit dollars and margins for the nine-months ending September 30, 2005, and has resulted in deteriorating credit metrics, using Moody's standard adjustments, that approximate the following: EBIT/cash Interest Expense was 1.07x; and Debt/ EBITDA (Pro Forma) was 8.9x. Somewhat mitigating the deteriorating credit metrics was Polypore's ability to generate approximately $54 of free cash flow for the period. Polypore maintained liquidity of $90 million of availability under its revolving credit facility and $30 million of cash. While experiencing market difficulties and higher raw material and energy costs, Polypore has prepaid approximately $45 million of bank debt and repaid $5 million of foreign debt. In July 2005, Polypore hired a new CEO with significant experience in chemical and chemical related industries. Management is putting in place plans to manage the cellulosic decline. Management is also implementing price increases in its stable lead acid battery business where their separators are approximately 3- 5% of the total battery cost and 80% of revenues is replacement business. As reflected in Polypore's quarterly SEC filings, the company is performing close to its covenant levels. The company will likely need to negotiate additional flexibility given the covenant tightening detailed. Future events that could potentially improve Polypore's ratings or outlook include: * improving revenues and operating margins through organic growth; * successful expansion into specialized markets; or * significant reduction in debt and leverage through an offering of permanent equity capital. Future events that could result in a reduction in the rating or outlook include: * acquisitions or investments that increase leverage; * incremental returns of capital to investors that increase debt or delay the debt reduction; * declines in the company's revenue base due to a loss in market share, an erosion in its technological lead in key markets, or a scale-back in its research and development expenditures; * continued declines in margins due to price compression, lower manufacturing yields, operating inefficiencies, and higher raw material cost; or * a decline in liquidity. Polypore, headquartered in Charlotte, North Carolina, is a leading worldwide developer, manufacturer and marketer of specialized polymer-based membranes used in separation and filtration processes. The company is managed under two business segments. The energy storage segment, which currently represents approximately two-thirds of total revenues, produces separators for lead-acid and lithium batteries. The separations media segment, which currently represents approximately one-third of total revenues, produces membranes used in various healthcare and industrial applications. For the LTM period ended September 30, 2005, Polypore's revenues approximated $435 million. PORTOLA PACKAGING: Aug. 31 Balance Sheet Upside-Down by $57.8 Mil. ------------------------------------------------------------------ Portola Packaging, Inc., delivered its annual report on Form 10-K for the fiscal year ended Aug. 31, 2005, to the Securities and Exchange Commission on Nov. 28, 2005. The Company incurred a net loss of $11,553,000 for the fiscal year ended Aug. 31, 2005, compared to a net loss of $20,791,000 for the fiscal year ended Aug. 31, 2004. At Aug. 31, 2005, Portola Packaging's balance sheet showed a $57,754,000 of stockholders' deficit compared to a $46,871,000 stockholders' deficit at Aug. 31, 2004. Portola Packaging reported sales of $68.6 million for the fourth quarter of fiscal year 2005 compared to $66.2 million for the fourth quarter of fiscal year 2004, an increase of 3.6%. For fiscal year 2005, sales were $265.0 million compared to $242.5 million for fiscal year 2004, an increase of 9.3%. The Company reported operating income of $4.5 million for the fourth quarter of fiscal year 2005, compared to operating income of $300,000 for the fourth quarter of fiscal year 2004. For the fiscal year 2005, the Company had an operating income of $8.4 million compared to an operating loss of $1 million for fiscal year 2004. The Company reported a net income of $100,000 for the fourth quarter of fiscal year 2005 compared to a net loss of $4.5 million for the fourth quarter of fiscal year 2004. For fiscal year 2005, the Company had a net loss of $10 million compared to a net loss of $20.8 million for fiscal year 2004. The Company stated that the improvement of $4.6 million in the net income for the fourth quarter of fiscal year 2005 as compared to the fourth quarter of fiscal year 2004 is primarily attributed to improved gross margins and lower operating expenses primarily attributed to reduced spending and decreased staffing levels. During the fourth quarter of fiscal 2004, the Company incurred one-time plant relocation expenses of $400,000, an asset impairment charge of $1.1 million and a gain of $600,000 on the sale of the San Jose, California facility. Portola Packaging Inc. -- http://www.portpack.com/-- is a leading designer, manufacturer and marketer of tamper evident plastic closures used in dairy, fruit juice, bottled water, sports drinks, institutional food products and other non-carbonated beverage products. The Company also produces a wide variety of plastic bottles for use in the dairy, water and juice industries, including various high density bottles, as well as five-gallon polycarbonate water bottles. In addition, the Company designs, manufactures and markets capping equipment for use in high speed bottling, filling and packaging production lines. The Company is also engaged in the manufacture and sale of tooling and molds used in the blow molding industry. PROLONG INTERNATIONAL: AMEX Delisting Prompts OTCBB Move -------------------------------------------------------- The American Stock Exchange has notified Prolong International Corporation (AMEX:PRL) in correspondence dated Nov. 21, 2005 that it was not in compliance with the minimum listing standards for trading on the Exchange. Except for the company making a successful appeal demonstrating compliance, the Exchange has become obliged by its rules to initiate delisting proceedings. The company has decided not to make an appeal, but rather it has begun the process for trading its shares through the Over the Counter Bulletin Board, commonly known as the OTCBB. Prolong shares formerly traded on the OTCBB, prior to being listed on AMEX. Prolong shares will continue to trade on the AMEX until the delisting process is completed. At this time, it is not anticipated that there will be any interruption in the trading of Prolong shares. The applicable AMEX Company Guide rules are: * Section 1003(a)(iii): Shareholders equity of less than $6 million and losses from continuing operations or net losses in its five most recent fiscal years; * Section 1003(a)(ii): Shareholders equity of less than $4 million and losses from continuing operations or net losses in three of its four most recent fiscal years; * Section 1003(a)(iv): Sustained losses which were so substantial in relation to its overall operations or its existing financial resources, or its financial condition had become so impaired that it appeared questionable, in the opinion of the Exchange, as to whether the company would be able to continue operations or meet its financial obligations as they matured; * Section 1003(f)(v): The Exchange deemed it appropriate for the company to effect a reverse split to address its low selling price; and * Section 1003(f)(iv): Failure to pay when due any applicable listing fees. Headquartered in Irvine, California, Prolong International Corporation -- http://www.prolong.com/-- is a technology-driven consumer products holding company and parent of Prolong Super Lubricants, Inc., manufacturer and marketer of patented consumer automotive, commercial/industrial and household products. The company's products are marketed and sold under the brand name Prolong Super Lubricants(r) and are used in consumer, automotive and industrial applications. Prolong products are sold throughout the United States at major chain stores and auto retailers and in international markets. * * * Going Concern Doubt As reported in the Troubled Company Reporter on Apr. 20, 2005, Elton Alderman, CEO of Prolong International Corporation said , "We started off the year 2004 expecting higher sales and better financial results than were achieved. Within this year's annual audited financial statements, the Company's independent auditors have provided their opinion that the financial statements of the Company present fairly, in all material respects, the financial position of the Company and are in conformity with generally accepted accounting principles. They have also expressed their opinion to management that the company needs to add to its working capital through new borrowings, additional equity or a combination thereof, in order to assure adequate liquidity for ongoing and continued business operations, as the Company's past losses and working capital deficiencies raise substantial doubt about its ability to continue as a going concern. The Company's board and management agree with their assessment and have been and continue to be actively engaged in the process of seeking to secure such new financing on the best available terms. The Company has challenges to meet, to be sure, but with the continued support of our shareholders, vendors, customers and dedicated employees, I believe the Company will make an impressive performance statement to the world." PROTOCOL SERVICES: Can Walk Away from Poway and Los Angeles Leases ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of California gave Protocol Services, Inc., and its debtor-affiliates permission to reject two unexpired leases and assume the Foothill Ranch lease. Origination Expiration Unexpired Leases Lessor Date Date ---------------- ------ ----------- ---------- 12650 Danielson Ct. RSJ LLC 9/1/2000 6/30/2011 Poway, CA 92064 1416 Savoy Circle San Diego, Calif. 92107 350 S. Grand St. Equity Office 9/1/2004 8/31/2007 Los Angeles, CA 90071 Properties 550 South Hope St. Suite 2200a Los Angeles, CA 90071 25902 Towne Center Dr. Celestica Corp. 8/20/1997 8/31/2007 Foothill Ranch, CA 4701 Technology Parkway 92610 Fort Collins, CO 80528 The Debtors have evaluated that the Poway and Los Angeles leases are no longer useful to their ongoing operations as it will result in costs reduction. The Debtor can now be able to consolidate management functions at the Foothill Ranch facility. Under the Foothill Ranch lease, the Debtors entered into a Letter of Intent to acquire additional space to support one of the Debtors' largest customers. The Debtor assumed Foothill Ranch lease to provide more space for their operations from Poway and Los Angeles leases. The Debtors anticipate completing the move of its operations from the two facilities to the Foothill Ranch facility by the end of this month. Although the assumption of the Foothill Ranch lease will require the Debtors to pay $337,000 of cure amount, the Debtors' overall savings from two rejected leases will be approximately $650,000 in 2006 and approximately $875,000 in 2007. Headquartered in Deerfield, Illinois, Protocol Services, Inc., and its subsidiaries offers agency services, database development and management, data analysis, direct mail printing and lettershops, e-marketing, media replication, and inbound and outbound teleservices. Protocol has offices and operations in California, Colorado, Illinois, Louisiana, Florida, Michigan, North Carolina, New York, Massachusetts, Connecticut and Canada and employs over 4,000 individuals. The Company and its affiliates -- Protocol Communications, Inc., Canicom, Inc., Media Express, Inc., and 3588238 Canada, Inc. -- filed for chapter 11 protection on July 26, 2005 (Bankr. S.D. Calif. Case Nos. 05-06782 through 05-06786). Bernard D. Bollinger, Jr., Esq., and Jeffrey K. Garfinkle, Esq., at Buchalter, Nemer, Fields & Younger, represent 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. PROXIM CORP: Court Sets December 20 as Claims Bar Date ------------------------------------------------------ The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware established 4:00 p.m. on Dec. 30, 2005, as the deadline for all creditors, including governmental units, owed money by Proxim Corporation, and its debtor-affiliates, on account of claims, arising prior to June 11, 2005, to file their proofs of claim. Creditors must file written proofs of claim on or before the December 30 claims bar date and those forms must be delivered to: The Trumbull Group LLC Attn: Proxim Claims Agent P.O. Box 721 Windsor, Connecticut 06095 Headquartered in San Jose, California, Proxim Corporation -- http://www.proxim.com/-- designs and sells wireless networking equipment for Wi-Fi and broadband wireless networks. The Debtors provide wireless solutions for the mobile enterprise, security and surveillance, last mile access, voice and data backhaul, public hot spots, and metropolitan area networks. The Debtor along with its affiliates filed for chapter 11 protection on June 11, 2005 (Bankr. D. Del. Case No. 05-11639). When the Debtor filed for protection from its creditors, it listed $55,361,000 in assets and $101,807,000 in debts. PURADYN FILTER: Sept. 30 Balance Sheet Upside-Down by $3.9 Million ------------------------------------------------------------------ puraDYN Filter Technologies, Inc., delivered its quarterly report on Form 10-Q for the quarter ending September 30, 2005, to the Securities and Exchange Commission on Nov. 14, 2005. The Company has sustained losses since its 1987 inception and used net cash in operations of approximately $1,488,000 and $2,392,000 during the nine-months ended September 30, 2005 and 2004, respectively. As a result, the Company has had to rely principally on private equity funding, including the conversion of debt into stock, as well as stockholder loans to fund its activities to date. At September 30, 2005, the company's balance sheet showed $2,531,487 in total assets, and a stockholders' deficit of $3,857,699. Going Concern Doubt DaszkalBolton has expressed substantial doubt about Puradyn's ability to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2004. The company's management points to these factors: * recurring operating losses, * liabilities exceeding assets and * the reliance on cash inflows from an institutional investor and current stockholder puraDYN designs, manufactures and markets the puraDYN(R) Bypass Oil Filtration System, the most effective filtration product on the market today. It continuously cleans lubricating oil and maintains oil viscosity to safely and significantly extend oil change intervals and engine life. Effective for internal combustion engines, transmissions and hydraulic applications, the Company's patented and proprietary system is a cost-effective and energy-conscious solution targeting an annual $13 billion potential industry. The Company has established aftermarket programs with several of the transportation industry leaders such as Volvo Trucks NA, Mack Trucks, PACCAR; a strategic alliance with Honeywell Consumer Products Group, producers of FRAM(R) filtration products; and continues to market to major commercial fleets. puraDYN(R) equipment has been certified as a 'Pollution Prevention Technology' by the California Environmental Protection Agency and was selected as the manufacturer used by the US Department of Energy in a three-year evaluation to research and analyze performance, benefits and cost analysis of bypass oil filtration technology. REFCO INC: A. Togut Gets Court OK to Operate Refco LLC's Business ----------------------------------------------------------------- As previously reported, the Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York permitted the Chapter 11 estates of Refco Inc., and its debtor-affiliates to sell the Regulated Commodities Futures Merchant Business and the Assumption and Assignment of certain related executory contracts and unexpired leases. The Court approved the sale of the regulated commodities futures merchant business to Man Financial Inc. The Acquired Business includes Refco LLC's FCM business. The Chapter 11 Sale Order authorized the Chapter 11 Debtors to cause Refco LLC to file a case under chapter 7 of the Bankruptcy Code in order to implement the Debtors' performance under the agreement with the Buyer. The Chapter 11 Sale Order further requires, prior to consummation of the Agreement, that the Trustee comply with: (i) the requirements of subchapter IV of chapter 7 of the Bankruptcy Code necessary for the consummation of the Agreement, (ii) the applicable requirements of the Commodity Exchange Act and Title 17 of the Code of Federal Regulations, including Part 190 - "Bankruptcy", and (iii) the applicable rules and requirements of Refco LLC's designated self-regulatory organization, the Chicago Mercantile Exchange. The Chapter 11 Sale Order also requires that, prior to the consummation of the Agreement, the Trustee file a motion seeking an order providing, inter alia: (i) that the proposed transfer of customer securities, property or commodity contracts to Buyer is consistent with Sections 766(c) and (d) of the Bankruptcy Code, the Part 190 Regulations and the CME Rules, and cannot be avoided under Section 764(b) of the Bankruptcy Code, (ii) that the Trustee is authorized to assume and perform the Agreement and sell Refco LLC's business to Buyer, and (iii) that the Trustee is authorized to assume and assign certain related executory contracts and leases to the Buyer, all as set forth and provided in the Chapter 11 Sale Order and the Chapter 7 Sale Order. Albert Togut, the interim Chapter 7 trustee of Refco LLC, tells Judge Drain that he has worked diligently to familiarize himself with: (i) the facts, circumstances, structure and complexity of the Sale transaction contemplated by the Agreement, (ii) the requirements of Subchapter IV, (iii) the stringent deadlines imposed by the Part 190 Regulations for the transfer or liquidation of customer accounts, and (iv) the applicable rules and regulations of the CFTC, the CME and other regulatory bodies. The Chapter 7 Trustee has received extensive advice from the law firms of Togut, Segal and Segal LLP and Jenner & Block LLP concerning his duties and obligations under applicable law, as well as his responsibilities under the Agreement. Accordingly, the Trustee sought and obtained the Court's permission to continue to operate the business of Refco LLC for a limited period of time in order to consummate the Sale, perform his duties and obligations under the Chapter 7 Sale Order, and otherwise fulfill the obligations imposed upon him by Subchapter IV, including section 766, the Part 190 Regulations, and other applicable rules and regulations. Judge Drain grants the Trustee the fullest measure of quasi- judicial immunity permitted by law. Judge Drain rules that the Trustee will be free from any personal liability, and immune from any suit for personal liability, on account of any actions or inactions taken by the Trustee in good faith pursuant to Court orders, in compliance with any order, rule, law, judgment, regulation or decree, and in exercising his objectively reasonable business judgment, in connection with his operation of Refco LLC's business and the discharge of his duties in the Chapter 7 case. Headquartered in New York, New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. (Refco Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) REFCO INC: Refco LLC's Ch. 7 Trustee Can Assume Acquisition Pact ---------------------------------------------------------------- The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York authorized Albert Togut, the interim Chapter 7 trustee of Refco LLC, to assume and perform under the acquisition agreement dated as of November 13, 2005, by and among Man Financial Inc., as Buyer, and Refco Inc., Refco Group Ltd., LLC, Refco Global Holdings, LLC, Refco Global Futures LLC, Refco, LLC, Refco (Singapore) PTE Limited, Refco Canada Co., Refco Overseas Ltd., and certain affiliates of Refco, LLC, as Sellers, free and clear of all Liens and Claims, other than Assumed Liabilities. The Court also authorized the sale of the regulated futures commission merchant business and the assignment of certain related executory contracts to Man Financial. A full-text copy of the Court Order and the Acquisition Agreement is available for free at: http://bankrupt.com/misc/refco_ordermanfinancialpact.pdf The Commodity Futures Trading Commission has approved the transfer of customer accounts contemplated by the Agreement by a letter dated November 22, 2005. The Chapter 7 Trustee, in his business judgment, believes that the Agreement is the highest and best offer for the assets to be sold under the circumstances. The principal terms of the Agreement are: (a) Purchase Price -- $282,000,000 (subject to adjustment) (b) Acquired Business The Acquired Business consists of the FCM Business in the United States (i.e. the Chapter 7 Debtor's business), the Company's FCM businesses in the United Kingdom, Canada, Singapore, Hong Kong, the Institutional FX business, and Refco Securities Inc. (c) Sale Free and Clear The Assets are to be transferred free and clear of liens, mortgages, security interests, conditional sales or other title retention agreements, pledges, claims, judgments, demands, Excluded Liabilities, encumbrances (except the Assumed Liabilities). (d) Assumed Liabilities The Assumed Liabilities means: (i) all Liabilities of the Sellers that are required to be performed, and that accrue, on or after the applicable Closing Date under the Assumed Contracts and Assumed IP Licenses (but excluding any Liabilities of the Sellers in respect of a breach by any Seller of or default by any Seller under those Assumed Contracts or Assumed IP Licenses prior to the applicable Closing Date), to the extent those Assumed Contracts and Assumed IP Licenses, and all rights of the Sellers thereunder, are effectively assigned to Buyer at Closing, (ii) Liabilities for accrued vacation, sick time and time-off with respect to any Transferred Employee, and (iii) all Customer Account Liabilities as of the applicable Closing Date with respect to any Customer Accounts that are conveyed to Buyer pursuant to the Agreement. For the avoidance of doubt: (1) Assumed Liabilities will not include any Excluded Liabilities, and (2) Buyer will not be responsible for any Liabilities resulting from the ownership, use, operation or maintenance of the Acquired Assets, or the conduct of the Business by the Sellers, prior to the Closing. (e) Excluded Liabilities The Buyer will not assume or in any manner whatsoever be liable or responsible for any Liabilities of Sellers other than the Assumed Liabilities. (f) Executory Contracts (i) The Debtors will assume and assign certain executory contracts and unexpired leases, as set forth by the Buyer, by giving the counterparty to those Contracts notice of the proposed assumption and assignment and the amount, if any, necessary to "cure" any existing defaults. The counterparties to the Contracts will have 10 days to object to the assumption and assignment of the Contract and the cure amount. (ii) In connection with any assumption and assignment of the Contracts, the Debtors will be responsible for payment of any cure amounts. Headquartered in New York, New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. (Refco Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) REFCO INC: Gets Court OK to Continue Cash Management System Use --------------------------------------------------------------- As previously reported in the Troubled Company Reporter on Nov. 29, 2005, J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, tells the U.S. Bankruptcy Court for the Southern District of New York that since Refco Inc., and its debtor-affiliates' filing of their Cash Management Motion, AlixPartners LLC has conducted extensive research into the Debtors' cash management system, their available cash, their costs and expenses of operation, and their need for and ability to provide cash for postpetition administrative expenses. Based on AlixPartners' determinations, the Debtors have concluded that they no longer need the extensive cash management authority proposed in the Cash Management Motion. The Debtors propose to continue to use the same accounts and disbursement mechanics after the filing of their Chapter 11 cases, for both debtor and non-debtor entities, with the modifications that are required to preserve all substantive rights of each of the separate Refco entities. To clarify, the Debtors do not propose that all funds in all Refco affiliates' accounts be swept on a regular basis to the cash concentration accounts at Refco Capital, LLC. Mr. Milmoe explains that the Debtors seek authority only to permit funds to be transferred to those accounts to support specific disbursements. Mr. Milmoe relates that disbursements will continue to be made from the concentration accounts held by Refco Capital, LLC. However, the disbursements would be pre-funded, based on the initial expense allocations that the Debtors perform. Refco Capital, LLC, would make disbursements allocated to a particular entity, whether debtor or non-debtor, under a Paying Agent Agreement, which provides that Refco Capital, LLC, makes the disbursements as agent for the entity to whom the expenses are allocated. To carry out the agency relationship, the other entity is required to provide good funds to Refco Capital, LLC, to back the payments. This requirement is designed to protect Refco Capital, LLC, from extending credit to the other Refco entities. The Paying Agent Agreement will be modified, however, so that it would operate only on a "pay as you go" system. A full-text copy of the revised Paying Agent Agreement is available for free at: http://bankrupt.com/misc/refco_revisedpayingagentpact.pdf * * * Judge Drain authorizes the Debtors to continue to use their existing cash management systems. Within 120 days of filing the petitions, or February 14, 2006, the Debtor will be responsible for holding all cash and cash equivalents in proper accounts or under proper investment guidelines as required by Section 345 of the Bankruptcy Code. Refco Capital Markets, Ltd., will not use cash held at, by, or on behalf of RCM: (a) in any way that would impair the postpetition ability to trace proceeds of a particular party in interest's accounts or transactions, (b) held in an account that is specifically identified to a particular party-in-interest, or (c) from an account as to which RCM knows that a specific party-in-interest makes a claim that funds received from or belonging to that party in interest were in that account, if there are funds available in other accounts, as to which RCM is not aware of any specific claim. Refco Capital LLC will make an initial allocation of expenses and disbursements among any Debtor and non-Debtor affiliates using a reasonable method of allocation; provided, however, that these allocations will not be final and binding, and a party-in- interest, upon appropriate motion, notice and hearing, may challenge those allocations, and provided further that professional fees and expenses will not be allocated among the Debtor and non-Debtor affiliates except as authorized by the Court under an order approving the payment of those professionals' fees. On or before December 21, 2005, the Debtors will file with the Court and serve on parties-in-interest a statement of the proposed final overhead allocation methodology with which the Official Committee of Unsecured Creditors of Refco, Inc., agrees. If the Debtors and the Committee, after making a good faith effort to reach an agreement, are unable to agree on a methodology on or before December 20, 2005, the Debtors will file and serve the statement of the methodology that they propose and a statement of any Committee disagreements. A hearing will be held on approval of an allocation methodology at the regularly scheduled omnibus hearing on January 10, 2006, at 10:00 a.m. Judge Drain also approves the Paying Agent Agreement as revised. Headquartered in New York, New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. (Refco Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) RESIDENTIAL ACCREDIT: S&P Affirms Low-B Ratings on 6 Cert. Classes ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings on 44 classes from three RMBS transactions issued by Residential Accredit Loans, Inc. The affirmed ratings are the result of an updated loan-by-loan analysis performed on the mortgage pool. The loss coverage levels derived from the analysis are sufficient to maintain the current ratings. Standard & Poor's will continue to monitor these transactions to ensure the assigned ratings accurately reflect the associated risks. Ratings Affirmed RALI Series Class Rating ------ ----- ------ 2003-QS8 A-1, A-2, A-3, A-4, A-5, A-6 AAA 2003-QS8 A-7, A-P, A-V AAA 2003-QS8 M-1 AA 2003-QS8 M-2 A 2003-QS8 M-3 BBB 2003-QS8 B-1 BB 2003-QS8 B-2 B 2003-QS13 A-1, A-2, A-3, A-5 AAA 2003-QS13 A-6, A-7, A-8, A-9 AAA 2003-QS13 A-10, A-P, A-V AAA 2003-QS13 M-1 AA 2003-QS13 M-2 A 2003-QS13 M-3 BBB 2003-QS13 B-1 BB 2003-QS13 B-2 B 2003-QS15 A-1, A-2, A-3, A-5, A-6, A-7 AAA 2003-QS15 A-8, A-P, A-V AAA 2003-QS15 M-1 AA 2003-QS15 M-2 A 2003-QS15 M-3 BBB 2003-QS15 B-1 BB 2003-QS15 B-2 B RESIDENTIAL ACCREDIT: Fitch Rates $3.9 Mil. Sub. Certs. at Low-B ---------------------------------------------------------------- Fitch rates Residential Accredit Loans, Inc. mortgage pass-through certificates, series 2005-QS16: -- $403,370,473 classes A-1 through A-12, A-P, A-V, R-I and R-II senior certificates 'AAA'; -- $11,770,100 class M-1 'AA'; -- $4,279,800 class M-2 'A'; -- $3,209,800 class M-3 'BBB'; In addition, these privately offered subordinate certificates are rated by Fitch: -- $2,139,900 class B-1 'BB'; -- $1,712,000 class B-2 'B'; -- $1,497,939 class B-3 and is not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 5.75% subordination provided by the 2.75% class M-1, the 1.00% class M-2, the 0.75% class M-3, the privately offered 0.50% class B-1, the 0.40% privately offered class B-2 and the 0.35% privately offered class B-3. 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 * Residential Funding Corp.'s servicing capabilities as master servicer. As of the cut-off date, Nov. 1, 2005, the mortgage pool consists of 1,971 conventional, fully amortizing, 30-year fixed-rate, mortgage loans secured by first liens on one- to four-family residential properties with an aggregate principal balance of $427,980,012. The mortgage pool has a weighted average original loan-to-value ratio of 75.03%. The pool has a weighted average FICO score of 718, and approximately 44.49% and 7.71% of the mortgage loans possess FICO scores greater than or equal to 720 and less than 660, respectively. Equity refinance loans account for 38.28%, and second homes account for 4.48%. The average loan balance of the loans in the pool is $217,139. The three states that represent the largest portion of the loans in the pool are California, Florida and Virginia. All of the mortgage loans were purchased by the depositor through its affiliate, Residential Funding, from unaffiliated sellers as described in this prospectus supplement and in the prospectus, except in the case of 28.5% of the mortgage loans, which were purchased by the depositor through its affiliate, Residential Funding, from HomeComings Financial Network, Inc., or HomeComings, a wholly owned subsidiary of the master servicer. Approximately 17.9% of the mortgage loans were purchased from National City Mortgage Corporation, an unaffiliated seller. Except as described in the preceding sentence, no unaffiliated seller sold more than 4.6% of the mortgage loans to Residential Funding. Approximately 68.2% of the mortgage loans are being subserviced by HomeComings. None of the mortgage loans were subject to the Home Ownership and Equity Protection Act of 1994. Furthermore, none of the mortgage loans are loans that, under applicable state or local law in effect at the time of origination of the loan are referred to as: (1) 'high-cost' or 'covered' loans or (2) any other similar designation if the law imposes greater restrictions or additional legal liability for residential mortgage loans with high interest rates, points and/or fees. 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 under GMAC-RFC's Expanded Criteria Mortgage Program (Alt-A program). Alt-A program loans are often marked by one or more of the following attributes: * a non-owner-occupied property; * the absence of income verification; or * a loan-to-value ratio or debt service/income ratio that is higher than other guidelines permit. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for the presence of these attributes. Deutsche Bank Trust Company Americas will serve as trustee. RALI, 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 fund as two real estate mortgage investment conduit. RFMSI: S&P Raises Low-B Ratings on Five Certificate Classes ----------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on 13 classes from three transactions issued by RFMSI. At the same time, the ratings are affirmed on the remaining classes from these transactions. The raised ratings are the result of an updated loan-by-loan analysis performed on the mortgage pool. The loss coverage levels derived from the analysis are significantly lower than the levels at issuance, primarily due to loan seasoning, updated FICO scores, and lower loan-to-value ratios resulting from property value appreciation. As a result, Standard & Poor's raised certain ratings to reflect the credit support provided at the new, lower loss coverage levels. The affirmations are based on loss coverage percentages that are sufficient to maintain the current ratings. Standard & Poor's will continue to monitor these transactions to ensure the assigned ratings accurately reflect the associated risks. Ratings Raised RFMSI Rating ------ Series Class To From ------ ----- -- ---- 2003-S4 M-3 AA AA- 2003-S4 B-1 A+ A 2003-S4 B-2 BBB- BB 2003-S14 M-1 AA+ AA 2003-S14 M-2 AA A 2003-S14 M-3 A- BBB 2003-S14 B-1 BBB- BB 2003-S14 B-2 BB- B 2003-S15 M-1 AA+ AA 2003-S15 M-2 AA A 2003-S15 M-3 BBB+ BBB 2003-S15 B-1 BB+ BB 2003-S15 B-2 BB- B Ratings Affirmed RFMSI Series Class Rating ------ ----- ------ 2003-S4 A-1, A-2, A-3, A-3A, A-4, A-4, A-5 AAA 2003-S4 A-6, A-7, A-8, A-9, A-10, A-11, A-12 AAA 2003-S4 A-13, A-P, A-V, M-1 AAA 2003-S4 M-2 AA+ 2003-S14 A-1, A-2, A-3, A-4, A-5, A-6, A-P, A-V AAA 2003-S15 A-1, A-P, A-V AAA ROO GROUP: $3.5 Million 3rd Quarter Loss Fuels Going Concern Doubt ------------------------------------------------------------------ ROO Group, Inc., delivered its quarterly report on Form 10-QSB for the quarter ending Sept. 30, 2005, to the Securities and Exchange Commission on November 18, 2005. The Company reported a $3,558,975 net loss on $1,605,263 of net revenues for the quarter ending September 30, 2005. At Sept. 30, 2005, the Company's balance sheet shows $6,926,510 in total assets and $3,325,991 in positive stockholders' equity. The Company's management expresses substantial doubt about the Company's ability to continue as a going concern due to its: * net operating losses; * $710,000 working capital deficit as of September 30, 2005; and * $4,134,000 negative cash flows from operating activities. Moore Stephens, P. C., the Company's auditor expressed going concern doubt after auditing the Company's financial statements for the year ending December 31, 2004. A full-text copy of the regulatory filing is available at no charge at http://ResearchArchives.com/t/s?367 ROO Group, Inc. -- http://www.roo.com/-- is a global provider of digital media solutions and technology that enables the activation, marketing and distribution of digital media video content over the Internet and emerging broadcasting platforms such as set top boxes and wireless. ROO offers turnkey video solutions for businesses seeking to improve their web presence with video broadcasts or broadcast their own latest video clips. ROO helps business advertise their latest offering with interactive advertising solutions, 15-30 second video commercials with a linked call to action and played simultaneously with topical video content in a television style format over the Internet. SAXON ASSET: Moody's Reviews Class BF-1 Certificates' B3 Rating --------------------------------------------------------------- Moody's Investors Service placed under review for possible downgrade one subordinate certificate from one transaction, issued by Saxon Asset Securities Trust in 2000. These certificates are secured by fixed rate and adjustable rate home equity loans. The review will focus on the bonds' current credit enhancement levels compared to the current projected loss numbers. The underlying collateral of the certificate being placed on review for possible downgrade appears to be performing worse than Moody's original expectations. In addition, the severity of loss on the liquidated loans may increase due to a higher concentration of manufactured housing loans. Moody's complete rating action: Under Review for Possible Downgrade: * Series 2000-1; Class BF-1, current rating B3, under review for possible downgrade. SG MORTGAGE: Moody's Rates Class M-11 Sub. Certificates at Ba2 -------------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by SG Mortgage Securities Trust 2005-OPT1, and ratings ranging from Aa1 to Ba2 to the subordinate certificates issued in the securitization. The securitization is backed by Option One Mortgage Corporation originated or acquired adjustable-rate (84%) and fixed-rate (16%) subprime mortgage loans. The ratings are based primarily on: * the credit quality of loans; * subordination; * overcollateralization; * excess spread; * an interest rate swap agreement; and * a yield maintenance agreement. Moody's expects collateral losses to range from 4.75% to 5.25%. Option One Mortgage Corporation will service the loans. Moody's has assigned Option One its top servicer quality rating (SQ1) as a primary servicer of subprime loans. The complete rating actions: Issuer: SG Mortgage Securities Trust 2005-OPT1 Securities: Asset-Backed Certificates, Series 2005-OPT1 * Class A-1, rated Aaa * Class A-2, rated Aaa * Class A-3, rated Aaa * Class M-1, rated Aa1 * Class M-2, rated Aa2 * Class M-3, rated Aa3 * Class M-4, rated A1 * Class M-5, rated A2 * Class M-6, rated A3 * Class M-7, rated Baa1 * Class M-8, rated Baa2 * Class M-9, rated Baa3 * Class M-10, rated Ba1 * Class M-11, rated Ba2 SWISS MEDICA: Posts $1.5-Mil Net Loss in Quarter Ended Sept. 30 --------------------------------------------------------------- Swiss Medica, Inc., delivered its financial results for the quarter ended Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 14, 2005. Swiss Medica incurred a $1,546,699 net loss on $1,771,138 of net revenues for the three months ended Sept. 30, 2005, in contrast to a $905,152 net loss on $238,616 of net revenues for the comparable period in 2004. The Company's balance sheet showed $6.7 million in total assets at Sept. 30, 2005, and liabilities of $3.6 million. At Sept. 30, 2005, the Company had accumulated deficit of $30.5 million. As of Sept. 30, 2005, Swiss Medica's current assets exceed current liabilities by $1.87 million. Secured Promissory Note Swiss Medica issued secured promissory note, in the principal amount of $560,000 to Strategic Equity Fund, LP, on Nov. 2, 2005. The promissory note, secured by the Company's personal property, is due and payable on April 28, 2006, and bears interest at a rate of 2% per month. In addition, the Company issued to Strategic Equity 150,000 shares of its common stock plus warrants to acquire another 50,000 shares of common stock at $0.20 per share that expire on the fifth anniversary of the issuance date. Going Concern Doubt Russell Bedford Stefanou Mirchandani LLP expressed substantial doubt about Swiss Medica's ability to continue as a going concern after it audited the Company's financial statements for the years ended Dec. 31, 2004 and 2003. The auditing firm pointed to the Company's difficulty in generating sufficient cash flow to meet its obligations and sustain operations. In addition, certain of the Company's debt instruments impose restrictions on its ability to incur additional indebtedness, create liens on assets, make loans or investments and pay dividends. Management says these restrictions limit the Company's operating flexibility and makes it more vulnerable to economic downturn and competitive pressures. About Swiss Medica Swiss Medica - http://www.swissmedica.com/-- is a consumer healthcare company, which commercializes proprietary 100% pure bioscience products or all-natural compounds that have health promoting, disease preventing or medicinal properties. TCW LINC: Fitch Keeps Junk Ratings on $121 Million CBO Tranches --------------------------------------------------------------- Fitch Ratings upgrades two classes of notes issued by TCW LINC III CBO, Ltd. These rating actions are effective immediately: -- $16,313,490 class A-2L notes upgraded to 'A+' from 'BB-'; -- $62,218,890 class A-2 notes upgraded to 'A+' from 'BB-'; -- $34,000,000 class A-3A notes remain at 'CC'; -- $45,000,000 class A-3B notes remain at 'CC'; -- $22,000,000 class B-1 notes remain at 'C'; -- $13,000,000 class B-2A notes remain at 'C'; -- $7,000,000 class B-2B notes remain at 'C'. TCW LINC III is a collateralized bond obligation managed by TCW Investment Management Company, which closed July 13, 1999. TCW LINC III is composed of 91.4% high yield bonds and 8.6% CDOs. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. Since the last rating action on Feb. 17, 2005, TCW LINC III has redeemed a significant portion of its capital structure, resulting in the class A-1F and class A-1 notes being paid in full and the reduction of the class A-2L and A-2 notes by 24.1%. Currently, there is $125 million of collateral to cover $78.5 million of liabilities for the class A-2L and class A-2 notes and $79 million of liabilities for the class A-3A and class A-3B notes. The class A overcollateralization and class B OC ratios have decreased to 76.8% and 57.1%, respectively, as of the most recent trustee report dated Oct. 17, 2005 from 84.4% and 70.5% as of the Jan. 18, 2005 trustee report. However, the A OC ratio includes the class A-2L, A-2, A-3A and A-3B notes and does not provide an accurate picture of the creditworthiness of the class A-2L and A-2 notes. All class A notes are anticipated to receive current interest but it is unlikely that the A-3A and A-3B noteholders will receive full principal. The class B-1, B-2A and B-2B notes are cut off from the receipt of both interest and principal for the foreseeable future as all distributions are being applied to cure the A OC test. As a result of this analysis, Fitch has determined that the current ratings assigned to the class A-2L, and class A-2 notes no longer reflect the current risk to noteholders and have improved, while the current ratings for the class A-3A, class A-3B, class B-1, class B-2A, and class B-2B notes still reflect the current risk to noteholders. The ratings of the class A-2L, class A-2, class A-3A, and class A-3B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class B-1, class B-2A, and class B-2B notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings Web site at http://www.fitchratings.com/ TELOGY INC: Voluntary Chapter 11 Case Summary --------------------------------------------- Lead Debtor: Telogy, Inc. 3200 Bohannon Drive Union City, California 94587 Bankruptcy Case No.: 05-49371 Debtor-affiliate filing separate chapter 11 petitions: Entity Case No. ------ -------- e-Cycle, LLC 05-49372 Type of Business: Telogy, Inc., rents, sells, leases electronic test equipment including oscilloscopes, spectrum, network, logic analyzers, power meters, OTDRs, and optical, from manufacturers like Tektronix, Rohde & Schwarz. See http://www.tecentral.com/ e-Cycle, LLC, provides outsourced services and solutions for electronic equipment supply chains. See http://www.ecycleinc.com Chapter 11 Petition Date: November 29, 2005 Court: Northern District of California (Oakland) Judge: Edward D. Jellen Debtors' Counsel: Ramon Naguiat, Esq. Pachulski, Stang, Ziehl, Young Jones & Weintraub P.C. 150 California Street, 15th Floor San Francisco, California 94111-4500 Tel: (415) 263-7000 Debtors' Financial Advisor: Alvarez & Marsal Estimated Assets Estimated Debts ---------------- --------------- Telogy, Inc. More than $100 Million More than $100 Million e-Cycle, LLC $1 Mil. to $10 Mil. $500,000 to $1 Mil. The Debtors did not file a list of their 20 largest unsecured creditors. ULTRASTRIP SYSTEMS: Posts $2 Million Net Loss in Third Quarter -------------------------------------------------------------- Stuart, Florida-based UltraStrip Systems, Inc., reported revenues of $187,402 for the three months ended Sept. 30, 2005, as compared to revenues of $143,490 for the three months ended Sept. 30, 2004. The Company generated $124,940 of field services revenue in support of the Hurricane Katrina disaster relief programs, had spare part sales of $51,303 and royalties of $11,159 for the three months ended Sept. 30, 2005, as compared with spare part sales of $135,424 and royalties of $8,066 for the three months ended September 30, 2004. UltraStrip incurred a $1,987,631 net loss for the three months ended Sept. 30, 2005, compared to an $856,193 net loss for the three months ended Sept. 30, 2004. Loss from operations for the three months ended Sept. 30, 2005, was $1,539,304 compared to a $604,236 loss for the same period in the prior year. The increase in loss from operations in 2005 was due to increased salaries, increased non-cash compensation expense and the launch of Ecosphere. UltraStrip's balance sheet showed $2,221,263 in total assets at Sept. 30, 2005, and $3,950,388 in total liabilities. The Company continues to experience losses from operations and with no material ongoing revenues it is primarily dependent on outside sources of funding to continue its operations. The Company currently has no financial resources to meet its Sept. 30, 2005 working capital deficit of $2,029,771 and future operating costs. Going Concern Doubt Tedder, James, Worden & Associates, PA, expressed substantial doubt about UltraStrip's ability to continue as a going concern after it audited the Company's financial statements for the years ended Dec. 31, 2003 and 2004. The auditing firm pointed to the Company's recurring losses from operations, working capital deficit, and outstanding redeemable convertible cumulative preferred stock that became eligible for redemption after June 2002 for $5.2 million. About UltraStrip UltraStrip Systems, Inc. -- http://www.ultrastrip.com/-- is a water-engineering firm that develops and sells patented equipment to provide solutions to environmental problems. The Company's Mobile Water Filtration Systems, provided through its Ecosphere Technologies subsidiary, provides a solution to use its powerful water-filtration and purification technology in the world's most challenging applications, both in developing regions, and in areas hit by man-made or natural events that damage vital water resources. UltraStrip's patented robotic water jetting systems are designed to provide an environmentally safe coatings removal process in both heavy marine, automobile, and above ground storage tank applications. The robotic systems have been utilized for U.S. Naval ships. URBAN HOTELS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Urban Hotels Inc. dba Lax Plaza Hotel 6333 Bristol Parkway Culver City, California 90230 Bankruptcy Case No.: 05-50140 Type of Business: The Debtor operates Lax Plaza Hotel. Chapter 11 Petition Date: November 29, 2005 Court: Central District of California (Los Angeles) Judge: Alan M. Ahart Debtor's Counsel: M. Jonathan Hayes, Esq. Law Offices of M. Jonathan Hayes 21800 Oxnard Street, Suite 840 Woodland Hills, California 91367 Tel: (818) 710-3656 Total Assets: $23,000,000 Total Debts: $20,000,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bhupendra Mistry Personal Loans $500,000 1753 Cannes Drive Thousand Oaks, CA 91362 City of Culver Tax $302,422 P.O. Box 507 Culver City, CA 90232 Ramada Franchise Trade Debt $160,728 P.O. Box 360113 Pittsburgh, PA 15251 Board of Equalization Trade Debt $46,112 Unique Laundry Trade Debt $30,952 Global Co. Trade Debt $28,894 Goldberg & Solovy Foods Trade Debt $23,099 HBL Security Services, Inc. Trade Debt $21,907 Logenet Entertainment Trade Debt $21,402 James S. Yan Trade Debt $21,161 Guest Distribution Trade Debt $19,227 South Bay Produce Trade Debt $17,375 K M K Supply Company Trade Debt $16,997 Hallmark Motor/Mechanical Trade Debt $13,680 Viking Office Products Trade Debt $9,846 Telecheck Trade Debt $9,762 Republic Uniform Trade Debt $9,153 Key Equipment Finance Trade Debt $8,930 Elite Food Distributor, Inc. Trade Debt $8,267 Victor Market Co. Trade Debt $7,577 WELLS FARGO: Fitch Rates $448,000 Class B Certificates at Low-B --------------------------------------------------------------- Wells Fargo mortgage pass-through certificates, series 2005-15, are rated by Fitch Ratings: -- $219,989,374 classes A1, A2, A3, PO, and R, 'AAA' 'senior certificates'; -- $2,463,000 class B1, 'AA'; -- $448,000 class B2, 'A'; -- $336,000 class B3, 'BBB'; -- $224,000 class B4, 'BB'; -- $224,000 class B5, 'B'. The 'AAA' ratings on the senior certificates reflect the 1.75% subordination provided by the 1.10% class B-1, the 0.20% class B-2, the 0.15% class B-3, the 0.10% privately offered class B-4, the 0.10% privately offered class B-5, and the 0.10% privately offered class B-6. The ratings on the class B-1, B-2, B-3, B-4, and B-5 certificates are based on their respective subordination. Fitch believes the amount of credit enhancement available will be sufficient to cover credit losses. The ratings also reflect the high quality of the underlying collateral, the integrity of the legal and financial structures and the primary servicing capabilities of Wells Fargo Bank, N.A.; rated 'RPS1' by Fitch Ratings. The transaction consists of one group of 376 fully amortizing, fixed interest rate, first lien mortgage loans, with an original weighted average term to maturity of approximately 15 years. The aggregate unpaid principal balance of the pool is $223,908,372 as of November 1, 2005, and the average principal balance is $595,500. The weighted average original loan-to-value ratio of the loan pool is approximately 60.4%; 0.40% of the loans have an OLTV greater than 80%. The weighted average coupon of the mortgage loans is 5.424% and the weighted average FICO score is 751. Cash-outs and rate/term refinance represent 36.7% and 25.4% respectively. The states that represent the largest geographic concentration are California, New York, and Florida. All other states represent less than 5% of the outstanding balance of the pool. 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 of the mortgage loans were generally originated in conformity with underwriting standards of WFB. WFB sold the loans to Wells Fargo Asset Securities Corporation, a special purpose corporation, who deposited the loans into the trust. The trust issued the certificates in exchange for the mortgage loans. WFB will act as servicer and custodian, and Wachovia Bank, N.A. will act as trustee. Elections will be made to treat the trust as a real estate mortgage investment conduit for federal income tax purposes. WELLS FARGO: Fitch Places Low-B Ratings on $3.7 Mil. Cert. Classes ------------------------------------------------------------------ Wells Fargo mortgage pass-through certificates, series 2005-14, are rated by Fitch Ratings: -- $1,259,275,957 classes I-A-1 through I-A-11, I-A-PO, I-A-R, II-A-1, II-A-2, and II-A-PO, 'AAA' senior certificates; -- $29,045,000 class I-B-1 and II-B-1, 'AA'; -- $7,792,000 class I-B-2 and II-B-2, 'A'; -- $4,522,000 class I-B-3 and II-B-3, 'BBB' -- $2,615,000 class I-B-4 and II-B-4, 'BB' -- $1,060,000 class I-B-5, 'B' The 'AAA' ratings on the group I senior certificates reflects the 3.25% subordination provided by the 1.90% class I-B-1, the 0.55% class I-B-2, the 0.30% class I-B-3, the 0.20% privately offered class I-B-4, the 0.15% privately offered class I-B-5, and the 0.15% privately offered class I-B-6. The 'AAA' ratings on the group II senior certificates reflects the 4.20% subordination provided by the 2.60% class II-B-1, the 0.65% class II-B-2, the 0.40% class II-B-3, the 0.20% privately offered class II-B-4, the 0.15% privately offered class II-B-5, and the 0.20% privately offered class II-B-6. Fitch believes the amount of credit enhancement available will be sufficient to cover credit losses. The ratings also reflect the high quality of the underlying collateral, the integrity of the legal and financial structures and the primary servicing capabilities of Wells Fargo Bank, N.A. The transaction consists of two groups. The first group consists of 1,319 fully amortizing, fixed interest rate, first lien mortgage loans, with an original weighted average term to maturity of approximately 30 years. The aggregate unpaid principal balance of the pool is $707,008,215 as of Nov. 1, 2005, and the average principal balance is $536,018. The weighted average original loan-to-value ratio of the loan pool is approximately 68.35%; 0.78% of the loans have an OLTV greater than 80%. The weighted average coupon of the mortgage loans is 5.873% and the weighted average FICO score is 744. Cash-outs and rate/term refinance represent 35.91% and 18.13% respectively. The states that represent the largest geographic concentration are California, Maryland, and Virginia. All other states represent less than 5% of the outstanding balance of the pool. The second group consists of 958 fully amortizing, fixed interest rate, first lien mortgage loans, with an original WAM of approximately 30 years. The aggregate unpaid principal balance of the pool is $600,465,643 as of Nov. 1, 2005, and the average principal balance is $626,791. The weighted average OLTV of the loan pool is approximately 69.29%; 0.48% of the loans have an OLTV greater than 80%. The WAC of the mortgage loans is 5.893% and the weighted average FICO score is 744. Cash-outs and rate/term refinance represent 32.49% and 19.06% respectively. The states that represent the largest geographic concentration are California, Virginia, Maryland, New York. All other states represent less than 5% of the outstanding balance of the pool. 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 of the mortgage loans were generally originated in conformity with underwriting standards of WFB. WFB sold the loans to Wells Fargo Asset Securities Corporation, a special purpose corporation, who deposited the loans into the trust. The trust issued the certificates in exchange for the mortgage loans. WFB will act as servicer and custodian, and Wachovia Bank, N.A. will act as trustee. Elections will be made to treat the trust as a real estate mortgage investment conduit for federal income tax purposes. WESTLIN CORP: Court Sets Plan Confirmation Hearing for Dec. 19 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, approved Westlin Corporation's disclosure statement on Sept. 20, 2005. The plan offered by the company provides for full payment of its creditors and preserves current public stockholder equity with some dilution. Interested shareholders can request a copy of the plan and disclosure statement by contacting our attorney, Tow and Koenig in writing via fax at 281-681-1441. Shareholders have until Dec. 14, 2005, to file any objections or comments to the plan. A hearing on confirmation of the plan will be held on the Dec. 19, 2005, 515 Rusk Avenue, Houston, Texas 77002 in Courtroom No.403 at 10:00am. The company management and board members are pleased with the plan which will allow the company to preserve shareholder equity, repay creditors in full, and allow the company to resume its business plan. The current climate is ripe for execution of this business plan as there is a lack of substantially secure centers around the Country, especially in the Gulf Coast region. Headquartered in Houston, Texas, Westlin Corporation (Pinksheets:WSTN) -- http://www.westlin.com/-- is an Internet technology company engaged in Disaster Recovery and Business Continuity business lines. Its operation, located in a former Nuclear Fallout Shelter provides one of the most secure environments for on-line and near-line data storage, safe from natural disasters and terrorist acts. The company filed for chapter 11 protection on Sept. 3, 2004 (Bankr. Case No. 04-42765). Julie Mitchell Koenig, Esq., at Tow and Koenig PLLC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated less than $50,000 in assets and between $1 million to $10 million in liabilities. ZOND-PANAERO WINDSYSTEM: Defaults on $2.4 Million Interest Payment ------------------------------------------------------------------ Zond-Panaero Windsystem Partners I delivered its financial results for the quarter ended Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 14, 2005. Zond-Panaero reported net income of $200,000 for the third quarter of 2005, an increase of $150,000 or 163% as compared to the third quarter of 2004. For the nine months ended Sept. 30, 2005, the Company earned $1.6 million of net income on $2.8 million of revenues, in contrast to a $143,000 net loss on $2.9 million or revenues for the same period in 2004. The Company's balance sheet showed $3 million in total assets at Sept. 30, 2005, and liabilities of $2.8 million. Purchase Note Default Zond-Panaero continued to experience a lack of liquidity throughout the third quarter of 2005, primarily due to an ongoing shortfall in revenues from operations in comparison to the costs and expenses of operations. As a result, $2.4 million in interest payments due under a note issued to Mesa Construction Company were in arrears as of Sept. 30, 2005. Mesa Construction built the Company's integrated electric power generating facility located California in 1984. The Company paid MCC a total of $48.9 million for the purchase, construction and installation of the facility, comprised of $22.4 million in cash and $26.5 million in the form of eighteen-year, 13% notes payable in equal semi-annual installments of principal and interest totaling $1.9 million. Zond-Panaero's failure to make timely payments on the notes gave Mesa Construction the right to foreclose against its security interest in all the assets of the Company. MCC has not exercised its right to foreclosure. Going Concern Doubt Hein & Associates LLP expressed substantial doubt about Zond- Panaero's ability to continue as a going concern after it audited the Company's financial statements for the years ended Dec. 31, 2004 and 2003. The auditing firm pointed to the Company's failure to generate sufficient cash flows from operations to make payments of interest in arrears on outstanding debt. In addition, Zond-Panaero's term of Partnership ends on Dec. 31, 2005, unless terminated earlier in accordance with the Partnership Agreement. The Company will dissolve effective on the day on which the term of the partnership ends. Upon dissolution, Zond Windsystems Management LLC, the general partner will liquidate the assets of the Company, apply and distribute the proceeds and cause the cancellation of the Certificate of Limited Partnership with the Secretary of State of the State of California. In anticipation of the dissolution, the General Partner is evaluating the options in connection with the liquidation of the Company's assets. The primary liquidation options are: a) the sale of the Turbines to a third party or to Mesa or one of its affiliates and b) the abandonment of the Turbines to Mesa under the Wind Park Easement Agreement. The proceeds of the liquidation of the Company's are to be distributed: 1) for the payment of liquidation expenses and company debts other than those owing to any of the Partners; 2) for the payment of any debts owing to any of the Partners; and 3) for distributions to the Partners in proportion to their adjusted capital accounts, after giving effect to all contributions, distributions and allocations for all taxable years of the Company, including the taxable year during which the final liquidating distribution occurs. About Zond-Panaero Zond-Panaero Windsystem Partners I was formed on June 29, 1984 to purchase, own and operate a system of 300 Vestas Energy A/S Model V-15 wind turbine electric generators. The electricity generated by the Turbines is sold by the Partnership to its sole customer, Southern California Edison Company. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry A. Soriano-Baaclo, Marjorie C. Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Junior M. Pinili, Tara Marie A. Martin 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. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***