/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/051223.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, December 23, 2005, Vol. 9, No. 304 Headlines ADVANTA CORP: Moody's Upgrades Sub. Debt's Rating to B3 from Caa1 ALIMENTATION COUCHE-TARD: Debt Reduction Spurs S&P to Lift Ratings ALLIED SECURITY: Poor Performance Prompts S&P to Lower Ratings AMERICAN REPROGRAPHICS: Refinances Second Lien Credit Agreement APCO LIQUIDATING: Wants Plan-Filing Period Stretched to Mar. 17 APCO LIQUIDATING: Amended Plan Confirmation Hearing Set on Jan. 26 ASARCO LLC: Wants Stay Lifted to Set Off Chevron Debt ASARCO LLC: Can Hire Kevin McCaffrey as Legal Consultant ASARCO LLC: Panel Wants Tellechea's Transition Pact Refrained ATA AIRLINES: C8 Airlines' Amends Schedules of Assets & Debts ATA AIRLINES: Can Use ATSB Lenders' Cash Collateral Until Jan. 6 ATLANTIC MUTUAL: Countrywide Alliance Spurs S&P to Hold Ratings ATSI COMMS: Accumulated Deficit Tops $77 Million at October 31 BALLY TOTAL: Extends Closing of Crunch Fitness Sale to January 17 BLUEGREEN CORP: Internal Audit Review Spurs Financial Restatement BOUNDLESS CORP: Confirmation Hearing Moved to March 9 BOYDS COLLECTION: Court Okays Kirkland & Ellis as Bankr. Counsel BOYDS COLLECTION: Taps Skarlatos & Zonarich as Special Counsel BROOKLYN HOSPITAL: Garfunkel Wild Continues as Healthcare Counsel BROOKLYN HOSPITAL: Has Until March 29 to Decide on Leases BROOKLYN HOSPITAL: Look for Bankruptcy Schedules on December 29 CALPINE CORP: Can Access Up to $500 Million of DIP Financing CARDIAC SERVICES: Court Approves GECC's Plan of Reorganization CAROLINA TOBACCO: Hires Galbut & Hunter as Special Counsel CENTENNIAL COMMS: Completes $550 Million Senior Notes Offer CITIZENS COMMS: Board Names CEO Mary A. Wilderotter as Chairman COLLINS & AIKMAN: Names New Executives in Key Finance Positions COMFORCE CORPORATION: Repurchases $5.5 Million of 12% Senior Notes CONGOLEUM CORPORATION: Gives Updates on Company Matters CONSOLIDATED CONTAINER: Closes Acquisition of Steel Valley CURATIVE HEALTH: Restructuring Plan Cues S&P to Withdraw D Ratings DELTA AIR: Walks Away from Monarch Centre Lease DELTA AIR: Macquarium Wants Delta Technology to Decide on Contract DELTA AIR: Carrier Says Macquarium's Motion Has No Basis DELTA AIR: Court Enters Order Restricting Equity Trading DELTAGEN INC: Files Second-to-Last Monthly Operating Report DORAL FINANCIAL: Board Authorizes Redemption of $75MM Senior Notes DURATEK INC: Board Names Admiral Henry Executive Vice President DYNEGY INC: Moody's Raises Sub. Debentures' Rating to B2 from Caa2 EASYLINK SERVICES: Earns $300K of Net Income in Third Quarter ELCOM INT'L: Sale of New AIM-Traded Shares Raises $7.4 Million EPIXTAR CORP: Wants Open-Ended Deadline to Decide on Leases FRONTIER INSURANCE: Court Confirms Amended Reorganization Plan FRONTLINE CAPITAL: Gets Exclusive Period Extended Until Feb. 28 GARDEN STATE: Wants Until March 6 to Remove Civil Actions GARY JOHNSON: Case Summary & 22 Largest Unsecured Creditors GENESIS HEALTHCARE: Good Financial Profile Cues S&P to Up Ratings GEORGIA-PACIFIC: Fitch Lowers Senior Unsecured Bond Ratings to B+ GLOBAL EXECUTION: Fitch Rates $22.5 Million Class E Notes at BB GS AUTO: S&P Raises Low-B Ratings on Class D Certificates GT BRANDS: Wants to Walk Away from Unassigned IP Contracts HOLLINGER INT'L: June 30 Balance Sheet Upside-Down by $160 Million IAP WORLDWIDE: Moody's Lowers Second-Lien Loan Ratings to B3 J.L. FRENCH: Moody's Lowers 2nd-Lien Term Loan's Rating to Caa3 K2 INC: Moody's Reviews $200 Million Sr. Unsec. Notes' Ba3 Rating KAISER ALUMINUM: Makes More Modifications to Liquidating Plans KAISER ALUMINUM: Court Approves Settlement Pact with 8 Insurers KMART CORP: Nortons Want Stay Lifted to Let Lawsuit Proceed LOEWS CINEPLEX: Launches Offer for 9% Senior Subordinated Notes LOEWS CINEPLEX: Sells Five Theatres As Condition of AMC Merger LUCENT TECH: Court Orders $24 Million Payment to Winstar Comms. MARKEL CORP: S&P Assigns Low-B Ratings to Universal Shelf MAXTOR CORP: Moody's Reviews $60MM Sub. Debentures' Caa1 Rating MCI INC: Moody's Upgrades Long-Term Debt Ratings to Ba3 from B2 MCI INC: Signs Three-Year Telecom Solution Contract with Yara MCI INC: 11 Officers Dispose of 36,389 Shares of Common Stock MCLEODUSA INC: SBC Wants Cure Amount Paid Before Effective Date MCLEODUSA INC: Bickers With SBC About Adequate Assurance Payment MCLEODUSA INC: Wants SBC's Reconsideration Request Denied MERRY-GO-ROUND: Jan. 31 Hearing to Review Chapter 7 Trustee's Fee MIDLAND COGEN: Fitch Junks Rating on Secured Obligation Bonds MIDLAND REALTY: Fitch Affirms B Rating on $11.1MM Class J Certs. NADER MODANLO: Wants Exclusive Period Stretched to September 30 NADER MODANLO: FAI Co-Owner Wants Chapter 11 Trustee Appointed NEXTEL PARTNERS: Sprint Equity Purchase Cues S&P to Review Ratings NORTHWEST AIRLINES: Restructures Deals for Airbus A330s on Order NORTHWEST AIRLINES: Court Approves Rehearing of Antitrust Suit NORTHWEST: Court OKs Defeasement of Trust No. 1 Secured Debt OMEGA HEALTHCARE: Prices $175 Million Senior Notes Offering OPTION ONE: Extends 90-Day Payment for Borrowers to 180 Days ORIUS CORP: Wants to Hire Conway Del Genio as Financial Advisors ORIUS CORP: Wants to Hire Lord Bissell as Bankruptcy Counsel PACIFIC LUMBER: Weak Financial Profile Cues S&P's Negative Outlook PETSMART INC: Improved Operating Performance Spurs S&P's BB Rating PHOTOCIRCUITS CORP: Court Approves $7.33MM DIP Loan from Stairway POTLATCH CORP: Registers 1.6 Mil. Common Shares for Distribution PT HOLDINGS: Lenders Extend 2004 Reporting Deadline to Jan. 31 QUEBECOR MEDIA: Launches Offers for 11-1/8% & 13-1/4% Sr. Notes REFCO INC: 24 Customers Want RCM's Case Converted to Chapter 7 REFCO INC: Turisol Wants Ch. 11 Trustee Appointment Motion Denied REFCO INC: Court Okays Reduction of Break-Up Fee for Asset Sale REPTRON ELECTRONICS: Appoints Kirkland as New Independent Auditors SALOMON BROS: S&P's Ratings on Class M & N Certs. Tumbles to D SAMSONITE CORP: Equity Deficit Narrows to $38.9 Mil. at October 31 SEAGATE TECH: Moody's Reviews $400 Million Sr. Notes' Ba2 Rating SOLUTIA INC: Wants to Limit Transfers of Equity Interests SOUNDVIEW HOME: Fitch Rates $8.8MM Class M-11 Certificates at BB+ SPX CORPORATION: Board Okays New Share Repurchase Program STATION CASINOS: Can Access Up to $2B of Loans with Lower Interest STATION CASINOS: Inks $450 Mil. Joint Venture Pact with Greenspun TOMMY HILFIGER: Negative Operating Trends Earn S&P's BB- Rating TRINITY SPRINGS: AMCON Provides Updates on Company Matters TRUMP ENT: Majestic Star Closes Trump Indiana Acquisition TRUMP HOTELS: Trump Entertainment Amends Credit Agreement UAL CORP: Has Until March 3 to Solicit Plan Acceptances UAL CORP: Asks Court to Bless N174UA Aircraft Restructuring Pact UAL CORP: Wants Court Nod on Pratt & Whitney Settlement Pact VALENCE TECH: Assigns Pref. Stock Redemption Rights to Berg & Berg WESTWAYS FUNDING: Fitch Puts BB Rating on $37.5 Mil. Income Notes WINSTAR COMMS: Wins $244 Million Judgment in Lucent Litigation * BOOK REVIEW: Merger: The Exclusive Inside Story of the Bendix-Martin Marietta Takeover War ********* ADVANTA CORP: Moody's Upgrades Sub. Debt's Rating to B3 from Caa1 ----------------------------------------------------------------- Moody's Investors Service upgraded Advanta Corporation's long-term ratings, including its senior unsecured to B1 from B2, reflecting reduced litigation risks and improved financial performance. This rating action concludes Moody's ratings review which began on September 19, 2005. The rating outlook is stable. Moody's said the upgrade reflects the removal of substantial uncertainty within the company, particularly with regard to litigation risks that the company had been exposed to -- including the recent resolution of its Chase related legal exposures. According to Moody's, Advanta has also exhibited substantial improvement in leverage and credit quality over the past two years. The company's credit quality results have improved not only due to a benign economic environment but also as a result of refinements in the company's marketing strategy and credit scoring technology. The company has also posted improved earnings, although profitability still lags more highly rated credit card peers, and rising rates and heightened competition could hamper results in the future. Advanta's ratings remain constrained by the firm's monoline nature and relatively modest competitive position versus those that compete in its space. Although the firm has developed a solid niche in business credit cards, it has limited scale advantages compared to the largest U.S. credit card issuers -- many of which are targeting Advanta's business card niche. In order to grow and compete, Advanta may be compelled to offer more generous, and expensive, rewards, lower APR's, or higher credit lines to existing and prospective customers. Moody's believes that the company has been disciplined to date, but growth pressures could influence future decision making. In addition, over the near-term Moody's believes that earnings growth could be hampered by increases in short term interest rates as credit quality improvement stabilizes. These factors support the stable outlook. Ratings upgraded included: Advanta Corporation: * Senior unsecured debt to B1 from B2 * Senior unsecured shelf to (P)B1 from (P)B2 * Subordinated debt to B3 from Caa1 * Subordinated shelf to (P)B3 from (P)Caa1 * Preferred Stock shelf to (P)Caa1 from (P)Caa2 Advanta Corporation, headquartered in Spring House, Pennsylvania, reported approximately $5 billion in managed assets as of September 30, 2005. ALIMENTATION COUCHE-TARD: Debt Reduction Spurs S&P to Lift Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its long-term corporate credit rating on Alimentation Couche-Tard Inc. to 'BB' from 'BB-' and its subordinated debentures to 'B+' from 'B'. The 'B+' senior subordinated notes are rated two notches below the long-term corporate credit rating to reflect their junior position to the significant amount of secured debt in the capital structure. At the same time, the company's bank loan rating is notched up once from the long-term corporate credit rating to 'BB+', with a '1' recovery rating. The outlook is stable. "The ratings on Alimentation Couche-Tard Inc. were raised to reflect the significant reduction in debt undertaken by the company since the Circle K acquisition in December 2003, coupled with operational improvement from its U.S. operations and ample liquidity," said Standard & Poor's credit analyst Don Poviliatis. ACT has exceeded its initial cost savings targets related to the Circle K stores, where the company has begun to successfully implement its project Impact store renovation program. Standard & Poor's credit concerns include: * operating margins in the U.S. that remain below ACTs historical average, * the company's stated intention to pursue a major acquisition and * an industry characterized by low barriers to entry. ACT is the second-largest independent convenience store operator in North America, with 4,853 stores of which 3,007 sell motor fuel, as of Oct. 9, 2005. The convenience store sector is very fragmented and characterized by low barriers to entry, but ACT enjoys one of the strongest market positions in the industry, enhanced by the brand equity associated with the Circle K banner and a merchandising differentiation strategy entitled Impact concepts. ACT's stores are segregated among eight markets, with three in Canada and five in the U.S. covering 23 states. The U.S. C-store industry is one of the fastest growing retail segments, accounting for about $400 billion in total sales, including $260 billion in annual fuel sales and $140 billion for merchandise sales. The C-store sector is characterized by low barriers to entry, with competition in the form of existing oil companies such as Shell Oil, and traditional C-store operators such as 7-Eleven and The Pantry Inc., with established networks in ACT's Sun Belt states. The stable outlook reflects the company's progress in reducing debt and generating strong cash flow from its Circle K assets. The outlook could be revised to positive in the medium term if ACT continues to show operational improvement, while maintaining stable credit metrics. Conversely, if the operating environment proves more challenging than expected, then the outlook could be revised to negative. Downward pressure on the ratings or outlook could still arise if the company were to undertake a sizeable debt-financed acquisition; however, this appears unlikely in the short term given the prevailing high valuations. ALLIED SECURITY: Poor Performance Prompts S&P to Lower Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on security officer services provider Allied Security Holdings LLC, including its corporate credit rating to 'B' from 'B+'. The outlook is stable. Total debt outstanding was about $387 million as of Sept. 30, 2005, excluding operating lease obligations. "The downgrade reflects financial performance below plan, and our expectation that debt reduction would take longer than previously anticipated," said Standard & Poor's credit analyst Mark Salierno. Standard & Poor's believes that the highly competitive pricing environment will continue to hinder the company's efforts to renegotiate expiring contracts at favorable terms. In addition, the company's pursuit of lower-margin, higher-volume business will continue to pressure EBITDA margins over the intermediate term. Although total sales for the first nine months of fiscal 2005 have increased by about 40.2%, the growth was primarily attributed to acquired Barton Protective Services. At the same time, the company's organic revenue growth has been modest, in the 3% area. AMERICAN REPROGRAPHICS: Refinances Second Lien Credit Agreement --------------------------------------------------------------- American Reprographics Company (NYSE: ARP) refinanced its Second Lien Credit and Guaranty Agreement, which will save the company more than $8 million annually on a pre-tax basis under the new interest rate and current outstanding balance. The company expanded its first lien credit facility to pay off in full the borrowings under the original second lien credit facility. S. "Mohan" Chandramohan, Chairman and Chief Executive Officer of American Reprographics Company said, "We've been eagerly anticipating the reduction of prepayment penalties on our second lien debt agreement in order to restructure our credit facilities and lower our interest payments. We are gratified to have completed the refinancing before the end of the year. The new debt structure will give us greater financial flexibility going forward as it strengthens our capital structure and supports the company's short and long-term operational goals." The amended first lien credit agreement provides for senior secured credit facilities aggregating up to $310,600,000, consisting of: * a $280,600,000 term loan facility and * a $30,000,000 revolving credit facility. The company used proceeds from the completed incremental new term loan, in the amount of $157,500,000, to prepay in full all principal and interest payable under the Second Lien Credit and Guaranty Agreement dated Dec. 18, 2003. The remaining balance of $50,000,000 in the increased term loan facility is available for the Company's use subject to the terms of the amended first lien credit facility. The company's obligations are guaranteed by its domestic subsidiaries and, subject to certain limited exceptions, are secured by first priority security interests granted in all of the company's and the guarantor's personal and real property, and 65% of the assets of its foreign subsidiaries. Term loans are amortized over the term with the final payment due June 18, 2009. Amounts borrowed under the revolving credit facility must be repaid by Dec. 18, 2008. In the fourth quarter of 2005, American Reprographics Company will incur pre-tax prepayment penalties of approximately $4 million associated with the pay-off of the borrowings under the Second Lien Credit and Guaranty Agreement. During the same period the Company will also write off pre-tax deferred financing costs of approximately $5.3 million associated with the amended first lien credit agreement. American Reprographics Company is the leading reprographics company in the United States providing business-to-business document management services to the architectural, engineering and construction, or AEC industries. The company provides these services to companies in non-AEC industries, such as technology, financial services, retail, entertainment, and food and hospitality, which also require sophisticated document management services. American Reprographics Company provides its core services through its suite of reprographics technology products, a network of more than 200 locally-branded reprographics service centers across the U.S., and on-site at their customers' locations. The Company's service centers are arranged in a hub and satellite structure and are digitally connected as a cohesive network, allowing the provision of services both locally and nationally to more than 65,000 active customers. * * * As previously reported in the Troubled Company Reporter, Standard & Poor's Ratings Services assigned its 'BB-' bank loan rating and recovery rating of '2' to American Reprographics Co. LLC's proposed $157.5 million add-on first lien senior secured term facility due 2009, reflecting the expectation of a substantial recovery of principal in the event of a payment default. ARC is expected to use the proceeds from the proposed facility to refinance its existing second lien term loan facility. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating on ARC. Total lease adjusted debt was about $330 million as of Sept. 30, 2005. The outlook is positive. APCO LIQUIDATING: Wants Plan-Filing Period Stretched to Mar. 17 --------------------------------------------------------------- APCO Liquidating Trust and its debtor-affiliate, APCO Missing Stockholder Trust, ask the U.S. Bankruptcy Court for the District of Delaware to extend, until March 17, 2006, the time within which they alone can file a chapter 11 plan. The Debtors also ask the Court for more time to solicit acceptances of that plan from their creditors, until May 16, 2006. The Debtors' proposed First Amended Liquidating Plan of Reorganization is currently scheduled for a confirmation hearing on Jan. 26, 2006. Even though their proposed Plan is already scheduled for a confirmation hearing, the Debtors ask for the extension out of an abundance of caution to avoid the premature formulation of a competing chapter 11 plan by any other parties. Additionally, the requested extension is reasonable given the Debtors' efforts in efficiently and expeditiously their chapter 11 cases and they are not seeking the extension to pressure the creditors into accepting an unsatisfactory plan. The Court will convene a hearing at 9:30 a.m., on Jan. 26, 2005, to consider the Debtors' request. Headquartered in Oklahoma City, Oklahoma, APCO Liquidating Trust and APCO Missing Stockholder Trust were created on behalf of the common stockholders of APCO Oil Corporation. The Debtors filed for chapter 11 protection on August 19, 2005 (Bankr. D. Del. Case No. 05-12355). Gregory P. Williams, Esq., John Henry Knight, Esq., and Rebecca L. Booth, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. When the Debtor filed for protection, they estimated assets and debts between $10 million to $50 million. APCO LIQUIDATING: Amended Plan Confirmation Hearing Set on Jan. 26 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware will convene a confirmation hearing at 9:30 a.m., on Jan. 26, 2006, to consider the First Amended Liquidating Plan of Reorganization filed by APCO Liquidating Trust and its debtor-affiliate, APCO Missing Stockholder Trust. The Court approved the adequacy of the Debtors' Disclosure Statement explaining the Plan on Sept. 30, 2005. Summary of First Amended Plan On or before the effective date of the Plan, the Liquidation Trustee, on behalf of the Debtors, and any Committee will execute the Liquidation Trust Agreement and will take all steps necessary to establish the Liquidation Trust. The Liquidation Trust's sole purpose will be to liquidate and distribute the Trust Assets, with no objective to engage in the conduct of a trade or business. On the effective date, all of the Debtors' right, title and interest in all of the Trust Assets will be automatically transferred to the Liquidation Trust free and clear of liens, claims or interests. Treatment of Claims and Interests A) Allowed non-tax priority claims will be paid in full, in cash, in the allowed amount of those claims after the effective date, unless the holders of those claims agree to a different treatment of their claims. B) Allowed secured claims will be paid in full after the effective date and at the Liquidation Trustee's sole discretion, either in cash, or abandonment of the property securing the holders of those claims, or other treatment agreed between the Liquidation Trustee and the holders of secured claims. C) Allowed unsecured claims, totaling approximately $900,000 will receive their pro rata share of distributions from the Trust Assets in accordance with Article IV of the Plan, after the payment or satisfaction of, or adequate reservation for administrative claims, tax claims, allowed non-tax priority claims and allowed secured claims. D) Interests holders will receive their pro rata share of the remaining from the Trust Assets in accordance with Article IV of the Plan, after payment or satisfaction of all administrative claims, tax claims, allowed non-tax priority claims, allowed secured claims and allowed unsecured claims. A full-text copy of the Disclosure Statement and First Amended Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=051222052434 Objections to the First Amended Plan, if any, must be filed and served by Jan. 17, 2006. Headquartered in Oklahoma City, Oklahoma, APCO Liquidating Trust and APCO Missing Stockholder Trust were created on behalf of the common stockholders of APCO Oil Corporation. The Debtors filed for chapter 11 protection on August 19, 2005 (Bankr. D. Del. Case No. 05-12355). Gregory P. Williams, Esq., John Henry Knight, Esq., and Rebecca L. Booth, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. When the Debtor filed for protection, they estimated assets and debts between $10 million to $50 million. ASARCO LLC: Wants Stay Lifted to Set Off Chevron Debt ----------------------------------------------------- Eric A. Soderlund, Esq., at Baker Botts L.L.P., in Dallas, Texas, informs the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi that Chevron U.S.A., Inc., has provided ASARCO LLC with lubricants and fuel for use in the Debtor's operations, both during the prepetition and postpetition periods. As of the bankruptcy filing, ASARCO owed Chevron $191,870. Chevron, on the other hand, held two prepetition deposits: $950,000 for fuel and $150,000 for lubricants. Accordingly, ASARCO asks Judge Schmidt to: (a) modify the automatic stay to allow Chevron to set off the Prepetition Debt against the Prepetition Deposits; (b) permit Chevron to release the balance of the Prepetition Deposits to ASARCO; and (c) retain Chevron's right to utilize the Returned Deposits, as a defense to any avoidance action brought against it, as if the deposits had not been returned. Mr. Soderlund tells Judge Schmidt that ASARCO will need to increase its supply of fuel and lubricants purchased from Chevron. Currently, Mr. Soderlund states, ASARCO's credit line is limited to $250,000, which is insufficient for ASARCO to accomplish the necessary increase in supply. Mr. Soderlund asserts that allowing Chevron to set off the Prepetition Debt against the Prepetition Deposits and preserving Chevron's defenses to any potential actions will make it possible for Chevron to release the deposit balance to ASARCO. By then, ASARCO will be in a position to negotiate a postpetition deposit with Chevron that will be sufficient to meet ASARCO's need for increased supply from Chevron. If its request is not granted, ASARCO's ability to conduct vital operations will be severely hampered, Mr. Soderlund says. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors,it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation. (ASARCO Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Can Hire Kevin McCaffrey as Legal Consultant -------------------------------------------------------- ASARCO LLC informs the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi that Kevin McCaffrey began working for ASARCO as a salaried in-house attorney in 1986. Except for a period of time in which he worked for ASARCO's Financial Planning Department, Mr. McCaffrey spent his entire career in the company's legal department. ASARCO says that throughout his employment, Mr. McCaffrey has been addressing the specific environmental responsibilities, liabilities, and remedial requirements of each of the environmental properties held by the company and its subsidiaries, and was involved in negotiating and drafting substantially all relevant consent decrees with local, state, and federal environmental agencies for years. Mr. McCaffrey terminated his employment with ASARCO as its Senior Associate General Counsel on Oct. 31, 2003. Since Mr. McCaffrey was intimately familiar with its business, legal affairs, and environmental operations, ASARCO immediately retained him as a consultant in connection with those matters. Currently, Mr. McCaffrey is serving as the Subsidiary Debtors' sole officer and director and has historically served on the board of directors of several other ASARCO subsidiaries at various points. ASARCO tells Judge Schmidt that as its former in-house counsel and as the de facto general counsel for many of its subsidiaries over the years, Mr. McCaffrey managed outside counsel, a multitude of litigation and settlements, and was involved in insurance coverage issues and settlements. In addition, Mr. McCaffrey negotiated many environmental insurance settlements, recovering over $400,000,000 for ASARCO and its subsidiaries. ASARCO believes that the diversity and depth of Mr. McCaffrey's expertise, insight, and skill pertaining to ASARCO's historical business, subsidiaries, legal affairs, and environmental operations is unparalleled. Throughout his 19 years with ASARCO, Mr. McCaffrey has acquired a unique familiarity with a wide range of significant operations, which cannot be obtained by another individual known in the company. To help someone new acquire even a fraction of Mr. McCaffrey's knowledge base, ASARCO acknowledges that it would have to expend incredible amounts of time and money, to the prejudice of all parties-in-interest in the Debtors' Chapter 11 cases. Accordingly, ASARCO sought and obtained the Court's authority to employ Mr. McCaffrey as its consultant, nunc pro tunc to Aug. 9, 2005. Mr. McCaffrey will devote at least 25 hours per month rendering consulting services to ASARCO, in connection with: (a) the sale or disposition of various ASARCO real estate holdings, mining properties, former and current operations, and business lines; (b) the sale, reorganization, or disposition of various foreign ASARCO holdings, including exploration properties and joint ventures; (c) the management of ASARCO equity holdings in various subsidiaries; (d) the property and environmental management of ASARCO's Perth Amboy facility; (e) environmental matters at various ASARCO-owned and non- owned properties; (f) asbestos claims and lawsuits; (g) insurance recovery matters; (h) general corporate advice; and (i) other matters as requested by ASARCO management from time to time. In addition, Mr. McCaffrey will continue to serve as the sole officer and director of these Subsidiary Debtors: * Lac d'Amiante du Quebec Ltee; * Lake Asbestos of Quebec, Ltd.; * LAQ Canada, Ltd.; * CAPCO Pipe Company, Inc.; and * Cement Asbestos Products Company. All of these Subsidiary Debtors are non-operating companies and are under Chapter 11 protection. Mr. McCaffrey may further serve as the sole officer and director of the additional direct or indirect ASARCO subsidiaries that ASARCO identifies in the future. ASARCO expects some, if not all, of these subsidiaries to file voluntary petitions for bankruptcy relief. The parties are aware that the interests of subsidiaries, of which Mr. McCaffrey is an officer and director, may conflict with ASARCO's interests. Pursuant to a Consulting Agreement to be executed between the parties, ASARCO will indemnify and hold harmless Mr. McCaffrey against any action, suit or proceeding arising out of his role as consultant. Under the Consulting Agreement, ASARCO will pay Mr. McCaffrey $73 per hour for his consulting services. The company will also reimburse him for all reasonable and necessary travel expenses and out-of-pocket costs he incurs while performing those services. Mr. McCaffrey assures the Court that he does not hold any adverse interest to ASARCO's estates and is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors,it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation. (ASARCO Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Panel Wants Tellechea's Transition Pact Refrained ------------------------------------------------------------- ASARCO LLC asks the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to approve its transition agreement with Daniel Tellechea. Mr. Tellechea recently informed ASARCO of his intention to resign as president and chief executive officer of the company. To assure a smooth transition to new corporate leadership following Mr. Tellechea's departure, ASARCO negotiated the Transition Agreement. Under the terms of the Transition Agreement, Mr. Tellechea resigns his position effective immediately. Mr. Tellechea will receive no further compensation from the Debtor until after Agreement is approved. However, during the pendency of the request, for a period of up to 40 days, the Debtor's Administrative Committee has elected to maintain the health plan, dental plan and life insurance plan coverage for the benefit of Mr. Tellechea and his dependents at no cost to Mr. Tellechea. Upon approval of the Transition Agreement, Mr. Tellechea will provide consulting services to ASARCO and its management on an as-needed basis for a period of up to six months. The consulting services will include assisting the incoming president and CEO in learning and performing his new responsibilities and fulfilling whatever tasks the newly appointed officer requests. In consideration for the consulting services, ASARCO will pay Mr. Tellechea $12,500 per month, not to exceed a total of $75,000 for six months. Mr. Tellechea's monthly compensation during this transition period is about one-half the amount that he currently receives in his capacity as president and CEO. In the event that a Chapter 11 plan is confirmed in ASARCO's bankruptcy case, Mr. Tellechea will be entitled to an additional $75,000 success bonus. If a Chapter 11 plan is not confirmed, then Mr. Tellechea will not be owed the success bonus. Additionally, Mr. Tellechea and his dependents will continue to be covered under the Asarco Plan Benefits at no cost to them for the same period of six months. The compensation that Mr. Tellechea receives under the Transition Agreement will be in lieu of any and all salary, prepetition accrued vacation, bonus, and any other compensation due him as of November 14, 2005. Furthermore, as part of the Transition Agreement, Mr. Tellechea releases ASARCO and its subsidiaries from any and all claims relating to his employment with the Debtor, except as to any indemnification he may be entitled to as an officer or director of ASARCO or its subsidiaries. The Transition Agreement also provides that Mr. Tellechea will fully cooperate with the Debtor's and will testify, if asked, regarding any matters relating to the time that he was employed by ASARCO. Mr. Tellechea further agrees that, if requested, he will meet with the Debtor's attorneys or other representatives, and will otherwise assist in the in the investigation, defense, or prosecution of any matters involving the Debtor relating to the period of his service as an officer. In addition, Mr. Tellechea agrees to keep confidential, and not to use for his own benefit or in competition with the Debtor, any confidential information, including business plans, forecasts, pricing policies, customer agreements, or customer lists. The Transition Agreement may be terminated by either party on 30 days written notice. The termination clause will allow ASARCO the flexibility to terminate the agreement sooner than six months in the event that it determines that Mr. Tellechea's services are no longer required. If the Transition Agreement is terminated early, ASARCO is not required to continue to make the monthly compensation payments to Mr. Tellechea, but the majority of the agreement, including the release of the Debtors and the full cooperation provisions, will remain in effect. The Debtor believes that the Transition Agreement is warranted. Without the Agreement, ASARCO will lose a substantial source of institutional knowledge, and the transition to the new president and CEO will be a difficult one. The Agreement will also ensure that Mr. Tellechea will make himself available, as needed, for testimony regarding any issues relating to the time of his employment. The releases given by Mr. Tellechea provide a substantial benefit to all of the debtors and their estates by removing any uncertainty as to potential claims. Subsidiary Committee Objects The Official Committee of Unsecured Creditors of the Subsidiary Debtors asks the Court to refrain from approving ASARCO LLC's Transition Agreement with Daniel Tellechea until the Subsidiary Committee has investigated the facts and circumstances surrounding Mr. Tellechea's resignation, as well as his knowledge of other issues relevant to the Debtors' bankruptcy proceeding. The Subsidiary Committee specifically reserves the right to raise additional objections to the Transition Agreement to the extent its concerns are not adequately addressed by any interview with Mr. Tellechea. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors,it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation. (ASARCO Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000). ATA AIRLINES: C8 Airlines' Amends Schedules of Assets & Debts ------------------------------------------------------------- C8 Airlines, Inc., formerly known as Chicago Express Airlines, Inc., delivered to the Bankruptcy Court amended schedules of assets and liabilities. C8 added four creditors holding $56,283 in aggregate tax claims under Schedule E-Creditors Holding Unsecured Priority Claims. C8 also added 47 creditors holding $2,065,551 in aggregate trade payables and intercompany liability under Schedule F-Creditors Holding Unsecured Nonpriority Claims. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Can Use ATSB Lenders' Cash Collateral Until Jan. 6 ---------------------------------------------------------------- ATA Airlines, Inc., its debtor-affiliates and the ATSB Lenders stipulate that the Debtors may use the ATSB Lenders' cash collateral and other collateral through the earliest of: (i) the close of business on January 6, 2006; (ii) the occurrence of any event of default set forth in the Cash Collateral Order; or (iii) the time as the Debtors' Settlement Agreement with the ATSB Lenders and the Official Committee of Unsecured Creditors will be materially breached or rendered null. The Debtors agree to pay, in advance, Sage-Popovich, Inc., to perform any work deemed advisable by the ATSB Lenders to update SPI's audit, valuation and inspection of the Debtors' inventory of rotables, repairables and expendables. The Debtors will also pay a $200,000 monthly fee plus reasonable expenses to Lazard Freres & Co. LLC, as financial advisor to the ATSB Lenders, until the earlier of: (i) the effective date of a plan of reorganization in the Debtors' Chapter 11 cases; or (ii) the time as the ATSB Lenders have received relief from the stay imposed pursuant to Section 362 of the Bankruptcy Code with respect to half, in terms of value, of the Appraised Collateral and Pledged Equipment then in the possession of ATA Airlines, Inc. All the payments to Lazard will constitute adequate protection payments and will not be applied to reduce the principal amount of the ATSB Loan Obligations or the Claims of the ATSB Lenders. The Debtors and the ATSB Lenders also stipulate that any definitive documentation between the Debtors and MatlinPatterson must provide the Debtors: (x) no less than $30,000,000 of liquidity through the DIP Financing Transaction; and (y) an investment of no less than $70,000,000 in the Debtors on terms and conditions acceptable to the ATSB Lenders. The Debtors, the ATSB Lenders and the Committee stipulate that the deadline by which the Committee must file any challenge, on the basis of Sections 544 and 548 of the Bankruptcy Code, to the ATSB Lenders' "Guarantor Unsecured Claims" as defined in the Settlement Agreement will be extended to January 6. The ATSB Lenders stipulate that any amendment to the Southwest DIP financing, which is approved according to the terms of the Southwest DIP financing, is acceptable to them. The Debtors covenant with the ATSB Lenders to maintain: (i) at least $35,000,000 in Available Cash during the Extension Period; and (ii) no less than the greater of the Available Cash amount or 90% of the Available Cash amount forecasted at each week end in the Debtors' cash forecast, dated December 13, 2005: Week Ending Available Cash 90% of Available Cash ----------- -------------- --------------------- 12/16/05 $47,055,040 $42,349,536 12/23/05 $44,023,289 $39,620,960 12/30/05 $67,517,748 $60,765,973 01/06/05 $60,713,602 $54,642,242 Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATLANTIC MUTUAL: Countrywide Alliance Spurs S&P to Hold Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' counterparty credit and financial strength ratings on Atlantic Mutual Insurance Co., Centennial Insurance Co., and ALICOT Insurance Co. (f/k/a/ Atlantic Lloyds Insurance Co. of Texas). The outlook is stable. Subsequently, Standard & Poor's withdrew all its financial strength ratings on these companies and withdrew its counterparty credit ratings on Centennial Insurance Co. and ALICOT Insurance Co., at their request. Standard & Poor's also affirmed its 'B+' surplus note rating on Atlantic Mutual Insurance Co. Standard & Poor's is not withdrawing this rating because the company's surplus notes remain outstanding and are material in amount. "The rating action reflects a new strategic alliance between Atlantic Mutual Group and an insurance company subsidiary of Countrywide Financial Corp. (A/Stable/--)," explained Standard & Poor's credit analyst Jason Jones. "Atlantic Mutual Group should benefit from Countrywide's strong brand and national presence in the marketing of its personal lines business, and its capitalization should be strengthened due to quota share reinsurance in which Countrywide will take part of the risk." Although the alliance could benefit the rating on Atlantic Mutual Group's surplus notes, there are offsetting risks that prevent an upgrade at this time. A future upgrade could occur if the Countrywide alliance succeeds, results in personal lines are good, and surplus increases from the March 31, 2005, level. A downgrade could occur if the Countrywide alliance were unsuccessful, if agent and customer loyalty were to falter, if personal lines results are poor, or if there is adverse development in the run-off commercial book greater than the modest deficiency that Standard & Poor's incorporates into its capital model. The personal lines business is expected to generate underwriting profits in 2005-2006. Agent and customer loyalty should support premiums, though a moderate decline is likely as Atlantic Mutual Group begins to share premiums with Countrywide. Restructuring costs and the effects of a reinsurance commutation in the first quarter of 2006 will affect overall 2005 results. After the first quarter, restructuring costs are expected to decline, and no further losses from reinsurance commutations are expected now that all finite reinsurance contacts that increased surplus have been unwound. The company is expected to have sufficient resources to meet interest coverage requirements and has sufficient capitalization. Quality of capital is weakened by excessive reliance on surplus notes, but this is expected to improve over time due to retained earnings. ATSI COMMS: Accumulated Deficit Tops $77 Million at October 31 -------------------------------------------------------------- ATSI Communications Inc. delivered its quarterly report on Form 10-QSB for the quarter ending October 31, 2005, to the Securities and Exchange Commission on December 15, 2005. The company reported a $1,288,000 of net income on $2,322,000 of net revenues for the quarter ending October 31, 2005. Operating losses from continuing operations were approximately $348,000 and $442,000, for the quarters ended October 31, 2005 and 2004, respectively. Additionally, the company had a working capital deficit of approximately $4,259,000 at October 31, 2005 At October 31, 2005, the company's balance sheet shows $379,000 in total assets and $5,033,000 in total liabilities. As of Oct. 31, 2005, the company had an accumulated deficit of $77 million. Going Concern Doubt As previously reported in the Troubled Company Reporter on November 18, 2005, the company incurred a recurring net losses from operations of $2,224,000 and $8,485,000 in fiscal 2005 and 2004, respectively, has an accumulated deficit of $78 million. These conditions create substantial doubt as to ATSI's ability to continue as a going concern. Management will continue to pursue financings that may include raising additional capital through sale of common stock, preferred stock, or warrants. The financial statements do not include any adjustments that might be necessary if ATSI is unable to continue as a going concern. ATSI Communications -- http://www.atsi.net-- filed for Chapter 11 protection on February 4, 2003 in the U.S. Bankruptcy Court for the Western District of Texas (San Antonio) (Lead Bankr. Case No. 03-50753). Martin Warren Seidler, Esq., represents the Debtors in these cases. At the time of filing, the Debtors listed estimated assets of between $10 and $50 Million and estimated debts of between $1 and $10 Million. BALLY TOTAL: Extends Closing of Crunch Fitness Sale to January 17 ----------------------------------------------------------------- Bally Total Fitness (NYSE:BFT) extended the closing deadline to Jan. 17, 2006 for the transaction to sell its Crunch Fitness division to Marc Tascher, a leading entrepreneur and club industry veteran, in partnership with the private equity group of Angelo, Gordon & Co., an alternative asset investment management firm with approximately $9 billion in capital under management. As previously disclosed, the clubs being sold include all of Bally's 21 Crunch locations, which are located in New York, Chicago, Los Angeles, Atlanta, Miami and San Francisco, as well as Bally's 2 Gorilla Sports clubs in San Francisco and 2 of Bally's Pinnacle Fitness clubs in San Francisco. 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 Dec. 6, 2005, Standard & Poor's Ratings Services revised its CreditWatch implications on Bally Total Fitness Holding Corp. to developing from negative. The corporate credit rating remains at 'CCC'. Bally's ratings were originally placed on CreditWatch on Aug. 8, 2005, following the commencement of a 10-day period after which an event of default would have occurred under the company's $275 million secured credit agreement's cross-default provision and the debt would have become immediately due and payable. Subsequently, Bally entered into a consent with lenders to extend the 10-day period until Aug. 31, 2005. Prior to Aug. 31, the company received consents from its bondholders extending its waiver of default to Nov. 30, 2005. BLUEGREEN CORP: Internal Audit Review Spurs Financial Restatement ----------------------------------------------------------------- Bluegreen Corporation (NYSE:BXG) filed a Form 8-K, dated Dec. 19, 2005, with the Securities and Exchange Commission. In connection with the possible securitization of certain of its receivables, the company undertook a review of the prior accounting treatment for one of its existing notes receivable purchase facilities. As a result of that review, on Dec. 15, 2005, the company's Audit Committee concurred with management's recommendation that the company should restate its consolidated financial statements for the year ended March 31, 2002, the nine months ended Dec. 31, 2002 and the years ended Dec. 31, 2003 and 2004 and the nine months ended Sept. 30, 2005, to reflect the sales of notes receivable under the Purchase Facility from its inception in June 2001 as on-balance sheet financing transactions as opposed to off-balance sheet sales transactions pursuant to Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", as the company had originally accounted for these transactions. Pending their restatement, these financial statements should not be relied upon. When the Purchase Facility was executed in June 2001 and again when it was amended and restated in April 2002, the operative documents included provisions that allowed the company to substitute new notes receivable for up to 20% of the notes receivable previously sold. The company's understanding was that the Purchase Facility permitted the substitution of new notes receivable for only: 1) notes receivable that were in default or 2) the existing notes receivable from customers who were upgrading their vacation ownership interest and wished to consolidate their existing notes receivable with new notes receivable in the upgrade transaction. Since inception of the Purchase Facility, the company only substituted Default Receivables and Upgrade Receivables under the Purchase Facility, and the act of substituting these receivables itself is not inconsistent with achieving off-balance sheet treatment pursuant to SFAS 140, as the substitutions would have been initiated by the actions of the company's customers, not of the company itself. However, because the relevant provisions of the Purchase Facility were arguably ambiguous and could be construed to allow the company to substitute new notes receivable for previously sold receivables for any reason, the company has concluded that the existence of the ambiguous provisions should have precluded notes receivable sales under the Purchase Facility from being accounted for as off-balance sheet sales transactions. During the term of the Purchase Facility, the company consummated two term securitization transactions, one in December 2002 and one in July 2004, which included substantially all of the notes receivable that had been previously accounted for as having been sold under the Purchase Facility. The company believes that both term securitization transactions have been appropriately accounted for as sales pursuant to SFAS 140, and therefore the notes receivable financed under the Purchase Facility would be considered in the restated financial statements to be sold in the term securitization transactions, with resulting gains on sale recognized at that time. In connection with a preliminary review of accounting for the Purchase Facility as an on-balance sheet financing, the company determined that the computation of the gains on sales of receivables in the two term securitization transactions did not take into account the fair value allocation of financial components methodology for recording its retained interest and servicing asset as prescribed by SFAS 140. The impact of the fair value allocation of financial components methodology is to reduce the gain on sale, but once the retained interest is marked to market value immediately thereafter, the impact will be to increase other comprehensive income in the balance sheet. The company does not believe that the restatement will have any impact on its cash flows and should not materially impact shareholders' equity as of Dec. 31, 2004 or Sept. 30, 2005. Also, the company believes that the matters for which the financial statements are being restated will not have a material adverse effect on the Company's future earnings. However, the company's independent accountants have not reviewed or audited the foregoing and there is no assurance that the final restatement will not differ from the foregoing preliminary estimate. Accordingly, these estimates remain subject to revision and the results of the audit of the company's annual financial statements for the periods designated. Further, while the company does not believe that the accounting treatment of our other receivables purchase facilities and term securitization transactions will be impacted, the review and audit by the company's independent accountants may result in additional changes. The company intends to file the restated financial statement information in an amendment to its Annual Report on Form 10-K for the year ended Dec. 31, 2004, as soon as reasonably practicable. The company's Audit Committee has discussed the matters disclosed in this filing under Item 4.02(a) with the company's independent accountants. Headquartered in Boca Raton, Florida, Bluegreen Corporation (NYSE:BXG) -- http://www.bluegreenonline.com/-- is a leading provider of Colorful Places to Live and Play(R). Bluegreen Resorts' flexible points-based vacation ownership system provides approximately 150,000 owners access to over 40 resorts and an exchange network of over 3,700 resorts and other vacation experiences such as cruises. Bluegreen Communities has sold over 49,000 planned residential and golf community homesites in 32 states since 1985. Founded in 1966, Bluegreen employs approximately 4,900 associates. In 2005, Bluegreen ranked No. 57 on Forbes' list of The 200 Best Small Companies and No. 48 on FORTUNE'S list of America's 100 Fastest Growing Companies. Bluegreen Corp.'s 10-1/2 Senior Secured Notes due 2008 carry Moody's Investors Service's B3 rating and Standard & Poor's B- rating. BOUNDLESS CORP: Confirmation Hearing Moved to March 9 ----------------------------------------------------- The Honorable Dorothy Eisenberg of the U.S. Bankruptcy Court for the Eastern District of New York will convene a hearing at 11:00 a.m. on March 9, 2006, to discuss the merits of the Third Amended Joint Plan of Reorganization filed by Boundless Technologies, Inc., and its debtor-affiliates. The plan confirmation hearing was previously scheduled to begin earlier this month. 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. BOYDS COLLECTION: Court Okays Kirkland & Ellis as Bankr. Counsel ---------------------------------------------------------------- The Honorable Duncan W. Keir of the U.S. Bankruptcy Court for the District of Maryland put his stamp of approval on Boyds Collection, Ltd., and its debtor-affiliates' application to employ Kirkland & Ellis LLP as their general bankruptcy counsel. Kirkland & Ellis will: a) advise the Debtor with respect to their powers and duties as debtors-in-possession in the continued management and operation of their businesses and properties; b) attend meetings and negotiate with representatives of creditors and other parties-in-interest; c) represent the Debtors in connection with obtaining postpetition financing; d) advise the Debtors in connection with any potential sale of assets and consult with the Debtors regarding tax matters; c) take all necessary actions to protect and preserve the Debtors' estates, including the prosecution of actions on their behalf, defend any action commenced against them and represent their interests in negotiations concerning all litigation in which the Debtors are involved; d) prepare all motions, applications, answers, orders, reports and papers necessary to the administration of the Debtors' estates; e) take any necessary action on behalf of the Debtors to obtain approval of a disclosure statement and confirmation of a plan of reorganization; f) appear before the Bankruptcy Court, any appellate courts and the office of the U.S Trustee, and protect the interests of the Debtors' estates before those Courts and the U.S. Trustee; and g) perform all other legal services to the Debtors that are necessary in connection with its chapter 11 cases. Matthew A. Cantor, Esq., a partner at Kirkland & Ellis, is one of the lead attorneys for the Debtors. Mr. Cantor discloses that his Firm received a $100,000 retainer. Mr. Cantor charges $745 per hour for his services. Mr. Cantor reports that Kirkland & Ellis's professionals bill: Professional Hourly Rate ------------ ----------- Richard M. Cieri $825 Michael I. Gottfried $657 Edward O. Sassower $595 Lisa G. Gartenlaub $455 Javier Schiffrin $455 Katherine Piper $420 Designation Hourly Rate ----------- ----------- Partner $425 - $950 Counsel $325 - $740 Associates $235 - $540 Pareprofessionals $90 - $280 Kirkland & Ellis assured the Court that it does not represent any interest materially adverse to the Debtors or their estates. Headquartered in McSherrystown, Pa., The Boyds Collection, Ltd. -- http://www.boydsstuff.com/-- designs and manufactures unique, whimsical and "Folksy with Attitude(SM)" gifts and collectibles, known for their high quality and affordable pricing. The Company filed for chapter 11 protection on Oct. 16, 2005 (Bankr. Md. Lead Case No. 05-43793). As of June 30, 2005, Boyds reported $66.9 million in total assets and $101.7 million in total debts BOYDS COLLECTION: Taps Skarlatos & Zonarich as Special Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Maryland gave The Boyds Collection, Ltd., and its debtor-affiliates permission to retain Skarlatos & Zonarich LLP as their special labor and employment counsel. Skarlatos & Zonarich will advise the Debtors and their board of directors with respect to: * labor and employment matters; and * litigation that may arise from labor and employment matters. The firm's professionals current hourly rates: Professional Hourly Rate ------------ ----------- Partners $185 - $250 Associates $150 Clerks & Legal Assistants $65 - $100 To the best of the Debtors' knowledge, Skarlatos & Zonarich does not represent or hold any interest adverse to the Debtors or their estates. Headquartered in McSherrystown, Pennsylvania, The Boyds Collection, Ltd. -- http://www.boydsstuff.com/-- designs and manufactures unique, whimsical and "Folksy with Attitude(SM)" gifts and collectibles, known for their high quality and affordable pricing. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 16, 2005 (Bankr. Md. Case No. 05-43793). Matthew A. Cantor, Esq., at Kirkland & Ellis LLP represents the Debtors in their restructuring efforts. As of June 30, 2005, Boyds reported $66.9 million in total assets and $101.7 million in total debts. Net sales for the twelve-month period ended June 2005 were approximately $90 million. BROOKLYN HOSPITAL: Garfunkel Wild Continues as Healthcare Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of New York, Brooklyn Division, authorized the Brooklyn Hospital Center and Caledonian Health Center, Inc., to retain Garfunkel, Wild & Travis, P.C., as their special healthcare, regulatory, corporate and finance counsel, nunc pro tunc to Sept. 30, 2005. Garfunkel Wild will: (a) assist the Debtors in negotiating and documenting arrangements and agreements with their lenders, suppliers, landlords and other parties relating to general corporate, healthcare, finance and other non-bankruptcy related matters; (b) provide regulatory advice to the Debtors and consult with the Debtors on health care and other non-bankruptcy related matters; (c) assist in the preparation and prosecution of non- bankruptcy administrative and litigation matters relative to the Debtors' businesses; (d) provide continuing legal advice in connection with health care, regulatory, corporate, finance and other non-bankruptcy related issues; (e) provide a historical base of information relative to, and assist in the review and objections to, claims; (f) assist in providing non-bankruptcy, corporate and commercial assistance as may relate to the sale, lease or other disposition of assets of the estates; and (g) perform other non-bankruptcy related legal services and assistance desirable and necessary to the efficient and economic administration of the Debtors' bankruptcy cases. Burton S. Weston, Esq., a member at Garfunkel, Wild & Travis, P.C., disclosed the hourly rates of professionals to be engaged: Designation Hourly Rate ----------- ----------- Partners $295 to $435 Associates $215 to $250 Paralegals $120 Professional Hourly Rate ------------ ----------- Robert A. Wild, Esq. $435 Judith A. Eisen, Esq. $435 Fredrick I. Miller, Esq. $435 Burton S. Weston, Esq. $425 Andrew Schulson, Esq. $295 Afsheen A. Shah, Esq. $215 For almost 20 years, Garfunkel served as the Debtors' healthcare, regulatory, corporate and finance counsel, performing a breadth of legal services relating to the facility's business and financial affairs, except for labor and malpractice requirements. Garfunkel has also provided litigation support to the Debtors and is fully knowledgeable as to the current status of many of the Debtors' disputed claims. Also, Garfunkel has represented the Debtors in many of their leasehold and other real estate related transactions and is aware of the scope of their existing commitments. Richard G. Braun, Jr., Brooklyn Hospital's Executive Vice President and Chief Financial Officer, told the Court that the Debtors want Garfunkel's continued retention because a substitution at this stage will add unnecessary costs and administration in the Debtors' bankruptcy cases. The Debtors believe that Garfunkel, Wild & Travis, P.C., does not hold or represent any interest adverse to the Debtors or to their estates. Headquartered in Brooklyn, New York, The Brooklyn Hospital Center -- http://www.tbh.org-- provides a variety of inpatient and outpatient services and education programs to improve the well being of its community. The Debtor, together with Caledonian Health Center, Inc., filed for chapter 11 protection on September 30, 2005 (Bankr. E.D.N.Y. Case No. 05-26990). Lawrence M. Handelsman, Esq., and Eric M. Kay, Esq., at Stroock & Stroock & Lavan LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $233,000,000 in assets and $337,000,000 in debts. BROOKLYN HOSPITAL: Has Until March 29 to Decide on Leases --------------------------------------------------------- The Honorable Carla E. Craig of the U.S. Bankruptcy Court for the Eastern District of New York extended, until March 29, 2006, Brooklyn Hospital Center and its debtor-affiliate's period within which they can elect to assume, assume and assign, or reject their unexpired nonresidential real property leases. The Debtors explained that as of the bankruptcy filing, they are parties to seven unexpired leases of nonresidential real property. The Debtors gave the Court four reasons in support of the requested extension: 1) because of the vast number of administrative and business issues arising from the commencement of their chapter 11 cases while, at the same time operating their businesses, they have been unable to complete the examination and analysis of the unexpired leases in order to make an informed decision whether or not to assume or reject those leases; 2) the leases are valuable assets of their estates and an integral component of their reorganization efforts; 3) the requested will promote their ability to maximize the value of their chapter 11 estates, avoid the incurrence of needless administrative expenses by minimizing the likelihood of inadvertent rejections of valuable leases or premature assumption of burdensome leases; and 4) they are current on all outstanding post-petition obligations under the leases. Headquartered in Brooklyn, New York, The Brooklyn Hospital Center -- http://www.tbh.org-- provides a variety of inpatient and outpatient services and education programs to improve the well being of its community. The Debtor, together with Caledonian Health Center, Inc., filed for chapter 11 protection on Sept. 30, 2005 (Bankr. E.D.N.Y. Case No. 05-26990). Lawrence M. Handelsman, Esq., and Eric M. Kay, Esq., at Stroock & Stroock & Lavan LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $233,000,000 in assets and $337,000,000 in debts. BROOKLYN HOSPITAL: Look for Bankruptcy Schedules on December 29 --------------------------------------------------------------- The Brooklyn Hospital Center and Caledonian Health Center, Inc., sought and obtained an extension, until Dec. 29, from the U.S. Bankruptcy Court for the Eastern District of New York of their time to file their schedules of assets and liabilities, and statements of financial affairs. The Debtors told the Court that they need the extension because of the size and complexity of their businesses. In addition, the Debtors have a limited staff available to review a large volume of materials that must be assembled in order to accurately file the schedules and statements. Headquartered in Brooklyn, New York, The Brooklyn Hospital Center -- http://www.tbh.org-- provides a variety of inpatient and outpatient services and education programs to improve the well being of its community. The Debtor, together with Caledonian Health Center, Inc., filed for chapter 11 protection on Sept. 30, 2005 (Bankr. E.D.N.Y. Case No. 05-26990). Lawrence M. Handelsman, Esq., and Eric M. Kay, Esq., at Stroock & Stroock & Lavan LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $233,000,000 in assets and $337,000,000 in debts. CALPINE CORP: Can Access Up to $500 Million of DIP Financing ------------------------------------------------------------ Calpine Corporation (OTC: CPNLQ) received approval of first day motions from the U.S. Bankruptcy Court for the Southern District of New York. During a hearing held on Dec. 21, 2005, before the Honorable Burton R. Lifland, Calpine submitted a number of motions requesting approvals and received, among other things: * interim authorization to continue to perform under power trading contracts and * the immediate use of $500 million of its $2 billion debtor- in-possession financing facility. The company also received authorization to continue paying employee wages and salaries and providing benefits. Robert P. May, Calpine's Chief Executive Officer, stated, "We are very pleased with the Court's prompt approval of these first day motions, which will help Calpine continue its normal business operations without interruption. In particular, the Court's authorization to continue to perform under existing and new power and gas trading contracts and pledge collateral in support of transactions should provide additional assurance that Calpine power plants will continue to provide reliable supplies of electric power to the markets that depend on us." DIP Financing Calpine received interim Court approval for the immediate use of up to $500 million of its $2 billion DIP financing facility. The company has received commitments for the DIP facility from Deutsche Bank and Credit Suisse First Boston. The Court has scheduled a hearing for Jan. 25, 2006, to consider final approval of the entire $2 billion DIP financing facility. "The DIP financing provides us with the much needed liquidity and flexibility to run our business, and should give assurance to our natural gas suppliers, gas transportation companies, and other vendors and suppliers that they will be paid going forward on a current basis," said Mr. May. "In turn, our customers can continue to rely on our power plants for the electricity and other energy services they depend on Calpine to provide." Calpine also received authorization from the Court to pay pre- petition and post-petition employee wages and salaries, and provide benefits, including healthcare, disability, life insurance and certain vacation benefits, during its restructuring under Chapter 11. Headquartered in San Jose, California, Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance, and operational services. Calpine was founded in 1984. The Debtor and its affiliates filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., at Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $26,628,755,663 in total assets and $22,535,577,121 in total debts. CARDIAC SERVICES: Court Approves GECC's Plan of Reorganization -------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Tennessee, Nashville Division, confirmed Dec. 20, General Electric Capital Corporation's Amended Plan of Reorganization for Cardiac Services, Inc. GECC is the holder of the only security interest in Cardiac Services. GECC's Plan intends to make the Debtor a viable economic entity by: 1) restructuring the Debtor's secured obligation; 2) the surrender of three mobile catheterization and peripheral vascular labs and associated equipment to GECC reduce its $1.5 million unsecured claim; 3) an infusion of capital from the Interest Holders to further reduce GECC's secured claim; and 4) the release of GECC's lien on the Debtor's cash collateral in an amount to allow payment of administrative, tax, and allowed unsecured claims. Under the Amended Plan: 1) General unsecured creditors' allowed $7,308,077 claims will be paid the lesser of $250,000 or 50% of the principal amount of each unsecured claim. 2) GECC's $7.9 million secured claim will retain a first priority perfected secured interest in the Debtor's assets. On the Effective Date, the Debtor will make a $500,000 lump sum payment against GECC's Secured Claim, and $2 million of the new capital raised by the Equity Interest Holders will be paid to GECC for partial satisfaction of its Secured Claim. The remaining $5.4 million balance will be paid with 8% annual interest in $83,257 monthly installments over the next six years. 3) Interest Holders are given two options: A) Under this option, holders won't be asked to make new capital cash contributions to the Debtor. However, their equity interests will be cancelled upon confirmation of the Plan; or B) Those electing to make new capital contributions to the Debtor will receive capital stock in the Reorganized Cardiac Services. Interest holders need to contribute a total of $3,000,000, with a minimum cash contribution of $2,000,000. The remaining $1 million will be in a guaranty form to secure the Debtor's obligation to GECC. If the Interest Holders fail to generate the required contribution, a Liquidating Trust will be created and GECC will receive all net proceeds from the sale of the Debtor's assets. A full-text copy of GECC's Amended Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=051020025304 Headquartered in Nashville, Tennessee, Cardiac Services, Inc., provides surgical services, mobile catherization and peripheral vascular labs, and associated equipment. The Company filed for chapter 11 protection on March 8, 2005 (Bankr. M.D. Tenn. Case No. 05-02813). Paul E. Jennings, Esq., at Paul E. Jennings Law Offices, P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of $10 million to $50 million. CAROLINA TOBACCO: Hires Galbut & Hunter as Special Counsel ---------------------------------------------------------- Carolina Tobacco Company sought and obtained permission from the U.S. Bankruptcy Court for the District of Oregon to employ Galbut & Hunter as its special counsel, nunc pro tunc to May 16, 2005. The Debtor retained the Firm to represent it in pending state court litigation in Arizona styled as Carolina Tobacco Company v. Terry Goddard, Maricopa County Superior Court Case No. CV 2003-015645. Specifically, the Firm will: (a) prepare and file all documents necessary to stay the pending litigation; and (b) take any other necessary or advisable action on the status of its bankruptcy proceeding or any actions taken by the defendants. The Firm's primary professionals bill: Attorney Designation Hourly Rate -------- ----------- ----------- Martin R. Galbut, Esq. Attorney $400 Megan Bakken Paralegal $95 Mr. Galbut assures the Court that his Firm does not hold any interests adverse to the Debtor's estate. Headquartered in Portland, Oregon, Carolina Tobacco Company -- http://www.carolinatobacco.com/-- manufactures Roger-brand cigarettes. The Company filed for chapter 11 protection on April 18, 2005 (Bankr. D. Ore. Case No. 05-34156). Tara J. Schleicher, Esq., at Farleigh Wada & Witt P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $24,408,298 in assets and $14,929,169 in debts. CENTENNIAL COMMS: Completes $550 Million Senior Notes Offer ----------------------------------------------------------- Centennial Communications Corp. (NASDAQ: CYCL) completed its offering of $550 million in aggregate principal amount of senior notes due 2013. The senior notes were issued in two series consisting of: (i) $350 million of floating rate notes that will bear interest at three-month LIBOR plus 5.75% and mature in January 2013 and (ii) $200 million of fixed rate notes that will bear interest at 10% and mature in January 2013. Centennial will use the net proceeds from the offering, together with a portion of its available cash, to pay a special cash dividend of $5.52 per share to Centennial's common stockholders and prepay approximately $39.5 million of borrowings under its senior secured credit facility. Centennial's board of directors has approved and declared the special cash dividend of $5.52 per share to Centennial's common stockholders of record as of the close of business on December 30, 2005. The payment date for the special cash dividend is expected to be on Jan. 5, 2006. In connection with the completion of the senior notes offering, Centennial received an amendment to its senior secured credit facility to permit, among other things, the issuance of the senior notes and payment of the special cash dividend. For U.S. federal income tax purposes, Centennial expects that no more than 10% of the special cash dividend will be taxable as a dividend. The remainder will be treated first as a tax-free return of capital up to each stockholder's tax basis in the Company's common stock (determined on a per share basis) with any excess generally being treated as a capital gain. The senior notes offering was conducted pursuant to Rule 144A under the Securities Act of 1933, as Amended (the "Securities Act"), and outside the United States in accordance with Regulation S under the Securities Act. The issuance of the senior notes was not registered under the Securities Act and the senior notes may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Based in Wall, N.J., Centennial Communications, (NASDAQ: CYCL) -- http://www.centennialwireless.com/-- is a leading provider of regional wireless and integrated communications services in the United States and the Caribbean with approximately 1.3 million wireless subscribers and 326,400 access lines and equivalents. The U.S. business owns and operates wireless networks in the Midwest and Southeast covering parts of six states. Centennial's Caribbean business owns and operates wireless networks in Puerto Rico, the Dominican Republic and the U.S. Virgin Islands and provides facilities-based integrated voice, data and Internet solutions. Welsh, Carson, Anderson & Stowe and an affiliate of the Blackstone Group are controlling shareholders of Centennial. At Aug. 31, 2005, Centennial Communications' balance sheet showed a $465.3 million stockholders' deficit, compared to a $481.9 million deficit at May 31, 2005. * * * As reported in the Troubled Company Reporter on Dec. 14, 2005, Standard & Poor's Ratings Services assigned its 'CCC' rating to Wall, New Jersey-based regional wireless carrier Centennial Communication Corp.'s proposed $200 million senior notes due 2012 and $350 million senior floating-rate notes due 2012, both to be issued under Rule 144A with registration rights. Proceeds from these unsecured note issues, together with cash on hand, will be used to pay an approximate $600 million special dividend to common shareholders. At the same time, Standard & Poor's raised the rating on the company's $750 million secured bank loan to 'B' from 'B-' and the recovery rating was upgraded to '1' from '2'. All the other ratings of Centennial and its related entities, including its 'B-' corporate credit rating, were affirmed and removed from CreditWatch. The outlook is stable. CITIZENS COMMS: Board Names CEO Mary A. Wilderotter as Chairman --------------------------------------------------------------- Citizens Communications Corporation's Board of Directors appointed Mary A. Wilderotter, the Company's President and Chief Executive Officer, as Chairman of the Board of Directors. In connection with that appointment, Mrs. Wilderotter resigned from her position as President and now holds the positions of Chairman and Chief Executive Officer. Jerry Elliott, formerly Executive Vice President and Chief Financial Officer, was appointed to the position of President and until a new Chief Financial Officer is appointed, will also serve as acting Chief Financial Officer. Daniel J. McCarthy, formerly Senior Vice President - Field Operations, was appointed to the position of Executive Vice President and Chief Operating Officer. The Company's Board of Directors also elected Jeri Finard to serve as a Director of the Company. Ms. Finard was also appointed to the Company's Compensation Committee. Mrs. Wilderotter, 50, has been associated with the Company since September 2004 when she was elected President and Chief Executive Officer. Previously, she was Senior Vice President - Worldwide Public Sector in 2004, Microsoft Corp. and Senior Vice President - Worldwide Business Strategy, Microsoft Corp., 2002 to 2004. Before that she was President and Chief Executive Officer, Wink Communications, 1996 to 2002. Mrs. Wilderotter is a member of the board of directors of Quantum Corp. and McClatchy Corp. Mr. Elliott, 46, has been associated with the Company since March 2002. He was elected Executive Vice President and Chief Financial Officer in July 2004. Previously, he was Senior Vice President and Chief Financial Officer from December 2002 to July 2004 and Vice President and Chief Financial Officer from March 2002 to December 2002. Prior to joining the Company, he was Managing Director of Morgan Stanley's Media and Communications Investment Banking Group. Mr. McCarthy, 41, has been associated with the Company since December 1990. He was elected Senior Vice President, Field Operations in December 2004. He was previously Senior Vice President Broadband Operations from January 2004 to December 2004, and President and Chief Operating Officer of Electric Lightwave, LLC, a subsidiary of the Company, from January 2002 to December 2004. Previously, he was President and Chief Operating Officer, Public Services Sector from November 2001 to January 2002, Vice President and Chief Operating Officer, Public Services Sector from March 2001 to November 2001, and Vice President, Citizens Arizona Energy from April 1998 to March 2001. Citizens Communications Corporation is a telecommunications company headquartered in Stamford, Connecticut. * * * As reported in the Troubled Company Reporter on Sept. 29, 2005, Fitch Ratings affirmed the 'BB' rating on Citizens Communications Company's senior unsecured debt securities and the 'BB-' rating on Citizens Utilities Trust's 5% company-obligated mandatorily redeemable convertible preferred securities due 2036. Fitch said Citizens' Rating Outlook is Stable. As reported in the Troubled Company Reporter on Sept. 2, 2005, Standard & Poor's Ratings Services affirmed its ratings on Stamford, Connecticut-based Citizens Communications Co., including the 'BB+' corporate credit rating. S&P said the outlook is negative. COLLINS & AIKMAN: Names New Executives in Key Finance Positions --------------------------------------------------------------- Frank Macher, President and Chief Executive Officer of Collins & Aikman Corporation (CKCRQ) reported the following recent financial executive appointments: Tim Trenary has been appointed Vice President and Treasurer. Mr. Trenary joins Collins & Aikman from Federal-Mogul where he most recently held the position of Finance Director for South America and the Director, Financial Services and Processes. Prior to this role, Mr. Trenary was the Director, Reorganization Finance & Administration. Mr. Trenary holds a Bachelor degree in Accounting from Michigan State University and a Master of Business Administration from University of Detroit. Matti Masanovich has been appointed Vice President, Internal Audit. Mr. Masanovich previous automotive experience includes positions as Director, Audit Services for Federal-Mogul Corporation. Mr. Masanovich holds a Bachelor degree in Finance & Accounting and a Master of Business Administration in Finance & International Business from the University of Windsor. Mr. Masanovich has worked previously with PricewaterhouseCoopers LLP in Detroit, Michigan and Coopers & Lybrand in Toronto, Ontario. Pete Speers has been appointed Vice President, Financial Planning and Analysis. Mr. Speers joins the Company from Diversified Property Solutions where he served as Director, Fixed Asset and Sarbanes Oxley Consulting Practice. Mr. Speers' previous automotive experience includes serving as a Group Controller and Pricing and Product Development Manager for Visteon Corporation. Prior to these roles he served in positions of increasing responsibility for Ford Motor Company. Mr. Speers holds a Bachelor degree in Engineering from Michigan Technological University and a Master of Business Administration in Finance from The University of Chicago. "We are extremely pleased to announce the addition of these executives to Collins & Aikman's management team," said Macher. "These recent appointments reflect the depth and talent of financial leadership now at the Company and our commitment to providing accurate, timely and informative reporting to all interested parties going forward. "Their comprehensive experience regarding the financial requirements of the automotive supply base makes them ideally suited for the rapidly changing dynamics of our industry. Their understanding of our strategic business development plan and the challenges faced by today's global Tier One suppliers will be invaluable as Collins & Aikman completes its restructuring and prepares to emerge from bankruptcy protection." 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. COMFORCE CORPORATION: Repurchases $5.5 Million of 12% Senior Notes ------------------------------------------------------------------ COMFORCE Corporation (Amex: CFS) repurchased $5.5 million principal amount of its 12% Senior Notes due Dec. 1, 2007. The company effectuated these repurchases utilizing availability under its bank credit facility. Since June 2000, the company has reduced its public debt from $138.8 million to $46.3 million. John Fanning, Chairman and Chief Executive Officer of COMFORCE commented, "We are pleased to announce another significant repurchase of our higher interest rate debt. We are continuing to work with our financial advisers to examine all appropriate alternatives to refinance our 12% Senior Notes and further improve our capital structure." Mr. Fanning continued, "Despite our commitment to further improving our capital structure, we will not enter into obligations that we do not view as being in the best interest of our shareholders. Our 12% Senior Notes do not mature for almost two years, and if we find that market conditions are not conducive to a favorable refinancing at this time, we are fully prepared to wait until market conditions improve." COMFORCE Corporation -- http://www.comforce.com/-- provides specialty staffing, consulting and outsourcing services primarily to Fortune 1000 companies and other large employers. The Company operates in three business segments -- Human Capital Management Services, Staff Augmentation, and Financial Outsourcing Services. The Human Capital Management Services segment provides consulting services for managing the contingent workforce through its PRO Unlimited subsidiary. The Staff Augmentation segment provides Healthcare Support Services, including RightSourcing Vendor Management Services and Nurse Staffing Services, Technical Services, Information Technology, Telecom, and Other Staffing Services. The Financial Outsourcing Services segment provides payroll, funding and outsourcing services to independent consulting and staffing companies. COMFORCE has 37 offices nationwide. At Sept. 25, 2005, COMFORCE Corp.'s balance sheet showed a $23,977,000 stockholders' deficit compared to a $29,835 deficit at Dec. 26, 2004. CONGOLEUM CORPORATION: Gives Updates on Company Matters ------------------------------------------------------- Congoleum Corporation (AMEX:CGM) made several announcements regarding its financing arrangements, developments with respect to its plan of reorganization, and the appointment of two new directors. Credit Facility Amendment First, Congoleum reported that the U.S. Bankruptcy Court for the District of New Jersey approved an amendment to Congoleum's Debtor-in-possession credit facility at a hearing held on Dec. 19, 2005. The amendment extended the maturity of that facility for a year, until Dec. 31, 2006. Plan Filing Second, Congoleum reported that active negotiations are underway with respect to the terms of a new plan of reorganization, which Congoleum expects to file with the Court by Feb. 3, 2006. In connection with these negotiations, Congoleum anticipates that the trustee for holders of its 8.625% notes due in August 2008 will ask that a committee of bondholders be formed to negotiate treatment of their claims under the new plan. The Court has scheduled a hearing on April 13, 2006 to consider the adequacy of the plan disclosure statement. Roger S. Marcus, Chairman of the Board, commented, "We are pleased that the various parties are engaged in negotiating resolution of the issues that have been obstacles to confirmation of previous plans. It now appears that achieving a consensual plan with the asbestos claimants is going to require concessions on the part of Congoleum's bondholders, as well as concessions on the part of Congoleum's shareholders. While we do not yet know the specific terms, it is clear that the interests of all parties will be best served by a plan that can be confirmed without delay and bring this very expensive process to an end. We hope to achieve that result during the second half of 2006." New Directors Finally, Congoleum reported that Adam H. Slutsky and Jeffrey H. Coats were elected to its Board of Directors effective Dec. 16, 2005. Mr. Slutsky will serve as a Class C director with a term expiring at Congoleum's 2008 annual meeting of shareholders, filling the vacancy created by the retirement of Cyril C. Baldwin, Jr. last month. Mr. Slutsky is CEO of Mimeo.com, an online document production company. Mr. Slutsky previously worked for AOL after it acquired Moviefone, an internet ticket company he founded. Mr. Coats will serve in a newly created Class A director position with a term expiring at Congoleum's 2006 annual meeting of shareholders. Mr. Coats is Chief Executive Officer, President and director of Mikronite Technologies Group Inc., an industrial technology company, and also serves as a director of Autobytel Inc. Prior to that, Mr. Coats was a founder and Managing Director of TH Lee Global Internet Managers, L.P. after serving in various positions, including Managing Director, at units of General Electric Capital Corporation. Both Mr. Slutsky and Mr. Coats will serve on the Audit Committee of Congoleum's board. Mr. Marcus commented, "We consider ourselves very fortunate to have Adam Slutsky and Jeff Coats joining the board at this time. They each bring a wealth of talent and experience to complement that of the existing directors, and I look forward to their contributions as we move the business ahead." Headquartered in Mercerville, New Jersey, Congoleum Corporation -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The Company filed for chapter 11 protection on December 31, 2003 (Bankr. N.J. Case No. 03-51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Domenic Pacitti, Esq., at Saul Ewing, LLP, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $187,126,000 in total assets and $205,940,000 in total debts. At. Sept. 30, 2005, Congoleum Corporation's balance sheet showed a $35,614,000 stockholders' deficit compared to a $20,989,000 deficit at Dec. 31, 2004. Congoleum is a 55% owned subsidiary of American Biltrite Inc. (AMEX:ABL). CONSOLIDATED CONTAINER: Closes Acquisition of Steel Valley ---------------------------------------------------------- Consolidated Container Company completed its acquisition of substantially all of the assets of Steel Valley Plastics of Warren, Ohio -- a manufacturer of 3 and 5-gallon polycarbonate water bottles. This transaction, announced as pending on December 5, 2005, closed on December 14. Terms of the acquisition were not disclosed. Concurrently, the Company disclosed its intention to wind down operations in its polycarbonate manufacturing facility in Leetsdale, Pennsylvania immediately, with the goal of closing the facility in mid-February. The Company will also be expanding the new Warren, Ohio plant, adding two more manufacturing lines, a significant amount of support equipment and increasing the size of the Warren facility. The expanded plant will employ 25-30 people. Jeff Greene, President and CEO of CCC, stated, "The acquisition and expansion of the Steel Valley Plastics plant will allow CCC to significantly upgrade the quality and service of its polycarbonate manufacturing facilities in the Northeast and Great Lakes regions. The consolidation of the Leetsdale and Warren platforms into a single entity will create a significantly better manufacturing operation that will enable us to service our customers more quickly and with a wider range of products than ever before in this region." The acquisition of Steel Valley Plastics marks the third acquisition this year. Previous acquisitions included STC Plastics of Chino, California, purchased in February, and Mayfair Plastics of Carson, California, purchased in June. Consolidated Container Company LLC, which was created in 1999, develops, manufactures and markets rigid plastic containers for many of the largest branded consumer products and beverage companies in the world. CCC has long-term customer relationships with many blue-chip companies including Dean Foods, DS Waters of America, The Kroger Company, Nestle Waters North America, National Dairy Holdings, The Procter & Gamble Company, Coca-Cola North America, Quaker Oats, Scotts and Colgate-Palmolive. CCC serves its customers with a wide range of manufacturing capabilities and services through a nationwide network of 61 strategically located manufacturing facilities and a research, development and engineering center located in Atlanta, Georgia. Additionally, the company has 4 international manufacturing facilities in Canada, Mexico and Puerto Rico. As of Sept. 30, 2005, the Company's equity deficit widened to $78.57 million from a $67.95 million deficit at Dec. 31, 2004. CURATIVE HEALTH: Restructuring Plan Cues S&P to Withdraw D Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services withdrew its ratings on Curative Health Services Inc., including the 'D' corporate credit and senior unsecured debt ratings. The ratings were previously lowered to 'D' on Dec. 5, 2005, reflecting the company's failure to make the required interest payment on its senior unsecured notes. The company announced its entrance into a plan support agreement, under which the senior unsecured noteholders agreed to a consensual financial restructuring under Chapter 11 of Title 11 of the U.S. Bankruptcy Code. DELTA AIR: Walks Away from Monarch Centre Lease ----------------------------------------------- As reported in the Troubled Company Reporter on Nov. 10, 2005, Delta Air Lines, Inc., and Monarch Centre Association, LLC, are parties to an ATL Lease Agreement, dated September 1, 1997. Delta Air Lines Inc. and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's permission to: -- reject the lease, effective October 31, 2005, under Section 365(a) of the Bankruptcy Code; and -- abandon the personal property associated with the Lease under Section 554(a). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, in New York, explains that the Lease governs the Debtors' use and occupancy of certain office space located at 3424 Peachtree Road NE, Suite 1745, in Atlanta, Georgia. Pursuant to the terms of a separation agreement between Delta and Ronald Allen, a former chief executive officer of Delta, the Debtors maintain the Office Space for the benefit and personal use of Mr. Allen. Delta does not otherwise use the Office Space and derives no benefit from the maintenance of the Office Space. As part of their ongoing restructuring efforts, the Debtors have determined that the Office Space and, therefore, the Lease, are not necessary to their continued business operations. The personal property that the Debtors seek to abandon is of inconsequential value and of no benefit to their estates, Mr. Huebner adds. * * * The Court authorizes Delta Air Lines, Inc., to reject its ATL Lease Agreement with Monarch Centre Association, LLC, effective Oct. 31, 2005. The Court also authorizes the Debtor to abandon the personal property associated with the Lease. 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. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: Macquarium Wants Delta Technology to Decide on Contract ------------------------------------------------------------------ Macquarium, Inc., asks the U.S. Bankruptcy Court for the Southern District of New York to compel Delta Technology, LLC, to assume or reject their Professional Services Agreement, dated September 29, 2003. Macquarium is an Atlanta-based professional services company that specializes in Web development, enterprise content management, and other computer software consulting services. Macquarium has provided services to Delta Technology through a series of agreements since February 2003. Pursuant to that PSA, Macquarium is presently performing under two Statements of Work: (A) Under the Knowledge Management SOW, entered into effective April 22, 2005, Macquarium is providing services to produce an enterprise content management system to permit Delta and its call center workers to access and use information contained in its Global Reference System more efficiently. The original estimate for the Knowledge Management project was $718,308, with a projected $478,000 remaining. Delta owed $178,878 on this project on September 14, 2005; and (B) Under the DeltaNet Portal SOW, entered into on May 26, 2005, Macquarium is providing services in development of the Delta Air Lines Employee Portal/Content Management System, which is intended to implement Delta Technology's worldwide employee communication program. The original project estimate for the DeltaNet Portal SOW was $99,000, with approximately $45,000 remaining based on current projections. Delta owed $19,980 on the DeltaNet project on September 14. Macquarium expects to complete the Knowledge Management Project by March 2006, and the DeltaNet Portal project by December 2005. During the course of their transactions, Delta has repeatedly asked Macquarium to provide services at reduced rates, invoking the parties' close relationship and Delta's professed need to cut costs in an effort to avoid bankruptcy, Lynn E. Judell, Esq., at Andrews Kurth LLP, in New York, tells the Court. Macquarium agreed to the changes on at least three occasions. Most recently, earlier this year, Macquarium agreed to reduced rate structures in connection with the Knowledge Management and DeltaNet projects that are presently under way. Delta Technology also requested extended credit terms to assist in its cash flow control efforts. Macquarium agreed and, prepetition, provided 45-day terms on monthly invoices, based on assurances that those terms would be strictly adhered to by Delta. Thus, Macquarium was essentially financing the costs of the projects for up to 75 days at a time. Delta Technology complied with these extended payment terms for a period of time, until the payment of $72,978 that was due on September 14, 2005, upon which it defaulted. An additional $125,881 is also owed for prepetition services provided, for a total estimated prepetition liability of $198,858. Since its bankruptcy filing, Delta Technology has demanded that Macquarium continue, not only to provide services, but also to extend financial accommodations to Delta through the extended 45-day to 75-day financing terms, even threatening litigation and sanctions should Macquarium cease to do so. Ms. Judell asserts that Delta should not be permitted to use the automatic stay to force Macquarium to continue to extend burdensome financial accommodations postpetition. She notes that Section 365(e)(2)(B) does not permit a debtor to force provision of postpetition financial accommodations under any circumstances. "Macquarium does not enjoy the luxury of such tactics itself," Ms. Judell remarks. "It must continue paying its employees and contractors. It has no assurances, beyond the apparent present availability of DIP financing, that it will ever be paid even for its postpetition services. This is in addition to the heavy burden already imposed on Macquarium's finances by Delta's $198,858 default pre-bankruptcy." Unlike, for instance, a long-term lease that may or may not turn out to be useful to a restructured Delta Technology, Ms. Judell notes that Macquarium's agreements, intended to cut costs and increase efficiencies, are part and parcel of Delta Technology's restructuring effort. Quite simply, regardless of what may be the case with respect to executory contracts generally, Delta Technology does not need any more time to make the decision required by Section 365(a) with respect to the Macquarium agreements. Ms. Judell asserts that Delta should be directed to move either to assume or reject those agreements within 10 days after the Court approves Macquarium's request. If for any reason Delta Technology persuades the Court that it cannot make up its mind yet with respect to assumption or rejection of the Macquarium agreements, Macquarium then in all equity should not be required to continue to finance the projects in the meantime, Ms. Judell continues. For any extension beyond ten days of the time for Delta's decision, Macquarium requests that it be authorized to cease performing services on the Projects until Delta either assumes or rejects the agreements. 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. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: Carrier Says Macquarium's Motion Has No Basis -------------------------------------------------------- Delta Air Lines, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to deny the request of Macquarium, Inc. to compel Delta Technology, LLC, to assume or reject their Professional Services Agreement, dated September 29, 2003. According to Benjamin S. Kaminetzky, Esq., at Davis Polk & Wardwell, in New York, Macquarium demanded that the Debtors decide on the PSA after its failed attempt to force the Debtors to concede to new contractual terms favorable to Macquarium. Mr. Kaminetzky avers that Macquarium is now attempting to circumvent two key debtor protections integral to the bankruptcy process -- the automatic stay of Section 362 of the Bankruptcy Code and the breathing room provided in Section 365 to analyze executory contracts -- to transform its unsecured, prepetition claim into immediate cash in full, bypassing every other creditor. Mr. Kaminetzky recounts that Delta Technology recently offered to modify and curtail payment terms if Macquarium would withdraw its request. Macquarium refused and, instead, demanded immediate payment for its prepetition services, or a commitment to expand its business with Delta Technology in 2006 to the tune of a guaranteed $3,000,000. Macquarium asserts it is owed $198,858 prepetition under the Statement of Work entered into under the PSA. Mr. Kaminetzky asserts that Macquarium's request -- which, if granted, would only allow the Debtors 10 days to evaluate the Agreement -- is without foundation. Mr. Kaminetzky assures the Court that the denial of the request would not unduly prejudice Macquarium. Delta Technology intends to make all postpetition payments to Macquarium as required, which is the same treatment that Debtors have provided to other similarly situated creditors. 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. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: Court Enters Order Restricting Equity Trading -------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York entered an order that imposes substantial restrictions on trading in equity interests in and debt claims against Delta Air Lines, Inc. and affiliates. 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. DELTAGEN INC: Files Second-to-Last Monthly Operating Report ----------------------------------------------------------- Deltagen, Inc. (Pink Sheets:DGEN) filed the monthly operating report relating to its October 2005 results with the United States Bankruptcy Court for the Northern District of California, San Francisco Division, on Dec. 14, 2005. Deltagen intends to file the November MOR with the Court on or about December 20, 2005. Because Deltagen's chapter 11 plan of reorganization took effect on Nov. 29, 2005, the November MOR will be the last MOR Deltagen will file with the Court. Deltagen will continue to file quarterly post-confirmation reports with the Court as and when required. Although Deltagen has no obligation to make public disclosure with respect to its results of operations or other matters, it currently intends to announce its 2005 financial results sometime during the first quarter of 2006. Deltagen also currently intends to announce quarterly results for 2006. Deltagen Inc. provides essential data on the in vivo mammalian functional role of newly discovered genes. The Company and its debtor-affiliates filed for chapter 11 protection on June 27, 2003 (Bankr. N.D. Calif. Case No. 03-31906). Alan Talkington, Esq., and Frederick D. Holden, Esq., at Orrick, Herrington and Sutcliffe, and Henry C. Kevane, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors. On Nov. 14, 2005, Judge Montali confirmed the Debtors' Joint Plan of Reorganization. DORAL FINANCIAL: Board Authorizes Redemption of $75MM Senior Notes ------------------------------------------------------------------ Doral Financial Corporation (NYSE: DRL) reported that, following the recent announcement of its proposed timetable for the completion of the restatement, its Board of Directors had authorized a number of initiatives designed to mitigate the uncertainty that could result in the event it were to receive a notice of default under its public indentures and thereby allow Doral to complete its restatement process in an orderly manner. Specifically, the Board has authorized the redemption in whole of Doral's 7.84% Senior Notes due October 10, 2006 in the aggregate principal amount of $75 million. Pursuant to the terms of the indenture governing the Notes, the Notes will be redeemed at a redemption price equal to the greater of: (i) 100% of their principal amount; and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption on a semiannual basis at the Treasury Yield plus 25 basis points, plus in each case accrued interest to the date of redemption. Doral expects that the redemption price will exceed 100% of the principal amount of the Notes. As required by the terms of the indenture, the Company will retain an independent investment bank to calculate the redemption price. Doral intends to issue a press release setting forth the date fixed for redemption as soon as practicable. Doral also announced that it will commence a consent solicitation to solicit the bondholders under the indenture dated as of May 14, 1999 to temporarily forbear their right to declare an event of default as a result of the Company's failure to comply with its reporting obligations under the 1999 Indenture. Doral will hire a consent solicitation agent for these purposes. The terms and conditions of the consent solicitation will be set forth in a Consent Solicitation Statement to be delivered by the consent solicitation agent. Doral expects to commence the consent solicitation as soon as practicable. Doral also reiterated that it expects to file its amended annual report on Form 10-K for the year ended Dec. 31, 2004 within approximately 60 days, and its quarterly reports on Form 10-Q for the first three quarters of 2005 as soon as practicable after the filing of its amended annual report on Form 10-K. Doral Financial Corporation -- http://www.doralfinancial.com/-- a financial holding company, is the largest residential mortgage lender in Puerto Rico, and the parent company of Doral Bank, a Puerto Rico based commercial bank, Doral Securities, a Puerto Rico based investment banking and institutional brokerage firm, Doral Insurance Agency, Inc. and Doral Bank FSB, a federal savings bank based in New York City. * * * As reported in the Troubled Company Reporter on Nov. 01, 2005, Moody's Investors Service downgraded to Ba3 from Ba1 the senior debt of Doral Financial Corporation. The ratings have been downgraded a number of times since Moody's initial review process began in April 2005. According to Moody's, a number of negative developments have occurred since the most recent downgrade, which was on Sept. 6, 2005. A partial list of ratings that have been downgraded: * Senior debt to Ba3 from Ba1 and * Subordinated debt to B1 from Ba2. DURATEK INC: Board Names Admiral Henry Executive Vice President --------------------------------------------------------------- Duratek, Inc.'s (NASDAQ:DRTK) Board of Directors has elected Joseph G. Henry, Rear Admiral, USN (Ret.) to the newly created position of Chief Operating Officer and Executive Vice President. Admiral Henry has served as Chief Operating Officer of Duratek's Federal Services organization since joining the Company in March of 2004. Prior to joining Duratek, he served in the U.S. Navy for 33 years, retiring as a Two-Star Admiral. During his naval service, he commanded two nuclear submarines and Submarine Group Ten, which included 10 Trident Submarines and the Nuclear Repair Facility in Kingsbay, Georgia. Admiral Henry's last assignment with the Navy was Director of Personnel Plans and Policy where he had cognizance over personnel issues and the Navy's $23 billion personnel budget. He is a graduate of the U.S. Naval Academy, holds an MBA from Brenau University, and completed the Senior Officer in National Security Program at Harvard's John F. Kennedy School of Government. Duratek President and CEO, Robert Prince said, "Creating the position of Chief Operating Officer is integral to our strategic development plan, enabling me to focus on strategic growth initiatives, backed by a strong COO leading day-to-day operations. Joe Henry has developed an excellent relationship with customers and employees since joining Duratek and will be a highly effective leader for our operations. I'm looking forward to working with Joe in his new role to continue to enhance Duratek's performance." Duratek Inc. provides radioactive materials disposition and nuclear facility operations for commercial and government customers. * * * As reported in the Troubled Company Reporter on Dec. 22, 2003, Standard & Poor's Rating Services assigned its 'BB-/Stable/--' corporate credit rating to Columbia, Maryland-based Duratek, Inc. At the same time, Standard and Poor's assigned its 'BB-' rating to Duratek's $145 million senior secured credit facilities. DYNEGY INC: Moody's Raises Sub. Debentures' Rating to B2 from Caa2 ------------------------------------------------------------------ Moody's Investors Service upgraded the long term debt ratings of Dynegy Inc. (Dynegy, NYSE: DYN) and its subsidiaries. The Dynegy Holdings Inc. (DHI) Corporate Family Rating was raised to B1 from B3. These rating upgrades reflect completion of Dynegy's restructuring over the past several years that has resulted in a more focused merchant power generation company with less debt. This action concludes the rating review announced on May 9 following the company's announcement that it intended to sell its midstream natural gas liquids business (DMS). In addition, DHI's Speculative Grade Liquidity Rating was affirmed at SGL-2, reflecting our expectation for good liquidity for the 12 months ending December 31, 2006. The outlook is stable. DHI's B1 corporate family rating is supported by the company's diversified electrical generation asset base that should benefit from: * an expected recovery in the power market; * management's demonstrated discipline through several years of restructuring the company that considers the needs of debt holders; and * its significant cash balances with no near term maturities. Dynegy's rating is restrained by: * the company being in a single line of business that is dependent on improving power markets; * its high absolute leverage; and * ongoing liquidity requirements related to hedging and customer risk management. These long term ratings were affected: Dynegy Holdings Inc.: -- Senior Secured Revolving Credit Facility to Ba3 from B2 -- Second Priority Senior Secured Global Notes to B1 from B3 -- Senior Unsecured to B2 from Caa2 -- Shelf (Senior Unsecured/Subordinated/Preferred) to (P)B2/(P)B3/(P)Caa1 from (P)Caa2/(P)Ca/(P)C Dynegy Inc.: -- Convertible Subordinated Debentures to B2 from Caa2 -- Shelf (Senior Unsecured/Subordinated/Preferred) to (P)Caa1/(P)Caa2/(P)Caa3 from (P)Ca/(P)C/(P)C NGC Corporation Capital Trust I: -- Trust Securities to B3 from Ca Roseton and Danskammer: -- Pass-Through Certificates to B2 from Caa2 Dynegy Capital Trust II: -- Shelf to (P)B3 from (P)Ca Dynegy Capital Trust III: -- Shelf to (P)Caa1 from (P)C Dynegy has effectively completed the restructuring it began in 2002 following Enron's bankruptcy and the subsequent collapse of the merchant energy sector. Dynegy: * sold non-core assets, * repaid debt, * improved liquidity, * restructured tolling agreements, and * settled litigation. Dynegy has emerged from this restructuring as a company with a single line of business focused on merchant electric power generation. Dynegy currently owns a 12,769 MW portfolio of generation assets that is diversified by type of generation dispatch, fuel source and geographic region. Dynegy's portfolio provides a mix of consistent cash flow from its baseload and intermediate plants, while its gas-fired peaking units provide upside exposure to an expected recovery in the power markets. Notwithstanding Dynegy's portfolio diversification, the company is totally exposed to an overbuilt power generation market and the company's long term viability and recovery depends on: * stronger power demand, * higher electricity prices, and * improved spark spreads. Dynegy expects its power generation business to generate EBITDA of $725 to $825 million in 2006. After factoring in corporate overhead and interest expense, Moody's expects the company's funds from operations to be less than half this level. Assuming capex of around $200 million, Dynegy should be free cash flow positive in 2006. While this would be a significant improvement, Dynegy needs to demonstrate it can deliver this level of operating and financial performance consistently. In addition, the company needs power prices to continue improving in 2006. Moody's B1 corporate family rating reflects our expectation for some improvement in this market. At the end of 2005, Moody's expects Dynegy will have about $4 billion of balance sheet debt, which includes the ChevronTexaco convertible preferred but does not include the $900 million non- recourse debt at Sithe Energies. Adding other liabilities using Moody's standard adjustments, principally the Roseton and Danskammer leases, raises adjusted debt to about $5 billion. This would imply that FFO/debt, assuming $350 million of run-rate FFO, is currently about 7%. Dynegy sold DMS on October 31 for $2.4 billion and used about $800 million of the proceeds to repay debt. Moody's estimates that at year-end 2005 Dynegy will have about $1.3 billion cash on hand. Dynegy expects to use this excess cash to repay debt but it reserves the right to use the funds to acquire assets. If Dynegy used $0.5-1 billion of its cash to repay debt, its FFO/debt would increase to the 8-9% range. Again, Moody's would emphasize that Dynegy has not committed to repay debt with its excess cash and may use it to invest in other assets. In addition, the company's cash flow projections assume improvement in power market fundamentals. However, the B1 corporate family rating is based on a reasonable expectation of slowly improving operating and financial performance and some degree of debt reduction. The B1 rating is also supported by Dynegy's capital structure with limited debt maturities over the next several years, which should provide additional time for power market recovery. Moody's analyzed the asset value of Dynegy's generation fleet, using a range of values for its three types of plants: * coal-fired baseload, * mixed fuel and natural gas intermediates, and * gas-fired peaking plants. Moody's excluded the Independence (Sithe Energies) plant as it is capitalized separately with secured non-recourse project finance debt. The remaining facilities are conservatively estimated to be worth between $5 billion and $7.5 billion, which, even at the low end, would cover all of Dynegy's debt. Additional debt repayment would provide even greater asset coverage of the remaining debt. Dynegy's B1 corporate family rating reflects: * the size and scale of its overall asset mix; * its operating performance; * leverage; and * cash flow coverage metrics compared to other merchant generating companies. Starting from the CFR, Moody's notched the individual debt instruments as: -- DHI senior secured bank debt notched up one level to Ba3 reflecting its security and control by the banks. -- DHI senior secured second priority notes rated the same as the B1 CFR reflecting priority ahead of unsecured debt and that they represent about 45% of balance sheet debt. -- DHI senior unsecured notched down one level to B2. These notes had previously been notched two levels to the CFR reflecting a lower likelihood of recovery, but the asset valuation indicates strong chance of par recovery so the revised rating is a more typical single notch difference from the CFR. -- DHI shelf (subordinated/preferred) notched two and three notches, respectively, reflecting the effective subordination of the senior unsecured notes and the lower likelihood of recovery. -- Dynegy, Inc. convertible subordinated debentures and Roseton and Danskammer pass through certificates rated B2, same as DHI senior unsecured. -- Dynegy, Inc. shelf is rated behind DHI reflecting structural subordination and a lower likelihood of recovery at this entity. -- NGC Corporation Capital Trust I trust securities are rated B3, the same as DHI subordinated debt. -- Dynegy Capital Trust II and Dynegy Capital Trust III rated the same as DHI's subordinated and preferred ratings, respectively. Dynegy's SGL-2 rating reflects Moody's expectation of good liquidity for the 12 months ending December 31, 2006. Dynegy has a very good ability to meet its funding needs with internal sources, including well over $1 billion in cash; however its current bank credit facilities do not provide incremental liquidity as they require cash collateral for borrowings and letters of credit. The facilities are also secured by substantially all of the company's assets, including the stock in its subsidiaries. Moody's expects that over the next four quarters, operating cash flow alone may not be able to fund all of Dynegy's cash needs, including capex. However, it is expected that the company's forecasted December 31, 2005 cash balances of $1.3 billion will more than cover any further cash needs. At September 30, 2005, Dynegy had $1.3 billion in credit facilities, consisting of: * a $700 million revolving credit; and * a $600 million term loan ($593 million outstanding that was repaid with DMS proceeds). On October 31, Dynegy amended and restated its credit facilities into $1 billion facilities, consisting of a $400 million letter of credit facility and a $600 million revolving credit facility. Both facilities are required to be collateralized with cash equal to 103% of outstanding letters of credit or borrowings. The revolving credit facility matures at the end of December and Dynegy expects to replace it with a new facility during the first quarter 2006; however, until it does Dynegy's liquidity will be limited to its cash balances. The stable outlook reflects Moody's expectation of Dynegy's continued operating performance improvement as the power markets recover, continued debt reduction and improving leverage, while maintaining at least $600 million liquidity. The stable outlook also recognizes the possibility that Dynegy will use some of the proceeds from the DMS sale to purchase assets; however Moody's expects that management will exercise discipline to achieve at least credit neutral metrics. Dynegy's rating could improve through a combination of: * improving operational performance; * consistent positive free cash flow; and * cash flow coverage (FFO/debt) that is expected to be above 10%. Dynegy's rating could drop as a result of: * deteriorating operating or financial performance relative to its plan; * a leveraging acquisition; or * liquidity materially below $500 million. Headquartered in Houston, Texas, Dynegy Inc. is the parent of Dynegy Holdings Inc. Dynegy's primary business is power generation. EASYLINK SERVICES: Earns $300K of Net Income in Third Quarter ------------------------------------------------------------- EasyLink Services Corporation (NASDAQ: EASYE) reported its financial results for the third quarter ended September 30, 2005. For the third quarter 2005 the Company reported revenues of $19.7 million and net income of $.3 million, in accordance with its previously issued guidance. Revenues for the third quarter of $19.7 million compare to $20.1 million in the second quarter of this year and $22.5 million in the third quarter of 2004. Net income for the third quarter was $.3 million, which compares to $.8 million in the second quarter of this year and $4.2 million in the third quarter of 2004. Gross margin declined to 59% in the third quarter of 2005 as compared to 65% in the second quarter of 2005 and 62% in the third quarter of 2004. The Company further reported that it had earnings before interest, taxes, depreciation and amortization during the third quarter of 2005 of $1.9 million. This compares to $2.6 million during the second quarter of 2005. EBITDA for the third quarter includes a gain of $1.9 million from the disposition of our domain name purchase option partially offset by losses totaling $.7 million from the sale of our fax businesses in Singapore and Malaysia and the sale of our shares of Infocrossing stock. In the third quarter of 2004 EBITDA amounted to $7.6 million, which included a $4.1 million gain from the sale of our Mailwatch service line. EBITDA is not a financial measure within generally accepted accounting principles. Cash and cash equivalents at the end of the third quarter were $8.4 million, as compared to $12.2 million at the end of 2004. The decline in cash includes $3.8 million in capital spending primarily associated with the Company's consolidation of its Bridgeton, Missouri, data center into its Piscataway, New Jersey, headquarters data center. Thomas Murawski, Chairman, President, and CEO of EasyLink commented: "We are pleased to be able to announce our third quarter results, and report that with the completion of our restatements and the filing of our third quarter 10Q the transition to our new public accounting firm is now complete. With this now in place we anticipate that the E following are trading symbol will be removed shortly. Our third quarter results were in line with expectations, which were tempered somewhat by the restructuring of our domestic sales organization, which started in May. Our Transaction Management Services unit recorded third quarter revenues of $4.5 million, including a $300,000 one- time sale of an electronic invoicing system for one of the world's largest travel services companies. Transaction Management Services revenue has grown 37% over the first 9 months of the year versus the same period last year. Transaction Management Services recurring revenue will be relatively flat in the fourth quarter primarily driven by delays in customer implementations but is expected to resume its growth trend in the first quarter of 2006 as a result of several major deals which are now being implemented or ramped to their revenue potential. For the second quarter of 2006 we expect Transaction Management revenues to be around $5.5 million." Nine Months Results Revenues for the nine months ended September 30, 2005 were $60.1 million as compared to $70.9 million for the same period in 2004. In 2005, the Company had a net loss of $1.6 million. The Company reported net income of $6.9 million for the nine months ended September 30, 2004. Earnings before interest, taxes, depreciation and amortization during the nine months ended September 30, 2005 amounted to $3.5 million. For the nine months ended September 30, 2004 EBITDA amounted to $15.2 million. Business Outlook EasyLink expects the following for the fourth quarter of 2005: -- total revenues of approximately $18 to $18.6 million and gross margin of approximately 59%. The Company anticipates its Transaction Delivery revenue to be in the range of $14 million to $14.4 million and its Transaction Management revenue to be in the range of $4 million to $4.2 million for the fourth quarter. -- net results are expected to be a net loss of $.01 to $.02 per share. EasyLink Services Corporation (NASDAQ: EASYE), -- http://www.EasyLink.com/-- headquartered in Piscataway, New Jersey, is a leading global provider of outsourced business process automation services that enable medium and large enterprises, including 60 of the Fortune 100, to improve productivity and competitiveness by transforming manual and paper-based business processes into efficient electronic business processes. EasyLink is integral to the movement of information, money, materials, products, and people in the global economy, dramatically improving the flow of data and documents for mission-critical business processes such as client communications via invoices, statements and confirmations, insurance claims, purchasing, shipping and payments. Driven by the discipline of Six Sigma Quality, EasyLink helps companies become more competitive by providing the most secure, efficient, reliable, and flexible means of conducting business electronically. * * * Going Concern Doubt KPMG LLP expressed substantial doubt about EasyLink'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 said it again received that going concern qualification notwithstanding the significant improvements in its financial condition and results of operations over the past three years. The auditors point to the company's working capital deficiency and an accumulated deficit. The company also received qualified opinions from its auditors in 2000, 2001, 2002 and 2003. ELCOM INT'L: Sale of New AIM-Traded Shares Raises $7.4 Million -------------------------------------------------------------- Elcom International, Inc. (OTC Bulletin Board: ELCO; AIM: ELC and ELCS) secured $7.4 million (4.2 million pounds sterling), through an issue of 277,685,000 new Elcom common shares at a price of 1.5 pence or $0.0266 per share. From the proceeds of the New Issue, the Company will repay loans, plus accrued interest, totaling $1.7 million (1.0 million pounds sterling), resulting in proceeds to the Company of $5.7 million (3.2 million pounds sterling). In addition, loans from a non-U.S. investor(s), including accrued interest, of $500,000 (300,000 million pounds sterling), will convert into additional shares, resulting in an additional 20,563,711 New Shares being issued at the New Issue price. The total value of the New Shares issued in the New Issue and the loan conversion by a non-U.S. investor represents $7.9 million (4.5 million pounds sterling) at the New Issue price. This issuance of the New Shares was made in reliance on the exemption from registration under Regulation S of the U.S. Securities Act of 1933, for offers and sales of securities outside the U.S. Under Regulation S, the holders of the New Shares are prohibited from reselling such shares in the U.S. to U.S. persons or entities or for the benefit or account of a U.S. person, for a one-year period. During this one-year period, holders of the New Shares may otherwise trade such shares in the United Kingdom through the facilities of the London Stock Exchange's AIM market and outside the U.S., pursuant to Regulation S and subject to securities laws applicable in the jurisdictions in which such shares are traded. The New Shares are listed under the symbol 'ELCS' (the 'S' denoting Regulation S shares) and trade on AIM but will not commingle with the Company's common stock traded on the OTCBB (and AIM under the symbol 'ELC'), until and unless the Company registers the shares under the U.S. Securities Act of 1933 or an exemption from registration is available. Bridge Loans Mr. Crowell, the Chairman and CEO of the Company, and Mr. Smith, the Vice- Chairman of the Company, have previously made bridge loans to the Company totaling $120,000 each, as disclosed in previous filings. Mr. Crowell's loans, together with the interest thereon at 8%, will be repaid from the proceeds of the New Issue. Mr. Smith's loan of $120,000, together with the interest thereon at 8%, will be converted into approximately 4.6 million common shares (at approximately $0.0276 per share), pursuant to the exemption from registration under Regulation D. This conversion will be at a price slightly higher than the New Issue price and will be consummated subsequent to the New Issue. Under the arrangements described above, Elcom has allotted 298,248,711 New Shares, representing approximately 83% of the 359,530,571 shares outstanding after the New Issue and conversion of non-U.S. investor loans. Application has been made for these shares to be admitted to AIM, which was expected to become effective by Dec. 21, 2005. The company has undertaken, in certain circumstances, to effect the registration of the New Shares under the U.S. Securities Act of 1933. Smith & Williamson Corporate Finance Limited is the company's nominated adviser and assisted the Company in this transaction. Robert J. Crowell, Elcom International, Inc.'s Chairman and CEO said, "This financing has been in process for many months and represents the foundation for Elcom's future growth, including the Zanzibar eMarketplace in the U.K., our second government contract, which, quite possibly could be the largest government eMarketplace in the world in short order. I would like to thank all of our channel partners and clients who have supported and assisted Elcom over the past year." Mr. Crowell continued, "Importantly, we expect this financing to allow us to expand our presence in the U.S. through various initiatives currently underway, two of which were contingent on receiving this funding. These U.S. initiatives are in the early stages, such as Oakland Unified School District's eMarketplace, but could be substantial in the future. I believe this financing will allow us to position Elcom as a leading provider of public sector integrated eProcurement and eMarketplace systems across the world, and will result in additional opportunities for the Company with other governments as well as in the private sector. We intend to move very quickly from a reactive mode to a proactive model." As a result of the New Issue, the anti-dilution provision contained in the company's 10% Convertible Debentures that were issued in 2003 has been triggered. Hence, following the New Issue, the conversion rate for the approximately $1.3 million principal amount of the Convertible Debentures, and accrued interest thereon, will be $0.046 per share versus the original $0.1246 per share conversion rate. Separate Functions The company also said that in accordance with accepted best practices in corporate governance, it will separate the functions of Chairman of the Board and Chief Executive Officer. Effective Dec. 21, 2005, Robert J. Crowell will continue as Chairman of the Board and John E. Halnen, current President and Chief Operating Officer, will assume the additional role of CEO. Robert J. Crowell, the Company's Chairman of the Board, stated, "With the Zanzibar eMarketplace contract in place and the Company's long-awaited financing completed, I am pleased to have my role in the Company shift, as it has over the last six months or so, to a more strategic planning one. Leading the planning for the future of the Company, in conjunction with the Board including John Halnen as a director and as CEO, is something I am very much looking forward to." John E. Halnen, the President and new CEO, stated, "With multiple new initiatives coming on line in the U.S. and U.K., I look forward to my enhanced responsibilities. With over ten years with Elcom and eight years with Bob Crowell previously at NEECO, Inc., I feel our ability to work together is about as strong as it can be. I believe Elcom is uniquely positioned to take advantage of emerging demand for public and private sector eMarketplaces and look forward to new opportunities in the future." Elcom International, Inc. (OTC Bulletin Board: ELCO and AIM: ELC and ELCS) -- http://www.elcominternational.com/-- operates elcom, inc, an international B2B Commerce Service Provider offering affordable solutions for buyers, sellers and commerce communities to automate many or all of their purchasing processes and conduct business online. PECOS, Elcom's remotely-hosted flagship solution, enables enterprises of all sizes to achieve the many benefits of B2B eCommerce without the burden of infrastructure investment and ongoing content and system management. At Sept. 30, 2005, Elcom International, Inc.'s balance sheet showed a $6,010,000 stockholders' deficit compared to a $2,840,000 deficit at Dec. 31, 2004. EPIXTAR CORP: Wants Open-Ended Deadline to Decide on Leases ----------------------------------------------------------- Epixtar Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Florida to extend the deadline within which they can assume, assume and assign or reject unexpired non-residential real property leases until the confirmation date of their plan of reorganization. The Debtors are parties to and guarantors of the leases. A list of their leases is available for free at: http://bankrupt.com/misc/epixtarleasesexhibit.pdf The Debtors tell the Court that they have focused their efforts to negotiating with Laurus Master Fund, Ltd., their primary lender, to obtain DIP financing and cash collateral use necessary to the viability of their business operations. The extension will provide the Debtors more time to analyze the financial and logistic information necessary to determining the leases they will need to assume in order to continue their operations post-confirmation. Epixtar Corp. -- http://www.epixtar.com/-- f/d/b/a Global Assets Holding Inc., headquartered in Miami, Florida, aggregates contact center capacity and robust telephony infrastructure to deliver comprehensive, turnkey services to the enterprise market. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 6, 2005 (Bank. S.D. Fla. Case No. 05-42040). Michael D. Seese, Esq., at Kluger, Peretz, Kaplan & Berlin, P.L., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $30,376,521 and total debts of $39,158,724. FRONTIER INSURANCE: Court Confirms Amended Reorganization Plan -------------------------------------------------------------- The Hon. Cecelia G. Morris of the U.S. Bankruptcy Court for the Southern District of New York confirmed the First Amended Plan of Reorganization filed by Frontier Insurance Group Inc. Judge Morris determined that the Plan meets the 13 standards for confirmation required under Section 1129(a) of the Bankruptcy Code. Terms of the Plan Under the Plan, the Debtor will emerge under the sole control of Insurance Management Group, LLC -- Frontier's largest single creditor and holder of secured and senior debts. In general, Insurance Management will receive 100% of the Reorganized Debtor's stock while the rest of the creditors will receive distributions from recoveries of the Debtor's Causes of Actions. A Creditor Trust will be established to liquidate trust assets and make distributions to creditors. Treatment of Claims At the option of the Creditor Trustee, secured claims will not be altered or in the alternative, the collateral will be disposed and the proceeds paid to the secured creditors. General unsecured creditors will share pro rata in any Net Litigation proceeds. Each holder of an allowed subordinated debt claim will receive these amounts: i) 5% of the Pro Rata share of any Net Litigation Proceeds between $1 and $5,000,000; ii) 10% of the Pro Rata share of any Net Litigation Proceeds between $5,000,001 and $10,000,000; iii) 15% of the Pro Rata share of any Net Litigation Proceeds between $10,000,001 and $20,000,000; iv) 20% of the Pro Rata share of any Net Litigation Proceeds between $20,000,001 and $40,000,000; and v) 50% of the Pro Rata share of any Net Litigation Proceeds in excess of $40,000,000, provided that the Reorganized Debtor will receive these amounts: i) 95% of the Pro Rata share of any Net Litigation Proceeds between $1 and $5,000,000; ii) 90% of the Pro Rata share of any Net Litigation Proceeds between $5,000,001 and $10,000,000; iii) 85% of the Pro Rata share of any Net Litigation Proceeds between $10,000,001 and $20,000,000; iv) 80% of the Pro Rata share of any Net Litigation Proceeds between $20,000,001 and $40,000,000; and v) 50% of the Pro Rata share of any Net Litigation Proceeds in excess of $40,000,000. Equity interests will be cancelled. Headquartered in Rock Hill, New York, Frontier Insurance Group, Inc., is an insurance holding company, which through its subsidiaries, is a national underwriter and creator of specialty insurance products serving the needs of insureds in niche markets. The Company filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-36877). Matthew H. Charity, Esq., at Baker & Hostetler, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $13,670,000 and total debts of $250,210,000. FRONTLINE CAPITAL: Gets Exclusive Period Extended Until Feb. 28 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended until February 28, 2006, the period where FrontLine Capital Group can file a plan of reorganization. The Court also extended until April 28, 2006, to solicit acceptances of that plan. BT Holdings, the Debtor's second largest unsecured creditor, with an aggregate claim of $27.8 million, agreed with the Debtor's exclusive period extension. Since no Committee of Unsecured Creditors is appointed in this case, BT Holdings has been negotiating with the Debtor with respect to formulating a consensual chapter 11 plan. Headquartered in New York City, FrontLine Capital Group is a holding company that manages its interests in a group of companies that provide a range of office related services. The Company filed for chapter 11 protection on June 12, 2002 (Bankr. S.D.N.Y. Case No. 02-12909). Mickee M. Hennessy, Esq., at Westerman Ball Ederer & Miller LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $264,374,000 in assets and $781,374,000 in debts. GARDEN STATE: Wants Until March 6 to Remove Civil Actions --------------------------------------------------------- Garden State MRI Corporation asks the U.S. Bankruptcy Court for the District of New Jersey to extend, until March 6, 2006, the period within which they may remove actions pursuant to Rule 9027 of the Federal Rules of Bankruptcy Procedures. The Debtor explained that prior to the Petition Date, it was involved in litigation against Dr. Golestaneh and his related entities in the Superior Court of New Jersey, Chancery Division for Cumberland County, Docket No. C-13-05. The Debtor tells the Court that it needs more time to determine whether to remove the state court litigation since it has been in constant negotiations with secured creditors and potential financing sources which could lead to a resolution of the litigation. The Debtor believe that the extension will afford them the opportunity to make fully informed decisions concerning removal of each action and will assure that their rights are not forfeited. The Debtor tell the Court that the rights of its adversaries will not be prejudiced by the extension since any party to an action that is removed may seek to have it remanded by the state court. Headquartered in Vineland, New Jersey, Garden State MRI Corporation, dba Eastlantic Diagnostic Institute -- http://www.eastlanticdiagnostic.com/-- operates an out-patient imaging and radiology facility. The Company filed for chapter 11 protection on June 9, 2005 (Bankr. D. N.J. Case No. 05-29214). Arthur Abramowitz, Esq. and Jerrold N. Poslusny, Jr., Esq., at Cozen O'Connor, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of less than $50,000 and estimated debts between $10 million to $50 million. GARY JOHNSON: Case Summary & 22 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Gary T. Johnson aka G. Thomas Johnson 165 Tyler Avenue Groton, Connecticut 06340 Bankruptcy Case No.: 05-37707 Chapter 11 Petition Date: December 20, 2005 Court: District of Connecticut (New Haven) Judge: Lorraine Murphy Weil Debtor's Counsel: Ira B. Charmoy, Esq. Charmoy & Charmoy P.O. Box 745 1700 Post Road Fairfield, Connecticut 06824 Tel: (203) 254-9393 Fax: (203) 254-9797 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 22 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ GreenPoint Mortgage Loan $719,975 Funding, Inc. P.O. Box 84013 Columbus, GA 31908-4013 Flagstar Bank Loan $568,820 Mail Stop S-115-3 5151 Corporate Drive Troy, MI 45098-2638 Fremont Investment & Loan Loan $542,500 Credit Department P.O. Box 34078 Fullerton, CA 92834-34078 Wilshire Credit Corporation Loan $532,157 Credit Department P.O. Box 8517 Portland, OR 97207-8517 Washington Mutual Bank FA Loan $267,965 P.O. Box 3139 Milwaukee, WI 53201-3139 American Express Merchandise $178,000 P.O. Box 1270 & services Newark, NJ 07101 GE Capital $150,000 PO Box 644207 Pittsburgh, PA 15264 Key Equipment Finance Inc. Office furniture & $105,000 P.O. Box 1865 computer equipment Albany, NY 12201 American Express Account #83-03 $101,448 Central Customer Assistance 048109515940 2730 Liberty Avenue Pittsburgh, PA 15222 Avaya Financial Services Merchandise $100,000 P.O. Box 463 services Livingston, NJ 07039 Dell Finacial Service Leases for computers $100,000 P.O. Box 80409 Austin, Texas 78708 John H. Garity, Jr. Personal guaranty $100,000 40 Elm Street Noank, CT 06340 Citi Cards Merchandise & $74,255 P.O. Box 183063 services Columbus, OH 43218-3063 Pacific Capital Bank Equipment Signs, flagpoles, $70,000 Leasing bricks, rugs, P.O. Box 60607 posters, work Santa Barbara, CA 93160 stations, signs, c/o First Niagara Leasing, Inc. security system servicer for Pacific Capital Bank Equipment Leasing P.O. Box 1865 Albany, NY 12201 Santa Barbara Bank & Trust Lease for equipment $70,000 Leasing Division from New Haven Credit Department Awning Co. P.O. Box 60607 Santa Barbara, CA 93160 Amex Key Equipment Lease $60,000 P.O. Box 203901 Houston, TX 77216 CDW Leasing, LLC Lease for Computer $25,000 7145 SW Varns Street equipment Portland, OR 97223-8018 Merchandise & $24,683 Mastercard services Merchandise & $10,190 Visa services Merchandise & $10,190 Bank One Visa services American Express Merchandise $21,800 P.O. Box 360002 & services Fort Lauderdale, FL 33336 US Bank Visa Merchandise & $15,000 Credit Department services P.O. Box 790408 St. Louis, MO 63179 GE Capital Colonial Pacific $12,928 P.O. Box 642752 Pittsburgh, PA 15264-2752 Bank of America Mastercard Merchandise $10,571 P.O. Box 1758 & services Newark, NJ 07101-1758 Citicorp Vendor Finance Lease for Xerox $10,000 P.O. Box 7247-0322 Phaser 2135N Philadelphia, PA 19170 Printer 3522940 GENESIS HEALTHCARE: Good Financial Profile Cues S&P to Up Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Genesis Healthcare Corporation. The long-term corporate credit rating was raised to 'BB-' from 'B+'. The rating outlook is stable. Genesis, a skilled nursing facility operator based in Kennett Square, Pennsylvania, had about $410 million of debt outstanding as of Sept. 30, 2005. "The upgrade is attributable to Genesis' improved financial profile and our increased confidence in the company's commitment to a financial policy consistent with the new rating," said Standard & Poor's credit analyst David Peknay. "This incorporates the potential impact of the impending reduction in Medicare reimbursement in January 2006." The speculative-grade ratings on Genesis HealthCare reflect the risks that the company faces as a sizable participant in an industry that is subject to potentially sharp cuts. This is somewhat offset by the geographical dispersion of the company's facilities -- more than 200 nursing homes and assisted-living centers located in 12 Eastern states. Since its December 2003 separation from institutional pharmacy company NeighborCare Inc., Genesis HealthCare has made several changes to its operation, including selective portfolio changes, expansions of key clinical programs, increasing reimbursement levels by growing patient acuity, and investing heavily in operating systems and facility capital improvements to increase efficiency. Although a large percentage of the company's total beds are located in only four states, Genesis derives operating benefits from these facility concentrations. Moreover, occupancy and Medicaid trends in those states have been favorable; Genesis' overall occupancy rate of 90% has remained strong. The company's improved operating performance and credit protection measures reflect the success of its initiatives. From December 2003 to September 2005, Genesis' total debt fell to $410 million from $462 million, and lease-adjusted debt to EBITDA fell to 3.2x from 5.2x. GEORGIA-PACIFIC: Fitch Lowers Senior Unsecured Bond Ratings to B+ ----------------------------------------------------------------- Fitch Ratings has downgraded Georgia-Pacific Corporation's senior unsecured bond ratings and the company's issuer default rating to 'B+'. The Outlook is Stable, and the company's ratings have been removed from Watch Negative. Koch Industries, Inc.'s acquisition of GP will place substantial acquisition leverage on the company's operations. GP and Koch Forest Products, Inc. has or will increase accounts receivable sold to an aggregate $750 million, enter into term loans totaling some $9.5 billion and a $1.5 billion revolver. These facilities along with equity from Koch will ultimately finance $12.8 billion in acquired stock, $2.4 billion in repurchased bonds, and repay revolver outstandings, fees, and merger expenses. Leverage will increase to around 5.3 times fiscal 2005's EBITDA from 3.0x trailing 12 months EBITDA at the end of the third quarter. Fitch expects that GP will weather the added debt load well next year and will have the capacity to reduce debt significantly. Near-term fundamentals are currently strong in tissue and containerboard, where Fitch believes GP is the lowest cost producer. Even freesheet and paperboard are set to start the year off on a better footing. However, prices for lumber, plywood, oriented strand board, and gypsum board could be susceptible to softening housing and reconstruction markets and an increased supply of lumber from Canada. These latter markets have been accounting for just over 48% of operating profits recently but are expected to turn in a softer performance in 2006 and later years. Historical returns in building products are volatile and with so much of its earnings power levered to wood and gypsum products, GP's debt load is substantially at greater risk than it was back in 2000 when the company was public and equity was always an option. Furthermore, GP's ratings reflect an increased measure of risk that does not contemplate asset or business sales as they did after the acquisition of Fort James. The motivation may be there, but express intentions are not. GP produces a wide variety of products: lumber, plywood, OSB, wallboard, tissue products, corrugated packaging, and uncoated freesheet. The company is number one, two, or three in most of these markets. GLOBAL EXECUTION: Fitch Rates $22.5 Million Class E Notes at BB --------------------------------------------------------------- Fitch Ratings has issued a new issue report on Global Execution Auto Receivables Securitization 2005-A. The asset-backed notes were issued on Nov. 30, 2005 and were rated: -- Interest-only class A fixed-payment notes 'F1+'; -- $150,000,000 floating-rate class A-P notes 'AAA'; -- $849,000,000 4.830% class A-1 notes 'AAA'; -- $970,500,000 4.840% class A-2 notes 'AAA'; -- $798,000,000 4.880% class A-3 notes 'AAA'; -- $90,000,000 floating-rate class B notes 'AA'; -- $52,500,000 floating-rate class C notes 'A'; -- $33,752,850 floating-rate class D-1 preferred shares 'BBB'; -- EUR28,660,000 floating rate class D-2 preferred shares 'BBB'; -- $17,500,000 8.220% class E-1 notes 'BB'; -- $5,000,000 floating-rate class E-2 notes 'BB'. The securities are backed by a portfolio of retail installment sale contracts secured by new and used automobiles, light-duty trucks, and vans indirectly originated and currently serviced by Bank of America, N.A. The ratings on the securities are based on the: * quality of the receivables, * initial credit enhancement for the class A notes of 10.25%, * availability of excess spread to fund the reserve account to its target level of 2.75% of the current collateral balance, and * the transaction's sound legal and cash flow structure. Class D-2 preferred shares are denominated in Euros, while remaining classes are denominated in U.S. dollars. Like most auto loans securitizations, risks to investors include poor asset performance, receivership/insolvency of the seller/servicer and manufacturers, and economic weakness. Fitch is of the opinion that the quality of both the receivables and the obligors, coupled with the available structural credit enhancement, enable the noteholders and equityholders to receive full payments of interest and principal in accordance with the terms of the transaction documents. Class A, B and C notes are issued by co-issuers GEARS, Ltd. 2005-A and GEARS LLC, 2005-A; class D preferred shares are issued by GEARS, Ltd. 2005-A; and class E notes are issued by GEARS 2005-A Auto Owner Trust. The class A, B and C notes and the class D preferred shares have an indirect interest in the pool of receivables contributed at closing and a direct interest in underlying class A, B, C and D notes which have a direct interest in the receivables pool. The class E notes have a direct interest in the receivables pool. Class A-IO has no principal amount or interest rate. On each distribution date, a fixed payment is applied against class A-IO, which will continue for the first six distribution dates until the class is amortized, and these payments will rank senior to interest payable on the class a notes. Interest on the securities is distributed monthly, commencing Dec. 20, 2005. Principal is allocated on a sequential basis, starting with pro rata allocations to class A-1 notes and A-P notes. When class A-1 is paid in full, the remaining class A, B, and C notes amortize sequentially. The class D preferred shares receive capital distributions after classes A, B and C notes are paid in full. Class E notes receive principal following payment in full of the underlying class A, B, C and D notes. The pool contains 49.41% new automobiles and light-duty trucks and has a weighted average annual percentage rate of 7.25%. The high credit quality of the borrowers is evidenced by the high weighted average Fair, Isaac & Co., Inc. score of the receivables and historical performance. With a WA original term of 65.81 months and a remaining term of 54.49 months, the transaction benefits from 11.02 months of seasoning. Consistent with a recent industry trend of longer original term loans, the majority of loans in GEARS contains terms exceeding 60 months. Out of the 59.80% of loans with terms between 61 and 84 months, GEARS contains 0.66% of loans between 73 and 84 months. BANA has exhibited continued improvement in its U.S.-managed portfolio. Both delinquencies and net losses are down when compared with years ending December 2000. As of Sept. 20, 2005, total delinquencies were 1.40%, and net losses were at 0.80%. GS AUTO: S&P Raises Low-B Ratings on Class D Certificates --------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on the class B, C, and D notes issued by GS Auto Loan Trust 2003-1 and GS Auto Loan Trust 2004-1. At the same time, the ratings are removed from CreditWatch positive, where they were placed Oct. 25, 2005. At the same time, the 'AAA' ratings on the class A notes from the same transactions are affirmed. The rating actions reflect the strong collateral performance of the underlying pools of prime auto loans, as well as low expected remaining losses. As of the November 2005 distribution date, cumulative net losses for both deals remained below Standard & Poor's initial expectations. Series 2003-1, with 31 months of performance, had a pool balance equal to 25.3% of its initial pool balance and cumulative net losses that were 1.39% of its initial pool balance . Series 2004-1, with 21 months of performance, had a pool balance equal to 40.1% of its initial pool balance and cumulative net losses that were 1.10% of its initial pool balance. The class B and C notes from both series benefit from a concurrent pay structure that maintains hard credit support, which consists of subordination and overcollateralization, at target levels. As of the November 2005 distribution date, for both series, hard credit support for the class B and C notes were at their target levels of 7.5% and 5.5% of current pool balance, respectively. The class D notes from both series rely on overcollateralization as the sole source of hard credit support. For both deals, overcollateralization has reached its floor of 1% of its initial pool balance and will continue to grow as a percent of the current pool balance. As of the November 2005 distribution date, overcollateralization represented 3.95% and 2.47% of current pool balance for series 2003-1 and 2004-1, respectively. Standard & Poor's expects the remaining credit support will be sufficient to support the notes at their raised and affirmed rating levels. Ratings Raised And Off Creditwatch Positive GS Auto Loan Trust 2003-1 Rating Class To From ----- -- ---- B AAA A/Watch Pos C AA+ BBB/Watch Pos D A+ BB/Watch Pos GS Auto Loan Trust 2004-1 Rating Class To From ----- -- ---- B AA+ A/Watch Pos C A+ BBB/Watch Pos D BBB- BB-/Watch Pos Ratings Affirmed GS Auto Loan Trust 2003-1 Class Rating ----- ------ A-4 AAA GS Auto Loan Trust 2004-1 Class Rating ----- ------ A-3 AAA A-4 AAA GT BRANDS: Wants to Walk Away from Unassigned IP Contracts ---------------------------------------------------------- GT Brands Holdings LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for permission to reject certain intellectual property license agreements. On July 8, 2005, the Debtors entered into an asset purchase agreement with Gaiam, Inc., GT Merchandising & Licensing LLC, GYM Time, LLC, BSBP Productions LLC, and GoodTimes Entertainment LLC. The parties effectuated the closing under the agreement on Sept. 13, 2005. In connection with the transaction, the Debtor assumed and assigned certain executory contracts to Gaiam under which the Debtors had been granted the right to use and exploit certain intellectual property rights owned by third parties. Under the contracts, the Debtors were permitted to: -- manufacture and distribute products that incorporated the IP rights; and -- sublicense the IP rights to third parties. Following the assignment of the contracts to Gaiam in connection with the sale transaction, the Debtors determined that the rejection of the unassigned contracts is in the Debtors' best interests. The Debtors believe certain terms of the unassigned contracts may hinder Gaiam's desires to market and sublicense the assigned rights. A full-text copy of the unassigned contracts is available at no charge at: http://ResearchArchives.com/t/s?3e8 Headquartered in New York, New York, GT Brands Holdings LLC, supplies home video titles to mass retailers. The Debtors also develop and market branded consumer, lifestyle and entertainment products. The Company and its affiliates filed for chapter 11 protection on July 11, 2005 (Bankr. S.D.N.Y. Case No. 05-15167). Brian W. Harvey, Esq., at Goodwin Procter LLP, represents the Debtors in their chapter 11 proceedings. When the Debtors filed for protection from their creditors, they listed total assets of $79 million and total debts of $212 million. HOLLINGER INT'L: June 30 Balance Sheet Upside-Down by $160 Million ------------------------------------------------------------------ Hollinger International Inc. delivered its quarterly report on Form 10-Q for the quarterly period ending June. 30, 2005, to the Securities and Exchange Commission on Dec. 16, 2005. Hollinger International incurred a net loss of $34,051,000 for the six months ended June 30, 2005, compared to a net loss of $45,288,000 for the six months ended June 30, 2004. At June 30, 2005, the Company had an accumulated deficit of $528,970,000 compared to a $213,820,000 accumulated deficit at Dec. 31, 2004. At June 30, 2005, the Company's balance sheet showed $998,228,000 of total assets and liabilities totaling $1,139,422,000. Material Weaknesses The Company reported in its 2004 Form 10-K report that as of Dec. 31, 2004, its management identified material weaknesses in its internal control over financial reporting relating to: 1) an ineffective control environment that did not sufficiently promote effective internal control over financial reporting, 2) ineffectively designed information technology general controls over program development, program changes, computer operations, and access to programs and data, 3) the lack of a formal strategic risk assessment process, 4) ineffective controls over the preparation of interim and year-end financial statements and reconciliation of key accounts, and 5) ineffective policies and procedures relating to the preparation of current and deferred income tax provisions and related balance sheet accounts. In 2005, the Company has taken actions to remediate those material weaknesses and it is continuing to assess additional controls that may be required to remediate those weaknesses. The Company's management, under the supervision and with the participation of the CEO and CFO, has evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures as of June 30, 2005, pursuant to Exchange Act Rule 13a-15(e) and 15d-15(e). As of June 30, 2005, the Company had not completed implementation and testing of the changes in controls and procedures that it believes are necessary to conclude that the material weaknesses have been remediated and therefore, the Company's management has concluded that it cannot assert that the control deficiencies relating to the reported material weaknesses have been effectively remediated. As a result, the Company's CEO and CFO have concluded that the Company's disclosure controls and procedures were ineffective as of June 30, 2005. Hollinger International Inc. is a newspaper publisher whose assets include The Chicago Sun-Times and a large number of community newspapers in the Chicago area as well as in Canada. Hollinger maintains a Web site at http://www.hollingerinternational.com/ At June 30, 2005, Hollinger's balance sheet showed a stockholders' equity deficit of $159,863,000 compared to $152,186,000 of positive equity at Dec. 31, 2004. IAP WORLDWIDE: Moody's Lowers Second-Lien Loan Ratings to B3 ------------------------------------------------------------ Moody's adjusted the ratings assigned on December 6, 2005 to IAP Worldwide Services, Inc. in response to changes in its proposed capital structure. IAP has announced an incremental increase of approximately $65 million to the proposed first lien term loan B. Despite a proposed decrease in total debt with an approximately $105 million permanent reduction in the proposed second lien term loan and a reduction in the proposed dividend to $146 million from $186 million, the B2 corporate family rating is unchanged (refer to the Moody's press release dated December 6, 2005 for details of the original proposal and ratings rationale). Moody's took these rating actions: * $75 million (originally $100 million) proposed first lien revolver, maturing 2010, lowered to B2 from B1 * $415 million (originally $350 million) proposed first lien term loan, due 2012, lowered to B2 from B1 * $120 million (originally $225 million) proposed second lien term loan, due 2013, raised to B3 from Caa1 * Corporate Family Rating, affirmed B2 The ratings outlook is stable. The downgrade of the ratings on the first lien revolver and term loan to B2 from B1 reflects the incremental increase in first lien facilities that would now dominate the debt structure, and therefore preclude notching above the B2 corporate family rating. The reduction of first loss protection with the decrease in the proposed amount of second lien debt also is reflected in the adjustment of the rating . However, the first lien rating continues to reflect an expectation of full recovery in a distressed scenario. The upward adjustment of the rating on the second lien term loan to B3 from Caa1 reflects improved recovery prospects given the reduced amount of proposed second lien debt. However, the B3 rating is highly sensitive to any further increase in first lien debt. Extended drawings on the first lien revolver or deterioration in enterprise value due to declines in revenue or profitability, changes in US federal government contracting practices, loss of a major contract, further increases in financial leverage, or greater dividend payments would likely trigger a downgrade of the instrument rating. Proceeds of the credit facilities are to be used to: * repay $378 million of debt outstanding under the existing secured credit facilities; * fund a dividend to shareholders of $146 million (down from $186 million); * pay fees and expenses of $9 million; and * fund a premium of $2 million to replace the existing second lien loan. IAP Worldwide Services, Inc., headquartered in Cape Canaveral, Florida, is a leading provider of: * facilities management, * contingency support, and * technical services to U.S. military and government agencies. IAP is owned by: * Cerberus Capital Management LP (74%), * the original founders of IAP Worldwide (25%), and * others (1%). Cerberus Capital Management acquired its ownership interest in IAP in May 2004. IAP's annual pro forma revenue for the twelve months ended September 30, 2005 amounted to over $1 billion. J.L. FRENCH: Moody's Lowers 2nd-Lien Term Loan's Rating to Caa3 --------------------------------------------------------------- Moody's Investors Service lowered the ratings of for J.L. French Automotive Castings, Inc. -- Corporate Family to Caa1 from B3, first-lien senior secured facility to Caa1 from B3, and second- lien term loan to Caa3 from Caa1. The downgrade incorporates: * J.L. French's high leverage; * deterioration in its debt coverage ratios; and * concern regarding the adequacy of JL French's free cash flow generation and ability to meet ongoing obligations. The company's results have been adversely affected by lower North American production volumes at its two principal customers, Ford and General Motors. The outlook is negative. Ratings downgraded: * Guaranteed first-lien senior secured credit facilities, to Caa1 from B3 * Second-lien term loan due 2012, to Caa3 from Caa1 * Corporate Family Rating to Caa1 from B3 During 2005 J.L. French's revenues were adversely affected by weakness in the North American auto sector as well as its concentration with Big 3 OEM customers; Ford and GM represent a significant majority of the company's revenue. As a result of lower year-to-date production volumes, higher material costs and seasonal working capital usage, JL French's free cash flow has also been adversely affected. Given continued weak production volumes and structural challenges faced by Ford and General Motors, free cash flow is likely to remain under pressure. Using Moody's standard adjustments, the company's debt/EBITDA has exceeded 6.5x, and EBIT/ interest expense was less than 1 X. Given the weak operating metrics and cash flow trends, the company's ability to continue to meet its obligations will be challenged. The senior secured first lien debt continues to represent the majority of the firm's debt structure. As a result, its rating has been kept level with the Corporate Family rating. The second lien facility has been lowered two notches to reflect its effective subordination and lower recovery expectations in a loss given default scenario. Moody's also stated that J.L. French is a private company and does not provide financial information in the public domain. While the company has historically provided information for rating purposes, Moody's does not believe that such information will be available on an ongoing basis. Consequently, the rating agency will not be able to monitor the ratings going forward. Consistent with Moody's policies the ratings will be withdrawn. JL French, headquartered in Sheboygan, Wisconsin, is one of the world's largest independent designers and manufacturers of aluminum die cast components and assemblies for automotive original equipment manufacturers. Annual revenues currently approximate $525 million. K2 INC: Moody's Reviews $200 Million Sr. Unsec. Notes' Ba3 Rating ----------------------------------------------------------------- Moody's Investors Service downgraded the speculative grade liquidity rating of K2 Inc. to SGL-3 from SGL-2 and placed its long term debt ratings under review for possible downgrade. These rating actions reflect the company's weaker than expected cash flow and higher than expected borrowings as soft operating performance in its paintball business and new product investments have caused a significant increase in working capital needs. This rating was lowered: * Speculative grade liquidity rating, to SGL-3 from SGL-2 These ratings were placed under review for downgrade: * Corporate Family Rating, Ba3 * $200 million of 7.375% senior unsecured notes due 2014, Ba3 The downgrade of the speculative grade liquidity rating reflects Moody's concern that weak levels of free cash flow have translated into higher than anticipated borrowings under the company's revolving credit facility. Moody's had anticipated that borrowings under the revolving credit facility would decline below $70 million by December 2005; borrowings are now likely to be much greater. Weak free cash flow reflects the softer than expected performance of K2's paintball business and higher than expected investment in new products across its business lines. Improvements in free cash flow could be constrained by: * acquisition activity; * the continued weak performance of the paintball business; and * foreign currency translation. The SGL-3 rating is supported by Moody's expectation that K2 will maintain an adequate liquidity profile over the coming twelve- month period with modestly positive free cash flow in 2006. Moody's anticipates that the company's cash balances and $250 million committed revolving credit facility will be adequate to fund K2's seasonal losses and/or working capital borrowing needs, which could be significant. Moody's notes that K2 also has a short-term committed European credit line and supplemental uncommitted Asian credit lines. The review of K2's long term debt ratings will focus on: * management's plans to improve its control of working capital needs and the implications of these plans for free cash flow; * the company's potential acquisition activity; * the near-term prospects for the paintball business; * demand for winter products; and * the general performance of its other key businesses. Moody's will also examine whether the company is likely to be able to improve credit metrics to the levels specified in the June 17, 2004 press release (free cash flow to debt close to 10% and debt- to-EBITDA around 3.0 times) when the Ba3 corporate family rating was first assigned. As part of this review, Moody's will also review the notching of K2's senior unsecured notes (which are currently rated at the level of the corporate family rating) given that the company's increased usage of its senior secured revolving credit facility augments risks associated with contractual subordination. Even if the Ba3 corporate family rating is confirmed, Moody's may decide to rate the senior unsecured notes one-notch below the corporate family rating, depending on the prospects for more permanent reductions in borrowing levels. K2 Inc., with corporate headquarters in Carlsbad, California, is a leading manufacturer and distributor of sporting goods in: * team sports, * fishing, * marine/outdoor, * winter sports, * summer sports, * paintball, and * apparel. The company's extensive brand portfolio includes: * Rawlings, * Shakespeare, * Stearns, * K2, * Brass Eagle, and * Marmot. Pro forma sales for the twelve-month period ended September 2005 are approximately $1.3 billion. KAISER ALUMINUM: Makes More Modifications to Liquidating Plans -------------------------------------------------------------- To, among other things, address comments received from certain parties-in-interest regarding their proposed modifications to their Third Amended Joint Plans of Liquidation, Kaiser Alumina Australia Corporation, Kaiser Finance Corporation, Alpart Jamaica Inc. and Kaiser Jamaica Corporation have agreed to make additional modifications to the Plans and the Distribution Trust Agreement for each Plan. The Modifications to the Third Amended Joint Plan of Liquidation for Kaiser Alumina Australia Corporation and Kaiser Finance Corporation amend: (a) Section 1.1(38) -- definition of "Contractual Subordination Disputes"; (b) Section 2.4(c)(i)(B) -- regarding the classification and treatment of Senior Note Claims if the Plan is rejected by Subclass 3A or 3B; (c) Section 2.5(a) -- regarding the 7-3/4% SWD Revenue Bond Dispute and the settlement of that dispute; (d) Section 2.6(a) -- regarding Senior Note Indenture Trustee and Ad Hoc Group Counsel Fees and Expenses; (e) Section 9.4(e)(i) -- regarding the timing and calculation of amounts to be distributed on account of the settlement of the 7-3/4% SWD Revenue Bond Dispute; and (f) Section 11 -- regarding the Bankruptcy Court's retention of jurisdiction. A full-text copy of the Third Modification to the Third Amended Joint Plan of Liquidation for Alpart Jamaica Inc. and Kaiser Jamaica Corporation is available for free at: http://bankrupt.com/misc/kaiseraustralia_thirdplanmodification.pdf The Modifications to the Third Amended Joint Plan of Liquidation for Alpart Jamaica Inc. and Kaiser Jamaica Corporation amend: (a) Section 1.1(37) -- definition of "Contractual Subordination Disputes"; (b) Section 2.4(c)(i)(B) -- regarding the classification and treatment of Senior Note Claims if the Plan is rejected by Subclass 3A or Subclass 3B; (c) Section 2.5(a) -- regarding the 7-3/4% SWD Revenue Bond Dispute and the settlement of that dispute; (d) Section 2.6(a) -- regarding Senior Note Indenture Trustee and Ad Hoc Group Counsel Fees and Expenses; (e) Section 8.2(b) -- regarding the rights, powers and privileges of the Distribution Trustee; (f) Section 9.4(e)(i) -- regarding the timing and calculation of amounts to be distributed on account of the settlement of the 7-3/4% SWD Revenue Bond Dispute; and (g) Section 11 -- regarding the Bankruptcy Court's retention of jurisdiction. A full-text copy of the Third Modification to the Third Amended Joint Plan of Liquidation for Alpart Jamaica Inc. and Kaiser Jamaica Corporation is available for free at: http://bankrupt.com/misc/kaiserjamaica_thirdplanmodification.pdf The Debtors contend that the Third Modifications do not adversely change the treatment of any claim of any creditor against any of the Liquidating Debtors. Thus, the Liquidating Debtors ask the Court to deem the Third Modifications accepted by those creditors that voted to accept the applicable Plan. 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. 86; Bankruptcy Creditors' Service, Inc., 215/945-7000) KAISER ALUMINUM: Court Approves Settlement Pact with 8 Insurers --------------------------------------------------------------- Judge Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware approved Kaiser Aluminum and Chemical Corporation's settlements, in their entirety, with seven of the eight Settling Insurers: -- 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. As previously reported in the Troubled Company Reporter on December 1, 2005, 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. 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. 86; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART CORP: Nortons Want Stay Lifted to Let Lawsuit Proceed ----------------------------------------------------------- Nancy and Harry Norton ask the U.S. Bankruptcy Court for the Northern District of Illinois to lift the automatic stay to allow their lawsuit, currently pending in the Fifth Judicial Circuit, State of South Carolina, Richland County, to proceed. In 2000, the Nortons filed their complaint against Kmart Corporation, seeking to recover damages relating to a personal injury Ms. Norton incurred at a Kmart store in June 1999. Gina B. Krol, Esq., at Cohen & Krol, in Chicago, Illinois, informs Judge Sonderby that the Nortons have complied with the Bankruptcy Court's procedures for the liquidation and settlement of personal injury claims. However, Ms. Krol says that the claimants have been unable to reach a settlement with Kmart Corporation. In addition, Ms. Krol notes that the personal injury claims procedures do not provide automatic relief from the plan injunction under Section 1141 of the Bankruptcy Code. To the extent that the injunction remains applicable to their claims, the Nortons request that the Section 1141 injunction also be modified to allow their state court case to proceed. 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. 105; Bankruptcy Creditors' Service, Inc., 215/945-7000) LOEWS CINEPLEX: Launches Offer for 9% Senior Subordinated Notes --------------------------------------------------------------- Loews Cineplex Entertainment Corporation commenced a tender offer for all of its 9.0% Senior Subordinated Notes due 2014. The aggregate principal amount of the Notes outstanding is $315,000,000. In conjunction with the tender offer, consents are being solicited from noteholders to effect certain proposed amendments to the indenture governing the Notes. Upon the terms and subject to the conditions set forth in the Offer to Purchase and Consent Solicitation Statement dated Dec. 21, 2005, Loews is offering to purchase all of the outstanding Notes at a price of $1,012.50 per $1,000 principal amount of Notes, which consists of a consent payment of $12.50 per $1,000 principal amount of Notes and tender offer consideration of $1,000 per $1,000 principal amount of Notes. In addition, holders who validly tender and do not validly withdraw their Notes in the tender offer will receive accrued and unpaid interest from the last interest payment date up to, but not including, the date of payment for the Notes, if the Notes are accepted for purchase pursuant to the tender offer. The tender offer is scheduled to expire at 5:00 p.m., New York City time, on Jan. 25, 2006, unless extended. Any holder validly tendering Notes after the Consent Date will, if such Notes are accepted for purchase pursuant to the tender offer, receive the Tender Offer Consideration, plus accrued but unpaid interest to, but not including, the date of payment for the Notes so tendered. No Consent Payment will be made in respect of Notes tendered after 5:00 p.m., New York City time, on Jan. 6, 2006. The proposed amendments to the indenture governing the Notes would, among other things, eliminate substantially all of the restrictive covenants, certain events of default and certain other provisions contained in the indenture. The tender offer is subject to the satisfaction or waiver of certain conditions, including, among other things, the receipt of consents of the holders of at least a majority of the aggregate principal amount of the Notes outstanding, the satisfaction or waiver of all conditions precedent to the consummation of the merger of LCE Holdings, Inc., the parent company of Loews, and Marquee Holdings Inc., the parent company of AMC Entertainment Inc., and the merger of Loews and AMCE, with AMCE continuing as the surviving corporation after the merger, and the receipt of funds by the Combined Company sufficient to pay the aggregate Total Consideration from the anticipated proceeds of a contemplated placement of new senior subordinated debt. Requests for Tender Offer Documents may be directed to D.F. King & Co., Inc., as information agent for the tender offer and consent solicitation, at 48 Wall Street, New York, New York 10005. The information agent may be contacted toll-free at (888) 628-1041 or call collect at (212) 269-5550. The Dealer Managers and Solicitation Agents for the tender offer are Credit Suisse First Boston LLC, Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. Questions regarding the tender offer and consent solicitation may be directed to any Dealer Manager and Solicitation Agent: * Credit Suisse First Boston LLC, Liability Management Group, at (800) 820-1653 (US toll-free) and (212) 325-7596 (collect); * Citigroup Global Markets Inc., Liability Management Group, at (800) 558-3745 (US toll-free) and (212) 723-6106 (collect); and * J.P. Morgan Securities Inc., Liability Management Group, at (866) 834-4666 (US toll-free) and (212) 834-3424 (collect). Loews Cineplex Entertainment Corporation -- http://www.enjoytheshow.com/-- is one of the world's leading film exhibition companies that owns, operates or, through its subsidiaries and joint ventures, has an interest in 198 theatres with 2,235 screens in the United States, Mexico, South Korea and Spain. Loews Cineplex Entertainment Corporation, headquartered in New York, New York. * * * As reported in the Troubled Company Reporter on Sept. 8, 2005, Standard & Poor's Ratings Services, in light of a steep drop in movie theater attendance in the current year, revised its outlook on Loews Cineplex Entertainment Corp. (B/Negative/--) to negative from positive. "Attendance drops are especially damaging to movie exhibitors because they curtail not only ticket collection revenue but also high-margin concession sales," said Standard & Poor's credit analyst Steve Wilkinson. Concession sales can generate 40%-50% of the gross profit collected from moviegoers despite representing only 25%-30% of sales. LOEWS CINEPLEX: Sells Five Theatres As Condition of AMC Merger -------------------------------------------------------------- As a result of the merger review process, the United States Department of Justice and the attorneys general of California, the District of Columbia, Illinois, Massachusetts, New York, and Washington reached agreements with AMC Entertainment Inc. and Loews Cineplex Entertainment Corporation, pursuant to which the companies will sell 10 theatres. Five theatres from each circuit have been selected by the aforementioned government entities for sale as a condition to enable the companies to proceed with their transaction. The theatres are: * AMC Fenway 13 (Boston); * AMC City North 14 (Chicago); * AMC Union Station 9 (D.C.); * AMC Kabuki 8 (San Francisco); * AMC Van Ness 14 (San Francisco); * Loews Webster Place 11 (Chicago); * Loews E-Walk 13 (New York City); * Loews (Cineplex Odeon) Meridian 16 (Seattle); * Loews Keystone 16 (Dallas); and * Loews (Cineplex Odeon) Wisconsin Ave. 6 (D.C.). It is anticipated that the sales process could take at least four months. Loews-AMC Merger On June 21, 2005, AMC Entertainment Inc. and Loews Cineplex Entertainment Corporation reported that they entered into a definitive merger agreement that would result in the combination of their businesses and the merger of AMC Entertainment Inc. and Loews Cineplex Entertainment Corporation. The merger agreement also provides for the merger of their respective holding companies, Marquee Holdings Inc. and LCE Holdings, Inc., with Marquee Holdings Inc., which is controlled by affiliates of J.P. Morgan Partners, LLC and Apollo Management, L.P., continuing as the holding company for the merged businesses. The current stockholders of LCE Holdings, Inc., including affiliates of Bain Capital Partners, The Carlyle Group and Spectrum Equity Investors, would hold approximately 40% of the outstanding capital stock of the continuing holding company. The merged company, to be called AMC Entertainment Inc., will be headquartered in Kansas City, Missouri, and will own, manage or have interests in approximately 450 theatres with about 5,900 screens in 30 states and 13 countries. Peter C. Brown, AMC Chairman of the Board, Chief Executive Officer and President, will remain in this role in the merged company. When combined, the company will have approximately 24,000 associates serving more than 280 million guests annually. An integration committee will be formed in which Travis E. Reid, President and Chief Executive Officer of Loews Cineplex Entertainment Corporation, and Brown will serve as co-chairs. The integration committee also will include representatives of the two sponsor groups. Refinancing Plans The companies plan to refinance their senior credit facilities in connection with the closing of the merger. The merger will not constitute a change of control for purposes of the outstanding senior notes of Marquee Holdings Inc. or the outstanding senior notes or senior subordinated notes of AMC Entertainment Inc. While it has not yet been determined whether the merger will require a change of control repurchase offer under Loews Cineplex Entertainment Corporation's outstanding 9% Senior Subordinated Notes due 2014, the companies have secured commitments to refinance such notes to the extent that such an offer is required under the indenture governing such notes. Completion of the merger is subject to the satisfaction of customary closing conditions for transactions of this type, including antitrust approval and completion of financing. It is anticipated that the merger will close within six to nine months. About AMC Entertainment Inc. AMC Entertainment Inc. -- http://www.amctheatres.com/-- is a leader in the theatrical exhibition industry. Through its circuit of AMC theatres, the company operates approximately 226 theatres with 3,522 screens in the United States, Canada, France, Hong Kong, Portugal, Spain and the United Kingdom. The company, headquartered in Kansas City, Missouri. About Loews Cineplex Entertainment Corporation Loews Cineplex Entertainment Corporation -- http://www.enjoytheshow.com/-- is one of the world's leading film exhibition companies that owns, operates or, through its subsidiaries and joint ventures, has an interest in 198 theatres with 2,235 screens in the United States, Mexico, South Korea and Spain. Loews Cineplex Entertainment Corporation, headquartered in New York, New York. LUCENT TECH: Court Orders $24 Million Payment to Winstar Comms. --------------------------------------------------------------- The Hon. Joel B. Rosenthal, on Dec. 21, ordered Lucent Technologies to pay $244 million, plus statutory interest and other costs, to Christine Schubert, the chapter 7 trustee for Winstar Communications. Winstar brought a breach of contract and bankruptcy preference action against Lucent Technologies in April 2001. The trustee took over the prosecution of the lawsuit in 2002. The trial was completed in June 2005. Lucent said that the verdict would result in a charge to earnings of approximately $300 million for the company's first fiscal quarter of 2006, which ends Dec. 31, 2005. "We have made strong arguments supporting our view that this suit was without merit. We are examining the judge's ruling very carefully and will vigorously appeal the decision," said Lucent Technologies General Counsel Bill Carapezzi. About Winstar Communications Inc. Headquartered in New York, New York, Winstar Communications, Inc., provides broadband services to business customers. The Company and its debtor-affiliates filed for chapter 11 protection on April 18, 2001 (Bankr. D. Del. Case Nos. 01-01430 through 01-01462). The Debtors obtained the Court's approval converting their case to a chapter 7 liquidation proceeding in January 2002. Christine C. Shubert serves as the Debtors' chapter 7 trustee. When the Debtors filed for bankruptcy, they listed $4,975,437,068 in total assets and $4,994,467,530 in total debts. About Lucent Technologies Lucent Technologies -- http://www.lucent.com/-- designs and delivers the systems, services and software that drive next- generation communications networks. Backed by Bell Labs research and development, Lucent uses its strengths in mobility, optical, software, data and voice networking technologies, as well as services, to create new revenue-generating opportunities for its customers, while enabling them to quickly deploy and better manage their networks. Lucent's customer base includes communications service providers, governments and enterprises worldwide. * * * As reported in the Troubled Company Reporter on Oct. 28, 2005, Fitch Ratings has upgraded Lucent Technologies: -- Issuer default rating to 'BB-' from 'B'; -- Senior unsecured debt to 'BB-' from 'B'; -- Subordinated convertible debentures to 'B' from 'CCC+' -- Convertible trust preferred securities to 'B' from 'CCC+'. MARKEL CORP: S&P Assigns Low-B Ratings to Universal Shelf --------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'BBB-' senior debt, 'BB+' subordinated debt, and 'BB' preferred stock ratings to Markel Corp.'s (NYSE:MKL) recently filed universal shelf. The new shelf has an undesignated notional amount in accordance with the new SEC rules effective Dec. 1, 2005. At the same time, Standard & Poor's affirmed its 'BBB-' counterparty credit rating on Markel. The outlook remains stable. "The counterparty credit rating on Markel reflects several strengths including its very strong business position and operating performance, excluding a large hurricane loss in third-quarter 2005, in some of its operating segments and its geographic diversification," explained Standard & Poor's credit analyst Jason Jones. "Partially offsetting these strengths are the weak performance in Markel's international operations, especially in the discontinued operations, the company's somewhat high financial leverage, and recent earnings volatility from hurricane losses." Standard & Poor's expects Markel to have strong operating performance in 2005 when hurricane losses are excluded and weak operating performance overall due to exceptionally high hurricane losses. Excluding the substantial loss from hurricane Katrina, results in excess and surplus and specialty admitted segments should continue at about the same strong level as in 2004, and in 2006 the recent softening in the market is expected to put moderate downward pressure on earnings. London Market and Other segments are expected to perform better than they have in the recent past, on the expectation that adverse reserve development on prior years will decrease; nevertheless, the London Market and Other segments are not as strong as Markel's U.S. operations and the potential exists that more reserve additions will be needed. Financial leverage is expected to remain somewhat high at about its current level, and potential new leverage to finance acquisitions could offset reductions in leverage due to retained earnings. MAXTOR CORP: Moody's Reviews $60MM Sub. Debentures' Caa1 Rating --------------------------------------------------------------- Moody's Investors Service placed the ratings of Seagate Technology HDD Holdings on review for possible downgrade. The review is prompted by the company's announcement of its intention to acquire Maxtor Corporation in an all-stock transaction for approximately $1.9 billion. Concurrently, Moody's is also placing the ratings for Maxtor under review for a possible upgrade. The acquisition, which has been approved by both boards of directors, is expected to close by the end of June 2006 and is subject to customary approvals and consents. Moody's review of Seagate will assess the prospects for: 1) integration challenges in effectively combining their broad operations; 2) revenue attrition resulting from both companies' significant presence in common end markets; 3) margin contraction arising from differences in cost structures and the extent to which this can be mitigated through effective integration and the realization of expected cost synergies; and 4) management's capital structure plans with respect to Maxtor's approximate $581 million of balance sheet debt as well as its commitment to maintaining a very liquid and lowly leveraged balance sheet. Seagate's existing ratings reflect the company's dominant position in the disk drive industry and incorporate the sector's capital intensity, volatility, and the highly commoditized nature of the disk drive business that is characterized by short product life- cycles and maturation linked ASP declines. Recent performance by Seagate has been stable to improving, with gross margins increasing from just under 18% in early fiscal 2004 to over 25% in the September 2005 quarter and operating margins showing similar positive trends. As of September 2005, Seagate's cash balances (including short term investments) were $1.8 billion and debt totaled $740 million, $340 million of which was repaid in October. Moody's review of Maxtor's ratings for a possible upgrade will consider the stronger credit profile of Seagate and assess whether Seagate intends to legally guarantee Maxtor's debt. Maxtor's existing ratings reflect the same industry characteristics noted above as well as the company's relatively smaller size, very weak profitability and negative free cash flow (cash flow from operations less capital expenditures). The ratings also considered Maxtor's strong position in the consumer electronics segment and its moderately reduced manufacturing cost base through transitioning to low cost China facilities over the last year. For the latest twelve months ending October 1, 2005 Maxtor reported net sales of $3.9 billion and a gross margin of 10.8% compared to 8.1% for fiscal 2004, however the company continues to post losses, with a $9 million operating loss in the most recent quarter. Seagate is currently seeking to replace its existing $150 million senior secured credit facility which could give Seagate the flexibility to more broadly execute a recently approved $400 million stock buy-back program and pay common dividends, the latter of which is currently limited by the existing credit facility to $150 million annually. Management expects that the acquisition will expand the combined company's product portfolio and breadth of technology and result in annual cost savings of approximately $300 million one year after the closing of the transaction, which will require restructuring costs of about $500 million. Ratings under review for possible downgrade; 1) Ba1 rating to Seagate's $150 million guaranteed senior secured revolving credit facility, due 2007 2) Ba2 rating to Seagate's $400 million senior notes 8%, due 2009 3) Ba1 Corporate Family Rating to Seagate 4) SGL -- I liquidity rating to Seagate These ratings have been placed on review for possible upgrade: 1) B2 rating to Maxtor's remaining $135 million of the $230 million 6.8% convertible senior notes, due 2010 2) Caa1 rating to Maxtor Corporation's $60 million 5-3/4% convertible subordinated debentures, due 2012 3) B2 Corporate Family Rating to Maxtor Maxtor Corporation, headquartered in Milpitas, California, is a leading provider of hard disk drives and related storage solutions for: * desktop computers, * high-performance Intel-based servers, * near-line storage systems, and * consumer electronics. Seagate, with primary offices in Scotts Valley, California, is a worldwide leader in the design, manufacture and marketing of rigid disc drive products used as the primary medium for storing electronic information in systems ranging from personal computers and consumer electronics to data centers delivering information over corporate networks and the Internet MCI INC: Moody's Upgrades Long-Term Debt Ratings to Ba3 from B2 --------------------------------------------------------------- Moody's Investors Service downgraded the long- and short-term debt ratings of Verizon Communications Inc. to A3 and Prime-2, from A2 and Prime-1, respectively, reflecting the likely pressure on cash flows arising from the company's plan to upgrade its local wireline network with fiber-to-the-premises (FTTP or FiOS) over the next several years. Moody's has also lowered the ratings of the individual wireline operating companies to reflect expected pressure on their operating and financial profiles from competition, combined with the costs of the network upgrade. Moody's upgraded MCI's long- term debt ratings to Ba3 from B2 based on expected synergy benefits resulting from its acquisition by Verizon, as well as Verizon's likely willingness to financially support MCI, should it be required. The A3 long-term debt rating of Verizon Wireless (VZW) was placed on review for possible upgrade reflecting Moody's expectation that: * continued strong revenue growth, * an excellent cost structure, and * very low churn will lead to steadily improving earnings and cash flows, which, in combination with a very significant change in its earnings distribution policy, will allow Verizon Wireless to delever rapidly. These actions resolve the reviews, initiated on February 14, 2005 when Verizon announced its plan to acquire MCI for about $8.9 billion in cash, stock and assumed debt. The complete list of rating actions follows at the end of the press release. The outlooks for the ratings of VZ and its wireline operating companies are stable. The downgrade of Verizon's rating reflects the agency's view that Verizon's strategy of deploying fiber-to-the-premises in order to meet increased competition in providing wireline services to the residential market , while technologically robust, will require significant upfront cost, weakening VZ's financial metrics over the intermediate term in exchange for highly uncertain returns. Moody's expects this deployment to significantly reduce dividends from the wireline companies to the parent company for debt service, which, when coupled with the competitive pressures on wireline revenues, motivated the rating downgrade. Moody's concerns center around the high cost and relatively slow pace of VZ's FiOS deployment. Moody's projects it will about 10 years to pass approximately 30 million households, which increases the risk of losing residential telephony share to cable companies, who Moody's expects will be able to offer a facilities-based bundle at cost competitive prices to almost all of Verizon's customers within the next three years. In addition, the expense of the full fiber buildout will pressure near-term credit metrics. Moody's estimates that Verizon's cost to pass a home with fiber will average about $750, three times what the alternative fiber- to-the-node strategy costs. Overall business risk is increasing rapidly with accelerating local access line losses and a shift in its asset base and investment needs toward highly competitive business segments like: * video, * broadband, * corporate data, and * wireless. Furthermore, Moody's views the threat to VZ's core residential wireline cash flow stream from cable competition as significant. Moody's recognizes the company's decisions to: * upgrade its networks; * enhance and diversify its consumer revenue streams (through long distance, broadband, wireless and video service offerings); and * accelerate the development of its enterprise service business as strategically appropriate, in light of this threat. Over time, Moody's believes that the FiOS build-out may be the most robust technological means to compete against cable competition. It has the potential to generate significant new revenues from video and higher speed data offerings and it may ultimately lower ongoing network operating costs by about 50%. VZ's execution risk is still substantial, however, with the fixed income investor shouldering most of the downside risk. Moody's believes the potential acquisition of MCI will not materially weaken Verizon's consolidated credit metrics because of MCI's relatively small size and the expectation that most of the anticipated revenue and cost synergies will be achieved close to schedule. The acquisition jumpstarts Verizon's efforts to compete in the large, growing and profitable enterprise space. It also diversifies Verizon's revenue stream, providing it with a solid foundation in the enterprise market from which to grow its enterprise business. Verizon's rating is supported by Moody's assessment that continued strong growth of earnings and cash flows from Verizon Wireless will offset lower dividend payments from the wireline subsidiaries. Moody's believes that VZ will receive significant cash from VZW over the next few years as VZW utilizes the bulk of its growing free cash flow to repay about $15B of intercompany borrowings from Verizon. Moody's expects consolidated debt levels to rise about $3.0 billion in 2006, as VZ absorbs MCI and increases network spending on its FiOS deployment. In 2007, Moody's believes that VZ will generate about $25 billion of cash from operations (after Moody's standard adjustments) and about $2.0 billion of free cash flow, and expects VZ to use this cash flow to reduce about $40 billion of debt (estimated pre-MCI acquisition for FYE2005 to include VZ plus 55% of Verizon Wireless' external debt). Moody's expects 2007 (proportionate for 55% of Verizon Wireless) debt/EBITDA to above 1.5X, retained cash flow to debt to be below 30%, and (EBITDA-capital expenditures)/interest to be about 4.0X. VZ pays a significant portion of its cash flow in dividends, which reduces cash flow available for debt repayment. Moody's considers the potential proceeds from any sale or spin-off of the directories business a potentially significant source of financial flexibility if proceeds are applied to strategic investments or debt reduction. However, the loss of this very high margin business and its relatively significant and predictable earnings and cash flows would have negative impact on Verizon's rating should the company return the bulk of the proceeds to shareholders. Moody's review for possible upgrade of Verizon Wireless's ratings reflects the agency's expectation for: * continued strong revenue growth; * an excellent cost structure; and * very low churn should lead to steadily improving earnings and cash flows; which, in combination with a very significant change in its earnings distribution policy, should allow Verizon Wireless to delever rapidly. The review of VZW will focus on: 1) the company's ability to sustain earnings and cash flow growth rates in the face of fortified competitors; 2) the timing and magnitude of the expected strengthening of VZW's balance sheet given growing capex spending needs and the possibility of additional spectrum purchases; and 3) Moody's assessment of the timing of a possible unwinding of the Verizon Wireless partnership and its impact on the balance sheets of both Verizon Wireless and Verizon Communications. The upgrade to Ba3 of MCI's debt ratings represents Moody's view that the synergy benefits expected from its acquisition by Verizon as well as Moody's perception of Verizon's likely willingness to financially support MCI (should it be required) merits a two-notch upgrade of MCI's standalone rating. Moody's expects the MCI notes will be refinanced at the Verizon Global Funding (VZGF) level shortly after the merger closes. Moody's believes that VZ will focus on generating multi-billion dollar expense savings and increased revenue once its acquisition of MCI closes. The agency regards these plans as achievable, in the most part, because of: * obvious redundancies; * network integration opportunities; and * Verizon's past experience in integrating significant acquisitions. Owning MCI's extensive long distance network should improve VZ's cost structure in relation to its own long distance, broadband and even wireless long-haul transport needs. Moody's expects that the benefits will ramp up over time as investments and expenses (i.e. severance) necessary to achieve the synergies is front loaded. Moody's recognizes the benefits to VZ of acquiring a stronger player in the enterprise market through the purchase of MCI, and the benefits to all the established players from in-market consolidation. The stable outlook at the parent is based on Moody's expectations that improving profitability at Verizon Wireless, as long as Verizon captures the vast majority of the cash flows from Verizon Wireless, will partially offset the effects of expanding wireline competition and an expensive network upgrade. The ratings could come under additional pressure if: 1) VZ's acquisition of MCI fails to produce significant synergy benefits; 2) Verizon Wireless' operating performance falters; 3) revenue declines at VZ's wireline operations accelerate or if margins decline; 4) VZ consolidates its ownership of Verizon Wireless or makes a material acquisition or a sale of operations in a manner that causes a deterioration in projected credit metrics; or 5) the cost of the fiber build-out exceeds current estimates or if it falls significantly behind schedule. The ratings could be upgraded if VZ were to demonstrate sustainable material top line growth in its consolidated wireline businesses while maintaining margins and Verizon Wireless were to sustain above industry average operating performance (subscriber additions, churn, margins), coupled with a demonstrated willingness by management to manage Verizon's capital structure to stronger credit metrics than Moody's currently expects. If VZ can drive significant revenue growth and profitablility through the deployment of FiOS, ratings are likely to improve. Moody's lowered the ratings of all VZ's operating companies (in some cases several notches): * Verizon-New England (A3/Baa1 from A2/A3), * Verizon-New York (Baa3 from Baa2), * Verizon-New Jersey (A3 from A1), * Verizon-Pennsylvania (A3 from A1), * Verizon-Virginia (Baa1 from A1), * Verizon-Florida (Baa1 from A1), * Verizon-Maryland (A3 from A1), * Verizon-Delaware (A3 from Aa3), * Verizon-West Virginia (A3 from Aa3), * Verizon-South (Baa1 from A2), * Verizon-North (A3 from A1), * GTE-Southwest (Baa2/Baa1 from A3/A2), * Verizon-Northwest (A3 from A1), and * Verizon-California (A3 from A1). Moody's believes the funding strategy for Verizon's operating companies, in light of the very expensive FiOS buildout being undertaken at the operating company level, weakens their individual credit quality to no stronger than the corporate family as a whole. Verizon's financial strategy of managing cash flow at its operating subsidiaries (whether through intercompany loans or dividend policy) limits the ability of the individual operating companies to materially reduce debt. All the operating companies, with the exception of Verizon-West Virginia, have experienced very large (on average 40%) year-over- year increases in capital spending as a result of Verizon's decision to upgrade its local networks to fiber-to-the-premises. Consequently, the pre-dividend free cash flow generating ability of the operating companies has greatly diminished. The downgrade of the ratings on Verizon-Virginia, Verizon-Florida and Verizon-South to Baa1, as well as the downgrade of GTE- Southwest's senior unsecured ratings to Baa2, also incorporates Moody's belief that these companies are more likely to rely on parent company support given their relatively weaker financial metrics and operating performances. In the case of Verizon- Virginia and Verizon-South, the dramatic acceleration of line losses indicates intensifying competition. The downgrade of the long-term debt rating of GTE-Southwest to Baa2 also reflects: * above-average access line losses; * weak asset returns coupled with a relatively high cost structure; and * among the most leveraged balance sheets in the family. The ratings of Verizon-New York and Verizon-New England were historically the lowest of the ILEC's, given their weak operating performance. Consequently, Moody's downgraded these companies only one notch (long-term ratings of Verizon-New York to Baa3 and the long-term guaranteed and unguaranteed debt ratings of Verizon- New England to A3 and Baa1, respectively) given the agency's current view on VZ's financial strategy. Moody's believes that the steps Verizon-New York has taken to generate free cash flow by eliminating upstream dividends to its parent, and to substitute intra-company debt for external debt, provide the company with some operating cushion at its current rating level. Nonetheless, Moody's expects that Verizon-NY's free cash flow will remain under considerable pressure for some time, given the likelihood: * that access line losses will continue to drive lower revenues; * that much of the company's cost structure is fixed; and * that it faces the expense of a significant network upgrade. Relatively weak return on assets and significantly underfunded pension obligations also pressures the ratings of Verizon-New York and Verizon-New England. While Moody's notes the progress that these companies have made curbing revenue loss and improving EBITDA margins, Moody's believes that accelerating access line losses will challenge the sustainability of this trend. The stable outlooks for ratings at the wireline subsidiaries are based on Moody's expectation that the steps that Verizon has taken to shore up the credit quality at the various operating subsidiaries, including significant reductions in dividends to Verizon Communications, and the substitution of inter-company loans for external debt will offset, at least for the next 12 to 18 months, expected additional earnings and cash flows pressures at the operating companies. Verizon's method for funding its operating companies has changed over time. All maturing debt and new capital needs at the operating companies is now funded with inter-company borrowings, rather than external debt. While these inter-company notes rank pari passu with external debt, Moody's believes that this financing arrangement indicates relatively strong parental support for these subsidiaries and gives most of the wireline subsidiaries several notches of rating lift. However, should Verizon once again choose to finance these subsidiaries with any new external debt, it is very likely that the ratings at those subsidiaries would fall by several notches to levels that solely reflect their individual, stand-alone credit quality. A possible sale, spinoff or divestiture of assets could also affect the ratings of all operating companies. The ratings of Verizon's operating companies could come under additional pressure if: 1) revenue declines accelerate to close to 5% annually; or 2) the Fiber-to-the-Premise network upgrade does not, over-time: -- significantly lower costs; -- support new revenue streams; and -- lead to increases in cash flow. Annual access line losses persistently above 10% could further pressure all ILEC ratings. The operating companies' ratings could also fall further if Moody's downgrades Verizon Communications' senior unsecured rating. Complete list of rating actions: Ratings downgraded are: Verizon Global Funding Corp.: -- issuer rating to A3 from A2 -- short-term debt rating to Prime-2 from Prime-1 Verizon Network Funding: -- short-term to Prime-2 from Prime-1 NYNEX Corporation: -- senior unsecured to A3 from A2 GTE Corporation: -- senior unsecured to Baa1 from A3 Verizon New York, Inc.: -- notes and debentures to Baa3 from Baa2 Verizon New England, Inc.: -- notes and debentures to Baa1 from A3, except the $480M of Series B debentures, due 2042, which are downgraded to A3 from A2 based on unconditional and irrevocable guarantee from Verizon Communications Verizon Delaware, Inc.: -- debentures to A3 from Aa3 Verizon West Virginia, Inc.: -- debentures to A3 from Aa3 Verizon New Jersey, Inc.: -- debentures to A3 from A1 Verizon Pennsylvania, Inc.: -- debentures to A3 from A1 Verizon Maryland, Inc.: -- debentures to A3 from A1 Verizon North, Inc.: -- debentures to A3 from A1 Verizon Northwest, Inc.: -- debentures to A3 from A1 Verizon California, Inc.: -- debentures to A3 from A1 Verizon Virginia, Inc.: -- notes and debentures to Baa1 from A1 Verizon Florida, Inc.: -- debentures to Baa1 from A1 Verizon South, Inc.: -- debentures to Baa1 from A2 except the $300M of Series F debentures, due 2041, which are downgraded to A3 from A2 based on unconditional and irrevocable guarantee from Verizon Communications GTE Southwest, Inc.: -- first mortgage bonds to Baa1 from A2 -- notes and debentures to Baa2 from A3 Ratings upgraded: MCI, Inc.: -- Corporate Family to Ba3 from B2 -- Senior Notes to Ba3 from B2 Ratings placed on review for possible upgrade: Verizon Wireless Capital, LLC: -- A3 senior unsecured Verizon Communications is a regional Bell operating carrier, headquartered in New York City. MCI Inc. is a global telecommunications provider headquartered in Ashburn, Virginia. MCI INC: Signs Three-Year Telecom Solution Contract with Yara ------------------------------------------------------------- MCI, Inc. (NASDAQ: MCIP) has signed a three-year contract with Yara, the world's largest supplier of mineral fertilizers, in Norway for a total telecommunication solution. Within the scope of the contract MCI has arranged to provide telecoms services, communication solutions, landline and mobile traffic to Yara. By choosing MCI, Yara is benefiting from the operating efficiencies of using one of the largest networks in the world, while also leveraging the innovation and reliability of MCI's services. MCI's total solution enables Yara to use their resources more efficiently, which is one of its key operational priorities. The resulting cost savings come primarily from the international termination of mobile calls, where the mobile calls are switched through MCI's wholly owned global network designed to deliver maximum reliability, quality and security. Further cost savings are added by the increased use of mobile solutions as well as virtual switch board solutions. "Yara's decision to choose MCI underscores our commitment to deliver high-quality customer service, performance and value", says Morten Gran, Country Leader of MCI Norway. "This is another example of how MCI's global reach, combined with the expertise of our local organisation, can create tangible benefits for our customers." MCI provides a comprehensive portfolio of voice, data and Internet services, enabling businesses to migrate their individual communication solutions to innovative and efficient technologies at their own pace. The range of services offers organizations like Yara a variety of access line speeds and bandwidth options creating a seamless platform for all-digital communications and convergence applications. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 109; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 22, 2005, Standard & Poor's Ratings Services placed its ratings of Ashburn, Virginia-based MCI Corp., including the 'B+' corporate credit rating, on CreditWatch with positive implications. The action affects approximately $6 billion of MCI debt. MCI INC: 11 Officers Dispose of 36,389 Shares of Common Stock ------------------------------------------------------------- In separate filings with the Securities and Exchange Commission on November 30, 2005, 11 officers of MCI, Inc., disclose that they recently sold or otherwise disposed of their shares of common stock in the Company: No. of Amount of Shares Securities Officer Designation Disposed Price Now Owned -------- ----------- -------- ----- ---------- Blakely, Executive V.P. 3,630 $19.77 251,585 Robert T. and C.F.O. Briggs, Pres., Operations 2,890 $19.77 156,799 Fred M. &Technology Capellas, President and CEO 9,422 $19.77 1,010,786 Michael D. Casaccia, Executive VP, 2,211 $19.77 131,485 Daniel L. Human Resources Crane, EVP of Strategy 2,890 $19.77 159,850 Jonathan C. & Corp. Dev. Crawford, President, 1,606 $19.77 80,026 Daniel E. Int'l & Wholesale Hackenson, EVP, CIO 1,884 $19.77 78,086 Elizabeth Higgins, EVP of Ethics 2,283 $1,977 120,345 Nancy M. & Bus. Conduct Huyard, President, 4,397 $19.77 230,865 Wayne US Sales & Service Kelly, Exec. VP & 3,518 $19.77 184,723 Anastasi D. General Counsel Trent, SVP Comm. & 1,658 $19.77 100,747 Grace Chen Chief of Staff Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 109; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 22, 2005, Standard & Poor's Ratings Services placed its ratings of Ashburn, Virginia-based MCI Corp., including the 'B+' corporate credit rating, on CreditWatch with positive implications. The action affects approximately $6 billion of MCI debt. MCLEODUSA INC: SBC Wants Cure Amount Paid Before Effective Date --------------------------------------------------------------- Joji Takada, Esq., at Freeborn & Peters LLP, in Chicago, Illinois, relates that the SBC Entities provide extensive telecommunication utility services to McLeodUSA Incorporated and its debtor-affiliates pursuant to 10 separate interconnection agreements and tariffs in 10 states. The SBC Entities include: a. Illinois Bell Telephone Company, doing business as SBC Illinois; b. Indiana Bell Telephone Company Incorporated, doing business as SBC Indiana; c. Michigan Bell Telephone Company, doing business as SBC Michigan; d. Wisconsin Bell, Inc., doing business as SBC Wisconsin; e. The Ohio Bell Telephone Company, doing business as SBC Ohio; and f. Southwestern Bell Telephone L.P., doing business as SBC Arkansas, SBC Kansas, SBC Missouri, SBC Oklahoma and SBC Texas. Mr. Takada notes that the Debtors have stated their intention to assume the SBC Agreements. Mr. Takada notes that as of Dec. 12, 2005, the Debtors owe the SBC Entities $35,434,309 in connection with the Debtors' various defaults under the SBC Agreements, consisting of: * prepetition arrearages totaling at least $2,247,641; * postpetition amounts totaling at least $9,536,668; * $225,000 for the SBC Entities' fees and expenses including reasonable attorneys' fees and expenses; and * additional deposits or collateral security totaling $23,400,000, as a result of the Debtors' various prepetition defaults under the SBC Agreements, or alternatively, in connection with the Debtors' obligation to provide "adequate assurance of future performance" to the SBC Entities under Section 365(b)(1)(C) of the Bankruptcy Code upon assumption of the SBC Agreements. Mr. Takada insists that the Debtors must tender the SBC Cure Claim to the SBC Entities no later than the Effective Date, to comply with their obligations under Section 365(b)(1) and assume the SBC Agreements under the Plan. The extent and amount of the SBC Cure Claim must also be resolved prior to the Effective Date before the Debtors can satisfy the conditions to Effective Date in the Plan and emerge from the bankruptcy proceedings. Therefore, the SBC Entities ask the U.S. Bankruptcy Court for the Northern District of Illinois not to approve the Debtors' assumption of the SBC Agreements absent payment of the Cure Amount pre-Effective Date. Headquartered in Cedar Rapids, Iowa, McLeodUSA Incorporated -- http://www.mcleodusa.com/-- provides integrated communications services, including local services in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The Debtor and its affiliates filed for chapter 11 protection on Oct. 28, 2005 (Bankr. N.D. Ill. Case Nos. 05-53229 through 05-63234). Peter Krebs, Esq., and Timothy R. Pohl, Esq., at Skadden, Arps, Slate, Meagher and Flom, represent the Debtors in their restructuring efforts. As of June 30, 2005, McLeodUSA Incorporated reported $674,000,000 in total assets and $1,011,000,000 in total debts. McLeodUSA Inc. previously filed for chapter 11 protection on January 30, 2002 (Bankr. D. Del. Case No. 02-10288). The Court confirmed the Debtor's chapter 11 plan on April 5, 2003, and that Plan took effect on April 16, 2002. The Court formally closed the case on May 20, 2005. (McLeodUSA Bankruptcy News, Issue No. 6 Bankruptcy Creditors' Service, Inc., 215/945-7000). MCLEODUSA INC: Bickers With SBC About Adequate Assurance Payment ---------------------------------------------------------------- As previously reported in the Troubled Company Reporter on Dec. 2, 2005, the SBC Entities ask the U.S. Bankruptcy Court for the Northern District of Illinois, Chicago Division, to: (a) compel the Debtors to: * immediately pay the postpetition arrearage; and * tender a cash deposit reflecting two months of charges incurred by the Debtors to the SBC Entities under the Tariffs and ICAs amounting to $23,400,000 for services to be provided to the Debtors by the SBC Entities under the Tariffs and ICAs; and (b) permit SBC Entities to terminate services under the Tariffs and ICAs without further Court Order, or other administrative or judicial authority upon: * a payment or other default by the Debtors under either the Tariffs or the ICAs; or * a failure to provide assurances as mandated by the Bankruptcy Court. Debtors Object Timothy R. Pohl, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in Chicago, Illinois, asserts that the SBC Entities are not at any real risk of nonpayment for postpetition services. Hence, the Debtors believe that the SBC Entities' request for adequate assurance should, as contemplated by Section 366(c)(3) of the Bankruptcy Code, be modified to be no more than some minimal amount. The amount should be determined based on a reasoned review of the actual credit risks to the SBC Entities. Mr. Pohl notes that nothing in Section 366 establishes any minimum amount of deposit or other security. The "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005," which was signed into law on April 20, 2005, and became applicable to cases filed after Oct. 17, 2005, codifies that the term "assurance of payment" means: (i) a cash deposit; (ii) a letter of credit; (iii) a certificate of deposit; (iv) a surety bond; (v) a prepayment of utility consumption; and (vi) another form of security that is mutually agreed on between the utility and the debtor or the trustee. Mr. Pohl points out that while BAPCPA provides for the forms of adequate assurance, it does not give the SBC Entities the unfettered right to demand assurance of payment beyond what is reasonable given the facts and circumstances of the case. Under the facts and circumstances of the Debtors' cases, the SBC Entities are not subject to any material risk of nonpayment. Among other facts and circumstances to be considered in determining what constitutes adequate assurance for the SBC Entities, the Court may take into consideration that: -- the Debtors' plan of reorganization is a true prepackaged Chapter 11 case; -- the Plan provides for the payment in full and reinstatement of all general unsecured claims, which includes all claims of the SBC Entities; -- it entered an order that authorizes the Debtors to pay all prepetition claims as they become due in the ordinary course of business postpetition and the Debtors have been doing so; and -- the SBC Entities have received $6,000,000 to $7,000,000 more than they would have received if the First Day Utility Order had not been entered. If the Court determines that it must or should require the Debtors to provide a security to the SBC Entities for postpetition services pending the Debtors' emergence from Chapter 11, the Debtors submit that a deposit equal to the actual average accrued amounts owing for services rendered by the SBC Entities, which is approximately $6,000,000 to $7,000,000, is more than sufficient. If required to post a deposit, the Debtors should not then, at the same time, be paying the SBC Entities' prepetition claims prior to the effectiveness of a plan of reorganization. Instead, the Court should credit the approximately $6,000,000 in prepetition claims already paid to the SBC Entities, under the express assumption that normal credit terms would continue, against any deposit requirement, or, in essence, deem the payments made to be the funding of a postpetition deposit. Those amounts can then be applied to pay prepetition claims upon emergence from chapter 11 when and if the Plan is confirmed. For these reasons, McLeodUSA Incorporated and its debtor- affiliates ask the U.S. Bankruptcy Court for the Northern District of Illinois to deny the SBC Entities' request because the $6,000,000 to $7,000,000 postpetition payment they made to the SBC Entities is sufficient assurance of payment. SBC Entities Talk Back Neither the law nor the facts support the Court's finding that the SBC Entities have been "adequately assured" of payment thus far, or will be "adequately assured" of payment through the Effective Date and beyond, Joji Takada, Esq., at Freeborn & Peters LLP, in Chicago, Illinois, contends. The Debtors rely on their "Financial Forecast and Projections" to quell any notion that the SBC Entities will not be paid. But their statement hardly inspires confidence among the SBC Entities, especially when qualified by "assumptions that may differ from actual results" and "known and unknown risk factors" detailed in the Debtors' Disclosure Statement. The SBC Entities are concerned about some of the Debtors' admissions that the Company: -- does not generate positive cash flow; -- could continue to incur significant losses over the next several years; and -- has a risk of inadequate liquidity. Perhaps the fact that the Debtors have lost over $2,000,000,000 in less than three years and never experienced positive cash flow explains the Company's less than enthusiastic representations as to their financial outlook, Mr. Takada points out. "The significant risk to the SBC Entities from being compelled to continue doing business with Debtors, absent an appropriate amount of adequate assurance, is heightened by the Debtors' history of late payment on their accounts with the SBC Entities." In this regard, the SBC Entities ask the Court to compel the Debtors to provide adequate assurance in the amount of two months' billings or $23,400,000. According to Mr. Takada, the $6,000,000 to $7,000,000 deposit offered by the Debtors is inadequate under the circumstances. Given the present amount of wholesale services required by the Debtors, a $6,000,000 to $7,000,000 deposit would only cover approximately two weeks' worth of use, in turn, giving the SBC Entities limited protection given their $35,000,000 exposure. The Debtors' argument that the SBC Entities' prepetition claims are being paid in the ordinary course fails, Mr. Takada contends. The Bankruptcy Court has never waived or otherwise restricted the recapture and avoidance of those payments in a meltdown scenario or otherwise. Without the express waiver, payment of prepetition claims is hardly an acceptable payment assurance. In addition, the SBC Entities have rejected holding the monies as security under Section 366(c)(1)(A)(iv). Mr. Takada relates that the SBC Entities have already applied the cash to prepetition invoices. It would literally require hundreds of hours for the SBC Entities to properly account for holding the cash as "security." Furthermore, the Debtors' suggested "assurance of payment" is inequitable and inconsistent with general bankruptcy law. It would be per se preferential for the Debtors to pay in the ordinary course all prepetition general unsecured claims except for the SBC Entities' claims. The Debtors' proposal also conflicts with the spirit and intent of the Bankruptcy Court's order approving payment to general unsecured claims in the ordinary course, Mr. Takada says. Even accepting the Debtors' position, there is a significant hole in the $23,400,000 deposit requested by the SBC Entities given the over $11,000,000 in outstanding payment due to the SBC Entities. Headquartered in Cedar Rapids, Iowa, McLeodUSA Incorporated -- http://www.mcleodusa.com/-- provides integrated communications services, including local services in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The Debtor and its affiliates filed for chapter 11 protection on Oct. 28, 2005 (Bankr. N.D. Ill. Case Nos. 05-53229 through 05-63234). Peter Krebs, Esq., and Timothy R. Pohl, Esq., at Skadden, Arps, Slate, Meagher and Flom, represent the Debtors in their restructuring efforts. As of June 30, 2005, McLeodUSA Incorporated reported $674,000,000 in total assets and $1,011,000,000 in total debts. McLeodUSA Inc. previously filed for chapter 11 protection on January 30, 2002 (Bankr. D. Del. Case No. 02-10288). The Court confirmed the Debtor's chapter 11 plan on April 5, 2003, and that Plan took effect on April 16, 2002. The Court formally closed the case on May 20, 2005. (McLeodUSA Bankruptcy News, Issue No. 6 Bankruptcy Creditors' Service, Inc., 215/945-7000). MCLEODUSA INC: Wants SBC's Reconsideration Request Denied --------------------------------------------------------- As previously reported in the Troubled Company Reporter on Nov. 16, 2005, at McLeodUSA Incorporated and its debtor- affiliates' request, the U.S. Bankruptcy Court for the Northern District of Illinois, Chicago Division: (a) prohibits the Utility Companies from altering, refusing, or discontinuing services of prepetition claims; and (b) provides that the Utility Companies have "adequate assurance of payment" within the meaning of Section 366 based on the acceptance of payment of prepetition undisputed amounts in the ordinary course of business, without the need for payment of additional deposits or security. SBC Entities Seek Reconsideration of Utility Order Joji Takada, Esq., at Freeborn & Peters LLP, in Chicago, Illinois, asserts that the Debtors' assurances of future payment to their utility providers, including the SBC Entities, conflict with Section 366 of the Bankruptcy Code, as amended by the Bankruptcy Abuse Prevention and Consumer Protection Act, and are inadequate as a matter of law. Debtors' Reply The SBC Entities' request for reconsideration should be denied because the First Day Utility Order was proper and did not violate Section 366 of the Bankruptcy Code, Timothy R. Pohl, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in Chicago, Illinois, asserts. As a threshold matter, Mr. Pohl contends, it is not at all clear that the SBC Entities are entitled to the statutory relief provided in Section 366 in the first place. The Debtors do not consume the utility services provided by the SBC Entities. Rather, pursuant to multiple tariffs, so-called interconnection agreements and other commercial agreements, the Debtors purchase telecommunications products from the SBC Entities at wholesale prices for resale to the Debtors' customers. In fact, the SBC Entities are business competitors of the Debtors. Even if Section 366 is applicable, the SBC Entities' request is premised on facts that are misleading and incorrect, Mr. Pohl argues. The actual circumstances have been conveniently ignored, including, among others, the fact that no undisputed prepetition amounts owing to the SBC Entities that are due and payable pursuant to their terms are outstanding. Mr. Pohl further argues that the SBC Entities have misapplied the provisions of Section 366 and wrongly assert that the First Day Utility Order granted relief prohibited by the statute. The First Day Utility Order did not violate Section 366, Mr. Pohl insists. The First Day Utility Order: (a) unilaterally offered a significant economic benefit to utility companies in the form of current payment of prepetition claims; (b) triggered the Debtors' statutory right to seek a modification by the Court of any additional demands made by utility companies; and (c) established a process by which the Court can review adequate assurance requests given all the facts and circumstances of the Debtors' cases. Mr. Pohl notes that the SBC Entities were provided, pending a hearing to consider the Debtors' request for the Court to modify the SBC Entities' demands, approximately $6,000,000 to $7,000,000 in extra cash. "That amount is approximately the same amount that the SBC Entities are owed, at any point in time, for services that have been rendered to the Debtors by the SBC Entities but not yet paid for (because not yet due and payable)." The Debtors submit that the relief granted by the Court was, and is, fully appropriate and not prohibited by the statute, Mr. Pohl asserts. "None of the Debtors' numerous utility company creditors except the SBC Entities has challenged the propriety of the First Day Utility Order." Accordingly, the Debtors ask the Court to deny the Reconsideration Motion. Utility Order is Flawed, SBC Entities Insist Joji Takada, Esq., at Freeborn & Peters LLP, in Chicago, Illinois, notes that Section 366 is intended to protect utilities like the SBC Entities from the risk of nonpayment for postpetition services provided to debtors by offering utilities a straightforward statutory scheme under which relief is automatic. The Utility Order, however, deprives the SBC Entities of the statutorily required relief, Mr. Takada asserts. The SBC Entities thus have asked the Court to reconsider the Utility Order and to set an amount of adequate assurance that makes sense in light of: (i) the more than $11,600,000 in monthly services that the SBC Entities provide to the Debtors; and (ii) the approximately 75-90 day grace period following bill issuance during which the SBC Entities must continue to provide services even if they have not been paid. Mr. Takada alleges that the Debtors have attempted to end-run the requirements of Section 366(c) by inserting in their ex parte Utility Order the provision that by accepting payment for prepetition services, the SBC Entities will "be deemed (a) to have mutually agreed on a form of security acceptable to the Utility Company and the Debtors and (b) to have adequate assurance of future payment." The problem with that provision is that the SBC Entities were not consulted on the ex parte Utility Order, nor have they since "mutually agreed" that payment for services they provided prepetition is "adequate assurance of future payment" for postpetition services. Mr. Takada believes that, in reality, the Debtors offer the SBC Entities nothing more than an administrative expense priority. "That treatment is not a form of adequate assurance of payment permitted by Section 366, as amended by the [Bankruptcy Abuse Prevention and Consumer Protection Act of 2005], absent the SBC Entities' agreement." Given the plain language of Section 366 and the undisputed circumstances, the SBC Entities ask the Court to grant the Reconsideration Motion. Headquartered in Cedar Rapids, Iowa, McLeodUSA Incorporated -- http://www.mcleodusa.com/-- provides integrated communications services, including local services in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The Debtor and its affiliates filed for chapter 11 protection on Oct. 28, 2005 (Bankr. N.D. Ill. Case Nos. 05-53229 through 05-63234). Peter Krebs, Esq., and Timothy R. Pohl, Esq., at Skadden, Arps, Slate, Meagher and Flom, represent the Debtors in their restructuring efforts. As of June 30, 2005, McLeodUSA Incorporated reported $674,000,000 in total assets and $1,011,000,000 in total debts. McLeodUSA Inc. previously filed for chapter 11 protection on January 30, 2002 (Bankr. D. Del. Case No. 02-10288). The Court confirmed the Debtor's chapter 11 plan on April 5, 2003, and that Plan took effect on April 16, 2002. The Court formally closed the case on May 20, 2005. (McLeodUSA Bankruptcy News, Issue No. 6 Bankruptcy Creditors' Service, Inc., 215/945-7000). MERRY-GO-ROUND: Jan. 31 Hearing to Review Chapter 7 Trustee's Fee ----------------------------------------------------------------- The Honorable E. Stephen Derby will convene a hearing in Baltimor at 10:00 a.m. on Tuesday, January 31, 2006, to consider whether to allow Deborah H. Devan, the Chapter 7 Trustee overseeing the liquidation of Merry-Go-Round Enterprises, to collect an $8.8 million fee. That $8.8 million amount represents 3% of what has been and will be distributed to Merry-Go-Round creditors and, Ms. Devan argues, is the amount Congress says a chapter 7 trustee who did a superb job like she did should collect at the conclusion of a chapter 7 case. Ms. Devan, as previously reported in the Troubled Company Reporter, will return roughly 40 cents-on-the-dollar to Merry-Go- Round's unsecured creditors from the administratively insolvent estate that she inherited when the fashion retailer's chapter 11 restructuring failed. The bulk of the increase in estate value came from a $185 million settlement Ms. Devan extracted from Ernst & Young LLP. Katherine A. Levin, Esq., representing the United States Trustee, argues that payment of a $2.5 million lodestar fee -- derived by multiplying reasonable hourly rates of $225 to $330 per hour by 9,300 reasonable hours Ms. Devan worked on the case over the past decade -- is more appropriate. The U.S. Trustee won't lend support to a $6.3 million fee enhancement. A number of creditors -- with actual economic stakes in the outcome of Merry-Go-Round's case -- support Ms. Devan's fee request. No party-in-interest other than the U.S. Trustee has objected to payment of the $8.8 million fee. To date, Ms. Devan has distributed (or plans to distribute) $294.4 million to Merry-Go-Round creditors. Ms. Devan is prepared to make a final distribution to unsecured creditors as soon as her compensation is approved. Ms. Devan made a 30% distribution to unsecured creditors in early 2003. This final distribution will return another 11 cents-on-the-dollar to unsecured creditors. A full-text copy of Ms. Devan's 85-page Application is available at no charge at: http://bankrupt.com/misc/94-50161-9771.pdf A full-text copy of Ms. Devan's Memorandum of Law in support of her Application is available at no charge at: http://bankrupt.com/misc/94-50161-9789.pdf A full-text copy of the U.S. Trustee's 12-page Objection is available at no charge at: http://bankrupt.com/misc/94-50161-9817.pdf Ms. Devan's request for payment of 3% of what she's distributed to Merry-Go-Round creditors isn't novel. Ms. Devan's $8.8 million request (which is roughly $950 per hour) falls within the range of amounts paid to chapter 7 trustees in other cases: * Bart A. Brown received an award of $6,940,000 for his 8,606 hours (just over $800 per hour) in In re Foxmeyer Corp., et al. (Bankr. D. Del. Case Nos. 96-1329 through 96-1334) from the Honorable M. Bruce McCullough for his work over a seven- year period; * Tom H. Connolly, Esq., received $1,661 per hour for his work in In re Guyana Development Corp., 201 B.R. 462 (Bankr. S.D. Tex. 1996); * In In re MiniScribe Corp., 241 B.R. 729 (Bankr. D. Colo. 1999), confirmed after remand, 257 B.R. 56 (Bank. D. Colo. 2000), the Court awarded the Trustee the equivalent of $1,712 per hour; * Richard C. Breeden collected a $13.85 million fee as trustee in In re The Bennett Funding Group (Bankr. N.D.N.Y. Case No. 96-61376, Memorandum-Decision dated Feb. 20, 2003) (Gerling, J.), which equaled 3% of the hundreds of millions of dollars he distributed to Bennett's creditors; * James P. Hassett, as Trustee for O.P.M. Leasing Services, received about $2.5 million for his work in that case 1981 case (which would be considerably higher if expressed in 2005 or 2006 dollars); and * Mr. Hassett received an $8 million fee -- the full 3% of funds disbursed to creditors permissible under 11 U.S.C. Sec. 326(a) -- for services between Oct. 1989 and June 1996 as trustee in In re Continental Information Systems Corporation (Bankr. S.D.N.Y. Case Nos. 89-B-10073 through 89-B-10084 (PBA)); and * Christine C. Shubert, the chapter 7 trustee in In re Winstar Communications, Inc., et al. (Bankr. D. Del. Case Nos. 01-01431 through 01-01462), currently receives interim compensation awards equal to 3% of the amount she distributes to creditors from time-to-time under a deal approved by the Honorable Joel B. Rosenthal on November 12, 2003, with the consent of Winstar's secured creditors. Merry-Go-Round filed chapter 11 bankruptcy protection in 1994 (Bankr. D. Md. Case No. 94-5-0161-SD). Following a couple of failed attempts to find its place on the retail landscape, the case converted to a chapter 7 liquidation in early 1996. Since that time, Ms. Devan has worked on winding-up the Debtors' estates. Cynthia L. Leppert, Esq., and Jason N. St. John Esq., at Neuberger, Quinn, Gielen, Rubin & Gibber, P.A., in Baltimore represent Ms. Devan. MIDLAND COGEN: Fitch Junks Rating on Secured Obligation Bonds ------------------------------------------------------------- Fitch Ratings has downgraded to 'B+' from 'BB-' the ratings on Midland Cogeneration Venture LP's taxable secured lease obligation bonds due 2006. Fitch has also downgraded to 'CCC+' from 'BB-' MCV's tax-exempt secured lease obligation bonds due 2009. The ratings on the taxable and tax-exempt bonds have been removed from Rating Watch Negative with the completion of Fitch's analysis of MCV's projected financial performance. Fitch projects that MCV could fully deplete its cash reserves and default on the debt service portion of rent in 2008. MCV will rely upon its cash reserves to meet rent payments, as revenues earned under the power purchase agreement are insufficient to fully cover both natural gas costs and rent obligations. Fitch's financial projections incorporate Fitch's current outlook for natural gas prices and the assumption that Consumers Energy Co. will exercise the regulatory out provision in the power purchase agreement in 2007, reducing capacity payments thereafter. While MCV could default if actual results track Fitch's projections, there are several factors that could improve MCV's financial performance, such as lower than anticipated natural gas prices, further reductions in dispatch, or a favorable resolution to outstanding property tax litigation. Though high natural gas costs have negatively affected financial performance, the value of MCV's hedging agreements has increased substantially with rising natural gas prices. However, MCV will lose a considerable proportion of the hedge's value when a number of hedging agreements expire in 2006 and, to a lesser extent, in 2007. Furthermore, MCV's exposure to natural gas price volatility will grow as it becomes more dependent upon spot market purchases of natural gas. MCV's management has not indicated that the company will file for bankruptcy. However, taking into account MCV's projected financial performance and sizable but declining hedged position, Fitch cannot ignore the possibility of a voluntary bankruptcy. Thus, the rating on the taxable bonds reflects the potential for a voluntary bankruptcy filing before the taxable bonds mature in July 2006. The rating also reflects the recovery prospects for the taxable bonds under a hypothetical bankruptcy scenario, as bondholders would benefit from the substantial value of MCV's hedging agreements and cash reserves. In the event that MCV does not enter bankruptcy prior to the July 2006 payment date, Fitch expects that projected cash reserves will be sufficient to support full and timely payment of debt service on the taxable bonds. Fitch views the credit quality of the tax-exempt bonds to fall below that of the taxable bonds. Similar to the rating on the taxable bonds, the rating on the tax-exempt bonds takes into consideration the possibility of a voluntary bankruptcy and the collateral value of both the hedges and the cash reserves. However, absent a near-term bankruptcy or a consensual restructuring of existing agreements, repayment of the tax-exempt bonds would be jeopardized by MCV's growing exposure to volatile natural gas prices as its hedged position declines over the long term. It is important to note that MCV's cash reserves and, consequently, the long-term credit quality of the tax-exempt bonds, continue to be highly dependent upon continued implementation of the Resource Conservation Plan. A favorable resolution to the property tax litigation could increase cash reserves and enhance the credit quality of the tax-exempt bonds, though the final outcome remains uncertain. MCV consists of a nominal 1,500-MW gas-fired, combined-cycle cogeneration qualifying facility located in Midland County, Michigan, supplying electric energy and capacity to Consumers, electric energy and steam to Dow Chemical, and steam to Dow Corning. MCV is a limited partnership jointly owned by subsidiaries of CMS Energy, El Paso Corp., and Dow Chemical. The taxable debt was issued by Midland Funding Corp. II, a special-purpose funding vehicle created to finance partially the sale-leaseback of the facility in 1990. The tax-exempt debt was issued by the Economic Development Corp. of the County of Midland on behalf of the owner-trustees. MIDLAND REALTY: Fitch Affirms B Rating on $11.1MM Class J Certs. ---------------------------------------------------------------- Fitch Ratings upgrades Midland Realty Acceptance Corp.'s commercial mortgage pass-through certificates, series 1996-C1: -- $18.6 million class G to 'AAA' from 'AA'. In addition, Fitch affirms these classes: -- Interest-only class A-EC 'AAA'; -- $12.2 million class D 'AAA'; -- $5.6 million class E 'AAA'; -- $7.4 million class F 'AAA'; -- $11.1 million class J 'B'. Fitch does not rate the $5.6 million class H, the $2.3 million principal-only class K-1, and the interest-only class K-2 certificates. The class A-1, A-2, A-3, B, and C certificates have paid in full. The rating upgrade is due to the increase in subordination levels resulting from loan payoffs and amortization. As of the November 2005 distribution date, the pool has paid down 83.1% to $62.7 million from $371.1 million at issuance. In addition, the pool has paid down 46.6% since Fitch's last ratings action. One loan is currently in special servicing. The loan was transferred to the special servicer in September 2004 due to lease rollover concerns, but has since experienced an improvement in occupancy. The loan has been brought current and is expected to be returned to the master servicer. A property in Beaumont, Texas, which secures a loan representing 2.4% of the pool, was reported to have suffered extensive damage from Hurricane Rita. The borrower estimated the damage at approximately 6.5% of the current loan balance. While most of the tenants were reported to have left the property because electricity had not yet been restored, the borrower carried business interruption insurance and has kept the loan current. Twenty-nine loans remain in the pool. Eight loans mature in 2006, with the remainder maturing between 2008 and 2012. The weighted average mortgage rate of the remaining loans is 9.14%; however, most loans cannot prepay without penalty until generally less than 12 months prior to maturity. NADER MODANLO: Wants Exclusive Period Stretched to September 30 --------------------------------------------------------------- Nader Modanlo asks the U.S. Bankruptcy Court for the District of Maryland to extend until Sept. 30, 2006, the period in which he can file a chapter 11 plan. The Debtor tells the Court that until a number of appellate proceedings pending in the Maryland Courts are exhausted, a plan can't be formulated. The Debtor says the amount of claims against him is staggering and that determining the validity and value of the claims will take at least nine months. The Debtor reminds the Court that he is current in his filings and financial obligations to the U.S. Trustee and says his request is made in good faith. Nader Modanlo of Potomac, Maryland, is the President of Final Analysis Communication Services, Inc. Mr. Modanlo filed for chapter 11 protection on July 22, 2005 (Bankr. D. Md. Case No. 05-26549). Joel S. Aronson, Esq., at Ridberg Sherbill & Aronson LLP, represents the Debtor. When the Debtor filed for protection from his creditors, he listed $500,000 to $1,000,000 in estimated assets and more than $100 million in debts. NADER MODANLO: FAI Co-Owner Wants Chapter 11 Trustee Appointed -------------------------------------------------------------- Michael H. Ahan, co-equal owner of Final Analysis, Inc., asks the U.S Bankruptcy Court for the District of Maryland to appoint a chapter 11 trustee in Nader Modanlo's chapter 11 case. Mr. Ahan cites four reasons why the Court should appoint a chapter 11 trustee: 1. the Debtor has a judicially determined track record of violating his fiduciary duties; 2. the Debtor refuses to disclose material information regarding his assets, liabilities and financial affairs; 3. the Debtor has conflicts of interest that preclude him from acting as a fiduciary for his creditors; and 4. the Debtor is incompetent to act as a fiduciary for his creditors. Mr. Ahan also asks the Court, in the alternative, to covert the case to a chapter 7 liquidation. Mr Ahan argued that: a. the chapter 11 case was filed in bad faith; b. the case has been pending since July and the Debtor has not made any progress toward reorganization; c. converting the case to a chapter 7 liquidation is in the best interest of creditors than dismissing the case; Nader Modanlo of Potomac, Maryland, is the President of Final Analysis Communication Services, Inc. Mr. Modanlo filed for chapter 11 protection on July 22, 2005 (Bankr. D. Md. Case No. 05-26549). Joel S. Aronson, Esq., at Ridberg Sherbill & Aronson LLP, represents the Debtor. When the Debtor filed for protection from his creditors, he listed $500,000 to $1,000,000 in estimated assets and more than $100 million in debts. NEXTEL PARTNERS: Sprint Equity Purchase Cues S&P to Review Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'A-' corporate credit rating on Sprint Nextel Corp. and subsidiaries. All ratings on Nextel Partners Inc., including the 'BB' corporate credit rating, remain on CreditWatch with positive implications. "These actions follow the companies' announcement that $28.50 per share is the price at which Sprint Nextel will purchase Nextel Partners' class A common stock under the put right initiated by Nextel Partners following the Sprint Nextel merger," said Standard & Poor's credit analyst Eric Geil. The outlook on Sprint Nextel is stable. The ratings on Nextel Partners were placed on CreditWatch on Oct. 25, 2005, following the exercise of the put right. The value of the put transaction is within an acceptable range of the amount that had previously been factored into the ratings on Sprint Nextel. The aggregate amount of the put is $6.5 billion, including shares from the expected conversion of $300 million in convertible notes. Sprint Nextel intends to satisfy the put with cash, and total acquisition consideration will be about $7.7 billion, including about $1.2 billion in Nextel Partners net debt. Sprint Nextel expects to complete the transaction by the end of the second quarter of 2006, subject to obtaining customary regulatory approvals. Absent guarantees from Sprint Nextel, S&P expects to raise the corporate credit rating on Nextel Partners to at least 'BBB-', based on S&P's assessment of Partners' strategic importance to Nextel's nationwide Integrated Digital Enhanced Network. S&P's final determination of the ratings on Partners will consider Sprint Nextel's integration plans for the company and any further support of Partners' debt S&P might impute from Sprint Nextel. NORTHWEST AIRLINES: Restructures Deals for Airbus A330s on Order ---------------------------------------------------------------- Northwest Airlines (OTC: NWACQ:PK) disclosed that its board of directors has approved agreements reached with Airbus and Pratt & Whitney for the two manufacturers to continue delivery and financing of all of the remaining 14 A330-300 and A330-200 aircraft that Northwest has on order. The agreements, filed Dec. 7 with the U.S. Bankruptcy Court for the Southern District of New York, are subject to approval by the Bankruptcy Court, as well as certain other conditions. During its restructuring, Northwest is reducing labor costs, strengthening its balance sheet and optimizing its fleet to more effectively compete in an increasingly competitive environment. Today's announcement is a significant part of the airline's fleet optimization plan, said President and CEO Doug Steenland. "The A330 is the most modern, fuel-efficient jet in Northwest's international fleet, and as such, it is a vital part of securing our future," Steenland said. "The continued financing agreements with Airbus and Pratt & Whitney will ensure that Northwest can continue to meet customer needs by offering a wide-ranging international route system." Airbus has agreed to finance 10 of the 14 A330s, and Pratt & Whitney will finance the other four. The aircraft are scheduled to become part of Northwest's fleet during 2006 and 2007. Terms of the agreements were not disclosed. "Airbus is pleased to have reached agreement with Northwest Airlines to participate in their global restructuring efforts," said Gustav Humbert, Airbus president and CEO. "NWA has been a strong, long-term Airbus business partner, and our participation demonstrates the value we place on that relationship." Northwest currently operates a fleet of 11 A330-300 aircraft on trans-Atlantic routes and seven A330-200 aircraft on trans- Pacific and intra-Asia routes. All of Northwest's A330 aircraft are equipped with the airline's lie-flat World Business Class seats, which offer 176 degrees of recline, more degrees of recline than any other U.S. airline's competing product, as well as an array of innovative comforts and features. Customers in both cabins of Northwest's A330 aircraft also enjoy a state-of-the-art in-flight entertainment system, featuring a wide variety of audio and video entertainment, all available on demand. The A330 also provides Northwest with significant maintenance savings and up to 30 percent in fuel savings over the DC10-30 aircraft it is replacing. The A330 possesses a similar flight deck and systems as Northwest's Airbus A319/A320 fleet, which also helps contain training expenses for the airline. Northwest Airlines 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. 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. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000) NORTHWEST AIRLINES: Court Approves Rehearing of Antitrust Suit -------------------------------------------------------------- As previously reported, Northwest Airlines, Inc., and Spirit Airlines, Inc., stipulated to modify the automatic stay to allow the United States Court of Appeals for the Sixth Circuit to issue its decision on Spirit's appeal. On November 9, 2005, the United States Court of Appeals for the Sixth Circuit rendered its decision. After further negotiations, the parties agree that: (a) Northwest Airlines may file a petition for rehearing en banc to the United States Court of Appeals for the Sixth Circuit, and Spirit may respond to the petition in all respects; (b) should the Rehearing en banc be granted, the parties may fully participate in the proceedings; (c) depending on the final outcome of the petition for rehearing, either party may petition the United States Supreme Court for certiorari and fully participate in any ensuing legal arguments there; (d) all other rights of the parties are otherwise reserved and the automatic stay is not otherwise modified. Judge Gropper approves the Stipulation in its entirety. 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. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) NORTHWEST: Court OKs Defeasement of Trust No. 1 Secured Debt ------------------------------------------------------------ As previously reported, Northwest Airlines Corp. and its debtor- affiliates asked 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 asked 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. ABN AMRO Objects ABN AMRO Bank N.V. argues that the Debtors must undertake the prerequisites for the full defeasance and termination of the structured finance transaction for the 10 Boeing Aircraft. ABN AMRO doubts that U.S. Bank, N.A., the collateral agent and lien holder on all of the assets of NWA Trust No. 1, has consented to the defeasance and release of liens when U.S. Bank can only provide the consent at the direction of several parties, including ABN AMRO, to defease their obligations under the Boeing Transaction. ABN AMRO is the liquidity provider under the Boeing Transaction pursuant to an Irrevocable Revolving Credit Agreement, dated as of November 15, 1996. Raniero D'Aversa, Jr., Esq., at Mayer, Brown, Rowe & Maw LLP, in New York, relates that ABN AMRO is committed to fund interest payments to noteholders if Northwest Airlines, Inc., fails to make lease payments for the Aircraft. Mr. D'Aversa tells Judge Gropper that ABN AMRO has an ongoing commitment to make loans under the Boeing Transaction, and has various contractual rights and priorities vis-a-vis the noteholders. If and when U.S. Bank Trust, the Indenture Trustee, makes distributions, ABN AMRO is entitled to be reimbursed for draws and certain Liquidity Obligations prior to any payments to the noteholders. ABN AMRO is also protected by the security interest granted in favor of U.S. Bank. As a result, the liens securing the obligations under the Boeing Transaction cannot be released so long as ABN AMRO has any continuing obligation under the Liquidity Facility. Furthermore, after the 60-day stay period under Section 1110 of the Bankruptcy Code expired on November 14, 2005, ABN AMRO has been entitled, among other things, to terminate the Liquidity Facility and, shortly thereafter, direct U.S. Bank to foreclose the liens on the assets of Trust 1. Mr. D'Aversa informs the Court that Northwest failed to make payments under the Leases due on or about September 12, 2005. Accordingly, Trust 1 failed to make the payment due September 12 on the Class A Notes and the Class B Notes issued by Trust 1. On September 13, 2005, pursuant to its obligations as Liquidity Provider, ABN AMRO funded $1,705,420 for the missed interest payments on both notes. Those amounts, in addition to other amounts due under the applicable documents, remain unpaid. Mr. D'Aversa asserts that the $36,934,579 Purchase Amount and the $5,506,747 retained cash should not be deemed the Defeasance Amount. He says that the Debtors cannot at this time determine the amount required to fully satisfy all of the obligations under the Boeing Transaction because, among other things, the Indenture Trustee has not calculated the full amounts due and owing to the respective parties. He adds that the Defeasance Amount should be sufficient to pay amounts due in: (i) the Class A Trust Indenture dated as of March 10, 1994 (ii) the Class B Trust Indenture dated as of March 10, 1994; (iii) the Liquidity Facility; and (iv) the other Operative Documents. Likewise, the Debtors should not purport to allocate the payment of the Defeasance Amount among the parties, Mr. D'Aversa adds. He notes that ABN AMRO has already funded interest shortfalls and has incurred reimbursable expenses in connection therewith. The Boeing Transaction documents have intricate distribution waterfalls, which dictate how U.S. Bank must distribute funds to itself, as Collateral Agent, ABN AMRO as Liquidity Provider, and the noteholders. The Debtors cannot effect the release of liens without properly terminating the Boeing Transaction, Mr. D'Aversa continues. He states that U.S. Bank must deliver to ABN AMRO a certification that all of the remaining debt of Trust 1 has been paid in full or the debt is otherwise no longer entitled to the benefits of the Liquidity Facility. * * * After due deliberation, the Court grants the Debtors' Request. Judge Gropper finds that the $42,441,326 computed by the Debtors would be sufficient to pay in full: (a) the reasonable fees, costs, and expenses of the Indenture Trustee and the Collateral Agent; (b) the reimbursement of an outstanding drawing on ABN AMRO, together with accrued interest thereon and the Liquidity Provider's reasonable fees, costs and expenses; (c) the aggregate unpaid principal amount of all of the Class A Notes together with interest accrued thereon to March 10, 2006; and (d) the aggregate unpaid principal amount of all of the Class B Notes together with interest accrued thereon to March 10, 2006. NWA Aircraft Finance, Inc., is directed to immediately transmit the funds received from Northwest Airlines and $5,506,747 of retained cash to the Collateral Agent. Upon receipt of the funds, U.S. Bank, together with U.S. Bank Trust will: (a) promptly pay: * any and all of their past due fees and expenses; * any and all amounts due to the Liquidity Provider; and * any principal amount of the Notes that was due on September 10, 2005, together with interest accruing thereon to the date of the payment; (b) deposit all remaining Funds in the trust accounts held by U.S. Bank Trust solely for the benefit of the noteholders in amounts at least sufficient to pay the balance of the Notes; and (c) terminate the liquidity agreement with the ABN AMRO. Aircraft Finance's transmittal of the Funds to the Collateral Agent will be without set-off, counterclaim, right of avoidance, recoupment, or reduction of any nature, whether pursuant to Chapter 5 of the Bankruptcy Code or otherwise. Judge Gropper clarifies that the Funds will not be property of the estates of any of the Debtors, and neither the Debtors will have any right, title or interest in or to the Funds, and no other creditor of any of the Debtors or any other holder of a lien against the assets of any person may acquire valid claims or liens as to the Funds. 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. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) OMEGA HEALTHCARE: Prices $175 Million Senior Notes Offering ----------------------------------------------------------- Omega Healthcare Investors, Inc. (NYSE:OHI) reported that on Dec. 20, 2005 it agreed to sell $175 million aggregate principal amount of 7.00% senior notes due 2016 in a private placement at an issue price of 99.109% of the principal amount of the Notes (equal to a per annum yield to maturity of 7.125%), resulting in gross proceeds to Omega of $173.4 million. The Notes will be unsecured senior obligations of Omega and will be guaranteed by Omega's subsidiaries. The notes will be offered only to qualified institutional buyers under Rule 144A under the Securities Act of 1933, as amended, and to non-U.S. persons outside the United States under Regulation S under the Securities Act. Omega will use the net proceeds of the offering to offer to fund its cash tender offer and consent solicitation for its outstanding $100 million aggregate principal amount of 6.95% notes due 2007, to repay outstanding indebtedness under its $200 million senior revolving credit facility, for general corporate purposes and to pay related fees and expenses. The Notes issued in this offering have not been registered under the Securities Act, or any applicable state laws. Accordingly, the Notes may not be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from registration under the Securities Act and applicable state securities laws. Headquartered in Timonium, Maryland, Omega HealthCare Investors, Inc. -- http://www.omegahealthcare.com/-- is a real estate investment trust investing in and providing financing to the long- term care industry. At September 30, 2005, the Company owned or held mortgages on 216 skilled nursing and assisted living facilities with approximately 22,407 beds located in 28 states and operated by 38 third-party healthcare operating companies. * * * Omega Healthcare's 6.95% notes due 2007 and 7% notes due 2014 carry Moody's Investors Service's B1 rating, Standard & Poor's BB- rating and Fitch's BB- rating. OPTION ONE: Extends 90-Day Payment for Borrowers to 180 Days ------------------------------------------------------------ Option One Mortgage Corporation is extending its relief provisions to borrowers impacted by Hurricanes Katrina and Rita. Most importantly, the company will allow borrowers who are still out of contact or need additional time to defer loan payments for 180 days from the date of the FEMA-declared disaster for Katrina, or until the end of February. This amounts to six months of deferred mortgage payments. After Hurricane Katrina struck, Option One immediately allowed borrowers to suspend payments for the first 90 days, a provision that was given to borrowers affected by Hurricanes Rita and Wilma, as well. The company also mobilized its specially trained and dedicated customer team to work with borrowers who were affected and to customize solutions for them. "Our first priority is working with our borrowers to understand their individual needs in this unprecedented situation," Teji Singh, senior vice president, servicing operations, said. "We also want to help borrowers avoid unnecessary costs and protect the financial interests they have in their homes. For that reason, we encourage any borrower who has not yet been in touch to please contact us so we can help them work out the best solution for their particular circumstances." While most borrowers are making their payments, it is clear that some borrowers need more time. In addition to the additional 90-day payment deferral, other relief provisions were also extended including: -- Non-payment will not be reported to credit agencies. -- Impacted borrowers will not be charged late fees. -- Any legal actions in progress, including foreclosure actions, are suspended. Option One may extend payment delays and other relief measures past 180 days on a case-by-case basis if the borrower needs that help. If a property inspection is necessary, the borrower will not be charged for this. For more information, visit http://www.optiononemortgage.com/and click on the icon about hurricane relief. Or call (800) 648-9605 from 8 a.m. to 6 p.m. EST, Monday - Friday. You will be connected to someone from the Borrower Disaster Assistance Team who is available to work with you to help you preserve your assets. Founded in 1992, Irvine, California-based Option One Mortgage Corporation -- http://www.optiononemortgage.com/-- originates and acquires nonprime residential mortgage products through a national network of brokers and lenders. Option One also services and sub-services nonprime mortgage loans, with more than $77 billion under management at Nov. 30, 2005. Additionally, the company markets a variety of direct-to-consumer mortgage products nationwide through its wholly owned subsidiary, H&R Block Mortgage Corporation. Option One employs more than 5,500 associates. It is a subsidiary of H&R Block Inc., -- http://www.hrblock.com/-- a diversified company with subsidiaries that deliver tax services and financial advice, investment and mortgage products and services, and business accounting and consulting services. * * * As reported in the Troubled Company Reporter on Dec. 01, 2005, 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 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 ORIUS CORP: Wants to Hire Conway Del Genio as Financial Advisors ---------------------------------------------------------------- Orius Corp., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Illinois for permission to employ Conway, Del Genio, Gries & Co., LLC as their financial advisors. Conway Del Genio will: 1) advise and assist the Debtors in the process of marketing and selling all or parts of Orius Telecom Services Inc, whether pursuant to Section 363(b) of the Bankrutpcy Code or otherwise; 2) assist the Debtors in the development, evaluation, negotiation, and execution of any potential restructuring plan or plan of reorganization; 3) assist the Debtors in the initial stages of their chapter 11 cases, including development of communications plans, preparation of critical vendor motions and first-day motions, development of employee retention plans and other tasks as may be necessary; 4) assist the Debtors in obtaining debtor-in-possession financing and in preparing and negotiating cash collateral arrangements; 5) assist the Debtors in the preparation of reports and in communications with their lenders and other constituencies, and in the preparation of any plan or plans of reorganization and related disclosure statement or statements to be filed by the Debtors or their subsidiaries; 6) render all other necessary financial advisory services to that are necessary in connection with their chapter 11 cases. Robert Del Genio, a member of Conway Del Genio, reports that his Firm will be paid with: 1) a monthly fee of $100,000; 2) a restructuring fee equal to two percent of the Debtors' obligations that are the subject of a restructuring that is consummated, and the restructuring fee is payable in full upon the effective date of the Debtors' plan of reorganization; 3) a sale transaction fee contingent upon the consummation of a sale transaction of the Debtors' assets, and equal to 2% of the aggregate consideration of a sale transaction of up to $30 million, and 4% of the incremental aggregate consideration of a sale transaction that is over $30 million; and 4) out of pocket expenses to be reimbursed monthly, including including the fees and disbursements of Conway Del Genio attorneys, plus any sales, use or similar taxes. Conway Del Genio assures the Court that it does not represent any interest materially adverse to the Debtors and is a disinterested person as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Barrington, Illinois, Orius Corp. -- http://www.oriuscorp.com/-- is a nationwide provider of construction, deployment and maintenance services to customers operating within the telecommunications; broadband; gas and electric utilities; and government industries. The Company and its affiliates filed for chapter 11 protection on Dec. 12, 2005 (Bankr. N.D. Ill. Case No. 05-63876). Aaron C. Smith, Esq., and Folarin S. Dosunmu, Esq., at Lord, Bissell & Brook LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets of $10 million to $50 million and estimated debts of $50 million to $100 million. ORIUS CORP: Wants to Hire Lord Bissell as Bankruptcy Counsel ------------------------------------------------------------ Orius Corp., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Illinois for permission to employ Lord, Bissell & Brook LLP as their general bankruptcy counsel. Lord Bissell will: 1) advise the Debtors with respect to their powers and duties as debtors and debtors-in-possession in the continued management and operation of their businesses and properties; 2) attend meeting and negotiate with representatives of creditors and other parties-in-interest and advise and consult the Debtors on the conduct of their chapter 11 cases; 3) advise the Debtors in connection with possible asset sales, business combinations, including the negotiation of asset, stock purchase, merger or joint venture agreements, implementing bidding procedures, evaluating competing offers and drafting corporate documents for proposed sales, and advise in closing asset sales; 4) advise the Debtors in connection with post-petition financing and cash collateral arrangements and in negotiations and drafting of documents related to DIP financing and cash collateral, and advise in connection with emergence financing and capital structure and in negotiations and drafting of documents related to those transactions; 5) advise the Debtors related to the evaluation of the assumption, rejection or assignment of unexpired leases and executory contracts, and prepare on their behalf all motions, applications, answers, orders, reports and papers necessary to the administration of the Debtors' estates; 6) advise the Debtors with respect to legal issues relating to their ordinary course of business and negotiate and prepare on the Debtors' behalf plan or plans of reorganization, disclosure statement or statements and all related documents to the plan and disclosure statement; 7) attend meetings with third parties and appear before the Bankruptcy Court, other courts and the U.S. Trustee and protect the Debtors' interests before those courts and the U.S. Trustee; and 8) perform all other appropriate and necessary legal services to the Debtors in connection with their chapter 11 cases. Forrest B. Lammiman, Esq., a member of Lord Bissell, discloses that his Firm received a $200,000 retainer. Mr. Lammiman reports Lord Bissell's professionals bill: Designation Hourly Rate ----------- ----------- Partners $425 - $590 Associates $210 - $305 Paralegals $125 - $175 Lord Bissell assures the Court that it does not represent any interest materially adverse to the Debtors and is a disinterested person as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Barrington, Illinois, Orius Corp. -- http://www.oriuscorp.com/-- is a nationwide provider of construction, deployment and maintenance services to customers operating within the telecommunications; broadband; gas and electric utilities; and government industries. The Company and its affiliates filed for chapter 11 protection on Dec. 12, 2005 (Bankr. N.D. Ill. Case No. 05-63876). When the Debtors filed for protection from their creditors, they listed estimated assets of $10 million to $50 million and estimated debts of $50 million to $100 million. PACIFIC LUMBER: Weak Financial Profile Cues S&P's Negative Outlook ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Pacific Lumber Co. to negative from developing. The company's 'CCC-' corporate credit rating was affirmed. "We are concerned about the company's diminished liquidity, negative cash flow, and continuing harvest restrictions and onerous regulations," said Standard & Poor's credit analyst Dominick D'Ascoli. The rating on redwood and Douglas-fir lumber producer Pacific Lumber reflects: -- Very weak financial performance during the past few years; -- Financial difficulties at its wholly owned subsidiary and primary log supplier, Scotia Pacific Co. LLC Scotia has announced it is looking into restructuring its timber notes and will likely seek Chapter 11 bankruptcy protection; -- The public's environmental sensitivity regarding harvesting trees in California. Environmental lawsuits will likely continue for the foreseeable future; -- Onerous environmental regulations with multiple governmental agencies involved in the harvest permitting process; and -- Narrow product focus with little operating diversity in the highly cyclical lumber market. Liquidity was $8 million on Sept. 30, 2005, comprised of $7.7 million of availability under a $30 million borrowing-based revolving credit facility maturing in 2010 and $300,000 or cash and marketable securities. Liquidity declined dramatically in the third quarter because the company was required to post a $9.9 million letter of credit to secure workers compensation liabilities triggered by Standard & Poor's low rating on the company and lower sales as a result of continued harvest restrictions. Pacific Lumber estimates its cash flow from operations will not be sufficient to fund its operations until the fourth quarter of 2006 and that it will use its available liquidity to fund the shortfall. The rating will be lowered if Pacific Lumber files for bankruptcy protection. The outlook could be revised to stable if Scotia Pacific successfully restructures its debt and is able to provide Pacific Lumber with adequate log volumes and if Pacific Lumber's financial performance improves. PETSMART INC: Improved Operating Performance Spurs S&P's BB Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit rating on specialty pet retailer PetSmart Inc. to 'BB' from 'BB-'. The upgrade is based on the company's improved operating performance and credit measures. Comparable-store sales increased 4.1% in the first three quarters of 2005, while operating margins expanded to 17.1% from 16.3% the year before. Operating performance has been driven by good execution and favorable industry trends. As a result, cash flow protection measures have continued to strengthen, with lease-adjusted EBITDA for the latest 12 months covering interest by 4.0x, and lease-adjusted debt to EBITDA at 3.0x. The outlook has been revised to stable. The ratings on Phoenix, Arizona-based PetsMart reflect the risks associated with the company's participation in the competitive and highly fragmented pet supplies retail industry. These risks are only partially mitigated by the company's established market position in the industry and its improving trends for operating performance and credit measures. "PetSmart has made significant progress in improving its operations over the past three years," said Standard & Poor's credit analyst Robert Lichtenstein, "reflecting its successful store reformatting and expanded focus on pet services." PHOTOCIRCUITS CORP: Court Approves $7.33MM DIP Loan from Stairway ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of New York authorized Photocircuits Corporation to incur $7.33 million postpetition debt from Stairway Capital Management, L.P. on an interim basis. The Debtor said that the funds are necessary to meet all of its working capital needs, and to preserve the going concern sale value of its assets. In addition, the Debtor's suppliers, vendors and other creditors are looking to the immediate approval of the DIP loan for assurance that they will be paid on a continuous and timely basis. Stairway is entitled to superiority administrative expense status and secured by superpriority status over senior liens on and security interest in all of the Debtor's assets. The loan will mature on January 31, 2006. Headquartered in Glen Cove, New York, Photocircuits Corporation -- http://www.photocircuits.com/-- was the first independent printed circuit board fabricator in the world. Its worldwide reach comprises facilities in Peachtree City, Georgia; Monterrey, Mexico; Heredia, Costa Rica; and Batangas, Philippines. The Company filed for chapter 11 protection on Oct. 14, 2005 (Bankr. E.D.N.Y. Case No. 05-89022). Gerard R Luckman, Esq., at Silverman Perlstein & Acampora LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated more than $100 million in assets and debts. POTLATCH CORP: Registers 1.6 Mil. Common Shares for Distribution ---------------------------------------------------------------- Potlatch Corporation filed a Registration Statement with the Securities and Exchange Commission for the distribution of 1.6 million shares of common stock under its 2005 Stock Incentive Plan. A full-text copy of the 2005 Stock Incentive Plan is available for free at http://ResearchArchives.com/t/s?3e5 The company priced the shares of stock registered at $47.11 per share, aggregating around $75.38 million. The Company's common shares are traded at the New York Stock Exchange under the symbol "PCH". The Company's shares trades between $46.90 and $52.10 per share. A full-text copy of the Registration Statement is available for free at http://ResearchArchives.com/t/s?3e3 Potlatch Corporation -- http://www.potlatchcorp.com/-- owns and manages approximately 1.5 million acres of timberlands and operates 13 manufacturing facilities. The Company's timberland and all of its manufacturing facilities are located within the continental United States, primarily in Arkansas, Idaho, Minnesota and Nevada. The Company is engaged principally in growing and harvesting timber and converting wood fiber into two broad product lines: (a) commodity wood products; and (b) bleached pulp products. * * * As reported in the Troubled Company Reporter on Oct. 31, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on forest products company Potlatch Corp. to 'BB' from 'BB+'. At the same time, Potlatch's unsecured debt rating was lowered to 'BB' from 'BB+' and its subordinated debt rating was lowered to 'B+' from 'BB-'. All ratings were removed from CreditWatch where they were placed with negative implications on Sept. 20, 2005. The outlook is stable. As reported in the Troubled Company Reporter on Oct. 27, 2005, Moody's Investors Service affirmed Potlatch Corporation's Ba1 senior unsecured and Ba2 senior subordinated debt ratings. Ratings affirmed: * Corporate family rating: Ba1 * Senior unsecured notes and debentures: Ba1 * 10.00% senior subordinated notes due 2011: Ba2 Outlook: Stable As reported in the Troubled Company Reporter on Oct. 24, 2005, Fitch Ratings has affirmed Potlatch Corporation's senior unsecured ratings and issuer default rating at 'BB+' and the company's senior subordinated rating at 'BB'. The Potlatch Rating Outlook remains Stable. PT HOLDINGS: Lenders Extend 2004 Reporting Deadline to Jan. 31 -------------------------------------------------------------- PT Holdings Company Inc., parent company of Port Townsend Paper Corporation, reported the receipt of a 30-day waiver extension to deliver its 2004 audited financial statements under their primary revolving credit facility. Under the extension, the 2004 audited financial statements are now due by Jan. 31, 2006. As previously announced, the company is also in the process of restating and re-auditing its 2002 and 2003 financial statements. "In spite of the continued hard work of our staff and our independent auditors, we haven't completed the necessary steps to issue our 2002, 2003 and 2004 financial statements," said Timothy P. Leybold, Chief Financial Officer. "We fully expect to issue the statements shortly after the holidays." The company's pursuit of the 30-day extension was due in part to the company's discovery of asset allocation errors within the 2001 purchase accounting for the acquisition of Crown Packaging. These errors will require restatement of the company's fixed assets, intangible assets, and goodwill balances, along with the related annual depreciation, amortization, and tax effects on the company's operating results for each of the years ended December 31, 2002, 2003 and 2004. These restatements to 2002 and 2003 are in addition to those previously announced on October 28. Specifically, the correction is expected to increase the amount of fixed assets and identifiable intangible assets acquired while correspondingly reducing the amount of goodwill originally recorded. The company has retained an independent appraisal firm to assist management in determining the appropriate allocation of purchase price between these long-term asset classes. The company will have $3 million of additional borrowing availability under its revolving credit facility upon delivery of its 2004 audited financial statements to its lenders. The current $3 million reserve applied against the company's borrowing availability under the company's revolving credit agreement increased from $2.5 million on Nov. 30, 2005. The Port Townsend Paper family of companies employs approximately 800 people and annually produces more than 320,000 tons of unbleached Kraft pulp, paper and linerboard at its mill in Port Townsend, Washington. The company also manufactures approximately 1.8 billion square feet of corrugated products annually at its three Crown Packaging Plants and two BoxMaster Plants located in British Columbia and Alberta. QUEBECOR MEDIA: Launches Offers for 11-1/8% & 13-1/4% Sr. Notes --------------------------------------------------------------- Quebecor Media Inc. has commenced cash tender offers and consent solicitations for any and all of its outstanding 11-1/8 % Senior Notes due July 15, 2011 and 13-3/4 % Senior Discount Notes due July 15, 2011. Each tender offer is scheduled to expire at 12:01 a.m. New York City time on Jan. 18, 2006, unless extended or terminated. The consent solicitations are scheduled to expire at 5:00 p.m. New York City time on Dec. 30, 2005, unless extended. The tender offers are being made upon the terms, and subject to the conditions, set forth in the Offer to Purchase and Consent Solicitation Statement, dated Dec. 16, 2005, and the related Letter of Transmittal, which more fully set forth the terms of the tender offers and consent solicitations. The Senior Notes bear CUSIP number 74819RAB2 and ISIN US74819RAB24, and the Discount Notes bear CUSIP number 74819RAD8 and ISIN US74819RAD89. The total consideration per $1,000 principal amount of Senior Notes validly tendered and not withdrawn prior to the Consent Date will be based on the present value on the early settlement date (or on the final settlement date, if Quebecor Media foregoes an early settlement date, as described in the Offer to Purchase) of $1,055.63 (the amount payable on July 15, 2006, which is the date that the Notes may first be redeemed by Quebecor Media), and the present value of interest that would be payable on, or accrue from, the last interest payment date until July 15, 2006, in each case, determined based on a fixed spread of 50 basis points over the yield on the 7.0% U.S. Treasury Note due July 15, 2006. The total consideration per $1,000 principal amount at maturity of Discount Notes validly tendered and not withdrawn prior to the Consent Date will be based on the present value on the early settlement date (or on the final settlement date, if Quebecor Media foregoes an early settlement date) of $1,068.75 (the amount payable on July 15, 2006, which is the date that the Notes may first be redeemed by Quebecor Media), determined based on a fixed spread of 50 basis points over the yield on the 7.0% U.S. Treasury Note due July 15, 2006. In addition, holders of Senior Notes (but not Discount Notes) accepted for purchase will receive accrued and unpaid interest to, but not including, the applicable settlement date, in respect of such Senior Notes. Yields for the U.S. Treasury Notes referenced above will be calculated at 2:00 p.m., New York City time, at least one business day following the Consent Date and at least two business days prior to the Expiration Date. The company intends to issue a press release announcing the Price Determination Date by 9:30 a.m., New York City time, on such date and will issue a press release announcing the pricing information promptly after it is determined. In connection with the tender offers, Quebecor Media is soliciting consents to certain proposed amendments to eliminate substantially all of the restrictive covenants and certain events of default in the respective indentures governing the Senior Notes and the Discount Notes. A consent payment of $30.00 per $1,000 principal amount of Senior Notes and $30.00 per $1,000 principal amount at maturity of Discount Notes to holders who validly tender their Notes and deliver their consents at or prior to the Consent Date is included in the total consideration. Holders that tender their Notes after the Consent Date but prior to or at the expiration of the tender offers will receive the purchase price, which is equal to the total consideration less the consent payment. Holders tendering Notes will be required to consent to proposed amendments to the respective indentures governing the Senior Notes and the Discount Notes, which will eliminate substantially all of the restrictive covenants and certain events of default and related provisions contained in the respective indentures. Adoption of the proposed amendments under the respective indentures requires the consent of at least a majority of the outstanding principal amount of the Senior Notes and at least a majority of the outstanding principal amount at maturity of the Discount Notes, respectively. The consummation of the tender offers and consent solicitations is subject to the conditions set forth in the Offer to Purchase, including the receipt of the Majority Consents from the Noteholders, and is conditioned on Quebecor Media obtaining the financing necessary to fund the tender offers and consent solicitations. Each tender offer and consent solicitation is independent of the other, and Quebecor Media may amend, extend or terminate each individually. Quebecor Media may, subject to certain restrictions, amend, extend or terminate the offers and consent solicitations at any time in its sole discretion without making any payments with respect thereto. Holders may withdraw their tenders and revoke their consents at any time prior to the execution of the supplemental indentures giving effect to the proposed amendments, which will occur promptly following the Consent Date if the Majority Consents are obtained. Tendered Notes may not be withdrawn and consents may not be revoked after the Withdrawal Deadline unless we extend the Withdrawal Deadline. Quebecor Media has engaged Citigroup Corporate and Investment Banking as dealer manager for the tender offers and solicitation agent for the consent solicitations. Questions regarding the tender offers and consent solicitations may be directed to: Citigroup Corporate and Investment Banking Tel. Nos.: (800) 558-3745 or (212) 723-6106 Requests for documentation should be directed to the Information Agent and the Depositary for the tender offers and consent solicitations: Global Bondholder Services Corporation Tel. No.: (212) 430-3774 (collect) Toll Free No.: (866) 470-4300 Quebecor Media Inc., a company incorporated in Canada under the Companies Act, is one of Canada's largest media companies. Its principal lines of business are cable, newspaper publishing, television broadcasting, business telecommunications, book, magazine and video retailing and publishing, distribution and music recording, and new media services. Quebecor Media Inc.'s 11-1/8 Senior Notes due 2011 carry Moody's Investors Service's B2 rating and Standard & Poor's B rating. REFCO INC: 24 Customers Want RCM's Case Converted to Chapter 7 -------------------------------------------------------------- Twenty-four customers holding approximately $500,000,000 in claims ask the Court to convert Refco Capital Markets, Ltd.'s Chapter 11 case to a stockbroker liquidation under Sections 109(d) and 1112(b) and Subchapter III of Chapter 7 of the Bankruptcy Code. The Customer Group, which initiated the request, consists of: * Inter Financial Services, Ltd., * Capital Management Select Fund Ltd., * Global Management Worldwide Limited, * Arbat Equity Arbitrage Fund Limited, * Russian Investors Securities Limited, * Garden Ring Fund Limited, * RB Securities Limited, * GTC Bank Inc., * IDC Financial S.A., * Investment Development Finance Corp/II, * Investment & Development Finance Corp., * Oslo International S.A., * Alfredo Skinner-Klee and Alexandra Sol de Skinner-Klee, * Ernesto Ruiz Sinibaldi, * Christian Klose Pieters and Aida Margarita Rosales de Klose, * Hibernia Invest & Finance, S.A., * Ralph Hervarac Inc., * Ballery Holdings, * Bilston International Inc., * Banco Reformador S.A., * Transcom Bank (Barbados) Ltd., and * Inversiones Sacramento S.A. In separate pleadings, Josefina Franco Sillier and Banco Uno S.A. join in the Customer Group's Conversion Motion. Thomas J. Moloney, Esq., at Cleary, Gottlieb, Steen & Hamilton LLP, in New York, informs the U.S. Bankruptcy Court for the Southern District of New York that Refco Capital Markets, Ltd., is a stockbroker as defined by Section 101(53A) of the Bankruptcy Code. In that connection, RCM has customers and engaged in the business of effecting transactions in securities for the account of others or with members of the general public, from or for their customers' accounts. Based on disclosures by Refco Inc. and its subsidiaries, RCM has approximately 3,000 customers. The Customer Group Mr. Moloney relates that each member of the Customer Group is an RCM customer under Section 741(2) of the Bankruptcy Code because each is: (A) an entity with whom RCM has dealt with as principal or agent and that has a claim against RCM on account of a security received, acquired, or held by RCM in the ordinary course of RCM's business as a stockbroker, from or for the securities account or accounts of each member of the Customer Group and other customers: -- for safekeeping; -- with a view to sale; -- to cover a consummated sale; -- pursuant to a purchase; -- as collateral under a security agreement; or -- for effecting registration of transfer; and (B) an entity that has a claim against RCM arising out of: -- a sale or conversion of a security received, acquired, or held; or -- a deposit of cash, a security, or other property with RCM for purchasing or selling a security. Members of the Customer Group have been parties to, and have engaged in securities transactions pursuant to, certain Customer Agreements with RCM since: (i) August 2001 for Inter Financial; (ii) June 2004 for Capital Management; (iii) July 1999 for RB Securities; and (iv) prior to the Petition Date for the other members of the Customer Group. For each of those customers, RCM provided directly customer account statements reflecting their holdings. Mr. Moloney illustrates that RCM dealt with its clients as "customers" and is currently holding assets constituting "customer property" that were in the Customer Group's accounts. Through an October 27, 2005 letter, former Refco Chief Executive Officer Phillip R. Bennett informed Refco customers that with respect to their accounts, the timetable for returning funds to customers would be determined by the Bankruptcy Court. However, the October 27 letter did not disclose that RCM no longer had sufficient customer property in its possession to return to RCM customers all the customer property once held in the customers' accounts. On December 5, 2005, the Refco Debtors made a Court-ordered disclosure in which it was acknowledged that RCM held approximately $1,905,000,000 in assets, against which there were customer claims of $3,675,000,000 -- a shortfall of approximately $1,770,000,000. The Customer Group's Accounts According to disclosures made to specific customers regarding the coverage ratios in their individual accounts, the shortfall did not affect customers equally. For some customers, RCM asserted that it has retained only a small portion of the customer property listed in their customer accounts. For other customers, RCM continued to hold a greater percentage of the securities. The disclosure also revealed that the majority of RCM's assets are intercompany claims to customer property, including claims for $2,151,000,000 and $608,000,000 against Refco Global Finance Ltd. and Refco Group Ltd., LLC, as of September 30, 2005. Mr. Moloney states that neither Refco Global nor Refco Group is an operating entity. Mr. Moloney asserts that stockbrokers and commodity brokers can be liquidated only through a Chapter 7 liquidation, and "cannot be debtors under Chapter 11," because of the "special customer protection deemed necessary" in cases involving those brokers. "As an insolvent stockbroker that is unable to meet its obligations or pay its debts as they become due and that does not qualify to be a debtor under chapter 11, RCM should be a debtor in a chapter 7 subchapter III liquidation proceeding," Mr. Moloney contends. "A chapter 7 stockbroker liquidation is necessary and appropriate so that all customers of RCM can be treated equally and can obtain the Congressionally mandated priority treatment with respect to customer property under [Section 752 of the Bankruptcy Code] and other protections provided to customers under subchapter III of chapter 7." Mr. Moloney relates that customer protection under the Bankruptcy Code include: -- subordination of insider and other claims under Section 747; -- reduction of securities to money to reduce market risks under Section 748; and -- avoidance of certain transfers and treating a property as customer property under Section 749. Appointment of Interim Trustee for RCM Is Necessary The Customer Group asserts that, regardless of whether a Chapter 11 Trustee is appointed for any of the Refco entities, there is a substantial need for a separate interim trustee for RCM. Mr. Moloney points out that RCM has a unique interest because based on the reported intercompany obligations owed to RCM, it appears that RCM's customer property was transferred to other Debtors. In addition, RCM's transfers of customer property have persisted even after RCM's Petition Date, when those transfers clearly violated Section 549 of the Bankruptcy Code. Another form of agreement posted by the Debtors may indicate that the Refco Debtors and non-debtor affiliates entered cross- affiliate netting agreements, Mr. Moloney notes. As a result of those practices, certain customer property in RCM's possession, custody, or control may have been used to satisfy the obligations between other Refco Debtors and non-debtor affiliates, including the regulated entities. Mr. Moloney also points out that the likelihood that the close- out of Refco accounts by other entities might disproportionately affect RCM may have been increased by the fact that the RCM moratorium was declared four days before the Chapter 11 filings by the various Refco entities. "It is unclear who, if anyone, would have been looking out for the interests of RCM and its customers when these decisions were made," Mr. Moloney says. A single trustee for RCM and the other Refco Debtors cannot carry out the required fiduciary obligations to investigate, pursue claims, and recover customer property and other assets for RCM and the thousands of RCM customers from nearly all of the other Refco Debtors and non-debtor affiliates, Mr. Moloney argues. "Under these unique circumstances, a Trustee appointed for RCM and the other Refco Debtors would undoubtedly have impermissible conflicts under Bankruptcy Rule 2009(d)." Any appointment would also lead to unnecessary inconvenience and expense, Mr. Moloney adds, because the Customer Group would immediately seek to disqualify that trustee and exercise their voting rights to replace the trustee to ensure that RCM is controlled by an independent fiduciary that has not existed since RCM's case began. Turisol Casa Responds Turisol Casa de Cambio C.A., and its related entities and affiliates informs the Court that as of December 14, 2005, the Debtors' customers and other parties-in-interest do not have sufficient information to make an informed decision on the future course the Debtors' cases should take. The Debtors have offered to provide discovery in the next few weeks that hopefully will satisfy that need. Therefore, Turisol believes it is appropriate that the Customer Group's Conversion Motion not be heard until January 31, 2006, to allow for production and review of the necessary information. 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. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) REFCO INC: Turisol Wants Ch. 11 Trustee Appointment Motion Denied ----------------------------------------------------------------- As reported in the Troubled Company Reporter on Dec. 14, 2005, Deirdre A. Martini, the United States Trustee for Region 2, asks the Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York to appoint a Chapter 11 trustee in Refco Inc., and its debtor-affiliates' chapter 11 cases pursuant to Section 1104(a)(2) of the Bankruptcy Code. Andrew D. Velez-Rivera, Esq., trial attorney for the U.S. Trustee, tells the Court that the appointment of a truly independent fiduciary to investigate the Debtors' prepetition affairs and to maximize the recoveries for their estates has been of paramount concern to the U.S. Trustee since Refco, Inc., filed for bankruptcy protection. * * * Ad Hoc Committee Responds The Ad Hoc Committee of Refco Capital Markets Ltd. Customers acknowledges that where intercompany claims are incidental to the primary reorganization efforts in Chapter 11 cases, some courts have permitted a single trustee to serve for jointly administered estates. However, Andrew Dash, Esq., at Brown Rudnick Berlack Israels LLP, in New York, argues that: -- Refco Capital Markets, Ltd., conducts no on-going business; -- the Debtors' expert has testified that RCM's assets have no premium over liquidation value; and -- there is no reorganization contemplated in the Debtors' cases. "Most critically, intercompany claims held by RCM against the other jointly administered estates constitute the single greatest asset of the RCM estate, and successful and immediate prosecution of intercompany claims seem to be the difference between a dividend to RCM's creditors as a whole in the 50% range and full payment with interest," Mr. Dash emphasizes. Accordingly, any benefit of joint administration of the estates by a single trustee especially in a case where indictments are already pending on account of wide-spread financial fraud, is greatly overweighed by the over-arching need to assure RCM's $3,000,000 of customers and creditors of a fair and independent protection of RCM's property and legal rights, Mr. Dash contends. Thus, the Ad Hoc Committee asserts that if one or more trustees are to be appointed, a separate trustee must be appointed for RCM. Turisol Says Motion is Premature Sandra E. Mayerson, Esq., at Holland & Knight LLP, in New York, notes that based on the information currently in Turisol Casa de Cambio C.A.'s possession, it would appear that the Debtors and in particular, Refco Capital Markets, Ltd., are not eligible to be debtors under Chapter 11 of the Bankruptcy Code. Nevertheless, until the Debtors have finished providing the information they have promised, Turisol reserves all of its rights to support, object or otherwise respond to both the U.S. Trustee's request. Accordingly, Turisol asks the Court to deny the Trustee's request or, in the alternative, adjourn its hearing until a ruling is rendered on the Chapter 7 Motion filed by a group of customers. 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. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) REFCO INC: Court Okays Reduction of Break-Up Fee for Asset Sale --------------------------------------------------------------- As reported in the Troubled Company Reporter on Dec. 20, 2005, the U.S. Bankruptcy Court for the Southern District of New York approved Refco Inc. and its debtor-affiliates' the bidding procedures for the proposed sale of assets related to Refco's online foreign-exchange trading unit, namely: * The sale of more than 15,000 retail client accounts of Refco FX Associates LLC -- http://www.refcofx.com/--; and * The 35% share of Forex Capital Markets LLC currently owned by Refco. FXCM, a Futures Commission Merchant registered with the CFTC and a member of the National Futures Association, provides a foreign currency trading platform and execution services to retail investors * * * Sally McDonald Henry, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, tells the Court that to resolve a potential objection by the Official Committee of Unsecured Creditors, FXCM has agreed to reduce its request for a Break-Up Fee from $3,150,000 to $2,000,000 and Expense Reimbursement from $1,000,000 to $500,000. Ms. Henry maintains that there has been no self-dealing or manipulation by either the Sellers or the Purchasers. Moreover, the Break-Up Fee will encourage a robust auction process. The proposed Purchase Agreement with the Purchasers provides the Sellers with a guaranteed floor bid that will remain in place during the course of the auction. The Court grants the Debtors' request as amended. 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. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) REPTRON ELECTRONICS: Appoints Kirkland as New Independent Auditors ------------------------------------------------------------------ Reptron Electronics, Inc. (OTC Bulletin Board: RPRN) reported that its Audit Committee of the Board of Directors has appointed Kirkland, Russ, Murphy & Tapp, P.A. to replace Grant Thornton LLP as the company's independent auditors, effective immediately. Kirkland, Russ, Murphy & Tapp, P.A. is one of the leading accounting firms in the Tampa Bay area. "Grant Thornton LLP provided expertise and dedicated service to Reptron for many years, for which we are greatly appreciative," said Charles L. Pope, Reptron's chief financial officer. "We expect that this change will provide a client-auditor relationship that better serves our current needs and capabilities as well as result in appreciable cost savings." Reptron said that the decision to change auditors was not made as a result of any disagreements with Grant Thornton LLP regarding the Company's accounting practices or financial reporting, financial statement disclosure or auditing scope or procedure, nor did they resign from the engagement. Reptron Electronics, Inc. -- http://www.reptron.com/-- is a leading electronics manufacturing services company providing engineering services, electronics manufacturing services and display integration services. Reptron Manufacturing Services offers full electronics manufacturing services including complex circuit board assembly, complete supply chain services and manufacturing engineering services to OEMs in a wide variety of industries. Reptron Display and System Integration provides value-added display design engineering and system integration services to OEMs. At Sept. 30, 2005, Reptron Electronics, Inc.'s balance sheet showed a stockholders' deficit of $379,000, compared to $14 million positive equity at Dec. 31, 2004. SALOMON BROS: S&P's Ratings on Class M & N Certs. Tumbles to D -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on six classes and lowered its ratings on five classes of Salomon Bros. Commercial Mortgage Trust 2001-C1's commercial mortgage pass-through certificates. At the same time, ratings are affirmed on five other classes from the same transaction. The raised and affirmed ratings reflect credit enhancement levels that adequately support the ratings in various stress scenarios. The downgrades reflect the potential for ongoing interest shortfalls and the risk of principal losses upon liquidation of the specially serviced assets. According to the remittance reported dated Nov. 18, 2005, the trust collateral consisted of 169 loans with an aggregate outstanding principal balance of $838.2 million, down from 182 loans with an aggregate balance of $952.7 million at issuance. The master servicer, Midland Loan Services Inc., provided partial- or full-year 2004 net cash flow debt service coverage figures for 92% of the pool, which excludes all defeased loans. Based on this information, Standard & Poor's calculated a weighted average DSC of 1.37x, up from 1.30x at issuance. The top 10 assets have an aggregate outstanding balance of $154 million and a weighted average DSC of 1.44x, up from 1.30x at issuance. The current DSC excludes the largest asset in the trust, a vacant office building, which is REO. Additionally, the third- and 10th-largest assets are on the master servicer's watchlist. Standard & Poor's reviewed recent property inspections provided by Midland for assets underlying the top 10 loans, and all were characterized as "good." There are four assets with the special servicer, CWCapital Asset Management LLC. Details on these assets are: -- Atrium at Highpoint, the largest asset in the pool, is a 212,929-sq.-ft. office property in Irving, Texas. The asset has an outstanding balance of $20.1 million and a total exposure of $21.6 million. The loan was initially transferred to the special servicer because the former borrower sought financial relief after the sole tenant sought to renegotiate its existing lease. The tenant subsequently vacated the property, and the former borrower brought a lender liability suit against the trust, alleging that the trust interfered with the lease negotiations. A substantial loss is expected upon the eventual resolution of this asset. -- 95 Metcalf Square is a 154,275-sq.-ft. mixed-use property in Overland Park, Kansas, with a $10.2 million balance and $2.5 million in servicer advances. The property is currently REO, and a significant loss is expected upon the liquidation of this asset. -- Stream International is a 99,869-sq.-ft. office property in Canton, Massachusetts, with a $5.9 million balance and a total exposure of $6.3 million. The loan is 90-plus days delinquent in its debt service payments and was transferred to the special servicer because the sole tenant, which occupied 100% of the space, recently vacated the property. A tenant recently signed a lease for 58% of the space, and a moderate loss is expected upon the eventual resolution of this loan. -- Marmalade Square Apartments is a 100-unit multifamily property in Salt Lake City, Utah. The loan was transferred to the special servicer due to a monetary default. The special servicer has informed Standard & Poor's that this loan recently paid off with no loss to the trust. Midland reported 41 loans on its watchlist with an aggregate outstanding balance of $195 million. The third-largest asset in the pool, Ironwood Apartments, is a 288-unit multifamily property in Houston, Texas. The loan appears on the watchlist because it reported a 2004 DSC of 0.75x. The 10th-largest asset in the pool, Summit Ridge Business Park, is a 133,841-sq.-ft. office property in San Diego, California. The loan appears on the watchlist because it matures in February 2006. The property is currently 85% occupied and reported a 2004 DSC of 1.57x. The remaining loans on the watchlist appear there primarily due to occupancy or DSC issues. Standard & Poor's stressed the specially serviced loans, loans on the watchlist, and other loans with credit issues as part of its analysis. The resultant credit enhancement levels adequately support the raised, lowered, and affirmed ratings. Ratings Raised Salomon Bros. Commercial Mortgage Trust 2001-C1 Commercial Mortgage Pass-through Certificates Series 2001-C1 Rating Class To From Credit support ----- -- ---- -------------- B AAA AA 20.17% C AA A 15.33% D A+ A- 13.91% E A- BBB+ 12.20% F BBB+ BBB 10.50% G BBB BBB- 8.79% Ratings Lowered Salomon Bros. Commercial Mortgage Trust 2001-C1 Commercial Mortgage Pass-through Certificates Series 2001-C1 Rating Class To From Credit support ----- -- ---- -------------- J B BB 4.24% K B- B+ 3.39% L CCC B- 2.53% M D CCC+ 1.68% N D CCC 1.11% Ratings Affirmed Salomon Bros. Commercial Mortgage Trust 2001-C1 Commercial Mortgage Pass-through Certificates Series 2001-C1 Class Rating Credit support ----- ------ -------------- A-2 AAA 25.00% A-3 AAA 25.00% H BB+ 6.52% X-1 AAA N/A X-2 AAA N/A N/A - Not applicable. SAMSONITE CORP: Equity Deficit Narrows to $38.9 Mil. at October 31 ------------------------------------------------------------------ Samsonite Corporation delivered its quarterly report on Form 10-Q for the quarter ending October 31, 2005, to the Securities and Exchange Commission on December 15, 2005. The company reported a $3.2 million net loss on $248.7 million of net revenues for the quarter ending October 31, 2005. For the three months ended October 31, 2005, operating income decreased to 6.9 million from $17.6 million at July 31, 2005. As of October 31, 2005, the Company's equity deficit narrowed to $38,936,000 from a $49,139,000 deficit at Jan. 31, 2005. The Company had assets totaling $571,487,000 and debts aggregating $595,063,000 at October 31, 2005. A full-text copy of Samsonite's latest quarterly report is available at no charge at http://researcharchives.com/t/s?3e4 Samsonite Corporation -- http://www.samsonite.com-- designs, manufactures and distributes luggage, casual bags, business cases and travel related products throughout the world. The Company also licenses its brand names and is involved with the design and sale of apparel. SEAGATE TECH: Moody's Reviews $400 Million Sr. Notes' Ba2 Rating ---------------------------------------------------------------- Moody's Investors Service placed the ratings of Seagate Technology HDD Holdings on review for possible downgrade. The review is prompted by the company's announcement of its intention to acquire Maxtor Corporation in an all-stock transaction for approximately $1.9 billion. Concurrently, Moody's is also placing the ratings for Maxtor under review for a possible upgrade. The acquisition, which has been approved by both boards of directors, is expected to close by the end of June 2006 and is subject to customary approvals and consents. Moody's review of Seagate will assess the prospects for: 1) integration challenges in effectively combining their broad operations; 2) revenue attrition resulting from both companies' significant presence in common end markets; 3) margin contraction arising from differences in cost structures and the extent to which this can be mitigated through effective integration and the realization of expected cost synergies; and 4) management's capital structure plans with respect to Maxtor's approximate $581 million of balance sheet debt as well as its commitment to maintaining a very liquid and lowly leveraged balance sheet. Seagate's existing ratings reflect the company's dominant position in the disk drive industry and incorporate the sector's capital intensity, volatility, and the highly commoditized nature of the disk drive business that is characterized by short product life- cycles and maturation linked ASP declines. Recent performance by Seagate has been stable to improving, with gross margins increasing from just under 18% in early fiscal 2004 to over 25% in the September 2005 quarter and operating margins showing similar positive trends. As of September 2005, Seagate's cash balances (including short term investments) were $1.8 billion and debt totaled $740 million, $340 million of which was repaid in October. Moody's review of Maxtor's ratings for a possible upgrade will consider the stronger credit profile of Seagate and assess whether Seagate intends to legally guarantee Maxtor's debt. Maxtor's existing ratings reflect the same industry characteristics noted above as well as the company's relatively smaller size, very weak profitability and negative free cash flow (cash flow from operations less capital expenditures). The ratings also considered Maxtor's strong position in the consumer electronics segment and its moderately reduced manufacturing cost base through transitioning to low cost China facilities over the last year. For the latest twelve months ending October 1, 2005 Maxtor reported net sales of $3.9 billion and a gross margin of 10.8% compared to 8.1% for fiscal 2004, however the company continues to post losses, with a $9 million operating loss in the most recent quarter. Seagate is currently seeking to replace its existing $150 million senior secured credit facility which could give Seagate the flexibility to more broadly execute a recently approved $400 million stock buy-back program and pay common dividends, the latter of which is currently limited by the existing credit facility to $150 million annually. Management expects that the acquisition will expand the combined company's product portfolio and breadth of technology and result in annual cost savings of approximately $300 million one year after the closing of the transaction, which will require restructuring costs of about $500 million. Ratings under review for possible downgrade; 1) Ba1 rating to Seagate's $150 million guaranteed senior secured revolving credit facility, due 2007 2) Ba2 rating to Seagate's $400 million senior notes 8%, due 2009 3) Ba1 Corporate Family Rating to Seagate 4) SGL -- I liquidity rating to Seagate These ratings have been placed on review for possible upgrade: 1) B2 rating to Maxtor's remaining $135 million of the $230 million 6.8% convertible senior notes, due 2010 2) Caa1 rating to Maxtor Corporation's $60 million 5-3/4% convertible subordinated debentures, due 2012 3) B2 Corporate Family Rating to Maxtor Maxtor Corporation, headquartered in Milpitas, California, is a leading provider of hard disk drives and related storage solutions for: * desktop computers, * high-performance Intel-based servers, * near-line storage systems, and * consumer electronics. Seagate, with primary offices in Scotts Valley, California, is a worldwide leader in the design, manufacture and marketing of rigid disc drive products used as the primary medium for storing electronic information in systems ranging from personal computers and consumer electronics to data centers delivering information over corporate networks and the Internet SOLUTIA INC: Wants to Limit Transfers of Equity Interests --------------------------------------------------------- Solutia Inc. and its debtor-affiliates have accumulated significant net operating losses for United States federal income tax purposes, according to Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York. Under the Internal Revenue Code of 1986, as amended, and the Treasury Regulations, the Debtors can carry forward their NOLs to offset their future taxable income for up to 20 taxable years. In this way, the Debtors can utilize their NOLs to reduce their future consolidated United States federal income tax obligations. Mr. Cieri discloses that, as of the end of calendar year 2005, the Debtors' NOLs are estimated to be $767,800,000. Based on the applicable 35% corporate tax rate in effect, this represents $268,700,000 in potential tax savings that could be utilized by the Debtors in future years. These tax savings -- and the accompanying increase in the Debtors' cash flow -- will greatly facilitate the Debtors' successful reorganization, Mr. Cieri says. A corporation's ability to use its NOLs may be reduced under certain circumstances, Mr. Cieri explains. The Debtors' primary concern is the reduction in NOLs that occurs if the corporation experiences an "ownership change." A corporation that undergoes an "ownership change" may be limited in the amount of NOLs that it can use to offset its taxable income. Pursuant to Section 382(g) of the IRC, an "ownership change" occurs if, immediately after a "testing date," and as measured during a rolling three- year "testing period," the percentage of the corporation's stock held by certain significant shareholders increases by 50 percentage points or more. Once all or part of a NOL is disallowed under Section 382 of the IRC, its use is limited forever, and once an equity interest is transferred, the transfer generally cannot be nullified. Thus, Mr. Cieri notes, unrestricted transfers of Equity Securities could hinder the Debtors' reorganization efforts by limiting their ability to use the NOLs to offset future taxable income. As a result of the Debtors' Chapter 11 cases, trading in Solutia Inc.'s Equity Securities was suspended by the New York Stock Exchange. Even upon the delisting of Solutia's Equity Securities and the resumed trading in the over-the-counter market, trading in the Equity Securities has been extremely limited and has not occurred among investors trading in large volumes. However, on November 18, 2005, a group of investors, led by Lime Capital Management LLC, filed a schedule 13-G under the Securities and Exchange Act of 1934, indicating that they had acquired a Beneficial Interest in Solutia. These stockholders collectively own 7,767,509 shares of Solutia, which represents 7.4% of the outstanding Equity Securities. Accordingly, this transfer runs the risk of affecting the Debtors' NOLs. Due to the significant potential tax savings that will be lost if an "ownership change" occurs, and the recent increase in trading of the Debtors' Equity Securities, Mr. Cieri asserts that it is now necessary to restrict the trading of Equity Securities and related Options to help facilitate a successful restructuring of the Debtors. Accordingly, the Debtors ask the Court to require that certain notice and waiting periods govern certain significant transfers of Equity Securities. This will provide the Debtors with advance notice of certain transfers that may jeopardize their NOLs and will enable them, if necessary, to act expeditiously to prevent the transfers and to protect and preserve their NOLs. Order to Show Cause Judge Beatty entered an Order to Show Cause, which among other things: (1) requires certain beneficial owners of at least 4,700,681 shares -- representing approximately 4.5% of all issued and outstanding shares -- of Solutia's equity securities to notify Solutia and the Bankruptcy Court that they are Substantial Owners; (2) requires Substantial Owners to file a notice with Solutia and the Bankruptcy Court before any acquisition or disposition of Solutia equity securities or options to acquire or dispose of Solutia equity securities; and (3) requires any other person or entity to file a notice with Solutia and the Bankruptcy Court before any acquisition of Solutia equity securities, or option to acquire Solutia equity securities, that would make such person or entity a Substantial Owner. The Order to Show Cause allows Solutia to object in the Bankruptcy Court to any equity transactions, within 30 days of receipt of notice of those transactions, if the transaction poses a material risk of adversely affecting the Debtors' ability to utilize the NOLs or other tax attributes. Any acquisition or disposition to which Solutia objects would not become effective unless and until approved by an order of the Bankruptcy Court. Under the Order to Show Cause, any purchase, sale or other transfer of Solutia equity securities in violation of the restrictions in the Order to Show Cause would be void ab initio as an act in violation of the Order to Show Cause and would therefore confer no rights on the proposed transferee. A full-text copy of the Order to Show Cause is available for free at http://ResearchArchives.com/t/s?3e9 The Court will convene a hearing on February 1, 2006, at 2:30 p.m., to consider the Debtors' request. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. SOUNDVIEW HOME: Fitch Rates $8.8MM Class M-11 Certificates at BB+ ----------------------------------------------------------------- Soundview Home Loan Trust asset-backed certificates, series 2005-4, is rated by Fitch: -- $656.5 million classes I-A1, II-A1, II-A2 , IIA-3 and IIA-4 'AAA'; -- $26.7 million class M1-A 'AA+'; -- $13.3 million class M1-B 'AA+'; -- $32.6 million class M-2 'AA+'; -- $20.3 million class M-3 'AA'; -- $18.1 million class M-4 'AA-'; -- $17.2 million class M-5 'A+'; -- $15 million class M-6 'A'; -- $12.3 million class M-7 'A-'; -- $11.9 million class M-8 'BBB+; -- $10.1 million class M-9 'BBB'; -- $7.5 million class M-10 'BBB-'; -- $8.8 million class M-11 'BB+'. The 'AAA' rating on the senior certificates reflects the 25.65% total credit enhancement provided by the 3.03% class M-1A, 1.52% class M-1B, the 3.70% class M-2, the 2.30% class M-3, the 2.05% class M-4, the 1.95% class M-5, the 1.70% class M-6, the 1.40% class M-7 , the 1.35% class M-8, the 1.15% class M-9, the 0.85% class M-10, the 1.00% class M-11, and the 3.65% initial and target overcollateralization. All certificates have the benefit of monthly excess cash flow to absorb losses. In addition, the ratings reflect: * the quality of the loans, * the integrity of the transaction's legal structure, and * the capabilities of JPMorgan Chase Bank, NA; Countrywide Home Loans Servicing, LP; and National City Home Loan Services, Inc. as servicers and Deutsche Bank National Trust Company, as trustee. The certificates will also benefit from an Interest Rate Swap Agreement with Bear Stearns Financial Products Inc. as swap provider, effective October 2006 through November 2009, which may be used to cover unpaid interest and realized losses. Under the Interest Rate Swap Agreement, on each distribution date, the trust will be obligated to make fixed payments at a rate of 4.936% on a declining notional amount and the swap provider will be obligated to make floating payments at a rate of one-month LIBOR on such notional amount. The mortgage pool consists of two groups of conforming and non-conforming, first and second lien, fixed-rate and adjustable- rate mortgage loans. The Group I mortgage loans have a cut-off date pool balance of $283,159,882. The weighted average loan rate is approximately 7.298%. The weighted average remaining term to maturity is 348 months. The average principal balance of the loans is $133,126. The weighted average combined loan-to-value ratio is 82.84% and the weighted average Fair, Isaac & Co. score is 616. The properties are primarily located in California, Florida, New York, Ohio and Illinois. The Group II mortgage loans have a cut-off date pool balance of $317,141,347. The weighted average loan rate is approximately 6.845%. The weighted average remaining term to maturity is 347 months. The average principal balance of the loans is $273,398. The weighted average CLTV ratio is 83.57% and the weighted average FICO score is 641. The properties are primarily located in California, Florida and New York. In addition, on or before March 20, 2006, the depositor may sell and the trustee will be obligated to purchase, on behalf of the trust, additional mortgage loans to be included in the mortgage pool. On the closing date, the depositor will pay to the trustee: * an amount equal to approximately $61,108,180, which will be held by the trustee in a pre-funding account, and * an amount equal to approximately $38,522,288, which will be held by the trustee in a pre-funding account for the purchase of such subsequent mortgage loans. All of the mortgage loans were purchased by Financial Asset Securities Corp., the depositor, from Greenwich Capital Financial Products, Inc., who previously acquired the mortgage loans from NovaStar Mortgage, Inc., First Franklin Financial Corp., Countrywide Home Loans, Inc., WMC Mortgage Corp., Accredited Home Lenders, Inc., Meritage Mortgage Corporation, and Decision One Mortgage Company LLC. SPX CORPORATION: Board Okays New Share Repurchase Program --------------------------------------------------------- SPX Corporation (NYSE: SPW) reported that its Board of Directors has authorized a new share repurchase program. This program replaces the company's existing repurchase program. It is consistent with, and permits share repurchases in an amount up to that permitted by, the new credit agreement entered into by the company on Nov. 18, 2005. Under the new program, if the company's Consolidated Leverage Ratio (as defined in the new credit agreement) is less than 2.50 to 1.00, after giving effect to such repurchase, the company may repurchase stock in an unlimited amount, subject to the covenants in the new credit agreement. This ratio is currently less than 2.50 to 1.00. If the company's Consolidated Leverage Ratio is greater than or equal to 2.50 to 1.00, after giving effect to such repurchase, the company may repurchase stock and pay dividends in an aggregate amount equal to $250 million as adjusted, as described more fully in the new credit agreement, by Consolidated Net Income (as defined in the new credit agreement). In that situation the company is also permitted under its new credit agreement to repurchase stock and pay dividends in an amount up to an additional $75 million in any fiscal year. A full text copy of the new credit agreement is available for free at http://ResearchArchives.com/t/s?3e7 Trading Plan SPX also said that it intends to adopt a written trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934 to facilitate the repurchase of its common stock in accordance with the share repurchase program. The plan will be effective from Dec. 21, 2005, through June 30, 2006. The company plans to provide 2006 earnings guidance on or about January 19 and, at that time, to update its share repurchase plans through June and the balance of the year. Until that time, the company intends to repurchase shares of its stock at a rate generally consistent with its repurchase activities since March 2005. In addition, depending on market conditions, the company may repurchase additional shares during that time. The company is also contemplating repurchasing up to 1 million shares in a block transaction. As part of its re-capitalization strategy announced on Mar. 3, 2005, SPX repurchased approximately 10.2 million shares of its stock through Nov. 2, 2005. In November, the company announced its intention to repurchase 2 to 3 million shares of its stock by year-end. The company has repurchased those shares. In addition, the company has reduced debt by 70% and completed the divestiture strategy undertaken in 2004, further increasing its financial flexibility. SPX Corporation -- http://www.spx.com/-- is a leading global provider of flow technology, test and measurement solutions, thermal equipment and services and industrial products and services. * * * As reported in the Troubled Company Reporter on Sept. 6, 2005, Moody's Investors Service upgraded the ratings of SPX Corporation. The upgrade concludes the rating review initiated on March 4, 2005. After the upgrade, the rating outlook is stable. Ratings upgraded: * corporate family rating, to Ba1 from Ba2; * senior secured credit facility, due 2008, to Ba1 from Ba2; * 7.5% and 6.25% senior notes, due 2013 and 2011 respectively, to Ba2 from Ba3; and * Liquid Yield Option Notes (LYONs), due 2021, to Ba2 from Ba3 The SGL-1 liquidity rating is confirmed. STATION CASINOS: Can Access Up to $2B of Loans with Lower Interest ------------------------------------------------------------------ Station Casinos, Inc., entered into a Third Amended and Restated Loan Agreement with Bank of America, N.A., Wells Fargo Bank, N.A. and these financial institutions: * Bank of Scotland; * Calyon New York Branch; * Commerzbank AG, New York and Grand Cayman Branches; * Deutsche Bank Trust Company Americas; * JPMorgan Chase Bank, N.A.; * HSH Nordbank AG, New York Branch; * The Bank of Nova Scotia; * The CIT Group/Equipment Financing, Inc.; * U.S. Bank National Association; * BNP Paribas; * Wachovia Bank, National Association; * Allied Irish Bank; * The Bank Of New York; * Comerica Bank; * National City Bank of the Midwest; * Union Bank of California, N.A.; * Hibernia National Bank; * UFJ Bank Limited; * United Overseas Bank Limited, Los Angeles Agency; * Bank of Hawaii; * Oak Brook Bank; * The Royal Bank of Scotland PLC; * Natexis Banques Populaires; * The Governor and Company of the Bank of Ireland; * Sovereign Bank; * The Peoples Bank, Biloxi, Mississippi; * First Tennessee Bank National Association; * Erste Bank Der Oesterreichischen Sparkassen AG; and * North Fork Business Capital Corp. The new facility replaces the Company's prior credit agreement dated December 21, 2004. Among other things, the new facility: -- increases the lenders aggregate commitments from $1 billion to $2 billion; -- lowers the interest rate on revolving loans at each level of the pricing grid by 37.5 basis points; -- reduces the fee charged on the unused portion of the new facility in various levels of the pricing grid; -- extends the maturity date from December 2009 to December 2010; -- eliminates the limitations on capital expenditures and, as a result, capital expenditures are only governed by the leverage ratios; -- increases the share repurchase basket to $750 million, which limitation only applies if the Company's parent leverage ratio is greater than 4.5 to 1.0; -- creates a separate $700 million basket for other distributions and investments; and -- increases the limit on interest rate swaps to $1.25 billion. On December 19, 2005 the Company also entered into an interest rate swap with a notional amount of $250 million beginning March 2006 and expiring in December 2010. Under the terms of the swap, the Company will pay 4.92% and receive 3-month LIBOR. The interest rate swap essentially fixes the interest rate on $250 million of debt at 4.92% plus the Company's LIBOR spread, which as of December 15, 2005, is 1.00%. A full-text copy of the Third Amended and Restated Loan Agreement is available for free at http://ResearchArchives.com/t/s?3e6 Station Casinos, Inc. -- http://www.stationcasinos.com/-- is the leading provider of gaming and entertainment to the residents of Las Vegas, Nevada. Station's properties are regional entertainment destinations and include various amenities, including numerous restaurants, entertainment venues, movie theaters, bowling and convention/banquet space, as well as traditional casino gaming offerings such as video poker, slot machines, table games, bingo and race and sports wagering. Station owns and operates Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Santa Fe Station Hotel & Casino, Wildfire Casino and Wild Wild West Gambling Hall & Hotel in Las Vegas, Nevada, Texas Station Gambling Hall & Hotel and Fiesta Rancho Casino Hotel in North Las Vegas, Nevada, and Sunset Station Hotel & Casino, Fiesta Henderson Casino Hotel, Magic Star Casino and Gold Rush Casino in Henderson, Nevada. Station also owns a 50% interest in both Barley's Casino & Brewing Company and Green Valley Ranch Station Casino in Henderson, Nevada, and a 6.7% interest in the Palms Casino Resort in Las Vegas, Nevada. In addition, Station manages the Thunder Valley Casino near Sacramento, California, on behalf of the United Auburn Indian Community. * * * As reported in the Troubled Company Reporter on Aug. 26, 2005, Moody's Investors Service raised the ratings of Station Casino, Inc. and affirmed the company's SGL-2 speculative grade liquidity rating. Moody's also assigned a Ba3 rating to Station's $150 million add-on to its existing 6-7/8% senior subordinated notes due 2016. These ratings were raised: -- Corporate family rating, to Ba1 from Ba2; -- $450 million 6% senior notes due 2012, to Ba2 from Ba3; -- $450 million 6-1/2% senior subordinated notes due 2014, to Ba3 from B1; and -- $350 million 6-7/8% senior subordinated notes due 2016, to Ba3 from B1. This new rating was assigned: -- $150 million 6-7/8% senior subordinated note add-on due 2016 -- Ba3. This rating was affirmed: -- Speculative grade liquidity rating, at SGL-2. As reported in the Troubled Company Reporter on Mar. 29, 2005, Standard & Poor's Ratings Services revised its rating outlook on Las Vegas, Nevada-based Station Casinos, Inc. to positive from stable. At the same time, Standard & Poor's affirmed its ratings on the owner of off-Strip casino properties, including its 'BB' corporate credit rating. STATION CASINOS: Inks $450 Mil. Joint Venture Pact with Greenspun ----------------------------------------------------------------- Station Casinos, Inc. (NYSE: STN), and The Greenspun Corporation have entered into an agreement to develop Aliante Station, a hotel and casino in Aliante, a 1,905-acre master-planned community in North Las Vegas. Station will develop and manage the facility, which will be located on a gaming-entitled 40-acre site on the northeast corner of Interstate 215 and Aliante Parkway within the Aliante master- planned community. The agreement calls for 50/50 ownership of the project, with Station receiving a management fee. The project is expected to cost between $400 and $450 million. Project construction is expected to commence in late 2006 or early 2007 with a projected opening in mid 2008. It is anticipated that the initial phase of Aliante Station will contain less than 25% of the hotel rooms and approximately 40% of the total square footage of Red Rock Casino Resort and Spa. The Company will receive a management fee of 2% of revenues and approximately 5% of EBITDA. Greenspun will contribute a 40-acre parcel of land to the joint venture and the Company will contribute a 55-acre parcel of land and approximately $2 million of cash. The Company anticipates financing Aliante Station through its existing bank group. The Company projects a first-year cash-on-cash return in the low to mid teens and growing over time, similar to other Station projects. "When we conceptualized and developed Aliante, we incorporated a hotel/casino as part of our overall master plan in order to provide the entertainment amenities that many residents are looking for," said Brian Greenspun, Chairman of the Board of The Greenspun Corporation. "We have a great relationship with the Fertittas and Station Casinos as a result of the success of Green Valley Ranch Resort and we are confident that they will develop and operate a high-quality project for our residents and the surrounding North Las Vegas community," Mr. Greenspun concluded. "We are excited about the opportunity to develop and operate a hotel and casino in Aliante, the most successful master-planned community in North Las Vegas," said Lorenzo Fertitta, President of Station. "North Las Vegas is one of the fastest growing cities in the country and Aliante is the premiere location in North Las Vegas for a hotel and casino. We believe that market is ready for our product." The master-planned community currently features a golf course, city parks and an extensive 24-mile trail system. Aliante is a partnership between American Nevada Corporation and Del Webb Communities. According to City of North Las Vegas demographers, North Las Vegas' population is expected to continue to double every eight years with an average annual growth rate of 9.4%. This year, North Las Vegas' population exceeded 180,000 residents. The U.S. Census Bureau also named North Las Vegas the second fastest growing city in the country from 2000-2003 with a population increase of 25%. "As the premiere provider of local's entertainment, we look forward to bringing hotel rooms, restaurants and entertainment such as gaming and movie theatres to an area we believe is hungry for these types of amenities," said Mr. Fertitta. Subsidiaries of The Greenspun Corporation and Station are partners in Green Valley Ranch Resort and Casino, Barley's Casino & Brewing Company and The Greens Cafe, all of which are located in Henderson, Nevada. About The Greenspun Corporation The Greenspun Corporation is a privately owned, family-run company that manages and oversees the financial interests of the Greenspun family of Las Vegas, Nevada. The company operates its own businesses and invests in public and private securities, primarily in the media, communications, travel and tourism, real estate and gaming industries. About Station Casinos Station Casinos, Inc. -- http://www.stationcasinos.com/-- is the leading provider of gaming and entertainment to the residents of Las Vegas, Nevada. Station's properties are regional entertainment destinations and include various amenities, including numerous restaurants, entertainment venues, movie theaters, bowling and convention/banquet space, as well as traditional casino gaming offerings such as video poker, slot machines, table games, bingo and race and sports wagering. Station owns and operates Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Santa Fe Station Hotel & Casino, Wildfire Casino and Wild Wild West Gambling Hall & Hotel in Las Vegas, Nevada, Texas Station Gambling Hall & Hotel and Fiesta Rancho Casino Hotel in North Las Vegas, Nevada, and Sunset Station Hotel & Casino, Fiesta Henderson Casino Hotel, Magic Star Casino and Gold Rush Casino in Henderson, Nevada. Station also owns a 50% interest in both Barley's Casino & Brewing Company and Green Valley Ranch Station Casino in Henderson, Nevada, and a 6.7% interest in the Palms Casino Resort in Las Vegas, Nevada. In addition, Station manages the Thunder Valley Casino near Sacramento, California, on behalf of the United Auburn Indian Community. * * * As reported in the Troubled Company Reporter on Aug. 26, 2005, Moody's Investors Service raised the ratings of Station Casino, Inc. and affirmed the company's SGL-2 speculative grade liquidity rating. Moody's also assigned a Ba3 rating to Station's $150 million add-on to its existing 6-7/8% senior subordinated notes due 2016. These ratings were raised: -- Corporate family rating, to Ba1 from Ba2; -- $450 million 6% senior notes due 2012, to Ba2 from Ba3; -- $450 million 6-1/2% senior subordinated notes due 2014, to Ba3 from B1; and -- $350 million 6-7/8% senior subordinated notes due 2016, to Ba3 from B1. This new rating was assigned: -- $150 million 6-7/8% senior subordinated note add-on due 2016 -- Ba3. This rating was affirmed: -- Speculative grade liquidity rating, at SGL-2. As reported in the Troubled Company Reporter on Mar. 29, 2005, Standard & Poor's Ratings Services revised its rating outlook on Las Vegas, Nevada-based Station Casinos, Inc. to positive from stable. At the same time, Standard & Poor's affirmed its ratings on the owner of off-Strip casino properties, including its 'BB' corporate credit rating. TOMMY HILFIGER: Negative Operating Trends Earn S&P's BB- Rating --------------------------------------------------------------- The ratings on Tommy Hilfiger USA Inc., including its 'BB-' corporate credit rating, remain on CreditWatch with negative implications, where they were placed on Nov. 3, 2004. The men's and women's sportswear, jeanswear, and childrenswear company had about $343 million in long-term debt outstanding as of June 30, 2005. The ratings remain on CreditWatch and reflect Standard & Poor's concern regarding the company's negative operating trends, including the decline in revenues and pre-tax earnings in recent periods. The U.S. Attorney's office for the Southern District of New York was conducting an investigation regarding the company's commission payments to a foreign subsidiary. On Aug. 11, 2005, Tommy Hilfiger announced it settled the investigation by agreeing to pay about $18.1 million in taxes and interest, and will file amended tax returns for the fiscals 2001-2004. The company just filed its 10-K for the fiscal year ended March 2005, and a 10-Q for the quarter ended June 2005 with the SEC. There was an adverse opinion from the company's CPAs with respect to internal controls over financial reporting for the fiscal year ended March 2005. This relates primarily to internal tax functions, and the company has taken steps to address these issues by hiring additional tax personnel and outside advisors. TRINITY SPRINGS: AMCON Provides Updates on Company Matters ---------------------------------------------------------- AMCON Distributing Company (AMEX:DIT), an Omaha, Nebraska based consumer products company, reported on Oct. 21, 2005 that it had entered into a letter of intent with William F. Wright, its Chairman of the Board, Chief Executive Officer and largest stockholder, for the proposed acquisition of 80% of the outstanding common stock of The Healthy Edge, Inc. which is currently a direct wholly-owned subsidiary of AMCON. The LOI contemplated that Healthy Edge would own, at the time of closing of the proposed acquisition: * 100% of the equity of: -- Health Food Associates, Inc. (d/b/a Akin's Natural Food Market), -- Chamberlin's Natural Foods, Inc. (d/b/a Chamberlin's Market and Cafe), and -- Hawaiian Natural Water Company, Inc., as well as * 85% of the equity of Trinity Springs, Inc., each of which are currently direct or indirect subsidiaries of AMCON. The LOI also contemplated that the closing for the purchase of Healthy Edge stock would occur by Dec. 12, 2005. This timing generally coincided with an amendment to the loan agreement for the Company's revolving credit facility with its bank lenders requiring the bottled water businesses of Hawaiian Natural and Trinity Springs to be sold or liquidated by Dec. 10, 2005. The bank lenders recently extended this date to Dec. 31, 2005. AMCON is continuing to negotiate the terms of the potential acquisition with Mr. Wright, who is one of the proposed investors in a limited liability company formed to effect such acquisition. These negotiations have been complicated by, among other things, a recent ruling by the District Court of the Fifth Judicial District of the State of Idaho which recently granted the plaintiff's motion for partial summary judgment declaring that the stockholders of Trinity Springs Ltd. (which subsequently changed its name to Crystal Paradise Holdings, Inc.) did not validly approve the sale of its business and assets to Trinity Springs, Inc., AMCON's subsidiary, because the vote of certain shares issued as a dividend should not have been counted. The District Court has not yet ruled on whether money damages or rescission of the sale transaction and related matters will be ordered as the relief in this action. AMCON and TSI have filed a motion seeking an order requiring the plaintiffs to show the details, terms and conditions of their proposed rescission remedy and the plaintiffs' ability, if any, to effectuate such a remedy. A rescission remedy would require the plaintiffs to restore the parties to their position prior to the asset transaction, including the return of the consideration paid by TSI in the transaction and subsequently invested in or loaned to TSI by AMCON and other affiliated parties. Likely Trinity Springs Chapter 11 Filing AMCON's bank lenders will not allow additional funds to be invested in or loaned to Trinity Springs, Inc., by AMCON or its other subsidiaries. The uncertainty created by the District Court's ruling make it unlikely that Trinity Springs, Inc. will be able to raise additional capital, at least until either: (i) the District Court issues the order referenced above and plaintiffs clarify their ability to effect rescission, or (ii) a negotiated settlement is reached with the plaintiffs and Crystal Paradise Holdings, Inc. If these events do not occur with sufficient lead time before Trinity Springs, Inc. runs out of operating cash, Trinity Springs, Inc. may be placed into Chapter 11 bankruptcy and may not be included as part of any sale transaction with the limited liability company in which Mr. Wright will be an investor. AMCON is a leading wholesale distributor of consumer products including beverages, candy, tobacco, groceries, food service, frozen and chilled foods, and health and beauty care products with distribution centers in Illinois, Missouri, Nebraska, North Dakota and South Dakota. Chamberlin's Natural Foods, Inc. and Health Food Associates, Inc., both wholly-owned subsidiaries of The Healthy Edge, Inc., operate health and natural product retail stores in central Florida (6), Kansas, Missouri, Nebraska and Oklahoma (4). The retail stores operate under the names Chamberlin's Market & Cafe and Akin's Natural Foods Market. Hawaiian Natural Water Company, Inc. produces and sells natural spring water under the Hawaiian Springs label in Hawaii and other foreign markets and purified bottled water on the Island of Oahu in Hawaii. The natural spring water is bottled at the source on the Big Island of Hawaii. Trinity Springs, Inc. produces and sells geothermal bottled water and a natural mineral supplement under the Trinity label and recently introduced a vitamin enhanced beverage product under the Trinity Enhanced label. The water and mineral supplement are both bottled at the base of the Trinity Mountains in Paradise, Idaho, one of the world's deepest known sources. Trinity Springs also distributes Hawaiian Springs on the U.S. mainland. TRUMP ENT: Majestic Star Closes Trump Indiana Acquisition --------------------------------------------------------- The Majestic Star Casino, LLC and its affiliates completed the acquisition of Trump Indiana, Inc. Effective Dec. 21, 2005, the Company will own and operate two casino vessels and a hotel at Buffington Harbor in Gary, Indiana. Under the terms of a purchase agreement dated Nov. 3, 2005, the Company acquired Trump Indiana for a purchase price of $253 million, subject to certain adjustments. The Company is wholly owned by Detroit businessman Don H. Barden, who is the country's first and only African American to own a national casino company. Mr. Barden, Chairman and CEO of the Company, now owns five casino properties with annual revenues exceeding $500 million. The company is one of only a handful of privately-held gaming companies in the United States. Commenting on the closing of the acquisition, Mr. Barden said, "This was a complicated deal, but I am very pleased with the outcome. The transaction was a natural next step for us. We will immediately benefit from combining the two operations by realizing significant efficiencies. Additionally, we now control over 300 acres of land at Buffington Harbor, which creates an extraordinary development opportunity. We are positioned to become the most competitive gaming operation in the Chicagoland market." "Initially, the Company will focus on a successful integration of Majestic Star and Majestic Star II (f/k/a Trump Indiana) and on achieving the significant cost savings and synergies identified through our due diligence process. Over time, we expect to improve our cash flow and strengthen our balance sheet. With a new source of revenue and cash flow, we expect to generate significant free cash flow to be used to reduce debt and invest in each of our properties." Mr. Barden continued, "I would like to take this opportunity to thank my executive management team, our investment bankers and attorneys. This was truly a team effort and we could not have closed on this deal without everyone's commitment and tenacity. I want to welcome the Trump Indiana team members to the Company. We look forward to a long and mutually rewarding relationship." About The Majestic Star Casino LLC The Majestic Star Casino, LLC is a multi-jurisdictional gaming company. Majestic also owns and operates a Fitzgeralds-brand casino and hotel in Tunica County, Mississippi (Fitzgeralds Tunica) and a Fitzgeralds-brand casino in Black Hawk, Colorado (Fitzgeralds Black Hawk). Majestic also manages for Barden Development, Inc., its parent company, a casino and hotel in downtown Las Vegas ("Fitzgeralds Las Vegas"). As of Dec. 31, 2004, the casinos that Majestic owns and manages collectively contained approximately 4,496 slot machines, 119 table games and 1,145 hotel rooms. About Trump Entertainment Resorts Inc. Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc., nka Trump Entertainment Resorts, Inc. -- http://www.thcrrecap.com/-- through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The Company and its debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, P.A., represent the Debtors in their successful chapter 11 restructuring. When the Debtors filed for protection from their creditors, they listed more than $500 million in total assets and more than $1 billion in total debts. The Court confirmed the Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005, and the plan took effect on May 20, 2005. * * * As reported in the Troubled Company Reporter on Nov. 10, 2005, Moody's Investors Service revised the outlook of Majestic Star Casino, L.L.C. to developing following the announcement that it will acquire Trump Entertainment Resorts Holdings, L.P.'s Gary, Indiana riverboat casino for $253 million in cash, or about 8 times the casino property's latest twelve month EBITDA. Concurrently, the ratings for both Majestic Star and Trump were affirmed; Trump's rating outlook is stable. The acquisition is expected to close by the end of 2005 and is subject to customary approvals and consents. These Trump ratings have been affirmed: -- $200 million senior secured revolver due 2010 -- B2; -- $150 million senior secured term loan due 2012 -- B2; -- $150 million senior secured delayed draw term loan due 2012 -- B2; -- $1.25 billion second lien senior secured notes due 2015 -- Caa1; -- Speculative grade liquidity rating -- SGL-3; and -- Corporate family rating -- B3. TRUMP HOTELS: Trump Entertainment Amends Credit Agreement --------------------------------------------------------- On Dec. 8, 2005, Trump Entertainment Resort Holdings, L.P., as borrower, entered into an amendment dated Dec. 7, 2005, to the Credit Agreement dated May 20, 2005, with: -- Trump Entertainment Resorts, Inc., as general partner and guarantor; -- certain subsidiary guarantors; -- initial lenders; -- issuing bank and swing line bank; -- Morgan Stanley & Co. Incorporated, as collateral agent; -- Morgan Stanley Senior Funding, Inc., as administrative agent; -- UBS Securities LLC as syndication agent; -- Merrill Lynch Capital and Wells Fargo Foothill, Inc., as documentation agents; and -- Morgan Stanley Senior Funding and UBS Securities, as joint lead arrangers and book-runners. A full-text copy of the May 20, 2005, Credit Agreement is available for free at http://ResearchArchives.com/t/s?3e1 In a regulatory filing with the Securities and Exchange Commission, Robert M. Pickus, the Company's executive vice president and secretary, explains that the First Amendment allowed TER Holdings to consummate the sale of all of the shares of Trump Indiana, Inc., to Majestic Star Casino, LLC, pursuant to the Stock Purchase Agreement dated Nov. 3, 2005, between TER Holdings and Majestic Star. In addition, the First Amendment: -- extended the last date that TER Holdings may draw the Term B-2 Facility from May 20, 2006, to Nov. 20, 2006; -- increased TER Holdings' ability to make capital expenditures under the Credit Agreement; and -- modified the first lien leverage ratio and debt leverage ratio that TER Holdings is required to maintain under the Credit Agreement. The First Amendment, Mr. Pickus says, is conditioned on the consummation of the Sale and TER Holdings' payment of a fee to the lenders equal to 0.10% of the $500,000,000 aggregate principal amount of commitments under the Credit Agreement. Some of the lenders under the Credit Agreement or their affiliates may provide commercial or investment banking services to TER Inc., TER Holdings and their subsidiaries. A full-text copy of the First Amendment to the Credit Agreement is available for free at http://ResearchArchives.com/t/s?3d4 Majestic Star Sale As previously reported in the Troubled Company Reporter on Nov. 8, 2005, Trump Entertainment Resorts, Inc. (NASDAQ NMS: TRMP) reported that the Company and The Majestic Star Casino, LLC, have signed a definitive stock purchase agreement to sell Trump Indiana, Inc., a subsidiary of the Company that owns and operates the Company's riverboat casino and hotel at Buffington Harbor in Gary, Indiana, to Majestic. The agreement calls for Majestic to pay a purchase price of $253 million, subject to certain adjustments and customary representations and warranties. The sales price represents approximately 8.1 times the trailing 12-month Earnings Before Interest, Taxes, Depreciation and Amortization of Trump Indiana. After accounting for certain taxes, fees and other closing costs and expenses, the sale is anticipated to result in approximately $227 million in net proceeds to the Company. Under the agreement, Majestic will purchase all of the issued and outstanding equity of Trump Indiana. The sale, which is expected to be consummated by the end of the year, is subject to the receipt of customary regulatory approvals and the consent of the Company's lenders under its $500 million credit facility. Majestic currently owns a riverboat casino adjacent to Trump Indiana, and through a joint venture, Majestic and Trump Indiana own, develop and operate all common land-based and waterside operations in support of their riverboat casinos at Buffington Harbor in Gary, Indiana. Through another joint venture, Trump Indiana and an affiliate of Majestic also operate a parking garage at Buffington Harbor. Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc., nka Trump Entertainment Resorts, Inc. -- http://www.thcrrecap.com/-- through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The Company and its debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, P.A., represent the Debtors in their successful chapter 11 restructuring. When the Debtors filed for protection from their creditors, they listed more than $500 million in total assets and more than $1 billion in total debts. The Court confirmed the Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005, and the plan took effect on May 20, 2005. (Trump Hotels Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 215/945-7000). UAL CORP: Has Until March 3 to Solicit Plan Acceptances ------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois approved UAL Corporation and its debtor-affiliates' request to bridge the exclusive solicitation period through March 3, 2006. As reported in the Troubled Company Reporter on Dec. 8, 2005, the Debtors are currently in the midst of their solicitation process and are preparing for a confirmation hearing beginning on Jan. 18, 2006, with an anticipated exit in February. However, as the exclusivity periods expire on Jan. 2, the Debtors will not have a chance to confirm their solicited Plan of Reorganization before another party could file a competing plan on Jan. 3. Chad J. Husnick, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, explained that the Debtors face this issue of timing because, in consultation with the Official Committee of Unsecured Creditors and the United States Trustee, the Debtors agreed to substantially lengthen the confirmation, solicitation, and voting processes. The Debtors agreed to delay commencing the solicitation process to give the Creditors' Committee more time to review and comment on the Plan. The 60-day extension is granted so that in the unexpected event that the Plan is not confirmed in late January, the Debtors, in consultation with the Committee, will have a chance to regroup and determine what steps to take next without having to immediately face the potential filing of a competing plan. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 109; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Asks Court to Bless N174UA Aircraft Restructuring Pact ---------------------------------------------------------------- UAL Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Illinois to approve restructuring term sheets for one of their very few remaining, unrestructured auction pool aircraft. Specifically, the Debtors seek the Court's authority to: (a) reject certain operative agreements relating to aircraft equipment identified by U.S. Registration No. N174UA; (b) restructure the financing arrangement and operative agreements relating to the Aircraft, and consummate the restructuring transaction, all in accordance with the terms and conditions of the Term Sheet; and (c) settle certain claims arising from the restructured financing arrangement. The Debtors also ask the Court to modify the automatic stay to allow certain aircraft financiers to exercise remedies. James H.M. Sprayregen, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, relates that throughout the bankruptcy cases, the Debtors have undertaken an intensive process to restructure the different types of financing arrangements for their fleet. This program has been integral to the Debtors' overall restructuring. The U.S. leveraged lease financing arrangement relating to the N174UA consists of these operative agreements: (1) a lease, (2) a secured loan, and (3) other agreements, documents, and instruments that effectuate the Lease and Secured Loan, including trust indenture, participation, and indemnity agreements. The Term Sheet contemplates the conversion of the Financing Arrangement into a single investor lease by rejecting or terminating the current Lease and other Operative Agreements, and entering into a new operating lease and other agreements. Alternatively, the Debtors and the Aircraft Financiers may consummate the Restructuring Transaction simply by amending certain of the Operative Agreements already in place. Additionally, the Debtors ask the Court to provide for: * reservation of the Aircraft Financiers' rights to assert general unsecured, non-priority prepetition claims for any and all damages and losses relating to, or arising out of the Restructuring Transaction; and * liquidation, allowance and payment of certain claims from the Debtors' use of the N174UA since the Petition Date in full settlement and satisfaction of alleged administrative expense claims. Mr. Sprayregen asserts that the Restructuring Transaction will provide a rent reduction for the N174UA and will limit the administrative expense and unsecured claims of the Aircraft Financiers. The Debtors will also reserve a limited termination right under the Restructuring Transactions. Therefore, the Restructuring Transaction will result in cost savings and improved cash flow for the Debtors. The Term Sheet, on the other hand, provides that administrative and unsecured claims arising from the Debtors' use of the N174UA and from the Restructuring Transaction will be liquidated and paid. Settling the administrative and unsecured claims arising from the Debtors' use and possession of the N174UA is in the best interest of the estate because settling and compromising the claims will avoid unnecessary litigation costs and delays, Mr. Sprayregen explains. According to Mr. Sprayregen, the Debtors' entry into and consummation of the Term Sheet, Restructuring Transaction, and the Restructured Operative Agreements all constitute ordinary course transactions, for which Court approval is not required. However, the Debtors are seeking the Court's authority out of an abundance of caution. Terms are Confidential Since the Term Sheet contains confidential commercial information, it will be filed with the Court under seal, Mr. Sprayregen says. The Debtors will provide a copy of the Term Sheet to the professionals for the Official Committee of Unsecured Creditors, the Aircraft Leasing Subcommittee of the Unsecured Creditors Committee, the DIP lenders, and any party having a direct interest in the N174UA, subject to the parties entering into confidentiality agreements acceptable to the Debtors and the Aircraft Financiers. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 109; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Wants Court Nod on Pratt & Whitney Settlement Pact ------------------------------------------------------------ United Technologies Corporation, acting through its Pratt & Whitney division, is the Debtors' largest supplier of turbine engines and associated parts and services. Current significant contractual obligations between the Debtors and Pratt & Whitney include: * a fleet management program for the Debtors' fleet of V2500 engines operated on their Airbus A319/320 aircraft; and * a materials management program for the Debtors' fleet of PW4000 engines operated on the Debtors' wide-body aircraft. UAL Corporation and its debtor-affiliates are Pratt & Whitney's single largest customer in its commercial engine business. On May 7, 2003, Pratt & Whitney filed Claim No. 32948 against the Debtors, asserting prepetition claims aggregating $12,169,306, including: (a) a $5,099,704 administrative priority claim based on a reclamation demand made on December 16, 2002; and (b) a $7,069,602 secured claim based on alleged rights of set-off. The Debtors dispute the alleged priority and amount of Claim No. 32948. The Debtors further assert that as of the Petition Date, Pratt & Whitney owed them $4,792,445 based on Pratt & Whitney's withholding of certain prepetition payment obligations as well as Pratt & Whitney's obligation under certain guaranty plans on goods the Debtors purchased. After good faith, arm's-length negotiations, the Debtors and Pratt & Whitney entered into a settlement agreement resolving the dispute. The Settlement Agreement provides that: (1) Pratt & Whitney will have an allowed administrative expense claim for $3,010,628 and an allowed general unsecured claim for $4,603,679 for an aggregate of $7,614,307; (2) Pratt & Whitney's $7,614,307 Claim will be set off by the $4,792,445 owed by Pratt & Whitney to the Debtors, first to be applied to Pratt & Whitney's administrative expense claim, with the remainder to be applied against the general unsecured claim; (3) As a result of the set-off, Pratt & Whitney will have an allowed general unsecured claim against the Debtors for $2,821,862; (4) Pratt & Whitney will receive no other distribution on account of Claim No. 32948; and (5) The Debtors will waive, abandon, release and relinquish any avoidance action or similar claims or cause of action they may have against Pratt & Whitney. The Debtors ask the Court to approve the Settlement Agreement, and to modify the automatic stay solely for the purpose of allowing the set-off contemplated under the Agreement. Micah E. Marcus, Esq., at Kirkland & Ellis, in Chicago, Illinois, relates that as of December 2, 2005, the Debtors have not filed any avoidance or preference action against Pratt & Whitney. However, the Debtors and Pratt & Whitney are parties to a tolling agreement that provides that any complaint filed by the Debtors on or before December 30, 2005, will be deemed timely. Mr. Marcus points out that the Settlement Agreement will immediately reduce the total secured and administrative priority claims against the Debtors by over $12,000,000. The Settlement Agreement will also allow the Debtors to avoid potentially protracted litigation, with costs that may very well exceed the potential savings to the Debtors' estate as a result of the Settlement Agreement. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 109; Bankruptcy Creditors' Service, Inc., 215/945-7000) VALENCE TECH: Assigns Pref. Stock Redemption Rights to Berg & Berg ------------------------------------------------------------------ Valence Technology, Inc. (Nasdaq:VLNC), developers of Saphion(R) technology, reported that on Dec. 15, 2005, Berg & Berg Enterprises, LLC honored the redemption of $4.3 million of series C-1 convertible preferred stock held by Riverview Group LLC, by paying the redemption price directly to Riverview Group LLC. Valence Technology's proprietary Saphion technology is used in the industry's first commercially available, safe, large-format lithium-ion rechargeable battery systems. Berg & Berg is an affiliate of Carl E. Berg, chairman of the board and principal stockholder of Valence Technology. On Dec. 14, 2005, Valence assigned its right to purchase the series C-1 preferred stock to Berg & Berg. In connection with this assignment, Berg & Berg has agreed that the series C-1 stock shall be convertible at the lower of its stated conversion price of $4.00 or the closing price of the company's common stock on the conversion date, provided the conversion price can be no lower than $1.98, the closing bid price of Valence's common stock on December 13, 2005. In addition, Valence and Berg & Berg agreed to waive the mandatory redemption of the series C-1 preferred stock and agreed that dividends for the series C-1 will continue to accrue at their stated rate of two percent. Headquartered in Austin, Texas, Valence Technology -- http://www.valence.com/-- develops and markets battery systems using Saphion(R) technology, the industry's first commercially available, safe, large-format Lithium-ion rechargeable battery technology. Valence Technology holds an extensive, worldwide portfolio of issued and pending patents relating to its Saphion technology and lithium-ion rechargeable batteries. The company has facilities in Texas, Las Vegas, Nevada, and Suzhou and Shanghai, China. Valence is traded on the Nasdaq Capital Market under the symbol VLNC. At Sept. 30, 2005, Valence Technology's balance sheet showed a stockholders' deficit of $59,673,000, compared to a $54,642,000 deficit at March 31, 2005. WESTWAYS FUNDING: Fitch Puts BB Rating on $37.5 Mil. Income Notes ----------------------------------------------------------------- Fitch rates Westways Funding VI, Ltd's issuances: -- $130,000,000 class A-1A floating-rate senior notes 'AAA'; -- $20,000,000 class A-1B fixed-rate senior notes 'AAA'; -- $67,500,000 class A-2 floating-rate senior notes 'AAA'; -- $30,000,000 class P-1 notes 'AAA'; -- $15,000,000 class B floating-rate senior subordinated notes 'AA'; -- $15,000,000 class C floating-rate subordinated notes 'A'; -- $15,000,000 class D floating-rate junior subordinated notes 'BBB'; -- $10,000,000 class L loan interests 'BBB'; -- $37,500,000 income notes 'BB'. Westways VI will issue $10,000,000 of the aggregate principal amount that would otherwise be issued as class D Notes as the class L loan interests. The initial principal amount of these securities is a part of the maximum aggregate principal amount of the class D notes. The class P-1 notes will consist of a component representing $9,900,000 of income notes and a component representing a $30,000,000 Fannie Mae STRIP due Feb. 28, 2014. The initial principal amount of the income notes comprising a component of the class P-1 notes is a part of the initial aggregate principal amount of the income notes. The ratings of the classes A-1A, A-1B, A-2, B, C, and D notes and class L loan interests reflect the likelihood that investors will receive periodic interest payments through the redemption date as well as their respective stated principal balances. The ratings of the income notes and class P-1 notes only reflect the likelihood that investors will receive their stated principal balances upon the legal final maturity date. The proceeds of the all classes of notes, except for class P-1, will be used to purchase a diversified portfolio of primarily floating-rate agency and 'AAA' rated private-label residential mortgage-backed securities, commercial mortgage-backed securities, and asset-backed securities. The portfolio can be levered using reverse repurchase agreements equivalent to up to 6 times capital. The portfolio interest rate duration and spread duration will vary with portfolio size. A fully levered portfolio will be limited to a minimum interest rate duration of -0.71 years to a maximum of 0.71 years, maximum spread duration of 3 years, and convexity of -2.5 years. The investment manager, TCW Asset Management Co., will actively manage the investments on behalf of the issuer, Westways VI, a special purpose company incorporated under the laws of the Cayman Islands. TCW will manage the portfolio in accordance with specific investment policies, restrictions, and guidelines reviewed by Fitch. WINSTAR COMMS: Wins $244 Million Judgment in Lucent Litigation -------------------------------------------------------------- The Hon. Joel B. Rosenthal, on Dec. 21, ordered Lucent Technologies to pay $244 million, plus statutory interest and other costs, to Christine Schubert, the chapter 7 trustee for Winstar Communications. Winstar brought a breach of contract and bankruptcy preference action against Lucent Technologies in April 2001. The trustee took over the prosecution of the lawsuit in 2002. The trial was completed in June 2005. Lucent said that the verdict would result in a charge to earnings of approximately $300 million for the company's first fiscal quarter of 2006, which ends Dec. 31, 2005. "We have made strong arguments supporting our view that this suit was without merit. We are examining the judge's ruling very carefully and will vigorously appeal the decision," said Lucent Technologies General Counsel Bill Carapezzi. About Lucent Technologies Lucent Technologies -- http://www.lucent.com/-- designs and delivers the systems, services and software that drive next- generation communications networks. Backed by Bell Labs research and development, Lucent uses its strengths in mobility, optical, software, data and voice networking technologies, as well as services, to create new revenue-generating opportunities for its customers, while enabling them to quickly deploy and better manage their networks. Lucent's customer base includes communications service providers, governments and enterprises worldwide. About Winstar Communications Inc. Headquartered in New York, New York, Winstar Communications, Inc., provides broadband services to business customers. The Company and its debtor-affiliates filed for chapter 11 protection on April 18, 2001 (Bankr. D. Del. Case Nos. 01-01430 through 01-01462). The Debtors obtained the Court's approval converting their case to a chapter 7 liquidation proceeding in January 2002. Christine C. Shubert serves as the Debtors' chapter 7 trustee. When the Debtors filed for bankruptcy, they listed $4,975,437,068 in total assets and $4,994,467,530 in total debts. * BOOK REVIEW: Merger: The Exclusive Inside Story of the Bendix-Martin Marietta Takeover War -------------------------------------------------------- Author: Peter F. Hartz Publisher: Beard Books Paperback: 418 pages List Price: $34.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/1893122336/internetbankrupt William Agee, the youngest man ever to head one of the top 100 American corporations, seemed unstoppable. In 1977, at the age of 39, he took over Bendix Corporation, an aerospace, automotive, and industrial firm, determined to diversify the company out of the automotive industry. In his words, "Automobile brakes are in the winter of their life and so is the entire automobile industry." He sold off a few Bendix units, got some cash together, and began to look for acquisitions. Then Agee's relationship with Mary Cunningham burst into the news. Agee had promoted Cunningham from his executive assistant to vice president, to the outrage of other Bendix employees. Their affair, replete with power, brains, youth, good looks, charm, denial, and deceit, fascinated the American public. Cunningham was forced to leave Bendix to work for Seagrams, with the entire country wondering just how well she would do. The two divorced their respective spouses and married soon thereafter. To the chagrin of many, Cunningham continued to play a pivotal role in Bendix affairs. Eager to regain his standing, Agee turned to acquisition as soon as the gossip died down. A failed attempt to acquire RCA left him more determined than ever. He then set his sights on Martin- Marietta, an undervalued gem in the 1982 stock market slump. Thus began an all-out war of tenders and countertenders, egoism and conceit, half-truths and dissimulation, and sudden alliances and last-minute court decisions. This is a very exciting account of the war's scuffles, skirmishes, and battles. The author, son of a long-time Bendix director, was able to interview some of the major participants who most likely would have refused the requests of other authors. Some gave him access to personal notes from the various proceedings. The author thoroughly researched the documents involved in the takeover war, as well as news reports and press releases. He explains the complicated legal maneuverings very clearly, all the while keeping the reader entertained with the personal lives and thoughts of the players. People love this book. The New York Times Book Review said "Aggression and treachery, hairbreadth escapes and last-minute reversals, "white knights" and "shark repellants" - all of these and more can be found in the true-life adventure of the Bendix- Martin Marietta merger war." The Wall Street Journal said "Merger brims with tension, authentic-sounding dialogue and insider detail." Peter F. Hartz was born in Toronto, Canada, in 1953, and moved to the U.S. as a child. He holds degrees from Colgate University and Brown University. He lives in Toluca Lake, California. ********* 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 Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Pinili, Jr., Tara Marie 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 ***