/raid1/www/Hosts/bankrupt/TCR_Public/060413.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, April 13, 2006, Vol. 10, No. 88
Headlines
ADELPHIA COMMS: Files Revised Plan to Settle Intercreditor Dispute
AINSWORTH LUMBER: Moody's Puts B2 Rating on New $75 Million Notes
ALLIED HOLDINGS: Panel Balks at Some New Insurance Program Terms
ALLIED HOLDINGS: Inks Lease Agreement with Jack Cooper Transport
ALLIED HOLDINGS: Committee Wants to See Chapter 11 Plan by June 30
ARGENT SECURITIES: Moody's Rates Two Certificate Classes at Low-B
ARMSTRONG WORLD: Confirmation Delay Delays Appraiser's Work
ARMSTRONG WORLD: Employs Ryan & Company as Tax Consultant
ATA AIRLINES: Objects to AMR Leasing's $5.39 Million Admin. Claim
ATA AIRLINES: Wants Flying Food Settlement Agreement Approved
AXLETECH INT'L: Delayed Financials Cue Moody's Ratings Review
BEAR STEARNS: Moody's Places Class I-B-3 Cert. Rating at Ba2
BEAR STEARNS: Moody's Rates Class M-10 Certificates at Ba1
BOMBARDIER INC: Moody's Confirms Ba2 Ratings With Negative Trend
BOWATER INC: David J. Paterson Replaces Arnold M. Nemirow as CEO
BOWNE & CO: Restated Financials Include $3.4MM Net Income Decrease
CABLEVISION SYSTEMS: Declares $10 Dividend on Classes A & B Stock
CINRAM INT'L: Moody's Cuts Debt & Corporate Family Ratings to B1
COEUR D'ALENE: Selling Coeur Silver Unit to U.S. Silver for $15M
COLLINS & AIKMAN: Resolves Mid-America Lease Dispute
COLLINS & AIKMAN: Panel Gets More Time to Contest DIP Loan Terms
COMFED MORTGAGE: Moody's Lowers Two Certificate Ratings to B2
CRAY INC: Faces Nasdaq Delisting Due to Form 10-K Filing Delay
CWABS TRUST: Moody's Places Class B Certificate Rating at Ba1
DELTA AIR: Pilots Receive $10 Million Pledge from ALPA
DILLARD'S INC: Fitch Affirms Capital Securities' B- Rating
DOLE HOLDING: Fitch Puts CCC+ Term Loan Rating on Negative Watch
EAGLEPICHER HOLDINGS: IRS Objects to Amended Joint Chapter 11 Plan
ENRON CORP: Settles Claims Dispute with Lehman, Magnox & Williams
FDL INC: Creditors Panel Taps Elliott Levin as Bankruptcy Counsel
FERRO CORP: Trustee for $355 Mil. Notes Sends Default Notice
FIRST UNION: Moody's Holds Low-B Ratings on 4 Certificate Classes
FOSS MANUFACTURING: Trustee Wants to Sell Assets for $39 Million
G+G RETAIL: Wants Removal Period Stretched Until July 24
GENERAL MILLS: Discloses Third Fiscal Quarter Financial Results
GLOBAL HOME: Taps Pachulski Stang as Bankruptcy Counsel
GMAC COMMERCIAL: Fitch Affirms $20 Mil. Class J Cert.'s CCC Rating
GSAA HOME: Moody's Rates Class B-3 Certificates at Ba2
HAYES LEMMERZ: S&P Lowers Corporate Credit Rating to B- from B+
HEALTHSOUTH CORP: S&P Assigns B Rating With Stable Outlook
HELIX ENERGY: S&P Puts BB- Corp. Credit Rating With Stable Outlook
HILLMAN GROUP: Moody's Confirms B2 Ratings With Stable Outlook
IMPAC CMB: Moody's Holds B2 Rating on $11 Mil. Class G Bond Issue
INDYMAC CAPITAL: Fitch Affirms BB+ Preferred Securities Rating
INTEGRATED ELECTRICAL: Court Gives Interim Nod on PwC Retention
INTEGRATED ELECTRICAL: Walks Away from Four Real Property Leases
INTEGRATED ELECTRICAL: Wants Russell Reynolds as Recruiter
JB POINDEXTER: Poor Performance Results in Moody's Low-B Ratings
JEAN COUTU: Completes Sale of Eckerd Headquarters in Florida
JEAN COUTU: Earns $31.6 Million in Third Quarter Ended February 25
J.L. FRENCH: Can Advance $382,500 to China Holdings Affiliate
JOHNSONDIVERSEY HOLDINGS: S&P Lowers Corporate Credit Rating to B
KRATON POLYMERS: Reports $22.7 Million of Net Income in 2005
LEVITZ HOME: Court Approves Rejection of Eletto Delivery Agreement
LG.PHILIPS DISPLAYS: Section 341(a) Meeting Set on April 25
LONG BEACH: S&P Places Class M-3 Securities' Rating on Default
LONG BEACH: Moody's Puts Low-B Ratings on Cert. Classes M-10 & B
M&S TRANSPORTATION: U.S. Trustee Wants Chapter 11 Case Dismissed
MARINER ENERGY: Moody's Rates Proposed $250MM Note Offering at B3
MARINER ENERGY: S&P Rates Planned $250MM Sr. Unsecured Notes at B-
MEDICALCV INC: Chief Financial Officer Jack Jungbauer to Retire
MICHELINA'S INC: S&P Affirms B+ Rating With Negative Outlook
MIRANT CORP: Asks Court to Approve Mint Farm-Cascade Settlement
MORGAN STANLEY: Moody's Puts Low-B Ratings on Two Cert. Classes
NABI BIOPHARMA: S&P Downgrades Ratings to B- With Negative Outlook
NAVISTAR INT'L: To Restate Financial Results for FY 2002 to 2005
NEBRASKA BOOKS: Moody's Holds B2 Credit Rating Following CBA Deal
NELLSON NUTRACEUTICAL: Taps Seneca Financial as Valuation Advisor
NORTHWEST AIR: Wants to Extend Two U.S. Bank Letters of Credit
NORTHWEST AIR: Wants to Pay $55 Million Prepetition Tax Claims
NORTHWEST AIR: Wants Court Nod on PBGC Interim Settlement
OCA INC: Has Interim Access to Bank of America's Cash Collateral
OCA INC: Can Continue Employing CDG as Restructuring Advisor
OCA INC: Creditors Must File Proofs of Claim by May 15
ON SEMICONDUCTOR: Buying LSI Logic's Gresham Assets for $105 Mil.
O'SULLIVAN IND: Asks Court to Disallow or Estimate Seven Claims
O'SULLIVAN INDUSTRIES: Files Annual Report for Fiscal 2005
PARMALAT: Court Extends Injunction to June 2 Despite Objections
PIER 1: Posts $39.8 Million Net Loss in Fiscal 2006
PLIANT CORP: Disclosure Statement Hearing Scheduled for Tomorrow
PLIANT CORP: Battle Ensues Over $3.2 Million Management Incentives
POPULAR ABS: Moody's Puts Low-B Ratings on 2 Certificate Classes
PPM AMERICA: Moody's Reviews Ba1 Note Rating and May Downgrade
PROTECTION ONE: Moody's Puts B2 Rating on Proposed $66.8MM Loan
PROTECTION ONE: S&P Puts B+ Rating on Proposed $67 Million Loan
RAMP TRUST: Moody's Rates Class M-10 Certificate at Ba1
REFCO INC: U.S. Trustee Adds Two Members to Creditors Committee
REFCO INC: Wants to Walk Away from Gerald Sherer Contract
RESTAURANT CO: S&P Places B Corp. Credit Rating on Negative Watch
SACO TRUST: Moody's Rates Class B-4 Certificate at Ba1
SAYBROOK POINT: Lower Credit Quality Cues Moody's Ratings Review
SENECA CBO: Credit Quality Decline Cues Moody's Ratings Review
SEQUA CORP: Cash-Repatriation Plan Doesn't Alter Moody's B1 Rating
SFBC INTERNATIONAL: Moody's Junks Corporate Family Rating from B3
SGS INT'L: Solicits Consents to Amend 12% Sr. Sub. Notes Indenture
SPHERIS INC: S&P Downgrades Corporate Credit Rating to B- from B
STATION CASINOS: Moody's Shifts Trend Following Stock Repurchase
TARGA RESOURCES: Asset Sale Delay Prompts Moody's Ratings Review
TERWIN MORTGAGE: Moody's Rates Two Certificate Classes at Low-B
TRUMP ENT: Retains Korn Ferry to Search for Sr. VP of Development
UAL CORP: Deregisters Shares Distributable Under Incentive Plans
UAL CORP: Fitch Puts B- Issuer Default Rating With Stable Outlook
UNIFRAX CORP: S&P Rates Planned $230MM Sr. Credit Facilities at B
UNIFRAX CORP: Moody's Assigns B2 Loan & Corporate Family Ratings
USG CORP: Consortium Asserts $12.5M Fee on Rejected Backstop Pact
VARIG S.A.: Workers Demand Government Intervention
VERIFONE HOLDINGS: Lipman Deal Prompts Moody's to Hold B1 Ratings
VIRGIN MOBILE: S&P Puts B- Corp. Credit Rating on Negative Watch
WERNER HOLDING: S&P Lowers Corp. Credit Rating to CCC from CCC+
WINN-DIXIE: Court Okays Abandonment of Unsold Inventory & FF&E
WINN-DIXIE: Court Approves Amended Hilco & Gordon Agency Agreement
WINN-DIXIE: Court Okays Assumption of Modified Cisco Systems Lease
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
*********
ADELPHIA COMMS: Files Revised Plan to Settle Intercreditor Dispute
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In an effort to advance its bankruptcy case and maximize the
return to its creditors, Adelphia Communications Corporation has
filed, on April 12, 2006, a modified Fourth Amended Joint Plan of
Reorganization and Disclosure Statement Supplement that offer a
proposed solution to the dispute between certain creditor groups
that has delayed the Company's emergence from Chapter 11.
"At the direction of the Court, we have remained neutral with
respect to intercreditor disputes while staying focused on
maximizing recovery for all bankruptcy constituents," said William
Schleyer, chairman and CEO of Adelphia. "However, given that
certain creditor groups have been unable to resolve their
differences despite months of negotiations and litigation, we
received permission from the Court on April 6 to propose a
compromise that would, if accepted, eliminate or reduce the risks
of continued litigation and thus help preserve the significant
benefits to all creditors of the sale transaction to Time Warner
and Comcast. To maximize value of the Adelphia estate, it is
essential that we complete the sale of the Company's assets by
July 31st."
Mr. Schleyer added, "We continue to expect the transaction to
close on schedule and look forward to the cooperation of all
interested parties."
Under the revised Plan of Reorganization, creditors can vote to
accept Adelphia's proposed settlement solution or opt for a
"holdback" plan that essentially postpones the dispute for future
resolution while allowing the rest of the bankruptcy case and the
sale to Time Warner and Comcast to conclude in a timely manner.
The settlement proposed in the revised Plan of Reorganization does
not reflect any determinations by Adelphia or the Court regarding
the likely outcome of the issues being litigated by the creditors,
but instead proposes a compromise among the creditors' asserted
positions intended to reduce or eliminate the risks of continued
litigation.
The holdback alternative in the revised plan is subject to the
risks that the cash and Time Warner Cable stock immediately
available under the revised plan will not be sufficient to fully
fund the required holdbacks, and that any other property proposed
to fund the holdbacks, such as rights to receive future releases
(if any) of reserves established by the plan or future proceeds
(if any) of litigation on behalf of the Company, will not be
approved by the Court. If the compromise is not accepted,
Adelphia intends to vigorously pursue confirmation of the holdback
plan. However, there is a risk that the holdback plan might not
be confirmed.
Adelphia's revised plan reflects a 14% (or $710 million) decline
in its advisors' estimate of the current valuation of stock to be
received in the transaction, a decline that is less than the
overall decline of cable stocks in that period. The $12.7 billion
cash component of the transaction is unaffected; therefore, the
advisors' estimate of the overall value of the deal is only four
percent lower than the prior estimate.
On April 10, 2006, the Company reached an agreement, subject to
Court approval, with an ad hoc committee representing certain
holders of trade claims against Adelphia operating subsidiaries on
the terms under which such claims holders would support Adelphia's
plan of reorganization.
A full-text copy of the Company's Fourth Amended Joint Plan of
Reorganization at no charge at
http://ResearchArchives.com/t/s?7d7
A full-text copy of the Company's Fourth Amended Disclosure
Statement Supplement is available at no charge at
http://ResearchArchives.com/t/s?7d9
About Adelphia Communications
Based in Coudersport, Pa., Adelphia Communications Corporation --
http://www.adelphia.com/-- is the fifth-largest cable television
company in the country. Adelphia serves customers in 30 states
and Puerto Rico, and offers analog and digital video services,
high-speed Internet access and other advanced services over its
broadband networks. The Company and its more than 200 affiliates
filed for Chapter 11 protection in the Southern District of New
York on June 25, 2002. Those cases are jointly administered under
case number 02-41729. Willkie Farr & Gallagher represents the
ACOM Debtors. Kasowitz, Benson, Torres & Friedman, LLP, and Klee,
Tuchin, Bogdanoff & Stern LLP represent the Official Committee of
Unsecured Creditors.
AINSWORTH LUMBER: Moody's Puts B2 Rating on New $75 Million Notes
-----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to Ainsworth Lumber
Co. Ltd.'s new $75 million 7-year floating rate notes.
Concurrently, the B2 corporate family rating and the B2 ratings on
Ainsworth's existing notes were affirmed, as was the stable
outlook.
The new notes will rank pari passu with Ainsworth's existing
senior unsecured notes. Proceeds will be used to augment
liquidity and for general corporate purposes including funding a
portion of the ongoing CDN$260 million expansion of Ainsworth's
Grande Prairie, Alberta facility.
Despite increasing debt by nearly 10%, by bolstering an already
strong liquidity position, the transaction provides additional
downside protection as the company embarks on another expansion
initiative. This downside protection is made more important given
the near term potential of:
a) interest rates increasing;
b) housing starts declining; and
c) oriented strandboard prices retreating, an outcome made
more likely given ongoing industry-wide capacity expansion
initiatives.
With this background, the new notes were rated B2, equivalent with
the rating of the company's existing notes.
Rating assigned:
* $75 million regular bond/debenture: B2
Ratings Affirmed:
* Corporate family rating: B2
* Regular Bond/Debentures: B2
Outlook affirmed: stable
Ainsworth's B2 ratings are influenced primarily by the company's
relatively modest size, product line and geographic concentration,
and the extremely volatile pricing of its core product, OSB. The
rating also accounts for aggressive financial policies and growth
aspirations. Moody's ratings also reflect Ainsworth's competitive
cost position, and superior liquidity arrangements.
Despite recent performance that is indicative of a higher rating,
Moody's expects Ainsworth's results to significantly moderate, and
also expects free cash flow to be devoted to growth initiatives.
Consequently, the outlook is stable.
As Moody's does not anticipate the company taking steps to reduce
debt, an upgrade is unlikely. Should the company participate in
additional debt financed acquisition activity, or should liquidity
arrangements become impaired, adverse rating action may result.
Ainsworth Lumber Co., Ltd., headquartered in Vancouver, British
Columbia, Canada, is a publicly traded integrated producer of
oriented strandboard.
ALLIED HOLDINGS: Panel Balks at Some New Insurance Program Terms
----------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in Allied
Holdings, Inc., and its debtor-affiliates' chapter 11 cases asks
the U.S. Bankruptcy Court for the Northern District of Georgia to
deny the Debtors request to enter into an insurance agreement with
National Union for their U.S. Insurance Programs.
As reported in the Troubled Company Reporter on March 23, 2006,
the Debtors received and accepted a proposal for Casualty
Insurance Program dated Dec. 19, 2005, as amended on Jan. 25,
2006, from National Union Fire Insurance Co. of Pittsburgh,
Pennsylvania, on behalf of itself and certain affiliates of
American International Group, Inc.
Among others, the Proposal provides:
a. workers' compensation coverage with a guaranteed cost of
approximately $34,000,000 and no retained risk for the
Debtors;
b. an automobile liability policy, which has a $1,000,000 per
accident deductible with no aggregate cap on the
deductible. The automobile liability coverage will cost
the Debtors $4,200,000 plus the cost of any accident that
incurs less than $1,000,000 in liability; and
c. a general liability policy with no deductible for a
$400,000 annual fee.
Under the Proposal, premiums may be subject to adjustment on
audit of actual exposure. the Debtors entered into new premium
financing agreements with Flatiron Capital Corporation and AICCO,
Inc., to finance the premium amounts due under the Proposal.
In lieu of posting collateral with Haul Insurance Limited, the
Debtors' non-debtor subsidiary, Allied Holdings posted $7,700,000
in collateral in the form of letters of credit and cash with
National Union.
Committee Objection
According to Jonathan B. Alter, Esq., at Bingham McCutchen LLP, in
Atlanta, Georgia, the Official Committee of Unsecured Creditors
does not contest the Debtors' need to insure their business
operations, but believes that certain of the terms in the proposed
Insurance Program circumvent the safeguards inherent in an
reorganization conducted under the Bankruptcy Code.
Mr. Alter contends that some provisions of the Insurance Program
derogate from the priorities and protections in the Bankruptcy
Code, and therefore should be modified because they prejudice the
rights of unsecured creditors.
The Committee believes that future renewals should not
automatically be entered into without the Court's review of its
terms.
The Committee believes that the Insurers should not be entitled to
automatic relief without the unsecured creditors first having been
afforded due process and the protections of Section 362 of the
Bankruptcy Code.
In addition, the Committee asks the Court to find the Insurance
Program to be subject to a carve-out of like amount and for the
same purpose as that contained in the DIP Agreement because the
Debtors and the Insurers have not shown why they should be
afforded greater priority than the DIP Agent and the DIP Lenders.
The Committee asks the Court to deny the Debtors' request, and
modify, limit or eliminate unlawful provisions in the Insurance
Program to bring the Insurance Program into compliance with the
Bankruptcy Code.
Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services. The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at
Troutman Sanders, LLP, represents the Debtors in their
restructuring efforts. Henry S. Miller at Miller Buckfire & Co.,
LLC, serves as the Debtors' financial advisor. Anthony J. Smits,
Esq., at Bingham McCutchen LLP, provides the Official Committee of
Unsecured Creditors with legal advice and Russell A. Belinsky at
Chanin Capital Partners, LLC, provides financial advisory services
to the Committee. When the Debtors filed for protection from
their creditors, they estimated more than $100 million in assets
and debts. (Allied Holdings Bankruptcy News, Issue No. 19;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ALLIED HOLDINGS: Inks Lease Agreement with Jack Cooper Transport
----------------------------------------------------------------
Allied Holdings, Inc., and its debtor-affiliates seek authority
from the U.S. Bankruptcy Court for the Northern District of
Georgia for permission to enter into a lease agreement with Jack
Cooper Transport Company, Inc., for real property located in
Georgetown, Kentucky.
On March 17, 2006, Allied Systems, Ltd., as landlord, executed a
lease with Jack Cooper Transport Company, Inc., as tenant, for
approximately 9.43 acres of industrial land located at 239 Triport
Road in the City of Georgetown, County of Scott, Commonwealth of
Kentucky. The Lease commenced on April 1, 2006, and continues on
a month-to-month basis thereafter, with $5,625 in monthly rent due
on the first day of each month.
The parties also entered into a purchase and sale agreement for
the Real Property, pursuant to which Jack Cooper will purchase the
Real Property for $625,000, subject to higher and better offers.
Allied Systems has ceased business operations at the Real Property
based on the changes to its customer base in the region.
Thomas R. Walker, Esq., at Troutman Sanders LLP, in Atlanta,
Georgia, states that Jack Cooper is currently the only potential
purchaser of the Real Property.
The Lease is intended as a short-term vehicle for generating
income until the Property is sold.
Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services. The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at
Troutman Sanders, LLP, represents the Debtors in their
restructuring efforts. Henry S. Miller at Miller Buckfire & Co.,
LLC, serves as the Debtors' financial advisor. Anthony J. Smits,
Esq., at Bingham McCutchen LLP, provides the Official Committee of
Unsecured Creditors with legal advice and Russell A. Belinsky at
Chanin Capital Partners, LLC, provides financial advisory services
to the Committee. When the Debtors filed for protection from
their creditors, they estimated more than $100 million in assets
and debts. (Allied Holdings Bankruptcy News, Issue No. 19;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ALLIED HOLDINGS: Committee Wants to See Chapter 11 Plan by June 30
------------------------------------------------------------------
As reported in the Troubled Company Reporter on March 23, 2006,
Allied Holdings, Inc., and its debtor-affiliates asked the U.S.
Bankruptcy Court for the Northern District of Georgia to extend
the period during which they have the exclusive right to:
a. file a plan of reorganization through and including
September 28, 2006; and
b. solicit acceptances of that plan through and including
November 27, 2006.
Creditors Committee Objects
According to Jonathan B. Alter, Esq., at Bingham McCutchen LLP,
in Atlanta, Georgia, since the Petition Date, the Debtors'
financial and operating forecasts have contained inaccuracies
resulting from miscalculation of future expenses and of industry
production volume trends.
In addition, the Debtors have violated certain financial covenants
in their DIP Credit Agreement, calling into question management's
ability to identify the forecasting errors and to propel the
Debtors' businesses toward prompt emergence from bankruptcy. That
resulted to the Lenders' applying a short leash through a
forbearance agreement best described in terms of days, not weeks.
The Official Committee of Unsecured Creditors believes that a
five-month extension of the Exclusive Periods will result in
further erosion of estate assets through the incurrence of
additional direct bankruptcy-related costs.
Mr. Alter contends that the Debtors have failed to demonstrate
the existence of cause to extend their Exclusive Periods.
Thus, the Committee asks the Court to limit the extension of the
Debtors' Exclusive Periods:
-- to file a plan of reorganization until June 30, 2006, and
-- to solicit acceptances of that plan until August 29, 2006.
Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services. The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at
Troutman Sanders, LLP, represents the Debtors in their
restructuring efforts. Henry S. Miller at Miller Buckfire & Co.,
LLC, serves as the Debtors' financial advisor. Anthony J. Smits,
Esq., at Bingham McCutchen LLP, provides the Official Committee of
Unsecured Creditors with legal advice and Russell A. Belinsky at
Chanin Capital Partners, LLC, provides financial advisory services
to the Committee. When the Debtors filed for protection from
their creditors, they estimated more than $100 million in assets
and debts. (Allied Holdings Bankruptcy News, Issue No. 19;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ARGENT SECURITIES: Moody's Rates Two Certificate Classes at Low-B
-----------------------------------------------------------------
Moody's Investors Service assigned Aaa rating to the senior
certificates issued by Argent Securities Trust 2006-W3 Asset-
Backed Pass-Through Certificates, Series 2006-W3, and ratings
ranging from Aa1 to Ba2 to the subordinate certificates in the
deal.
The securitization is backed by adjustable-rate and fixed rate
subprime mortgage loans originated through Ameriquest's wholesale
division, Argent Mortgage Company using underwriting guidelines
that are slightly less stringent than those used by Ameriquest's
retail channel -- Ameriquest Mortgage Company. The ratings are
based primarily on the credit quality of the loans, and on the
protection from subordination, excess spread,
overcollateralization, and an interest rate swap agreement.
Moody's expects collateral losses to range from 4.85% to 5.35%.
Ameriquest Mortgage Company will act as Master Servicer and AMC
Mortgage Services will act as sub-servicer for the mortgage
collateral.
Ameriquest had previously disclosed discussions with financial
regulatory agencies or attorneys general offices of several
states, regarding lending practices of AMC. ACC Capital Holdings
Corporation, the parent company of Argent and AMC, had recorded a
provision of $325 million in its financial statements with respect
to this matter. ACC has recently announced that it had entered
into a settlement agreement with forty-nine states and District of
Columbia.
Under the terms of the settlement agreement, ACC agreed to pay
$295 million toward restitution to borrowers and $30 million to
cover the States' legal costs and other expenses. In addition,
ACC has agreed on behalf of itself, AMC and AMC's retail
affiliates, to supplement several of its business practices and to
submit itself to independent monitoring. The agreement is not
expected to have any material credit implications on
securitizations backed by collateral originated by AMC, Argent or
their affiliates.
The complete rating actions are:
Argent Securities Trust 2006-W3 Asset-Backed
Pass-Through Certificates, Series 2006-W3
* Class A-1, Assigned Aaa
* Class A-2A, Assigned Aaa
* Class A-2B, Assigned Aaa
* Class A-2C, Assigned Aaa
* Class A-2D, Assigned Aaa
* Class M-1, Assigned Aa1
* Class M-2, Assigned Aa2
* Class M-3, Assigned Aa3
* Class M-4, Assigned A1
* Class M-5, Assigned A2
* Class M-6, Assigned A3
* Class M-7, Assigned Baa1
* Class M-8, Assigned Baa2
* Class M-9, Assigned Baa3
* Class M-10, Assigned Ba1
* Class M-11, Assigned Ba2
ARMSTRONG WORLD: Confirmation Delay Delays Appraiser's Work
-----------------------------------------------------------
Armstrong World Industries, Inc., seeks permission from U.S.
Bankruptcy Court for the District of Delaware to modify the scope
and terms of retention of American Appraisal Associates, Inc., the
Debtors' independent valuation experts.
AWI needs AAA to:
-- update, as of the effective date of the Modified Plan, the
fair value of certain of AWI's assets, including the assets
of Worthington Armstrong Venture, a joint venture with
Worthington Industries, for fresh start accounting
purposes; and
-- value AWI's stock as of the Effective Date for tax
reporting purposes as required by Treasury Regulation
Section 1.468B-3(b)(4).
AWI explains that because of the continued delay in its Chapter 11
emergence, AAA did not begin performance of fresh start accounting
services and tax reporting services as previously authorized by
the Court.
In light of the upcoming confirmation hearing on AWI's Modified
Plan of Reorganization, AWI has asked AAA to perform the
Supplemental Valuation Services on the company's emergence from
Chapter 11 in accordance with an engagement letter dated
March 31, 2006.
For AWI to comply with its fresh-start accounting obligations
under the Generally Accepted Accounting Principles in the United
States, AWI must restate for book purposes the value of its
assets.
AAA has provided AWI with independent valuations for substantially
all of AWI's assets during Phase I and Phase II of the engagement.
The Treasury Regulation requires AWI, within 45 days after
emergence from Chapter 11 to report with the Internal Revenue
Service the values of AWI's stock as of the effective date, for
tax reporting purposes.
Under the Modified Plan, AWI will distribute shares of Reorganized
AWI's common stock to holders of allowed general unsecured claims.
AWI will also fund an asbestos personal injury trust with, among
others, stock in Reorganized AWI.
AWI will pay AAA for its services according to the firm's
customary hourly rates:
Position Financial Real Estate Industrial
-------- --------- ----------- ----------
Senior Vice President $560 $331 $316
Managing Principal 501 321 295
Principal 319 276 232
Engagement Director 237 170 181
Senior Staff 181 139 151
Staff 137 113 123
Associate 103 88 117
The firm will also be reimbursed for necessary expenses.
AAA vice president Rick Muldoon will lead the engagement together
with Richard P. Law, vice president and managing principal of
AAA's Financial Valuation Group, as project manager.
About Armstrong World
Headquartered in Lancaster, Pennsylvania, Armstrong World
Industries, Inc. -- http://www.armstrong.com/-- the major
operating subsidiary of Armstrong Holdings, Inc., designs,
manufactures and sells interior floor coverings and ceiling
systems, around the world.
The Company and its debtor-affiliates filed for chapter 11
protection on December 6, 2000 (Bankr. Del. Case No. 00-04469).
Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell
C. Silberglied, Esq., at Richards, Layton & Finger, P.A.,
represent the Debtors in their restructuring efforts. The Debtors
tapped the Feinberg Group for analysis, evaluation, and treatment
of personal injury asbestos claims.
Mark Felger, Esq. and David Carickhoff, Esq., at Cozen and
O'Connor, and Robert Drain, Esq., Andrew Rosenberg, Esq., and
Alexander Rohan, Esq., at Paul, Weiss, Rifkind, Wharton &
Garrison, represent the Official Committee of Unsecured Creditors.
The Creditors Committee tapped Houlihan Lokey for financial and
investment advice. The Official Committee of Asbestos Personal
Injury Claimant hired Ashby & Geddes as counsel.
When the Debtors filed for protection from their creditors, they
listed $4,032,200,000 in total assets and $3,296,900,000 in
liabilities. (Armstrong Bankruptcy News, Issue No. 91; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
ARMSTRONG WORLD: Employs Ryan & Company as Tax Consultant
---------------------------------------------------------
The Honorable Judith K. Fitzgerald of the U.S. Bankruptcy Court
for the District of Delaware authorizes Armstrong World
Industries, Inc., and its debtor-affiliates to employ Ryan &
Company, Inc., as its state and local tax consultant, nunc pro
tunc to January 16, 2006.
As reported in the Troubled Company Reporter on Feb. 8, 2006,
Ryan & Co. will review AWI's multi-state sales and use tax payment
records and identify refund or reduction opportunities -- the SALT
Services -- more fully detailed in a retention agreement between
the parties, dated December 20, 2005.
Ryan & Co. will provide administrative and technical support to
minimize the real and personal property tax assessments for AWI's
sites, and create a centralized control system for all real and
personal property taxes on the identified locations throughout the
United States, resulting in 68 returns and 10 exemption filings.
Ryan & Co.'s property tax consulting services will consist of
three phases, and will cover tax year 2006 and will automatically
renew each January 1 unless either party provides written notice
at least 60 days prior to the renewal date. Either party may
terminate the agreement by providing written notice at least 60
days prior to the termination.
In the initial phase, Ryan & Co. will:
-- perform administrative work, including monitoring the
assessments as they are issued, and approving for payment
all property tax bills sent to it by AWI;
-- perform tax compliance services using the ePropertyTax's
Property Tax Office software product;
-- perform audit services, including responding to and
managing all property tax audits; and
-- will conduct an in-depth review and analysis of the
proposed real property assessments and prior year personal
property renditions and assessments for major facilities.
In the second phase, when a property has been over-assessed due to
a reason other than a basic assessor error that can be resolved
via discussion with the assessor, Ryan & Co. will recommend filing
an administrative appeal.
In the third phase, if, after all administrative remedies have
been exhausted, AWI decides to litigate, Ryan & Co. will continue
to assist in the appeal and will counsel with the attorneys during
this process.
Samuel P. Birchfield will have overall responsibility for the
engagement. Supporting Mr. Birchfield will be the entire team of
Ryan & Co.'s property tax professionals.
About Armstrong World
Headquartered in Lancaster, Pennsylvania, Armstrong World
Industries, Inc. -- http://www.armstrong.com/-- the major
operating subsidiary of Armstrong Holdings, Inc., designs,
manufactures and sells interior floor coverings and ceiling
systems, around the world.
The Company and its debtor-affiliates filed for chapter 11
protection on December 6, 2000 (Bankr. Del. Case No. 00-04469).
Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell
C. Silberglied, Esq., at Richards, Layton & Finger, P.A.,
represent the Debtors in their restructuring efforts. The Debtors
tapped the Feinberg Group for analysis, evaluation, and treatment
of personal injury asbestos claims.
Mark Felger, Esq. and David Carickhoff, Esq., at Cozen and
O'Connor, and Robert Drain, Esq., Andrew Rosenberg, Esq., and
Alexander Rohan, Esq., at Paul, Weiss, Rifkind, Wharton &
Garrison, represent the Official Committee of Unsecured Creditors.
The Creditors Committee tapped Houlihan Lokey for financial and
investment advice. The Official Committee of Asbestos Personal
Injury Claimant hired Ashby & Geddes as counsel.
When the Debtors filed for protection from their creditors, they
listed $4,032,200,000 in total assets and $3,296,900,000 in
liabilities. (Armstrong Bankruptcy News, Issue No. 89; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
ATA AIRLINES: Objects to AMR Leasing's $5.39 Million Admin. Claim
-----------------------------------------------------------------
As previously reported, the U.S. Bankruptcy Court for the Southern
District of Indiana approved a stipulation between the
Reorganizing ATA Airlines, Inc., its debtor-affiliates and AMR
Leasing Corporation resolving all of AMR's general unsecured non-
priority damages claims filed against the Debtors, without
prejudice to AMR's rights to seek allowance and payment of Claim
No. 2069 -- its administrative expense claim.
Both parties further agreed that:
-- the Stipulation will have no evidentiary effect or
probative value in determining the allowed amount of AMR's
administrative expense claim; and
-- to the extent that the claims for damages asserted by AMR
in Claim No. 2069 are determined to be unsecured non-
priority claims rather than administrative expense claims,
the allowance of AMR's Claim No. 2058 as a general
unsecured non-priority claim fully satisfies all unsecured
non-priority claims.
Debtors Object to AMR Admin. Claim
Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis,
Indiana, tells the Court that AMR's administrative expense claim
has four components:
(1) $1,383,2672 related to the Debtors' alleged failure to
discharge liens on the Engines -- the "Lien Claim";
(ii) $4,200,000 for the Debtors' alleged failure to maintain
the Engines in accordance with the Leases -- the
"Maintenance Program Claim";
(iii) $322,866 for damages AMR contends are attributable to
ATA Airlines, Inc.'s alleged failure to comply with
maintenance and return obligations set forth in the Leases
and the Participation Agreement -- the "Return Condition
Claim"; and
(iv) $870,000 for unpaid rental payments under the Leases that
were for the end of calendar year 2005 and some portion of
2006 -- the "Rent Claim".
Mr. Nelson argues that the Maintenance Program Claim seeks damages
not related to, or caused by, any breach by ATA of any of its
obligations under the Leases. Instead, the Maintenance Program
Claim is an attempt by AMR to recover money from ATA for
ATA's alleged failure to do something it never agreed to do and
was never obligated to do.
The Return Condition Claim, on the other hand, is an ordinary
rejection damages claim and not an administrative expense claim,
Mr. Nelson explains. The Claim has been vastly overstated as
well.
"A correct application of the applicable formula to AMR's own
overstated cost estimates and mistaken interpretations of the
Leases shows that AMR owes the Debtors substantial sums because
the Airframes exceeded the return condition required by the
Leases," Mr. Nelson maintains.
The Rent Claim is also for rent covering the Debtors' "use" of the
Aircraft for a period that did not even begin until after the
Aircraft were returned to AMR. Treating the Rent Claim as an
administrative expense claim would give AMR an extraordinary
windfall in contravention of fundamental bankruptcy goals and
policies, Mr. Nelson says. The Rent Claim, like the Return
Condition Claim, is also overstated and should be reduced or
eliminated entirely by principles of mitigation.
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. Daniel H.
Golden, Esq., Lisa G. Beckerman, Esq., and John S. Strickland,
Esq., at Akin Gump Strauss Hauer & Feld, LLP, represents the
Official Committee of Unsecured Creditors. 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. 51; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ATA AIRLINES: Wants Flying Food Settlement Agreement Approved
-------------------------------------------------------------
Terry E. Hall, Esq., at Baker & Daniels, in Indianapolis,
Indiana, relates that ATA Airlines, Inc., and Flying Food Group,
LLC, were parties to a contract under which Flying Food sold and
delivered catering products and services to ATA.
The Prepetition Agreement was rejected pursuant to the order
confirming the Reorganizing Debtors' Plan of Reorganization on
January 31, 2006.
However, ATA and Flying Food continued their relationship under
agreed terms pursuant to a Court order entered on January 12,
2005.
Prior to the Petition Date, Flying Food asserted -- and ATA agreed
-- that Flying Food was owed $1,242,399 representing unpaid
invoices under the Prepetition Agreement.
ATA believes that Flying Food's services are significant to its
business operations and, therefore, desires to retain Flying
Food's services.
To settle matters related to the Prepetition Claim and the
Prepetition Agreement, ATA and Flying Food entered into a
settlement agreement.
Among other things, the Settlement Agreement provides that:
(a) the Prepetition Agreement will be rejected;
(b) Flying Food's $1,242,399 Prepetition Claim will be allowed
as a general unsecured claim; and
(c) ATA and Flying Food will execute a new agreement for the
provision of services; and
(d) ATA and Flying Food will release and discharge each other
from any and all claims, arising from or related to the
Prepetition Agreement including any and all actions --
including avoidance actions -- under Chapter 5 of the
Bankruptcy Code. Flying Food will retain its right to
payment under the ATA Reorganizing Debtors' First Amended
Plan of Reorganization on the Prepetition Claim.
Accordingly, ATA and Flying Food ask the U.S. Bankruptcy Court for
the Southern District of Indiana to:
-- approve the Settlement Agreement;
-- allow the $1,242,399 Prepetition Claim as a general
unsecured claim; and
-- authorize ATA to execute the New Agreement.
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. Daniel H.
Golden, Esq., Lisa G. Beckerman, Esq., and John S. Strickland,
Esq., at Akin Gump Strauss Hauer & Feld, LLP, represents the
Official Committee of Unsecured Creditors. 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. 51; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
AXLETECH INT'L: Delayed Financials Cue Moody's Ratings Review
-------------------------------------------------------------
Moody's Investors Service placed the ratings of AxleTech
International Holdings, Inc. under review for possible downgrade.
The action follows the company's delay in producing audited
financial statement for the period ending Dec. 31, 2005. These
financial statements, which would be the first report on the
company post its mid-October acquisition by The Carlyle Group,
were due on April 10, 2006.
The company reports that the delay relates to unanticipated
complexities associated with the audit of two stub periods and
delays in completing the purchase accounting flowing from the
approximate $335 million acquisition price. AxleTech has
approached its bank groups for waivers, which will provide for a
30 day grace period. Should such waivers not be received, the
company could be declared in technical default of its borrowing
agreements.
Ratings placed under Review:
* Corporate Family, B2
* Senior Secured $50 million First Lien Revolving Credit, B2
* Senior Secured $130 million First Lien Term Loan, B2
* Senior Secured $85 million Second Lien Term Loan, Caa1
The review will consider the company's ability to secure the
waiver and produce its financial statements in a timely fashion.
The review will also consider the company's ability to obtain
waivers from its bank group until the statements are available as
well as the terms and conditions of such waivers. In addition
Moody's will focus on the extent to which the company's
performance may have deviated from expectations at the time the
ratings were assigned, as well as any revisions to earlier
assumptions on AxleTech's prospective operating performance or
valuations of the company's assets and liabilities.
Should the delay in completing the financial statements become
further extended, or if Moody's determines that it lacks
sufficient financial information to appropriately monitor the
company's credit, the ratings could be downgraded and/or
withdrawn.
AxleTech International Holdings, Inc., headquartered in Troy,
Michigan, is a leading supplier of planetary axles, brakes and
other drivetrain components and aftermarket parts for off-highway,
military and specialty vehicles. The company has approximately
425 employees with significant operations in Oshkosh, Wisconsin,
Belvidere, Illinois, St. Etienne, France and Osasco, Brazil.
BEAR STEARNS: Moody's Places Class I-B-3 Cert. Rating at Ba2
------------------------------------------------------------
Moody's Investors Service assigned Aaa ratings to the senior
certificates issued by Bear Stearns Alt-A Trust 2006-1, Mortgage
Pass-Through Certificates, Series 2006-1, and ratings ranging from
Aa2 to Ba2 to the subordinate certificates in the deal.
The securitization is backed by AmSouth Bank, EMC Mortgage
Corporation, GMAC Mortgage Corporation, HSBC Mortgage Corporation,
and various other originators originated adjustable-rate Alt-A
mortgage loans. The ratings are based primarily on the credit
quality of the loans and on the protection from subordination,
overcollateralization and excess spread for Group I. Moody's
expects collateral losses to range from 1.35% to 1.55% for Group
I, and collateral losses to range from 0.75% to 0.95% for Sub-Loan
Group II-1-3.
EMC Mortgage Corporation, GMAC Mortgage Corporation, HSBC Mortgage
Corporation, and Union Federal Bank of Indianapolis will service
the loans, and Wells Fargo Bank, N.A. will act as master servicer.
Moody's has assigned EMC Mortgage Corporation its servicer quality
rating as a primary servicer of prime 1st lien loans.
The complete rating actions are:
Bear Stearns Alt-A Trust 2006-1
Mortgage Pass-Through Certificates, Series 2006-1
* Class I-1A-1, Assigned Aaa
* Class I-1A-2, Assigned Aaa
* Class I-M-1, Assigned Aa2
* Class I-M-2, Assigned A2
* Class I-B-1, Assigned Baa2
* Class I-B-2, Assigned Baa3
* Class I-B-3, Assigned Ba2
* Class II-1A-1, Assigned Aaa
* Class II-1X-1, Assigned Aaa
* Class II-1A-2, Assigned Aaa
* Class II-1A-3, Assigned Aaa
* Class II-1X-2, Assigned Aaa
* Class II-2A-1, Assigned Aaa
* Class II-2A-2, Assigned Aaa
* Class II-2X-1, Assigned Aaa
* Class II-3A-1, Assigned Aaa
* Class II-3A-2, Assigned Aaa
* Class II-3X-1, Assigned Aaa
* Class II-B-1, Assigned Aa2
* Class II-X-B1, Assigned Aa2
* Class II-B-2, Assigned A2
* Class II-X-B2, Assigned A2
* Class II-B-3, Assigned Baa2
* Class II-X-B3, Assigned Baa2
BEAR STEARNS: Moody's Rates Class M-10 Certificates at Ba1
----------------------------------------------------------
Moody's Investors Service assigned Aaa rating to the senior
certificates issued by Bear Stearns Asset Backed Securities I
Trust 2006-HE3, Asset-Backed Certificates, Series 2006-HE3, and
ratings ranging from Aa1 to Ba1 to the mezzanine certificates in
the deal.
The securitization is backed by adjustable-rate and fixed-rate
subprime mortgage loans acquired by EMC Mortgage Corporation and
originated by Encore Credit Corp., Opteum Financial Services, LLC,
and various other originators, none of which originated more than
10% of the mortgage loans. The ratings are based primarily on the
credit quality of the loans, and on the protection from
subordination, over-collateralization, and excess spread. Moody's
expects collateral losses to range from 5.60% to 6.10%.
EMC Mortgage Corporation and Wells Fargo Bank, N.A. will service
the loans, and LaSalle Bank, N.A. will act as master servicer.
The complete rating actions are:
Bear Stearns Asset Backed Securities I Trust 2006-HE3
Asset-Backed Certificates, Series 2006-HE3
* Class A-1, Assigned Aaa
* Class A-2, Assigned Aaa
* Class A-3, Assigned Aaa
* Class M-1, Assigned Aa1
* Class M-2, Assigned Aa2
* Class M-3, Assigned Aa3
* Class M-4, Assigned A1
* Class M-5, Assigned A2
* Class M-6, Assigned A3
* Class M-7, Assigned Baa1
* Class M-8, Assigned Baa2
* Class M-9, Assigned Baa3
* Class M-10, Assigned Ba1
BOMBARDIER INC: Moody's Confirms Ba2 Ratings With Negative Trend
----------------------------------------------------------------
Moody's Investors Service confirmed the Ba2 long-term debt ratings
of Bombardier Inc., and its wholly owned captive finance
subsidiary, Bombardier Capital Inc. The SGL-2 Speculative Grade
Liquidity Rating of Bombardier Inc., is affirmed. The outlook is
Negative.
In confirming the Ba2 long term rating, Moody's noted the general
operating stability evident in Bombardier's recently released
financial results, and the expectation that continued favorable
trends in the business jet segment coupled with improving
performance in the transportation segment should enable the
company to demonstrate improved credit metrics over the coming
year. The rating outlook remains negative, and considers the
ongoing uncertainty surrounding its regional jet business and the
company's large contingent obligations.
While Bombardier continues to demonstrate financial metrics that
are somewhat weak, maintenance of the Ba2 rating is supported by
the improved performance in the company's business jet and
turboprop operations. Strong backlog for these products should
support aerospace segment results during the coming year, even
while the regional jet business remains pressured by weak demand
for 50 seat aircraft. Results from the transportation segment are
also expected to improve as the restructuring initiatives in this
segment continue to yield benefits, and will provide further
support for the rating. In addition, while the company's customer
finance operations remain, as do all such finance activities of
aircraft manufacturers, subject to concentration risk, the finance
portfolio has been pared back to a core supportive role and is no
longer an significant incremental risk element to the overall
credit.
Moody's ratings incorporate a degree of risk associated with the
company's regional jet business. While demand for larger aircraft
remain strong, smaller RJ demand has fallen sharply. In addition
to uncertainties related to future aircraft demand, concerns
associated with the regional jet segment include a limited and
concentrated order book, and current and prospective financial
commitments that could become burdensome.
Lack of demand and continued restructuring among the company's
primary customers, US passenger airlines, continues. Recent
bankruptcy reorganizations have resulted in as many as 100 used
aircraft available in this still developing secondary market. In
Moody's opinion, there is a distinct possibility that demand for
new aircraft will remain limited for some time and that secondary
market values could be negatively affected undermining the value
of collateral supporting the company's on balance sheet finance
portfolio and its contingent risk exposure.
The company's liquidity profile is modestly supportive of the
rating and would be more so but for the approximately $1 billion
of debt maturities in the next twelve months. High levels of
balance sheet liquidity are considered to be adequate to support
this maturity profile and the company's seasonal working capital
needs while remaining within the covenants of the company's bank
loan agreements.
A stabilization of the outlook would be considered when the
uncertainties of the regional jet sector diminish, debt coverage
metrics improve, and liquidity is restored post the large debt
payments due in the next twelve months.
The rating would be under downward pressure if diminished cash
flow, for whatever reason, were to cause reported cash to decline
below $1.5 billion, if the company's interim finance portfolio
were to increase above the company's stated limit of $1 billion
for a sustained period, if the outlook for continued improvement
in cash flow and operating margins in the transportation segment
were to weaken or retained cash flow to debt were to decline below
10% or EBIT to interest were to fall below 1.0 times
The ratings confirmed are:
* Bombardier Inc. -- its Ba2 Long Term Corporate Family
Rating; and its Ba2 senior unsecured debt rating.
* Bombardier Capital Inc. -- the Ba2 senior debt rating; the
Ba2 rating for its MTN program.
* Bombardier Capital Funding Ltd Partnership -- the Ba2 senior
debt rating, guaranteed by Bombardier Capital Inc.
Bombardier Inc., headquartered in Montreal, Quebec, is a
diversified company involved primarily in the aerospace,
transportation, and financial services markets.
BOWATER INC: David J. Paterson Replaces Arnold M. Nemirow as CEO
----------------------------------------------------------------
Bowater Incorporated (NYSE: BOW) names David J. Paterson as
President and Chief Executive Officer effective May 1, 2006. He
succeeds Arnold M. Nemirow, who is retiring as Chief Executive
Officer but will remain as non-executive Chairman until later this
year.
Since 2003, Mr. Paterson, 51, has been Executive Vice President of
Georgia-Pacific Corporation, in charge of its Building Products
Division. He joined Georgia-Pacific in 1987, and in recent years
has been responsible for its Pulp and Paperboard Division, its
Paper and Bleached Board Division and its Communication Papers
Division. Mr. Paterson holds a Bachelor of Science Degree from
the School of Industrial and Labor Relations, Cornell University,
and a Masters in Business Administration from the University of
Michigan.
"David brings a vast amount of business experience as well as a
successful record of accomplishments to Bowater. I am confident
that he will provide the strong leadership necessary to further
our Company's financial recovery," said Mr. Nemirow.
In January 2006, Mr. Nemirow, 63, disclosed his intention to
retire this year pending completion of a search for his successor.
He joined Bowater in 1994 as President and Chief Operating
Officer, becoming Chief Executive Officer in March 1995, and
Chairman in 1996. Prior to joining Bowater, Mr. Nemirow served as
President and Chief Executive Officer of Wausau Paper Mills
Company after spending sixteen years with Great Northern Nekoosa
Corporation. He began his career in 1969 with a Wall Street law
firm.
Headquartered in Greenville, South Carolina, Bowater Incorporated
produces newsprint and coated mechanical papers. In addition, the
company makes uncoated mechanical papers, bleached kraft pulp and
lumber products. The company has 12 pulp and paper mills in the
United States, Canada and South Korea and 12 North American
sawmills that produce softwood lumber. Bowater also operates two
facilities that convert a mechanical base sheet to coated
products. Bowater's operations are supported by approximately
1.4 million acres of timberlands owned or leased in the United
States and Canada and 30 million acres of timber cutting rights in
Canada. Bowater is one of the world's largest consumers of
recycled newspapers and magazines. Bowater common stock is listed
on the New York Stock Exchange, the Pacific Exchange and the
London Stock Exchange. A special class of stock exchangeable into
Bowater common stock is listed on the Toronto Stock Exchange (TSX:
BWX).
* * *
Standard & Poor's Ratings Services lowered its ratings on Bowater
and subsidiary Bowater Canadian Forest Products Inc., including
the corporate credit rating on each entity to 'B+' from 'BB' in
December 2005. S&P said the outlook is stable.
Moody's Investors Service puts Ba3 senior implied, senior
unsecured and issuer ratings on Bowater. Moody's says the outlook
is negative.
Fitch Ratings rated Bowater's senior unsecured bonds and bank debt
'BB-'. Fitch said the Rating Outlook is Stable.
BOWNE & CO: Restated Financials Include $3.4MM Net Income Decrease
------------------------------------------------------------------
Bowne & Co., Inc. (NYSE: BNE) filed its 2005 Annual Report on Form
10-K for the year ended Dec. 31, 2005.
As previously reported in the Troubled Company Reporter on
March 24, 2006, the Company delayed filing its Form 10-K in order
to restate financial results for the fiscal years 2004 and prior,
for certain adjustments of current and deferred income tax
liabilities.
The restatement did not impact revenue, operating income, income
from continuing operations before taxes, segment profit or net
cash flow previously reported by the Company. However, the
restatement did impact, directly or indirectly, the tax of certain
items, leading to the restatement of these financial measures:
-- Stockholders' equity: Stockholders' Equity for the year
ended Dec. 31, 2004, was restated to $379.9 million from its
previously reported $372.8 million, as a result of the prior
year adjustments to certain tax accounts.
-- Income from continuing operations: For the year ended
Dec. 31, 2005, income from continuing operations was
$774,000, a $1.2 million increase from the preliminary loss
of $408,000 previously reported.
-- Net income from discontinued operations: Net income from
discontinued operations decreased $3.4 million primarily as
a result of an adjustment to the gain on the sale of Bowne
Global Solutions, due to a change in the tax balances at the
date of the sale.
This change is primarily a result of the revisions in net income
from discontinued operations reflecting the adjustment to the gain
on the sale of Bowne Global Solutions.
A full-text copy of the Company's 2005 Annual Report on Form 10-K
is available at no charge at http://ResearchArchives.com/t/s?7d2
About Bowne & Co.
Founded in 1775, Bowne & Co., Inc. -- http://www.bowne.com/-- is
a global leader in providing high-value solutions that empower its
clients' communications. Bowne & Co. combines its capabilities
with superior customer service, new technologies, confidentiality
and integrity to manage, repurpose and distribute a client's
information to any audience, through any medium, in any language,
anywhere in the world.
* * *
As reported in the Troubled Company Reporter on Feb. 8, 2006,
Moody's Investors Service affirmed the rating on Bowne & Co.,
Inc.'s $75 million Convertible Subordinated Debentures due 2033 at
B2 and affirmed Bowne's Corporate Family Ba3 rating. Moody's
changed the outlook to positive from stable.
CABLEVISION SYSTEMS: Declares $10 Dividend on Classes A & B Stock
-----------------------------------------------------------------
Cablevision Systems Corporation's Board of Directors declared a
special cash dividend of $10.00 per share on each outstanding
share of its NY Group Class A Stock and NY Group Class B Stock.
The dividend will be payable on April 24, 2006, to holders of
record at the close of business on April 18, 2006.
The Board's decision came in the heels of the closing of CSC
Holdings, Inc.'s term loan financing on March 29, 2006. CSC
Holdings, a Cablevision wholly owned subsidiary would provide
$3 billion from its loan to fund the dividend. After more than
three months since the dividend was still first declared, all
legal and financial obstacles have been hurdled to allow the
distribution.
Because of the magnitude of the special cash dividend, the New
York Stock Exchange has determined that the ex-dividend date will
be April 25, 2006, the business day following the payment date for
the special cash dividend. Trading ex-dividend means the seller
retains the right to receive a previously declared dividend. The
buyer receives the share of stock, but not the right to receive
the dividend. Shareholders of record on the April 18, 2006,
record date who subsequently sell their common shares before the
April 25, 2006, ex-dividend date will also be selling their right
to receive the special cash dividend. Shareholders are encouraged
to consult with their financial advisors regarding the specific
implications of the deferral of the ex-dividend date.
For U.S. federal income tax purposes, the Company expects that the
special dividend should qualify as a tax-free return of capital to
shareholders to the extent of each shareholder's basis in the
Company's common stock, determined on a per share basis, with any
excess generally being treated as a capital gain. The anticipated
tax treatment is based upon Cablevision's estimate of a deficit in
current and accumulated earnings and profits through the end of
2006. As a result, the tax treatment is subject to change.
Shareholders are encouraged to consult with their own tax and
financial advisors regarding the implications of this special
dividend on their individual tax position.
Information derived from regulatory filings with the Securities
and Exchange Commission and compiled by Bloomberg shows that these
15 large shareholders hold just over 50% of Cablevision's
outstanding shares:
Percentage
Shareholder Name Shares Held Equity Stake
---------------- ----------- ------------
GAMCO Investors Incorporated 21,645,000 9.6%
CAM North America LLC 17,567,000 7.8%
Smith Barney 9,778,000 4.3%
D.E. Shaw & Co. 7,964,000 3.5%
Deutsche Bank AG 7,781,000 3.5%
Harris Associates LP 6,945,000 3.1%
T. Rowe Price 5,879,000 2.6%
Harwich Capital 5,796,000 2.6%
Capital Guardian Trust 5,554,000 2.5%
Morgan Stanley 5,238,000 2.3%
Comcast Corporation 5,129,000 2.3%
Barclays Global plc 4,934,000 2.2%
Eubel Brady & Stuttman Asset Mgt. 4,183,000 1.9%
Capital International Limited 4,088,000 1.8%
JP Morgan Chase & Co. 3,938,000 1.7%
----------- -----
114,418,000 51.7%
=========== =====
Headquartered in Manhattan, Cablevision Systems
Corporation -- http://www.cablevision.com/-- is one of the
nation's leading telecommunications and entertainment companies.
Cablevision currently operates the nation's single biggest cable
cluster, serving 3 million households in the New York metropolitan
area. Its portfolio of operations ranges from high-speed internet
access, robust digital cable television as well as advanced
digital telephone services, professional sports teams, world-
renowned entertainment venues and national television program
networks.
At December 31, 2005, Cablevision Systems' balance sheet showed
liabilities exceeding assets by more than $2.46 billion.
CINRAM INT'L: Moody's Cuts Debt & Corporate Family Ratings to B1
----------------------------------------------------------------
Moody's Investors Service downgraded Cinram International Inc.'s
Corporate Family Rating and existing Senior Secured debt ratings
to B1 from Ba3 and assigned provisional ratings of (P) B1 to the
company's proposed Senior Secured bank facilities. The outlook is
stable.
The downgrade reflects the company's plans to recapitalize itself
as an income trust, which will result in essentially all of
Cinram's future free cash flow being paid out to shareholders
without any upfront reduction in leverage. In Moody's opinion,
the income trust structure will significantly reduce the company's
financial cushion which it had to face sizeable business risks
captured in the original Ba3 rating. Moody's notes that Cinram's
recapitalization plan is subject to shareholder and other
regulatory approvals.
The B1 Corporate Family Rating broadly reflects Cinram's expected
weak free cash flow-to-debt ratio as well as significant business
risks, including the concentration of its business with few key
customers; Moody's perception that Cinram's negotiating scope with
these customers is limited; the potential for DVD unit volatility;
ongoing declines in DVD/CD unit pricing; and expected margin
contraction. These risks are somewhat offset by Cinram's
established relationships with major movie studios, its status as
one of two main independent DVD and CD manufacturers, with turnkey
replication, distribution and logistics services, relatively low
EBITDA-based leverage, and structural provisions provided for in
the rated credit facilities.
Cinram International Inc. is the world's largest manufacturer and
distributor of DVD's, CD's and VHS pre-recorded media, with
headquarters in Toronto, Ontario, Canada.
Downgrades:
* Corporate Family Rating, Downgraded to B1 from Ba3
* Senior Secured Bank Credit Facility, Downgraded to
B1 from Ba3
Assignments:
* Senior Secured Bank Credit Facility, Assigned (P)B1
Outlook Actions:
* Outlook, Changed To Stable From Rating Under Review
COEUR D'ALENE: Selling Coeur Silver Unit to U.S. Silver for $15M
----------------------------------------------------------------
Coeur d'Alene Mines Corporation (NYSE: CDE, TSX: CDM) entered into
an agreement to sell 100% of the shares of Coeur Silver Valley to
U.S. Silver Corporation, a Delaware Corporation, for $15 million
in cash. Coeur Silver Valley is a wholly owned subsidiary of
Coeur d'Alene Mines Corporation that owns and operates the Galena
underground silver mine and adjoining properties in Northern
Idaho.
Dennis E. Wheeler, Coeur's Chairman, President and Chief Executive
Officer, commented, "Given our company's long association with the
Silver Valley, we are especially pleased to find a buyer whose
management similarly has well established roots in the area. We
wish U.S. Silver Corporation and the world-class workforce at the
Galena mine nothing but the best. The sale of Coeur Silver Valley
is another example of Coeur's commitment to redirect its growth
strategy toward lower-cost, longer-life silver assets that will
generate high-margin cash flow and profits for our shareholders."
The sale is contingent upon customary closing conditions such as
U.S. Silver Corporation's arrangements for financing, approval by
the board of directors of Coeur d'Alene Mines, and completion of
final documentation. Coeur and U.S. Silver Corporation will work
together to ensure continuity of operations during the transition
period. The transaction is expected to close by June 1, 2006.
Coeur d'Alene Mines Corporation is the world's largest publicly
traded primary silver producer and has a strong presence in gold.
The Company has mining interests in Alaska, Argentina, Australia,
Bolivia, Chile, Nevada, and Idaho.
Coeur d'Alene Mines Corporation -- http://www.coeur.com/-- is the
world's largest primary silver producer, as well as a significant,
low-cost producer of gold. The Company has mining interests in
Nevada, Idaho, Alaska, Argentina, Chile, Bolivia and Australia.
* * *
Coeur d'Alene Mines Corporation's $180 Million notes due Jan.
15, 2024, carry Standard & Poors' B- rating. As reported in the
Troubled Company Reporter on Oct. 4, 2004, Standard & Poor's
Ratings Services affirmed its 'B-' corporate credit and senior
unsecured debt ratings on Coeur D'Alene Mines Corporation and
removed the ratings from CreditWatch, where they were placed on
June 1, 2004, with positive implications. S&P said the outlook is
stable.
COLLINS & AIKMAN: Resolves Mid-America Lease Dispute
----------------------------------------------------
As reported in the Troubled Company Reporter on Feb. 1, 2006,
Collins & Aikman Corporation and its debtor-affiliates sought to
reject their lease with Mid America II, LLC, for the premises at
Mid America Business Park, in Oklahoma City.
Mid-America objected to the rejection contending that the Lease
cannot be effectively rejected until the Debtors have vacated the
Premises through the removal of all their property.
The parties have resolved the objections and agree that:
1) the Mid America Lease is rejected effective as of July 15,
2006, provided that if the Debtors surrender the Mid
America Premises sooner than that date and give Mid
America 10 days' prior written notice of the surrender,
the Mid America Lease will be rejected effective as of the
expiration of the 10-day notice;
2) Prior to the Rejection Date, the Debtors will:
(a) With respect to the generator located at the east end
of the Mid America Premises:
-- remove the Generator;
-- knock down the shed enclosing the Generator;
-- remove the concrete slab on which the Generator sits
and plant grass in its place; and
-- remove the control panel for the Generator and cap
off the related wiring per code;
(b) With respect to the compressor located at the east end
of the Mid America Premises:
-- remove the Compressor;
-- pay Mid America $3,000 in full satisfaction for the
cost of removing the structure in which the
Compressor is located;
-- leave the main header for the Compressor in place;
-- remove the hoses that drop from the main header for
the Compressor; and
-- leave the junction box for the Compressor in place
and cap off the related wiring per code; and
(c) With respect to the air condition unit located at the
south end of the Mid America Premises:
-- remove the A/C Unit;
-- remove the main duct for the A/C Unit; and
-- repair the hole in the wall where the main duct for
the A/C Unit enters the building.
The Debtors will continue to pay rent and all other obligations
due under the Mid America Lease pursuant to the terms of the Mid
America Lease through and including the Rejection Date.
Becker Stipulation
In a separate stipulation, the Debtors and Becker Ventures agree
that Becker will have until July 30, 2006, to file a proof of
claim arising from the rejection of the leases at Stephenson
Highway, in Troy, Michigan. The Court approves the stipulation.
About Collins & Aikman
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). Richard M. Cieri, Esq., at Kirkland & Ellis LLP,
represents C&A in its restructuring. Lazard Freres & Co., LLC,
provides the Debtor with investment banking services. Michael S.
Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents
the Official Committee of Unsecured Creditors Committee. When the
Debtors filed for protection from their creditors, they listed
$3,196,700,000 in total assets and $2,856,600,000 in total debts.
(Collins & Aikman Bankruptcy News, Issue No. 28; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
COLLINS & AIKMAN: Panel Gets More Time to Contest DIP Loan Terms
----------------------------------------------------------------
The Official Committee of Unsecured Creditors of Collins & Aikman
Corporation and its debtor-affiliates and JPMorgan Chase Bank, NA,
the Agent for the Prepetition Lenders, agree to further extend the
deadline for the Committee to file an adversary proceeding or
contested matter challenging stipulations and admissions contained
in the Final DIP Order to an indefinite date.
The Indefinite Extension may be terminated by either party on 10
days' prior written notice to the other party.
The Indefinite Extension is solely with respect to:
(a) stipulations and admissions relating to the Debtors' real
property; and
(b) the Committee's right to assert that the Agent for the
Prepetition Lenders does not have perfected security
interests in or liens on the assets of Collins & Aikman
Corporation due to the failure of the Collins & Aikman to
obtain the approval of a requisite number of its
shareholders to grant security interests or liens.
About Collins & Aikman
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). Richard M. Cieri, Esq., at Kirkland & Ellis LLP,
represents C&A in its restructuring. Lazard Freres & Co., LLC,
provides the Debtor with investment banking services. Michael S.
Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents
the Official Committee of Unsecured Creditors Committee. When the
Debtors filed for protection from their creditors, they listed
$3,196,700,000 in total assets and $2,856,600,000 in total debts.
(Collins & Aikman Bankruptcy News, Issue No. 28; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
COMFED MORTGAGE: Moody's Lowers Two Certificate Ratings to B2
-------------------------------------------------------------
Moody's Investors Service downgraded the rating of two certificate
classes, issued by Comfed Mortgage in 1987 and 1988. The
transactions are backed by adjustable-rate mortgage loans. The
two subordinated certificates have been downgraded because current
enhancement levels in the form of subordination may not be enough
to support the current rating level.
Moody's complete rating actions are:
Issuer: Mortgage Pass-Through Certificates
Seller: Comfed Savings Bank
Downgrade:
* Series 1987-01; Class A, downgraded to B2 from Ba2
* Series 1988-01; Class A, downgraded to B2 from Ba3
CRAY INC: Faces Nasdaq Delisting Due to Form 10-K Filing Delay
--------------------------------------------------------------
Cray Inc. (NASDAQ: CRAY) received a notice from the Listing
Qualifications Department of The Nasdaq Stock Market on April 7,
2006 stating that the Company was not in compliance with the
requirements of Nasdaq Marketplace Rule 4310(c)(14), due to Cray's
failure to file its annual report on Form 10-K for the fiscal year
ended Dec. 31, 2005, on a timely basis.
Cray has requested a hearing before a NASDAQ Listing
Qualifications Panel to seek continued listing on The Nasdaq
National Market until the Company files its Form 10-K for the
fiscal year 2005.
On March 31, 2006, Cray reported that it would delay the filing of
its 2005 Form 10-K pending the completion of a review of a non-
cash item in 2004 of $3.3 million that could result in an
adjustment to its 2004 financial statements. The Company
currently does not have an anticipated date of filing for the
annual report, but continues to work as expeditiously as possible
with the external auditors to complete the review.
About Cray Inc.
Based in Seattle, Washington, Cray Inc. -- http://www.cray.com/--
provides innovative supercomputing systems that enable scientists
and engineers in government, industry and academia to meet both
existing and future computational challenges. Building on years
of experience in designing, developing, marketing and servicing
the world's most advanced supercomputers, Cray offers a
comprehensive portfolio of HPC systems that deliver unrivaled
sustained performance on a wide range of applications.
CWABS TRUST: Moody's Places Class B Certificate Rating at Ba1
-------------------------------------------------------------
Moody's Investors Service assigned Aaa rating to the senior
certificates issued by CWABS Asset-Backed Certificates Trust 2006-
6, and ratings ranging from Aa2 to Ba1 to the subordinate
certificates in the deal.
The securitization is backed by Countrywide Home Loans Inc
originated, adjustable-rate and fixed-rate, subprime mortgage
loans acquired by Countrywide Financial Corporation. The ratings
are based primarily on the credit quality of the loans, and on the
protection from subordination, overcollateralization, excess
spread, primary mortgage insurance, and an interest rate swap
agreement provided by The Bank of New York. After taking into
account the benefit from the mortgage insurance Moody's expects
collateral losses to range from 4.25% to 4.75%.
Countrywide Home Loans Servicing LP will act as master servicer.
The complete rating actions are:
CWABS Asset-Backed Certificate Trust 2006-6
Asset-Backed Certificates, Series 2006-6
* Class 1-A-1, Assigned Aaa
* Class 1-A-1M, Assigned Aaa
* Class 2-A-1, Assigned Aaa
* Class 2-A-2, Assigned Aaa
* Class 2-A-3, Assigned Aaa
* Class A-R, Assigned Aaa
* Class M-1, Assigned Aa2
* Class M-2, Assigned Aa3
* Class M-3, Assigned A1
* Class M-4, Assigned A2
* Class M-5, Assigned A3
* Class M-6, Assigned Baa1
* Class M-7, Assigned Baa2
* Class M-8, Assigned Baa3
* Class B, Assigned Ba1
DELTA AIR: Pilots Receive $10 Million Pledge from ALPA
------------------------------------------------------
The Delta pilots, represented by the Air Line Pilots Association,
Int'l, moved one step closer to finalizing preparations for a
strike. On Monday, the union received final approval for a
$10 million grant from ALPA's war chest, the Major Contingency
Fund. This money will to be used to fund a strike if the Delta
pilots' contract is rejected.
The union made the $10 million request in February and ALPA's
Executive Board approved it on an expedited basis as the deadline
for the decision on rejecting the Delta pilots' contract nears.
Additionally, upon approval of the grant the Strike Preparedness
Committee has been renamed the Strike Committee in anticipation of
an imminent strike. The full-scale efforts of the committee are
now redirected from strike preparation to strike implementation.
Delta MEC Chairman, Captain Lee Moak, reaffirmed, "The Delta
pilots will strike if their contract is rejected, and Delta senior
executives seem intent on rejection instead of negotiations. A
strike grows more and more likely as our deadline looms without
meaningful negotiations or results."
Last week the Delta pilots' union overwhelmingly voted for a
strike and the union's governing body, the Delta Master Executive
Council authorized the chairman to call for a strike at his sole
discretion anytime after April 17. The union's leadership also
ordered the pilots to remove all personal and professional gear
from their pilot bases throughout the country in case a strike is
called.
Despite the movement towards a strike, Delta executives do have a
choice: they could withdraw their 1113 motion to reject the
pilots' contract, begin meaningful negotiations and immediately
begin to restore stability to the airline. Instead, they have
continued to attack the pilots with overreaching demands, while
having no plan to deal with the fallout from this course of
action.
Since the adoption of Section 1113 legislation, no contract
governed by the Railway Labor Act has been rejected through
bankruptcy. All other bankruptcy petitioners successfully
negotiated contracts and avoided the drastic and irreversible
impact of rejection. The decision to reject the contract
currently rests with a third-party neutral panel in accordance
with the terms of Letter of Agreement 50, and their decision to
either deny or grant the company's motion is expected by April 15.
About ALPA
Founded in 1931, the Air Line Pilots Association --
http://www.alpa.org/-- represents 62,000 pilots at 39 airlines in
the U.S. and Canada. ALPA represents approximately 6,000 active
Delta Air Lines pilots and 500 furloughed Delta pilots.
About Delta Air
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. Timothy R. Coleman at The Blackstone Group
L.P. provides the Debtors with financial advice. Daniel H.
Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss
Hauer & Feld LLP, provide the Official Committee of Unsecured
Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey
Howard & Zukin Capital and James S. Feltman at Mesirow Financial
Consulting, LLC, serve as the Committee's financial advisors. As
of June 30, 2005, the Company's balance sheet showed $21.5 billion
in assets and $28.5 billion in liabilities.
DILLARD'S INC: Fitch Affirms Capital Securities' B- Rating
----------------------------------------------------------
Fitch affirmed its ratings of Dillard's, Inc., as:
-- Issuer Default Rating 'BB-'
-- Credit facility 'BB+'
-- Senior notes 'BB-'
-- Capital securities 'B-'
Dillard's had $1.5 billion of debt and hybrid securities
outstanding as of Jan. 28, 2006. At the same time, Fitch has
revised Dillard's Rating Outlook to Positive from Stable.
The ratings reflect:
* ongoing softness in Dillard's sales and margins; and
* the challenging nature of the department store sector
offset in part by:
* the company's presence in growing regions of the country; and
* a significant real estate ownership position.
The Positive Outlook reflects:
* the company's improved balance sheet and liquidity; and
* the expectation for a further reduction in financial leverage
in 2006.
Dillard's has been adding more upscale merchandise and introducing
more fashion into its apparel offerings to attract younger and
more affluent customers. Toward this end, Dillard's ramped up its
private label and exclusive brands to 24% of sales in 2005
compared with 18.2% in 2002. While this strategy has merit, it
has not evolved to the point that it is driving meaningful floor
traffic, as Dillard's comparable store sales were flat in 2005 and
down 1% in the first two months of 2006. Despite flat sales, the
operating margin improved modestly in 2005 to 3.9% from 3.4% in
2004 due to good expense control. However, the operating margin
remains below industry norms.
Dillard's has been in a debt reduction mode for the past six
years, and repaid an additional $144 million of debt in 2005 while
also repurchasing $101 million of its shares. This debt repayment
together with growth in cash flow led to improvement in adjusted
debt/EBITDAR in 2005 to 2.7x from 3.2x in 2004. In 2006, Fitch
expects Dillard's will repay debt maturities of around $200
million with operating cash flow and existing liquidity ($300
million of cash on hand as of Jan. 28, 2006). As a result,
financial leverage should decline further.
Looking ahead, Dillard's has sufficient capacity on its revolver
($1.1 billion as of Jan. 28, 2006) for its seasonal borrowing
needs, which are expected to peak at around $250 million in 2006.
The revolver can also be used, in part, for future debt
maturities, as needed. Dillard's extensive real estate holdings
(the company owns around 80% of its retail square footage) add
additional financial flexibility.
DOLE HOLDING: Fitch Puts CCC+ Term Loan Rating on Negative Watch
----------------------------------------------------------------
Fitch Ratings placed these debt and Recovery Ratings for Dole
Food Company, Inc., Dole Holding Company, LLC (its parent) and
Solvest Ltd. (Bermuda subsidiary) on Rating Watch Negative:
Dole Food Company, Inc.:
-- Issuer Default Rating 'B'
-- Senior secured bank facilities 'BB/RR1'
-- Senior unsecured debt 'BB-/RR2'
Dole Holding Company, LLC:
-- Issuer Default Rating 'B'
-- Second-lien term loan 'CCC+/RR6'
Solvest Ltd.:
-- Senior secured bank facilities 'BB/RR1'
Fitch's actions follow the:
* delayed filing of Dole's 2005 annual report;
* anticipated increased size and intricate structure of the
company's new credit facility; and
* extremely difficult operating environment that currently
exist for the fresh produce industry.
Based on preliminary Dec. 31, 2005 results, Dole had approximately
$2 billion of debt. Total debt-to-operating EBITDA was 5.3x and
operating EBITDA-to-interest incurred was 2.7x. While debt only
increased $158 million over year end 2004, EBITDA declined 17% due
to higher production, fuel and containerboard costs. Free cash
flow for 2005 is expected to be negative due to higher working
capital requirements and increased capital expenditures.
The Negative Rating Watch reflects a significant potential
reduction in recovery prospects for Dole's senior unsecured notes
due to the increased amount of secured debt in Dole's capital
structure. The Negative Rating Watch also reflects uncertainty
related to the potential collectiblity given the international
dispersement of Dole's assets and the allocation of collateral
among the company's secured term debt and revolver. Under the
terms of Dole's new facility, a higher proportion of debt is
expected to be issued at the Bermuda-based subsidiary level, which
has a different asset base than that of Dole Food Co., Inc. -- the
operating company.
Dole Food Company is one of the world's largest producers of:
* fresh fruit,
* fresh vegetables, and
* fresh-cut flowers.
Approximately 54% of Dole's revenue is generated from outside of
the United States. Dole's operations are fully integrated with
the vast majority of growing, harvesting, processing and packaging
done in South America and the Far East. 58% of Dole's tangible
assets are outside of the United States. Dole's four primary
operating segments contributed to 2005 revenue and operating
income:
* Fresh Fruit 63% of 2005 revenues and 68% of 2005 operating
income;
* Fresh Vegetables 18% of revenues and 4% of operating income;
* Packaged Foods 15% of revenues and 29% of operating income;
and
* Fresh-Cut Flowers which contributed 3% of revenues but loss
$5.1 million.
Dole Foods is 100% owned by its CEO and Chairman, David H.
Murdock.
EAGLEPICHER HOLDINGS: IRS Objects to Amended Joint Chapter 11 Plan
------------------------------------------------------------------
The Internal Revenue Service of the United States of America asks
the U.S. Bankruptcy for the Southern District of Ohio to reject
EaglePicher Holdings, Inc. and its debtor-affiliates Amended Joint
Chapter 11 Plan of Reorganization.
The IRS tells the Court that the government holds an
administrative priority claim as well as a general unsecured
claim. The IRS says that it filed its claims and received no
objection. Accordingly, the government's claims are deemed
allowed under Section 502(a) of the Bankruptcy Code. The IRS says
that a good portion of the claims are estimated since the Debtors
have failed to file tax returns. Once the tax returns are filed,
the IRS says it will amend its proofs of claim to reflect the
actual amount owed.
The IRS tells the Court that it objects to the Debtor's plan
because:
a. the plan fails to provide full payment of the its
administrative claim;
b. the plan does not provide payment of its unsecured priority
claims in equal monthly installments; and
c. the plan does not state when the first monthly payment for
its unsecured claim will be distributed.
Headquartered in Phoenix, Arizona, EaglePicher Incorporated
-- http://www.eaglepicher.com/-- is a diversified manufacturer
and marketer of innovative advanced technology and industrial
products for space, defense, automotive, filtration,
pharmaceutical, environmental and commercial applications
worldwide. The company along with its affiliates and parent
company, EaglePicher Holdings, Inc., filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Ohio Case No. 05-12601).
Stephen D. Lerner, Esq., at Squire, Sanders & Dempsey L.L.P,
represents the Debtors in their restructuring efforts. Houlihan
Lokey Howard & Zukin is the Debtors financial advisor. When the
Debtors filed for protection from their creditors, they listed
$535 million in consolidated assets and $730 in consolidated
debts.
ENRON CORP: Settles Claims Dispute with Lehman, Magnox & Williams
-----------------------------------------------------------------
Reorganized Enron Corporation and its debtor-affiliates sought and
obtained the U.S. Bankruptcy Court for the Southern District of
New York's consent to enter into settlement agreements with Lehman
Brothers International (Europe), Magnox Electrict PLC and Williams
Power Company, Inc., formerly known as Williams Energy Marketing
and Trading Company.
The LBIE Entities filed various claims against the Debtors
asserting obligations to certain agreements, including guaranty
agreements with Enron Corp.:
Claimant Claim No. Debtor Claim Amount
-------- --------- ------ ------------
LBIE 1422 Enron $8,519,345
Magnox 13032 Enron Capital & 24,421,337
Trade Resources
International Corp.
13006 Enron 24,421,337
Williams 2277 Enron 15,000,000
13145 Enron Power 97,295,333
Marketing Inc.
13051 Enron North America 4,896,665
Corp.
Magnox's Claim No. 13032 was later reduced and allowed for
$194,017. Magnox filed Claim No. 25296 for $24,421,337 against
Enron to amend Claim No. 13006.
Enron filed two adversary proceedings to avoid some guaranty
agreements:
1. Adversary Proceeding No. 03-93543, Enron Corp. v. Williams
Power Company, Inc.; and
2. Adversary Proceeding No. 03-93560, Enron Corp. v. Magnox
Electric PLC.
Among others, the Settlement Agreements provide for the allowance
of five claims:
a. Claim No. 1422 against Enron as a Class 4 prepetition,
general unsecured claim for $5,800,000;
b. Claim No. 25296 against Enron:
-- in part as a Class 4 prepetition, general
unsecured claim in a stipulated amount; and
-- in part as a Class 185 prepetition, general unsecured
claim in a stipulated amount;
c. Claim No. 2277 as a Class 185 prepetition, general
unsecured claim against Enron in an agreed amount;
d. Claim No. 13145 as a Class 6 prepetition, general unsecured
claim against EPMI in a stipulated amount; and
e. Claim No. 13051 as a Class 5 prepetition, general unsecured
claim against ENA in an agreed amount.
Claim No. 13006 will be disallowed and expunged, and the Guaranty
Avoidance Actions will be dismissed.
About Enron
Headquartered in Houston, Texas, Enron Corporation filed for
chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case
No. 01-16033) following controversy over accounting procedures,
which caused Enron's stock price and credit rating to drop
sharply. Judge Gonzalez confirmed the Company's Modified Fifth
Amended Plan on July 15, 2004, and numerous appeals followed. The
Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004.
Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil,
Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts. Luc A. Despins, Esq., Matthew Scott Barr,
Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy,
LLP, represent the Official Committee of Unsecured Creditors.
(Enron Bankruptcy News, Issue No. 169; Bankruptcy Creditors'
Service, Inc., 15/945-7000)
FDL INC: Creditors Panel Taps Elliott Levin as Bankruptcy Counsel
-----------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in FDL,
Inc.'s chapter 11 case asks the U.S. Bankruptcy Court for the
Southern District of Indiana for permission to employ Elliott D.
Levin, Esq., of Rubin & Levin, P.C., as its bankruptcy counsel.
Mr. Levin will:
a. give the Committee legal advice with respect to its duties
and powers in connection with the continued operation of
the business and management of the property of the Debtor;
b. examine the conduct of the Debtor's affairs and the causes
of its inability to pay its debts as they mature;
c. conduct an examination of officers and employees of the
Debtor and of other witnesses in order to determine whether
the Debtor has made preferential transfers of its property;
d. assist the Committee in negotiating with the Debtor
concerning the terms of a proposed Plan; and
e. perform all other legal services for the Committee which
may be necessary.
Documents submitted to the Court did not say how much Mr. Levin's
rates are.
Mr. Levin assures the Court that he is "disinterested" as that
term is defined in Section 101(14) of the Bankruptcy Court.
Mr. Levin can be reached at:
Elliott D. Levin, Esq.
Rubin & Levin, P.C.
500 Marott Center, 342 Massachusetts Avenue
Indianapolis, Indiana 46204-2161
Tel: (317) 634-0300
Fax: (317) 263-9411
http://www.rubin-levin.com
Headquartered in Kokomo, Indiana, FDL, Inc. manufactures office
and fast food metal furniture. The company filed for Chapter 11
protection on March 24, 2006 (Bankr. S.D. Ind. Case No. 06-01222).
Deborah Caruso, Esq., and Erick P. Knoblock, Esq., at Dale & Eke,
P.C., represent the Debtor. When the Debtor filed for protection
from its creditors, it did not state its assets but estimated
debts between $10 Million and $50 Million.
FERRO CORP: Trustee for $355 Mil. Notes Sends Default Notice
------------------------------------------------------------
Ferro Corporation (NYSE:FOE) received notice of default from the
Trustee of certain of its notes and debentures with an aggregate
principal amount of $355 million.
As reported in the Troubled Company Reporter on April 7, 2006, the
Trustee's action followed the filing of a similar notice of
default. The Company has 90 days to cure its delayed filing of
financial reports or obtain a waiver from the bondholders. A
failure to cure or obtain a waiver will result in an event of
default. If there is an event of default, the bondholders have
the right to accelerate repayment of the bonds.
Ferro has been in default on its reporting requirements since it
delayed filing its Form 10-Q for the second quarter of 2004 due to
the restatement of its 2003 and first quarter 2004 results. Both
notices of default relate only to reporting requirements and the
related officer certificates.
As previously reported, recognizing that the reporting delay could
result in a notice of default from bondholders, Ferro negotiated
commitments on a new credit facility from National City Bank and
Credit Suisse in an amount up to $700 million on March 30, 2006.
The commitment includes $400 million in term loans that are
structured to be available to the Company if repayment of
outstanding notes and debentures is accelerated by actions taken
by current bondholders. The remaining $300 million of the
facility will replace the Company's current revolving credit
facility.
Ferro believes the term loans in the new credit facility will
provide the liquidity needed by the Company in the event of any
acceleration of payment of its notes and debentures. The Company
is currently engaged in finalizing this credit facility and
expects to have the new facility in place prior to the expiration
of the 90-day period contained in the notices of default.
Ferro also received a 90-day waiver on financial reporting
requirements under its asset securitization program. The Company
expects to extend the program during the waiver period.
"We fully anticipated the possibility of receiving default
notices," said James Kirsch, President and CEO. "When the new
credit facility is in place, which we anticipate will happen
within the next 90 days, we will be able to cure the defaults or
have sufficient funds to pay bondholders who request acceleration.
We continue to believe we will have arrangements in place to meet
all the liquidity needs of our operations and the financial
flexibility we need to build a stronger, more profitable Ferro."
The notes and debentures included in the notice of default are:
* $200 million 9.125% Senior Notes due Jan. 1, 2009;
* $25 million 7.625% Debentures due May 1, 2013;
* $25 million 7.375% Debentures due Nov. 1, 2015;
* $50 million 8.0% Debentures due June 15, 2025; and
* $55 million 7.125% Debentures due April 1, 2028.
About Ferro Corporation
Ferro Corp. -- http://www.ferro.com/-- is a major international
producer of performance materials for industry, including coatings
and performance chemicals. The Company has operations in 20
countries and reported sales of approximately $1.8 billion in
2004.
* * *
As reported in the Troubled Company Reporter on Mar. 22, 2006,
Moody's Investors Service downgraded the senior unsecured ratings
of Ferro Corporation to B1 from Ba1 due to continuing delays in
the issuance of audited financial statements. "The downgrade of
Ferro's ratings to B1 reflects the continuing delay in the
delivery of audited financial statements," Moody's said. "While
the company business profile is consistent with a rating in the
Ba category, according to Moody's rating methodology for the
chemical industry, the lack of timely audited financial statements
creates uncertainty over the company's financial profile. This
uncertainty is reflected by the assignment of the B1 ratings."
Moody's then withdrew Ferro's ratings following this downgrade,
saying it could reassign ratings to Ferro's notes and bonds once
it has received audited financials for 2004 and 2005. Ferro has
$355 million of senior unsecured notes and debentures outstanding,
with maturities between 2009 and 2028.
FIRST UNION: Moody's Holds Low-B Ratings on 4 Certificate Classes
-----------------------------------------------------------------
Moody's Investors Service upgraded the ratings of five classes and
affirmed the ratings of eight classes of First Union National
Bank--Chase Manhattan Bank Commercial Mortgage Trust, Commercial
Mortgage Pass-Through Certificates, Series 1999-C2:
* Class A-2, $636,734,763, Fixed, affirmed at Aaa
* Class IO, Notional, affirmed at Aaa
* Class B, $47,260,093, Fixed, upgraded to Aaa from Aa2
* Class C, $62,028,874, Fixed, upgraded to Aa2 from A2
* Class D, $14,768,779, Fixed, upgraded to Aa3 from A3
* Class E, $41,352,582, Fixed, upgraded to A3 from Baa2
* Class F, $17,722,535, Fixed, upgraded to Baa2 from Baa3
* Class G, $41,352,582, Fixed, affirmed at Ba2
* Class H, $11,815,024, Fixed, affirmed at Ba3
* Class J, $11,815,023, Fixed, affirmed at B1
* Class K, $11,815,024, Fixed, affirmed at B3
* Class L, $11,815,023, Fixed, affirmed at Caa1
* Class M, $11,815,024, Fixed, affirmed at Caa2
As of the March 17, 2006 distribution date, the transaction's
aggregate certificate balance has decreased by approximately 21.4%
to $928.4 million from $1.2 billion at securitization. The
Certificates are collateralized by 183 mortgage loans secured by
commercial and multifamily properties. The pool includes a
conduit component, representing 93.3% of the pool, and a credit
tenant lease component, representing 6.7% of the pool. The loans
range in size from less than 1.0% of the pool to 4.7% of the pool,
with the top 10 loans representing 24.5% of the pool. Thirty-four
loans, representing 23.4% of the pool, have defeased and are
secured by U.S. Government securities. Thirty-two loans have been
liquidated from the pool, resulting in aggregate realized losses
of approximately $12.5 million.
Two loans, representing 0.6% of the pool, are in special
servicing. Moody's has estimated aggregate losses of
approximately $2.0 million for the specially serviced loans.
Moody's was provided with full-year 2004 and partial or full
operating results for 86.6% and less than 50.0% respectively, of
the non-defeased performing conduit loans. Moody's loan to value
ratio for the conduit component is 92.1%, compared to 89.1% at
securitization. Based on Moody's analysis, 30.1% of the pool has
a LTV greater than 100.0%, compared to 8.1% at securitization.
The top three loans represent 11.6% of the outstanding pool
balance. The largest loan is the Sheraton Suites Portfolio Loan,
which is secured by three full service hotels totaling 732
guestrooms. The properties are located in Delaware, Illinois and
Texas. The sponsor of the borrowing entity is Starwood Hotels and
Resorts. The portfolio's performance has declined significantly
since securitization. The weighted average RevPAR for 2004 was
$67.76, compared to $80.79 at securitization. Based on the
financial information provided by the master servicer, debt
service coverage for calendar year 2004 was below 1.0x. Moody's
LTV is in excess of 100.0%, compared to 86.2% at securitization.
The second largest loan is the Olen Portfolio Loan, which is
secured by five office/industrial properties and one office
building, all located in Orange County, California. The
properties total 609,000 square feet. The portfolio's performance
has been stable since securitization. Moody's LTV is 91.8%,
compared to 96.1% at securitization.
The third largest loan is the Lakeside Apartments Loan, which is
secured by a 461-unit luxury apartment complex located
approximately 40 miles southwest of Atlanta in Newnan, Georgia.
Property occupancy has declined slightly to 91.0% from 93.0%
securitization. Moody's LTV is 92.6%, essentially the same as at
securitization.
The CTL component includes 26 loans secured by properties under
bondable leases. The largest exposures include Accor SA, CVS and
Rite Aid Corporation.
The pool's collateral is a mix of U.S. Government securities,
multifamily, retail, office, hotel, CTL, industrial and
healthcare. The collateral properties are located in 36 states.
The highest state concentrations are California, Texas, Georgia,
Pennsylvania and New York. All the loans are fixed rate.
FOSS MANUFACTURING: Trustee Wants to Sell Assets for $39 Million
----------------------------------------------------------------
Patrick J. O'Malley, the chapter 11 Trustee for Foss Manufacturing
Company, Inc., asks the Court for permission to sell the Debtor's
assets to Foss Manufacturing LLC for $39 million, a report in the
Portsmouth Herald relates.
Who's behind the newly formed LLC is a mystery at the moment.
According to the Nevada Secretary of State's office, Foss
Manufacturing LLC was incorporated on March 27. A list of
officers is supposed to be submitted by April 30.
Patrick Cronin, writing for Portsmouth Herald, states that the
sale will allow the Debtor's business -- and employment of its 355
workers -- to continue. Foss Manufacturing LLC will buy all of
the Debtor's assets except its equity in Foss Manufacturing
Europe.
The agreement provides for full payment of all secured claims,
administrative expenses and $300,000 in cash to wind down
operations.
CapitalSource will finance Foss Manufacturing LLC's purchase of
the company's assets.
The Court will convene a hearing on April 28, 2006, to consider
the Trustee's request.
Headquartered in Hampton, New Hampshire, Foss Manufacturing
Company, Inc. -- http://www.fossmfg.com/-- is a producer of
engineered, non-woven fabrics and specialty synthetic fibers, for
a variety of applications and markets. The Company filed for
chapter 11 protection on Sept. 16, 2005 (Bankr. D. N.H. Case No.
05-13724). Andrew Z. Schwartz, Esq., at Foley Hoag LLP represents
the Debtor in its restructuring efforts. Beth E. Levine, Esq., at
Pachlski, Stang, Zieh, Young, Jones & Weintraub represents the
Official Committee of Unsecured Creditors. When the Debtor filed
for protection from its creditors, it listed $49,846,456 in assets
and $53,419,673 in debts.
G+G RETAIL: Wants Removal Period Stretched Until July 24
--------------------------------------------------------
G+G Retail, Inc., asks the U.S. Bankruptcy Court for the Southern
District of New York to extend until July 24, 2006, the period
within which it can remove prepetition civil actions.
The Debtor tells the Court that it has focused its time and
attention on transitioning into chapter 11 and is actively
preparing its Schedules of Assets and Liabilities and Statements
of Financial Affairs. The Debtor hasn't had the opportunity to
review prepetition actions that might need to be removed from
other jurisdictions to the Southern District of New York for
continued litigation or resolution.
The extension will afford the Debtors more time to make fully-
informed decisions concerning removal of each prepetition action
and will assure that it does not forfeit valuable rights under
Section 1452 of the Bankruptcy Code.
Headquartered in New York, New York, G+G Retail Inc. retails
ladies wear and operates 566 stores in the United States and
Puerto Rico under the names Rave, Rave Girl and G+G. The Debtor
filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. S.D.N.Y.
Case No. 06-10152). William P. Weintraub, Esq., Laura Davis
Jones, Esq., David M. Bertenthal, Esq., and Curtis A. Hehn, Esq.,
at Pachulski, Stang, Ziehl, Young & Jones P.C. represent the
Debtor. G+G hired Financo, Inc., as its investment banker.
Scott L. Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen,
P.C., represents the Official Committee of Unsecured Creditors.
The Committee also hired Jack Rapp at Abacus Advisors Group LLC as
its business consultant. When the Debtor filed for protection
from its creditors, it estimated assets of more than $100 million
and debts between $10 million to $50 million. In February 2006,
Max Rave, LLC, an entity to be owned by BCBG Max Azria Group,
Inc., and Guggenheim Corporate Funding LLC, bought substantially
all of G+G Retail's assets for $35 million.
GENERAL MILLS: Discloses Third Fiscal Quarter Financial Results
---------------------------------------------------------------
General Mills, Inc. (NYSE:GIS) disclosed its financial results for
the third quarter of fiscal 2006. Net sales for the 13 weeks
ended February 26, 2006, were $2.86 billion, up 3% from the same
period a year ago. Segment operating profits of $479 million
essentially matched prior-year results. Taxes in the third
quarter of 2006 and 2005 included items affecting comparability.
Including these items, earnings after tax grew 7% to reach
$246 million.
Chairman and Chief Executive Officer Steve Sanger said, "Results
for the third quarter met our expectations. We continued to
achieve good topline growth, with all three of our business
segments posting net sales increases in the quarter. But as we
anticipated, profit growth was restrained by higher input costs
(primarily commodities and fuel), higher employee benefits expense
and increased advertising investment."
Through the first nine months, General Mills net sales grew 3% to
$8.80 billion, driven by a 2% increase in worldwide unit volume.
Segment operating profits grew 5% to $1.63 billion. Earnings
after tax grew 11% to $868 million.
U.S. Retail
Net sales for General Mills' domestic retail operations grew 3% in
the third quarter to $1.99 billion, driven by a 3% unit volume
increase. Operating profits totaled $420 million, matching
prior-year results.
Net sales for the Yoplait division grew 9% over last year's third
quarter. Big G cereal net sales grew 5% from last year's third
quarter results when merchandised price increases resulted in a
decline in net sales. Baking Products net sales grew 12%,
reflecting good performance during the holiday baking season. Net
sales for the Snacks division grew 4% led by continued good growth
on Nature Valley granola bars. Net sales for Pillsbury USA and
the Meals division each grew 1% in the period.
Through the first nine months of 2006, net sales for the U.S.
Retail segment were up 3% to $6.13 billion, reflecting 2% volume
growth and net price realization. Segment operating profit grew 2
percent to $1.37 billion.
International Segment
Net sales for the company's consolidated international businesses
grew 3% in the third quarter to $444 million. Unit volume grew
4%. Two points of growth from pricing and mix were more than
offset by the negative impact of foreign exchange in the quarter.
Operating profit grew to $37 million, up 16% from $32 million last
year.
Through the first nine months, net sales for General Mills'
consolidated international businesses were up 7% to $1.36 billion.
Operating profit increased 32% to $154 million.
Bakeries and Foodservice Segment
Third-quarter net sales for General Mills' Bakeries and
Foodservice segment grew 3% to $424 million, reflecting net price
realization. Unit volume matched last year's third quarter.
Segment operating profit decreased 8% due to higher input costs.
Through the first nine months of the fiscal year, net sales for
the Bakeries and Foodservice segment were up 1% to $1.31 billion.
Operating profit rose 7% to $101 million.
Joint Venture Summary
Earnings after tax from joint ventures totaled $15 million in the
third quarter, down from $23 million last year due to the absence
of earnings from SVE. Cereal Partners Worldwide, the company's
ready-to-eat cereal joint venture with Nestle, posted 8% volume
growth in the quarter. Net sales grew 2%, restrained by
unfavorable foreign exchange. Net sales for the Haagen-Dazs ice
cream joint ventures in Asia were down 22% due to an unseasonably
cold winter and increased competitive pressure in Japan. 8th
Continent, the U.S. joint venture with DuPont, posted 13% net
sales growth for its line of soy beverages.
Through the first nine months of 2006, earnings from joint
ventures totaled $54 million after tax. The earnings growth for
continuing joint ventures was 15%.
Corporate Items
Net interest expense for the quarter totaled $101 million, down 6%
due primarily to lower debt levels. Last year's interest expense
included $12 million of interest income resulting from the
resolution of certain tax issues. The effective tax rate for the
third quarter of 2006 was 34.7%, reflecting the year-to-date
impact of a change in the annual effective tax rate from 35.5% to
35.3%. Last year's third-quarter taxes included $45 million in
expense representing a portion of the taxes for disposition of
General Mills' interest in the SVE joint venture. As reported,
last year's third-quarter tax rate was 46.5 percent.
Corporate unallocated items totaled $19 million expense in the
third quarter of 2006 compared to $19 million income in 2005,
primarily reflecting higher employee benefit costs. Restructuring
and other exit costs totaled $5 million pre-tax in the third
quarter of 2006 compared to $3 million in last year's third
quarter. Last year's third quarter also included $3 million of
related expenses recorded in cost of sales.
Cash Flow Summary
Cash flow from operations totaled $1.20 billion through February
2006, up 21% from $988 million in the same period last year.
Capital expenditures through the first nine months totaled
$191 million in 2006 compared to $249 million in 2005. During the
quarter, the company repurchased approximately 1.1 million shares
of stock. Through nine months, the company has repurchased
17.1 million shares at an average price of $47.12. Average
diluted shares outstanding for the quarter totaled 364 million
compared to 405 million in last year's third quarter.
General Mills, Inc., is a cereal maker. Among its Big G Cereals
unit's brands are Cheerios, Chex, Total, Kix, and Wheaties. It
also makes flour (Gold Medal), baking mixes (Betty Crocker,
Bisquick), dinner mixes (Hamburger Helper), fruit snacks (Fruit
Roll-Ups) and grain snacks (Chex Mix, Pop Secret). It is also
makes branded yogurt (Colombo, Go-Gurt, and Yoplait). Through
joint ventures, the Company has expanded its cereals and snacks
into Europe. Its 2001 acquisition of Pillsbury (refrigerated
dough products, frozen vegetables) from Diageo doubled the its
size.
* * *
Moody's Investors Service put a (P)Ba1 preferred stock rating to
the General Mills' $5.9 billion multi-seniority shelf registration
in September 2004.
GLOBAL HOME: Taps Pachulski Stang as Bankruptcy Counsel
-------------------------------------------------------
Global Home Products, LLC and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware for permission to
employ and retain Pachulski Stang Ziehl Young Jones & Weintraub
LLP as their bankruptcy counsel.
Pachulski Stang will:
a. provide legal advice with respect to the Debtors' powers
and duties as debtors in possession in the continued
operation of their business and management of their
properties;
b. prepare on behalf of the Debtors necessary applications,
motions, answers, orders, reports, and other legal papers;
c. appear in Court on behalf of the Debtors and in order to
protect the interests of the Debtors before the Court;
d. prepare and pursue confirmation of a plan and approval of a
disclosure statement; and
e. perform all other legal services for the Debtors that may
be necessary and proper in these proceedings.
Laura Davis Jones, Esq., a partner at Pachulski Stang, tells the
Court that the Firm's professionals bill:
Professional Designation Hourly Rate
------------ ----------- -----------
Laura Davis Jones, Esq. Attorney $675
David M. Bertenthal, Esq. Attorney $475
Bruce Grohsgal, Esq. Attorney $475
Joshua M. Fried, Esq. Attorney $395
Sandra G.M. Selzer, Esq. Attorney $295
Karina Yee $155
Ms. Jones assures the Court that the Firm is "disinterested" as
that term is defined in Section 101(14) of the Bankruptcy Code.
Headquartered in Westerville, Ohio, Global Home Products, LLC --
http://www.anchorhocking.com/and http://www.burnesgroup.com/--
sells houseware and home products and manufactures high quality
glass products for consumers and the food services industry. The
company also designs and markets photo frames, photo albums and
related home decor products. The company and 16 of its affiliates
filed for Chapter 11 protection on Apr. 10, 2006 (Bankr. D. Del.
Case No. 06-10340). Laura Davis Jones, Esq., Bruce Grohsgal,
Esq., James E. O'Neill, Esq., and Sandra G.M. Selzer, Esq., at
Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP, represent
the Debtors. When the company filed for protection from their
creditors, they estimated assets between $50 million and $100
million and debts of more than $100 million.
GMAC COMMERCIAL: Fitch Affirms $20 Mil. Class J Cert.'s CCC Rating
------------------------------------------------------------------
Fitch Ratings upgraded and removed from Rating Watch Positive GMAC
Commercial Mortgage Securities, Inc.'s mortgage pass-through
certificates, series 1999-C1 as:
-- $86.7 million class D to 'AAA' from 'A+'
-- $20.0 million class E to 'AAA' from 'A-'
-- $83.4 million class F to 'BBB+' from 'BB'
-- $13.3 million class G to 'BBB-' from 'BB-'
In addition, the following classes are affirmed:
-- $678.2 million class A-2 at 'AAA'
-- Interest only class X at 'AAA'
-- $66.7 million class B at 'AAA'
-- $66.7 million class C at 'AAA'
-- $26.7 million class H at 'B'
-- $20.0 million class J at 'CCC'
The $14.0 million class K-1 is not rated by Fitch. Class A-1 has
paid in full.
The rating upgrades reflect increased credit enhancement due to:
* loan payoffs;
* scheduled amortization; and
* additional defeasance (4.8%) since Fitch's last rating
action.
As of the March 2006 distribution date, the transaction's
aggregate principal balance has decreased 19.4%, to $1.08 billion
from $1.3 billion at issuance. In total, 38 loans (20.1%) have
fully defeased since issuance; in addition, 22.2% of the second
largest loan (5.3%) has defeased.
Currently, 10 loans (4.5%) are in special servicing with
significant losses expected on four loans. The largest loan
(1.3%) is secured by four congregate care healthcare facilities
located in Texas. The loan, which remains current, is cross-
defaulted with another specially serviced congregate care facility
located in San Antonio, Texas. The San Antonio loan (0.3%) is 90
days delinquent and the facility is closed. The special servicer
is in the process of negotiating a forbearance agreement with the
borrower. Fitch does not project a loss on the loan at this time.
The second largest specially serviced loan (0.8%) is secured by
two multifamily properties located in:
* New Orleans; and
* Harvey, Louisiana.
The properties had incurred significant damage from Hurricane
Katrina. However, the loan is expected to pay in full from
insurance proceeds.
The largest real-estate owned asset (0.7%) is an office property
in Pontiac, Michigan, which became REO in October 2005 via a deed-
in-lieu. The special servicer is preparing to market the asset
for sale. Fitch expects significant losses upon liquidation of
the asset as a result of a significant drop in the value of the
property.
The second largest REO asset (0.4%) is a multifamily property in
Greensboro, North Carolina, to which the trust took title in
May 2004. Thirty-nine units at the property were taken offline
(32 units were condemned) due to flooding. Offers to purchase the
property have been received; however, these offers are contingent
upon the buyer being permitted to rehabilitate the condemned
units.
Fitch projected losses on the specially serviced assets are
expected to be absorbed by nonrated class K-1.
GSAA HOME: Moody's Rates Class B-3 Certificates at Ba2
------------------------------------------------------
Moody's Investors Service assigned Aaa rating to the senior
certificates issued by GSAA Home Equity Trust 2006-5, Asset-Backed
Certificates, Series 2006-5, and ratings ranging from Aa1 to Ba2
to the subordinate certificates in the deal.
The securitization is backed by Countrywide Home Loans, Inc.,
GreenPoint Mortgage Funding, Inc., Goldman Sachs Mortgage Conduit,
and various others originated or acquired Alt-A mortgage loans.
The ratings are based primarily on the credit quality of the
loans, and on the protection from subordination, excess spread,
overcollateralization, and an interest rate swap agreement.
Moody's expects collateral losses to range from 1.00% to 1.20%.
Avelo Mortgage, L.L.C., Countrywide Home Loans Servicing LP,
GreenPoint Mortgage Funding, Inc., and various others will service
the loans. JPMorgan Chase Bank, N.A. will act as master servicer.
The complete rating actions are:
GSAA Home Equity Trust 2006-5,
Asset-Backed Certificates, Series 2006-5
* Class 1A1, Assigned Aaa
* Class 2A1, Assigned Aaa
* Class 2A2, Assigned Aaa
* Class 2A3, Assigned Aaa
* Class 2A4, Assigned Aaa
* Class M-1, Assigned Aa1
* Class M-2, Assigned Aa2
* Class M-3, Assigned Aa3
* Class M-4, Assigned A1
* Class M-5, Assigned A3
* Class B-1, Assigned Baa1
* Class B-2, Assigned Baa2
* Class B-3, Assigned Ba2
HAYES LEMMERZ: S&P Lowers Corporate Credit Rating to B- from B+
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Hayes Lemmerz International Inc., to 'B-' from 'B+',
because of the poor near-term earnings and cash-flow prospects
for the wheel manufacturer amid challenging conditions in the
automotive industry. The ratings were also removed from
CreditWatch with negative implications, where they were placed
March 23, 2006.
Northville, Michigan-based Hayes has total debt of about $800
million, and it has underfunded employee benefit obligations of
$400 million. The outlook is negative.
Hayes has reported weak results during the past year. For its
fiscal year ended Jan. 31, 2006, the company reported adjusted
EBITDA of $185 million, a 17% decline from the previous year's
level, and cash-flow generation was negative. Adjusted EBITDA
excludes $418 million of charges for asset impairments,
restructuring costs, and other special items.
"Industry conditions for automotive suppliers have been tough
because of higher raw-material costs, customer market-share
shifts, product-mix changes, and pricing pressure," said Standard
& Poor's credit analyst Martin King. "In addition, liquidity has
become more constrained for these companies as their credit
ratings have declined, reducing their borrowing availability under
asset-based credit facilities and causing some vendors to tighten
credit terms."
Hayes is expected to continue to experience earnings pressures
during 2006 as its two largest customers:
* Ford Motor Co. (BB-/Negative/B-2), and
* General Motors Corp. (B/Watch Neg/B-3),
continue to suffer from market-share declines and operating
challenges.
These two companies together account for more than 35% of Hayes'
sales. Soft demand for light-truck products, which account for a
disproportionate share of Hayes' revenues, could also hurt
earnings.
There are also ongoing challenges, such as tough global
competition and potential industry labor strife. The business is
furthermore highly capital intensive, and auto demand is cyclical.
The company has only partially been able to compensate for these
disadvantages with its good geographic diversity: About 55% of its
revenue and the bulk of its EBITDA come from outside North
America.
Hayes has announced various restructuring and austerity measures
recently, including:
* the closing of a U.S. aluminum wheel plant;
* the consolidation of several business units; and
* the reduction of certain employees' compensation.
The U.S. aluminum wheel market has been beset by tough competition
from low-cost Asian manufacturers, which has driven pricing and
profitability down to low levels, forcing Hayes to reduce its U.S.
capacity. The steel wheel business, while not growing, continues
to be a solid contributor to earnings. Hayes' components segment
suffers from poor profitability, partly because the company is
unable to fully recover raw-material cost increases in this
segment. The consolidation of the components operations into one
business unit should help to reduce operating costs.
HEALTHSOUTH CORP: S&P Assigns B Rating With Stable Outlook
----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to Birmingham, Alabama-based HealthSouth Corp.
The rating outlook is stable.
In addition, Standard & Poor's assigned its bank loan and
recovery ratings to HealthSouth's $2.55 billion senior secured
bank facilities. The facilities, which consist of:
* a $500 million revolving credit (including a $100 million
synthetic letter of credit facility), and
* a $2.05 billion term loan,
are rated 'B+' (one notch higher than the 'B' corporate credit
rating on HealthSouth) with a recovery rating of '1', indicating
a high expectation for full recovery of principal in the event of
a payment default.
The company used the proceeds a $1.0 billion interim loan and
$400 million of convertible preferred stock to refinance all
of HealthSouth's previously existing debt. Pro forma debt
outstanding for HealthSouth will be about $3.3 billion.
"The speculative-grade ratings reflect HealthSouth's position as a
major U.S. provider of rehabilitative health care services,
outpatient surgery, and diagnostic imaging, as well as the
challenges of operating in a competitive industry that has
significant reimbursement risk," noted Standard & Poor's credit
analyst David Peknay.
HealthSouth's size and scope of services position the company well
to benefit from an aging population that could help drive healthy
growth rates in its businesses. However, the company has not
realized these benefits due to mismanagement and fraudulent
financial reporting, which caused significant damage to its
operations and reputation.
HealthSouth had incurred large financial losses that were revealed
after extensive forensic accounting was performed to reconstruct
several years of financial statements. Now with:
* entirely new governance,
* new senior management,
* substantially new local management, and
* more responsible and appropriate business practices,
Standard & Poor's believes that HealthSouth is past the worst of
its troubles and will operate with a strong commitment to the
principles of sound corporate governance.
However, though its corporate renaissance bodes well for its
ability to navigate through a difficult health care environment,
the company's success is uncertain, as it will continue to face a
number of risks.
HELIX ENERGY: S&P Puts BB- Corp. Credit Rating With Stable Outlook
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to integrated energy services company Helix Energy
Solutions Group Inc. and its 'BB' rating and '1' recovery rating
to the company's new first lien $840 million term loan B and $250
million first lien revolving credit facility.
The outlook is stable. The new term loan is being used in part to
finance the recently announced $1.4 billion acquisition of
Remington Oil & Gas Co. The remaining consideration for the
transaction will be funded through exchanging 0.436 Helix shares
for each Remington share.
Pro forma for the transaction Houston, Texas-based Helix Energy
will have close to $1.3 billion in total debt.
"The ratings on Helix Energy reflect the challenges in integrating
the Remington acquisition and its ability to reap the benefits of
potential synergies between the two businesses," said Standard &
Poor's credit analyst Jeffrey Morrison.
Standard & Poor's also expects that Helix Energy's credit measures
will be solid for the current ratings and that liquidity will be
sufficient to fund its planned capital spending and debt service
requirements.
HILLMAN GROUP: Moody's Confirms B2 Ratings With Stable Outlook
--------------------------------------------------------------
Moody's Investors Service confirmed Hillman Group's B2 senior
secured credit facility rating and Hillman Companies B2 corporate
family rating concluding a review for possible downgrade initiated
in March 2006. At the same time, Moody's upgraded Hillman's
liquidity rating to SGL -2 from SGL -3. The ratings outlook is
stable.
The rating actions reflect the recent filing of Hillman's restated
2004 10K and 2005 10K without detriment to Hillman's
profitability, cash flow or liquidity; the company restated its
2004 10K principally because of revenue recognition and income tax
issues. Upon filing its 2004 and 2005 audited financial
statements, the company is no longer at risk of violating a
covenant and losing access to its $40 million revolver.
Hillman's ratings are constrained by its high, albeit decreasing,
adjusted leverage, modest size in a heavily fragmented industry
and low tangible asset coverage, especially in a distressed
scenario. The ratings are supported by Hillman's leading market
share in fasteners and keys/key accessories, stable industry
demand, good operating margins and the company's extensive
distribution network.
The stable outlook reflects Moody's expectation that Hillman will
maintain its leading market share and that leverage will not
significantly increase over the next twelve to eighteen months.
The stable outlook also reflects Moody's belief that the company
will remain current in their annual SEC filings and will become
current in their quarterly SEC filings over the next several
months.
This rating was upgraded:
* Speculative grade liquidity rating to SGL- 2 from SGL-3
These ratings were confirmed:
The Hillman Group, Inc.:
* $40 million senior secured Revolving Credit,
maturing 2010, at B2,
* $217.5 million senior secured Term Loan B,
maturing 2011, at B2.
The Hillman Companies, Inc.:
* Corporate Family Rating at B2;
The Hillman Companies, Inc., headquartered in Cincinnati, Ohio,
supplies hardware-related products and related merchandising
services to retail markets in North America. 2005 revenues
approximated $380 million.
IMPAC CMB: Moody's Holds B2 Rating on $11 Mil. Class G Bond Issue
-----------------------------------------------------------------
Moody's Investors Service upgraded the ratings of three classes
and affirmed the ratings of five classes of IMPAC CMB Trust 1998-
C1, Collateralized Mortgage Bonds:
* Class A-1B, $43,505,295, Fixed, affirmed at Aaa
* Class A-2, $2,003,353, Fixed, affirmed at Aaa
* Class B, $15,889,000, Fixed, affirmed at Aaa
* Class C, $19,066,000, Fixed, affirmed at Aaa
* Class D, $20,655,000, Fixed, upgraded to Aaa from Aa3
* Class E, $4,767,000, Fixed, upgraded to Aaa from A2
* Class F, $18,271,000 Fixed, upgraded to Baa3 from Ba2
* Class G, $11,122,000 Fixed, affirmed at B2
As of the March 20, 2006 distribution date, the transaction's
aggregate principal balance has decreased by approximately 54.3%
to $145.4 million from $317.8 million at securitization. The
Certificates are collateralized by 85 loans ranging in size from
less than 1.0% to 7.5% of the pool, with the top 10 loans
representing 40.7% of the pool.
Four loans have been liquidated from the trust, resulting in
aggregate realized losses of approximately $1.8 million. Four
loans, representing 7.8% of the pool, are in special servicing.
Moody's has estimated aggregate losses of approximately $3.5
million for all of the specially serviced loans. Sixteen loans,
representing 18.8% of the pool, are on the master servicer's
watchlist.
Moody's was provided with year-end 2004 and partial or full year
2005 operating results for 93.3% and less than 50.0%,
respectively, of the performing loans. Moody's weighted average
loan to value ratio is 77.0%, compared to 79.3% at Moody's last
full review in March 2005 and compared to 81.5% at securitization.
Moody's is upgrading Classes D, E and F due to increased credit
support and stable overall pool performance.
The top three loan exposures represent 17.5% of the outstanding
pool balance. The largest loan exposure is the Ghidorzi Portfolio
Loans, which consists of three cross collateralized mortgage loans
secured by two office buildings and one industrial property. All
of the properties are located in Wausau, Wisconsin. The
properties range in size from 52,000 to 371,000 square feet and
total 480,400 square feet. The overall occupancy rate is 97.0%,
compared to 99.0% at securitization. Moody's LTV is 70.3%,
compared to 86.6% at last review.
The second largest loan exposure is the Harvard Market Loan, which
is secured by a 41,000 square foot retail property located in
Seattle, Washington. The property is a condominium interest in a
91,000 square foot mixed use condominium project. The property is
shadow anchored by Quality Food Centers and is 95.0% occupied,
compared to 100.0% at last review. Major tenants include Bartell
Drug Company and The UPS Store. Moody's LTV is 85.8%, essentially
the same as at last review.
The third largest loan exposure is the Irvine Spectrum Auto Center
Loan, which is secured by a 42,000 square foot industrial
building. The property was 69.0% leased as of January 2006,
compared to 94.0% at securitization. The property's occupancy
declined significantly in 2005 due to the lease rollover of Ford
and Chrysler, the property's largest tenants, which both vacated
at lease expiration. The loan is on the master servicer's
watchlist due to the decline in occupancy and low debt service
coverage. Moody's LTV is in excess of 100.0%, compared to 91.3%
at last review.
The pool collateral is a mix of retail, office, mixed use,
multifamily, industrial and self-storage, lodging and healthcare.
The collateral properties are located in 13 states. The highest
state concentrations are California, Texas, Washington, Wisconsin
and Arizona. Virtually all of the properties located in
California are located in the southern portion of the state.
INDYMAC CAPITAL: Fitch Affirms BB+ Preferred Securities Rating
--------------------------------------------------------------
Fitch Ratings revised the Rating Outlook at IndyMac Bancorp
(NDE) and its rated subsidiaries to Positive from Stable.
The Positive Outlook reflects:
* NDE's solid operating performance;
* more diversified and stable funding profile; and
* improved credit metrics with the expectation that these
underlying credit strengths will remain.
Fitch is also encouraged by NDE's ability to enhance its franchise
strength by becoming a significant participant in the residential
mortgage origination and servicing sector and through the early
success of its expanded branch strategy.
Going forward, Fitch believes a key distinction for NDE will be
its ability to demonstrate the consistency of its thrift/mortgage
banking business model as mortgage origination approaches
historical levels and spreads remain tight. A return to
origination normalcy notwithstanding, Fitch expects NDE to
maintain reasonably strong and stable operating performance in a
shifting rate environment.
Competitive forces have compressed net interest margins across the
industry over the past several quarters and Fitch expects NDE's
net interest margin to remain pressured due to the relatively flat
yield curve and lower gain-on-sale spreads. However, an important
rating consideration is the company's ability to stabilize margins
and avoid a downward trend.
Future rating actions will be based on NDE's continued success in
executing its branch network objectives, enhancing its overall
franchise value, and sustaining operating strength in a changing
mortgage environment amid greater competition. Fitch will also
monitor NDE's growth plans and management's ability to manage that
growth. As a large national lender of Option adjustable-rate
mortgages and Interest-Only mortgages, Fitch will review the
forthcoming regulatory guidance relating to non-traditional
mortgage products to determine its effect on NDE's underwriting
standards and origination levels, if any.
Should NDE continue its positive momentum over the next twelve
months, Fitch would likely consider a rating upgrade for NDE.
Despite significant strides, however, mortgage originator and
servicer market share and franchise value remain challenged
relative to larger peers and competition is expected to remain
intense. As such, a positive rating action would likely be
restricted to a one notch upgrade. If a rating change is to take
place, it would likely occur with NDE's Issuer Default Rating,
senior debt, preferred stock and deposit rating. It also would be
likely that NDE's short-term, individual and support ratings would
remain unchanged from their current levels.
Fitch has affirmed and revised the Rating Outlook on these ratings
to Positive:
IndyMac Bancorp:
-- Long-term Issuer Default Rating (IDR) 'BBB-'
-- Long-term senior debt rating 'BBB-'
-- Short-Term Issuer 'F2'
-- Individual 'B/C'
-- Support '5'
IndyMac Bank, FSB:
-- Long-term deposit rating 'BBB'
-- Long-term Issuer Default Rating (IDR) 'BBB-'
-- Short-Term Issuer 'F2'
-- Short-term deposits 'F2'
-- Individual 'B/C'
-- Support '5'
IndyMac Capital Trust:
-- Preferred securities 'BB+'
INTEGRATED ELECTRICAL: Court Gives Interim Nod on PwC Retention
---------------------------------------------------------------
The Hon. Barbara Houser of the U.S. Bankruptcy Court for the
Northern District of Texas approved, on an interim basis,
Integrated Electrical Services, Inc., and its debtor-affiliates
Request to employ PricewaterhouseCoopers LLC as their internal
auditors and tax advisors pending a final hearing.
The Debtors told the Court that prior to filing for bankruptcy and
in the ordinary course of business, they employed PwC to perform
their recurring internal audit and to provide tax advice to the
Debtors.
Pursuant to an engagement letter dated February 13, 2006, PwC
agrees to continue to:
(1) be an independent advisor regarding Sarbanes-Oxley Section
404 approach and documentation;
(2) conduct interviews and perform walk-throughs as necessary
with appropriate process owners to validate information
received in management's process documentation for
corporation, information technology, and field sites
prepared by IES:
* revenues and receivables,
* purchasing and payables,
* payroll and employee benefits,
* fixed assets an capital expenditures,
* inventory,
* treasury and cash management
* ledger maintenance and financial reporting, and
* general information technology controls;
(3) update process flowcharts and control matrices as
necessary using the process documentation provided by IES
Management and information received during interviews
performed;
(4) for identified gaps and weaknesses in internal controls,
assist IES' management by providing advice and
suggestions regarding additional internal controls over
financial reporting to be implemented;
(5) assist in executing and testing IES' operating
effectiveness of internal controls to help support
management's assertion; and
(6) attend various project meetings as requested.
The Debtors and PwC are also parties to three Tax Engagement
Letters under which PwC will serve as tax advisors performing
these services:
1) Pursuant to the Tax Engagement Letter dated April 14, 2005,
assist with the review of consolidated financial tax
accrual for the quarters ended March 31, 2005 and ended
June 30, 2005 and the year ended September 30, 2005,
including:
* reviewing the activity in tax accounts,
* reviewing the book tax differences,
* reviewing the federal and state current and deferred tax
assets and liabilities and supporting cumulative
temporary differences and state deferred tax rates,
* reviewing the calculations of IES' tax reserves and
valuation allowances,
* reviewing the effective tax rate reconciliation and
supporting work papers prepared by IES, and
* preparing a summary memorandum document the review;
2) Pursuant to the Tax Engagement Letter dated March 3, 2005,
work with IES' tax department to assist in the
implementation of an appropriate process to comply with
Section 404 of the Sarbanes-Oxley Act, including:
* identification and documentation of the key tax
processes,
* developing a framework for identifying internal controls
over tax accounts and performing self-assessment,
* assist IES' tax department in using the framework to
successfully complete the self-assessment, and
* provide critical commentary on the results of the self-
assessment and the overall preparedness of the tax
function to support compliance with Section 404 of the
Sarbanes-Oxley Act of 2002; and
3) Pursuant to the Tax Engagement Letter dated December 21,
2005:
* prepare and sign as necessary tax documents; and
* provide recurring tax consulting services, including
providing answers to questions and opinion on tax
matters including research, accounting method matters
and preparation of memoranda, and to provide advice and
assistance with respect to matters involving the
Internal Revenue Service or other tax authorities.
Michaela C. Crocker, Esq., at Vinson & Elkins LLP, in Dallas,
Texas, says within the year prior to the Petition Date, the
Debtors have paid PwC approximately $3,100,000 in fees and
expenses. To date, the Debtors owe PwC $466,000 for prepetition
work. The Debtors also ask the Court for authority to pay the
amount in the ordinary course of business. For postpetition
work, the Debtors estimate that they owe PwC $158,000.
The Debtors will pay fees to PwC based on time spent in rendering
tax and auditing services. At the outset of its Internal Audit
engagement, PwC anticipated that approximately 3,000 to 3,500
hours would be needed to complete the internal audit:
Category Hours Blended Hourly Rate
-------- ----- -------------------
Information technology 1,000 $170
Field site visits 2,252 $145
The Debtors have also agreed to reimburse PwC for out of pocket
expenses. About 3,000 hours are currently outstanding.
Subject to the Tax Engagement Letters, the Debtors and PwC had
agreed to a $545,000 fixed fee for the Tax Compliance Services.
No payments have been made to date and $545,000 will be paid
postpetition, along with the related out-of-pocket expenses.
For Tax Advisory Services, the Debtors propose to pay PwC based
on these hourly rates:
Professional Range
------------ -----
Partner $460 - $750
Managing Director $460 - $550
Director $360 - $450
Manager $260 - $350
Senior Associate $185 - $210
Associate $155 - $175
Office Staff $90 - $100
The professionals primarily responsible for the services rendered
by PwC are Thomas J. Palmisano for Tax Advisory Services and Gary
C. Prasher for the Internal Audit Services.
Mr. Palmisano assures the Court that PwC does not hold or
represent any interest adverse to the Debtors' estates and is a
disinterested person as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Houston, Texas, Integrated Electrical Services,
Inc. -- http://www.ielectric.com/and http://www.ies-co.com/-- is
an electrical and communications service provider with national
roll-out capabilities across the U.S. Integrated Electrical
Services offers seamless solutions and project delivery of
electrical and low-voltage services, including communications,
network, and security solutions.
The Company provides everything from system design, installation,
and testing to long-term service and maintenance on a wide array
of projects. With approximately 140 locations nationwide, the
Company is prepared to seamlessly manage and deliver all your
electrical, security, and communication requirements. The Debtor
and 132 of its affiliates filed for chapter 11 protection on
Feb. 14, 2006 (Bankr. N.D. Tex. Lead Case No. 06-30602). Daniel
C. Stewart, Esq., and Michaela C. Crocker, Esq., at Vinson &
Elkins, L.L.P., represent the Debtors in their restructuring
efforts. Marcia L. Goldstein, Esq., and Alfredo R. Perez, Esq.,
at Weil, Gotshal & Manges LLP, represent the Official Committee of
Unsecured Creditors. As of Dec. 31, 2005, Integrated Electrical
reported assets totaling $400,827,000 and debts totaling
$385,540,000. (Integrated Electrical Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc. 215/945-7000)
INTEGRATED ELECTRICAL: Walks Away from Four Real Property Leases
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas gave
Integrated Electrical Services, Inc., and its debtor-affiliates
for authority to reject four non-residential real property leases.
The four non-residential real property leases are:
Expiration Monthly
Lessee Location of Lease Rate
------ -------- ---------- -------
Bryant Archdale, Sept. 30, 2007 $3,600
Electric North Carolina
Bryant Archdale, Dec. 31, 2008 $16,000
Electric North Carolina
Riviera Loveland, Feb. 28, 2008 $2,552
Electric Colorado
Thomas Cincinnati, Jan. 30, 2018 $6,387
Popp & Co. Ohio
The Court declared that the Colorado and Ohio leases are rejected
effective March 29, 2006. The North Carolina properties, the
Court say, are deemed rejected effective as of the last day of the
rent period within which the Debtors notify the lessors in writing
that they have removed their property from the leased premises, or
that they have abandoned the remaining property.
No Longer Needed
The Debtors tell the Court that they no longer need the leases in
the operation of their businesses.
Michaela C. Crocker, Esq., at Vinson & Elkins L.L.P., in Dallas,
Texas, tells the Court that the properties in Colorado and Ohio
are vacant, and that the Debtors are prepared to turn these over
to the lessors upon the Court's order.
Headquartered in Houston, Texas, Integrated Electrical Services,
Inc. -- http://www.ielectric.com/and http://www.ies-co.com/-- is
an electrical and communications service provider with national
roll-out capabilities across the U.S. Integrated Electrical
Services offers seamless solutions and project delivery of
electrical and low-voltage services, including communications,
network, and security solutions.
The Company provides everything from system design, installation,
and testing to long-term service and maintenance on a wide array
of projects. With approximately 140 locations nationwide, the
Company is prepared to seamlessly manage and deliver all your
electrical, security, and communication requirements. The Debtor
and 132 of its affiliates filed for chapter 11 protection on
Feb. 14, 2006 (Bankr. N.D. Tex. Lead Case No. 06-30602). Daniel
C. Stewart, Esq., and Michaela C. Crocker, Esq., at Vinson &
Elkins, L.L.P., represent the Debtors in their restructuring
efforts. Marcia L. Goldstein, Esq., and Alfredo R. Perez, Esq.,
at Weil, Gotshal & Manges LLP, represent the Official Committee of
Unsecured Creditors. As of Dec. 31, 2005, Integrated Electrical
reported assets totaling $400,827,000 and debts totaling
$385,540,000. (Integrated Electrical Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc. 215/945-7000)
INTEGRATED ELECTRICAL: Wants Russell Reynolds as Recruiter
----------------------------------------------------------
Integrated Electrical Services, Inc., and its debtor-affiliates
tell the U.S. Bankruptcy Court for the Northern District of Texas
that pursuant to their Plan of Reorganization, all of their
employment contracts, including that with C. Byron Snyder,
president and chief executive officer of Integrated Electrical
Services, Inc., will be assumed on the effective date. All
existing IES senior management will retain their current
positions as executive officers of the Reorganized IES on and
after the effective date of the Plan.
According to the terms of Mr. Snyder's employment contract,
unless the agreement is earlier terminated, he will remain the
IES president and CEO until the earlier of the time as a new
president and CEO is hired by the board of directors of IES, or
as is otherwise determined by the board.
Michaela C. Crocker, Esq., at Vinson & Elkins LLP, in Dallas
Texas, relates that IES board has elected to commence a search
for a replacement to Mr. Snyder. The Debtors expect the process
to be time-consuming and will require the retention of a
professional recruiting firm so that management will not be
unnecessarily distracted from the day-to-day operations of the
companies.
The Debtors seek the Court's authority to employ Russell Reynolds
Associates to assist them in their search. Ms. Crocker says the
Debtors chose Russell because of its reputation and extensive
experience in locating qualified individuals to fill executive
level positions.
The Debtors propose to pay Russell a potential fixed fee of
$300,000, plus reasonable expenses. The fee will be payable in
three monthly installments of $50,000, with the balance payable
upon completion of the assignment.
Headquartered in Houston, Texas, Integrated Electrical Services,
Inc. -- http://www.ielectric.com/and http://www.ies-co.com/-- is
an electrical and communications service provider with national
roll-out capabilities across the U.S. Integrated Electrical
Services offers seamless solutions and project delivery of
electrical and low-voltage services, including communications,
network, and security solutions.
The Company provides everything from system design, installation,
and testing to long-term service and maintenance on a wide array
of projects. With approximately 140 locations nationwide, the
Company is prepared to seamlessly manage and deliver all your
electrical, security, and communication requirements. The Debtor
and 132 of its affiliates filed for chapter 11 protection on
Feb. 14, 2006 (Bankr. N.D. Tex. Lead Case No. 06-30602). Daniel
C. Stewart, Esq., and Michaela C. Crocker, Esq., at Vinson &
Elkins, L.L.P., represent the Debtors in their restructuring
efforts. Marcia L. Goldstein, Esq., and Alfredo R. Perez, Esq.,
at Weil, Gotshal & Manges LLP, represent the Official Committee of
Unsecured Creditors. As of Dec. 31, 2005, Integrated Electrical
reported assets totaling $400,827,000 and debts totaling
$385,540,000. (Integrated Electrical Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc. 215/945-7000)
JB POINDEXTER: Poor Performance Results in Moody's Low-B Ratings
----------------------------------------------------------------
Moody's Investors Service lowered the ratings of J.B. Poindexter &
Co., Inc. -- Corporate Family, to B2 from B1; guaranteed senior
unsecured notes, to B3 from B1. The speculative grade liquidity
rating is unchanged at SGL-1.
The rating downgrades reflect the company's lower operating
performance during 2005 driven by lower customer orders than prior
year levels at its step van operation, its Truck Accessories
operations, driven by lower pick up truck sales in the USA and
Canada, and at its truck body operations as a result of lower
consumer rental orders. The lower operating income was also
driven by higher raw material costs which were not passed onto
customers.
The further notching of the guaranteed senior unsecured notes
reflects the expected deterioration in recovery values resulting
from the company's lower performance. JB Poindexter also has
completed three acquisitions over the past eighteen months, which
increased sales, but in aggregate, have not improved profitability
nor free cash flow to date.
In addition the ratings anticipate that even with improved new
order intake the company's financial performance is unlikely to
result in financial metrics that would support the B1 corporate
family during the intermediate term. The speculative grade rating
reflects expected usage of the revolving credit resulting from
planned capital expenditures for improved production efficiency
and technology.
The outlook is changed to stable. The stable outlook reflects the
company's stronger backlog going into 2006 and price increases
implemented by the company to offset increased costs. These
developments are expected to enable the company to produce credit
metrics consistent with the B2 corporate family rating during the
near term. Moody's notes that industry conditions could
meaningfully weaken again in 2007 as new emissions regulations go
into effect.
JB Poindexter's SGL-1 speculative grade liquidity rating
represents an expectation that the company will continue to
maintain a very good liquidity profile over the coming 12 months.
This profile is supported by JB Poindexter's approximately $56.1
million of cash and short term investments at Dec. 31, 2005.
While there are planned increased capital expenditures for
additional efficiency and productivity in 2006, the company is
expected to maintain sufficient cash balances to meet these needs.
The company has approximately $27.7 of unused availability under
its committed $30 million secured revolving credit facility.
The senior secured revolving credit facility is supported by a
borrowing base currently in excess of $30 million. JB Poindexter
furthermore has the option to increase the revolving credit
commitment up to $50 million, subject only to payment of a fee and
the absence of an event of default. A fixed charge coverage ratio
is the only financial covenant applicable to the revolving credit
facility, and is only applicable when excess revolver availability
falls below $10 million.
Ratings lowered:
* Corporate family rating to B2 from B1;
* $200 million of 8.75% guaranteed senior unsecured notes
due March 2014, to B3 from B1;
Ratings affirmed:
* SGL-1 speculative grade liquidity rating
Moody's last rating action for JB Poindexter was on Jan. 21, 2005
when the ratings were confirmed and the outlook changed negative.
JB Poindexter, headquartered in Houston, Texas, manufactures
commercial truck bodies for medium-duty trucks, pickup truck caps
and tonneau covers, truck bodies for walk-in step vans, funeral
coaches, limousines and specialized buses, provides contract
manufacturing services for precision metal parts and machining and
casting services, and markets expandable foam plastics used for
packaging, shock absorption, and material handling products. JB
Poindexter's pro forma annualized revenues are approximately $668
million.
JEAN COUTU: Completes Sale of Eckerd Headquarters in Florida
------------------------------------------------------------
The Jean Coutu Group, Inc., disclosed that its wholly owned
subsidiary, The Jean Coutu Group (PJC) USA, Inc., operating under
the name Brooks Eckerd Pharmacy, completed the sale of its former
Eckerd headquarters located in Largo, Florida. Jean Coutu
reported on Feb. 28, 2006, that it is selling the Florida
headquarters for $24 million.
About Jean Coutu
Headquartered in Longueuil, Quebec, The Jean Coutu Group Inc. --
http://www.jeancoutu.com/-- is the fourth largest drugstore chain
in North America and the second largest in both the eastern United
States and Canada. The Company and its combined network of 2,175
corporate and franchised drugstores (under the banners of Brooks
and Eckerd Pharmacy, PJC Jean Coutu, PJC Clinique and PJC Sante
Beaute) employ more than 60,000 people.
The Jean Coutu Group's United States operations employ 46,000
people and comprise 1,853 corporate owned stores located in 18
states of the Northeastern, mid-Atlantic and Southeastern United
States. The Jean Coutu Group's Canadian operations and franchised
drugstores in its network employ over 14,000 people and comprise
322 PJC Jean Coutu franchised stores in Quebec, New Brunswick and
Ontario.
* * *
As reported by the Troubled Company Reporter on Mar. 10, 2006,
Dominion Bond Rating Service changed the trends on the Bank Credit
Facilities, Senior Unsecured Debt, and Senior Subordinated Debt of
The Jean Coutu Group (PJC) Inc., to Negative from Stable.
DBRS rates Jean Coutu's Bank Credit Facilities at B (high); Senior
Unsecured Debt at B; and Senior Subordinated Debt at B (low).
DBRS reviewed Coutu's ratings following the retailer's
announcement that it is seeking amendment of the financial
covenants in its Bank Credit Facilities. This initiative was
precipitated by earnings weakness caused by slower-than-
anticipated progress on sales and earnings in Coutu's U.S.
operations following the acquisition and integration of Eckerd
stores. In addition, inventory remains above optimum levels due
to system-related problems in fall 2005, leading to higher-than-
planned debt balances.
As reported in the Troubled Company Reporter on March 13, 2006,
Moody's Investors Service affirmed the bank loan and senior note
ratings of Jean Coutu Group Inc., at B2 and B3, respectively, but
lowered the senior subordinated note and liquidity ratings to Caa2
and SGL-4, respectively. The rating outlook remains negative.
Consideration of the ratings is prompted by the diminished
financial flexibility that has resulted from the persistently weak
performance of the Company's acquired Eckerd stores. The weak
liquidity rating of SGL-4 reflected Moody's expectation that
operating cash flow over the next four quarters may be modest
relative to expected cash requirements. Moody's noted the
company's announcement that it is seeking to amend its bank loan
agreement because of concerns regarding future covenant
compliance.
JEAN COUTU: Earns $31.6 Million in Third Quarter Ended February 25
------------------------------------------------------------------
The Jean Coutu Group Inc. (TSX:PJC.SV.A) reported its financial
results for the quarter ended Feb. 25, 2006.
"The third quarter's financial results of The Jean Coutu Group
were positively impacted by improving sales growth in our US
network and continuing good performance in our Canadian network,"
said Jean Coutu, President and Chief Executive Officer. "We are
seeing better sales trends in our pharmacy departments and are
implementing numerous top line growth initiatives in the front-
end. In addition, management is focused on improving operating
efficiency across the networks."
For the third quarter, net earnings were $31.6 million compared
with $39.9 million for the same period last year and net earnings
of $30.8 million for the second quarter of this year. During the
third quarter of fiscal 2005, there was an unrealized foreign
exchange gain on monetary items of $11.9 million.
Despite a milder flu season in all of the Company's markets, the
Canadian network continues to perform well while US network same-
store sales growth has improved due to improving pharmacy sales
trends. US network front-end sales show improvement in categories
such as beauty and consumables, but continue to be impacted by the
decline in the photo category.
The first 39 week's net earnings were $73.5 million compared with
$58.2 million for the corresponding period last year.
Revenues
Total revenues of the Company's Canadian operations for the third
quarter reached $413.4 million compared with $359.4 million for
the third quarter of the 2005 fiscal year, an increase of $54
million or 15%. Third quarter Canadian revenues increased by 8.5%
year-over-year excluding the impact of currency exchange rate
fluctuations.
Jean Coutu's US operations generated total revenues of $2.462
billion, up slightly from the third quarter of fiscal 2005, due
principally to improving pharmacy sales, net of the closure of 78
non-performing Eckerd drugstores during the first quarter of
fiscal 2006, which had contributed $48.4 million to revenues
during the corresponding period in fiscal 2005.
Pharmacy sales were impacted by the conversion of brand name drugs
to generics, which generally have a lower selling price, but
higher gross margins to the drugstore retailer. 39-week revenues
increased to $7.076 billion for the period ended Feb. 25, 2006, up
$1.265 billion or 21.8% from last year. The increase is
principally due to the additional revenues of $1.297 billion from
the acquired Eckerd drugstores for the full 39 weeks in fiscal
2006, compared with 30 weeks in fiscal 2005.
The first 39 week's of fiscal 2006 total revenues increased by
$1.419 billion or 20.7% to $8.268 billion from $6.849 billion in
fiscal 2005.
Store network development
During the third quarter, 10 drugstores were opened, of which 7
were relocations and 5 were closed. On February 25, 2006, there
were 2,173 stores in the system, comprised of 320 Canadian PJC
stores, and 1,853 Brooks and Eckerd drugstores in the United
States.
Outlook
The Jean Coutu Group is well positioned to capitalize on the
growth in the North American drugstore retailing industry, based
on its strong brands, a focus on excellence in customer service in
pharmacy and front-end innovation with an emphasis on health and
beauty. Demographic trends in Canada and the United States are
expected to contribute to growth in the consumption of
prescription drugs, and to the increased use of pharmaceuticals as
the primary intervention in individual healthcare. Management
believes that these trends will continue and that the Company will
achieve sales growth through differentiation and quality of
offering and service levels in its drugstore network.
The Company operates its Canadian and US networks with a focus on
sales growth, store base projects and operating efficiency to
create shareholder value.
The Board of Directors of The Jean Coutu Group declared a
quarterly dividend of $C 0.03 per share. This dividend is payable
on May 11, 2006 to all holders of Class A subordinate voting
shares and holders of Class B shares listed in the Company's
shareholder ledger as of April 27, 2006.
About Jean Coutu
Headquartered in Longueuil, Quebec, The Jean Coutu Group Inc. --
http://www.jeancoutu.com/-- is the fourth largest drugstore chain
in North America and the second largest in both the eastern United
States and Canada. The Company and its combined network of 2,175
corporate and franchised drugstores (under the banners of Brooks
and Eckerd Pharmacy, PJC Jean Coutu, PJC Clinique and PJC Sante
Beaute) employ more than 60,000 people.
The Jean Coutu Group's United States operations employ 46,000
people and comprise 1,853 corporate owned stores located in 18
states of the Northeastern, mid-Atlantic and Southeastern United
States. The Jean Coutu Group's Canadian operations and franchised
drugstores in its network employ over 14,000 people and comprise
322 PJC Jean Coutu franchised stores in Quebec, New Brunswick and
Ontario.
* * *
As reported by the Troubled Company Reporter on Mar. 10, 2006,
Dominion Bond Rating Service changed the trends on the Bank Credit
Facilities, Senior Unsecured Debt, and Senior Subordinated Debt of
The Jean Coutu Group (PJC) Inc., to Negative from Stable.
DBRS rates Jean Coutu's Bank Credit Facilities at B (high); Senior
Unsecured Debt at B; and Senior Subordinated Debt at B (low).
DBRS reviewed Coutu's ratings following the retailer's
announcement that it is seeking amendment of the financial
covenants in its Bank Credit Facilities. This initiative was
precipitated by earnings weakness caused by slower-than-
anticipated progress on sales and earnings in Coutu's U.S.
operations following the acquisition and integration of Eckerd
stores. In addition, inventory remains above optimum levels due
to system-related problems in fall 2005, leading to higher-than-
planned debt balances.
As reported in the Troubled Company Reporter on March 13, 2006,
Moody's Investors Service affirmed the bank loan and senior note
ratings of Jean Coutu Group Inc., at B2 and B3, respectively, but
lowered the senior subordinated note and liquidity ratings to Caa2
and SGL-4, respectively. The rating outlook remains negative.
Consideration of the ratings is prompted by the diminished
financial flexibility that has resulted from the persistently weak
performance of the Company's acquired Eckerd stores. The weak
liquidity rating of SGL-4 reflected Moody's expectation that
operating cash flow over the next four quarters may be modest
relative to expected cash requirements. Moody's noted the
company's announcement that it is seeking to amend its bank loan
agreement because of concerns regarding future covenant
compliance.
J.L. FRENCH: Can Advance $382,500 to China Holdings Affiliate
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave
J.L. French Automotive Castings, Inc., and its debtor-affiliates
permission to advance funds to J.L. French Automotive Castings
China Holdings LLC, a non-debtor affiliate.
As reported in the Troubled Company Reporter on Mar. 21, 2006,
the Debtors told the Court that the funds will be used to
capitalize China Holdings' foreign-equity joint venture with
Chonqing Yujiang Die Casting Co., Ltd., and Chongqing Liangjiang
Machine Manufacture Co., Ltd. Yujiang is a die-casting company
and Lianjiang is a machining company, both currently do the bulk
of their business supplying China's motorcycle original equipment
manufacturers.
Proposed Joint Venture
The Debtors told the Court that through China Holdings, and with
Yujiang and Liangjiang, they plan to establish a new facility in
the city of Chongqing to produce die-castings and to machine and
assemble automotive parts. The three entities will form a Chinese
foreign-equity joint venture named Chonqing JL French-Yumei Die
Casting Co., Ltd.
Under the joint venture agreement, China Holdings will own 51%,
Yujiang, 29%, and Liangjiang, 20%. The Debtors said that the
total investment in the joint venture is estimated to be
$12.5 million with:
* $5 million to be contributed by the parties as equity and
* the remainder to be borrowed and secured by the assets of
the new entity.
The Debtors related that China Holdings total capital commitment
for the joint venture is $2.55 million or 51% of $5 million.
The agreement also calls for each party to contribute the first
15% of the equity within 90 days after the new entity receives its
business license from the State Administration of Industry and
Commerce. The agreement establishes that the remainder of the
equity contributions will be paid in several installments but no
more that three years after the initial capital contribution. The
Debtors tell the Court that its plans to execute the contract next
month although they have no estimate as to how long it will take
to obtain the approvals and licenses. The Debtors say that it is
likely that China Holdings will be required to make an initial
distribution of $382,500.
The Debtors relate that since China Holdings has only minimal
assets, they must transfer the requisite funds in order for China
Holdings to make the requisite contribution.
The Debtors argued that the proposed joint venture represents a
significant opportunity for the Debtors to expand their access to
overseas markets and maximize the value of their estates. The
Debtors said that their investment risk is limited to the
$2,555,000 equity commitment and as a 51% owner, they will appoint
four of six board members and will maintain the operational
control of the new entity.
About J.L. French
Headquartered in Sheboygan, Wisconsin, J.L. French Automotive
Castings, Inc. -- http://www.jlfrench.com/-- is one of the
world's leading global suppliers of die cast aluminum components
and assemblies. There are currently nine manufacturing locations
around the world including plants in the United States, United
Kingdom, Spain, and Mexico. The company has fourteen
engineering/customer service offices to globally support our
customers near their regional engineering and manufacturing
locations. The Company and its debtor-affiliates filed for
chapter 11 protection on Feb. 10, 2006 (Bankr. D. Del. Case No.
06-10119 to 06-06-10127). James E. O'Neill, Esq., Laura Davis
Jones, Esq., and Sandra G.M. Selzer, Esq., at Pachulski Stang
Ziehl Young & Jones, and Marc Kiesolstein, P.C., at Kirkland &
Ellis LLP, represent the Debtors in their restructuring efforts.
When the Debtor filed for chapter 11 protection, it estimated
assets and debts of more than $100 million.
JOHNSONDIVERSEY HOLDINGS: S&P Lowers Corporate Credit Rating to B
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term
ratings on JohnsonDiversey Holdings Inc. and its subsidiary
JohnsonDiversey Inc. by one notch. The corporate credit rating
was lowered to 'B' from 'B+'. At the same time, the 'B-2' short-
term rating and '3' bank loan recovery rating were affirmed.
All ratings were removed from CreditWatch where they had been
placed with negative implications on March 23, 2006, after the
company reported weaker-than-expected fourth-quarter earnings.
The outlook is stable.
"The downgrade reflects concerns that continuing market and
operating challenges, high raw-material costs, and actions
associated with a major restructuring program initiated late last
year could cause earnings and cash flow to be weaker than
previously expected during the next two years. This would result
in the company remaining more highly leveraged for longer than we
expected," said Standard & Poor's credit analyst Cynthia Werneth.
Moreover, even assuming the company is successful in meeting the
business challenges it will face during the next two years and the
restructuring is successful, JohnsonDiversey must eventually
address the fact that Unilever N.V. has the right to put its
equity interest in JohnsonDiversey to the company by 2010 at the
latest. (JohnsonDiversey is owned two-thirds by the Johnson family
and one-third by Unilever N.V.) If JohnsonDiversey were to
debt-finance the purchase of this equity stake, it would likely
remain very highly leveraged for many years.
One factor that supports credit quality is the potential for
meaningful asset sales. The company is considering for
divestiture businesses accounting for about $500 million or 15% of
2005 net sales. However, the benefit of debt reduction and the
boost to liquidity from asset sales would have to be weighed
against any negative impact on the business profile and the loss
of associated earnings.
The ratings on Sturtevant, Wisconsin-based JohnsonDiversey
Holdings reflect a highly leveraged financial profile and a weak
business risk profile. JohnsonDiversey is a leading global
manufacturer and marketer of cleaning and hygiene products and
related services for the institutional and industrial cleaning
market. The company is the second-largest player in a still-
fragmented, approximately $18 billion market, trailing only the
industry leader, Ecolab Inc.
Markets are relatively stable and benefit from trends toward
greater government food-safety regulations and customer demands
for cleanliness, and capital requirements are moderate. Still,
the company has been hurt by:
* operating inefficiencies,
* low capacity utilization, and
* a historical lack of pricing discipline,
and has not achieved the earnings and cash flow levels expected at
the time of the 2002 acquisition of DiverseyLever.
In addition, customer consolidation, particularly in Europe, has
reduced pricing power, and the company remains vulnerable to
inflationary cost pressures and economic slowdowns.
KRATON POLYMERS: Reports $22.7 Million of Net Income in 2005
------------------------------------------------------------
Polymer Holdings LLC, the parent company of KRATON Polymers LLC,
reported its financial results for the fourth quarter for the
fiscal year ended Dec. 31, 2005.
For the full year ended Dec. 31, 2005, KRATON reported $22.7
million of net income on $975.6 million of net revenues compared
to a $35.8 million net loss on $807.4 million of net revenues for
the same period in 2004.
Holdings' total revenues for the quarter were $223.0 million
compared to $208.8 million in the comparable period of 2004, an
increase of 6.8%. This improvement was primarily driven by an
increase in average selling prices and an increase in sales
volume.
Holdings' gross profit for the fourth quarter increased over $12.6
million or 41.3% to $43.1 million, as compared to $30.5 million in
the comparable period of 2004. After adjusting for period-to-
period differences in the amortization of the step-up in inventory
value related to the acquisition of the company in December 2003,
the improvement in gross profit over 2004 was $10.0 million.
Holdings' net loss for the quarter was $4.5 million, compared with
a net loss of $13.0 million in the comparable period of 2004.
Holdings ended the quarter with $100.9 million in cash and cash
equivalents, an increase of $54.6 million from December 31, 2004
and $29.4 million from Sept. 30, 2005.
KRATON, the operating subsidiary of Holdings, had a net loss for
the quarter of $1.9 million as compared with a net loss of $11.9
million in the comparable period of 2004. At the end of the fourth
quarter 2005, Last Twelve Months Adjusted Bank Covenant EBITDA, a
measure used to determine compliance with KRATON's debt covenants,
totaled $123.8 million, an increase of $25.8 million from the
comparable period of 2004. A reconciliation of KRATON's EBITDA
and Adjusted Bank Covenant EBITDA to net income or net loss, as
applicable, is attached. Net income for the full year was $22.7
million versus a net loss of $35.8 million for the prior year.
Holdings' total revenue, which includes product sales and $22.7
million of other revenues, for the full year ended Dec. 31, 2005,
was $975.6 million, compared to $807.4 million for the year ended
Dec. 31, 2004, an increase of 20.8%. Product sales increased to
$952.9 million as compared to $791.2 million last year, an
increase of 20.4%. Sales volume increased by approximately 6.9 kT,
or 2.0% during the year, which increased revenue by an estimated
$9.6 million. Favorable pricing and product mix accounted for an
estimated $145.8 million of the increase and favorable foreign
currency exchange rates improved revenue by an estimated $6.3
million. Net income for the full year was $14.4 million versus a
net loss of $36.9 million for the prior year.
"We are very pleased with our fourth quarter results and the
improvements we achieved during the year. In 2005 despite
continuing increases in raw material costs, KRATON was able to
make progress in our pricing strategies and operational
improvement programs," said George Gregory, Chief Executive
Officer and President. "Our efforts to drive profitable growth,
while carefully managing costs and inventory levels are paying
off. In 2005, we posted record numbers in sales volume growth and
inventory reduction. Our enhanced liquidity gives us the
confidence to continue to invest in the innovation and growth
required to meet the future needs of our customers."
About KRATON
KRATON Polymers LLC is a premier, global specialty chemicals
company and is the world's largest producer of styrenic block
copolymers ("SBCs"), a family of products whose chemistry was
pioneered by KRATON over forty years ago. SBCs are highly
engineered synthetic elastomers, which enhance the performance of
products by delivering a variety of attributes, including greater
flexibility, resilience, strength, durability and processability.
KRATON polymers are used in a wide range of applications including
road and roofing materials, numerous consumer products (diapers,
tool handles, toothbrushes), tapes, labels, medical applications,
packaging, automotive and footwear products. KRATON has the
leading position in nearly all of its core markets and is the only
producer of SBCs with global manufacturing capability. Its
production facilities are located in the United States, The
Netherlands, Germany, France, Brazil, and Japan.
Polymer Holdings LLC is the parent company of KRATON Polymers LLC
and has no material assets other than its investment in KRATON
Polymers LLC.
Standard & Poor's Ratings Services revised its outlook on Kraton
Polymers LLC and its parent, Polymer Holdings LLC, to stable from
negative. At the same time, Standard & Poor's affirmed all
ratings on Kraton and Polymer Holdings, including its 'B+'
corporate credit ratings.
LEVITZ HOME: Court Approves Rejection of Eletto Delivery Agreement
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized Levitz Home Furnishings, Inc., and its debtor-
affiliates to reject their Delivery Services Agreement with Joseph
Eletto Transfer, Inc., effective as of Feb. 6, 2006.
As reported in the Troubled Company Reporter on Feb. 16, 2006, the
Court authorized the Debtors to sell substantially all of their
assets to PLVTZ, LLC, and The Pride Capital Group, LLC.
By the Sale Order, the Purchaser acquired the right to notify the
Debtors of its decision not to assume or assign one or more of the
Debtors' executory contracts. The Debtors, in turn, had the right
to dispose of the excluded contract upon receipt of an Excluded
Contract Notice.
On Jan. 24, 2006, the Purchasers served a notice to the Debtors
identifying the Eletto Delivery Services Agreement as an Excluded
Contract.
Richard H. Engman, Esq., at Jones Day, in New York, notes that
since that the Debtors have sold all of their operating stores to
the Purchasers, they no longer need Eletto's delivery services.
The Delivery Services Agreement no longer provides a benefit to
the Debtors' estates or creditors.
About Levitz Home
Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc.
-- http://www.levitz.com/-- is a leading specialty retailer of
furniture in the United States with 121 locations in major
metropolitan areas principally the Northeast and on the West Coast
of the United States. The Company and its 12 affiliates filed for
chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case
No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq.,
at Jones Day, represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they reported $245 million in assets and $456 million
in debts. Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman
LLP represents the Official Committee of Unsecured Creditors.
Levitz sold substantially all of its assets to Prentice Capital on
Dec. 19, 2005. (Levitz Bankruptcy News, Issue No. 10; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
LG.PHILIPS DISPLAYS: Section 341(a) Meeting Set on April 25
-----------------------------------------------------------
Kelly Beaudin Stapleton, the United States Trustee for Region 3
will convene a meeting of LG.Philips Displays USA, Inc.'s
creditors at 11:00 a.m., on April 25, 2006, at Room 2112, Second
Floor, J. Caleb Boggs Federal Building, 844 King Street in
Wilmington, Delaware. This is the first meeting of creditors
required in all bankruptcy cases under Section 341(a) of the
Bankruptcy Code.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in San Diego, California, LG.Philips Displays USA,
Inc., is an indirect American affiliate of LG.Philips Displays
Holding B.V. The company manufactures cathode ray tubes that are
incorporated into television sets and computer monitors. The
company filed for chapter 11 protection on Mar. 15, 2006 (Bankr.
D. Del. Case No. 06-10245). Adam Hiller, Esq., at Pepper Hamilton
LLP represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it estimated
assets of more than $100 million and debts between $50 million and
$100 million.
LONG BEACH: S&P Places Class M-3 Securities' Rating on Default
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 11
classes of mortgage-backed securities issued by five Long Beach
Mortgage Loan Trust transactions. At the same time, six of these
ratings are placed on CreditWatch with negative implications, and
one remains on CreditWatch negative.
In addition, the ratings on 266 other classes from various Long
Beach Mortgage Loan Trust transactions are affirmed.
The downgrades and CreditWatch placements are based on
performance that has allowed losses to consistently outpace
excess interest and erode credit support. This has led to
overcollateralization levels that are below their targets.
Despite this poor performance, there were no trigger events, so
the overcollateralization and subordination targets were able to
step down, further compromising credit support. Cumulative losses
in these pools range from 2.10% to 5.71% of the original pool
balances, while 90-plus-day delinquencies range from 5.71% to
14.25% of the current pool balances.
Standard & Poor's will closely monitor the performance of the
transactions with ratings on CreditWatch. If losses decline to a
point at which they no longer exceed excess interest, and the
levels of overcollateralization and subordination have not been
further eroded, the ratings on these classes will be affirmed and
removed from CreditWatch. Conversely, if losses continue to
outpace excess interest, further negative rating actions can be
expected.
The affirmations are based on levels of credit enhancement that
are sufficient to support the current ratings. Cumulative losses
in the transactions with affirmed ratings range from 0.00% to
3.14% of the original pool balances, while 90-plus-day
delinquencies range from 0.00% to 13.52% of the current pool
balances.
Credit support for these transactions is provided by a combination
of:
-- overcollateralization,
-- excess spread, and
-- subordination.
In addition, some classes also benefit from bond insurance
policies issued either from:
-- XL Capital Assurance Inc. ('AAA' financial strength rating);
-- Financial Security Assurance ('AAA' FSR); or
-- MBIA Insurance Corp. ('AAA' FSR).
These classes are noted with an asterisk in the table below.
Long Beach Mortgage Co. either originated or acquired all of the
mortgage loans used as collateral in these pools in accordance
with its underwriting standards. The underlying collateral for
these transactions consists primarily of fixed- and adjustable-
rate, first-lien, 30-year mortgage loans on single-family homes.
Ratings lowered and placed on CreditWatch negative:
Long Beach Mortgage Loan Trust
Rating
Series Class To From
------ ----- -- ----
2001-1 M-2 BBB/Watch Neg A
2002-1 M-3 B/Watch Neg BBB-
2002-2 M-3 BB/Watch Neg BBB
2002-5 M-3 BB/Watch Neg BBB
2002-5 M-4A, M-4B B/Watch Neg BBB-
Rating lowered and remaining on CreditWatch negative:
Long Beach Mortgage Loan Trust
Rating
Series Class To From
------ ----- -- ----
2000-1 M-2 BB/Watch Neg BBB/Watch Neg
Ratings lowered:
Long Beach Mortgage Loan Trust
Rating
Series Class To From
------ ----- -- ----
2000-1 M-1 AA AAA
2001-1 M-3 D CCC
2002-2 M-4A, M-4B CCC B
Ratings affirmed:
Long Beach Mortgage Loan Trust
Series Class Rating
------ ----- ------
2000-1 AF-3, AF-4, AV-1 AAA
2001-1 A-1, S AAA
2001-1 M-1 AA+
2001-3 S-2 AAA
2001-4 II-A1, II-A3, II-S AAA
2002-1 II-S, II-M1 AAA
2002-1 M-2 A
2002-2 II-M1 AAA
2002-2 M-2 A
2002-3 II-A*, II-S1* AAA
2002-4 II-A* AAA
2002-5 M-1 AA
2002-5 M-2 A
2003-1 A-2, S-2 AAA
2003-1 M-1 AA
2003-1 M-2 A
2003-1 M-3 BBB
2003-1 M-4 BBB-
2003-2 AF, AV AAA
2003-2 M-1 AA
2003-2 M-2 A
2003-2 M-3 A-
2003-2 M-4 BBB+
2003-2 M-5 BBB
2003-3 A AAA
2003-3 M-1 AA
2003-3 M-2 A
2003-3 M-3 BBB
2003-3 M-4 BBB-
2003-4 AV-1, AV-3 AAA
2003-4 M-1 AA
2003-4 M-2 A
2003-4 M-3 A-
2003-4 M-4A, M-4F BBB+
2003-4 M-5A, M-5F BBB
2003-4 M-6 BBB-
2004-1 A-1, A-2, A-3, A-5 AAA
2004-1 M-1 AAA
2004-1 M-2 AAA
2004-1 M-3 AAA
2004-1 M-4 AAA
2004-1 M-5 AAA
2004-1 M-6 AAA
2004-1 M-7 AA+
2004-1 M-8 AA
2004-1 M-9 AA-
2004-1 B A+
2004-2 A-1, A-2, A-3, A-4 AAA
2004-2 M-1 AA
2004-2 M-2 A+
2004-2 M-3 A
2004-2 M-4 A-
2004-2 M-5 BBB+
2004-2 M-6 BBB
2004-2 M-7 BBB-
2004-2 B BB+
2004-3 A-1, A-2, A-3, A-4 AAA
2004-3 S-1, S-2 AAA
2004-3 M-1 AA+
2004-3 M-2 AA
2004-3 M-3 AA-
2004-3 M-4 A+
2004-3 M-5 A
2004-3 M-6 A-
2004-3 M-7 BBB+
2004-3 M-8 BBB
2004-3 M-9 BBB-
2004-4 1A-1*, 2A-1, 2A-2 AAA
2004-4 2A-3, 2A-4 AAA
2004-4 M-1 AAA
2004-4 M-2, M-3 AA+
2004-4 M-4 AA
2004-4 M-5 AA-
2004-4 M-6 A+
2004-4 M-7 A
2004-4 M-8, M-9 A-
2004-4 M-10 BBB+
2004-4 M-11 BBB
2004-4 M-12 BBB-
2004-4 B BB+
2004-5 A-1, A-2, A-3, A-4 AAA
2004-5 A-5, A-6 AAA
2004-5 M-1 AA
2004-5 M-2 A+
2004-5 M-3 A
2004-5 M-4 A-
2004-5 M-5 BBB+
2004-5 M-6, M-7 BBB
2004-5 B-1, B-2 BBB-
2004-6 I-A1, I-A2, II-A1 AAA
2004-6 II-A2, A-3 AAA
2004-6 M-1 AA+
2004-6 M-2 AA
2004-6 M-3 AA-
2004-6 M-4 A+
2004-6 M-5 A
2004-6 M-6 A-
2004-6 M-7 BBB+
2004-6 B BBB
2004-A S AAA
2004-A M-1 AA
2004-A M-2 AA-
2004-A M-3 A+
2004-A M-4 A
2004-A M-5 A-
2004-A M-6 BBB+
2004-A M-7 BBB
2004-A M-8 BBB-
2004-A B BB+
2005-1 I-A1, II-A2, II-A2 AAA
2005-1 II-A3 AAA
2005-1 M-1 AA+
2005-1 M-2 AA
2005-1 M-3 AA-
2005-1 M-4 A+
2005-1 M-5 A
2005-1 M-6 A-
2005-1 M-7 BBB+
2005-1 M-8 BBB
2005-1 M-9 BBB-
2005-1 B-1 BB+
2005-1 B-2 BB
2005-2 I-A1, I-A2, II-A1 AAA
2005-2 II-A2, II-A3 AAA
2005-2 M-1 AA+
2005-2 M-2 AA
2005-2 M-3 AA-
2005-2 M-4 A+
2005-2 M-5 A
2005-2 M-6 A-
2005-2 M-7 BBB+
2005-2 M-8 BBB
2005-2 M-9 BBB-
2005-2 B-1 BB+
2005-2 B-2 BB
2005-2 I-A, II-A1, II-A2, II-A3 AAA
2005-2 M-1 AA+
2005-2 M-2 AA
2005-2 M-3 AA-
2005-2 M-4 A+
2005-2 M-5 A
2005-2 M-6 A-
2005-2 M-7 BBB+
2005-2 M-8 BBB
2005-2 M-9, M-10, M-11 BBB-
2005-WL1 I-A1, II-A1, II-A2 AAA
2005-WL1 II-A3, II-A4, III-A1 AAA
2005-WL1 III-A2, III-A3 AAA
2005-WL1 I/II-M1, III-M1 AA+
2005-WL1 I/II-M2, III-M2 AA
2005-WL1 I/II-M3 AA-
2005-WL1 I/II-M4, III-M3 A+
2005-WL1 I/II-M5, III-M4 A
2005-WL1 I/II-M6, III-M5 A-
2005-WL1 I/II-M7, III-M6 BBB+
2005-WL1 I/II-M8, III-M7, III-M8 BBB
2005-WL1 I/II-M9, III-M9 BBB-
2005-WL1 I/II-M10, I/II-B1, III-B1 BB+
2005-WL1 III-B2 BB
2005-WL1 I/II-B2, I/II-B3 BB-
2005-WL1 I/II-B4, III-B3 B+
2005-WL2 I-A1, I-A2, II-A1, II-A2 AAA
2005-WL2 III-A1, III-A1A, III-A2 AAA
2005-WL2 III-A3, III-A4 AAA
2005-WL2 M-1 AA+
2005-WL2 M-2 AA
2005-WL2 M-3 AA-
2005-WL2 M-4, M-5 A+
2005-WL2 M-6 A
2005-WL2 M-7, M-8 BBB+
2005-WL2 M-9 BBB
2005-WL2 M-10 BBB-
2005-WL2 B-1, B-2 BB+
2005-WL2 B-3 BB
2005-WL3 I-A1, I-A2, I-A3, I-A4* AAA
2005-WL3 II-A1, II-A2A, II-A2B AAA
2005-WL3 II-A3 AAA
2005-WL3 M-1 AA+
2005-WL3 M-2 AA
2005-WL3 M-3 AA-
2005-WL3 M-4 A+
2005-WL3 M-5 A
2005-WL3 M-6 A-
2005-WL3 M-7 BBB+
2005-WL3 M-8 BBB
2005-WL3 M-9 BBB-
2005-WL3 B-1, B-2 BB+
* Class is bond-insured.
LONG BEACH: Moody's Puts Low-B Ratings on Cert. Classes M-10 & B
----------------------------------------------------------------
Moody's Investors Service assigned Aaa rating to the senior
certificates issued by Long Beach Mortgage Loan Trust 2006-3, and
ratings ranging from Aa1 to Ba2 to the subordinate certificates in
the deal.
The securitization is backed by Long Beach Mortgage Company
originated adjustable-rate and fixed-rate mortgages. The ratings
are based primarily on the credit quality of the loans, and on the
protection from subordination, overcollateralization, excess
spread and an interest rate swap agreement provided by Bear
Stearns Financial Products Inc. Moody's expects collateral losses
to range from 4.80% to 5.30%.
Long Beach Mortgage Company will act as master servicer and
Washington Mutual Bank will act as a servicer. Moody's has
assigned Washington Mutual Bank its servicer quality rating as a
primary servicer of subprime loans.
The complete rating actions are:
Long Beach Mortgage Loan Trust 2006-3
* Class I-A, Assigned Aaa
* Class II-A1, Assigned Aaa
* Class II-A2, Assigned Aaa
* Class II-A3, Assigned Aaa
* Class II-A4, Assigned Aaa
* Class M-1, Assigned Aa1
* Class M-2, Assigned Aa2
* Class M-3, Assigned Aa3
* Class M-4, Assigned A1
* Class M-5, Assigned A2
* Class M-6, Assigned A3
* Class M-7, Assigned Baa1
* Class M-8, Assigned Baa2
* Class M-9, Assigned Baa3
* Class M-10, Assigned Ba1
* Class B, Assigned Ba2
M&S TRANSPORTATION: U.S. Trustee Wants Chapter 11 Case Dismissed
----------------------------------------------------------------
Charles E. Rendlen, III, the U.S. Trustee for Region 13, asks the
U.S. Bankruptcy Court for the Eastern District of Arkansas to
dismiss the chapter 11 proceeding of M&S Transportation, Inc., or
in the alternative, convert the case to a chapter 7 liquidation.
Mr. Rendlen tells the Court that the Debtor hasn't filed any
monthly operating reports since filing for bankruptcy. Without
these required reports, Mr. Rendlen says, it's impossible to
determine:
* whether a reorganization plan is feasible, and
* if the Debtor's post-petition expenses are being paid.
Mr. Rendlen argues that the non-filing of its operating reports
has resulted in unreasonable delay, which is prejudicial to the
interests of creditors and impedes the efficient administration of
bankruptcy cases.
Mr. Rendlen says that the Debtor hasn't paid its quarterly U.S.
Trustee fees either. Mr. Rendlen asks the Court to include a
provision in any conversion or dismissal order requiring the
Debtor to pay the fees and provide an appropriate affidavit
concerning cash disbursements from the chapter 11 estate within
ten days of entry of the order.
Headquartered in Little Rock, Arkansas, M&S Transportation, Inc.,
filed for chapter 11 protection on Sept. 30, 2005 (Bankr. E.D.
Ark. Case No. 05-23717). Stephen L. Gershner, Esq., at Davidson
Law Firm, Ltd., represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it estimated assets between $10 million and $50 million.
MARINER ENERGY: Moody's Rates Proposed $250MM Note Offering at B3
-----------------------------------------------------------------
Moody's assigned new ratings to Mariner Energy, Inc. With a
stable outlook, Moody's assigned a B2 Corporate Family Rating to
Mariner, and a B3 rating to the company's proposed $250 million
senior unsecured notes offering. Proceeds from the notes offering
will be used to repay borrowings under the company's senior
secured revolving credit facility.
The ratings reflect the high cost, short lived asset base of the
pro forma E&P business which is line with a B2 profile; the
company's full leverage on the proven developed reserve base for
the rating given its size and Gulf of Mexico concentration; the
need for management to demonstrate that it can successfully
integrate the new properties and that it can stabilize and grow
the historically inconsistent sequential quarterly production
trends for both the Mariner properties and the GOM properties
recently acquired from Forest Oil; the higher cost, higher risk,
and lumpy nature of the deepwater GOM which pro forma for the
Forest acquisition is about 19% of reserves and 15% of production;
and the currently low percentage of total production coming from
the more durable and longer-lived West Texas assets.
The ratings are supported by the enhanced scale derived from the
Forest GOM acquisition; a degree of diversification from Mariner's
longer lived West Texas properties which may add more meaningful
durability to the overall production profile; the company's stand
alone track record of reserve growth; a seasoned management team;
and the still supportive commodity price outlook which should
provide cover for the fairly high costs structure over the near-
term. While Moody's recognizes that Mariner has posted a
competitive three year organic reserve replacement cost of
$12.08/boe, the one year organic reserve replacement cost could
significantly rise given the nature of the Gulf of Mexico, as
evidenced by 2005 year-end results which showed about a $29.00/boe
drillbit F&D.
The stable outlook assumes that leverage will reduce over the next
12 months; that production trends improve with the lesser reliance
on the much more project-based deepwater GOM, and that the West
Texas properties will add further diversification; that the
capital productivity trends improve, particularly with organic
reserve replacement costs significantly lower than very high 2005
levels which Moody's believes is unsustainable long-term; and that
the company completes any material acquisitions with ample common
equity.
However, the outlook would be pressured if leverage on the PD
reserves materially exceeds and could stay above $7.00/boe; if the
company's capital productivity deteriorates as evidenced by
unsustainable reserve replacement costs, less than full
replacement of production, and negative sequential quarterly
production trends. The outlook or ratings could also be
negatively pressured by a significant acquisition largely funded
with debt, particularly if it does not add durability to the
overall production and reserve base.
A positive outlook and possible upgrade would be considered if the
company demonstrates that it has fully and successfully integrated
the new properties; shows consistent and rising sequential
quarterly production trends; leverage on the PD reserve base is
brought down to within $5.00/boe of PD reserves and can be
sustained at those levels. A positive outlook and upgrade would
also be considered with significant, amply common equity funded
acquisitions that are viewed to add scale, diversification, and
durability to the existing productive base.
The new notes are rated one-notch below the Corporate Family
Rating due to the substantial size of the secured debt carveout
permitted under the indenture, and the company's expected
utilization of a material amount of secured debt pro forma for the
notes offering. The indenture permits the greater of $600 million
or $300 million plus 15% of Adjusted Consolidated Tangible Net
Worth. Also, pro forma for the $250 million offering, Mariner
will still have at least $100 million outstanding under the
revolver with a borrowing base of $400 million.
Mariner Energy, Inc., headquartered in Houston, Texas, is engaged
in the exploration and production of oil and gas primarily in the
Gulf of Mexico and West Texas.
MARINER ENERGY: S&P Rates Planned $250MM Sr. Unsecured Notes at B-
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to independent exploration and production company
Mariner Energy Inc. At the same time, Standard & Poor's assigned
its 'B-' senior unsecured debt rating to Mariner's proposed $250
million senior unsecured notes due 2013. Proceeds from the notes
will be used to repay outstanding borrowings on Mariner's credit
facility. The outlook is stable.
Pro forma for the proposed offering, Houston, Texas-based Mariner
Energy will have $350 million of debt.
"The ratings on Mariner Energy reflect its aggressive growth and
exploration strategy, high debt leverage, and short reserve life
reflective of its small, concentrated reserve base focused in the
Gulf of Mexico," said Standard & Poor's credit analyst Paul
Harvey.
The senior unsecured notes have been "notched" to reflect the
priority debt of the credit facility, secured by a first lien on
all oil and gas properties, which encumbers more than 15% of
Mariner's assets under Standard & Poor's default scenario.
The stable outlook reflects expectations that Mariner will be able
to successfully integrate the Forest Oil Corp. assets while
improving its drilling costs. In addition, Mariner is expected to
limit near-term borrowings from its credit facility and, if
commodity prices permit, to use any free cash flow to reduce debt.
If Mariner's operational efficiencies weaken, or if it is unable
to replace reserves and production on a timely basis, ratings
would be lowered.
"Positive rating actions are possible over the longer term if
Mariner is able to consistently replace reserves and meaningfully
diversify its operations and production while keeping a
competitive cost structure," said Mr. Harvey.
MEDICALCV INC: Chief Financial Officer Jack Jungbauer to Retire
---------------------------------------------------------------
MedicalCV, Inc. (OTCBB:MDCV) reported that John (Jack) H.
Jungbauer, 56, will leave his position as Vice President, Finance
and Chief Financial Officer of the Company upon the engagement of
his successor.
"During the past year, we have dramatically improved the capital
structure of MedicalCV," said Mr. Jungbauer. "With the successful
restructuring, we've eliminated substantially all of our debt and
all of our preferred stock, providing us with additional resources
to develop and launch our minimally invasive laser-based system to
ablate cardiac tissue. With the accomplishment of these
milestones, I've decided that now is an opportune time to
transition my responsibilities to a new chief financial officer
who can help lead the company to the next level," Mr. Jungbauer
concluded.
"Jack has been an extremely valuable asset to our Company during
our transformation," stated Marc Flores, President and Chief
Executive Officer. "We look forward to working with him during
the search for his replacement, as well as during the transition
of his responsibilities."
About MedicalCV, Inc.
Headquartered in Inver Grove Heights, Minnesota, MedicalCV, Inc.
-- http://www.medicalcvinc.com/-- is a cardiothoracic surgery
device manufacturer. Previously, its primary focus was on heart
valve disease. It developed and marketed mechanical heart valves
known as the Omnicarbon 3000 and 4000. In November 2004, after an
exhaustive evaluation of the business, MedicalCV decided to
explore options for exiting the mechanical valve business. The
Company intends to direct its resources to the development and
introduction of products targeting treatment of atrial
fibrillation.
* * *
Going Concern Doubt
PricewaterhouseCoopers LLP expressed substantial doubt about
MedicalCV Inc.'s ability to continue as a going concern after
auditing the Company's financial statements for the years ended
April 30, 2005 and 2004. The auditing firm pointed to MedicalCV's
losses, negative cash flows from operations and difficulty in
obtaining additional funds to finance its working capital and
capital expenditure needs.
MICHELINA'S INC: S&P Affirms B+ Rating With Negative Outlook
------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating and its other ratings on Duluth, Minnesota-based
Michelina's Inc. (formerly known as Luigino's Inc.) and removed
them from CreditWatch, where they were placed on Sept. 9, 2005,
with developing implications.
The outlook is negative. Total debt outstanding was about $185
million at Jan. 1, 2006.
The CreditWatch placement followed the company's confirmation
that it was exploring a potential sale of the company. The
ratings were removed from CreditWatch because management has
disclosed that it is no longer actively marketing the company for
sale.
MIRANT CORP: Asks Court to Approve Mint Farm-Cascade Settlement
---------------------------------------------------------------
Mint Farm Generation, LLC, and Cascade Natural Gas Corporation
are parties to an Agreement for Natural Gas Service in the State
of Washington, dated February 28, 2001, pursuant to which Cascade
agreed to transport natural gas to service the Mint Farm
generation facility located in Longview, Washington.
Cascade filed proofs of claim against Mint Farm based on the
Contract. Mint Farm objected to those claims.
In 2005, the parties entered into a stipulation to resolve the
dispute over Cascade's Claims. The Stipulation provides, among
other things, that:
* Cascade had an allowed, general, prepetition, unsecured
claim for $592,709 against Mint Farm solely for the purpose
of voting on the Debtors' Plan of Reorganization; and
* determination for distribution purposes of any claim
Cascade may have based on the Contract will be deferred,
reserved and resolved through the claim objection process.
On September 14, 2005, Mint Farm sought Court approval to sell
its Washington Plant. Cascade objected to Mint Farm's request
asserting that the sale of the Plant without previously assuming
or rejecting the Contract was inappropriate.
The Bankruptcy Court subsequently directed Mint Farm to assume or
reject the Contract by the earlier of (i) the closing of the sale
of the Plant or (ii) the entry of a confirmation order.
Mint Farm decided to reject the Contract as of the Effective Date
of the Plan.
To reach a compromise that would benefit its estate and avoid
litigation, Mint Farm entered into a settlement agreement with
Cascade.
Under that Settlement Agreement, the parties agreed that:
(a) Cascade will receive a Mirant Debtor Class 3 Claim against
Mint Farm for $850,000 with respect to damages arising
from the rejection of the Contract;
(b) Subject to certain conditions, Cascade will pay to Mint
Farm 50% of all gross revenue received by Cascade relating
to the Plant in connection with:
(1) the Distribution System Transportation Service Tariff,
as filed with the Washington Utilities and
Transportation Commission;
(2) the Large Volume Distribution System Transportation
Service Tariff, as filed with the WUTC; and
(3) any other applicable law, tariff, contract or other
agreement relating to natural gas delivery or
transportation services to the Plant; and
(c) Cascade's obligation to pay 50% of all Revenue is subject
to these conditions:
(1) Cascade will first have received Revenue amounting
to $1,400,000; and
(2) Cascade's reimbursement obligations will cease on the
earlier to occur of Mint Farm receiving $850,000 from
Cascade or December 31, 2012.
The New Mirant Entities ask the U.S. Bankruptcy Court for the
Northern District of Texas to approve the Settlement Agreement
entered into by and between Mint Farm and Cascade.
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- is a competitive energy company that
produces and sells electricity in North America, the Caribbean,
and the Philippines. Mirant owns or leases more than 18,000
megawatts of electric generating capacity globally. Mirant
Corporation filed for chapter 11 protection on July 14, 2003
(Bankr. N.D. Tex. 03-46590), and emerged under the terms of a
confirmed Second Amended Plan on January 3, 2006. Thomas E.
Lauria, Esq., at White & Case LLP, represented the Debtors in
their successful restructuring. When the Debtors filed for
protection from their creditors, they listed $20,574,000,000 in
assets and $11,401,000,000 in debts. (Mirant Bankruptcy News,
Issue No. 94; Bankruptcy Creditors' Service, Inc., 215/945-7000)
* * *
As reported in the Troubled Company Reporter on Dec. 8, 2005,
Standard & Poor's Ratings Services placed a 'B+' corporate credit
rating on Mirant and said the outlook is stable.
MORGAN STANLEY: Moody's Puts Low-B Ratings on Two Cert. Classes
---------------------------------------------------------------
Moody's Investors Service assigned Aaa rating to the senior
certificates issued by Morgan Stanley Mortgage Loan Trust 2006-
4SL, Mortgage Pass-Through Certificates, Series 2006-4SL, and
ratings ranging from Aa2 to Ba2 to the subordinate certificates in
the deal.
The securitization is backed by Morgan Stanley Mortgage Capital
Inc., originated or acquired closed end second mortgage loans. The
ratings are based primarily on the credit quality of the loans,
and on the protection from subordination, excess spread, and
overcollateralization. Moody's expects collateral losses to range
from 8.05% to 8.55%.
HomeEq Servicing Corporation will service the loans.
The complete rating actions are:
Morgan Stanley Mortgage Loan
Trust 2006-4SL, Mortgage Pass-Through
Certificates, Series 2006-4SL
* Class A-1, Assigned Aaa
* Class M-1, Assigned Aa2
* Class M-2, Assigned A2
* Class M-3, Assigned A3
* Class B-1, Assigned Baa1
* Class B-2, Assigned Baa2
* Class B-3, Assigned Baa3
* Class B-4, Assigned Ba1
* Class B-5, Assigned Ba2
NABI BIOPHARMA: S&P Downgrades Ratings to B- With Negative Outlook
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Nabi
Biopharmaceuticals to 'B-' from 'B'. The rating outlook is
negative.
"The downgrade reflects our belief that despite the company's
recent announcement that it is resuming development of its
previously derailed lead pipeline product, StaphVAX (a vaccine
against staph infections), Nabi continues to face a number of
major uncertainties and has very limited cash flow generating
prospects," explained Standard & Poor's credit analyst Arthur
Wong.
Boca Raton, Florida-based Nabi focuses on the development of
treatments mainly for infectious and autoimmune diseases. The
low ratings reflect:
* the company's narrow business focus;
* lack of sales diversity;
* uncertain product prospects; and
* expected negative free cash flows over the intermediate term.
Nabi's business profile remains constrained by the lack of
diversity and limited growth potential in its current drug
portfolio. The company's main products are:
* Nabi-HB, and
* PhosLo,
which collectively account for the overwhelming majority of sales.
Nabi-HB, a hepatitis B immune globulin, generates roughly $40
million in annual sales. Sales of Nabi-HB are typically
correlated with the number of U.S. hepatitis B liver transplants.
However, sales growth for the drug lagged in 2005 because of a
change in treatment protocols, which now call for less costly
antiviral drugs and lower doses of antibody-based products (like
Nabi-HB).
Meanwhile, sales of PhosLo were only $14 million in 2005, compared
with $38 million in 2004. This decline was a result of excess
wholesaler inventory built up ahead of Nabi's prior price increase
for the product. PhosLo is a phosphate binder used to treat
elevated phosphate levels in patients undergoing dialysis.
Still, Standard & Poor's believes that PhosLo's sales growth will
resume in 2006. Dialysis is a very expensive treatment, and Nabi
holds a marketing advantage because PhosLo is much less expensive
than category leader Renagel, made by Genzyme Corp. However,
Genzyme is conducting a study, known as D-COR, in which it is
looking at the mortality and morbidity benefits of using Renagel
instead of calcium-based phosphate binders like PhosLo. Should
the results be positive for Renagel, it may hurt PhosLo's long-
term prospects.
NAVISTAR INT'L: To Restate Financial Results for FY 2002 to 2005
----------------------------------------------------------------
Navistar International Corporation (NYSE:NAV) will restate its
financial results for the fiscal years 2002 through 2004 and for
the first nine months of fiscal 2005.
The audit committee of the Company's board of directors has
designated KPMG LLP as the company's new independent auditor,
subject to KPMG's customary client acceptance procedures, to
replace Deloitte & Touche LLP, whose engagement with the company
was terminated by the audit committee. KPMG will opine on the
2005 Form 10-K as well as the prior years restatements.
The need for the restatements has been identified in the ongoing
review of accounting matters that have prevented the company from
filing its fiscal 2005 annual report on Form 10-K and its first
quarter 2006 quarterly report on Form 10-Q on time. With the
change of independent auditors the timing of the filing of the
2005 Form 10-K, including the prior periods on a restated basis,
cannot be determined at this time.
According to Bill Caton, Navistar's executive vice president,
finance, to date, the company has identified items requiring
restatement to include:
* accounting for anticipated external funding of product
development programs;
* timing of recognition of amounts deemed to be collectible
from certain suppliers, including rebates and warranty
recoveries;
* accounting for warranty to be provided by the company outside
of the terms of the contractual arrangements; and
* shifting balances and expense amounts between reporting
periods at one of the company's foundry operations.
The company's review process continues and will likely result in
the identification of additional items requiring correction in the
restated results.
Mr. Caton emphasized that the known adjustments will not affect
previously reported cash flows from operations on a restated
basis. "Our business continues strong and in fact, our March
orders for Class 8 trucks were at record levels, totaling 10,856,
compared with 6,854 units in February," he said. "Our medium truck
orders were the highest in 30 years, and by the end of April the
production rate at our Springfield plant will be 200 trucks per
day and nearly the same at our Chatham plant."
Interim Corporate Controller
The company also reported that James A. Blanda is joining Navistar
as interim corporate controller, subject to formal board approval
later this month. Blanda currently is a partner with Tatum LLC,
an interim executive services and consulting firm. Prior to that,
Blanda was senior vice president, financial services and chief
financial officer for the Chicago Stock Exchange from 1998 to 2004
and vice president and controller for Sears, Roebuck and Co. from
1992 to 1998.
"We certainly are fortunate that a financial professional with the
qualifications that Jim has was available to join our company,"
Caton said. "He has extensive experience and will work closely
with me to complete the review of all outstanding accounting
issues." In addition to the company's internal accounting staff,
approximately 40 employees from Huron Consulting Group, the
company's external accounting advisors, are currently assisting
the company with the review process.
About Navistar
Navistar International Corp. -- http://www.nav-international.com/
-- is the parent company of International Truck and Engine
Corporation. The company produces International(R) brand
commercial trucks, mid-range diesel engines and IC brand school
buses, Workhorse brand chassis for motor homes and step vans, and
is a private label designer and manufacturer of diesel engines for
the pickup truck, van and SUV markets. Navistar is also a
provider of truck and diesel engine parts and service sold under
the International(R) brand. A wholly owned subsidiary offers
financing services.
* * *
Notice of Default
As reported in the Troubled Company Reporter on Feb. 7, 2006,
Moody's Investors Service lowered the ratings of Navistar
International Corporation (senior unsecured to B1 from Ba3 and
subordinate to B3 from B2) and placed the ratings under review for
further possible downgrade. Moody's rating actions followed
Navistar's announcement that it has received notice from purported
holders of more than 25% of the company's approximately $200
million senior subordinated exchangeable notes due 2009, claiming
that the company is in default of reporting requirements relating
to the filing of its financial statements for the fiscal year
ending Oct. 31, 2005. The company disputes the allegation of
default. Nevertheless, receipt of the notice of default
represents a further negative development for the company stemming
from its inability to file financial statements in a timely manner
because of accounting issues.
NEBRASKA BOOKS: Moody's Holds B2 Credit Rating Following CBA Deal
-----------------------------------------------------------------
Moody's Investors Service affirmed the long term debt ratings of
Nebraska Book Company and its parent NBC Acquisition Corp.
following the company's announcement that it has signed an
agreement to acquire College Bookstores of America. The outlook
remains stable. The transaction will be financed with an
additional $24 million of Term Loan B as well as with $4 million
of available cash.
These ratings are affirmed:
For Nebraska Book Company:
* $265.4 million of senior secured bank credit facilities
at B2;
* $175 million of senior subordinated notes due 2012 at Caa1.
For NBC Acquisition Corp.:
* Corporate family rating at B2;
* $77 million of senior discount notes due 2013 at Caa2.
The rating outlook is stable.
The key drivers of the corporate family rating and stable outlook
are:
1) the weak financial metrics;
2) financial policy which favors a highly leveraged capital
structure;
3) the low volatility of the college textbook industry;
4) the company's solid market position in both the college
book store as well as the wholesale used textbook business;
5) the highly seasonal nature of its operations and relatively
small scale; and
6) the recent intensification of competition from on-line
retailers for the college bookstore customer.
A positive outlook could be assigned should operating performance
improve causing Debt/EBITDA to be sustainable below 6.0x with Free
Cash Flow/Debt sustainable above 7.0%. Negative rating pressure
would develop should Debt/EBITDA rises to 7.25x and/or Free Cash
Flow/Debt falls below 3%. Any material deterioration in the
company's liquidity position could also provide negative rating
pressure given the seasonal working capital requirements of the
company's businesses.
Nebraska Books Company, Inc., headquartered in Lincoln, Nebraska,
is a leading wholesaler of used textbooks and operates
approximately 137 college bookstores across the United States. The
company also offers other affiliated services. Revenues for the
LTM period ended Dec. 31, 2005 were approximately $414 million.
NELLSON NUTRACEUTICAL: Taps Seneca Financial as Valuation Advisor
-----------------------------------------------------------------
Nellson Nutraceutical, Inc. and its debtor-affiliates ask the
U.S. Bankruptcy Court for the District of Delaware for permission
to employ Seneca Financial Group, Inc., as their valuation and
litigation advisor.
Seneca Financial will:
a. conduct a review of the Debtors' long-term business plan,
financial projections, current capitalization and ownership
structure, sources of liquidity, and ongoing capital
requirements for the purposes of conducting a valuation of
the Debtors' business and assets;
b. review and assess any proposed Plan of Reorganization for
purposes of valuing the securities or other consideration
proposed to be issued under the plan and in developing
alternatives;
c. provide expert witness testimony concerning any of the
areas encompassed by the Firm's activities under this
agreement;
d. assist in the development and presentation to the Board of
Directors of the Debtors of matters relevant to a valuation
of the Debtors; and
e. provide other services as the Debtors, the Debtors'
counsel, and the Firm agree upon relative to the
reorganization of the Debtors.
James W. Harris, president of Seneca Financial, tells the Court
that the Firm's professionals bill:
Professional Designate Hourly Rate
------------ --------- -----------
James W. Harris President $625
Jesse DelConte Senior Analyst $250
Mark McDonald Analyst $175
Meeraj Thaker Analyst $175
Thomas Isenhour Analyst $175
Mr. Harris assures the Court that the Firm is "disinterested" as
that term is defined in Section 101(14) of the Bankruptcy Code.
Headquartered in Irwindale, California, Nellson Nutraceutical,
Inc., formulates, makes and sells bars and powders for the
nutrition supplement industry. The Debtors filed for chapter 11
protection on Jan. 28, 2006 (Bankr. D. Del. Case No. 06-10072).
Laura Davis Jones, Esq., Rachel Lowy Werkheiser, Esq., Richard M.
Pachulski, Esq., Brad R. Godshall, Esq., and Maxim B. Litvak,
Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C.
represent the Debtors in their restructuring efforts. Lawyers at
Young, Conaway, Stargatt & Taylor, LLP, represent an informal
committee of which General Electric Capital Corporation and
Barclays Bank PLC are members. In its Schedules of Assets and
Liabilities filed with the Court, Nellson Nutraceutical reports
$312,334,898 in total assets and $345,227,725 in total liabilities
when it filed for bankruptcy.
NORTHWEST AIR: Wants to Extend Two U.S. Bank Letters of Credit
--------------------------------------------------------------
Northwest Airlines Corp. and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York for
authority to extend two letter of credit facilities with U.S. Bank
National Association.
Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP, in
New York, relates that, in the ordinary course of their business,
the Debtors are required to obtain letters of credit. Failure to
timely provide and continue the L/Cs could disrupt or jeopardize
their ability to conduct their business operations.
$98,000,000 L/C Facility
Under a Second Amended and Restated Reimbursement Agreement,
dated as of September 13, 2005, the Debtors obtained a
$98,000,000 letter of credit facility from U.S. Bank. The
facility has a last issuance date of April 30, 2006, and a last
expiration date of April 30, 2007.
The Debtors used the letters of credit provided under the L/C
Facility to secure their obligations under workers' compensation
policies, U.S. Customs Service requirements and airport use/lease
agreements. As of March 28, 2006, the outstanding L/Cs under the
facility total $97,000,000.
The Debtors and U.S. Bank have agreed to extend the L/C Facility
issuance date to May 31, 2007, and expiration date to May 31,
2008. The extension is on the same terms and conditions as the
existing L/C Facility.
According to Mr. Ellenberg, absent an extension, the Debtors will
not be able to obtain issue new L/Cs past April 30. Failure to
timely provide the L/Cs could jeopardize the Debtors' ability to
conduct their operations. Moreover, they could be compelled to
provide cash or other deposits to replace any required L/Cs.
Before the Petition Date, to secure their obligations under the
L/C Facility, the Debtors granted U.S. Bank certain security
interests:
(1) U.S. Bank has a lien in the Debtors' Pacific route system
and 53 aircraft and associated engines, which assets also
serve as collateral for the Debtors' $975,000,000 term
loan facility;
(2) Under an intercreditor agreement among U.S. Bank, the
Term Loan Lenders, and the Pension Benefit Guaranty Corp.,
the Debtors' obligations to U.S. Bank under the Processing
Agreements and the L/C Facility are treated pari passu
with the Term Loan with respect to the Intercreditor
Agreement Collateral, up to an aggregate of $150,000,000;
and
(3) Up to an additional $500,000,000 of the Debtors'
obligations to U.S. Bank under the Processing Agreements
and the L/C Facility is subordinate to the Term Loan, but
senior to the PBGC's interests, with respect to the
Intercreditor Agreement Collateral.
The Debtors' obligations to U.S. Bank under the L/C Facility are
further secured by, among other things, a cash collateral
account, as well as a security interest in all amounts payable to
the Debtors under one of the Processing Agreements.
In addition, pursuant to the Processing Agreements, U.S. Bank has
withheld payments received from MasterCard or VISA to include in
a "Holdback Amount" on account of sales slips pending performance
by the Debtors and to cover the Debtors' obligations to U.S.
Bank, or to require payment of additional amounts by the Debtors
to ensure coverage of U.S. Bank's exposure upon the occurrence of
certain events.
Pursuant to the Processing Agreements, the Debtors agreed to fund
a $150,000,000 reserve on account of the Holdback Amount. The
Holdback Amount secures all obligations under the L/C Facility.
$55,000,000 L/C Facility
MLT, Inc., and NWA Inc. also obtained a $55,000,000 letter of
credit facility, with which expires on April 31, 2006, from U.S.
Bank under:
(i) an Amended and Restated Reimbursement Agreement dated as
of April 30, 2003, among U.S. Bank, MLT and NWA Inc., as
amended;
(ii) an Amended and Restated Securities Agreement (Securities
Account) dated as of April 30, 2003, between U.S. Bank and
NWA Inc., as amended; and
(iii) an "Amended and Restated Guarantee" dated as of April 30,
2003, among U.S. Bank NA, NWA Corp., Northwest Airlines
and Holdings, as amended.
NWA Corp., Northwest Airlines, and Holdings guarantee MLT and NWA
Inc.'s obligations under the facility.
The Debtors and U.S. Bank have agreed to extend the L/C Facility
commitment date to May 31, 2007. The extension is on the same
terms and conditions as the existing L/C Facility.
Mr. Ellenberg relates that the L/C Facility is used to satisfy
certain Department of Transportation requirements for airline
charter operations. Absent an extension of the facility, MLT
will be forced to cease operations.
The Debtors' obligations under the L/C Facility are fully secured
by a separate cash collateral account. Each month, the
outstanding balance of the letter of credit issued under the
facility increases or decreases according to the net amount
received up-front by MLT for vacations where service has not yet
been provided. As of March 28, 2006, the outstanding balance of
the L/C is approximately $31,000,000.
About Northwest Airlines
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. 23;
Bankruptcy Creditors' Service, Inc., 215/945-7000).
NORTHWEST AIR: Wants to Pay $55 Million Prepetition Tax Claims
--------------------------------------------------------------
Northwest Airlines Corp. and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York for
authority to pay up to $55,000,000 in property, state income, and
excise taxes to various state and local taxing authorities.
The Debtors propose to pay:
(i) undisputed prepetition tax claims, as they become due
and payable postpetition; and
(ii) disputed prepetition tax claims in accordance with
settlement procedures.
The Debtors also ask the Court to direct banks and other
financial institutions to receive, process, honor, and pay all
checks drawn on the Debtors' accounts to pay the Prepetition Tax
Claims.
Under applicable state laws, if the Debtors' prepetition tax
invoices are not paid in a timely manner, state and local taxing
authorities will be entitled to statutory liens on the Debtors'
property located in, or subject to tax in, the respective state.
The prospective attachment of liens to the Debtors' property can
and has presented complications, particularly where the liens
attach to aircraft, Mark C. Ellenberg, Esq., at Cadwalader,
Wickersham & Taft LLP, in New York, relates.
In addition, because valid statutory tax liens may be entitled to
priority status over the Debtors' other secured and unsecured
creditors, the state and local taxing authorities may hold
oversecured claims that are entitled to receive interest.
Applicable state statutory interest rates for failure to pay
taxes generally range from 12% per annum to 18% per annum --
rates well above the market rate. Payment of these high interest
rates and penalties could potentially decrease the amount
available to fund the Debtors' plan of reorganization,
Mr. Ellenberg avers.
The Debtors' request will not be construed as an admission of
validity or priority of any claim against them. They reserve
their rights to dispute the validity or priority of any claim
asserted.
Settlement Procedures
The Debtors propose to settle and pay the Disputed Prepetition
Tax Claims upon the consent of the Official Committee of
Unsecured Creditors, and without the necessity of Court approval
of each settlement.
The Debtors intend to implement these guidelines:
(a) The Debtors may negotiate and settle Disputed Prepetition
Tax Claims regardless of the amount or nature of the Claim
asserted;
(b) The Debtors will give notice of each proposed settlement
to the attorneys for the Creditors Committee;
(c) The Creditors Committee will have five business days to
object to, or request for additional 10 days to evaluate,
the proposed settlement. The Debtors may enter into a
proposed settlement absent a timely filed objection, or
upon approval, by the Committee;
(d) The Debtors and the Creditors Committee will use good faith
efforts to consensually resolve an objection. If they are
unable to achieve a consensual resolution, the Debtors may
seek Court approval of the proposed settlement upon an
expedited notice and a hearing; and
(e) The Creditors Committee's approval will not be required for
the settlement of individual Disputed Prepetition Tax
Claims with a disputed amount of $50,000 or less, excluding
interest.
A settlement constitutes a cost-effective method of resolving the
claims and avoids the expense and risk inherent in litigating the
Disputed Prepetition Tax Claims, Mr. Ellenberg maintains.
He assures the Court that, in proposing the settlements, the
Debtors will remain guided by the factors established by relevant
case law under Rule 9019 of the Federal Rules of Bankruptcy
Procedure regarding the reasonableness of the settlements. These
factors include:
(i) probability of success in the litigation;
(ii) the complexity, expenses and likely duration of the
litigation;
(iii) all other factors relevant to making a full and fair
assessment of the wisdom of the proposed compromise; and
(iv) whether the proposed compromise is fair and equitable to
the Debtors and their creditors.
About Northwest Airlines
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. 23;
Bankruptcy Creditors' Service, Inc., 215/945-7000).
NORTHWEST AIR: Wants Court Nod on PBGC Interim Settlement
---------------------------------------------------------
Northwest Airlines Corp. and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York to approve
a stipulation:
(i) settling, on an interim basis, certain disputes with the
Pension Benefit Guaranty Corporation and
(ii) granting adequate protection to the PBGC.
Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP,
in New York, relates that, pursuant to applicable law, the
Debtors have minimum funding obligations with respect to their
sponsored plans:
-- Northwest Airlines Pension Plan for Salaried Employees,
Plan No. 001, EIN 41-0449230; and
-- Northwest Airlines Pension Plan for Contract Employees,
Plan No. 004, EIN 41-0449230.
By letters dated April 15, 2003, the U.S. Internal Revenue
Service granted Northwest certain conditional waivers of the
minimum funding standard with respect to the Plans for the plan
year beginning January 1, 2003.
To secure its obligations under the Conditional Waivers,
Northwest, pursuant to a Payment Agreement with the PBGC, and
certain Security Documents identified in the Agreement, granted
the PBGC for itself and on behalf of the Plans:
(a) a first priority security interest in certain collateral
described in the Aircraft Mortgage and Security Agreement
and the Domestic Landing Slot Security Agreement, each
dated as of July 25, 2003; and
(b) a third priority security interest, subordinate only to
liens securing certain of the Senior Obligations, in
certain additional collateral described in the Aircraft
Mortgage and Security Agreement and the Route Security
Agreement, each dated as of July 31, 2003.
As of the Petition Date, Northwest was indebted and liable to the
Plans with respect to the Conditional Waivers, in the aggregate
principal amount of $370,936,877, plus all accrued but unpaid
interest thereon and any fees, expenses, or other charges
reimbursable.
Since the Petition Date, Northwest has made no payments of
interest or principal in respect of the Secured Prepetition Debt.
The PBGC has asserted that it is entitled to adequate protection
for the Secured Prepetition Debt because, among others, it
contends that the value of the Collateral is or may be
diminishing.
Northwest has asserted that the PBGC is adequately protected
because, inter alia, the value of the Collateral substantially
exceeds the value of the Secured Prepetition Debt and all other
secured indebtedness.
Northwest and the PBGC have engaged in ongoing discussions to
resolve the dispute, and while progress has been made, they have
not yet reached an agreement. In an effort to avoid litigation
with respect to their disputes, the Parties have agreed to an
interim agreement while they continue to negotiate a final
resolution of their disputes.
The terms of the Parties' Stipulation are:
(1) As adequate protection of the PBGC's interests in the
Collateral, the Debtors will:
(i) pay in cash to the Plans interest payments, each
covering a 30-day period, payable in arrears on each
of March 30, 2006, April 29, 2006, and May 29, 2006,
only, at the non-default 8.5% per annum interest, to
be calculated on the full outstanding principal a
mount of the Secured Prepetition Debt; and
(ii) reimburse the PBGC's professional fees and out-of-
in accordance with the Payment Agreement or the
Security Documents, up to a maximum amount of
$250,000;
(2) The Stipulation will be binding upon the Parties, nunc pro
tunc to March 1, 2006, and will terminate upon the earlier
of (x) the filing of a request by the PBGC seeking
additional adequate protection; or (ii) May 29, 2006;
(3) The PBGC may only file a request for additional adequate
protection with the Court in the event:
(i) of a material adverse change in the value of the
Collateral, which causes the value of the Collateral
to no longer be substantially in excess of the value
of the Secured Prepetition Debt and all other
indebtedness secured by the Collateral; or
(ii) the Debtors file a request for authorization to grant
any lien; or permit a lien to arise, on any of the
Collateral that would be senior to, or pari passu
with, the liens on the collateral held by PBGC; and
(4) In all circumstances, in the event that the PBGC files the
Adequate Protection Motion, the Debtors' obligations under
the Stipulation, to the extent they accrue or arise from
and after the date the PBGC files the Motion, will
unconditionally terminate, subject to certain limitations.
About Northwest Airlines
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. 23;
Bankruptcy Creditors' Service, Inc., 215/945-7000).
OCA INC: Has Interim Access to Bank of America's Cash Collateral
----------------------------------------------------------------
The Hon. Jerry A. Brown of the U.S. Bankruptcy Court for the
Eastern District of Louisiana authorized OCA, Inc., and its
debtor-affiliates to use cash collateral securing repayment of
their prepetition obligations to a group of lenders, represented
by Bank of America as administrative and collateral agent.
The lender group provided the Debtors with original term loans in
the aggregate principal amount of $25 million and a revolving
credit facility totaling $100 million under a credit agreement
dated Jan. 2, 2003.
As of the petition date, the Debtors owed the lender group
approximately $91.7 million, plus accrued and unpaid interest of
at least $501,688. The Debtors obligations to the lender group
are secured by a fully perfected, first priority priming lien on
and senior security interest in all of their assets.
The Debtors need access to the lender group's cash collateral to
meet their cash requirements for working capital and general
corporate needs. The Debtors tell the Bankruptcy Court that
access to the cash collateral will allow for the continued flow of
supplies and services necessary to sustain their operations and
enhance their prospects for a successful restructuring.
Second-Priority Liens
As adequate protection for the use of the cash collateral, the
Debtors grant the lender group a perfected, second-priority
postpetition security interests in and liens on all of their
assets. The junior liens secure an amount equal to the diminution
in the value of the lender group's cash collateral.
In addition, the lender group is also granted a superpriority
administrative claim, junior only to the superpriority claim held
by their DIP lenders, Bank of America and Silver Point Finance,
LP.
Interim DIP Order
The Debtors also sought authority from the Bankruptcy Court to
enter into a postpetition financing agreement with Silver Point,
Bank of America and certain other financial institutions.
Silver Point and Bank of America's DIP loan will allow the Debtors
to obtain cash advances, and other extensions of credit, on term
and revolving credit bases, in an aggregate principal amount of up
to $106.7 million
Pending final authorization to enter into the DIP financing
agreement, the Bankruptcy Court authorized the Debtors to:
-- initially obtain $3 million for the week ending March 20,
2006;
-- borrow $7 million in the second week ending March 27,
2006; and
-- obtain the maximum amount outstanding in a non-public
Budget for the remaining weeks, but not in excess
of $7 million.
Obligations arising under the DIP financing agreement will be
secured by:
-- a fully perfected, first priority lien on and senior
security interest on all of the Debtors' assets;
-- a fully perfected, first priority priming lien on and
senior security interest in all of the Debtors' assets;
and
-- a fully perfected, junior lien on and junior security
interest in all assets subject to a higher lien.
Judge Brown will convene a hearing at 2:00 p.m. on April 26, 2006,
to consider final approval of the Debtors' request to obtain
postpetition financing and use cash collateral.
The Official Committee of Unsecured Creditors has until April 20,
2006 to object to the Debtors financing requests. The United
States Trustee appointed an official committee on March 24, 2006.
The Committee's hired Mark K. Thomas, Esq., at Jenner & Block,
LLP, as lead counsel; William E. Steffes, Esq., at Steffes
Vingiello & McKenzie LLC, as local counsel; and Mohsin Y. Meghji
at Loughlin Meghji + Company as its financial advisor.
About OCA, Inc.
Based in Metairie, Louisiana, OCA, Inc. -- http://www.ocai.com/--
provides a full range of operational, purchasing, financial,
marketing, administrative and other business services, as well as
capital and proprietary information systems to approximately 200
orthodontic and dental practices representing approximately almost
400 offices. The Company and its debtor-affiliates filed for
Chapter 11 protection on March 14, 2006 (Bankr. E.D. La. Case No.
06-10179). William H. Patrick, III, Esq., at Heller Draper Hayden
Patrick & Horn, LLC, represents the Debtors. When the Debtors
filed for protection from their creditors, they listed
$545,220,000 in total assets and $196,337,000 in total debts.
OCA INC: Can Continue Employing CDG as Restructuring Advisor
------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Louisiana
authorized OCA, Inc., and its debtor-affiliates to continue
employing Conway, Del Genio, Gries & Co. LLC as their
restructuring advisor.
The Debtors hired CDG to help stabilize their business operations.
Michael F. Gries, a CDG founding member, has served as OCA, Inc.'s
Chief Restructuring Officer since Jan. 11, 2006.
CDG has invested a substantial amount of time in reviewing and
analyzing the Debtors documents, capital structure and financial
projections. The Debtors say that the CDG's knowledge of their
cases will allow the firm to provide cost effective, timely and
efficient service.
CDG's responsibilities in this engagement include:
a) providing CDG personnel to serve as officers of the
Debtors, including Mr. Gries as Chief Restructuring
Officer;
b) performing general due diligence to assist the Debtors in
defining their financial and operational performance,
including gathering and analyzing data, interviewing
appropriate management and evaluating the Debtor's
existing financial forecasts and budgets;
c) reviewing the Debtors cash management system, including
its current short and mid-term liquidity forecasts,
providing assistance in modifying and updating these
forecasts and providing overall management of the cash
receipt and disbursement functions;
d) assisting in the preparation of cash flow forecasts and
presentation of approved plans and forecasts to the
Debtors' constituents;
e) developing strategies for improving liquidity;
f) assisting the Debtors in the development and preparation
of a business and operating plan, including strategies for
retention of existing affiliations, growth through new
affiliations and evaluation of existing and required
levels of SG&A's;
g) evaluating and proposing divestitures and settlements;
h) developing contingency plans;
i) assisting the Debtors in addressing issues related to
maintaining ongoing financing of the Debtors operations;
j) managing the development, evaluation, negotiation and
execution of any potential restructuring transaction and
plan of reorganization;
k) assisting the negotiation with existing lenders, creditors
and other parties-in-interest in the implementation of a
restructuring transaction; and
l) conducting other studies, analyses or activities as
requested by the Board related to the Debtors'
restructuring efforts.
The Debtors have agreed to pay CDG $200,000 per month for its
services, plus out-of-pocket expenses. CDG also received a
$200,000 prepetition retainer from the Debtors.
Mr. Gries says that his firm does not have any financial interest,
business connection or conflict of interest with the any of the
Debtors.
Based in New York City, Conway Del Genio Gries & Co., LLC, --
http://www.cdgco.com/-- is a financial advisory firm providing
restructuring, crisis and turnaround management, and merger and
acquisition services.
Based in Metairie, Louisiana, OCA, Inc. -- http://www.ocai.com/--
provides a full range of operational, purchasing, financial,
marketing, administrative and other business services, as well as
capital and proprietary information systems to approximately 200
orthodontic and dental practices representing approximately almost
400 offices. The Company and its debtor-affiliates filed for
Chapter 11 protection on March 14, 2006 (Bankr. E.D. La. Case No.
06-10179). William H. Patrick, III, Esq., at Heller Draper Hayden
Patrick & Horn, LLC, represents the Debtors. When the Debtors
filed for protection from their creditors, they listed
$545,220,000 in total assets and $196,337,000 in total debts.
OCA INC: Creditors Must File Proofs of Claim by May 15
------------------------------------------------------
The Honorable Jerry A. Brown of the U.S. Bankruptcy Court for the
Eastern District of Louisiana in New Orleans entered an order this
week setting May 15, 2006, as the deadline for all creditors
holding claims against OCA Inc. and its debtor-affiliates arising
prior to Mar. 14, 2006, to file their proofs of claim.
Creditors must file written proofs of claim on or before the
may 15 Claims Bar Date and those forms must be sent either
electronically, by mail, or delivery by hand, courier, or
overnight service to:
Clerk of Court
U.S. Bankruptcy Court
601 Hale Boggs Federal Building
501 Magazine Street
New Orleans, LA 70130
Based in Metairie, Louisiana, OCA, Inc. -- http://www.ocai.com/--
provides a full range of operational, purchasing, financial,
marketing, administrative and other business services, as well as
capital and proprietary information systems to approximately 200
orthodontic and dental practices representing approximately almost
400 offices. The Company and its debtor-affiliates filed for
Chapter 11 protection on March 14, 2006 (Bankr. E.D. La. Case No.
06-10179). William H. Patrick, III, Esq., at Heller Draper Hayden
Patrick & Horn, LLC, represents the Debtors. Michael F. Gries at
Conway Del Genio Gries & Co., LLC, provides the Debtors with
restructuring advice. The United States Trustee appointed an
official committee on March 24, 2006. The Committee's hired Mark
K. Thomas, Esq., at Jenner & Block, LLP, as lead counsel; William
E. Steffes, Esq., at Steffes Vingiello & McKenzie LLC, as local
counsel; and Mohsin Y. Meghji at Loughlin Meghji + Company as its
financial advisor. When the Debtors filed for protection from
their creditors, they listed $545,220,000 in total assets and
$196,337,000 in total debts.
ON SEMICONDUCTOR: Buying LSI Logic's Gresham Assets for $105 Mil.
-----------------------------------------------------------------
ON Semiconductor Corporation's (Nasdaq: ONNN) primary operating
subsidiary, Semiconductor Components Industries, LLC, has executed
a definitive agreement with LSI Logic Corporation (NYSE: LSI) to
purchase LSI Logic Corporation's Gresham, Ore., wafer fabrication
facility and certain other semiconductor manufacturing equipment
for a total $105 million in cash.
The Company paid LSI Logic a deposit of $10.5 million concurrently
with the execution of the definitive agreement, is currently
obligated to pay $79.5 million at closing, and expects to pay the
remaining balance within 90 days after closing. The assets to be
purchased include an approximately 83 acre campus with an
estimated 500,000 square feet of building space of which
approximately 98,000 square feet is clean room. The 200 mm
capable tool-set and equipment included in the transaction is
currently capable of producing 18,000 8-inch wafers per month.
Pursuant to the agreement, ON Semiconductor will offer employment
to substantially all of the LSI Logic manufacturing employees
currently working at the Gresham facility. The skilled process
development and operational expertise of Gresham's employee base
are a critical aspect of the transaction and will help enable ON
Semiconductor to produce its own high volume, low cost, high
performance analog and digital power products down to 0.18 micron
levels -- with toolset capabilities down to the 0.13 micron level
in the future. ON Semiconductor is truly excited to welcome this
very capable team. Longer term, ON Semiconductor believes that
the access gained to submicron cell libraries, skilled process
development engineers, operational expertise and process
development know-how through this transaction will enable ON
Semiconductor to expand its portfolio of high performance analog
and power products.
In connection with this transaction, ON Semiconductor and LSI
Logic will enter into several related agreements, including a
Wafer Supply and Test Agreement, Intellectual Property License
Agreement, Transition Services Agreement and Facilities Use
Agreement. LSI Logic will continue to retain ownership after the
closing of its product designs, in-process inventory and external
customer receivables and will provide for assembly and final test
services, sales, marketing and distribution functions related to
its products. Under the Wafer Supply and Test Agreement, LSI
Logic will commit to purchase approximately $200 million of wafer
supply and certain test services over an initial period of 2
years. ON Semiconductor will also provide LSI Logic with access
to certain wafer supply and certain test services for up to 4
years, under additional terms that will be negotiated after the 2
year commitment period. It is expected that the Wafer Supply and
Test Agreement will enable ON Semiconductor to offset much of the
fixed costs associated with operating the Gresham facility in the
transition period when ON Semiconductor is ramping the production
of its own wafers in Gresham. The agreement will also enable LSI
Logic to ensure quality and supply to its customer base. Through
a non-recurring engineering arrangement with LSI Logic, ON
Semiconductor has already begun to run wafers in Gresham and has
received its first test wafers from production.
The transaction is expected to result in a slight reduction
(approximately 100 basis points) in the Company's 2006 gross
margin. Over the long term, the Company believes the purchase of
the Gresham wafer facility will have a positive effect on gross
margins for the Company as it develops a higher mix of high
performance analog and digital power products. The transaction is
subject to certain closing conditions, including regulatory
approval. Closing of the transaction currently is expected to
occur in approximately 45 days. The Company's payment obligations
in connection with the transaction are expected to be satisfied
with existing cash balances, cash flow from operations, proceeds
from sales of existing assets and the proceeds of potential future
financings.
The Company continues to believe that revenues for the first
quarter of 2006 will be approximately $330 million, gross margins
will be approximately 35 percent and average selling prices will
be down sequentially by approximately 1%. Bookings continue to be
strong and backlog levels at the beginning of the second quarter
of 2006 were up from backlog levels at the beginning of the first
quarter of 2006. At this time, and not including any impact
associated with the Gresham purchase, the Company anticipates that
second quarter 2006 revenues will be approximately $340 million to
$345 million, gross margins will be up approximately 50 basis
points sequentially and average selling prices will be flat to
slightly up sequentially.
"The purchase of the Gresham 8-inch wafer facility will accelerate
our technology roadmap -- enabling ON Semiconductor to develop a
larger mix of high-performance submicron analog and digital power
products," said Keith Jackson, ON Semiconductor's president and
CEO. "We currently own and operate 4-inch and 6-inch wafer
fabrication facilities throughout the world and the capabilities
of the Gresham 8-inch facility are consistent with our commitment
to our customers to supply state-of-the-art technology in high
volumes and at a low cost. We expect demand for our submicron
high performance products to continue to increase. Securing
advance manufacturing capabilities, process development know-how
and operational expertise in deep submicron technologies will
support our long-term strategic roadmap. The Gresham facility
purchase provides us with cost-effective advanced manufacturing
capabilities in a much shorter time frame and on more favorable
terms than expanding our existing fabrication infrastructure."
"These capital expenditures to expand fab capacity were already
part of our current 5-year plan, and the asset purchase of the
Gresham facility is just an acceleration of what we had already
planned to spend," said Donald Colvin, ON Semiconductor's senior
vice president and CFO. "This purchase enables us to introduce
new products faster and accelerates our internal capability
roadmap, while the supply agreement allows us to offset projected
fixed costs."
ON Semiconductor Corp. -- http://www.onsemi.com/-- supplies power
solutions to engineers, purchasing professionals, distributors and
contract manufacturers in the computer, cell phone, portable
devices, automotive and industrial markets.
At Dec. 31, 2005, the Company's equity deficit narrowed to
$300.3 million from a $537 million deficit at Dec. 31, 2004.
O'SULLIVAN IND: Asks Court to Disallow or Estimate Seven Claims
---------------------------------------------------------------
O'Sullivan Industries Holdings, Inc., and its debtor-affiliates
ask the U.S. Bankruptcy Court for the Northern District of
Georgia's to disallow, expunge or estimate seven claims:
Claimant Claim No. Claim Amount
-------- --------- ------------
Ames Department Stores, Inc. 129 $2,064,697
Internal Revenue Service 153 934,593
Sentry Insurance 398 988,164
Rowland Geddie III 2317 23,255
Joe Whyman 426 17,904
David Turney 297 4,935
296 -
A. The Ames Claim
Gregory D. Ellis, Esq., at Lamberth, Cifelli, Stokes & Stout,
P.A., in Atlanta, Georgia, relates that Ames filed Claim No. 129
against O'Sullivan Industries, Inc., seeking recovery of
approximately $2,000,000 in allegedly preferential transfers plus
interest and costs.
Ames and its debtor-affiliates filed for Chapter 11 protection
with the U.S. Bankruptcy Court for the Southern District of New
York. Judge Gerber presides over Ames' bankruptcy proceedings.
Claim No. 129 arises from a complaint Ames filed against
O'Sullivan Industries on July 1, 2003, in the Ames bankruptcy
case.
Mr. Ellis argues that in calculating the claim amount of its proof
of claim, Ames did not take into consideration the ordinary course
of business, new value and other defenses O'Sullivan possess under
Section 547(c) of the Bankruptcy Code. "Among others, O'Sullivan
Industries has a dollar-for-dollar new value defense to the
preference claims pursuant to Section 547(c)(4)."
Therefore, Mr. Ellis asserts, the Ames Claim is without merit.
B. The IRS Claim
The IRS filed Claim No. 153, which includes a $934,593 general
unsecured claim, for penalties and interest with respect to an
income tax return that O'Sullivan Industries allegedly failed to
file for the 1999 tax year.
The Debtors contend that they had filed a consolidated income tax
return for 1999 and had notified the IRS regarding the filing.
Thus, Claim No. 153 is without merit, Mr. Ellis maintains.
C. The Sentry Claim
Sentry filed Claim No. 396 for $988,164 against O'Sullivan
Industries. Sentry also purported to elect to participate in the
prepetition vendor and utility company settlement, even though it
is neither a "Vendor" nor a "Utility Company", as defined in the
Debtors' Plan of Reorganization, Mr. Ellis notes.
The Debtors and Sentry are parties to a workers' compensation
insurance policy dated June 30, 2004, wherein:
-- the Debtors periodically fund an account that covers
workers' compensation claims under $250,000, arising from
injuries that occurred between June 30, 2004, and June 30,
2005; and
-- Sentry administers the claims and provides the Debtors with
stop-loss coverage for claims above $250,000.
Mr. Ellis notes that the Debtors' obligations under the Sentry
Insurance Policy are secured by a letter of credit, which was
$3,500,000 as of the Petition Date. Sentry has since reduced the
LOC to $2,500,000, because the Debtors have not missed any
payments to Sentry.
The Debtors have satisfied all of their monthly obligations to
Sentry and intend to continue to do so as those obligations accrue
after they exit from bankruptcy, Mr. Ellis tells the
Court. Sentry has provided absolutely no basis for asserting a
$988,164 contingent claim, Mr. Ellis adds.
D. Four Deferred Compensation Claims
The Debtors offered a non-qualified deferred compensation plan to
highly compensated employees, enabling them to defer portions of
their income. The Deferred Compensation Plan was an unfounded
plan and payments were made out of the Debtors' general assets.
The Plan of Reorganization provides for the rejection of the
Deferred Compensation Plan.
O'Sullivan Industries' Schedule E of its Schedules of Assets and
Liabilities inadvertently included 15 claims totaling $305,000,
held by certain of O'Sullivan Industries' employees on account of
the Deferred Compensation Plan.
Four of the Debtors' employees filed Claim Nos. 296, 297, 2317 and
426, alleging priority treatment on account of the Deferred
Compensation Plan.
The Debtors maintain that the claim amounts of Claim Nos. 296,
297, 2317 and 426 do not differ significantly from the amounts set
forth in Schedule E.
Mr. Ellis asserts that the Deferred Compensation Claims are not
entitled to priority status under
Section 507(a)(5) of the Bankruptcy Code grants priority status to
allowed unsecured claims for contributions to an employee benefit
plan, but only to the extent they "aris[e] from services rendered
within 180 days before the date of the filing of the petition."
Mr. Ellis notes that no Deferred Compensation Claims arose from
services rendered after December 30, 2004, and certainly not
within 180 days before the Petition Date. Thus, Mr. Ellis asserts
that the Deferred Compensation Claims are not entitled to priority
status under Section 507(a)(5).
Estimation of Claims
The Plan provides that distributions reserved for the holders of
disputed claims in each class or payments for holders that elected
to participate in the prepetition vendor and utility company
settlement under the Plan will be deposited in interest-bearing
disputed claims reserve accounts in amounts sufficient to cover
the "face amount" of the disputed portions of the claims.
Accordingly, the Debtors anticipate depositing:
-- $334,779 into a disputed general unsecured claims reserve
account;
-- $419,356 into a disputed priority claims reserve account;
and
-- $271,467 into a disputed prepetition vendor and utility
company settlement account.
With respect to the Ames Claim, the IRS Claim, the Sentry Claim
and the Deferred Compensation Claims, the Debtors do not plan to
fund any disputed claims reserve accounts unless and until the
Court determines that the maximum allowable amount of the Claims
is greater than $0.
Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings,
Inc. -- http://www.osullivan.com/-- designs, manufactures, and
distributes ready-to-assemble furniture and related products,
including desks, computer work centers, bookcases, filing
cabinets, home entertainment centers, commercial furniture, garage
storage units, television, audio, and night stands, dressers, and
bedroom pieces. O'Sullivan sells its products primarily to large
retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and
Office Depot. The Company and its subsidiaries filed for chapter
11 protection on Oct. 14, 2005 (Bankr. N.D. Ga. Case No. 05-
83049). Joel H. Levitin, Esq., at Dechert LLP, represents the
Debtors. Michael H. Goldstein, Esq., Eric D. Winston, Esq., and
Christine M. Pajak, Esq., at Stutman, Treister & Glatt, P.C.,
represent the Official Committee of Unsecured Creditors. On Sept.
30, 2005, the Debtor listed $161,335,000 in assets and
$254,178,000 in debts. (O'Sullivan Bankruptcy News, Issue No. 16;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
O'SULLIVAN INDUSTRIES: Files Annual Report for Fiscal 2005
----------------------------------------------------------
On April 10, 2006, O'Sullivan Industries Holdings, Inc., filed
with the U.S. Securities and Exchange Commission its annual report
on Form 10-K for the year ended June 30, 2005.
For the fiscal year ended June 30, 2005, the company reported net
sales of $249,900,000, down 7% from $268,800,000 in fiscal 2004;
and an operating loss of $18,900,000, compared to operating income
of $9,200,000 in fiscal 2004.
At June 30, 2005, the company's balance sheet showed total assets
of $154.6 million and total debts of $373.4 million, resulting to
a $218.7 million stockholder's equity deficit.
A full-text copy of the Company's 2005 Annual Report is available
for free at:
http://bankrupt.com/misc/osullivan_form10kendedjune2005.pdf
Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings,
Inc. -- http://www.osullivan.com/-- designs, manufactures, and
distributes ready-to-assemble furniture and related products,
including desks, computer work centers, bookcases, filing
cabinets, home entertainment centers, commercial furniture, garage
storage units, television, audio, and night stands, dressers, and
bedroom pieces. O'Sullivan sells its products primarily to large
retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and
Office Depot. The Company and its subsidiaries filed for chapter
11 protection on Oct. 14, 2005 (Bankr. N.D. Ga. Case No. 05-
83049). Joel H. Levitin, Esq., at Dechert LLP, represents the
Debtors. Michael H. Goldstein, Esq., Eric D. Winston, Esq., and
Christine M. Pajak, Esq., at Stutman, Treister & Glatt, P.C.,
represent the Official Committee of Unsecured Creditors. On Sept.
30, 2005, the Debtor listed $161,335,000 in assets and
$254,178,000 in debts. (O'Sullivan Bankruptcy News, Issue No. 16;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
PARMALAT: Court Extends Injunction to June 2 Despite Objections
---------------------------------------------------------------
BankBoston N.A., FleetBoston Financial, Bank of America
Corporation, Bank of America National Trust & Savings
Association, Banc of America Securities LLC and Bank of America,
N.A., complain that the Preliminary Injunction Order is overly
broad and cannot be extended in its current form.
The Banks object to further extensions of the Preliminary
Injunction Order and to an entry of any permanent injunction
order to the extent that the Injunction Order:
1. purports to enjoin actions against the Foreign Debtors'
non-debtor affiliates and other non-debtor parties;
2. purports to enjoin the prosecution of postpetition claims
and future claims, as opposed to only prepetition claims;
3. purports to enjoin actions brought outside the United
States;
4. purports to apply to any claims of the United States
creditors that Dr. Enrico Bondi has objected on "date
certain" or similar procedural grounds peculiar to Italian
law;
5. does not expressly provide for the continuing jurisdiction
of both the Court and the District Court over the Foreign
Debtors;
6. contains an overly broad grant of exclusive jurisdiction to
the Court of Parma;
7. purports to limit lien and set-off rights against the
Foreign Debtors; and
8. purports to grant greater relief to the Foreign Debtors
than is provided for under Italian Law.
The Banks ask the Court to deny further extensions of the
Injunction Order unless:
a. the Preliminary Injunction Order is modified to address
their Objection; or
b. they receive written assurances that the modifications will
be reflected in a Permanent Injunction Order.
Thomas McC. Souther, Esq., at Sidley Austin LLP, in New York,
explains that the Banks did not previously object to the scope of
the Preliminary Injunction Order because they fully expected that
the Foreign Debtors would soon seek permanent injunction.
However, Mr. Souther points out, the Foreign Debtors have not yet
sought permanent injunction but instead repeatedly sought
extensions of the Preliminary Injunction Order.
Because the Foreign Debtors are unclear if they intend to seek a
permanent injunction, the Banks decided to raise their objections
to the scope of the Preliminary Injunction Order now so that
appropriate modifications can be made and carried over to the
form of the permanent injunction order.
"[T]he Foreign Debtors should not be permitted continued
extensions of the Preliminary Injunction Order without applying
for a permanent injunction order now that the Parmalat
[Restructuring] Plan has been approved," Mr. Souther argues.
On February 16, 2006, counsel for the Banks sent the Foreign
Debtors' counsel a letter outlining their objections to the
Preliminary Injunction Order scope in an effort to resolve the
objections consensually and avoid the incurrence of unnecessary
litigation expenses by both parties.
As of March 22, 2006, the Banks have received no substantive
response from the Foreign Debtors with respect to the issues
raised in the February letter.
Foreign Debtors Talk Back
Marcia A. Goldstein, Esq., at Weil, Gotshal & Manges LLP, in New
York, tells the Court that shortly after the Foreign Debtors'
receipt of the February letter, their counsel contacted counsel
for BofA to discuss the letter's contents.
During the discussion, the parties' counsel reviewed each of the
concerns BofA raised in the letter and considered various related
issues. According to Ms. Goldstein, the Foreign Debtors advised
BofA that they did not intend to request a permanent injunction
in the immediate future due to the need to resolve certain
outstanding matters previously presented before Bankruptcy Court.
Per the Bankruptcy Court's prior instructions, the Foreign
Debtors will provide sufficient notice to all parties-in-interest
when a permanent injunction is requested.
Ms. Goldstein notes that BofA's objection raises no substantive
objection whatsoever to the Preliminary Injunction, but rather
raises concerns about the form of a permanent injunction.
"The Objection is a transparent attempt by [the Banks] to gain
some form of leverage over the Foreign Debtors in order to
influence the terms of a permanent injunction," Ms. Goldstein
says. "The Foreign Debtors have not yet begun to consider the
terms of a permanent injunction and [the Banks'] attempt to
compel acquiescence to their demands, at this premature stage, is
unwarranted and an inappropriate use of [the] Court's time."
The Foreign Debtors believe that BofA has suffered no prejudice
during the two years the Preliminary Injunction has been in
place. The Banks also do not claim that any modification of the
Preliminary Injunction is needed to avoid any future prejudice,
Ms. Goldstein adds.
Accordingly, the Foreign Debtors ask the Court to overrule the
BofA Objection and extend the Preliminary Injunction for 60 days.
If the Court finds it appropriate for the Foreign Debtors to
submit a further response to BofA's concerns and their potential
application to the terms of a further Preliminary Injunction, the
Foreign Debtors ask the Court to:
a. schedule a hearing on no less than 30 days' notice to
afford them adequate opportunity to further review
the Objection with Italian co-counsel so as, inter alia, to
examine the impact of the issues on the Italian claims
process; and
b. continue the Preliminary Injunction through the conclusion
of the hearing.
Judge Drain Extends Injunction to June 2
On an interim basis, Judge Drain enjoins and restrains all
persons subject to the jurisdiction of the U.S. court from
commencing or continuing any action to collect a prepetition debt
against Parmalat SpA and its affiliates and subsidiaries, and the
successor of the Foreign Debtors pursuant to the Composition with
Creditors, without obtaining permission from the Bankruptcy
Court.
The Preliminary Injunction Order will remain in effect through
June 2, 2006.
On June 1, 2006, at 10:00 a.m., the Court will:
-- convene a hearing to consider the continuation of the
Preliminary Injunction; and
-- hold a pre-hearing case conference on the status of the
permanent injunction request.
Any objection to the continuation of the Injunction must be filed
and served on the counsel for the Foreign Debtors by May 16,
2006, at 4:00 p.m.
Judge Drain overrules the BofA Objection.
About Parmalat
Headquartered in Wallington, New Jersey, Parmalat USA Corporation
-- http://www.parmalatusa.com/-- generates more than 7 billion
euros in annual revenue. The Parmalat Group's 40-some brand
product line includes milk, yogurt, cheese, butter, cakes and
cookies, breads, pizza, snack foods and vegetable sauces, soups
and juices and employs over 36,000 workers in 139 plants located
in 31 countries on six continents. The Company filed for chapter
11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No.
04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at
Weil Gotshal & Manges LLP, represent the Debtors. When the U.S.
Debtors filed for bankruptcy protection, they reported more than
$200 million in assets and debts. The U.S. Debtors emerged from
bankruptcy on April 13, 2005. (Parmalat Bankruptcy News, Issue
No. 71; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PIER 1: Posts $39.8 Million Net Loss in Fiscal 2006
---------------------------------------------------
Pier 1 Imports, Inc. (NYSE:PIR) reported results for the fourth
quarter and fiscal year ended Feb. 25, 2006. The results of The
Pier Retail Group Limited, the Company's subsidiary based in the
United Kingdom, have been classified as discontinued operations
for all periods presented in the Company's consolidated financial
statements. The subsidiary was sold on March 20, 2006.
Fourth Quarter Results
Fourth quarter sales from continuing operations were $506,022,000,
up 0.7% from last year's sales from continuing operations of
$502,278,000, and comparable store sales declined 2.9%.
For the fourth quarter, merchandise margins decreased 400 basis
points from the year-ago period and gross profit, after de-
leveraging of store occupancy costs, declined 510 basis points
versus last year.
The Company reported a net loss of $9,976,000, which included an
after-tax loss from discontinued operations from The Pier of
$2,991,000. The loss from discontinued operations included a non-
cash pre-tax impairment charge of $7,441,000 to state the
Company's investment in The Pier at its estimated fair value. The
fourth quarter net loss from continuing operations of $6,985,000
included charges recorded in selling, general and administrative
expenses for these transitional costs and other significant
adjustments during the quarter:
-- after a comprehensive reevaluation of the real estate
portfolio of Pier 1 and Pier 1 Kids in fiscal 2006, the
Company accelerated closings of certain stores with weaker
sales. The decision was made to close 38 stores in fiscal
2006 and 35 store closings are planned for fiscal 2007.
The Company had originally scheduled to close 27 and 20
stores in fiscal 2006 and 2007, respectively. This
rationalization of the Company's store portfolio resulted in
non-cash pre-tax impairment charges and fixed asset and
intangible asset write-offs in the fourth quarter totaling
$5.8 million, as well as early lease terminations of $1.4
million before tax. Currently, the Company plans to open
approximately 40 new Pier 1 stores and no new Pier 1 Kids
stores during fiscal 2007. Additionally, the Company has
doubled the number of Pier 1 outlet stores as of the end of
fiscal 2006, and now operates 34 outlet stores in order to
effectively transition merchandise, improve margins and
maintain clean visual presentations in stores throughout the
year.
-- the Company also restructured certain corporate office and
field administration functions during the fourth quarter
that resulted in incremental costs for severance,
outplacement and retirement expenses totaling approximately
$2.6 million before tax.
Full Year Results
Total fiscal 2006 sales from continuing operations were
$1,776,701,000, a decrease of 2.7% from last year's sales from
continuing operations of $1,825,343,000, and comparable store
sales declined 7.1%. The Company reported a fiscal 2006 net loss
of $39,804,000, which included an after-tax loss from discontinued
operations from The Pier of $12,333,000. For the year, the
Company reported a net loss from continuing operations of
$27,471,000.
Marvin J. Girouard, the Company's Chairman and Chief Executive
Officer, said, "The Company continues to move forward with its
turnaround strategy, and during the fourth quarter we made
significant progress toward plans to improve sales and
profitability for fiscal year 2007 that began on Feb. 26, 2006.
We believe that our business will improve through the successful
implementation of strategies in the areas of merchandising,
marketing and store portfolio rationalization, as well as
corporate and field restructuring programs. These changes are
anticipated to improve sales, while reducing administrative
expenses. In addition, the Company's divestiture of the U.K.
stores last month is further evidence that we are intensely
focused on the core business.
"In early March, we dramatically transformed stores to feature the
'Pier 1 meets modern' look and new colors for the season.
Customers are responding positively to the more relevant and
modern designs, the uniqueness of the new styles as well as their
higher quality and value pricing. In mid-March, we began our
targeted marketing program consisting of new national television
ads and a spring catalog mailing to 10 million customers. It is
too early to make any assertions on longer term success; however,
we are encouraged by initial feedback on the new merchandise and
easy-to-shop store presentations. We believe that by the end of
the first quarter and into the beginning of the second quarter, we
will begin to see notable improvement in customer traffic."
The Company expects to file its Form 10-K for the year ended Feb.
25, 2006 during April 2006.
About Pier 1
Pier 1 Imports, Inc. -- http://www.pier1.com/-- is North
America's largest specialty retailer of imported decorative home
furnishings and gifts with Pier 1 Imports(R) stores in 49 states,
Puerto Rico, Canada, and Mexico and Pier 1 Kids(R) stores in the
United States.
* * *
As reported in the Troubled Company Reporter on Feb. 23, 2006,
Standard & Poor's Ratings Services assigned its 'B-' rating to
specialty home furnishings retailer Pier 1 Imports Inc.'s $165
million convertible senior unsecured notes due 2036 issued under
rule 144A with registration rights. This rating is listed on
CreditWatch with negative implications. The company's 'B'
corporate credit rating also remained on CreditWatch with negative
implications.
As reported in the Troubled Company Reporter on Feb. 17, 2006,
Moody's Investors Service downgraded Pier 1's corporate family
rating to B1 from Ba2. The rating outlook remains negative. The
rating action followed Pier 1's continuing operating difficulties,
triggered by a general decline in same store sales over the last
two years, and Moody's expectation that store performance and
operating margins will likely be slow to rebound over the near
term. The rating action also reflected an increase in leverage
following the companies recent $150 million unrated convertible
note offering.
PLIANT CORP: Disclosure Statement Hearing Scheduled for Tomorrow
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware will
convene a hearing tomorrow, April 18, 2006, at 9:30 a.m.
(prevailing Eastern Time) to consider pursuant to Section 1125 of
the Bankruptcy Code, the adequacy of the Disclosure Statement
accompanying Chapter 11 Plan of Reorganization filed by Pliant
Corporation and its debtor-affiliates.
The Debtors may amend the Disclosure Statement prior to the
Disclosure Statement Hearing to, among other things, update
information and file exhibits, Robert S. Brady, Esq., at Young
Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, says.
The Disclosure Statement Hearing may be adjourned from time to
time without further notice, except for the announcement of the
adjourned dates at the Hearing or any continued hearings.
The Debtors anticipate emerging from bankruptcy by June 30, 2006.
According to Pliant Vice President and General Counsel, Stephen
T. Auburn, the Plan is based primarily on a prepetition
compromise and agreement with the holders of:
a. more than 66-2/3% of Pliant's 13% Senior Subordinated
Notes;
b. a majority of the outstanding shares of Pliant's
mandatory redeemable preferred stock; and
c. a majority of the outstanding shares of Pliant's common
stock.
At its core, the Plan provides that:
-- $320 million of Pliant's 13% Senior Subordinated Notes will
be exchanged for a combination of:
* 30% of new common stock,
* $260,000,000 of new Series AA Preferred Stock,
* certain additional consideration, and
* up to $35,000,000 of new debt.
-- $278,000,000 of Pliant's mandatorily redeemable preferred
stock will be exchanged for a combination of:
* up to $75,500,000 of new Series AA Preferred Stock,
and
* 28% of new common stock.
-- holders of outstanding common stock will receive 42% of new
common stock.
-- the Debtors' first lien and second lien noteholders' claims
and the claims of trade and other general unsecured
creditors will remain unimpaired.
The Plan does not provide for substantive consolidation of the
Debtors' estates, Mr. Auburn says. Allowed claims held against
one Debtor will be satisfied solely from the cash and assets of
that Debtor and its estate, provided that, to the extent of any
insufficiency, funds may be advanced to the relevant Debtors by
Pliant's estate.
The Plan contemplates the reincorporation of Pliant in Delaware.
Prior to the Plan Effective Date, a new wholly owned subsidiary
of Pliant will be incorporated as a Delaware corporation. On the
Plan Effective Date, Pliant will merge with and into New Pliant,
with New Pliant surviving the merger.
New Common Stock
On the Effective Date, New Pliant will issue shares of New Common
Stock. Concurrently with the issuance, New Pliant will
distribute:
a. the Bondholder Common Stock to The Bank of New York -- the
indenture trustee under (i) the indenture, dated as of
May 31, 2000, as amended, and (ii) the indenture, dated as
of April 10, 2002, as amended, both with Pliant, as issuer
-- for further distribution to the holders of Allowed
Old Note Claims on a pro rata basis;
b. the Series A Common Stock to the holders of Series A
Preferred Stock Interests on a pro rata basis; and
c. the New Equity Common Stock to the holders of Outstanding
Common Stock Interests on a pro rata basis.
New Pliant Stockholders Agreement
New Pliant and the holders of New Common Stock will enter into a
New Pliant Stockholders Agreement on the Effective Date. The New
Pliant Stockholders Agreement will be binding on all parties
receiving New Common Stock regardless of whether the parties
execute the New Pliant Stockholders Agreement. No certificates
representing New Common Stock will be issued to any party until
the party has executed the New Pliant Stockholders Agreement.
The New Pliant Stockholders Agreement will generally provide
that:
a. the holders of New Common Stock will be entitled to, among
other things, some preemptive rights and will be subject to
certain "drag-along" provisions and restrictions on
transfers; and
b. New Pliant will be obligated to effect a public offering of
the New Common Stock, after the date that is three years
after the Effective Date, at the direction of the holders
of a majority of the shares of New Common Stock issued to
JP Morgan Partners (BHCA), L.P. and other related entities,
certain other holders of Series A Preferred Stock and
holders of Old Note Claims.
Series AA Preferred Stock
On the Effective Date, New Pliant will issue 335,600 shares of
Series AA Preferred Stock and will distribute:
a. the Bondholder Series AA Preferred Stock to the Old Notes
Indenture Trustee for further distribution to the holders
of Allowed Old Note Claims on a pro rata basis; and
b. the Series A/Series AA Preferred Stock to the holders of
Series A Preferred Stock Interests on a pro rata basis.
The holders of the Series AA Preferred Stock will have the right
to elect the Series AA Directors. Subject to some exceptions,
after the fourth anniversary of the Effective Date, the Series AA
Directors will have certain supermajority voting rights that will
permit them to initiate a sale of New Pliant and to control any
related vote of the board of directors.
If the Series AA Preferred Stock is not redeemed within five
years after the Effective Date, the holders of a majority of the
Series AA Preferred Stock will have the right, subject to certain
exceptions, to:
-- cause all of the outstanding Series AA Preferred Stock to
be converted into 99.9% of the fully diluted New Common
Stock; or
-- appoint a majority of the board of directors of New Pliant
without converting the Series AA Preferred Stock to New
Common Stock.
In the event that New Pliant seeks to sell all or substantially
all of its assets, the approval of the holders of at least two-
thirds of all of the Series AA Preferred Stock will be required.
If New Pliant seeks to effect a merger, subject to certain
exceptions, the approval of the holders of at least two-thirds of
the Series AA Preferred Stock will also be required.
Series AA Preferred Stock Registration
On the Effective Date, New Pliant and the Holders of Old Note
Claims and certain other holders of Series AA Preferred Stock
will enter into a Series AA Registration Rights Agreement. New
Pliant will be obligated to register an underwritten public
offering of the Series AA Preferred Stock, nine months after the
Effective Date, at the direction of holders of a majority of the
shares of Series AA Preferred Stock issued to the holders of Old
Note Claims.
$20-Mil. Tack-On Notes
If and to the extent required by the Plan, New Pliant will issue
and distribute $20,000,000 in Tack-On Notes to the Old Indenture
Trustee, on behalf of all holders of Old Notes, for ultimate
distribution pro rata to each holder of an Old Note Claim. The
Tack-On Notes will be issued under the First Lien Notes Indenture
and will benefit from all of the rights and privileges contained
in the Indenture.
$35-Mil. New Senior Subordinated Notes
If and to the extent required by the Plan, New Pliant will issue
and distribute $35,000,000 in New Senior Subordinated Notes to
the Old Indenture Trustee, on behalf of all holders of Old Notes,
for ultimate distribution pro rata to each holder of an Old Note
Claim. The New Senior Subordinated Notes will mature in 2010 and
will accrue payment in kind interest at a rate of 13% per annum
for the first year following issuance and semi-annual cash pay
interest at a rate of 13% per annum afterwards.
The New Senior Subordinated Notes will be subject to New Pliant's
right, which will be assignable, to refinance the New Senior
Subordinated Notes during the first year after the issuance of
the New Senior Subordinated Notes by tendering to the holders of
the New Senior Subordinated Notes, cash equal to:
-- $20,000,000; plus
-- interest accrued at a rate of 13% per annum from the date
of issuance through the date of payment on a principal
amount of $20,000,000; minus
-- any interest previously paid in cash on the New Senior
Subordinated Notes.
Management Stock Plan &
Deferred Cash Incentive Plan
New Pliant will issue, on the Effective Date, 8,000 shares of
Series M Preferred Stock and designate participants in the
Deferred Cash Incentive Plan. The shares of Series M Preferred
Stock will be distributed in accordance with the Management Stock
Plan and units will be distributed in accordance with the
Deferred Cash Incentive Plan.
The Management Stock Plan and Deferred Cash Incentive Plan will
be used to grant awards to officers and other employees of New
Pliant and the reorganized Debtors, Mr. Auburn explains.
The Series M Preferred Stock and the units in the Deferred Cash
Incentive Plan will initially be entitled, in the aggregate, to
7.5% of the equity value of New Pliant. The percentage may be
increased to an aggregate of 8% of the equity value of New Pliant
under certain circumstances.
Sources of Cash for Distributions
All cash necessary for New Pliant or the reorganized Debtors to
make payments pursuant to the Plan will be obtained from existing
cash balances, the operations of the Debtors and the reorganized
Debtors, sales of assets or an Exit Facility Credit Agreement.
New Pliant and the reorganized Debtors may also make the payments
using cash received from their subsidiaries through the New
Pliant and the reorganized Debtors' consolidated cash management
systems.
Exit Financing
Without any requirement of further action by security holders or
its directors, New Pliant and the reorganized Debtors will, on
the Effective Date, enter into an Exit Facility Credit Agreement
and any related agreements, including those required in
connection with the creation or perfection of the liens on the
exit facility collateral. The Exit Facility Credit Agreement
will be designated as a Senior Credit Agreement pursuant to the
terms of the Intercreditor Agreement.
A full-text copy of Pliant's Plan of Reorganization is available
for free at http://ResearchArchives.com/t/s?722
A full-text copy of Pliant's Disclosure Statement is available
for free at http://ResearchArchives.com/t/s?723
Plan Exhibits Filed
On April 7, 2006, the Debtors filed with the Court updated
exhibits to their Joint Plan of Reorganization and Disclosure
Statement, including four-year financial projections until 2009,
a list of their Compensation and Benefits Programs, and a form of
Exit Financing Term Sheet.
A full-text copy of the Financial Projections is available for
free at http://ResearchArchives.com/t/s?7da
A full-text copy of the Compensation and Benefits Programs is
available for free at http://ResearchArchives.com/t/s?7db
A full-text copy of the Exit Financing Term Sheet is available
for free at http://ResearchArchives.com/t/s?7dc
About Pliant
Headquartered in Schaumburg, Illinois, Pliant Corporation --
http://www.pliantcorp.com/-- produces value-added film and
flexible packaging products for personal care, medical, food,
industrial and agricultural markets. The Debtor and 10 of its
affiliates filed for chapter 11 protection on Jan. 3, 2006
(Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq.,
at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S.
Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the
Debtors in their restructuring efforts. The Debtors tapped
McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy
counsel. The Ontario Superior Court of Justice named RSM
Richter, Inc., as the Debtors' information officer in their
restructuring proceeding under Companies Creditors Arrangement Act
in Canada. As of Sept. 30, 2005, the company had $604,275,000 in
total assets and $1,197,438,000 in total debts. (Pliant
Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
PLIANT CORP: Battle Ensues Over $3.2 Million Management Incentives
------------------------------------------------------------------
Consistent with the compensation practices of other large
companies, Pliant Corporation and its debtor-affiliates, in 2004,
incorporated into their management compensation system an annual
performance-based Management Incentive Program. The performance-
based compensation under the MIP forms an integral part of the
total cash compensation paid by the Debtors to their management
team.
The Debtors' MIP is an incentive-based plan that is tied to both
individual and corporate performance levels and is expressly
designed to improve financial and operational results by
providing incentives to induce members of the Debtors' management
team to strive to meet certain performance levels, Robert S.
Brady, Esq., at Young Conaway Stargatt & Taylor LLP, in
Wilmington, Delaware, says.
Under the Debtors' MIP, management participants are eligible for
incentive compensation that is linked to certain performance
goals established at the discretion of the Compensation Committee
of the Debtors' Board of Directors. The Performance Goals
consist of both organizational performance goals and individual
performance goals, with the specific weight accorded to the
Compensation Committee's discretion.
Since the initiation of the Debtors' MIP, organizational
performance goals have been based on the Debtors' overall
financial performance, specifically EBITDA. However, in
recognition of the fact that the Debtors' performance may be
impacted by the cost of raw materials, the MIP provides that the
Board may make discretionary adjustments based on the price of
the raw materials. The MIP further provides that:
"The determination of EBITDA and other Performance Goal
measures shall be based upon components and criteria
established from time to time by the Board in its sole and
absolute discretion, and the Board's determination regarding
these items shall be final and conclusive."
The "Incentive Period" during which Performance Goals are
measured under the 2005 MIP is the 12-month period beginning on
January 1, 2005, and ending on December 31, 2005.
According to Mr. Brady, the Compensation Committee -- in
determining the amount of incentive compensation that is
ultimately paid out to eligible employees -- has typically
considered:
-- each eligible employee's compensation level;
-- the "Target Percentage" for each employee; and
-- the extent to which Performance Goals were met during the
Incentive Period.
At the beginning of each Incentive Period, the Compensation
Committee sets a "Target Percentage" for each eligible employee
that represents the percent of the employee's salary that the
Debtors hope to pay to the employee as a bonus after the end of
the Incentive Period. Target Percentages tend to vary broadly
among employees based on the Compensation Committee's
determination of the appropriate weighting of incentive-based
compensation for particular members of the management team.
The Debtors' management, in consultation with the Compensation
Committee, proposed that incentive payments equal to an average
payout of 70% of Target Percentages for 2005 -- totaling no more
than $3,212,554 in aggregate payout -- should be made to eligible
management employees. Pursuant to the 2005 MIP, 100 management
employees are eligible to receive the Incentive Compensation.
By this motion, the Debtors seek the U.S. Bankruptcy Court for the
District of Delaware's permission to pay the proposed Incentive
Compensation to the Eligible Employees.
"[T]he MIP has been in place since 2004, and the Debtors seek
only to pay amounts that they would have paid at this time under
the MIP in the ordinary course, but for the intervening Chapter
11 proceedings," Mr. Brady maintains.
The Debtors assert that the payment of the Incentive Compensation
is essential to reward management for its extraordinary efforts
and successes in 2005, to continue to motivate management
employees to meet or exceed financial and operational goals in
2006, and thus ensure their successful reorganization.
In recognition of management's continued strong performance in
the face of the adverse business conditions, the Compensation
Committee has determined that payments equal to an average payout
of 70% of Target Percentages for 2005 are appropriate, Mr. Brady
relates.
The Compensation Committee retained Buck Consultants, as outside
compensation consultant, to provide independent review and
evaluate the Debtors' proposed Incentive Compensation awards
against the compensation practices and performance of the
Debtors' peers and of entities in bankruptcy.
Buck determined that the Debtors' proposed awards are not only
reasonable in light of industry and bankruptcy practices, but are
also necessary to fairly compensate the Debtors' management, to
assure that they have proper incentives to meet 2006 performance
objectives, and to facilitate the Debtors' successful emergence
from Chapter 1 I proceedings.
The Debtors seek the Court's permission to file Buck's
Compensation Review under seal.
A full-text copy of the Debtors' Management Incentive Program is
available for free at http://ResearchArchives.com/t/s?7bd
Responses
1. Ad Hoc Committee
The Ad Hoc Committee of certain holders of Pliant Corp.'s 11-1/8%
Senior Secured Notes believes that the Debtors are well aware
that Section 503(c) of the Bankruptcy Code severely limits any
prepayments to insiders to induce a person to remain with the
Debtors' business. Thus, the Ad Hoc Committee contends that
rather than attempt to satisfy the rigorous criteria for the
payments, the Debtors chose to recharacterized what they are
seeking as approval of a performance "incentive program" and
justify the insider payments as an exercise of business judgment.
According to James E. O'Neill, Esq., at Pachulski Stang Ziehl
Young Jones & Weintraub LLP, the Debtors are seeking to pay what
at best would constitute prepetition unsecured claims of the
highest-level management outside of a plan of reorganization in
respect of prepetition performance.
"The MIP is not (and cannot be) a performance incentive plan, and
the Debtors' tortured attempts to fit this proverbial round peg
into a square hole do not withstand minimal scrutiny," Mr.
O'Neill insists.
The Ad Hoc Committee is also disappointed that the Debtors are
seeking to bestow bonuses on their senior managers in light of
last year's extraordinarily disappointing performance and the
Debtors' bankruptcy.
However, the Ad Hoc Committee does not object to the proposed
payments to 88 members of the Debtors' management who are not
"insiders" under Section 101(31). As to the 12 highest level
management -- including the CEO -- the Ad Hoc Committee propose
that the Court authorize payment of at most $10,000 per
individual -- the maximum amount entitled to priority under
Section 507(a)(4) -- minus any amount already awarded.
2. U.S. Trustee
Twelve of the 100 persons slated to receive payments under the
MIP are insiders, Kelly Beaudin Stapleton, the United States
Trustee for Region 3, tells the Court. The U.S. Trustee contends
that a grossly disproportionate percentage of the $3.2 million
proposed payment is earmarked for insiders.
The U.S. Trustee also notes that the Debtors' obligations under
the MIP are prepetition obligations, but they seek authority to
pay those obligations pre-plan under the "necessity of payment"
doctrine. The U.S. Trustee asserts that the "necessity of
payment" doctrine does not apply to the MIP.
Furthermore, the U.S. Trustee points out, the Debtors do not
contend that the employees who are owed 2005 MIP payments will
employ an immediate economic sanction if they are not paid, or
that there is any threat that failure to pay will place the
Debtors' continued operation in serious jeopardy. The Debtors
instead assert that nonpayment would among others, damage
management team relationship and irreparably harm management
morale, which assertions do not rise to the level of economic and
operational apocalypse required to justify payment under the
"necessity of payment" doctrine.
The U.S. Trustee tells Judge Walrath that the Debtors fail to
offer sufficient justification for paying management personnel --
especially insiders who will benefit disproportionately -- their
2005 MIP compensation rather than upon consummation of a plan of
reorganization.
Accordingly, the U.S. Trustee asks the Court to deny the Debtors'
request.
About Pliant
Headquartered in Schaumburg, Illinois, Pliant Corporation --
http://www.pliantcorp.com/-- produces value-added film and
flexible packaging products for personal care, medical, food,
industrial and agricultural markets. The Debtor and 10 of its
affiliates filed for chapter 11 protection on Jan. 3, 2006
(Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq.,
at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S.
Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the
Debtors in their restructuring efforts. The Debtors tapped
McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy
counsel. The Ontario Superior Court of Justice named RSM
Richter, Inc., as the Debtors' information officer in their
restructuring proceeding under Companies Creditors Arrangement Act
in Canada. As of Sept. 30, 2005, the company had $604,275,000 in
total assets and $1,197,438,000 in total debts. (Pliant
Bankruptcy News, Issue Nos. 7 & 8; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
POPULAR ABS: Moody's Puts Low-B Ratings on 2 Certificate Classes
----------------------------------------------------------------
Moody's Investors Service assigned Aaa rating to the senior
certificates issued by Popular ABS Mortgage Pass-Through Trust
2006-B, and ratings ranging from Aa2 to Ba3 to the subordinate
certificates in the deal.
The securitization is backed by Equity One, Inc., acquired
adjustable-rate and fixed-rate subprime mortgage loans. The
ratings are based primarily on the credit quality of the loans,
and on the protection from subordination, excess spread,
overcollateralization, and a yield maintenance agreement. Moody's
expects collateral losses to range from 5.50% to 6.00%.
Equity One, Inc., will service the loans. Moody's has assigned
Equity One its servicer quality rating SQ2- as a primary servicer
of subprime loans.
The complete rating actions are:
Popular ABS Mortgage Pass-Through Trust 2006-B
* Class A-1, Assigned Aaa
* Class A-2, Assigned Aaa
* Class A-3, Assigned Aaa
* Class M-1, Assigned Aa2
* Class M-2, Assigned A2
* Class M-3, Assigned A3
* Class M-4, Assigned Baa1
* Class M-5, Assigned Baa2
* Class M-6, Assigned Baa3
* Class B-1, Assigned Ba1
* Class B-2, Assigned Ba3
PPM AMERICA: Moody's Reviews Ba1 Note Rating and May Downgrade
--------------------------------------------------------------
Moody's Investors Service placed on watch for possible downgrade
the rating of the following notes issued in 1999 by PPM America
High Yield CBO 1 Company Ltd., a high yield collateralized bond
obligation issuer:
* The $448,800,000 Class A-1 Senior Secured Floating Rate
Notes, Due 2011
Prior Rating: Ba1
Current Rating: Ba1, on watch for possible downgrade
The rating action reflects the deterioration in the credit quality
of transaction's underlying collateral portfolio, consisting
primarily of high yield bonds, as well as the continued failure of
certain collateral and structural tests, according to Moody's. As
reported in the March 2006 trustee report, the
overcollateralization ratio was 42.16%, significantly lower than
the transaction's trigger level of 108%, the interest coverage
ratio for the Class A was 88.69%, below the transaction's trigger
level of 158.5%, and the interest coverage ratio for the Class B
was 48.7%, below the transaction's trigger level of 110%.
PROTECTION ONE: Moody's Puts B2 Rating on Proposed $66.8MM Loan
---------------------------------------------------------------
Moody's Investors Service assigned B2 rating to Protection One
Alarm Monitoring, Inc.'s proposed $66.8 million term loan, and
affirmed the company's B2 corporate family rating, the B2 rating
senior secured credit facility rating, and the Caa1 senior
subordinated notes rating. The outlook remains stable.
Protection One will use the proceeds from the $66.8 million term
loan, coupled with cash-on-hand, to fund a $75 million dividend
and for fees and expenses. The ratings reflect the recurring
revenue stream from the company's alarm contract portfolio,
declining customer attrition rates and an improved cost structure.
The ratings also reflect the reduction in the company's customer
account base over the last few years, intense competition, weak
cash flow-to-debt metrics, and significant costs to acquire new
customer accounts.
Assignments:
Issuer: Protection One Alarm Monitoring, Inc.
* Senior Secured Bank Credit Facility, Assigned B2
The ratings outlook is stable. The ratings are subject to review
of final documentation.
Moody's believes that the debt increase, the proceeds of which
Protection One will use to pay a shareholder distribution,
positions the company more weakly with respect to the B2 rating
category. Moody's notes that despite the company's recurring
revenue stream and improved cost structure, we expect free cash
flow-to-debt to be 2%-4% over the ratings horizon. The stable
ratings outlook reflects Moody's expectation that the company will
maintain its customer base by investing in new account generation
to offset customer attrition or otherwise substantially offset
attrition-related revenue losses with price increases. Cash flows
should benefit from the continuing growth of the market for
residential and commercial security products, and the company's
improved attrition rate, though further material improvements to
attrition rates would likely be difficult and costly to achieve.
Moody's expects that the company will continue to use its nominal
free cash flow to reduce debt.
The rating could improve if the company can grow its customer base
and generate a sustainable level of free cash flow to debt in the
range of 8-10%, which Moody's does not view as likely over the
near-term. Significantly increased leverage, due to an
acquisition or if the company's attrition rates return to the high
levels of a few years ago, could pressure the ratings.
Additionally, Moody's expects that Protection One will not return
capital to shareholders, beyond the anticipated $75 million
dividend, or otherwise seek to decapitalize the firm at the
expense of senior secured creditors. Such a return of capital to
shareholders, and the concurrent reduction in debt protection
measures, could trigger a ratings downgrade.
Protection One, headquartered in Lawrence, Kansas, installs,
monitors and maintains security alarms catering to residential,
commercial, multifamily and wholesale customers. The company had
revenue of roughly $260 million for the year ended Dec. 31, 2005.
PROTECTION ONE: S&P Puts B+ Rating on Proposed $67 Million Loan
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' senior
secured debt rating, with a recovery rating of '2', to
Lawrence, Kansas-based Protection One Alarm Monitoring Inc.'s
proposed $67 million add-on senior secured term loan.
At the same time, Standard & Poor's affirmed:
* its 'B+' corporate credit rating and its negative outlook;
* its 'B+' debt rating and '2' recovery rating on the company's
existing senior secured bank facility; and
* its 'B-' senior subordinated debt rating.
Pro forma for the proposed add-on, Protection One's senior secured
bank facility will consist of:
* a $25 million revolving credit facility (due 2010); and
* a $300 million term loan (due 2012).
The senior secured debt rating, which is the same as the corporate
credit rating, along with the '2' recovery rating, reflect
Standard & Poor's expectation of substantial (80%-100%) recovery
of principal by creditors in the event of a payment default or
bankruptcy. Proceeds from the add-on term loan, along with
approximately $10 million of cash on the balance sheet, will be
used to fund a $75 million shareholder distribution.
"The ratings reflect Protection One's modest presence in the
highly competitive U.S. security alarm industry, flat revenues,
and leveraged financial profile," said Standard & Poor's credit
analyst Ben Bubeck. These partly are offset by a largely
recurring revenue base and the expectation for continued positive
free operating cash flow generation.
With annual revenues of approximately $270 million, Protection One
is a second-tier provider of property monitoring services,
providing:
* sales,
* installation, and
* maintenance of security alarm systems
to approximately one million residential and commercial customers
nationally.
ADT Security Services is the dominant player in this market,
boasting more than 10x the annual revenue base of its nearest
competitor. Pro forma for the proposed add-on term loan,
Protection One had approximately $420 million in operating
lease-adjusted debt as of December 2005.
RAMP TRUST: Moody's Rates Class M-10 Certificate at Ba1
-------------------------------------------------------
Moody's Investors Service assigned Aaa rating to the senior notes
issued by RAMP Series 2006-NC3 Trust, and ratings ranging from Aa1
to Ba1 to the subordinate notes in the deal.
The securitization is backed by adjustable-rate and fixed-rate
subprime mortgage loans originated by New Century Mortgage
Corporation and Home123 Corporation and acquired by Residential
Funding Corporation. The ratings are based primarily on the
credit quality of the loans, and on the protection from
subordination, excess spread, overcollateralization, and an
interest rate swap agreement provided by Deutsche Bank AG, New
York Branch. Moody's expects collateral losses to range from
4.85% to 5.35%.
HomeComings Financial Network, Inc., will subservice the loans,
and Residential Funding Corporation will act as master servicer.
Moody's has assigned its above average servicer quality rating to
HomeComings Financial Network Inc for primary servicing of
subprime first-lien loans, and its top servicer quality rating to
Residential Funding Corporation for master servicing.
The complete rating actions are:
RAMP Series 2006-NC3 Trust
Mortgage Asset-Backed Pass-Through
Certificates, Series 2006-NC3
* Class A-1, Assigned Aaa
* Class A-2, Assigned Aaa
* Class A-3, Assigned Aaa
* Class M-1, Assigned Aa1
* Class M-2, Assigned Aa2
* Class M-3, Assigned Aa3
* Class M-4, Assigned A1
* Class M-5, Assigned A2
* Class M-6, Assigned A3
* Class M-7, Assigned Baa1
* Class M-8, Assigned Baa2
* Class M-9, Assigned Baa3
* Class M-10, Assigned Ba1
REFCO INC: U.S. Trustee Adds Two Members to Creditors Committee
---------------------------------------------------------------
The United States Trustee for Region 2, appointed two more
creditors -- D.E. Shaw & Co., LP, and Esopus Creek Advisors -- to
the Official Committee of Unsecured Creditors in Refco Inc., and
its debtor-affiliates' Chapter 11 cases.
The Creditors Committee is now composed of:
1. Everest Asset Management, Inc.
1100 North 4th Street, Suite 143
Fairfield, Iowa 52556
Attention: Peter Lamoureux, President
Phone: (641) 472-5500
2. Premier Bank International N.V.
Abraham Veerstraatt 7-A
Willemstad, Curazao, Netherlands Antilles
Attention: Diego Enrique Lepage Gimon,
Assistant Vice President
Phone: 59 99 461 3967/465 7708
3. Wells Fargo National Association, as Indenture Trustee
Sixth Street and Marquette Avenue
MAC N9303-120
Minneapolis, Minnesota 55479
Attention: Julie J. Becker, Vice President
Phone: (612) 316-4772
4. Cargill, Incorporated
15407 McGinty Road West
Wayzata, Minnesota 55319
Attention: Linda L. Cutler
Phone: (952) 742-6377
5. VR Global Partners, L.P.
Avora Business Park
77 Sadovnicheskaya Nab. Building 1
Moscow, 115035 Russia
Attention: Richard Deitz
Phone: 011 709 578 78181
6. Fimex International Ltd.
Pasea Estate, Road Town
Tortola, British Virgin Islands
Attention: J.R. Rodriguez
Phone: (212) 593-3464
7. Markwood Investments
c/o SSG Capital Advisors, L.P.
Five Tower Bridge
300 Bar Harbor Drive, Suite 420
West Conshohocken, Pennsylvania 19428
Attention: Arturo Frieri
Phone: (610) 9540-3637
8. D.E. Shaw & Co., LP
120 West 45th Street
New York 10035
Attention: Marc Sole
Phone: (212) 478-0179
9. Esopus Creek Advisors
500 Fifth Avenue, Suite 2620
New York 10110
Attention: Joseph Criscione
Phone: (212) 302-7214
About Refco Inc.
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. Luc A.
Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents
the Official Committee of Unsecured Creditors. 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. 27; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
REFCO INC: Wants to Walk Away from Gerald Sherer Contract
---------------------------------------------------------
Refco Inc., and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Southern District of New York for permission to
reject their Executive Employment and Non-Competition Agreement
with Gerald Sherer.
The Debtors tell the Court that Mr. Sherer was employed as the
Chief Financial Officer of Refco Group Ltd., LLC. The Debtors
relate that since filing for bankruptcy, they have sold a
substantial portion of their assets and are in the process of
winding down their affairs. The Debtors have determined that Mr.
Sherer's services are no longer needed.
Sally McDonald Henry, Esq., at Skadden, Arps, Slate, Meagher &
Flom LLP, in New York, tells the Court that the Debtors have
satisfied the "business judgment" standard for rejecting the
Agreement. The Debtors' obligations under the Agreement pose
continuing monetary obligations to their estates, thus, rendering
the Agreement "unnecessary" to the Debtors' wind-down operations.
Ms. Henry contends that rejection of the Agreement will save the
Debtors' estates costs with respect to salary and other
compensation and benefits due under the Agreement.
About Refco Inc.
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. Luc A.
Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents
the Official Committee of Unsecured Creditors. 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. 27; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
RESTAURANT CO: S&P Places B Corp. Credit Rating on Negative Watch
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings, including
its 'B' corporate credit rating, on Memphis, Tennessee-based
The Restaurant Co. on CreditWatch with negative implications.
The listing includes:
* the 'BB-' senior secured debt;
* the '1' recovery ratings; and
* the 'B' senior unsecured debt rating.
The rating action follows the company's announcement that it is
pursuing the acquisition of Marie Callender's Restaurant & Bakery.
"Ratings could be either lowered or affirmed, given the
incremental $100 million bank debt and additional lease equivalent
debt that will be assumed by Restaurant Co. as well as the small
size of Marie Callender's," said Standard & Poor's credit analyst
Robert Lichtenstein.
SACO TRUST: Moody's Rates Class B-4 Certificate at Ba1
------------------------------------------------------
Moody's Investors Service assigned Aaa rating to the senior
certificates issued by SACO I Trust 2006-4, Mortgage-Backed
Certificates, Series 2006-4, and ratings ranging from Aa1 to Ba1
to the mezzanine and subordinate certificates in the deal.
The securitization is backed by fixed-rate, closed-end Alt-A and
subprime mortgage loans acquired by EMC Mortgage Corporation. The
collateral was originated by American Home Mortgage Investment
Corp., New Century Mortgage Corporation, and various other
originators, none of which originated more than 10% of the
mortgage loans. The ratings are based primarily on the credit
quality of the loans, and on the protection from subordination,
overcollateralization, and excess spread. Moody's expects
collateral losses to range from 7.15% to 7.65%.
EMC Mortgage Corporation will act as master servicer.
The complete rating actions are:
SACO I Trust 2006-4
Mortgage-Backed Certificates, Series 2006-4
* Class A-1, Assigned Aaa
* Class A-2, Assigned Aaa
* Class A-3, Assigned Aaa
* Class M-1, Assigned Aa1
* Class M-2, Assigned Aa2
* Class M-3, Assigned Aa3
* Class M-4, Assigned A1
* Class M-5, Assigned A2
* Class M-6, Assigned A3
* Class B-1, Assigned Baa1
* Class B-2, Assigned Baa2
* Class B-3, Assigned Baa3
* Class B-4, Assigned Ba1
SAYBROOK POINT: Lower Credit Quality Cues Moody's Ratings Review
----------------------------------------------------------------
Moody's Investors Service placed on watch for possible downgrade
the ratings of these notes issued in 2001 by Saybrook Point CBO I,
Limited, a structured finance collateralized debt obligation
issuer:
1) The $18,000,000 Class B Floating Rate Senior Secured Notes
due 2036
Prior Rating: A2
Current Rating: A2, on watch for possible downgrade
2) The $18,000,000 Class C Fixed Rate Senior Secured Notes
due 2036
Prior Rating: Caa1
Current Rating: Caa1, on watch for possible downgrade
The rating actions reflect the deterioration in the credit quality
of the transaction's underlying collateral portfolio, consisting
primarily of structured finance securities, as well as the
occurrence of asset defaults and par losses, and the continued
failure of certain collateral and structural tests, according to
Moody's. As reported in the March 2006 trustee report, the
weighted average rating factor of the portfolio was 1748,
significantly higher than the transaction's trigger level of 500,
the overcollateralization ratio for the Class A and Class B notes
was 100.37%, well below the transaction's trigger level of 106%,
and the overcollateralization ratio for the Class C notes was
87.69%, below the transaction's trigger level of 102%, Moody's
noted.
SENECA CBO: Credit Quality Decline Cues Moody's Ratings Review
--------------------------------------------------------------
Moody's Investors Service placed on watch for possible downgrade
the ratings of these notes issued in 2000 by Seneca CBO III,
Limited, a high yield collateralized bond obligation issuer:
1) The $10,000,000 Class C Third Priority Senior Secured
Floating Rate Notes Due 2012
Prior Rating: Baa2
Current Rating: Baa2, on watch for possible downgrade
2) The $12,000,000 Class D Subordinated Secured Floating Rate
Notes Due 2012
Prior Rating: Ba3
Current Rating: Ba3, on watch for possible downgrade
The rating actions reflect the deterioration in the credit quality
of the transaction's underlying collateral portfolio, consisting
primarily of high yield bonds, as well as the occurrence of asset
defaults, and the continued failure of certain collateral and
structural tests, according to Moody's. As reported in the
February 2006 trustee report, the weighted average rating factor
of the portfolio was 3417, significantly higher than the
transaction's trigger level of 2400, the diversity score for the
portfolio was 44, below the transaction's trigger level of 45, and
the weighted average coupon test was 9.07%, below the trigger
level of 9.40%.
SEQUA CORP: Cash-Repatriation Plan Doesn't Alter Moody's B1 Rating
------------------------------------------------------------------
Moody's Investors Service affirmed Sequa Corporation's Corporate
Family Rating of B1, having considered the effects of the
company's recent foreign subsidiary financing relating to a cash-
repatriation dividend, undertaken under terms provided by the
American Jobs Creation Act. Sequa has a Speculative Grade
Liquidity Rating of SGL-2. The ratings outlook is stable.
Sequa's ratings continue to reflect the company's relatively high
debt levels, increased modestly by the $100 million of borrowings
undertaken in December 2005 to repatriate cash from foreign
subsidiaries under the provisions of the AJCA. The ratings also
reflect Moody's concern over the credit profile of key customers
in Sequa's two largest segments, commercial aerospace and
automotive, as a number of these customers have recently filed for
bankruptcy and their respective business segments are currently
experiencing on-going economic difficulties.
Moody's also considers positively the company's diverse revenue
base, both in terms of broad customer base as well as
diversification across industries, and general continued
improvement in the dominant commercial aerospace sector. Sequa
Corporation's SGL-2 speculative grade liquidity rating continues
to reflect Moody's estimation of a good liquidity profile over the
forward 12-months period.
As the company has demonstrated improving operating results
through 2005 while sustaining substantial cash balances, Moody's
believes that the company will be able to maintain liquidity
levels adequate to comfortably cover near-term cash requirements,
despite forecasted negative free cash flows as the company
continues to invest in working capital and CAPEX while major
industry sectors are experiencing growth.
The stable rating outlook reflects Moody's expectations that the
company will continue to grow its revenue base and maintain
margins approximately at current levels, while it sustains
liquidity at historical levels and repays a modest amount of debt
out of cash balances, despite expected negative free cash flow
generation. Ratings or their outlook may be subject to downward
revision if, as a result of further weakening in key customers'
credit conditions in the aerospace or automotive sectors, a
substantial level of business is lost or the quality of
receivables become more questionable.
Downward ratings pressure may also occur if the company were to
increase debt materially for any reason, such that leverage were
to exceed 5.5 times, if EBIT/Interest coverage were to fall below
1.5 times, or if retained cash flow were to fall below 10% of
total debt for a prolonged period. Conversely, ratings or their
outlook may be adjusted upward if operating results were to
improve such that free cash flow were to turn substantially
positive for a prolonged period, leverage were to fall below 4.0
times, and EBIT/Interest could be sustained at greater than 2.0
times.
These ratings have been affirmed:
Sequa Corporation:
* Senior unsecured notes due 2008-2009, rated B1,
* Corporate Family Rating of B1, and
* Speculative Grade Liquidity Rating of SGL-2.
Sequa Corporation, headquartered in New York, N.Y., is a
diversified industrial company. Its operations manufacture and
repair jet engine components, perform metal coating, produce
automotive airbag inflators, chemical detergent additives,
auxiliary printing press equipment, emissions control systems,
men's formalwear, and automotive cigarette lighters and power
outlets. Sequa had FY 2005 revenues of $2.0 billion.
SFBC INTERNATIONAL: Moody's Junks Corporate Family Rating from B3
-----------------------------------------------------------------
Moody's Investors Service downgraded SFBC International's
Corporate Family Rating to Caa1, from B3 and SFBC's Senior Secured
Credit Facility to B3, from B2. Moody's also affirmed the
speculative grade liquidity rating of SGL-4. The ratings outlook
is negative.
The downgrade of the Corporate Family Rating and Senior Secured
Credit Facility to Caa1 and B3, respectively, the affirmation of
the SGL-4 speculative grade liquidity rating and negative outlook
reflect a combination of the following factors: increased
potential off-balance sheet loss contingencies related to
litigation, deteriorating financial liquidity and flexibility, and
concerns about the sustainability of free cash flow.
Moody's believes that SFBC will need to increase its borrowing to
cover potential outflows associated with loss contingencies in the
face of limited financial flexibility over the next few months,
until results stabilize. Alternatively, if expected expenses to
resolve potential liabilities are higher than Moody's expects, or
operating results continue to deteriorate, the company's credit
profile could deteriorate further.
What Could Change the Rating Up: The ratings outlook could become
more favorable if the company is able to stabilize its results and
improve its liquidity position. It is crucial that the company
continues to expand its early development business and maintain
the current trends in its late stage development business. A
favorable resolution of ongoing litigation could also result in a
change in the current outlook.
What Could Change the Rating Down: The ratings could face downward
pressure if results at the Miami facility deteriorate at a rate
greater than anticipated or the non-Miami business weakens.
Further, significant cash outlays to settle any litigation could
pressure the ratings considering the company's minimal cash on
hand and inability to access external sources.
SFBC International, based in Miami, Florida, is a leading North
American contract research organization that provides Phase I
through Phase IV clinical development services, bio-analytical
laboratory services, and specialized drug development services to
pharmaceutical, biotechnology and generic pharmaceutical
companies.
SGS INT'L: Solicits Consents to Amend 12% Sr. Sub. Notes Indenture
------------------------------------------------------------------
SGS International, Inc. commenced a solicitation of consents from
the holders of its 12% Senior Subordinated Notes Due 2013 to a
certain proposed amendment to the indenture governing the Notes.
The purpose of the solicitation and the proposed amendment to the
indenture is to amend the covenant governing the incurrence of
indebtedness by certain foreign subsidiaries of the Issuer. The
amendment would modify the definition of "Permitted Debt" under
the indenture to provide that up to $20 million of indebtedness
could be incurred by foreign subsidiaries of the Company under the
senior secured credit facility basket, in addition to that
permitted under the permitted foreign and other non-guarantor
restricted subsidiary debt basket, inclusive of the $20 million of
term loans incurred at the closing of the acquisition of Southern
Graphic Systems, Inc. by the Canadian subsidiary of the Company.
The consent solicitation is conditioned on the receipt of consents
of holders of at least a majority in aggregate principal amount of
the outstanding Notes not held by the Issuer or its affiliates and
other customary restrictions and will expire at 11:59 p.m., New
York City time, on April 24, 2006, unless extended. Subject to
the conditions set forth in the Consent Solicitation Statement,
the Issuer will pay a consent fee equal to 0.25% of the principal
amount of the Notes ($2.50 per $1,000 principal amount of the
Notes) to each non-affiliated holder that has delivered (and not
revoked) a valid consent to the proposed amendments prior to the
expiration of the consent solicitation. Payment of such consent
fee will be payable after the execution of the proposed amendment.
The consent solicitation may be amended, extended or terminated,
at the option of the Issuer, as set forth in the Consent
Solicitation Statement. For a complete statement of the terms and
conditions of the consent solicitation, holders of the Notes
should refer to the Consent Solicitation Statement.
Questions regarding the consent solicitation may be directed to
the Solicitation Agent:
UBS Investment Bank
Telephone (203) 719-4210 (collect)
Toll Free (888) 722-9555
Requests for assistance in delivering consents or for additional
copies of the Consent Solicitation Statement should be directed to
the Tabulation and Information Agent:
D.F. King & Co.
Telephone (212) 269-5550 (collect)
Toll Free (800) 290-6427
Headquartered in Louisville, Kentucky, SGS International, Inc., is
one of the largest providers of digital imaging graphic services
to the consumer products packaging industry. These services
include brand development, creative design, prepress, image
carrier, and print support that are used by the three printing
processes -- flexography, gravure and lithography. For the 12
months ended September 2005, pro forma sales and EBITDA totaled
$283 million and $58 million.
* * *
As reported in the Troubled Company Reporter on Dec. 6, 2005,
Standard & Poor's Ratings Services assigned its 'B+' bank loan
ratings and recovery ratings of '2' to SGS International Inc.'s
proposed $194.4 million senior secured credit facilities,
indicating the expectation of a substantial recovery of principal
in the event of a payment default.
Standard & Poor's also assigned its 'B-' rating to the company's
planned $200 million senior subordinated notes due 2013. At the
same time, Standard & Poor's assigned a 'B+' corporate credit
rating to SGS International. The outlook is negative.
SPHERIS INC: S&P Downgrades Corporate Credit Rating to B- from B
----------------------------------------------------------------
Standard & Poor's Rating Services lowered its ratings on Franklin,
Tennessee-based medical transcription services provider Spheris
Inc. The corporate credit rating was lowered to 'B-' from 'B'.
The outlook is negative.
"The downgrade reflects concerns regarding the company's reduced
cushion under its financial covenants," said Standard & Poor's
credit analyst Alain Pelanne. "In addition, liquidity, which had
been supporting the rating at its previous level, has been
significantly reduced by Spheris' covenants."
While the company has undertaken initiatives that should help
address the shortage in medical transcriptionists (MTs) that hurt
its operating performance in 2005, Standard & Poor's remains
concerned about the risk currently posed by:
* the company's financial profile; and
* its ability to amend its covenants in the future.
The ratings on Spheris continue to reflect the company's narrow
operating focus in a highly competitive industry, as well as its
limited operating history and weak financial profile. The ratings
also reflect the limited supply of MTs. These concerns are only
partially mitigated by the company's position as the second-
largest player in a very fragmented industry and the relatively
predictable demand for medical transcription services.
Spheris provides medical transcription services to hospitals and
physician group practices. Medical transcription involves
converting patient information from speech into text to include in
medical records. Around 50% of hospitals currently perform this
function internally.
Spheris' leveraged financial profile provides minimal cushion
against potential business challenges. Credit measures are weak,
but appropriate for the rating category. EBITDA coverage of
interest is quite thin, at less than 2x. Lease-adjusted total
debt to EBITDA is high, at around 6x. With regard to financial
covenants, the difficult competitive environment has resulted in
very limited room for error. Spheris' ability to operate within
its amended covenants remains a critical concern for the rating,
and is being closely monitored by Standard & Poor's.
STATION CASINOS: Moody's Shifts Trend Following Stock Repurchase
----------------------------------------------------------------
Moody's Investors Service revised the ratings outlook of Station
Casinos, Inc. to negative following the company's announcement
that it repurchased approximately $232 million of its common stock
from Goldman Sachs in a private transaction under an accelerated
stock buyback program. Once the ASB program is completed, Station
Casinos will have repurchased between 7.1 million and 7.4 million
shares of its stock during 2006 and will have between 2.7 million
and 3.1 million share remaining under its existing share
repurchase authorization.
The negative outlook reflects Station Casinos' aggressive debt
financed share repurchase activity that is occurring at the same
time the company is borrowing to support its development projects.
As a result, leverage is likely to increase to the upper end of
the acceptable range for the current rating category.
Moody's previous rating action on Station Casinos occurred on Feb.
24, 2006 when a Ba3 rating was assigned to the company's newly
issued $300 million senior subordinated notes due 2018.
Station Casinos, Inc. owns and operates fourteen hotel/casinos in
the Las Vegas locals market including a 50% interest in both
Barley's Casino & Brewing Company and Green Valley Ranch Station
Casino, and a 6.7% interest in the Palms Casino Resort. In
addition, Station Casinos manages the Thunder Valley Casino for
the United Auburn Indian Community in California. Net revenue for
the latest twelve-month period ended Dec. 31, 2005 was about $1.1
billion.
TARGA RESOURCES: Asset Sale Delay Prompts Moody's Ratings Review
----------------------------------------------------------------
Moody's Investors Service placed the ratings for Targa Resources,
Inc. under review for possible downgrade, prompted by the
possibility that an important asset sale may not occur within the
time period initially planned by the company.
The assets, referred to as the North Texas assets, consist of two
natural gas processing plants and an associated gathering system
located in the Fort Worth Basin and were acquired as part of the
acquisition of Dynegy Midstream Services, Limited Partnership late
last year. At the time Targa's ratings were initially assigned,
Moody's indicated that if it did not sell the North Texas assets
by June 30, 2006, its ratings likely would be lowered. The need
for the asset sale to occur in a timely manner is driven by the
need to reduce Targa's very high leverage.
Targa began a marketed sale process for the North Texas assets in
early 2006 and is currently evaluating bids that were received.
The fact that the company is still evaluating the bids indicates
that they probably came in below management's expectations. Targa
also announced that it is considering "other monetization
strategies" for the North Texas assets.
Moody's believes that the drawn-out bid evaluation process and
consideration of "other monetization strategies" is motivated by a
desire to maximize the value to be received for the assets and not
because of an adverse change in market conditions. In addition,
Targa has commenced a 100 mmcf/d expansion at one of the
processing plants and has initiated three other expansion projects
for the assets. Moody's believes that these projects suggest that
Targa may be contemplating keeping the assets.
Moody's will likely downgrade Targa's ratings if it does not sell
the North Texas assets, as originally planned, by June 30, 2006.
During its review, Moody's also plans to evaluate the underlying
performance of Targa's business post-closing. Even if the asset
sale occurs, a downgrade could still occur as a result of this
evaluation. The ratings could be confirmed if the asset sale
occurs and if Moody's concludes that underlying performance is
consistent with expectations established at the time the initial
ratings were assigned.
On Review for Possible Downgrade:
Issuer: Targa Resources, Inc.
* Corporate Family Rating, Placed on Review for Possible
Downgrade, currently Ba3
* Senior Secured Bank Credit Facility, Placed on Review for
Possible Downgrade, currently Ba3
* Senior Unsecured Regular Bond/Debenture, Placed on Review
for Possible Downgrade, currently B2
Outlook Actions:
Issuer: Targa Resources, Inc.
* Outlook, Changed To Rating Under Review From Stable
Targa Resources, Inc. is headquartered in Houston, Texas.
TERWIN MORTGAGE: Moody's Rates Two Certificate Classes at Low-B
---------------------------------------------------------------
Moody's Investors Service assigned Aaa rating to the senior
certificates issued by Terwin Mortgage Trust 2006-3, and ratings
ranging from Aa1 to Ba2 to the subordinate certificates in the
deal.
Regarding the bonds backed by the Group I loans, the
securitization is backed by adjustable-rate and fixed-rate
subprime mortgage loans originated by various mortgage lenders and
acquired by Terwin Securitization LLC. The ratings are based
primarily on the credit quality of the loans, and on the
protection from subordination, excess spread,
overcollateralization, and an interest rate swap agreement
provided by Bear Stearns Financial Products, Inc. Moody's expects
collateral losses to range from 5.50% to 6.00%.
Regarding the bonds backed by the Group II loans, the
securitization is backed by adjustable-rate and fixed-rate
"Alt-A" mortgage loans originated by various mortgage lenders and
acquired by Terwin Securitization LLC. The ratings are based
primarily on the credit quality of the loans, and on the
protection from subordination, excess spread,
overcollateralization, and an interest rate swap agreement
provided by Bear Stearns Financial Products, Inc. Moody's expects
collateral losses to range from 1.65% to 1.85%.
Specialized Loan Servicing LLC will service the Group I loans,
while JPMorgan Chase Bank will service the Group II loans.
JPMorgan Chase Bank will also act as master servicer. Moody's has
assigned Specialized Loan Servicing LLC its servicer quality
rating as a primary servicer of subprime first-lien loans.
The complete rating actions are:
Terwin Mortgage Trust 2006-3, Asset-Backed Certificates
* Class I-A-1, Assigned Aaa
* Class I-A-2, Assigned Aaa
* Class I-A-3, Assigned Aaa
* Class I-M-1, Assigned Aa1
* Class I-M-2, Assigned Aa2
* Class I-M-3, Assigned Aa3
* Class I-M-4, Assigned A1
* Class I-M-5, Assigned A2
* Class I-M-6, Assigned A3
* Class I-M-7, Assigned Baa1
* Class I-M-8, Assigned Baa2
* Class I-M-9, Assigned Baa3
* Class I-B-1, Assigned Ba1
* Class I-B-2, Assigned Ba2
* Class II-A-1, Assigned Aaa
* Class II-A-2, Assigned Aaa
* Class II-A-3, Assigned Aaa
* Class II-M-1, Assigned Aa2
* Class II-M-2, Assigned A2
* Class II-M-3, Assigned Baa2
* Class II-M-4, Assigned Baa3
TRUMP ENT: Retains Korn Ferry to Search for Sr. VP of Development
-----------------------------------------------------------------
Trump Entertainment Resorts, Inc (NASDAQ:TRMP) retained Korn/Ferry
International to lead the Company's search for a Senior Vice
President of Development who will be charged with assisting the
Company in implementing the growth strategy adopted by the Board
of Directors.
As outlined in the Company's annual report, growth is a key
element in the Company's commitment to add value for shareholders.
By combining the magic of the Trump brand and demonstrated talent
in the operation of world-class casinos, the Company seeks to take
full advantage of the growth opportunities for casino gaming
throughout the world.
The new executive will lead the Company's efforts on its current
development opportunities and in identifying and evaluating new
development opportunities for the Company, including, possible
acquisitions, joint ventures, and new ground up development
opportunities. The new executive will also search for licensing
or management opportunities with parties interested in enhancing
their projects through an affiliation with the Trump brand that
would create additional shareholder value for the Company.
"We believe this individual will round out our executive team by
allowing someone to focus fully on development opportunities that
are consistent with our goals for the Trump brand," James B.
Perry, President and Chief Executive Officer commented. "These
efforts are an important part of the process of improving our
company and will complement our efforts to improve the operating
performance of our existing asset base."
Based in Atlantic City, N.J., 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 Entertainment Resorts Inc.'s 8.5% Senior Secured Notes due
2015 carry Moody's Investors Service's Caa1 rating and Standard &
Poor's B- rating.
UAL CORP: Deregisters Shares Distributable Under Incentive Plans
----------------------------------------------------------------
From 1995 to 2002, UAL Corporation filed registration statements
on Form S-8 with the U.S. Securities and Exchange Commission to
register shares of common stock in the company:
Registration Date Description of Shares Registered
----------------- --------------------------------
June 28, 1995 6,000 shares of common stock, par
value $0.01 per share, to be
offered or sold under the UAL
Corporation 1995 Directors Plan.
October 5, 2000 8,000,000 shares of common stock,
par value $0.01 per share, to be
offered or sold under the UAL
Corporation Incentive Stock Plan.
November 30, 2001 40,000 shares of common stock, par
value $0.01 per share, to be
offered or sold under the UAL
Corporation 1995 Directors Plan.
September 27, 2002 100,000 shares of common stock,
par value $0.01 per share, to be
offered or sold under the UAL
Corporation 1995 Directors Plan.
On February 1, 2006, UAL consummated the transactions
contemplated by its Second Amended Joint Plan of Reorganization.
In accordance with the Plan of Reorganization, the Common Stock
has been canceled and is no longer outstanding. UAL has
terminated all offerings of the Company's securities.
Accordingly, UAL cancelled the registration of these securities.
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. Judge Wedoff confirmed
the Debtors' Second Amended Plan on Jan. 20, 2006. The Company
emerged from bankruptcy protection on February 1, 2006. (United
Airlines Bankruptcy News, Issue No. 121; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
UAL CORP: Fitch Puts B- Issuer Default Rating With Stable Outlook
-----------------------------------------------------------------
Fitch assigned these debt and Recovery Ratings to UAL Corp. and
its principal operating subsidiary, United Airlines, Inc.
following the company's recent emergence from Chapter 11
bankruptcy protection:
-- Issuer Default Rating (IDR) 'B-'
-- $3 billion secured bank credit facility 'BB-/RR1'
The Rating Outlook for UAL and United is Stable.
The assigned ratings reflect:
* the fact that United has emerged from Chapter 11 with a
strengthened balance sheet;
* lower operating costs;
* reduced fixed financing obligations; and
* no domestic defined benefit pension plans.
Progress achieved in Chapter 11 is balanced against the airline's
still heavy debt and lease load and ongoing cash flow pressures
linked to a tough, but improving, operating environment. With the
$3 billion secured bank credit facility in place and sufficient
cash on-hand to survive an extended period of cash flow weakness,
a near-term liquidity squeeze is very unlikely. The recommended
'B-' IDR captures this fact, as well as the clear improvements in
the company's credit profile relative to the two legacy carriers
that have not gone through a Chapter 11 restructuring:
* AMR, and
* Continental (both with IDRs of 'CCC').
At the time of its Chapter 11 filing in December 2002, United had
an unsustainable cost structure and dramatically under-funded DB
pension plans. In addition, the carrier's high lease-adjusted
leverage created a crushing fixed obligation burden that
necessitated a major financial restructuring. Through changes in
collective bargaining agreements, United drove unit labor rates
down by over 30% to approximately three cents per available seat
mile. Critical progress toward liability restructuring came with
the 2005 termination of the airline's domestic DB plans, with an
associated liability of $7 billion. The plans were assumed by the
Pension Benefit Guaranty Corporation (PBGC) in accordance with a
settlement agreement that also gave the pension insurer $1.5
billion in notes, contingent notes and convertible preferred
equity. The termination of the pension plans represents a key
source of competitive advantage that United now has versus its
legacy carrier peers.
Both American and Continental, which have not gone through
bankruptcy, retain their DB plans. Delta is likely to terminate
its plans in Chapter 11, but Northwest may retain frozen DB plans
if favorable pension funding legislation is passed by Congress
this year.
In spite of the progress related to reductions in unit labor rates
and pension funding obligations, as well as the marking to market
of secured debt and lease obligations, United has emerged from
Chapter 11 into an airline operating environment that remains very
challenging. High jet fuel costs, in particular, continue to
complicate the task of driving cost per available seat mile (CASM)
down in 2006. With spot jet fuel prices now above $2.00 per
gallon (higher than United's revised full-year fuel price
assumption of $1.94 per gallon), improvements in operating margins
this year are likely to be driven principally by a strengthening
revenue environment rather than CASM reduction. United currently
has very little fuel hedge protection in place for 2006, and
potential spikes in energy costs over the next few months could
have a significant impact on the carrier's operating performance.
A one-cent change in the price of jet fuel drives approximately
$20 million of annual mainline operating expenses.
In response to continuing fuel cost pressure and a slight CASM and
operating margin disadvantage versus Continental and American,
United management has repeatedly emphasized the need to push non-
labor, non-fuel CASM lower in 2006 and beyond. Some progress
toward CASM reduction may come as a result of better aircraft
utilization in 2006. While United is not scheduled to take any
mainline aircraft deliveries this year, available seat mile
capacity is now expected to grow between 2.5% and 3% for the full
year. In addition, management has highlighted opportunities to
drive better productivity through streamlined airport, maintenance
and distribution processes. Following the extended Chapter 11
restructuring effort and with labor rates now set, however,
progress toward incremental CASM reduction will be more difficult
to achieve.
The key to stronger operating results in 2006 and 2007 is clearly
the improving revenue environment. The reduction in domestic
capacity linked to the bankruptcies of Delta and Northwest,
coupled with scheduled cuts at new US Airways, has established the
foundation for another year of strong passenger revenue per
available seat mile (PRASM) growth in 2006. United reported
mainline PRASM growth of 6.6% in 2005, and it is likely to turn in
a comparable performance in the first half of this year. Very
strong passenger demand and better pricing are putting all U.S.
carriers in a position to counter heavy fuel price pressure with
higher fares. Capacity growth by other carriers in international
markets (particularly trans-Atlantic routes) is likely to put more
pressure on international PRASM this year.
United's revenue strategy has been built around the idea that a
meaningful unit revenue premium versus the other U.S. legacy
carriers can be sustained through a strong, differentiated product
and a superior route network. Although United's passenger RASM
performance is strong relative to other carriers, further evidence
of a widening RASM gap is required if United's margins are to
improve versus the other legacy carriers.
The carrier's liquidity position has improved significantly post-
exit as a result of the $2.8 billion draw on the secured term loan
facility. The pay-down of the airline's $1.2 billion debtor-in-
possession credit facility at the time of exit, together with
somewhat stronger operating cash flow generation in the seasonally
weak first quarter, will likely allow United to report an
unrestricted cash balance well in excess of $3 billion as of
March 31. The carrier also holds restricted cash balances near $1
billion in connection with:
* cash collateral requirements for workers' compensation
programs,
* airport lease agreements, and
* credit card processing contracts.
United's post-exit capital structure remains highly leveraged,
with total balance sheet debt of approximately $10.3 billion (pro
forma for the issuance of $726 million in employee notes later in
2006). The bulk of United's debt is secured (approximately $8.9
billion at exit), but the company has also issued unsecured notes
to the PBGC ($500 million) and holders of Chicago O'Hare municipal
bonds ($150 million) as part of the bankruptcy claims resolution
process. United also has substantial off balance sheet financing
commitments in the form of aircraft and facilities operating
leases. At exit, 230 of United's 460 mainline aircraft were
leased, while the other 230 were encumbered in a variety of
secured debt structures.
The 'RR1' recovery rating assigned to the secured bank credit
facility reflects the deep collateral package backing the loan,
including:
* 110 mainline aircraft;
* spare engines;
* international route authorities in:
-- Japan,
-- China, and
-- London's Heathrow Airport; and
* cash and accounts receivable.
Even in a highly stressed asset valuation scenario, lenders are
likely to realize recovery levels well in excess of the $3.0
billion in committed funding. The facility also includes a
package of tight EBITDAR fixed charge coverage and liquidity
covenants.
UNIFRAX CORP: S&P Rates Planned $230MM Sr. Credit Facilities at B
-----------------------------------------------------------------
On April 11, 2006, Standard & Poor's Ratings Services held its
ratings on ceramic fiber manufacturer Unifrax Corp. (B+/Watch
Neg/--) on CreditWatch with negative implications. The ratings
were placed on CreditWatch on March 21, 2006, after the
announcement that private equity sponsor AEA Investors LLC would
acquire Unifrax from American Security Capital for $452 million
(and assume about $5 million of company debt). Standard & Poor's
will resolve the CreditWatch listing when the acquisition is
completed. If it is completed as planned, the corporate credit
rating on Unifrax would be lowered to 'B' from 'B+'. The outlook
would be stable.
At the same time, Standard & Poor's assigned its 'B' senior
secured bank loan rating and a recovery rating of '2' to
Unifrax's proposed $230 million senior credit facilities, based on
preliminary terms and conditions. The 'B' rating would be the
same as the corporate credit rating after the CreditWatch listing
is resolved; this and the recovery rating of '2' indicate Standard
& Poor's expectation for a substantial recovery of principal by
lenders (80%-100%) in the event of a default. When the
CreditWatch is resolved, the ratings that are assigned will be
affirmed. A proposed issue of $135 million in privately placed
subordinated notes will not be rated.
"The pending lower ratings will reflect Unifrax's higher financial
leverage after it is acquired by AEA Investors," said Standard &
Poor's credit analyst Natalia Bruslanova.
The ratings will continue to reflect Unifrax's small scale of
operations and the limited domestic growth prospects in its core
industrial application markets. Following the acquisition, the
ratings will also reflect the company's highly leveraged financial
risk profile. Partly offsetting these limitations are:
* the company's position as a leading niche producer;
* its historically sound margins;
* its stable cash-flow generation; and
* the growth prospects for ceramic fiber applications in the
automotive industry.
Niagara Falls, New York-based Unifrax is a global producer of
ceramic fiber products used for high-temperature applications in a
wide variety of industries and applications including:
* metal and ceramic/glass processing,
* automotive, and
* fire protection.
Unifrax has a solid No. 2 market share in the global refractory
ceramic fiber market and holds leading positions in both North
America and Europe. The company generated sales of about $222
million for the 12 months ended Dec. 31, 2005.
UNIFRAX CORP: Moody's Assigns B2 Loan & Corporate Family Ratings
----------------------------------------------------------------
Moody's assigned a B2 corporate family rating to Unifrax, assigned
a B2 rating to its $50 million revolving credit facility, and a B2
rating to its $180 million Term Loan B. The ratings were assigned
in connection with the upcoming purchase of Unifrax by AEA
Investors LLC, which will be funded with the aforementioned rated
debt, $135 million of senior subordinated mezzanine notes and
equity. The rating outlook is stable. When the Unifrax sale is
completed, Moody's will withdraw the ratings on the old debt.
The key rating factors, as discussed more fully in Moody's Global
Chemical Industry rating methodology, currently influencing
Unifrax's rating and outlook, in order of importance, are:
Size & Stability -- Unifrax's modest size limits its rating
and places it low in the "B" category or high in the "Caa"
category.
Financial Strength -- All three sub-factors, when considered
looking forward, pro-forma for the acquisition, map to the
"B" category.
Business Profile -- Unifrax's narrow product line, along with
the modest size of the firm, limits the rating. However,
Moody's notes that operational and geographic diversity are
high. On average, despite the company's small size,
Unifrax maps to a "Baa" rating for Business Profile.
Management Strategy -- The metrics driving this factor are
both negatively impacted by the sizeable debt load Unifrax
will be taking on for the leveraged buyout. The two sub-
factors in this category suggest ratings of low "Ba" and
"B".
The notching for Unifrax's new credit facilities at the corporate
family rating reflects Moody's expectation that the security will
not be sufficient to cover the majority of the secured debt in a
stressed situation.
The stable outlook reflects Moody's expectation that the company
will continue to grow its sales and that free cash flow will be
sufficient to steadily reduce outstanding debt.
Unifrax Corporation, based in Niagara Falls, New York, is a
leading producer of heat resistant ceramic fiber products,
primarily for automotive, fire protection, and industrial furnace-
related applications. Revenues were $222 million for the year
ended Dec. 31, 2005.
USG CORP: Consortium Asserts $12.5M Fee on Rejected Backstop Pact
-----------------------------------------------------------------
As reported in the Troubled Company Reporter on March 10, 2006,
USG Corp. entered into an equity backstop commitment agreement
with Berkshire Hathaway, Inc., in connection with the Debtors'
proposed rights offering.
Pursuant to the Equity Commitment Agreement, Berkshire will:
(1) make a $1,800,000,000 equity backstop commitment through
September 30, 2006;
(2) establish a $1,800,000,000 escrow; and
(3) make its commitment subject to a "hell or high water"
provision.
In exchange, USG agreed to:
(i) pay Berkshire a $100,000,000 commitment fee and an
additional $20,000,000 fee to extend the equity backstop
commitment through November 14, 2006; and
(ii) allow Berkshire a highly unusual carve-out from USG's
Shareholder Rights Plan that allows Berkshire to purchase
up to 40% of USG's common stock without triggering poison
pill provisions that would effect every other shareholder
attempting to purchase over 5% of USG's common stock.
In this light, the Statutory Committee of Equity Security
Holders issued a statement saying that it was "hopeful that an
economically superior deal can be fashioned" before
February 23, 2006.
Sandra G.M. Selzer, Esq., at Pachulski, Stang, Ziehl, Young,
Jones & Weintraub, LLP, tells the U.S. Bankruptcy Court that the
Consortium of Investors for the Equity Commitment Proposal
provides the "economically superior deal" that the Equity
Committee was hoping for.
The Consortium is comprised of investment funds managed by eight
fund groups including:
* Deephaven Capital Management LLC,
* Fidelity Management & Research Company,
* Silver Point Capital, L.P.,
* D.E. Shaw & Co., L.P.,
* Abrams Capital Partners,
* Redwood Capital Management, LLC,
* Citadel Limited Partnership, and
* Caspian Capital Advisors LLC.
Ms. Selzer relates that the individual Investors within the eight
fund groups participating in the Consortium manage in excess of
$90,000,000,000 in capital. Thus, the Investors had the
financial wherewithal to provide the backstop, and were not
subject to any restrictions on providing the equity backstop
commitment. In addition, as of February 2006, some of the
Investors collectively owned approximately 18% of USG common
stock.
The Consortium Proposal
On February 14, 2006, the Consortium approached the Equity
Committee with an alternative equity backstop proposal that was
virtually identical to the terms of the Equity Commitment
Agreement, including:
-- the $40 strike price for the rights,
-- the $1,800,000,000 equity commitment value,
-- the cap of 45 million shares, and
-- the inclusion of a "hell or high water" provision.
In addition, even though it did not offer to escrow $1.8 billion,
the Consortium agreed to support those funds with an irrevocable
call on each Investor's capital in the amount of their
corresponding commitment, which provided the financial support
needed to secure the equity backstop commitment.
Ms. Selzer tells Judge Fitzgerald that the Consortium Proposal
was economically superior to the Berkshire Agreement because:
(a) the proposed commitment fee was only $65,000,000 --
$35,000,000 less than Berkshire's commitment fee.
(b) the Consortium agreed to a two-tiered extension structure
that provided USG with significant savings if the rights
offering was completed by the end of July. At USG's
option, the Consortium's equity commitment could be
extended through September 30, 2006, and again through
November 14, 2006. The equity commitment fees for the
first and second extensions, if necessary, were
$l0,000,000 and $25,000,000.
(c) the Consortium, unlike Berkshire, was not requesting a
highly unusual carve-out from USG's Shareholder Rights
Plan.
After various conversations with the Equity Committee, the
Consortium agreed to revise its Proposal. The original
substantial contribution amount consisted of $15,000,000, plus
35% of any net savings above $40,000,000, plus reimbursement of
reasonable expenses. However, the Consortium agreed to reduce
the Substantial Contribution Amount to $12,500,000. The
Consortium also extended the initial commitment period through
August 15, 2006.
Various Backstop Proposals
The Equity Committee decided to approach USG with the Consortium
Proposal and provided the Consortium with a written agreement to
fully support a request by the Consortium for payment of the
Substantial Contribution Amount.
After the Consortium Proposal was publicly disclosed, USG
benefited from a new and a modified backstop proposal, Ms. Selzer
says.
Specifically, Credit Suisse First Boston approached USG with an
alternative proposal for the equity backstop. CSFB's commitment
fee was $67,000,000 through September 30, 2006, with a $6,700,000
extension fee through November 14,2006.
Berkshire agreed to reduce its commitment fee significantly from
$100,000,000 to $67,000,000 through September 30, 2006, and from
$120,000,000,000,000 to $73,700,000 through November 14, 2006.
Furthermore, Capital Management LLC, and Fidelity Management &
Research Co. offered an alternative backstop proposal that was
virtually identical to the Berkshire Agreement. However, the
proposal had a cheaper commitment fee of $65,000,000.
Berkshire initially requested a $100,000,000 fee, but it will now
only receive a $67 million commitment fee.
The Consortium also reduced its commitment fee from $65,000,000
to $55 million through September 30, 2006, with a $5,500,000
extension fee through November 14,2006. The Consortium will
further escrow the commitment fee so that no investor in the
Consortium would receive its portion of the fee unless the entire
group made good on its commitment to purchase all unsubscribed
shares.
Payment of Substantial Contribution Amount is Warranted
Ms. Selzer notes that while the Consortium Proposal was
ultimately rejected, USG and the Equity Committee have supported
the payment of the Consortium's Substantial Contribution Amount.
USG and the Equity Committee believe that the Consortium's
involvement in the process of securing an equity backstop
commitment was critical to generating up to $46,300,000 and at
least $33,000,000, depending on the rights offering completion
date, in savings for USG and its stakeholders.
Accordingly, the Consortium asks the Court to allow it a
$12,500,000 administrative expense priority claim for its
substantial contribution to USG's estate, and direct the Debtors
to pay the claim.
About USG Corp.
Headquartered in Chicago, Illinois, USG Corporation --
http://www.usg.com/-- through its subsidiaries, is a leading
manufacturer and distributor of building materials producing a
wide range of products for use in new residential, new
nonresidential and repair and remodel construction, as well as
products used in certain industrial processes.
The Company filed for chapter 11 protection on June 25, 2001
(Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., Gus
Kallergis, Esq., Brad B. Erens, Esq., Michelle M. Harner, Esq.,
Mark A. Cody, Esq., and Daniel B. Prieto, Esq., at Jones Day
represent the Debtors in their restructuring efforts.
Lewis Kruger, Esq., Kenneth Pasquale, Esq., and Denise Wildes,
Esq., represent the Official Committee of Unsecured Creditors.
Elihu Inselbuch, Esq., and peter Van N. Lockwood, Esq., at Caplin
& Drysdale, Chartered, represent the Official Committee of
Asbestos Personal Injury Claimants. Martin J. Bienenstock, Esq.,
Judy G. Z. Liu, Esq., Ralph I. Miller, Esq., and David A.
Hickerson, Esq., at Weil Gotshal & Manges LLP represent the
Statutory Committee of Equity Security Holders. Dean M. Trafelet
is the Future Claimants Representative. Michael J. Crames, Esq.,
and Andrew A. Kress, Esq., at Kaye Scholer, LLP, represent the
Future Claimants Representative. Scott Baena, Esq., and Jay
Sakalo, Esq., at Bilzen Sumberg Baena Price & Axelrod LLP,
represent the Asbestos Property Damage Claimants Committee.
When the Debtors filed for protection from their creditors, they
listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG
Bankruptcy News, Issue No. 107; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
VARIG S.A.: Workers Demand Government Intervention
--------------------------------------------------
The Brazilian government reiterated its commitment to help keep
bankrupt VARIG, S.A., afloat amidst mounting demands from the
airlines' employees for a government bailout.
Romina Nicaretta at Bloomberg News reports that VARIG's workers
staged protests in Brasilia, Rio de Janeiro, Porto Alegre and Sao
Paolo to pressure the government into easing some of VARIG's
financial burdens.
According to Ms. Nicaretta, the workers are asking the government
to waive approximately $123 million in fuel and airport charges
over the next three months to allow the carrier to negotiate its
reorganization plan.
As reported in the Troubled Company Reporter on April 12, 2006,
VARIG CEO Marcelo Bottini has asked the Brazilian government for:
-- a three-month delay to pay Infraero, Brazil's airport
authority; and
-- a two-month delay to pay BR Distribuidora, an affiliate of
Brazilian government-owned oil company Petrobras.
VARIG owes the airport authority about $54 million and spends
about $422,000 a day for airport fees.
In addition to fuel and airport tax cuts, the workers also want
the government to compensate VARIG for losses the airline suffered
when it froze airline tickets in the 1980's. The Brazilian price
freezes, implemented under the Cruzado and Bresser Plans, were
intended to stabilize rising inflation in Brazil.
In a related development, the Associated Press reports that
Brazil's Civil Aviation Authority rejected a proposal that would
have allowed Ocean Air, a local carrier, to take over some of
VARIG's routes.
About VARIG
Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil's
largest air carrier and the largest air carrier in Latin America.
VARIG's principal business is the transportation of passengers and
cargo by air on domestic routes within Brazil and on international
routes between Brazil and North and South America, Europe and
Asia. VARIG carries approximately 13 million passengers annually
and employs approximately 11,456 full-time employees, of which
approximately 133 are employed in the United States.
The Company, along with two affiliates, filed for a judicial
reorganization proceeding under the New Bankruptcy and
Restructuring Law of Brazil on June 17, 2005, due to a competitive
landscape, high fuel costs, cash flow deficit, and high operating
leverage. The Debtors may be the first case under the new law,
which took effect on June 9, 2005. Similar to a chapter 11
debtor-in-possession under the U.S. Bankruptcy Code, the Debtors
remain in possession and control of their estate pending the
Judicial Reorganization. Sergio Bermudes, Esq., at Escritorio de
Advocacia Sergio Bermudes, represents the carrier in Brazil.
Each of the Debtors' Boards of Directors authorized Vicente Cervo
as foreign representative. In this capacity, Mr. Cervo filed a
Sec. 304 petition on June 17, 2005 (Bankr. S.D.N.Y. Case Nos.
05-14400 and 05-14402). Rick B. Antonoff, Esq., at Pillsbury
Winthrop Shaw Pittman LLP represents Mr. Cervo in the United
States. As of March 31, 2005, the Debtors reported
BRL2,979,309,000 in total assets and BRL9,474,930,000 in total
debts.
VERIFONE HOLDINGS: Lipman Deal Prompts Moody's to Hold B1 Ratings
-----------------------------------------------------------------
Moody's Investors Service affirmed the Corporate Family Rating of
B1 of Verifone Holdings, Inc., but revised the ratings outlook to
negative from stable. The current rating action is prompted by
Verifone's announcement that it has reached a definitive agreement
to acquire Lipman Electronic Engineering Ltd and about 60% of the
$800 million purchase price will likely be financed by debt.
Lipman is headquartered in Israel. It is a provider of a variety
of handheld, wireless and landline point-of-sale products,
solutions and services. Revenue was $235 million for fiscal 2005.
The outlook revision to negative reflects:
1) possible integration challenges from this sizable
acquisition, especially considering the weakening
profitability metrics of Lipman in recent years;
2) possibly increased exposure to international markets which
may present stronger growth prospects but also introduce
more volatility for Verifone; and
3) expected weakening of credit metrics which had improved
partly due to Verfione's IPO as a result of this
acquisition.
The B1 corporate family rating continues to reflect Verifone's
solid market position and increasing product acceptance in the
growing market for point-of-sale electronic payment processing
business. While still relatively small in size, Verifone's
profitability metrics and cash flow generation have been strong
since Moody's first assigned the rating in 2004. The company has
also de-levered as a result of its successful IPO in 2005. These
ratings have been affirmed:
* Corporate Family rating of B1;
* $30 million senior secured revolving credit facility, due
July 2009, rated B1;
* $180 million senior secured term loan facility, due July
2011, rated B1
Outlook revised to Negative
Verifone Holdings, Inc. is headquartered in Santa Clara,
California, and is a global market leader in the development and
sale of point-of-sale electronic payment systems.
VIRGIN MOBILE: S&P Puts B- Corp. Credit Rating on Negative Watch
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B-' corporate
credit and bank loan ratings on prepaid wireless carrier Virgin
Mobile USA LLC (VMUSA) on CreditWatch with negative implications.
The '5' recovery ratings on the company's $500 million senior
secured term B bank loan and $100 million senior secured revolving
credit facility are unaffected.
The action follows the Warren, New Jersey-based company's
disclosure that it was not in compliance with the minimum service
revenue covenant under its bank credit agreement at Dec. 31, 2005.
The company is in discussions with its lenders to amend its bank
agreement. VMUSA's auditors indicate that the failure to comply
with the bank covenants raises substantial doubt about the
company's ability to continue as a going concern.
"We expect to resolve the CreditWatch listing upon completion of
the amendment and after evaluating the company's operating and
financial prospects in light of increasingly competitive wireless
industry conditions," said Standard & Poor's credit analyst Eric
Geil.
VMUSA also anticipates that it will not be in compliance with the:
* net service revenue,
* quarterly minimum leverage, and
* fixed-charge ratio covenant tests
as of June 30, 2006.
The company has classified the $497.5 million outstanding on the
$500 million term loan maturing in 2011 as a current liability.
There was no outstanding amount on the $100 million revolving
credit as of Dec. 31, 2005.
WERNER HOLDING: S&P Lowers Corp. Credit Rating to CCC from CCC+
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Greenville, Pennsylvania-based Werner Holding Co. (DE)
Inc. to 'CCC' from 'CCC+'. The outlook is negative.
"The rating action reflects our further concerns about Werner's
liquidity and its exposure to high aluminum prices, which have
risen by about 30 cents per pound since the end of the third
quarter of 2005," said Standard & Poor's credit analyst Lisa
Wright. "We expect that high aluminum prices will continue to
use Werner's available liquidity, which was $43 million as of
Sept. 30, 2005, elevating the likelihood of a payment default of
its debt obligations."
The competitive landscape has intensified for ladder manufacturer
Werner Holding, coinciding with rapidly rising raw-material and
transportation costs that Werner has not been able to fully offset
with price or volume increases. As a result, the company's
earnings and cash flows have decreased, and Werner has intensified
its restructuring activities. Werner expects total restructuring
activities through 2008 to cost $65 million-$70 million, with
$45 million already incurred as of Sept. 30, 2005. However, high
raw-material and transportation costs and a competitive pricing
environment could offset some of the expected cost savings.
Werner is very highly leveraged, and its financial covenants are
restrictive.
WINN-DIXIE: Court Okays Abandonment of Unsold Inventory & FF&E
--------------------------------------------------------------
Since Winn-Dixie Stores, Inc., and its debtor-affiliates filed for
bankruptcy, they have developed and implemented a new reduced
footprint. Accordingly, the Debtors have closed or sold more than
500 stores and liquidated the inventory, furniture, fixtures, and
equipment at 216 of those stores.
The Debtors have since decided to sell or close 35 more
underperforming stores and intended to market and sell them as
ongoing businesses.
The 35 Targeted Stores are:
Store No. Designated Market Area
--------- ----------------------
310 Miami-Ft. Lauderdale
240 Miami-Ft. Lauderdale
339 Miami-Ft. Lauderdale
301 Miami-Ft. Lauderdale
217 Miami-Ft. Lauderdale
211 Miami-Ft. Lauderdale
205 Miami-Ft. Lauderdale
372 Miami-Ft. Lauderdale
215 Miami-Ft. Lauderdale
2324 Orlando-Daytona
2298 Orlando-Daytona
2330 Orlando-Daytona
2257 Orlando-Daytona
2650 Orlando-Daytona
2254 Orlando-Daytona
2387 Orlando-Daytona
659 Tampa-St. Petersburg
602 Tampa-St. Petersburg
613 Tampa-St. Petersburg
695 Tampa-St. Petersburg
643 Tampa-St. Petersburg
738 Myers-Naples
735 Myers-Naples
725 Myers-Naples
719 Myers-Naples
149 Albany
71 Albany
2357 West Palm Beach-Ft. Pierce
208 West Palm Beach-Ft. Pierce
185 Jacksonville
409 Columbus
516 Birmingham
192 Tallahassee
1571 Lafayette
1579 Baton Rouge
The Debtors posted the list of the 35 Stores in their Web site.
As a result, the Debtors have experienced negative sales trends
at the Stores and based on the Debtors' past experience, the
negative sale will likely accelerate, D. J. Baker, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, in New York, tells the
Court.
For this reason, Winn-Dixie Stores, Inc., and its debtor-
affiliates sought and obtained authority from the U.S. Bankruptcy
Court for the Middle District of Florida to:
(a) discontinue operations at each of the Targeted Stores and
sell each Stores' existing inventory, equipment and
supplies; and
(b) sell the Merchandise, and the furniture, fixtures and
equipment at the Targeted Stores, free and clear of liens,
claims and interests;
(c) in their sole discretion, abandon any Merchandise or FF&E
they are unable to sell; and
(d) sell the pharmaceutical inventory and prescriptions at the
Targeted Stores to the Purchaser who submits the highest
or best offer, free and clear of liens, claims, and
interests.
Objections
A) Florida Tax Collectors
The Tax Collectors for 56 Florida counties, including the
counties where 28 of the Florida stores to be closed are located,
tell the Court that the 2005 tangible taxes for the Stores
aggregate $392,718 and remain unpaid.
The 28 Florida stores are located in:
* Brevard County,
* Broward County,
* Collier County,
* Miami-Dade County,
* Duval County,
* Hillsborough County,
* Indian River County,
* Lee County,
* Manatee County,
* Orange County,
* Osceola County,
* Palm Beach County,
* Pinellas County,
* Polk County,
* Sarasota County, and
* Seminole County,
Brian T. FitzGerald, Esq., counsel for the Florida Tax
Collectors, relates that the 2005 real estate taxes on some of
the Stores have been paid, but there are unpaid 2005 real estate
taxes for 15 Stores totaling $2,140,924.
Mr. FitzGerald adds that 2006 ad valorem taxes were assessed and
a statutory first lien was imposed on the property on Jan. 1,
2006, pursuant to Section 197.122 of the Florida Statutes.
Mr. FitzGerald contends that the Debtors' request to liquidate,
abandon, or otherwise transfer the tangible personal property at
all locations in a manner that best enhances value for creditors
-- may be in the best interest of the Debtors, but it is not in
the best interest of the Florida Tax Collectors, who have a first
lien on the collateral to be liquidated.
The Florida Tax Collectors have the ability under state law to
seize and sell tangible property, and they are not entitled to a
commission as the Debtors want to pay to Hilco Merchant
Resources, LLC, and Gordon Brothers Retail Partners, LLC.
Mr. FitzGerald asserts that a sale "free and clear of liens" is
improper without providing adequate protection:
(a) to the Florida Tax Collectors as a statutory first lien
holder; and
(b) that the 2006 postpetition taxes incurred by the Debtors
are paid in compliance with Sections 959 and 960 of the
Judicial Procedures Code.
The Tax Injunction Act, Section 1341 of the Judiciary Procedures
Code and Section 362(b)(18) of the Bankruptcy Code preclude
interference with the assessment of ad valorem taxes and lien
creation relative to ad valorem property taxes, Mr.
FitzGerald tells the Court.
Mr. FitzGerald argues that the Debtors' representation that there
are no interests or claims in the FF&E which will attach to the
net proceeds of sale other than the senior liens and
superpriority administrative claims of the DIP lender is
incorrect, in that it fails to advise the Court of the statutory
first liens of the Florida Tax Collectors.
Accordingly, the Florida Tax Collectors ask the Court deny
relief:
(a) relative to their collateral; and
(b) sought against them individually as constitutional
officers and arms of the State of Florida.
The Florida Tax Collectors ask the Court to order the Debtors to
establish a separate segregated escrow account with sufficient
funds to pay all 2005 and 2006 ad valorem property taxes for the
28 Stores, and that the escrow account be funded on a monthly
basis with additional interest due to the Florida Tax Collectors
as fully secured creditors until the taxes, interest, and
attorney's fees are paid in full.
B) Landlords of Store No. 215
Hecht Properties, Ltd., Viola Gautier, James Kramer, and Jeffrey
Lefcourt are the landlords to Store No. 215.
David C. Profilet, Esq., tells the Court that the Debtors failed
to consider that with abandonment, they are at risk of incurring
additional administrative obligations in the form of the costs
incurred by the Landlords to dispose of the abandoned property.
In some instances, the Debtors may be better equipped than the
Landlords to dispose of the property, and thus able to do so at a
lower cost, Mr. Profilet says.
Therefore, in the case of Store No. 215, if the Landlords are
left to dispose of any property abandoned by the Debtors, the
Landlords will assert an administrative claim for the abandonment
cost, as well as their attorneys' fees and expenses.
Sale of Pharmaceutical Assets
The Debtors operate pharmacies at 30 of the Targeted Stores. By
state law, the Debtors are unable to close a store without
selling or otherwise transferring the Pharmaceutical Assets to
another of its locations or to another vendor.
Where economically feasible, the Debtors will transfer the
Pharmaceutical Assets to another of their Stores. Otherwise, the
Debtors will sell the Pharmaceutical Assets.
According to Mr. Baker, there is a significant market for
Pharmaceutical Assets among a fairly small group of purchasers.
The Debtors are providing an information package detailing the
Pharmaceutical Assets available for sale to each potential
purchaser that, in their business judgment, will purchase the
Pharmaceutical Assets for maximum value while minimizing the
competitive risk to the Debtors' operation. The Debtors
anticipate receiving a number of offers for the Pharmaceutical
Assets.
The Court approved the sale of pharmaceutical assets and the
corresponding purchase agreements to the successful bidders:
Purchaser Store No. Location Final Bid
--------- --------- -------- ---------
Freds Stores of 192 Cairo, Georgia $45,000
Tennessee, Inc.
Walgreen Co. 217 Pompano Beach, Florida $325,000
602 Bartow, Florida
719 Cape Coral, Florida
2254 Kissimmee, Florida
2357 Vero Beach, Florida
Target
Corporation 339 Davie, Florida $435,000
643 Tampa, Florida
695 Palm Harbor, Florida
2298 Melbourne, Florida
2330 Merritt Island, Florida
CVS Corporation 71 Tifton, Georgia $260,000
149 Cordele, Georgia
659 Sarasota, Florida
725 North Fort Myers, Florida
735 Naples, Florida
1571 Ville Platte, Louisiana
1579 Plaquemine, Louisiana
2324 Cocoa, Florida
The only known claim or interest in the Pharmaceutical Assets
other than the Debtors is that of Wachovia Bank, National
Association, as Administrative Agent and Collateral Agent for
itself and the other financial institutions from time to time
parties to the Credit Agreement dated as of Feb. 23, 2005, as
may amended. The DIP Lender consents to sale of the
Pharmaceutical assets.
The DIP Lender is adequately protected because the Debtors will
use the sale proceeds in accordance with the terms of the Final
Financing Order.
Store Closing
Judge Funk permits the Debtors to cease retail operations at 35
Closing Stores, and sell the Merchandise and furniture, fixtures
and equipment in those stores.
Store No. Store Name
--------- ----------
71 Tifton, Georgia
149 Cordele, Georgia
185 Jacksonville, Florida
192 Cairo, Georgia
205 Miami, Florida
208 West Palm Beach, Florida
211 Plantation, Florida
215 N Miami Beach, Florida
217 Pompano Beach, Florida
240 Hialeah, Florida
301 Ft. Lauderdale, Florida
310 Davie, Florida
339 Davie, Florida
372 Sunrise, Florida
409 Opelika, Al
516 Brent, Al
602 Bartow, Florida
613 Bradenton, Florida
643 Tampa, Florida
659 Sarasota, Florida
695 Palm Harbor, Florida
719 Cape Coral, Florida
725 Ft Myers, Florida
735 Naples, Florida
738 Naples, Florida
1571 Ville Platte, Louisiana
1579 Plaquemine, Louisiana
2254 Kissimmee, Florida
2257 Orlando, Florida
2298 Melbourne, Florida
2324 Cocoa, Florida
2330 Merritt Island, Florida
2357 Vero Beach, Florida
2387 Casselberry, Florida
2650 Orlando, Florida
In the event any landlord alleges that the Agent or the Merchant
has violated the Order or any Landlord Agreement, the landlord
may seek a hearing on three days' notice.
In their sole discretion, with the exception of Store No. 215,
which Objection will be heard on a later date, the Debtors are
authorized, after consultation with the Creditors' Committee and
DIP Lender, to abandon any Merchandise and FF&E they are unable
to sell.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14,
2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840).
D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and
Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King &
Spalding LLP, represent the Debtors in their restructuring
efforts. Paul P. Huffard at The Blackstone Group, LP, gives
financial advisory services to the Debtors. Dennis F. Dunne,
Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B.
Macdonald, Esq., at Akerman Senterfitt give legal advice to the
Official Committee of Unsecured Creditors. Houlihan Lokey &
Zukin Capital gives financial advisory services to the
Committee. When the Debtors filed for protection from their
creditors, they listed $2,235,557,000 in total assets and
$1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News,
Issue No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000).
WINN-DIXIE: Court Approves Amended Hilco & Gordon Agency Agreement
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Florida gave Winn-
Dixie Stores, Inc., and its debtor-affiliates authority to employ
Hilco Merchant Resources, LLC, and Gordon Brothers Retail
Partners, LLC, as their liquidating agents, pursuant to an Agency
Agreement, for the sale of 35 Targeted Stores and the existing
inventory, furniture, fixtures and equipment in the Stores.
The material terms of the Agency Agreement are:
A. Agent's Fee. As compensation for the services being
provided, the Agent will be entitled to a fee equal to:
(a) $4,500 per Store plus,
(b)(1) 10% of the amount by which the Net Proceeds of the
Sale are equal to or greater than 36% of the Retail
Value of the Merchandise and less than 37% of the
Retail Value of the Merchandise;
(2) 20% of the amount by which the Net Proceeds of the
Sale are equal to or greater than 37% of the Retail
Value of the Merchandise and less than 38% of the
Retail Value of the Merchandise; or
(3) 30% of the amount by which the Net Proceeds of the
Sale are equal to or greater than 38% of the Retail
Value of the Merchandise.
B. FF&E Fee. The Debtors may elect, on a store-by-store
basis, to have the Agent dispose of the FF&E at the Closing
Stores. If the Debtors make an election for a Closing
Store, the fee payable to the Agent with respect to the
FF&E will be:
(a) $2,500 per Closing Store, plus
(b) 15% of the amount by which the net proceeds of sale of
the FF&E exceed $50,000 per store.
C. Control of Proceeds. All cash proceeds from the sale will
be handled in accordance with the Debtors' normal cash
management procedures.
D. Final Reconciliation. Within 60 days after the end of the
sale, the Agent and the Debtors will jointly prepare a
final reconciliation including a summary of Proceeds,
taxes, expenses, and any other accountings required.
Within five days of completion of the Final Reconciliation:
(a) any undisputed and unpaid expenses will be paid by the
Debtors; and
(b) any portion of the Agent's fee related to a Closing
Store for which there is no disputed amount will be
paid by the Debtors to the Agent.
E. Expenses of the Sale. All expenses of the sale will be
borne by the Debtors consistent with an expense budget to
be agreed to between the Agent and the Debtors.
F. Vacating the Stores. The sales under the Agency Agreement
will commence immediately after the Court approves the
Agreement and continue until April 30, 2006, provided that
the sale of the FF&E at each store will continue until
May 23, 2006.
D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP,
in New York, tells the Court that the Debtors have retained Hilco
and Gordon Brothers for the liquidation of certain of their
Targeted Stores previously sold and are pleased with the Agents'
services.
Mr. Baker assures the Court that Hilco and Gordon Brothers do not
hold any interest adverse to the Debtors or their estates with
respect to the matters for which they are to be retained in the
Debtors' Chapter 11 cases.
Debtors Revise Agency Agreement
Mr. Baker advises the Court that the Agency Agreement has been
amended to provide that as payment for its services, the Agent
will be entitled to a fee equal to:
(a) $4,500 per Store, plus
(b) (i) those Net Proceeds that result in Net Proceeds equal
to or greater than 37.7% of the Retail Value of the
Merchandise, but less than or equal to 38.3% of the
Retail Value of the Merchandise, and
(ii) 30% of Net Proceeds to the extent that the Net
Proceeds result in Net Proceeds in excess of 38.3%
of the Retail Value of the Merchandise.
The Agent's Fee will be paid by the Debtors following final
reconciliation of proceeds, taxes, expenses, and any other
accountings required. All Remaining Merchandise will remain the
Debtors' property but the Agent will be responsible for the
disposition of the Remaining Merchandise in accordance with the
Debtors' instructions.
The Agent is granted a limited license and right to use, during
the Sale Term, the trade names, logos, and customer lists
relating to and used in connection with the operation of the
Closing Stores, solely for the purpose of conducting the Store
Closing Sales.
A full-text copy of the Revised Agency Agreement is available for
free at http://ResearchArchives.com/t/s?7d0
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14,
2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840).
D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and
Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King &
Spalding LLP, represent the Debtors in their restructuring
efforts. Paul P. Huffard at The Blackstone Group, LP, gives
financial advisory services to the Debtors. Dennis F. Dunne,
Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B.
Macdonald, Esq., at Akerman Senterfitt give legal advice to the
Official Committee of Unsecured Creditors. Houlihan Lokey &
Zukin Capital gives financial advisory services to the
Committee. When the Debtors filed for protection from their
creditors, they listed $2,235,557,000 in total assets and
$1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News,
Issue No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000).
WINN-DIXIE: Court Okays Assumption of Modified Cisco Systems Lease
------------------------------------------------------------------
Winn-Dixie Stores, Inc., and its debtor-affiliates and Cisco
Systems Capital Corporation are parties to a Master Agreement to
Lease Equipment No. 4574 dated as of March 18, 2004, pursuant to
which the Debtors leased router equipment from Cisco Systems. The
Prepetition Lease provides for the leasing of 900 routers for a
term of 48 months, as well as for their maintenance for a term of
44 months.
When the Debtors filed for bankruptcy, they have satisfied their
lease payment obligations through November 2005, but were indebted
to Cisco Systems for maintenance services amounting to $160,993.
As a result of the Debtors' footprint reduction program, the
Prepetition Lease carries an obligation for the Debtors to lease
and obtain maintenance services for 318 more routers. This
number is likely to increase as a result of the Debtors' recent
decision to sell or close 35 more stores.
D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP,
in New York, relates that prior to the Petition Date, the Debtors
sought to modify the maintenance portion of the Prepetition Lease
to substitute on-site services obtainable from BellSouth for
those being provided by Cisco Systems. As a result, the Debtors
have not made:
-- any postpetition maintenance payments to Cisco Systems
since the Petition Date, resulting in an outstanding
obligation totaling $386,386; and
-- any lease payments coming due after November 2005,
resulting in an outstanding obligation totaling $194,852.
The Debtors continues to have possession of the Leased Equipment
and wants to (i) assume the Prepetition Lease, as modified by
Schedule No. 002, and (ii) return some, but not all, of the
Leased Equipment.
Mr. Baker relates that Schedule No. 002 will:
(a) reduce the number of routers under the Lease by 318;
(b) permit the return of 40 more routers; and
(c) modify the maintenance provisions for the reduced number
of leased routers.
Schedule No. 002 will be effective with respect to lease
obligations beginning in December 2005. Maintenance payments
will be decreased retroactive to March 2005 based on the reduced
number of routers covered by Schedule 002. Thus, the
postpetition maintenance obligations will be reduced to $179,299.
Accordingly, the parties stipulate that the Debtors will seek to
assume the Prepetition Lease, as modified by Schedule No. 002.
The parties also want to enter into two Software/Services Payment
Reimbursement Agreements:
(1) Loan Agreement 2
Under Reimbursement Agreement No. 5094-SA002-0, Cisco
Systems will finance $558,314 on an unsecured basis, at an
interest rate of 4.25%, to cover postpetition and future
maintenance services for the leased routers in the
Debtors' remaining stores, to include new agreements for
the services sought to be obtained from BellSouth
Communications, LLC.
(2) Loan Agreement 3
Under Reimbursement Agreement No. 5094-SA003-0, Cisco
Systems will finance $204,470 on an unsecured basis, at an
interest rate of 4.25%, to cover maintenance services for
the headquarter routers. This is in connection with the
parties' agreement with respect to a new maintenance
agreement for routers located at the Debtors'
headquarters, which have been without a formal maintenance
agreement since November 2004.
In the event the unsecured financings are not considered to be
ordinary course, Cisco Systems will require the Court's approval.
The parties further agree to mutually release each other from all
claims, with the exception of obligations existing under Schedule
002, Loan Agreement 2 or Loan Agreement 3, and with the exception
of property taxes that may be owed by the Debtors under the
Prepetition Lease. The release will operate as a waiver of all
prepetition claims held by Cisco Systems against the Debtors,
including the $160,993 owed for prepetition maintenance.
Accordingly, Winn-Dixie Stores, Inc., and its debtor-affiliates
sought and obtained from the U.S. Bankruptcy Court for the Middle
District of Florida approval of:
(a) their assumption of the Prepetition Lease, as modified by
Schedule No. 002;
(b) their obtaining of unsecured financing pursuant to Loan
Agreements 2 and 3; and
(c) the mutual release of claims, as agreed by both parties.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14,
2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840).
D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and
Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King &
Spalding LLP, represent the Debtors in their restructuring
efforts. Paul P. Huffard at The Blackstone Group, LP, gives
financial advisory services to the Debtors. Dennis F. Dunne,
Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B.
Macdonald, Esq., at Akerman Senterfitt give legal advice to the
Official Committee of Unsecured Creditors. Houlihan Lokey &
Zukin Capital gives financial advisory services to the
Committee. When the Debtors filed for protection from their
creditors, they listed $2,235,557,000 in total assets and
$1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News,
Issue No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000).
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
-------------------------------------------------------------
Recent chapter 11 cases filed with assets and liabilities below
$1,000,000:
In re Interchange Specialty Services, Inc.
Bankr. W.D. Penn. Case No. 06-21414
Chapter 11 Petition filed April 3, 2006
See http://bankrupt.com/misc/pawb06-21414.pdf
In re Shreve Chiropractic Office, P.C.
Bankr. E.D. Tenn. Case No. 06-30654
Chapter 11 Petition filed April 4, 2006
See http://bankrupt.com/misc/tneb06-30654.pdf
In re Story Associates, Inc.
Bankr. D. Md. Case No. 06-11864
Chapter 11 Petition filed April 4, 2006
See http://bankrupt.com/misc/mdb06-11864.pdf
In re The Rosa Corporation
Bankr. D. Mass. Case No. 06-10839
Chapter 11 Petition filed April 4, 2006
See http://bankrupt.com/misc/mab06-10839.pdf
In re Abdelaziz Faris
Bankr. D. P.R. Case No. 06-00958
Chapter 11 Petition filed April 5, 2006
See http://bankrupt.com/misc/prb06-00958.pdf
In re Douglas Resources, Inc.
Bankr. D. Md. Case No. 06-11894
Chapter 11 Petition filed April 5, 2006
See http://bankrupt.com/misc/mdb06-11894.pdf
In re Elite Stone Creations, Inc.
Bankr. E.D. Wash. Case No. 06-00706
Chapter 11 Petition filed April 5, 2006
See http://bankrupt.com/misc/waeb06-00706.pdf
In re EZ-WASH, LLC
Bankr. M.D. Tenn. Case No. 06-01608
Chapter 11 Petition filed April 5, 2006
See http://bankrupt.com/misc/tnmb06-01608.pdf
In re Hanan's Investments, Inc.
Bankr. E.D. Mich. Case No. 06-44134
Chapter 11 Petition filed April 5, 2006
See http://bankrupt.com/misc/mieb06-44134.pdf
In re LMH Limited
Bankr. W.D. Wash. Case No. 06-40644
Chapter 11 Petition filed April 5, 2006
See http://bankrupt.com/misc/wawb06-40644.pdf
In re Miracle Christian International Life Center
Bankr. E.D. N.C. Case No. 06-01035
Chapter 11 Petition filed April 5, 2006
See http://bankrupt.com/misc/nceb06-01035.pdf
In re Al Turner Associates, Inc.
Bankr. D. N.J. Case No. 06-12793
Chapter 11 Petition filed April 6, 2006
See http://bankrupt.com/misc/njb06-12793.pdf
In re Altamont Partners-Coastal, LLC
Bankr. W.D. Wash. Case No. 06-10955
Chapter 11 Petition filed April 6, 2006
See http://bankrupt.com/misc/wawb06-10955.pdf
In re Nylon Dye Works, LLC
Bankr. M.D. N.C. Case No. 06-10367
Chapter 11 Petition filed April 6, 2006
See http://bankrupt.com/misc/ncmb06-10367.pdf
In re Zachary Rosenberg
Bankr. W.D. Tenn. Case No. 06-22405
Chapter 11 Petition filed April 6, 2006
See http://bankrupt.com/misc/tnwb06-22405.pdf
In re A.M. Jacobs, Inc.
Bankr. D. S.C. Case No. 06-01446
Chapter 11 Petition filed April 7, 2006
See http://bankrupt.com/misc/scb06-01446.pdf
In re Downtown Club of Richmond, Incorporated
Bankr. E.D. Va. Case No. 06-30807
Chapter 11 Petition filed April 7, 2006
See http://bankrupt.com/misc/vaeb06-30807.pdf
In re Elloitt Dewitt Sadler
Bankr. S.D. Ala. Case No. 06-10427
Chapter 11 Petition filed April 7, 2006
See http://bankrupt.com/misc/alsb06-10427.pdf
In re Scott & Molly LLC
Bankr. E.D.N.Y. Case No. 06-70749
Chapter 11 Petition filed April 7, 2006
See http://bankrupt.com/misc/nyeb06-70749.pdf
In re Vision Educational Learning Center & School for
the Performing Arts
Bankr. M.D. Fla. Case No. 06-00737
Chapter 11 Petition filed April 7, 2006
See http://bankrupt.com/misc/flmb06-00737.pdf
In re Geoffrey Crispin Stout
Bankr. N.D. Calif. Case No. 06-50575
Chapter 11 Petition filed April 9, 2006
See http://bankrupt.com/misc/canb06-50575.pdf
In re 310 I R, L.L.C.
Bankr. S.D. Ind. Case No. 06-01632
Chapter 11 Petition filed April 10, 2006
See http://bankrupt.com/misc/insb06-01632.pdf
In re Gem-Mars Swimming Pools Inc.
Bankr. W.D. Ky. Case No. 06-30848
Chapter 11 Petition filed April 10, 2006
See http://bankrupt.com/misc/kywb06-30848.pdf
In re Kordell & Associates, Inc.
Bankr. N.D. Ill. Case No. 06-03960
Chapter 11 Petition filed April 10, 2006
See http://bankrupt.com/misc/ilnb06-03960.pdf
In re Wakara Elk Ventures, LLC
Bankr. D. Nev. Case No. 06-10682
Chapter 11 Petition filed April 10, 2006
See http://bankrupt.com/misc/nvb06-10682.pdf
In re Convenient Plus Automotive Service, Inc.
Bankr. E.D.N.Y. Case No. 06-70785
Chapter 11 Petition filed April 11, 2006
See http://bankrupt.com/misc/nyeb06-70785.pdf
In re Lifetime Roof Systems, Inc.
Bankr. D. Kans. Case No. 06-20463
Chapter 11 Petition filed April 11, 2006
See http://bankrupt.com/misc/ksb06-20463.pdf
In re LEDJJS, Inc.
Bankr. D. N.J. Case no. 06-13017
Chapter 11 Petition filed April 11, 2006
See http://bankrupt.com/misc/njb06-13017.pdf
In re Millstone LLC
Bankr. D. N.J. Case no. 06-13033
Chapter 11 Petition filed April 11, 2006
See http://bankrupt.com/misc/njb06-13033.pdf
In re Theodore L. Grady Jr. & Amy L. Grady
Bankr. W.D. Wash. Case No. 06-40737
Chapter 11 Petition filed April 11, 2006
See http://bankrupt.com/misc/wawb06-40737.pdf
In re Wagon Master, Inc.
Bankr. W.D. Mo. Case No. 06-60279
Chapter 11 Petition filed April 11, 2006
See http://bankrupt.com/misc/mowb06-60279.pdf
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
On Thursdays, the TCR delivers a list of recently filed chapter 11
cases involving less than $1,000,000 in assets and liabilities
delivered to nation's bankruptcy courts. The list includes links
to freely downloadable images of these small-dollar petitions in
Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
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. Marie Therese V. Profetana, Shimero Jainga, Emi Rose S.R.
Parcon, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo,
Christian Q. Salta, Jason A. Nieva, Lucilo Junior M. Pinili, Tara
Marie A. Martin and Peter A. Chapman, Editors.
Copyright 2006. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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re-mailing and photocopying) is strictly prohibited without prior
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herein is obtained from sources believed to be reliable, but is
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*** End of Transmission ***