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/raid1/www/Hosts/bankrupt/TCR_Public/060529.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, May 29, 2006, Vol. 10, No. 126 Headlines ACE SECURITIES: Fitch Lowers Class M-6 Certificates' Rating to BB- ACXIOM CORP: Earns $131.1 Million in Fiscal Year 2006 ADELPHIA COMMS: Wants Aid in Asset Sale to Time Warner & Comcast AFFINIA GROUP: Moody's Affirms Caa2 Rating on Senior Sub. Notes AIRADIGM COMMUNICATIONS: Section 341(a) Meeting Set for June 8 AIRADIGM COMMUNICATIONS: Has Until June 6 to File Schedules AIRBASE SERVICES: Trustee Taps D.A. Davidson as Financial Advisor AIRBASE SERVICES: Section 341(a) Meeting Scheduled for June 20 ALLEGHENY ENERGY: Unit Obtains $967 Million Credit Facility ALLEGHENY ENERGY: Mulls Transmission Expansion Under PJM Plan ALLIANCE LAUNDRY: Acquires LSG's Laundry Division for EUR59 Mil. AMR CORP: Completes Offer for 15,002,091 Common Stock Shares ANNA NICOLE SMITH: Probate Dispute Remanded to 9th Cir. ASARCO LLC: Wants The Claro Group as Insurance-Recovery Advisor ASARCO LLC: Wachovia Wants Equipment Leases Decided Tomorrow ASPECT SOFTWARE: Moody's Assigns Caa1 Rating to $385M Term Loan ASSET BACKED: Moody's Assigns Low-B Rating on Two Cert. Classes ATLANTIC MUTUAL: S&P Holds Notes' Rating at CCC With Neg. Outlook ATTACHMATE CORP: S&P Rates Proposed $340 Million Facilities at B AVANEX CORP: Posts $10.2 Mil. Net Loss in 2006 Third Fiscal Qtr. AVONDALE MILLS: S&P Downgrades Corporate Credit Rating to CC BEAR STEARNS: Moody's Lowers Rating on $17.8 Mil. of Certs. to C BERRY-HILL GALLERIES: Has Until Aug. 7 to File Chapter 11 Plan BOUNDLESS MOTOR: Completes $12 Million Preferred Stock Sale BOYDS COLLECTION: Robert Coccoluto Replaces Jan Murley as CEO BRANDS SERVICES: Moody's Places Junk-Rated $150MM Notes on Review BRAND SERVICES: S&P Puts CCC+ Subordinated Rating on CreditWatch CALABASH RE: S&P Assigns BB Rating to $100 Million Class A-1 Notes CENVEO CORP: S&P Rates Planned $525 Million Credit Facility at BB- CHARLES RIVER: Selling Clinical Services to Kendle for $215 Mil. CITIBANK MUTUAL: Moody's Cuts Rating on Two Securities to Ca CLEARSTORY SYSTEMS: Moves to Voluntarily Deregister Stock COMMERCIAL MORTGAGE: Moody's Junks Rating on $8.9MM Class M Certs. CONTINENTAL AIRLINES: S&P Rates $130MM Class B Certificates at B+ CORUS GROUP: Sells Rolled Aluminum Unit to Aleris for EUR826 Mil. CREDIT SUISSE: S&P Upgrades Class L Certificates' Rating to BB- CVEK BUILDERS: Case Summary & 19 Largest Unsecured Creditors DOBSON COMMS: Prices Tender Offer for Unit's Sr. Secured Notes DOLE FOOD: Fitch Downgrades Senior Unsecured Debt Rating to CCC+ EAGLEPICHER HOLDINGS: Court Sets 3-Day Plan Confirmation Hearing ELLIEGRAPHICS LTD: Assignee Auctioning Equipment on May 31 ENRON: Settling Dispute with Water District of Southern Calif. ENRON CORP: District Court Approves $6.6B Class Suit Settlements EPIXTAR CORP: McClain & Co Steps Down as Independent Auditor FALCON AIR: Section 341(a) Meeting Scheduled for June 20 FDL INC: Objects to Fifth Third's Trustee Appointment Motion FDL INC: Committee Withholds Position on Trustee's Appointment FEP TRUST: Moody's Junks Rating on Four Classes of Notes FORD MOTOR: Board Approves Terms of President's Retirement FORD MOTOR: S&P Places BB- Long-Term Rating on Negative Watch FUTURE MEDIA: Court Approves Levene Neale as Bankruptcy Counsel FUTURE MEDIA: Court Approves Atala LLC as Financial Consultant GMAC COMMERCIAL: Moody's Holds Caa2 Rating on $5.2MM of Certs. GMAC COMMERCIAL: S&P Affirms Six Cert. Classes' Low-B Ratings GRAFTECH INT'L: Hires Mark Widmar as Chief Financial Officer GRAHAM PACKAGING: Fitch Puts CCC Rating on Sr. Subordinated Notes GREENS WORLDWIDE: Posts $5.9 Mil. Net Loss in 2006 1st Fiscal Qtr. HASTINGS MANUFACTURING: Court Converts Case to Ch. 7 Liquidation HCA INC: S&P Assigns BB+ Rating to Sr. Unsecured Debt Securities HOLLINGER INT'L: Settles Tweedy Browne Lawsuit for $3.5 Million INTELSAT LTD: Names New Sr. Management Members to Finance Team INVERNESS MEDICAL: Buying 49% of TechLab Stock JAMES ACHEY: Case Summary & 19 Largest Unsecured Creditors KENT FUNDING: Moody's Puts Rating on $3 Mil. Class E Notes at Ba1 KL INDUSTRIES: Court Okays Shaw Gussis as Bankruptcy Counsel KL INDUSTRIES: Panel Hires Winston & Strawn as Bankruptcy Counsel LAND O'LAKES: MoArk Unit Sells Part of Assets to Golden Oval Eggs LARRY'S MARKETS: Section 341(a) Meeting Scheduled for June 12 LEHMAN ABS: S&P Puts Class B-1 Debt's CCC Rating on Negative Watch LIFECARE HOLDINGS: S&P Affirms Notes' B Rating With Neg. Outlook LOVESAC CORP: Seeks Court Nod to Reject Pittsburgh Mills Lease MAXXAM INC: Palco Provides Asset Information to Potential Lenders MERIDIAN AUTOMOTIVE: Files Amended Plan of Reorganization MERRILL LYNCH: Fitch Affirms Class B-2 Loan's BB Rating MERRILL LYNCH: DBRS Holds Low-B Rating on 6 Certificate Classes NASH FINCH: S&P Affirms B+ Corporate Credit & Bank Loan Ratings NBC/AUSTIN WINDRIDGE: Taps Fuqua & Keim as Bankruptcy Counsel NBC/AUSTIN WINDRIDGE: Files Schedules of Assets and Liabilities NICKOLAS ENVIRONMENTAL: Involuntary Chapter 11 Case Summary OCA INC: Court OKs William Steffes as Committee's Local Counsel ON SEMICONDUCTOR: Completes $105 Mil. Purchase of LSI Logic Unit OWENS CORNING: Asks Court to OK J.P. Morgan Equity Commitment Pact PHOTOWORKS INC: Posts $933,000 Net Loss in 2006 Second Quarter PLAINS EXPLORATION: S&P Holds BB Corp. Credit Rating on Neg. Watch PLIANT CORP: All Voting Classes Approve Plan of Reorganization POGO PRODUCING: S&P Holds BB Corp. Credit Rating With Neg. Outlook PULL'R HOLDINGS: Wants Robinson Diamant as Bankruptcy Counsel Q TELEVISION: Signal Broadcasting Programming Terminated RAPID PAYROLL: Section 341(a) Meeting Scheduled for June 21 REXNORD CORP: S&P Maintains B+ Rating & Revises Watch to Negative ROCK-TENN: Moody's Confirms Corporate Family Rating at Ba2 ROO GROUP: Losses & Negative Cash Flows Spur Going Concern Doubt ROTECH HEALTHCARE: S&P Lowers Rating to B- With Negative Outlook SCRIP ADVANTAGE: Secured Creditors Forecloses Operating Assets SEALY CORP: Improved Performance Cues S&P to Raise Rating to BB- SKIN NUVO: Nevada Court Approves Amended Disclosure Statement SOUTHERN UNION: Moves Schedule for Remarketing of 2.75% Sr. Notes STIRLING COOKE: Scheme Creditors' Meeting Set on July 5 SURGILIGHT INC: March 31 Balance Sheet Upside Down by $925,230 SYBRON DENTAL: Closed Acquisition Cues S&P to Withdraw BB+ Rating TENSAR CORP: Tensar Group Acquisition Cues S&P to Affirm B- Rating THINKPATH INC: Posts $371,656 Net Loss in 2006 1st Fiscal Quarter TRINITY INDUSTRIES: Moody's Holds Corporate Family Rating at Ba2 UNITED COMPONENTS: Earns $4.8 Million During 2006 First Quarter USG CORP: Wants to Enter into $2.8-Bil. Exit Financing Facilities VERIDIEN CORP: March 31 Balance Sheet Upside Down By $5.9 Million VILLAJE DEL RIO: Files Schedules of Assets and Liabilities VISTEON CORP: S&P Assigns B+ Rating to New $800 Million Term Loan WARNER MUSIC: Fitch Assigns BB- Issuer Default Rating WESTLAND HOLDINGS: Moody's Puts Low-B Rating on Planned Term Loans WESTPORT COMMUNITY: Section 341(a) Meeting Scheduled for June 14 WILLIAMS COS: Building New Pipelines Under ONEOK Joint Venture WILLIAMS PARTNERS: Fitch Rates Proposed $150 Million Notes at BB X-RITE INC: S&P Assigns B+ Rating to Proposed $160 Million Loan XYBERNAUT CORP: Fails to Attract Qualified Bids for IP Assets YUKOS OIL: Sells 53.7% Mazeikiu Stake to PKN Orlen for $1.49BB * Bill Donohue Joins Alvarez & Marsal as Managing Director in NY * FTI Hires Kevin Shultz, Terry Orr, Craig Earnshaw & Bruce Benson * BOND PRICING: For the week of May 22 - May 26, 2006 ********* ACE SECURITIES: Fitch Lowers Class M-6 Certificates' Rating to BB- ------------------------------------------------------------------ Fitch took these rating actions on Ace Securities Corporation's asset backed pass-through certificates, series 2004-HE1: -- Class A affirmed at 'AAA' -- Class M-1 affirmed at 'AA' -- Class M-2 affirmed at 'A' -- Class M-3 affirmed at 'A-' -- Class M-4 downgraded to 'BBB' from 'BBB+', removed from Rating Watch Negative -- Class M-5 downgraded to 'BB' from 'BBB', removed from Rating Watch Negative -- Class M-6 downgraded to 'BB-' from 'BBB-', removed from Rating Watch Negative The affirmations affect approximately $78.64 million in outstanding certificates and reflect adequate relationships of credit enhancement to future loss expectations. The downgrades of classes M-4, M-5 and M-6 are due to higher than expected monthly losses, which have caused significant deterioration in the overcollateralization amount, and affect approximately $15.12 million of outstanding certificates. As of the April 2006 distribution date, the OC amount of $377,088 is below the target amount of $2,134,184. Fitch expects the OC to be depleted within the next couple of months and class B (not rated by Fitch) to start taking write-downs, which will put classes M-4, M-5 and M-6 at a greater risk of future losses. Cumulative losses to date (2.03%) and loans more than sixty days delinquent (21.45%) are higher than initially expected at this point in the transaction's seasoning. The loans were initially acquired by various originators including: * People's Choice Home Loan, Inc. (39.52%); * Ameriquest Mortgage Company (23.74%); and * Oakmont Mortgage (11.74%). As of the closing date, the average principal balance of the mortgage loans was approximately $104,036 and the weighted average combined loan-to-value ratio was approximately 82%. Loans with a loan balance less than $100,000 and a LTV greater then 85% have made up a disproportionately large share of the losses to date, as have loans located in Rust-Belt states (Indiana, Michigan, Ohio, Illinois) and the state of Texas. The pool is seasoned 25 months, and as such, has not yet reached the step-down date (when, barring a performance trigger breach due to high delinquencies or cumulative losses, the level of OC required to be maintained in the transaction is reduced or 'stepped down'). The transaction has a pool factor (current principal balance as a percentage of original) of 29%. The mortgage pool consists of conventional, first and second lien, adjustable- and fixed-rate residential mortgage loans. The properties are primarily located in: * California, * New York, and * Florida. The mortgage loans are master serviced by Wells Fargo Bank, N.A. (rated 'RMS1' by Fitch). ACXIOM CORP: Earns $131.1 Million in Fiscal Year 2006 ----------------------------------------------------- Acxiom Corporation reported fourth-quarter and full-year financial results for fiscal 2006 ended March 31, 2006. Fourth-quarter results include revenue of $344.3 million, income from operations of $44.6 million, operating cash flow of $74.2 million and free cash flow of $52.5 million. Full 2006 fiscal-year results include revenue of $1.333 billion and income from operations of $131.1 million. These results include the impact of net pre-tax charges of $15.8 million described in the Company's second quarter earnings release. Operating cash flow for the year was $275.8 million and free cash flow was $201.8 million, both record results. "We have accomplished what we said we would after a challenging first quarter of the fiscal year," Company Leader Charles D. Morgan said. "We met or exceeded all of our fiscal year Financial Road Map targets for total company performance and U.S. results. International revenue results for the year were at the high end of the revised Road Map range that we set after Q1 and exceeded the adjusted operating margin target for the full year that we set after Q3 results. Our cash flow reached a record level, we have an impressive list of new contracts and the committed pipeline is promising. Based on our team's execution of the strategies for the business, we are confident that the revenue and earnings will be in line with the fiscal 2007 projections in the Financial Road Map." Road Map and Outlook Fiscal 2006 U.S. revenue of $1.148 billion was within the target range of $1.140 billion to $1.160 billion included in the Company's Financial Road Map (December 31, 2005). International revenue of $184.9 million for the year was within the target range of $170 million to $190 million. Adjusted U.S. operating margin of 12.4% for fiscal 2006 was at the high end of the target range of 11.5 to 12.5%. International margin of 2.5% was above the target range of 1 to 2% that was projected in the updated Road Map adjusted for third quarter results. Return on Invested Capital for the 2006 fiscal year was 11.4%, which is near the mid-point of the fiscal 2006 target range of 11 to 12%. Acxiom's current Financial Road Map (March 31, 2006) reflects the Company's current expectations for fiscal year 2007, and the long- term goals reflect expected performance in fiscal 2010. For the fiscal year ended March 31, 2007, the Company estimates that: U.S. revenue will grow 7% to 10%, the U.S. operating margins will be 14% to 15%, international revenue will grow 0% to 5% and international margin will be 2% to 4%. Headquartered in Little Rock, Arkansas, Acxiom Corporation (Nasdaq: ACXM) -- http://www.acxiom.com/-- integrates data, services and technology to create and deliver customer and information management solutions for many of the largest, most respected companies in the world. The core components of Acxiom's innovative solutions are Customer Data Integration technology, data, database services, IT outsourcing, consulting and analytics, and privacy leadership. * * * As reported in the Troubled Company Reporter on July 15, 2005, Standard & Poor's Ratings Services affirmed its 'BB+' corporate credit rating on Little Rock, Arkansas-based Acxiom Corp. ADELPHIA COMMS: Wants Aid in Asset Sale to Time Warner & Comcast ---------------------------------------------------------------- Adelphia Communications Corporation sought, on May 26, 2006, authority from the U.S. Bankruptcy Court for the Southern District of New York to proceed with its asset sale to a subsidiary of Time Warner Cable and a portion of its asset sale to Comcast Corporation without first confirming a Chapter 11 Plan of Reorganization. If the motion is granted, it will increase the likelihood of the transaction being completed in a timely manner. Adelphia currently anticipates that a hearing to approve certain amended bid protections will be held on or about June 8, followed by a hearing to approve the sale, as well as a Plan of Reorganization related to Adelphia's joint ventures with Comcast, on or about June 27. Time Warner Cable and Comcast are working closely with Adelphia to find the swiftest path to accomplish the sale. Adelphia's motion was prompted by an ongoing dispute between certain creditor groups over how to distribute the sale proceeds, which has delayed resolution of Adelphia's bankruptcy, a prerequisite for closing the asset sale under the current terms of the deal. Court approval would authorize limited amendments to the sale agreements that would allow the asset sale to Time Warner Cable and certain of the assets to be sold to Comcast to take place without first confirming a Plan of Reorganization for such assets and without the corresponding creditors' vote. Adelphia's majority ownership interest in two joint ventures with Comcast Corporation, Century-TCI and Parnassos, would still be sold to Comcast concurrently with the consummation of a Plan of Reorganization for those joint ventures. Other assets being purchased by Comcast would, under the proposal, be purchased without prior confirmation of a Plan of Reorganization and without the associated creditors' vote. The closing of the Comcast and Time Warner Cable acquisitions are conditioned on one another and are expected to occur simultaneously. "Despite our best efforts, the creditors' disputes remain unresolved," William Schleyer, chairman and CEO of Adelphia, said. "Removing the requirement for a confirmed Plan of Reorganization for Adelphia greatly increases the odds of Adelphia's sale closing in a timely manner. We believe these modifications accommodate the desires of creditors to lock in maximum value for the estate while enabling them to continue settlement discussions and litigation without the pressure of a looming deadline. "It has the added benefit of providing greater certainty to our employees, customers and the local communities we serve who are anxious to make the transition from a much-improved Adelphia to even stronger companies in Comcast and Time Warner Cable." If the modified approach were used, after making distributions to creditors of the joint ventures pursuant to a Plan, Adelphia would be comprised of the balance of cash (approximately $12.7 billion, less cash payments to joint venture creditors) and Time Warner Cable stock (approximately 16% of the common stock of Time Warner Cable) used to pay for Adelphia's assets. The entities other than the joint ventures would remain in bankruptcy. The remaining creditors could continue their negotiations and litigation over how to distribute the value of the bankruptcy estate. For Adelphia employees, customers and the communities it serves, the modifications would have no effect on the well-planned transition related to operations and job transfers. There will be no change in the ultimate ownership of the former Adelphia systems; at the conclusion of the transactions, the ownership of such systems will be the same as contemplated under the previous plan and the separate agreement between Time Warner Cable and Comcast. The modifications Adelphia expects to request include a requirement that Adelphia sell a portion of Time Warner Cable shares to be received by Adelphia in an underwritten public offering and a provision that an amount equal to the already approved breakup fee automatically would be paid or credited against the purchase price if the sale fails to close by Aug. 31, 2006, under certain circumstances. There is no assurance that an asset sale or Plan of Reorganization can be consummated on a timely basis, if at all. An asset sale under Section 363 of the Bankruptcy Code may involve additional transaction-related costs, which may be substantial. A full-text copy of the Asset Sale Motion filed with the Court is available for free at: http://ResearchArchives.com/t/s?9fe About Adelphia 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. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. AFFINIA GROUP: Moody's Affirms Caa2 Rating on Senior Sub. Notes --------------------------------------------------------------- Moody's Investors Service raised the Speculative Grade Liquidity Rating of Affinia Group Inc. to SGL-2 from SGL-3, and affirmed the company's long term ratings. The SGL-2 liquidity rating represents good liquidity over the next 12 months. Although Moody's anticipates the company's internal cash flow generation will be negative due to cash restructuring costs and will be affected by seasonal working capital needs, it has a substantial amount of funding capacity from its revolving credit and securitization facilities to meet cash requirements over the next 12 months. Nonetheless, Affinia's financial characteristics and prospective debt coverage ratios remain consistent with the B3 Corporate Family rating, and its outlook remains negative. Rating upgraded: Speculative Grade Liquidity Rating to SGL-2 from SGL-3 Ratings affirmed: * Corporate Family, B3 * Senior Secured 1st Lien bank credit facilities, B2 * Senior Subordinated Notes, Caa2 At the end of the first quarter of 2006, Affinia's cash balance stood at $61 million compared to $82 million at the end of December 2005. The company has been able to significantly reduce its investment in working capital over the last year. Importantly, the first half of the year is the seasonal peak in working capital requirements, and the company had no borrowings under its revolving credit or utilization of its receivable securitization facility as of March 31, 2006. However, Affinia's ability to further reduce working capital is likely to diminish going forward, and seasonal variations in working capital will affect its liquidity profile. In addition, cash flows over the next 12 months will be constrained by the company's restructuring costs. In total, the company estimates that the restructuring program will involve pre-tax costs of $152 million over 2006 and 2007, $110 million of which will be cash expenditures. The bulk of restructuring costs in 2006 are expected to be incurred during the second half of the year. Combined, these two factors in Moody's opinion would likely result in break-even to negative free cash flow over the next 12 months. Going forward, the restructuring program should lower costs, improve efficiency and reduce excess capacity. However, savings are not expected to be fully realized until the 2007 and 2008 timeframe. Affinia's external liquidity is provided by a $125 million revolving credit facility, which expires in 2010, and a $100 million receivables facility, which has a term commitment maturing on November 30, 2009. The revolver was undrawn as of March 31, 2006 with letters of credit outstanding of $7 million. There was no utilization of the receivables facility at the end of March. Moody's expects this facility to be used to meet seasonal and cash restructuring needs during the next 12 months. This would leave the revolver largely unutilized. These two facilities should provide ample liquidity over the next 12 months. Affinia's access to the revolver is subject to compliance with financial covenants. These include a limit on capital expenditure levels as well as leverage and interest coverage ratios. The December 2005 amendments increased headroom under the company's leverage covenant and increased flexibility under the covenants by modifying the definition of Adjusted EBITDA and permitting a greater portion of cash flow to fund the restructuring program. At the end of March, the company was in compliance with its financial covenants which include a maximum net debt to adjusted EBITDA ratio of 5.5 times and minimum adjusted EBITDA to cash interest covenant ratio of 2.0 times. There is a limit of up to $40 million of cash and permitted investments that can be subtracted from debt to arrive at net debt for purposes of calculating the leverage ratio covenant. The leverage covenant will be stepping down to 5.25 times during the second half of the year. The company does not have any meaningful expirations until November 2009 when the securitization program expires, and has no material current scheduled debt maturities until November 2011. The company has minimal scope to arrange alternative liquidity given the secured nature of the credit facilities and the facilities' asset sale recapture provisions. While the restructuring program will cause Affinia to remain in an elevated leverage condition over the intermediate term, its financial and debt coverage characteristics remain consistent with the B3 Corporate Family contemplated by Moody's rating action of December 1, 2005. The outlook remains negative as the prospects for material amounts of free cash flow, which would facilitate debt reduction over the intermediate term, have been delayed until savings generated by the restructuring program are realized. As the restructuring program is still in its nascent stage, execution risk will continue until the run-rate from realized savings offsets the remaining disbursements. Consequently, the long-term ratings are unchanged. Affinia Group Inc., headquartered in Ann Arbor, MI, is a leading designer, manufacturer and distributor of automotive aftermarket components for passenger cars, SUVs, light and heavy duty trucks and off-highway vehicles. Principal products include brakes, filtration and chassis components which are sold across North America, Europe and South America. Annual revenues are approximately $2.1 billion. AIRADIGM COMMUNICATIONS: Section 341(a) Meeting Set for June 8 -------------------------------------------------------------- The U.S. Trustee for Region 11 will convene a meeting of Airadigm Communications, Inc.'s creditors at 10:00 a.m., on June 8, 2006, at the U.S. Trustee's Office, 780 Regent Street, Suite 307 in Madison, Wisconsin. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Little Chute, Wisconsin, Airadigm Communications, Inc. -- http://www.eisnteinpcs.com/-- provides local wireless phone services through its Einstein PCS wireless networking technology. The company filed for chapter 11 protection on July 28, 1999 (Bankr. W.D. Wis. Case No. 99-33500). The Court confirmed its plan of reorganization in 2000. The company filed a second chapter 11 petition on May 8, 2006 (Bankr. W.D. Wis. Case No. 06-10930). Kathryn A. Pamenter, Esq., and Ronald Barliant, Esq., at Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd., represent the Debtor in its new bankruptcy proceedings. No Official Committee of Unsecured Creditors has been appointed in the Debtor's new bankruptcy case. In its second bankruptcy filing, the Debtor estimated assets between $10 million to $50 million and debts of more than $100 million. AIRADIGM COMMUNICATIONS: Has Until June 6 to File Schedules ----------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Wisconsin gave Airadigm Communications, Inc., until June 6, 2006, to file its Schedules and Statement of Financial Affairs. The Debtor tells the Court that in order to accurately and completely prepare its schedules, it will need to assemble information from books and records, reports, agreements, tax returns and other sources. The Debtor contends that given the scope its business operations, particularly the approximately 250 contracts that it has entered into, completing the schedules will be time consuming. The Debtor says that the extension will allow it to better confirm the accuracy of its schedules, thereby limiting the possibility that it would have to later amend its schedules at additional expense to its estate. Headquartered in Little Chute, Wisconsin, Airadigm Communications, Inc. -- http://www.eisnteinpcs.com/-- provides local wireless phone services through its Einstein PCS wireless networking technology. The company filed for chapter 11 protection on July 28, 1999 (Bankr. W.D. Wis. Case No. 99-33500). The Court confirmed its plan of reorganization in 2000. The company filed a second chapter 11 petition on May 8, 2006 (Bankr. W.D. Wis. Case No. 06-10930). Kathryn A. Pamenter, Esq., and Ronald Barliant, Esq., at Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd., represent the Debtor in its new bankruptcy proceedings. No Official Committee of Unsecured Creditors has been appointed in the Debtor's new bankruptcy case. In its second bankruptcy filing, the Debtor estimated assets between $10 million to $50 million and debts of more than $100 million. AIRBASE SERVICES: Trustee Taps D.A. Davidson as Financial Advisor ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas gave its interim approval for Dennis Faulker, Chapter 11 Trustee for Airbase Services, Inc., to employ D.A. Davidson & Co., as his financial advisor. D.A. Davidson is expected to: (a) finalize an electronic data room and management presentation; (b) contact over 43 potential strategic and 47 financial buyers to determine their interest in purchasing the Debtor's assets; (c) execute non-disclosure agreements with 18 strategic and 5 financial buyers; (d) deliver selling memorandum to 18 potential strategic and 30 financial buyers; (e) conduct company tours, management presentations, and provide access to the electronic data room; and (f) secure six letters of intent from potential buyers. The trustee tells the Court that for this engagement, the firm will be paid a $250,000 fee. Michael R. Smith, managing director of D.A. Davidson, assures the Court that the firm is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Grand Prairie, Texas, Airbase Services, Inc. -- http://www.airbaseservices.com/-- maintains and repairs a wide range of cargo equipment and cabin interior designs for commercial airlines, and provides maintenance and management services for the airline industry. Due to bankruptcies filed by several of its airline customers, the Company filed for bankruptcy protection on May 1, 2006 (Bankr. N.D. Tex. Case. No. 06-41231). The Court approved the appointment of Dennis Faulkner as trustee in the Debtor's chapter 11 case on May 3, 2006. Mark J. Petrocchi, Esq., at Goodrich Postnikoff Albertson & Petrocchi, LLP, represents the Trustee. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for bankruptcy, the Company reported assets and debts amounting to $10 million to $50 million. AIRBASE SERVICES: Section 341(a) Meeting Scheduled for June 20 -------------------------------------------------------------- The U.S. Trustee for Region 6 will convene a meeting of Airbase Services, Inc.'s creditors at 10:00 a.m., on June 20, 2006, at the Fritz G. Lanham Federal Building, 819 Taylor Street, Room 7A24 in Ft. Worth, Texas. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Grand Prairie, Texas, Airbase Services, Inc. -- http://www.airbaseservices.com/-- maintains and repairs a wide range of cargo equipment and cabin interior designs for commercial airlines, and provides maintenance and management services for the airline industry. Due to bankruptcies filed by several of its airline customers, the Company filed for bankruptcy protection on May 1, 2006 (Bankr. N.D. Tex. Case. No. 06-41231). The Court approved the appointment of Dennis Faulkner as trustee in the Debtor's chapter 11 case on May 3, 2006. Mark J. Petrocchi, Esq., at Goodrich Postnikoff Albertson & Petrocchi, LLP, represents the Trustee. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for bankruptcy, the Company reported assets and debts amounting to $10 million to $50 million. ALLEGHENY ENERGY: Unit Obtains $967 Million Credit Facility ----------------------------------------------------------- Allegheny Energy, Inc., disclosed that its subsidiary, Allegheny Energy Supply Company, LLC, has obtained a new $967 million credit facility. Proceeds were used to refinance its existing $967 million secured term loan, due 2011. The refinancing will reduce interest expense by approximately $6 million per year. The new $200 million senior revolving credit facility and $767 million senior term loan both have five-year maturities. Both the revolving credit facility and the term loan will carry an initial interest rate equal to the London Interbank Offered Rate plus 87.5 basis points, with decreases in the rate possible if the company's credit ratings improve from current levels. The $967 million term loan being refinanced had an interest rate of LIBOR plus 150 basis points. Joint lead arrangers for the refinancing were Citigroup Global Markets Inc., The Bank of Nova Scotia and Banc of America Securities LLC. Allegheny Energy Based in Greensburg, Pennsylvania, Allegheny Energy, Inc. (NYSE:AYE) -- http://www.alleghenyenergy.com/-- is an investor- owned utility consisting of two major businesses. Allegheny Energy Supply owns and operates electric generating facilities, and Allegheny Power delivers low-cost, reliable electric service to customers in Pennsylvania, West Virginia, Maryland, Virginia and Ohio. * * * As reported in the Troubled Company Reporter on Jan. 20, 2006, Standard & Poor's Ratings Services raised its corporate credit ratings on diversified energy company Allegheny Energy Inc. and its subsidiaries to 'BB+' from 'BB-'. S&P said the outlook is positive. As reported in the Troubled Company Reporter on June 15, 2005, Moody's Investors Service assigned a Senior Implied rating of Ba1 and a Speculative Grade Liquidity Rating of SGL-2 to Allegheny Energy, Inc. This was the first time that Moody's assigned both such ratings to AYE. The company's other ratings, including the Ba2 senior unsecured rating, remained unaffected. ALLEGHENY ENERGY: Mulls Transmission Expansion Under PJM Plan ------------------------------------------------------------- Allegheny Energy, Inc., disclosed that a regional planning study calls for construction of approximately 210 miles of new transmission lines within the company's service territory. The study was released on May 19, 2006, by the planning staff of the regional transmission organization, PJM Interconnection. Their proposed five-year plan is focused on maintaining a reliable electric transmission system for consumers in the Mid-Atlantic area. "We stand ready to expand our system in accordance with PJM's plan," stated Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. "A reliable transmission grid is central to our mission of delivering dependable, low-cost electric service to consumers." The PJM staff's five-year plan calls for construction of a new 500-kilovolt (kV) line extending from southwestern Pennsylvania to West Virginia to northern Virginia. The plan incorporates portions of Allegheny's proposal that was submitted to PJM as the Trans-Allegheny Interstate Line - 330 miles of 500-kV lines solely within its service territory. Benefits of the proposed transmission expansion include: -- improving system reliability; -- meeting the growing demand for electricity; -- increasing west-to-east transfer capability, making cost- effective generation available to more consumers; and -- economic benefits for West Virginia and southwestern Pennsylvania, including expanding markets for local coal, the potential for new generation projects and more jobs. The PJM Board will consider the plan in late June. If approved, Allegheny will begin line engineering and planning studies. In addition, the company will seek state and federal authorizations to build the line, which is targeted for completion in 2011. The preliminary cost estimate for Allegheny's portion of the project is in excess of $850 million. The staff also addressed longer-term system expansion issues, extending as far as 15 years into the future. Allegheny looks forward to working with PJM and the other stakeholders to address these issues, including the company's role in longer-term transmission construction programs. Allegheny Energy Based in Greensburg, Pennsylvania, Allegheny Energy, Inc. (NYSE:AYE) -- http://www.alleghenyenergy.com/-- is an investor- owned utility consisting of two major businesses. Allegheny Energy Supply owns and operates electric generating facilities, and Allegheny Power delivers low-cost, reliable electric service to customers in Pennsylvania, West Virginia, Maryland, Virginia and Ohio. * * * As reported in the Troubled Company Reporter on Jan. 20, 2006, Standard & Poor's Ratings Services raised its corporate credit ratings on diversified energy company Allegheny Energy Inc. and its subsidiaries to 'BB+' from 'BB-'. S&P said the outlook is positive. As reported in the Troubled Company Reporter on June 15, 2005, Moody's Investors Service assigned a Senior Implied rating of Ba1 and a Speculative Grade Liquidity Rating of SGL-2 to Allegheny Energy, Inc. This was the first time that Moody's assigned both such ratings to AYE. The company's other ratings, including the Ba2 senior unsecured rating, remained unaffected. ALLIANCE LAUNDRY: Acquires LSG's Laundry Division for EUR59 Mil. ---------------------------------------------------------------- Alliance Laundry Systems LLC signed purchase agreements to acquire substantially all of Laundry System Group NV's Commercial Laundry Division for approximately EUR59 million. Alliance Laundry is an indirect subsidiary of ALH Holding Inc., a Teachers' Private Capital portfolio company. LSG's Commercial Laundry Division is headquartered in Wevelgem, Belgium. CLD markets commercial washer-extractors, tumbler dryers, and ironers worldwide under the Ipso and Cissell brand names. CLD has manufacturing facilities and sales offices in the United States and Belgium. Tom L'Esperance, Alliance Laundry's President and CEO stated, "The addition of the Ipso and Cissell brands and CLD's soft-mount washer-extractor product line significantly strengthens our ability to participate in the global laundry marketplace." Completion of the transaction, which is expected to close in the third quarter of 2006, is subject to further due diligence and customary closing conditions. About Alliance Laundry Alliance Laundry Systems LLC - http://www.comlaundry.com/-- is a leading North American manufacturer of commercial laundry products and provider of services for laundromats, multi-housing laundries and on-premise laundries. Alliance offers a full line of washers and dryers for light commercial and consumer use as well as large frontloading washers, heavy-duty tumbler dryers, and finishing equipment for heavy commercial use. The Company's products are sold under the well-known brand names Speed Queenr, UniMac(R), and Huebsch(R). * * * As reported in the Troubled Company Reporter on April 18, 2006, Moody's Investors Service affirmed the long-term debt ratings of Alliance Laundry Systems LLC. Ratings affirmed include a B1 rating on Alliance's $50 million senior secured revolver due 2011, a B1 rating on Alliance's $177 million senior secured term loan due 2012, a B3 on Alliance's $150 million senior subordinated notes due 2013, and a B1 corporate family rating. The rating outlook is stable. AMR CORP: Completes Offer for 15,002,091 Common Stock Shares ------------------------------------------------------------ AMR Corporation completed its previously announced public offering of 15,002,091 shares of the Company's common stock, par value $1.00 per share, at an offering price to the public of $26.80 per share, on May 19, 2006. The Company has granted Merrill Lynch, Pierce, Fenner & Smith Incorporated, the sole underwriter for the offering, a 30-day option to purchase up to 2,250,314 additional shares of Common Stock to cover over-allotments, if any. The shares of Common Stock were issued pursuant to the Company's shelf registration statement on Form S-3 (File Nos. 333-110760 and 333-110760-01), which was declared effective by the Securities and Exchange Commission on Dec. 17, 2003. American Airlines is the world's largest airline. American, American Eagle and the AmericanConnection regional airlines serve more than 250 cities in over 40 countries with more than 3,800 daily flights. The combined network fleet numbers more than 1,000 aircraft. American's Web site -- http://www.AA.com/-- provides users with easy access to check and book fares, plus personalized news, information and travel offers. American Airlines is a founding member of the oneworld Alliance, which brings together some of the best and biggest names in the airline business, enabling them to offer their customers more services and benefits than any airline can provide on its own. Together, its members serve more than 600 destinations in over 135 countries and territories. At Dec. 31, 2005, AMR Corporation's equity deficit doubled to $1.478 billion from a $581 million deficit from Dec. 31, 2004. * * * As reported in the Troubled Company Reporter on April 25, 2006, Standard & Poor's Ratings Services placed its ratings on AMR Corp. (B-/Watch Pos/B-3) and subsidiary American Airlines Inc. (B-/Watch Pos/--) on CreditWatch with positive implications. ANNA NICOLE SMITH: Probate Dispute Remanded to 9th Cir. ------------------------------------------------------- A unanimous opinion handed down by the United States Supreme Court earlier this month gave Vicki Lynn Marshall, aka Anna Nicole Smith, a further opportunity to resurrect the multi-million-dollar judgment entered in her bankruptcy case by the Honorable Samuel Bufford in Los Angeles, California, in 2000. That bankruptcy court judgment awarded Ms. Smith, former Playboy Playmate and Guess? Jeans model, $449 million in a court battle with the son of her late 90-year-old husband, oil baron J. Howard Marshall, over his $1.6 billion estate. The U.S. District Court reduced the judgment to $88 million. The judgment was tossed out by the United States Court of Appeals for the Ninth Circuit in a decision reported at 392 F.3d 1119 (9th Cir. 2004). The U.S. Supreme Court's decision reversed the Ninth Circuit's judgment. In Marshall v. Marshall, No. 04-1544, the High Court was asked four questions about the intersection of bankruptcy and probate law: 1. What is the scope of the probate exception to federal jurisdiction? 2. Did Congress intend the probate exception to apply where a federal court is not asked to probate a will, administer an estate, or otherwise assume control of property in the custody of a state probate court? 3. Did Congress intend the probate exception to apply to cases arising under the Constitution, laws, or treaties of the United States (28 U.S.C. Sec. 1331), including the Bankruptcy Code (28 U.S.C. Sec. 1334), or is it limited to cases in which jurisdiction is based on diversity of citizenship? 4. Did Congress intend the probate exception to apply to cases arising out of trusts, or is it limited to cases involving wills? E. Pierce Marshall, the oil baron's son, Ms. Smith's stepson, and Respondent, argued the bankruptcy court's judgment was flawed, the facts and law are on his side, and no federal court has jurisdiction over state probate matters. Supreme Court Justice Ruth Bader Ginsburg, who delivered the opinion, says that, ordinarily, federal courts shouldn't meddle in matters related to the probate or annulment of a will, the administration of a decedent's estate, or endeavoring to dispose of property that is in the custody of a state probate court. But that general rule, Justice Ginsburg continues, does not bar federal courts from adjudicating matters outside those confines and otherwise within federal jurisdiction. The probate exception to federal jurisdiction did not deprive the bankruptcy court of jurisdiction over Ms. Smith's counterclaim asserting that her stepson tortiously interfered with her expectancy of an inheritance or gift from her husband's estate. That counterclaim is an in personam claim against the stepson, not a claim against property in custody of the Texas probate court. Before the Ninth Circuit Court of Appeals (Docket No. 02-56002), Anna Nicole Smith is represented by: Eric Berg, Esq. HATCH & PARENT 21 East Carrillo Street Santa Barbara, CA 93101-2782 - and - Philip W. Boesch, Jr., Esq. BOESCH LAW GROUP 330 Washington Blvd., Suite 600 Marina Del Rey, CA 90292 - and - Kent L. Richland, Esq. Sheila S. Kato, Esq. GREINES MARTIN STEIN & RICHLAND, LLP 5700 Wilshire Blvd., Suite 375 Los Angeles, CA 90036-3697 and E. Pierce Marshall is represented by: George Eric Brunstad, Jr., Esq. Bingham McCutchen, LLP One State Street Hartford, CT 06103 - and - Joseph A. Eisenberg, Esq. JEFFER MANGELS BUTLER & MARMARO LLP 1900 Avenue of the Stars Los Angeles, CA 90067 - and - Sanford Svetcov, Esq. LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS, LLP 100 Pine St., Suite 2600 San Francisco, CA 94111 ASARCO LLC: Wants The Claro Group as Insurance-Recovery Advisor --------------------------------------------------------------- ASARCO LLC seeks authority from the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to employ The Claro Group as its insurance-recovery consultants, nunc pro tunc to Aug. 9, 2005. For more than two and a half years before ASARCO filed for bankruptcy, the Insurance Claims Group, now known as The Claro Group LLC, has worked for ASARCO to achieve asbestos-insurance recoveries from Equitas, a reinsurance entity for London Market syndicates, and the London Market Carriers, a group of 15 London- based insurance carriers. At this time, due to its extensive prior work as both insurance- recovery and asbestos-claims-management consultants, The Claro Group is the only entity that possesses the necessary depth of knowledge and experience to consult ASARCO regarding the asbestos claims. In addition, The Claro Group has spent years cultivating and building relationships with the London Market Carriers. As a result of its extensive experience with the London Market Carriers and its successful track record in securing recoveries from those carriers, ASARCO and its estate will greatly benefit by retaining The Claro Group as its insurance-recovery consultants. The Claro Group will continue to: (a) analyze historic cost information and claim estimates for potential future asbestos exposures; (b) develop and operate insurance coverage allocation models used to apportion past and projected future costs among the triggered liability insurance policies; (c) present the Asbestos Claims Analysis to the London Market Carriers; (d) defend the Asbestos Claims Analysis; and (e) participate in negotiations with the London Market Carriers, provide strategic advice and target-setting methodologies, and provide support to explain and respond to insurer inquiries regarding the Asbestos Claims Analysis. ASARCO will pay The Claro Group a contingency fee to be calculated as a variable percentage of the net settlement payments received by ASARCO. As compensation for prepetition settlements of $35,750,000 with two major insurance carriers, ASARCO has paid ICG $2,112,500 in prepetition fees. The Claro Group has worked both before and after the Petition Date to achieve a pending $20,000,000 settlement with the London Market Carriers. Subject to the Court's approval of the settlement, The Claro Group would be entitled to a $427,500 postpetition contingency fee. The $427,500 contingency fee and all other fees that may become due postpetition will be payable only if the money is collected and will be paid solely and exclusively from the proceeds of the settlement recovery. In addition, ASARCO will reimburse The Claro Group for any out-of-pocket expenses incurred in connection with the performance of its services. Furthermore, ASARCO will indemnify The Claro Group. Douglas H. Deems, Esq., managing director and general counsel for The Claro Group LLC, assures the Court that the firm does not represent any interest adverse to ASARCO or its estate. The Claro Group is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Wachovia Wants Equipment Leases Decided Tomorrow ------------------------------------------------------------ Wachovia Financial Services, Inc., fka First Union Commercial Corporation, asks the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to: (a) compel ASARCO LLC to decide whether to assume or reject its Equipment Lease with Wachovia by May 30, 2006; (b) grant Wachovia adequate protection for its Equipment; and (c) direct ASARCO to pay all outstanding rental payments if ASARCO remains in possession of the Equipment. In March 1998, ASARCO LLC, as successor-in-interest to ASARCO, Inc., executed a Master Equipment Lease Agreement with Wachovia Financial. The lease is for a period of 10 years. As of September 1998, ASARCO leases: -- two Komatsu 830E Haulpak Trucks, plus rims, tires and freight; -- a Gradal Rough Terrain Forklift; -- five 100-ton railroad ore cars; and -- four 930E Haulpack trucks with complete tires and rims for each truck. In July 2003, ASARCO purchased the four 930E Komatsu Haulpack trucks from Wachovia. Wachovia's Equipment is used in ASARCO's Ray Mine Site in Hayden, Arizona. The Equipment is subject to daily exposure in extreme temperatures and harsh desert conditions, causing its quick deterioration. When the Debtor filed for bankruptcy, ASARCO owes at least $141,302 to Wachovia. Under the Lease, ASARCO also agreed to pay Wachovia's legal fees and expenses for enforcement of Wachovia's rights after default. Since the bankruptcy petition date, ASARCO has not paid Wachovia the full rentals due under the Lease nor offered Wachovia adequate protection for the Debtors' continued possession and use of the Equipment. ASARCO has also not yet indicated whether it intends to retain the Equipment and assume the Lease, or reject it. Michael M. Parker, Esq., at Fulbright & Jaworski LLP, in San Antonio, Texas, tells the Court that ASARCO needs to decide immediately whether to assume or reject the Equipment Lease since it had more than nine months to analyze the Lease. Mr. Parker adds that ASARCO needs to decide now because the Equipment's value and life span are depreciating. To replace the now deteriorating Komatsu trucks, ASARCO has decided to buy nine Liebherr haul trucks to be used in the Ray Mine Site. Mr. Parker discloses that Wachovia does not intend to waive any administrative rent claim or other claims, which may accrue to its benefit in ASARCO's Chapter 11 case. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASPECT SOFTWARE: Moody's Assigns Caa1 Rating to $385M Term Loan --------------------------------------------------------------- Moody's Investors Service affirmed Aspect Software Inc. B2 Corporate Family Rating but revised the ratings outlook to negative. Moody's also assigned new ratings to debt issues related to the proposed recapitalization of the company. Proceeds from the $725 million first lien and $385 million second lien term loans will be used to finance a $450 million dividend payment to Aspect's shareholders and refinance the company's existing debt. These new ratings have been assigned: * $725 million first lien term loan due 2011 -- B2 * $385 million second lien term loan due 2012 -- Caa1 These ratings were affirmed: * Corporate Family rating of -- B2 * $50 million senior secured revolving facility due 2010 -- B2 These rating will be withdrawn upon refinancing * $475 million first lien term loan due 2010 -- B2 * Outlook Negative The outlook revision is driven by the proposed dividend payment which will result in a significant increase in EBITDA leverage from 3.8 times to 5.8 times. Interest coverage will narrow to less than 2x correspondingly. The recapitalization will reduce Aspect's financial flexibility in its competitive operating environment. The affirmation of Aspect's B2 corporate family rating and the new ratings reflect the mission critical nature of Aspect's call center software, its competitive position as the largest pure play providers in a relatively mature industry, its diversified client base with over 5,000 accounts, and the significant presence of its recurring maintenance revenue stream. The challenges facing Aspect include competition, relatively limited track record as a combined company following its recent merger as well as the impact of increased leverage. The B2 rating on the secured revolver and the first lien term loan reflect their majority proportion in the pro forma capital structure, representing about 65% of Aspect's total funded debt. The Caa1 rating on the second lien term loan reflects its lien subordination and the likelihood that recovery may be impaired in distress. Integrations since the merger appear to be on track. Revenue and EBITDA year to date track fairly closely to plan submitted prior to formalization of the merger. Aspect's operating environment remains highly competitive. The ongoing shift to IP telephony platform also makes IP infrastructure players more relevant and direct competitors, although the company's product portfolio does include IP-enabled products. Aspect Software Inc. is headquartered in Westford, Massachusetts. The company develops, markets, licenses and supports an end-to- end, integrated and unified suite of contact center software applications. ASSET BACKED: Moody's Assigns Low-B Rating on Two Cert. Classes --------------------------------------------------------------- Moody's Investors Service assigned a Aaa rating to the senior notes issued by Asset Backed Securities Corporation Home Equity Loan Trust NC 2006-HE4, and ratings ranging from Aa2 to Ba2 to the subordinate notes in the deal. The securitization is backed by New Century Mortgage Corporation originated, adjustable-rate and fixed-rate, subprime mortgage loans acquired by DLJ Mortgage Capital, Inc. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, excess spread, and overcollateralization. The ratings also receive benefit from an interest-rate swap agreement provided by Credit Suisse International. Moody's expects collateral losses to range from 4.80% to 5.30%. Select Portfolio Servicing, Inc. will service the loans. Moody's has assigned SPS its servicer quality rating as a primary servicer of subprime first-lien loans. The Complete Rating Actions: Asset Backed Securities Corporation Home Equity Loan Trust, Series NC 2006-HE4 Asset Backed Pass-Through Certificates, Series NC 2006-HE4 * Cl. A1, Assigned Aaa * Cl. A1A, Assigned Aaa * Cl. A2, Assigned Aaa * Cl. A3, Assigned Aaa * Cl. A4, Assigned Aaa * Cl. A5, Assigned Aaa * Cl. A6, Assigned Aaa * Cl. M1, Assigned Aa2 * Cl. M2, Assigned Aa3 * Cl. M3, Assigned A1 * Cl. M4, Assigned A2 * Cl. M5, Assigned A3 * Cl. M6, Assigned Baa1 * Cl. M7, Assigned Baa2 * Cl. M8, Assigned Baa3 * Cl. M9, Assigned Ba1 * Cl. M10, Assigned Ba2 ATLANTIC MUTUAL: S&P Holds Notes' Rating at CCC With Neg. Outlook ----------------------------------------------------------------- Standard & Poor's Ratings Services removed its ratings on Atlantic Mutual Insurance Co. from CreditWatch negative and affirmed its 'B+' counterparty credit rating and 'CCC' surplus notes rating on the company. The outlook is negative. The company's ratings were lowered and placed on CreditWatch on March 2, 2006, due to material unexpected adverse loss reserve development in the fourth quarter of 2005. Reported results and surplus were well below Standard & Poor's expectations, resulting in the rating action. The four factors affecting the resolution of the CreditWatch were: * the potential impact on the strategic alliance with Countrywide Financial Corp.; * whether the cause of loss reserve deterioration could be remedied; * potential benefits from reinsurance; and * possible changes to surplus note interest paying capacity. "The company has made progress on its challenges, including maintaining its partnership with Countrywide Financial and extending it to include Atlantic Mutual's entire on-going business, with the exception of a small amount of Florida business," explained Standard & Poor's credit analyst Jason Jones. This affords further financial support to the company and demonstrates continued commitment from Countrywide. The adverse development cover from National Indemnity Co. could attach if reserves develop materially and would offer benefit to the company if further adverse reserve development occurs. Reserves stabilized in the first quarter of 2006. The company's replacement of the former claims third-party administrator could have been caused by the third-party administrator's settlement practices, and the company is reasserting control of its run-off reserves. Interest paying capacity on the surplus notes is marginal, but the company's risk-based capital is well above authorized control level, which should mean the company can meet its interest obligations in the near term. The personal lines business is expected to generate underwriting profits in 2006. Agent and customer loyalty should support premiums. A moderate decline in premiums due to sharing of premiums with Countrywide should be partly offset by new business growth from the strategic alliance. In 2006, restructuring costs are expected to decline significantly, and no further losses from reinsurance commutations are expected. The interest coverage ratio for surplus notes interest payments has declined along with earnings but is expected to improve in 2006 to about 1x to 2x. Atlantic Mutual has sufficient regulatory risk-based capital, so it is expected that interest payments on the surplus notes will continue to be approved in 2006. Approvals for interest payments in the longer term are expected to depend on the company's being profitable, and an earnings shortfall could result in default on the surplus notes at some point. If the company fails to earn sufficient money to keep interest coverage at 1x or higher for the full year, or if the regulatory RBC ratio falls below ACL, the company would be downgraded. Since the surplus notes burden is expected to be high for an indefinite period, the outlook is unlikely to become stable for a long time, though it could be revised if the company improves capital adequacy with consistent earnings for two or more years. A downgrade could also occur: * if the Countrywide alliance were unsuccessful; * if agent and customer loyalty were to falter; * if personal lines results are poor; or * if there is material adverse net reserve development in the run-off commercial book ATTACHMATE CORP: S&P Rates Proposed $340 Million Facilities at B ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Seattle, Washington-based Attachmate Corporation, a software services provider specializing in host access and integration solutions. At the same time, Standard & Poor's assigned its 'B' bank loan rating and its '2' recovery rating to the company's proposed $340 million of first-lien senior secured credit facilities. "The rating on the first-lien facilities, the same as the corporate credit rating, and the '2' recovery rating indicate that lenders can expect meaningful (80-100%) recovery of principal in the event of payment default," said Standard & Poor's credit analyst Lucy Patricola. All ratings are based on preliminary offering statements and are subject to review upon final documentation. Proceeds from the new credit facilities will be used to finance the proposed purchase of NetIQ Corporation. Total consideration for the transaction will be about $331 million, net of cash, and includes the refinancing of existing indebtedness at Attachmate. The purchase will be conducted through Attachmate's parent holding company, Wizard Holding Corporation. The outlook is negative. The ratings on Attachmate reflect: * a narrow product portfolio; * a short operating history at current profitability levels; and * very high leverage at inception of the acquisition. Attachmate has a good market share in its niche of host access and integration software solutions through its recent merger with WRQ, a competitor providing similar solutions. Still, the combined companies have a limited track record at current profitability levels and a declining revenue base. NetIQ, a provider of software focused on security management and change control, is unprofitable, despite restructuring actions and divestitures of non-core assets, and lacks a strong market position in any of its product lines. The synergy potential of Attachmate and NetIQ is somewhat limited, based on cross selling to common buyers within the customer base and additional cost savings. AVANEX CORP: Posts $10.2 Mil. Net Loss in 2006 Third Fiscal Qtr. ---------------------------------------------------------------- Avanex Corporation generated net revenue of $40.1 million in its third fiscal quarter ended March 31, 2006, compared with $36.1 million in the prior quarter and $40.3 million in the third fiscal quarter of the prior year. The company reported a net loss of $10.2 million in the third fiscal quarter of 2006, a 45.2% improvement over the net loss of $18.5 million in the prior quarter, and a 46.2% improvement over the net loss of $18.9 million in the third fiscal quarter of the prior year. "I am pleased with the progress the company has made," Jo Major, president and CEO of Avanex said. "We achieved a 45% reduction in net loss from the second fiscal quarter of this year, and we achieved a similar reduction in net loss from the third fiscal quarter of last year. We continued to meet our restructuring objectives and reached important milestones, including becoming RoHS compliant and returning to revenue growth. As we complete the transition of our manufacturing operations, we are able to focus more on generating revenue, increasing our market share, and launching industry leading new products. "In addition to the steady progress that we are showing on our income statement, our balance sheet also substantially improved. During the third fiscal quarter, $21.4 million was converted from debt into equity and we raised net proceeds of $44.7 million in an equity stock offering," said Mr. Major. Fiscal Third Quarter Highlights: -- Raised net proceeds of $44.7 million in an equity stock offering and ended the quarter with $82.1 million in cash and short-term investments; -- $21.4 million of long term convertible notes converted into equity; -- A 45.2% reduction in net loss over the second fiscal quarter of 2006; -- Launched eight new products including a Xenpak Compatible Hot-Pluggable EDFA and an industry leading Optical Performance Monitoring solution; -- Met RoHS compliance requirements across all product lines; -- Completed planned manufacturing transfers from Italy and France on schedule. Fourth Quarter 2006 Fiscal Year Outlook Revenue is expected to be between $42 million and $45 million in the fourth fiscal quarter of 2006. Gross margin for the fourth fiscal quarter of 2006 is expected to increase over the third fiscal quarter of 2006. Going Concern Doubt Deloitte & Touche LLP expressed substantial doubt about Avanex Corporation's (Nasdaq: AVNX) ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended June 30, 2005. The auditing firm pointed to the Company's recurring losses and negative cash flows from operations. About Avanex Avanex Corporation (NASDAQ: AVNX) -- http://www.avanex.com/-- provides Intelligent Photonic Solutions(TM) to meet the needs of fiber optic communications networks for greater capacity, longer distance transmissions, improved connectivity, higher speeds and lower costs. These solutions enable or enhance optical wavelength multiplexing, dispersion compensation, switching and routing, transmission, amplification, and include network-managed subsystems. Avanex was incorporated in 1997 and is headquartered in Fremont, Calif. Avanex also maintains facilities in Elmira, N.Y.; Shanghai, China; Nozay, France; San Donato, Italy; and Bangkok, Thailand. AVONDALE MILLS: S&P Downgrades Corporate Credit Rating to CC ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on textile manufacturer and marketer Avondale Mills Inc. The corporate credit rating was lowered to 'CC' from 'CCC+'. The rating outlook is negative. Monroe, Georgia-based Avondale Mills had about $139 million of total debt outstanding at Feb. 24, 2006. "The downgrade follows the company's recent 8-K filing with the SEC that reported the board of directors is evaluating strategic alternatives for the company," noted Standard & Poor's credit analyst Susan Ding. These include: * a potential liquidation of all or a substantial part of its assets (which may include a sale of one or more of its facilities and other assets or lines of business); and * a potential restructuring of its capital structure and a portion of its operations. In recent periods, Avondale Mills' operations and credit protection measures have deteriorated significantly as a result of very tough industry conditions, compounded by the January 2005 Norfolk Southern train derailment, which drastically interrupted its business operations. With the company currently exploring alternatives, the outcome could be detrimental to bondholders. The rating reflects the very competitive and cyclical global industry conditions and the company's significant debt burden. Standard & Poor's is concerned about Avondale Mills' ability to continue adjusting its operating model in response to the current adverse operating environment. The company's continued decline in sales and profitability in recent periods reflect the overall weak demand for textile and apparel products and the shift in demand to lower-priced goods manufactured overseas. Debt leverage, as measured by total debt to EBITDA, remains high at 7.7x. Revenues for the last-six-month period declined by 31%, while EBITDA for the same period declined by 120% as a result of production issues related to the train derailment and very difficult operating conditions characterized by lower demand and higher operating costs (raw material and energy related). BEAR STEARNS: Moody's Lowers Rating on $17.8 Mil. of Certs. to C ---------------------------------------------------------------- Moody's Investors Service upgraded the ratings of two classes, downgraded the ratings of three classes and affirmed the ratings of six classes of Bear Stearns Commercial Mortgage Securities, Inc., Commercial Mortgage Pass-Through Certificates, Series 1998- C1: * Class A-1, $28,589,114, Fixed, affirmed at Aaa * Class A-2, $417,211,428, Fixed, affirmed at Aaa * Class X, Notional, affirmed at Aaa * Class B, $35,736,956, Fixed, affirmed at Aaa * Class C, $32,163,260, Fixed, upgraded to Aa1 from A1 * Class D, $32,163,260, Fixed, upgraded to Baa1 from Baa2 * Class E, $8,934,239, Fixed, affirmed at Baa3 * Class G, $12,507,935, Fixed, affirmed at Ba2 * Class H, $5,360,543, Fixed, downgraded to B1 from Ba3 * Class I, $17,868,478, Fixed, downgraded to C from Caa1 * Class J, $243,507, Fixed, downgraded to C from Caa2 As of the May 16, 2006 distribution date, the transaction's aggregate balance has decreased by approximately 15.6% to $603.3 million from $714.7 million at securitization. The Certificates are collateralized by 138 mortgage loans ranging in size from less than 1.0% to 3.6% of the pool, with the top 10 loans representing 27.0% of the pool. Thirty-five loans, representing 22.3% of the pool, have defeased and are collateralized with U.S. Government securities. Two of the pool's top 10 loans have defeased -- White Road Plaza and Shaw's Plaza Shopping Center. Five loans have been liquidated from the pool, resulting in aggregate realized losses of approximately $10.5 million. Three loans, representing 1.7% of the pool, are in special servicing. Moody's has estimated aggregate losses of $2.0 million for the specially serviced loans. Twenty-five loans, representing 13.2% 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 93.2% and 59.6% of the pool's performing loans, respectively. Moody's weighted average loan to value ratio is 72.1%, compared to 73.4% at Moody's last full review in January 2004 and compared to 75.7% at securitization. The upgrade of Classes C and D is due to a high level of defeased loans, increased credit support and stable overall pool performance. The downgrade of Classes H, I and J is due to realized and anticipated losses from the specially serviced loans and LTV dispersion. Based on Moody's analysis, approximately 15.9% of the pool has a LTV in excess of 100.0%, compared to 8.7% at securitization. Class K has been eliminated entirely due to losses and Class J has sustained losses of approximately $4.4 million. The top three loans represent 10.0% of the outstanding pool balance. The largest loan is the Mission Marketplace Loan, which is secured by a 344,000 square foot shopping center located in Oceanside, California. Major tenants include Kmart, Big Lots, Ralph's Grocery Store and a 13-screen cinema. The property is currently 96.0% leased, essentially the same as at last review. Moody's LTV is 76.4%, compared to 78.1% at last review. The second largest loan is the Lomas Santa Fe Loan, which is secured by a 214,000 square foot grocery anchored retail center located north of San Diego in Solana Beach, California. Major tenants include Vons and Ross Stores. The center is 99.0% occupied, the same as at last review. Performance has improved due to increased rental income. Moody's LTV is 56.0%, compared to 65.3% at last review. The third largest loan is the Naples Beach Hotel & Golf Club Loan, which is secured by a 284-room family oriented resort hotel located directly on the beach in Naples, Florida. Performance had improved since last review but declined dramatically in late 2005 due to damage from Hurricane Wilma. The most recently reported debt service coverage ratio is less than 1.0x and the loan is on the master servicer's watchlist. The loan has amortized by approximately 15.8% since securitization. Moody's LTV is 70.4%, compared to 60.5% at last review. The pool's collateral is a mix of retail, U.S. Government securities, office and mixed use, multifamily, industrial and self storageand lodging. The collateral properties are located in 24 states. The highest state concentrations are California, New York, Florida, Arizona and Connecticut. All of the loans are fixed rate. BERRY-HILL GALLERIES: Has Until Aug. 7 to File Chapter 11 Plan -------------------------------------------------------------- The Honorable Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York extended Berry-Hill Galleries, Inc., and Coram Capital LLC's exclusive period to file a plan of reorganization until Aug. 7, 2006. Judge Gerber also extended the Debtors' time to solicit acceptances of their plan until Oct. 5, 2006. P. Bradley O'Neill, Esq., at Kramer, Levin, Naftalis & Frankel, LLP, in New York, told the Court that the Debtors have made significant progress in their chapter 11 cases by resolving numerous disputes with Berry-Hill's prepetition lender and some of the Debtors' significant unsecured creditors. Additionally, the Debtors have successfully established protocols governing the sale and handling of owned artwork, the return of loaned artwork and the application of sales proceeds and return of certain consigned artwork. Resolution of each of these matters was crucial to the stabilization of the Debtors' operations, Mr. O'Neill added. The extension will give the Debtors an opportunity to focus their attention on maximizing the value of their estates and exploring and developing a restructuring strategy. Headquartered in New York, New York, Berry-Hill Galleries, Inc. -- http://www.berry-hill.com/-- buys paintings and sculpture through outright purchase or on a commission basis and also exhibits artworks. The Debtor and its affiliate, Coram Capital LLC, filed for chapter 11 protection on Dec. 8, 2005 (Bankr. S.D.N.Y. Case Nos. 05-60169 & 05-60170). Robert T. Schmidt, Esq., at Kramer, Levin, Naftalis & Frankel, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $100 million and debts between $1 million and $50 million. BOUNDLESS MOTOR: Completes $12 Million Preferred Stock Sale ----------------------------------------------------------- In series of transactions completed on March 19, 2006, effective March 16, 2006, Boundless Motor Sports Racing Inc., nka Dirt Motor Sports, Inc., entered into a Series D Convertible Preferred Stock Purchase Agreement pursuant to which the Company issued and sold 4,000 shares of Series D Convertible Preferred Stock and warrants to purchase 1,200,000 shares of its common stock, $0.0001 par value per share, for an aggregate purchase price of $12,000,000. The Series D Stock is convertible into an aggregate of 4,000,000 shares of common stock, representing a conversion price of $3.00 per share. The Series D Stock will automatically convert into shares of common stock on the date at least 180 days following the effective date of a registration statement covering the shares of common stock into which the Series D Stock is convertible, if: a) the closing bid price of the Company's common stock is equal to or greater than $7.50 per share for ten consecutive trading days; b) the dollar trading volume for each of the ten trading days exceeds $1,000,000; and c) the Registration Statement is and has been effective without lapse or suspension of any kind, for a period of sixty consecutive calendar days or the shares of common stock into which the Series D Stock is convertible may be sold to the public pursuant to Rule 144(k) under the Securities Act of 1933, as amended. The Series D Warrants have a term of five years and are exercisable at an exercise price of $4.50 per share. The Company may call the Series D Warrants at any time following the effective date of the Registration Statement covering the shares of common stock issuable upon exercise of the Series D Warrants, at a price of $0.001 per warrant, if: a) the per share market value of its common stock is equal to or greater than $10.00 per share for ten consecutive trading days; b) the dollar trading volume for each of the ten trading days exceeds $500,000; and c) the Registration Statement is and has effective been, without lapse or suspension of any kind, for a period of sixty consecutive calendar days. A full-text copy of the Series D Convertible Preferred Stock Purchase Agreement, dated as of May 16, 2006, is available for free at http://researcharchives.com/t/s?9eb The Company also entered into exchange agreements pursuant to which each of its issued and outstanding shares of Series B Convertible Preferred Stock, par value $.01 per share, and Series C Convertible Preferred Stock, par value $.01 per share, were exchanged for an aggregate of 9.843.3 shares of the Company's Series D Stock. The shares of Series D Stock issued in this exchange are convertible into 9,843,270 shares of common stock, the same number of shares of our common stock as the original Series B Stock and Series C Stock could have been converted. A full-text copy of the Series B Convertible Preferred Exchange Agreement, dated as of May 16, 2006, is available for free at http://researcharchives.com/t/s?9ec A full-text copy of the Series C Convertible Preferred Exchange Agreement, dated as of May 16, 2006, is available for free at http://researcharchives.com/t/s?9ed The Company also issued 4,400 shares of Series D and 1,320,178 Series D Warrants in pursuant to the exchange of $12,001,616 of short-term promissory notes in connection with the Series D financing. Further, warrants to purchase an aggregate of 5,839,701 shares of common stock, at exercise prices ranging from $3.00 to $5.00 per share, were cancelled and exchanged into an aggregate of 917,087 shares of our common stock and warrants to purchase 542,738 shares of our common stock at $.001 exercise price with a term of five years. Additionally, the investors and certain other parties acquired an aggregate of 3,920,287 shares of the Company's common stock at an aggregate purchase price of approximately $6,130,000. Of the shares acquired, 16,667 shares were obtained from a non-executive employee, 2,844,705 shares were obtained from Mr. Paul A. Kruger, its former Chairman and Chief Executive Officer, and 100,000 shares were obtained from Mr. Kruger's children. The Company did not sell any new shares of common stock in this transaction. Mr. Kruger and the Company also entered into a warrant and stock option cancellation agreement and a mutual release agreement, pursuant to which Mr. Kruger surrendered warrants and options to purchase an aggregate of 500,000 shares of the Company's common stock and Mr. Kruger resigned as Chairman and Chief Executive Officer. Mr. Kruger, his children, another former employee and the former employee's affiliates entered into a lock-up and leak out agreement with respect to their remaining common shares. Burnham Hill Partners, a division Pali Capital, Inc. acted as the Company's placement agent in connection with the transactions. A cash fee equal to 10% of the gross proceeds received by the Company in connection with the sale of the Series D Stock and Warrants was paid to BHP and a sub-placement agent. Further BHP and its registered assigns were issued five-year warrants equal to 10% of the common shares issuable upon conversion of the Series D exercisable at the Series D conversion price. BHP was not paid a fee in connection with the sale of the $6,130,000 of common stock and was not issued warrants in connection with exchange of the Series B and Series C Preferred into Series D. About Boundless Motor Boundless Motor Sports Racing Inc., nka Dirt Motor Sports, Inc., is a leading marketer and promoter of motorsports entertainment in the United States. The Company operate 6 dirt motorsports tracks in New York, Pennsylvania and Florida, and own and operate four of the premier sanctioning bodies in dirt motorsports: the World of Outlaws, DIRT Motorsports, United Midwestern Promoters (UMP) and the Mid America Racing Series (MARS). As of Dec. 31, 2005, the company's balance sheet showed total assets of $13.7 million and total debts of $15 million resulting to a $1.2 million stockholders' deficit. * * * As reported in the Troubled Company Reporter on April 24, 2006, Murrell, Hall, McIntosh & Co., PLLP, expressed substantial doubt about Boundless Motor Sports Racing Inc., nka Dirt Motor Sports, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the company's significant net losses and negative working capital. BOYDS COLLECTION: Robert Coccoluto Replaces Jan Murley as CEO ------------------------------------------------------------- The Boyds Collection, Ltd., reported the appointment of Robert Coccoluto as CEO, replacing Jan Murley. Ms. Murley, who is leaving to pursue other interests, will remain with the Company until June 30, 2006, or the Company's emergence from Chapter 11, to assist with the transition to new management. "I am honored and excited to accept the opportunity to lead the Company forward as a stronger competitor in the marketplace," Mr. Coccoluto, incoming chief executive officer, said. "The Board and the management team share my commitment to growing Boyds. I am confident that together we will build a stronger and invigorated Company that will be better able to serve our employees and all of our loyal customers. As we move forward, we are particularly focused on serving and retaining our retail and collector base, which has been and continues to be loyal and committed to the Company." Mr. Coccoluto previously served as President and CFO of the Company from 1998 to 2000. In 2001, he founded Advanced Design Group, which designed and marketed unique garden decorations. In 2004, he joined Frost Associates where he has served as a management and M&A advisor to companies in the gift and home decor industries. Ms. Murley has led the Company for the last three years. Before taking on responsibilities as CEO, she spent three years as group vice president for Hallmark Cards, the world's largest publisher of greeting cards and related gifts, which she joined following a more than 20-year tenure at Procter & Gamble. The Company also reported the appointment of Peter Frost as Chief Operating Officer. Mr. Frost previously served as VP of Finance and CFO of the Company from 1999-2002. In 2002, he joined Gotham Golf Partners, an owner and operator of 26 golf courses, as CFO. In 2003, he founded Frost Associates, where he serves as a management and M&A advisor to companies in the gift industry. Michael A. Prager, who is Boyds' Group Vice President, Wholesale, will assume the position of President, effective immediately. A highly experienced executive, Mr. Prager's nearly 20-year career has been spent at industry-leading consumer products companies, including Procter & Gamble, Johnson & Johnson and The Timberland Company. Mr. Prager has been with Boyds since 2004. "I am pleased by the confidence expressed by the Board in choosing me to take on the position of President. I believe my many years of experience will allow me to make a major contribution to the company's growth in the years to come." The court has scheduled a confirmation hearing with respect to the Boyds Reorganization Plan for June 8, 2006. The proposed Plan has the support of both its largest secured lender and the Official Committee of Unsecured Creditors in its Chapter 11 cases. Boyds is on track to emerge from Chapter 11 in June. Headquartered in McSherrystown, Pennsylvania, The Boyds Collection, Ltd. -- http://www.boydsstuff.com/-- designs and manufactures unique, whimsical and "Folksy with Attitude(SM)" gifts and collectibles, known for their high quality and affordable pricing. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 16, 2005 (Bankr. Md. Lead Case No. 05-43793). Matthew A. Cantor, Esq., at Kirkland & Ellis LLP represents the Debtors in their restructuring efforts. Houlihan Lokey Howard & Zukin Capital, Inc. serves as the Debtor's financial advisors. The law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP, represents the Official Committee of Unsecured Creditors. FTI Consulting serves as the Committee's financial advisors. As of June 30, 2005, Boyds reported $66.9 million in total assets and $101.7 million in total debts. BRANDS SERVICES: Moody's Places Junk-Rated $150MM Notes on Review ----------------------------------------------------------------- Moody's Investors Service placed Brand Services, Inc. existing B2 corporate family rating, its B2 credit facilities rating, and the company's Caa1 rated subordinated note rating on review for possible upgrade and at the same time assigned a B1 prospective rating to the company's proposed $100 million tack-on term loan and upsized $75 million revolving credit facility. The tack-on term loan and upsized revolver are contingent on the successful execution of the company's proposed Initial Public Offering of approximately $250 million. Proceeds from the IPO and tack-on term loan will be used to repay senior subordinated notes, holding company PIK notes, and redeem some of the company's preferred stock. If the company's contemplated transaction prevails as planned then the total unadjusted and proforma unadjusted leverage is expected by Moody's to decline to under 3.5 times by the year end 2006 from 5.3 times at the end of 2005. These ratings were put on review: * $287.4 million term loan B, rated B2; * $70 million revolver, rated B2; * $150 million senior subordinated notes, rated Caa1; * Corporate Family Rating, rated B2. These prospective ratings were assigned: * $100 million tack-on term loan, rated (P) B1; * $75 million revolving credit facility, rated (P) B1. The key rating factors currently influencing Brand's ratings are: the uncertainty whether the company will be successful in its contemplated IPO, history of weak operating performance and the degree to which the business outlook has improved materially, currently positive industry dynamics due to the significant demand for scaffolding caused by new building construction as well as maintenance of power generation plants and oil refineries. The company also has meaningful customer concentration. The B1 prospective rating to the company's proposed $100 million tack-on term loan and upsized $75 million revolving credit facility reflects the debt issuance being contingent on the IPO and the expectation that the company's credit metrics post the IPO will be in line with those that are typical for a B1 rated company. If proceeds from the IPO differ materially from the expected $250 million level, or where the use of proceeds is not applied towards significant debt reduction, the company's Corporate Family Rating and the prospective ratings may ultimately be at the B2 level. Brand Services, Inc., headquartered in Kennesaw, GA is the largest North American provider of scaffolding services. Revenues in 2005 were approximately $491 million. BRAND SERVICES: S&P Puts CCC+ Subordinated Rating on CreditWatch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' corporate credit and senior secured debt rating, and 'CCC+' subordinated rating on scaffolding services provider Brand Services Inc. on CreditWatch with positive implications. These ratings actions are in response to Brand's S-1 filing announcing the company's intention to progress with an IPO of $250 million in common stock, borrow additional debt under the company's existing term loan, and redeem the company's subordinated notes, subordinated pay-in-kind notes, and preferred stock. If the transaction goes through as proposed, the corporate credit rating and senior secured debt rating would be raised to 'B+', additional debt borrowed under the company's existing term loan would be rated 'B+', the rating on the subordinated notes would be withdrawn at the time of their redemption, and the outlook would be considered stable. "The ratings upgrade would be attributed to a significant debt reduction of about $145 million dollars, which would result in an adjusted total debt to EBITDA figure of less than 4x," said Standard & Poor's credit analyst Kevin Beicke. At the same time, the bank loan recovery score of '2' was placed on CreditWatch with negative implications. If the transaction goes through as proposed, the bank loan recovery score would be lowered to '3'. The lowering of the bank loan recovery score would be attributed to the same asset base securing a larger amount of bank debt. If the IPO and the rest of the transactions do not occur, all ratings would be affirmed and the outlook would be revised to stable. The outlook revision is based on improved operating and financial performance. CALABASH RE: S&P Assigns BB Rating to $100 Million Class A-1 Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB' senior secured debt rating to the $100 million Class A-1 Series 2006-1 principal at-risk variable-rate notes issued by Calabash Re Ltd. This is the first issuance under Calabash's newly establish $1 billion principal at-risk variable-rate note program. The proceeds from the issuance of the notes will provide Swiss Reinsurance America Corp. (AA/Watch Neg/--) with a source of index-based coverage for hurricanes in the U.S. on a per- occurrence basis over a three-year period. Calabash is a special-purpose Cayman Islands Class B insurer whose ordinary shares are held in a charitable trust. After Calabash issued the notes, it invested the proceeds in high-quality assets within a collateral account. Calabash will swap the total return of the asset portfolio with Swiss Re Financial Products Corp. (AA/Watch Neg/A-1+) in exchange for quarterly LIBOR-based payments. The notes will provide Swiss Reinsurance America Corp. with a source of multi-year retrocessional capacity linked to reinsurance of U.S. hurricane exposure provided by Swiss Reinsurance America Corp. to ACE American Insurance Co. and certain affiliates. If a hurricane passes through the covered area and triggers a loss to ACE's hurricane notional portfolio in excess of a predetermined index value, then the noteholders will be at risk for a loss of principal. The premium received by Calabash pursuant to the reinsurance agreement, combined with the payments received under the swap, will be used to make the scheduled interest payments to the noteholders. EQECAT's proprietary model was used to determine the probability of attachment of the notes. The model will be used along with information supplied by the National Hurricane Center to calculate modeled losses to ACE's hurricane notional portfolio and the industry hurricane notional portfolio following a hurricane. These modeled losses will be used in combination with the most recent catastrophe bulletin(s) from Property Claims Services to determine whether or not a covered loss to the noteholders has occurred as well as the amount of the loss. If a loss has occurred, assets in the collateral account will be sold to fund the reinsurance payment, and the principal amount of the notes will be reduced. Swiss Reinsurance America Corp. will pay the up-front and ongoing expenses of Calabash in connection with this security issuance. "The ratings on the notes are based on the probability of attachment as determined by EQECAT," said Standard & Poor's credit analyst Gary Martucci. EQECAT provided two measures of the probability of attachment: a near-term analysis and a long-term analysis. Standard & Poor's gave greater weight to the near-term analysis when assigning the rating on the notes, given their immediate and limited exposure period. The near-term analysis focuses on the period beginning in 1995, which indicates the potential for a greater frequency of hurricanes. "The rating is also based upon the creditworthiness of Swiss Reinsurance America Corp. as payer under the reinsurance agreement and Swiss Reinsurance Co. (AA/Watch Neg/A-1+) as guarantor of Swiss Re Financial Products Corp., the total return swap counterparty," Mr. Martucci added. CENVEO CORP: S&P Rates Planned $525 Million Credit Facility at BB- ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB-' bank loan rating and '1' recovery rating to Cenveo Corp.'s proposed $525 million senior secured credit facility, reflecting the expectation that lenders could expect full recovery of principle in the event of a payment default. In addition, Standard & Poor's revised its outlook on parent company Cenveo Inc. to positive from negative on the expectation for improving operating profitability, as Cenveo makes progress implementing its cost-cutting initiatives. At the same time, Standard & Poor's affirmed Cenveo Inc.'s 'B+' corporate credit rating. The Englewood, Colorado-based commercial printer had about $740 million in total lease adjusted debt as of March 2006. Proceeds from the proposed term loan will be used to partially fund the tender offer for Cenveo's $350 million senior notes due 2012 and pay premiums and fees. The outlook revision reflects a good level of progress toward accomplishing significant and prudent cost-cutting actions in 2006. Even though lease-adjusted debt leverage at Cenveo remains high for the current rating, about 6x, Cenveo has made meaningful improvements in EBITDA, profit margins and leverage for the six months ended March 2006, including about $135 million in debt repayment from Supremex Canadian envelope business sale proceeds. Pro forma for Cenveo's March 2006 sale of its Supremex, restructuring charges and losses related to the sale of non- strategic businesses, EBITDA from continuing operations increased 69% to $71 million for the six months ended March 2006 from $42 million in the prior year's period. Pro forma EBITDA margin from continuing operations increased to almost 9% from about 5% one year earlier. Standard & Poor's expects that Cenveo will implement its $75 million cost-reduction program in 2006, which will improve pro forma EBITDA and total debt leverage to under 5x by mid-2007. CHARLES RIVER: Selling Clinical Services to Kendle for $215 Mil. ---------------------------------------------------------------- Charles River Laboratories International, Inc., has entered into a Stock Purchase Agreement with Kendle International Inc. for the sale of the Company's Phase II-IV Clinical Services business for $215 million in cash, subject to a working capital adjustment at closing. Charles River's Board of Directors has approved the Stock Purchase Agreement. The closing of the transaction is subject to customary conditions, including, but not limited to: a) the expiration or termination of the applicable Hart- Scott-Rodino waiting period; b) the absence of any court order or decree or law prohibiting the closing, and c) the accuracy of representations and warranties. The Stock Purchase Agreement contemplates that the acquisition must be completed by Aug. 31, 2006. Charles River Laboratories International, Inc., sells pathogen- free, fertilized chicken eggs to poultry vaccine makers. It also offers contract staffing, preclinical drug candidate testing, and other drug development services. It also markets research models -- rats and mice bred for preclinical experiments, including transgenic "knock out" mice -- to the pharmaceutical and biotech industries. It sells its products in more than 50 countries to drug and biotech companies, hospitals, and government entities. * * * As reported in the Troubled Company Reporter on March 1, 2006, Moody's Investors Service assigned Ba1 ratings to new credit facilities of subsidiaries of Charles River Laboratories International, Inc., which are guaranteed by Charles River. Moody's also affirmed Charles River's Ba1 Corporate Family Rating, the Ba1 rating on its existing credit facilities, and the Speculative Grade Liquidity Rating of SGL-1. The rating outlook for the company is stable. CITIBANK MUTUAL: Moody's Cuts Rating on Two Securities to Ca ------------------------------------------------------------ Moody's Investors Service upgraded and downgraded various classes of several Citibank Mutual Fund Fee deals. The complete rating actions include: Securities: Mutual Fund Fee Trust XIV, Series 2000-4 and 2000-R4 * Series 2000-4: downgraded to Ca from B3 * Series 2000-R4: downgraded to Ca from B3 Securities: Hedged Mutual Fund Fee Trust 2003-1, Classes 1 and 2 * Class 1: upgraded to Aa2 from A2 * Class 2: upgraded to Aa2 from A2 The cash flows supporting these securities are various future fees generated by equity and debt mutual funds. The credit quality of a security backed by mutual fund fees depends on the likely fees to be generated by the mutual funds during the life of the security, and the potential variability of such collections. Expected future fees are highly dependent on forecast values of the mutual funds, which, in turn, are linked to current values and informed by historical performance. Mutual Fund Fee Trust XIV, issued in 2000, was impacted by the sharp market declines of 2001-2002. Mutual fund fee cash flows to the deal declined and hence slowed amortization, which has not since caught up, ultimately causing permanent impairment in the credit quality of this deal. Hedged Mutual Fund Fee Trust 2003-1, on the other hand, was issued in 2003 around market lows of that time, and benefited from the ensuing market improvement. This transaction's strong performance to date has put it in a position where it is expected to prove resilient in the face of a fairly strong degree of potential future market volatility. Mutual Fund Fee Trust XIV and Hedged Mutual Fund Fee Trust 2003-1 are several in a series of securitizations of the rights to mutual fund distribution fees purchased from Citibank, N.A., which obtained the rights from several mutual fund distribution companies under pre-existing and continuing master sale and purchase agreements. Citibank is a major financier of such fees. CLEARSTORY SYSTEMS: Moves to Voluntarily Deregister Stock --------------------------------------------------------- ClearStory Systems, Inc., disclosed that it intends to file a Form 15 with the Securities and Exchange Commission on or about June 19, 2006, to voluntarily deregister its common stock and suspend its reporting obligations under the Securities Exchange Act of 1934, as amended. ClearStory is eligible to deregister by filing a Form 15 because it has fewer than 300 common stock shareholders of record. On or about June 19, ClearStory also intends to voluntarily delist its common stock from the Over-the-Counter Bulletin Board maintained by the National Association of Securities Dealers, Inc. The members of the ClearStory Board of Directors believe that deregistering will result in accounting, legal and administrative expense reductions for ClearStory and enable ClearStory management to focus more time and resources on Company operations and enhancing shareholder value. The ClearStory Board of Directors approved the recommendation by ClearStory management to deregister and delist ClearStory common stock after carefully considering the advantages and disadvantages of continued registration and listing. These considerations include a significant increase in cost and administrative burden associated with public status in light of the Sarbanes-Oxley Act of 2002 and the adoption of new rules by the SEC. The ClearStory Board of Directors determined from a fiduciary perspective that rising compliance costs along with the substantial demands of SEC filing requirements on management time and resources, outweigh the benefits ClearStory receives from maintaining its status as a registered and listed company. "With the completion of the sale of our Business Document Solutions group to Datawatch Corporation on May 3, 2006, it is important for us to focus our resources on securing a leadership position in the growing digital media market," commented Henry F. Nelson, ClearStory president and chief executive officer, "Over the past two years, we have made significant investments in our digital media development platform and digital asset management application. We now need to concentrate our energy on leveraging these investments for long-term shareholder value." Upon filing the Form 15, ClearStory's obligation to file certain reports with the SEC, including Forms 10-KSB, 10-QSB and 8-K, will immediately be suspended, and accordingly, ClearStory does not intend to file its Form 10-KSB for the year ended March 31, 2006 with the SEC. ClearStory also expects that its common stock will continue to be quoted on "Pink Sheets" after it delists from the OTCBB; however, ClearStory cannot make any assurances that brokerage firms will continue to make a market in ClearStory's common stock after delisting. ClearStory expects that the deregistration of its common stock will become effective 90 days after the date of filing the Form 15 with the SEC. About ClearStory ClearStory Systems, Inc. (OTCBB: CSYS) -- http://www.clearstorysystems.com/-- is an established provider of flexible, on-demand ECM solutions. ClearStory's Radiant Content Suite provides discrete management and on-demand access for the full spectrum of content - from graphics and video to customer statements and email. The company's standards-based technology provides a powerful platform for integrating rich media and business documents into a multitude of business-critical environments, including marketing and finance departments, call centers, channel partner portals, compliance initiatives, and global marketing extranets. At Dec. 31, 2005, the Company's balance sheet showed $6,108,000 in total assets and liabilities of $$7,785,000, resulting in a stockholders' deficit of $1,677,000. * * * Miller Ellin & Company, LLP, expressed substantial doubt about ClearStory Systems, Inc.'s ability to continue as a going concern after it audited the Company's financial statement for the year ended March 31, 2005. The auditing firm pointed to the Company's recurring losses and working capital deficiency. COMMERCIAL MORTGAGE: Moody's Junks Rating on $8.9MM Class M Certs. ------------------------------------------------------------------ Moody's Investors Service upgraded the ratings of three classes, downgraded the ratings of two classes and affirmed the ratings of three classes of Commercial Mortgage Acceptance Corp., Commercial Mortgage Pass-Through Certificates, Series 1998-C1: * Class A-2, $337,874,175, Fixed, affirmed at Aaa * Class X, Notional, affirmed at Aaa * Class B, $59,611,000, Fixed, affirmed at Aaa * Class C, $59,612,000, Fixed, upgraded to Aaa from Aa2 * Class D, $62,593,000, Fixed, upgraded to Aaa from A3 * Class E, $20,862,000, WAC, upgraded to Aa1 from Baa2 * Class L, $11,924,000, Fixed, downgraded to Caa2 from Caa1 * Class M, $8,940,000, Fixed, downgraded to C from Ca As of the May 15, 2006 distribution date, the transaction's aggregate principal balance has decreased by approximately 44.7% to $659.8 million from $1.2 billion at closing. The Certificates are collateralized by 206 loans ranging in size from less than 1.0% to 5.8% of the pool, with the top 10 loans representing 21.0% of the pool. Two loans, representing 2.1% of the pool, have defeased and are collateralized with U.S. Government securities. Eight loans have been liquidated from the pool, resulting in aggregate realized losses of approximately $11.5 million. Two loans, representing less than 1.0% of the pool, are in special servicing. Moody's has estimated minimal losses at this time from the specially serviced loans. Forty-two loans, representing 22.2% of the pool, are on the master servicer's watchlist. Moody's was provided with partial or full year operating 2005 results for 87.0% of the performing loans in the pool. Moody's weighted average loan to value ratio is 75.3%, compared to 79.4% at Moody's last full review in December 2003 and compared to 84.0% at securitization. The upgrade of Classes C, D and E is due to increased credit support and improved overall pool performance. The downgrade of Classes L and M is due to realized losses from the specially serviced loans, LTV dispersion and concerns about the largest loan in the pool. Based on Moody's analysis, 13.3% of the pool has an LTV in excess of 100.0%. The top three loans represent 10.3% of the outstanding pool balance. The largest loan is the Two Chatham Center Loan, which is secured by a leasehold mortgage on a 280,000 square foot office building located in downtown Pittsburgh, Pennsylvania. The property is located in a mixed-use complex, which contains a 200- unit high-rise condominium, two office towers totaling 505,000 square feet and a 404-room hotel. The property was 70.0% occupied as of September 2005, compared to 80.5% at last review and compared to 99.0% at securitization. The largest tenants are Travelers Insurance Company and UPMC Health Plan. Property performance has been impacted by the decline in occupancy and Pittsburgh's weak office market. The Pittsburgh office market has a current estimated vacancy of approximately 20.0%. Moody's LTV is 98.6%, compared to 94.4% at last review. The second largest loan is the Piazza Carmel Shopping Center Loan, which is secured by a 138,000 square foot retail property located in San Diego, California. The property is 100.0% occupied, essentially the same as at last review. The center is anchored by Safeway, Inc., which occupies 36.1% of the premises. Moody's LTV is 54.7%, compared to 67.8% at last review. The third largest loan is the Shrewsbury Plaza Loan, which is secured by a 225,000 square foot retail property located in Shrewsbury, New Jersey. The property is 100.0% occupied, the same as at last review. Major tenants include Marshall's, ACME and Linens 'N Things. Moody's LTV is 64.7%, compared to 84.8% at last review. The pool collateral is a mix of retail, multifamily, office, industrial and self storage, lodging, mixed use, U.S. Government securities and healthcare. The collateral properties are located in 38 states. The highest state concentrations are California, Pennsylvania, North Carolina, Texas and Ohio. All of the loans are fixed rate. CONTINENTAL AIRLINES: S&P Rates $130MM Class B Certificates at B+ ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'AAA' preliminary rating to Continental Airlines Inc.'s (B/Negative/B-3) $190 million Class G pass-through certificates, and its 'B+' preliminary rating to the $130 million Class B pass-through certificates. The Class G certificates have an expected maturity of June 2, 2013, and a final maturity date of June 2, 2015; the Class B certificates mature June 2, 2013. Final ratings will be assigned upon completion of the review of legal documentation. "The rating on the Class G certificates is based on an insurance policy provided by Financial Guaranty Insurance Co. [AAA/Stable/--]," said Standard & Poor's credit analyst Philip Baggaley. "The rating on the Class B certificates is based on the credit of Continental Airlines, the strategic importance of the aircraft spare parts that collateralize the certificates in any bankruptcy reorganization, and various structural features intended to maintain collateral access and asset protection for certificate-holders." The transaction has a structure similar to those of aircraft- backed enhanced equipment trust certificates, but it benefits from credit strengths that parallel those for debtor-in-possession financings. As is the case for enhanced equipment trust certificates, creditors' access to collateral is based on legal protections available under Section 1110 of the federal bankruptcy code, there is a liquidity facility (for Class G certificates only) intended to cover a period during which the collateral could be repossessed and remarketed following a default by the airline, and the securities are tranched. However, the most important source of credit support in any Chapter 11 reorganization would be the essentiality of the collateral (aircraft spare parts) to maintain Continental's operations, a feature shared with debtor-in-possession credit facilities. The spare parts securing the notes consist of aircraft and engine spare parts placed in service after Oct. 22, 1994, that can be used on various models of B737, B757, B767, and B777-200 aircraft, together a large majority of Continental's mainline (non-regional) fleet. They have been appraised initially at $432.8 million, and the loan-to-value on the Class G notes upon issuance is 43.9%. The loan-to-value on the Class B notes upon issuance is 73.9%. Compared to an aircraft-backed EETC, the secured notes being rated benefit from spare parts' relatively stable values over time, their lower risk of obsolescence, and from the fact that the collateral would be crucial to any bankruptcy reorganization of Continental. The last implies that the senior and junior certificates would either be affirmed by the airline or renegotiated in a manner that would preserve payments to at least the Class G certificates (and the insurance policy would cover such payments for up to 24 months even if not received from Continental). The Class B certificates do not have a dedicated liquidity facility, nor an insurance policy, and would therefore default on interest payments if a payment fell due during the first 60 days of a Continental bankruptcy, or if negotiations between the airline and certificateholders stretched beyond that initial automatic stay period under Section 1110 of the Bankruptcy Code. Drawbacks to spare parts financings include: * the inherent difficulty of tracking a pool of assets that turns over; * the fact that (absent replenishment with new inventory) collateral coverage could change materially in a short period due to normal operational use of spares; and * that it would very likely take longer and be more costly to sell a large pool of repossessed spares than to sell aircraft. The certificates incorporate two mechanisms not found in typical EETCs to mitigate these drawbacks. The first is collateral maintenance ratios, which require Continental to add spare parts, provide other collateral, or pay down debt to restore loan-to- values (maximum 45% for Class G certificates and 75% for Class B certificates) or to maintain a minimum 150% ratio of rotable spare parts (those that can be refurbished, in contrast to expendable spares) to Class G certificates, in each case measured using semiannual appraised values. In a Continental bankruptcy, however, additions of spare parts or other collateral may be avoided by the bankruptcy judge under certain circumstances, and collateral other than spare parts (including cash collateral) would not benefit from Section 1110 protections. Because of the way the collateral maintenance and rotables ratios are calculated (cash is netted against outstanding certificates, rather than being counted as a form of collateral), substitution of cash for other collateral could actually cause the ratio of outstanding certificates to total collateral to be somewhat higher than the nominal loan-to-value ceilings. Second, the liquidity facility is sized to cover eight quarterly interest payments (up to 24 months) on the Class G certificates, longer than the typical three semiannual (18 months) payments typical for aircraft EETCs. The primary liquidity facility is provided by Morgan Stanley Bank (A+/Stable/A-1). Even with these mechanisms to mitigate drawbacks of a spare parts financing, repossession and sale of the collateral would be a less attractive option for certificateholders than is the case for holders of aircraft-backed EETCs, due to the logistical difficulties and lengthy period likely needed to sell the spare parts collateral. Conversely, the risk of Continental choosing to abandon this collateral to reduce its financial burden in bankruptcy is far less than would be true for any aircraft collateral pool backing an EETC. The 'B' corporate credit rating on Continental reflects its participation in the high-risk airline industry and a heavy debt and lease burden. These factors outweigh better-than-average operating performance among its peer large U.S. hub-and-spoke airlines. Continental reported a $66 million net loss in the first quarter of 2006 (a $46 million net loss before certain special items). This represented an improvement on 2005 results, despite 41% higher fuel expense, due to revenue gains (revenue per available seat mile up 4.4%) and labor concessions implemented part way through the first quarter last year. The airline should become profitable in the second and third quarters, and could report approximately break-even full-year results if current fuel prices and revenue trends continue. Ratings List: Continental Airlines Inc.: Corporate credit rating -- B/Negative/B-3 Preliminary Ratings Assigned: Continental Airlines Inc.: Pass-thru cert, series 2006-1, Class G* -- AAA (prelim.) Pass-thru cert, series 2006-1, Class B -- B+ (prelim.) * Insured by Financial Guaranty Insurance Co. CORUS GROUP: Sells Rolled Aluminum Unit to Aleris for EUR826 Mil. ----------------------------------------------------------------- Corus Group plc signed a Share Purchase Agreement for EUR826 million sale of its aluminum rolled products and extrusions businesses to Aleris International Inc. On March 16, 2006, Corus and Aleris signed a Letter of Intent for the proposed acquisition by Aleris of Corus' downstream aluminum rolled products and extrusions businesses for a gross consideration of EUR826 million. Following the completion of internal consultation and advice processes related to the transaction, Corus and Aleris confirmed they entered into a definitive Share Purchase Agreement. The transaction remains subject to certain external regulatory clearances. Completion is anticipated in the third quarter of 2006. The net cash proceeds, after deducting pension liabilities but excluding minority interests and net debt, would be approximately EUR728 million. These proceeds will be used to further strengthen both the Group's balance sheet and develop the carbon steel business. The transaction is not expected to have a material effect on the Group's net assets. In 2005, Corus' downstream aluminum rolled products and extrusions businesses generated a profit before taxation of EUR47 million. Gross assets related to these businesses, as at Jan. 1, 2006, were EUR1.120 billion. The management teams of these businesses are expected to transfer to Aleris. About Aleris Headquartered in Beachwood Ohio, suburb of Cleveland, Aleris International Inc.-- http://www.aleris.com/-- is a major North American manufacturer of rolled aluminum products and is a global leader in aluminum recycling and the production of specification alloys. Aleris is also a leading manufacturer of value-added zinc products that include zinc oxide, zinc dust and zinc metal. The Company operates 41 production facilities in the United States, Brazil, Germany, Mexico and Wales, and employs approximately 4,000 employees. About Corus Group Corus Group PLC -- http://www.corusgroup.com/-- is an international metal company, providing steel and aluminum products and services to customers worldwide. With an annual turnover of GBP9 billion, the company is comprised of four Divisions: Strip Products, Long Products, Distribution & Building Systems and Aluminum, and has a global network of sales offices and service centers. * * * As reported in the Troubled Company Reporter on May 11, 2006, Moody's Investors Service upgraded Corus Group plc's corporate family rating to Ba2, upgraded its senior unsecured and supported unsecured obligations to B1 and raised senior secured bank facility to Ba1. As reported in the Troubled Company Reporter on March 30, 2006, Standard & Poor's Ratings Services placed its 'BB-' long-term corporate credit rating on U.K.-based steel consortium Corus Group PLC on CreditWatch with positive implications following March 16, announcement concerning the intended disposal of the aluminum division, coupled with good financial performance in 2005. At the same time, Standard & Poor's placed its 'BB' senior secured bank loan ratings on Corus and its 'B+' senior unsecured debt ratings on Corus and Corus Finance PLC on CreditWatch with positive implications. The 'B' short-term corporate credit rating on Corus was also placed on CreditWatch with positive implications. At the same time, Fitch Ratings changed Corus Group PLC's Outlook to Positive from Stable and affirmed the Issuer Default Rating at BB- following the company's announcement of its 2005 results and plan to dispose its aluminum business for EUR826 million. CREDIT SUISSE: S&P Upgrades Class L Certificates' Rating to BB- --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on eight classes of commercial mortgage pass-through certificates from Credit Suisse First Boston Mortgage Securities Corp.'s series 2001-CP4. Concurrently, ratings are affirmed on 10 other classes from the same series. The raised and affirmed ratings reflect the defeasance of an additional $98.9 million (10%) in collateral since Standard & Poor's last review in July 2005 and credit enhancement levels that provide adequate support through various stress scenarios. As of the May 17, 2006, remittance report, the collateral pool consisted of 124 loans with an aggregate trust balance of $1.083 billion, down from 130 loans totaling $1.178 billion at issuance. The master servicer, Midland Loan Services Inc., reported primarily full-year 2004 or full-year 2005 financial information for 98% of the pool. Based on this information, Standard & Poor's calculated a weighted average debt service coverage ratio of 1.58x, up from 1.51x at issuance. The current DSCR figure excludes $302.7 million (28%) of the pool, which has been defeased. To date, the trust has experienced three losses totaling $9.7 million. The top 10 exposures secured by real estate have an aggregate outstanding balance of $344.6 million (32%) and a weighted average DSCR of 1.84x, up from 1.74x at issuance. The largest exposure is a pari passu loan with a whole loan balance of $109.6 million and an in-trust balance of $54.4 million. The loan is secured by two office buildings in New York, New York. The second-largest exposure has a balance of $52.4 million and is secured by two adjacent office buildings in Pasadena, California. The majority of the space (80%) is leased to Kaiser Foundation Health Plan (A+/Stable/--). Both exposures continue to exhibit characteristics reflective of high investment grade-obligations. The fifth-largest exposure consists of two cross-collateralized and cross-defaulted loans, one of which is on the servicer's watchlist. The ninth- and 10th-largest exposures are also on the watchlist. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 exposures, and three properties were characterized as "excellent," while the remaining collateral was characterized as "good." There is one asset with a balance of $6.2 million and a total exposure of $7.1 million that is with the special servicer. The Canyon Creek Apartments is a 229-unit multifamily property and was transferred to LNR Partners Inc., the special servicer, in July 2005. The collateral is under contract to be sold and is expected to close within 60 days. Standard & Poor's expects a significant loss upon the liquidation of this asset. Midland reported a watchlist of 27 loans ($204.0 million, 19%). The fifth-largest exposure has an outstanding balance of $29.5 million (3%) and consists of two $14.8 million loans that are cross-collateralized and cross-defaulted. The loans are secured by three office buildings in Raleigh, North Carolina, and have a total of 371,881 sq. ft. One of the loans appears on the watchlist because it reported a 2005 DSCR of 0.88x. The ninth-largest exposure has an outstanding balance of $18.3 million (2%) and is secured by a 173,171-sq.-ft. office building in Novi, Michigan. The property reported a 2005 DSCR of 1.48x and is on the watchlist because the largest tenant (52%) filed for Chapter 11 bankruptcy. However, this tenant recently extended its lease for 18 months. The 10th-largest exposure has an outstanding balance of $17.1 million (2%) and is secured by a 156,766-sq.-ft. office building in Shelton, Connecticut. This loan is on the watchlist because it reported a 2005 DSCR of 0.94x, down from 1.06x in 2004 and 1.47x in 2003. The remaining loans on the watchlist appear there primarily due to DSCR or occupancy issues. Standard & Poor's stressed the specially serviced asset, the loans on the watchlist, and other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised: Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2001-CP4 Rating Class To From Credit enhancement ----- -- ---- ------------------ C AAA AA+ 13.94% D AA+ AA- 11.90% E AA A 10.40% F AA- BBB+ 8.91% G A BBB 7.82% H BBB+ BBB- 5.78% K BB BB- 3.05% L BB- B+ 2.24% Ratings Affirmed: Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2001-CP4 Class Rating Credit enhancement ----- ------ ------------------ A-1 AAA 23.87% A-2 AAA 23.87% A-3 AAA 23.87% A-4 AAA 23.87% B AAA 18.16% J BB+ 4.01% M B 1.56% N B- 1.01% A-CP AAA N/A A-X AAA N/A N/A - Not applicable CVEK BUILDERS: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: CVEK Builders, Inc. 1530 Hubbard Avenue, Unit B Batavia, Illinois 60510 Tel: (630) 845-2638 Bankruptcy Case No.: 06-06151 Type of Business: The Debtor offers personalized architectural Design, home remodeling and construction services. See http://www.cvekbuilders.com Chapter 11 Petition Date: May 27, 2006 Court: Northern District of Illinois (Chicago) Judge: Jacqueline P. Cox Debtor's Counsel: Teresa L. Einarson, Esq. Thomas & Einarson Ltd. 1213 South Joliet Street, Suite F West Chicago, Illinois 60185 Tel: (630) 562-2280 Fax: (630) 562-2282 Total Assets: $823,364 Total Debts: $1,650,724 Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Taxes $222,203 230 South Dearborn Street Mail Stop 5010 CHI Chicago, IL 60604 Daves Electric Subcontractor $94,945 1545 Paramount Parkway Batavia, IL 60510-1469 FE Wheaton & Co. Inc. Materials $78,092 P.O. Box 459 Yorkville, IL 60560-0459 Jims Decorating Co. Inc. Subcontractor $76,181 A&J Concrete Construction Subcontractor $60,978 Jim and Patty Lambert Pending Lawsuit $50,000 Kustom Heating & Cooling Subcontractor $41,068 Prado Verdes Landscaping Landscaping Services $36,366 Juan Rivera Subcontractor $36,353 SS Schwarz Construction Subcontractor $33,920 Hogan Plumbing Inc. Subcontractor $33,110 Cleary Plastering Subcontractor $29,650 Jama Cedar Construction Subcontractor $28,143 Huebner Roofing Inc. Subcontractor $27,035 Citibank USA Home Depot Purchases $26,965 Russ All Plumbing & Sewer Subcontractor $23,150 Granite & Marble Subcontractor $21,621 Expressions, Inc. Enterprise Plumbing Subcontractor $20,992 Illinois Department of $18,752 Employment Security DOBSON COMMS: Prices Tender Offer for Unit's Sr. Secured Notes --------------------------------------------------------------- Dobson Communications Corporation disclosed that its wholly owned subsidiary Dobson Cellular Services, Inc., determined the price to be paid in its tender offer for any and all of its First Priority Senior Secured Floating Rate Notes due 2011 (CUSIP No. 256067AF6). The total consideration for each $1,000 principal amount of Notes validly tendered and not withdrawn prior to the consent time, 5:00 p.m., New York City time, on May 19, 2006, is $1,038.45, which includes a consent payment of $30. The total consideration was determined by reference to a fixed spread of 50 basis points over the yield of the 2.50% U.S. Treasury Note due Oct. 31, 2006, which yield was calculated at 2:00 p.m., New York City time, on May 19, 2006. The reference yield and the tender offer yield are 5.023% and 5.523%, respectively. Holders who validly tender their Notes after the consent time are not eligible to receive the consent payment. The Company also announced that Dobson Cellular obtained the requisite consents to the proposed amendments to the tendered Notes and the indenture governing the Notes from the holders of a majority in aggregate principal amount of the outstanding Notes. As of 5:00 p.m., on May 19, 2006, tenders and consents had been received with respect to approximately 93% of the outstanding principal amount of the Notes. The tender offer is scheduled to expire at 12:00 midnight, New York City time, on June 5, 2006, unless extended. The tender offer is subject to the satisfaction of certain conditions, including the condition that all conditions to the closing of the resale of the tendered Notes as Series B Notes have been satisfied or waived. Further details concerning the tender offer and consent solicitation are set forth in the Statement. The Company has engaged Morgan Stanley & Co. Incorporated as Dealer Manager and Solicitation Agent for the tender offer and consent solicitation. Persons with questions regarding the tender offer or the consent solicitation should be directed to Morgan Stanley & Co. Attn: Francesco Cipollone Toll Free: (800) 624-1808 Collect: (212) 761-1941. Requests for documents should be directed to: Bondholder Communications Group Information and Tender Agent Attn: Denise Conway Phone: (212) 809-2663 Headquartered in Oklahoma City, Dobson Communications Corporation (Nasdaq:DCEL) -- http://www.dobson.net/-- provides wireless phone services to rural markets in the United States and owns wireless operations in 16 states. * * * As reported in the Troubled Company Reporter on April 24, 2006, Fitch assigned ratings for Dobson Communications Corp. and its subsidiaries: Dobson Communications Corp.: -- Issuer default rating 'B-' -- $160 million senior floating rate notes 'CCC+/RR5' -- $150 million senior convertible debentures 'CCC+/RR5' -- $420 million senior notes 'CCC+/RR5' -- $136 million convertible preferred stock 'CCC-/RR6' Dobson Cellular Systems Inc.: -- Issuer default rating 'B-' -- $75 million senior secured credit facility 'BB-/RR1' -- $500 million first priority secured notes 'BB-/RR1' -- $325 million second priority secured notes 'BB-/RR1' Dobson Communications Corp.' 8-7/8% Senior Notes due 2013 carry Moody's Investors Service's Caa2 rating and Standard & Poor's CCC rating. DOLE FOOD: Fitch Downgrades Senior Unsecured Debt Rating to CCC+ ---------------------------------------------------------------- Fitch Ratings removed Dole Food Company, Inc. from Rating Watch Negative, where it was placed on April 10, 2006, and downgraded the company's Issuer Default Rating, unsecured debt, and Recovery Ratings. Fitch withdrew its credit rating on Dole Holding Company, LLC's second-lien term loan, which was refinanced by Dole Food Co. on April 12, 2006. Fitch downgraded these ratings: Dole Food Company, Inc. (Operating Company): -- Issuer Default Rating to 'B-' from 'B' -- Senior secured bank facility to 'BB-/RR1' from 'BB/RR1' -- Senior unsecured debt to 'CCC+/RR5' from 'BB-/RR2' Solvest Ltd. (Bermuda-based Subsidiary): -- Senior secured bank facility to 'BB-/RR1' from 'BB/RR1' Dole Holding Company, LLC (Intermediate Holding Company): -- IDR to 'B-' from 'B' Fitch also assigned these ratings: Dole Food Company, Inc.: -- Secured asset-based revolving facility 'BB-/RR1' Solvest Ltd.: -- IDR 'B-' These rating actions affect Dole's approximate $2.5 billion in consolidated debt outstanding as of April 12, 2006. The Rating Outlook is Negative. The ratings downgrade and Negative Outlook reflect Dole's high leverage and the extremely weak operating fundamentals of the fresh produce industry. Elevated fuel and other commodity costs disproportionately affect global fresh produce companies because much of their production is imported from Latin and Central America. Also, effective Jan. 1, 2006, the cost to market bananas increased as tariffs on bananas imported into the European Union rose 135% to EUR176/metric ton. The ratings also incorporate risks related to Dole's private ownership structure and lack of material covenants in its credit facilities and bond indentures. While high debt levels increase financial risk, the lack of significant near-term debt maturities and over $200 million of availability on its $350 million asset- based revolver provides adequate near-term financial flexibility. Dole has $390 million of debt maturities in 2009 and its revolver expires in 2011. If improvement in operating fundamentals and leverage is not apparent within the next several quarters, further downgrades to Dole's ratings may be warranted. Fitch's actions follow a review of Dole's first-quarter ended March 25, 2006 results, final fiscal 2005 financial results, and its recently renegotiated secured credit agreements. Dole's credit profile has weakened over the past 15 months due primarily to significant declines in operating income and higher debt levels. For the latest 12 months ended March 25, 2006, total debt (excluding holding company debt)-to-operating EBITDA was 7.2x, operating EBITDA-to-interest incurred was 2.1x, and net cash flow from operations-to-total debt was 0.4%. In fiscal 2004, these credit statistics measured 4.0x, 3.0x, and 11.6%, respectively. During the first quarter ended March 25, 2006, operating income declined 77% versus the prior year period. For the year ended Dec. 31, 2005, operating income declined 29% versus the full year 2004. The deterioration has primarily been caused by higher fuel, packaging and production costs. Fuel and other distribution related costs are estimated at about a third of overall expenses. Higher banana import tariffs contributed to the decline during the March 25, 2006 period. Bananas have historically represented about a third of gross profit. Dole's debt balances have increased because of higher working capital requirements. Large working capital fluctuations are not unusual for the commodity produce industry. However, on April 12, 2006, Dole expanded its secured credit facility to $1.425 billion from $1.050 billion. The company refinanced Dole Holdings, LLC's second-lien term loan at the Dole Food Co. level, thus lowering its cost of capital, raised the size of Solvest's term loan borrowings, and provided cash collateralization for its letters of credit. Dole's new credit facilities do not have many financial maintenance covenants and have limited restrictions related to the financing of its wellness center projects. The only significant covenants are a minimum quarterly fixed-charge coverage requirement of 1.0x and a limitation on the incurrence of additional debt if total leverage exceeds 5.5x. Fitch anticipates that, over the intermediate term, Dole's leverage can normalize below 5.5x. This would be acceptable for the 'B-' rating category. In the near term, Fitch expects Dole's credit protection measures to remain weak as the company manages through the new European Union banana regime and as fuel and container-board expenses remain elevated. For the quarter ended March 25, 2006, Dole received a waiver for certain covenants contained in its secured credit facility that was subsequently refinanced in April. Maximum leverage in the old facility was 5.75x through the third quarter of fiscal 2006, stepping down to 3.5x by year-end 2009. Dole's new credit facilities do not have a maximum leverage covenant. Nonetheless, Fitch anticipates that there is high probability that Dole may need to obtain additional waivers relating to its fixed-charge coverage covenant. For the LTM ended March 25, 2006, Fitch calculates that Dole's fixed-charge coverage approached 1.0x. In a distressed scenario, Fitch anticipates reduced recovery prospects for Dole's senior unsecured indebtedness. The 'RR5' recovery rating reflects below-average recovery in the event of default. This is primarily due to the increased amount of secured debt in Dole's capital structure. Solvest's secured bank facility increased from roughly $500 million of term loans and a revolver to $700 million of term loans. While the subsidiary does not have any real assets, its debt is guaranteed by DHM Holdings, Inc. (parent) and certain domestic and foreign subsidiaries on a pari passu basis with Dole's secured obligations. Dole's credit facility has a special provision applicable to lenders in a sharing of collateral event. The provision describes a mandatory procedure which is intended to result in equitable sharing of credit risk for all tranches of debt, including that issued by Solvest. The debt of Solvest also has a claim on certain U.S. cash flows and assets. As a result, in a distressed scenario, recovery on Solvest's secured debt is anticipated to be equal with that of Dole's secured creditors. 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 U.S. 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 U.S. 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 lost $5.1 million. Dole Foods is 100% owned by its CEO and chairman, David H. Murdock. EAGLEPICHER HOLDINGS: Court Sets 3-Day Plan Confirmation Hearing ---------------------------------------------------------------- The Hon. J. Vincent Aug, Jr. of the U.S. Bankruptcy Court for the Southern District of Ohio will convene a hearing at 10:00 a.m. on June 1, 2 and 5, 2006, to consider confirmation of EaglePicher Holdings, Inc., and its debtor-affiliates' Amended Joint Plan of Reorganization. The Court believes that three full days may be needed for the confirmation hearing. Treatment of Claims Under the Debtors' Plan, all Administrative Expenses will be paid in full and in cash. Each holder of Priority Tax Claims, will be: a. paid in full and in cash on the effective date; or b. paid in full and in cash over a period not exceeding six years after the date of assessment, with interest at a rate equal to the Federal Judgment Rate as of the Confirmation Date. Holders of allowed Unsecured Claims will be paid in cash, as soon as practicable after the Effective Date. In full payment of Secured Lender Claims, the claim will be either: a. paid in full and in cash, b. paid using the proceeds of the sale or disposition of the property securing the holder's claim. c. rendered satisfied pursuant to an agreement by and among the Debtors and the holders of the Secured Lender Claim. The Pre-Petition Note Claims against each of the Debtors are deemed allowed in the amount of $252,708,333. Each holder of Class 2A and 2B Pre-Petition Note Claims will receive, on the Initial Distribution Date and any Subsequent Distribution Dates, to the extent available for distribution: a) Pro Rata Share of any Estate Cause of Action Recoveries of Holdings for Class 2A; b) Pro Rata Share of any Estate Cause of Action Recoveries of EaglePicher Inc., Pro Rata Share of any Residual Interest in the EPI Custodial Trust and Pro Rata Share of any Residual Interest in the TP Custodial Trust relating to Transitional Property owned by EPI for Class 2B; Holders of Class 2C Pre-Petition Note Claims will receive: a) its Unsecured Claim Distribution Amount in the form of New HoldCo Common Stock on the Effective Date; b) its Pro Rata Share of any Estate Cause of Action Recoveries of EaglePicher Technologies LLC, to be distributed on the Initial Distribution Date and any Subsequent Distribution Dates, to the extent the Estate Cause of Action Recoveries are available for distribution; c) its Pro Rata Share of any Residual Interest in the EPT Custodial Trust; d) its Pro Rata Share of any Excess Cash on each applicable Distribution Date; provided, however, that the Pro Rata Share of Excess Cash will be paid directly by the Plan Trust to New HoldCo on behalf of each holder; and e) its Pro Rata Share of any Residual Interest in the TP Custodial Trust relating to Transitional Property owned by EPT. Holders of Class 2D Pre-Petition Note Claims will receive: a) its Unsecured Claim Distribution Amount in the form of New HoldCo Common Stock on the Effective Date; b) its Pro Rata Share of any Estate Cause of Action Recoveries of EaglePicher Pharmaceutical Services, LLC, to be distributed on the Initial Distribution Date and any Subsequent Distribution Dates, to the extent the Estate Cause of Action Recoveries are available for distribution; and c) its Pro Rata Share of any Excess Cash on each applicable Distribution Date; provided, however, that any Pro Rata Share of Excess Cash will be paid directly by the Plan Trust to New HoldCo on behalf of each holder. Each holder of a Class 2E Pre-Petition Note Claims will receive: a) its Unsecured Claim Distribution Amount in the form of New HoldCo Common Stock on the Effective Date; b) its Pro Rata Share of any Estate Cause of Action Recoveries of EaglePicher Filtration & Minerals, LLC, to be distributed on the Initial Distribution Date and any Subsequent Distribution Dates, to the extent the Estate Cause of Action Recoveries are available for distribution; and c) its Pro Rata Share of any Excess Cash on each applicable Distribution Date; provided, however, that any Pro Rata Share of Excess Cash will be paid directly by the Plan Trust to New HoldCo on behalf of each holder. Each holder of a Class 2F Pre-Petition Note Claims will receive: a) its Unsecured Claim Distribution Amount in the form of New HoldCo Common Stock on the Effective Date; b) its Pro Rata Share of any Estate Cause of Action Recoveries of the Hillsdale Debtors to be distributed on the Initial Distribution Date and any Subsequent Distribution Dates, to the extent the Estate Cause of Action Recoveries are available for distribution; c) its Pro Rata Share of any Excess Cash on each applicable Distribution Date; provided, however, that any Pro Rata Share of Excess Cash will be paid directly by the Plan Trust to New HoldCo on behalf of each holder; and d) its Pro Rata Share of any Residual Interest in the TP Custodial Trust relating to Transitional Property owned by the Hillsdale Debtors. Equity interest holders will receive no distributions under the Plan. A copy of the redlined version of the Debtor's Amended Joint Plan of Reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=060525215431 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. ELLIEGRAPHICS LTD: Assignee Auctioning Equipment on May 31 ---------------------------------------------------------- Caspert Management Co., Inc., will auction some of Elliegraphics, Ltd.'s assets at 12:00 noon on Wednesday, May 31, 2006. The auction will be held at 34-08 46th Street in Long Island City, New York. Potential bidders may inspect the equipment at 9:00 a.m. the morning of the sale. Caspert says the assets to be auctioned include: * one 2001 Polar 115ED 45" Power Paper Cutter With Stack Lift, * two Kensol KF2500 & KF500 Auto Foil Stampers, * one Heidelberg 18" x 23" Die Cutter, * one Halm Super Jet JP-WOD-6EX Envelope Printer, * two Scott Index Tabbers, * one Scott EdgeReinforcing Machine, * one Ehrliman Colly Collator, * one Lhermite Auto Punch, * three Kensol Hot Stampers, * two Sickinger Wire Closers, * one Sterling 15" Punchmaster, * one James Burn Semi-Automatic Binder, * Shelving, Office Furniture, Supplies and More. The sale is being conducted at the direction of Paul D. Feinstein, Esq., the Assignee in an Assignment for the Benefit of Creditors proceeding (Supreme Court of Queens County, Index No. 824606), who can be reached at: Paul D. Feinstein, Esq. 60 East 42nd Street, Suite 1136 New York, NY 10165 Tel: (212) 687-2080 Fax: (212) 687-2084 Mr. Feinstein's lawyer is: Richard L. Koral, Esq. 60 East 42nd Street, Suite 2320 New York, New York Tel: (212) 682-1212 The Auctioneer can be reached at: Caspert Management Co., Inc. 333 Sylvan Avenue Englewood Cliffs, New Jersey 07632 Tel: (800) 33-AUCTION Elliegraphics, Ltd. -- http://www.elliegraphics.com/-- is a privately held company. Formerly located at 137 Varick St. in Manhattan, the company relocated to 34-08 46th Street in Long Island City, New York, last year. ENRON: Settling Dispute with Water District of Southern Calif. -------------------------------------------------------------- Pursuant to Rule 9019(a) of the Federal Rules of Bankruptcy Procedure, Reorganized Enron Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to approve their settlement agreement, dated April 24, 2006, with The Metropolitan Water District of Southern California. Evan R. Fleck, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, explains that the parties were involved in transactions concerning the electricity, natural gas and associated markets in the Western United States during the period from January 16, 1997 through June 25, 2003. Commencing in November 2000 and extending through March 2002, Metropolitan and Enron Power Marketing, Inc., entered into a series of daily, monthly and quarterly contracts under a Western Systems Power Pool Agreement. On February 13, 2002, the U.S. Federal Energy Regulatory Commission directed its Trial Staff to commence a fact-finding investigation of potential market manipulation of electric and natural gas prices in the Western Markets. Metropolitan is an intervenor in the FERC proceedings involving the potential disgorgement of unjust profits by Enron related to its activities and compliance with FERC tariffs, policies and directives during the show cause period. On March 26, 2003, the FERC Trial Staff issued its final report on price manipulation in the Western Markets. The Trial Staff's final report found that the market monitoring and information protocols contained in the California ISO and PX tariffs put participants on notice that misconduct that arose from abuses of market power, and that adversely affected the efficient operations of the California ISO and PX markets, were violations of the California ISO and PX tariffs. The final report also stated that the Trial Staff's preliminary analysis of spot-market clearing prices, as compared to generation input costs during May to October 2000, revealed what appeared to be instances of potential anomalous bidding behavior. On June 25, 2003, the FERC ordered the Debtors to show cause why they had not participated in activities that constitute gaming or anomalous market behavior in violation of the California ISO and PX Tariffs. On the same day, the FERC directed the Debtors to show cause why they had not worked in concert through partnerships, alliances, or other arrangements to engage in activities that constitute Gaming Practices under the California ISO and PX Tariffs. On March 10, 2006, Enron and the Trial Staff filed an offer of settlement with the FERC. The settlement required Enron to extend an offer of settlement to Metropolitan reflecting comparable value to Enron's settlements with the City of Santa Clara, California and Valley Electric Association, Inc. Following negotiations, Enron and Metropolitan signed the Settlement Agreement. They agree that: (1) Metropolitan will pay EPMI $316,000 as settlement payment; (2) Metropolitan will acknowledge that it did not file any proof of claim in Enron's bankruptcy cases, and Metropolitan' claims as set forth in the liability schedules will be disallowed in their entirety; (3) Metropolitan will transfer, assign and convey to Enron all rights or claims to allocable shares of any profits, if any, that Enron may be finally required and ordered to disgorge in the Partnership/Gaming Proceeding; (4) Metropolitan will, with respect to the Enron Parties, withdraw all pleadings, testimony and related exhibits filed with the FERC. Metropolitan's withdrawal from the FERC Proceedings will include, without limitation: (i) withdrawal of its appeals and participation as against Enron, and agreement to take no position against Enron in any forum arising out of Enron Power Marketing, Inc. v. FERC, Case No. 04-1040, pending before the United States Court of Appeals for the District of Columbia Circuit; and (ii) its agreement to take no position regarding any request for retroactive revocation of any Enron Entity's market-based rate or blanket marketing authority in any forum; and (5) they will mutually release each other from all claims, causes of actions and liabilities. The parties also agree to dismiss with prejudice Adversary Proceeding No. 04-02968, filed by EPMI against Metropolitan. Mr. Fleck tells Judge Gonzalez that the Settlement Agreement will resolve the complex and disputed regulatory proceedings, bankruptcy and adversary proceedings, appellate proceedings, litigations and investigations concerning numerous issues and allegations arising from events relating to the Western Energy Disputes. The Settlement Agreement is subject to the FERC's approval. To reap the full economic benefits negotiated for in the Settlement Agreement, the parties will ask the FERC to approve the Settlement Agreement on or before August 31, 2006. The Court approves the Settlement Agreement. 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. 172; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON CORP: District Court Approves $6.6B Class Suit Settlements ---------------------------------------------------------------- The Honorable Melinda Harmon of the U.S. District Court for the Southern District of Texas grants final approval to three separate settlement agreements totaling $6,600,000,000 by the Canadian Imperial Bank of Commerce, JP Morgan Chase and Citigroup, with Enron Corp.'s shareholders. Enron's investors, with the University of California as lead plaintiff, filed a class action suit against, among others, the three banks for allegedly aiding Enron in concealing its financial misdeeds that led to the company's collapse and bankruptcy filing in 2001. UC says that the investors lost billion of dollars. The class action suit is Case No. 4:01-cv-03624, captioned Newby, et al., v. Enron Corporation, et al. The defendants in the suit also include the financial institutions of Merrill Lynch, Credit Suisse First Boston, Barclays Bank, and Deutsche Bank; Goldman Sachs, because of its role as an underwriter of Enron securities; former officers of Enron; and its accountants, Arthur Andersen, and certain law firms. The Citigroup Settlement Citigroup has agreed to make a $2,000,000,000 pre-tax payment to the settlement class, which consists of all purchasers of all publicly traded equity and debt securities issued by Enron and Enron-related entities between September 9, 1997 and December 2, 2001. The settlement is fully covered by Citigroup's existing litigation reserves. The settlement amount includes the plaintiff attorneys' fees, which will be determined by the District Court. The settlement provides that Citigroup denies committing any violation of law and has agreed to the settlement solely to eliminate the uncertainties, burden and expense of further protracted litigation. The JPMorgan Settlement JPMorgan Chase will pay $2,200,000,000 to the settlement class. Plaintiff attorneys' fees will be paid out of the settlement. UC alleged in the class action suit that JPMorgan Chase participated in an elaborate scheme to defraud investors and thereby violated Section 10(b) of the Securities Exchange Act of 1934 and other securities laws. The settlement, however, does not include any admission of wrongdoing by JPMorgan Chase. JPMorgan said that it agreed to the settlement solely to eliminate the uncertainties, burden and expense of further protracted litigation. The CIBC Settlement Canadian Imperial Bank of Commerce will pay $2,400,000,000 to the settlement class. Plaintiff attorneys' fees will be paid out of the settlement. The settlement does not include any admission of wrongdoing by CIBC. UC alleged that CIBC participated in an elaborate scheme to defraud investors, in violation of Section 10(b) of the Securities Exchange Act of 1934 and other securities laws. CIBC stated that it agreed to the settlement solely to eliminate the uncertainties, burden and expense of a protracted litigation. 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. 173; Bankruptcy Creditors' Service, Inc., 15/945-7000) EPIXTAR CORP: McClain & Co Steps Down as Independent Auditor ------------------------------------------------------------ The Hon. A. Jay Cristol of the U.S. Bankruptcy Court for the Southern District of Florida in Miami authorized CBIZ McClain Accounting, Tax & Advisory of South Florida, LLC and McClain & Company, LC, to withdraw as Epixtar Corp. and its debtor- affiliates' financial professionals. The Debtors hired CBIZ McClain as their accountants and McClain & Company as auditors. In a letter, dated April 21, 2006, addressed to Jack Cooney, chairman of Epixtar Corp.'s Audit Committee, McClain & Company informed the Debtors of its decision to withdraw from the engagement. The auditing firm said that it had lost confidence in the judgment of the Company's management. The auditing firm also accused the Debtors of attempting to coerce them into giving an opinion with respect to the Company's financial statements. According to McClain & Company, the Debtors had threatened to take legal action if the auditing firm pursued its decision to resign. Internal Control Weaknesses In the course of McClain & Company's audit of the Debtors' financial statements for the year ended Dec. 31, 2005, the auditing firm identified weaknesses in the Debtor's internal controls that eventually gave rise to questions regarding the judgment of the Debtors' management. McClain & Company pointed out: -- the Debtors have failed to disclose that there were pending felony charges against the Company's Chief Operating Officer dating back to November 2004 and that the executive had pled guilty on the charges. The auditing firm questioned the Debtors' decision to retain the executive officer. -- the Debtor filed, without the auditing firm's knowledge or consent, a Form 12b-25 which was inaccurate, incomplete and materially misleading. The auditing firm complained that a statement in the document saying " [McClain & Company] were unable to complete the preparation of the financial statements" was both false and misleading. Morrison, Brown, Argiz & Farra, LLP, replaced McClain & Company as the Debtors' auditors. About Epixtar Based in Miami, Florida, Epixtar Corp. -- http://www.epixtar.com/ -- fdba Global Assets Holding, Inc., aggregates contact center capacity and robust telephony infrastructure to deliver comprehensive, turnkey services to the enterprise market. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 6, 2005 (Bank. S.D. Fla. Case No. 05-42040). Michael D. Seese, Esq., at Kluger, Peretz, Kaplan & Berlin, P.L., represents the Debtors in their restructuring efforts. Glenn D. Moses, Esq., at Genovese Joblove & Battista, P.A., represents the Company's Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed total assets of $30,376,521 and total debts of $39,158,724. FALCON AIR: Section 341(a) Meeting Scheduled for June 20 -------------------------------------------------------- The U.S. Trustee for Region 21 will convene a meeting of Falcon Air Express, Inc.'s creditors at 2:00 p.m., on June 20, 2006, at the Claude Pepper Federal Building, 51 Southwest First Avenue, Room 1021 in Miami, Florida. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Miami, Florida, Falcon Air Express, Inc. -- http://www.falconairexpress.net/-- is a small and low-cost airline company that provides charter service and renders foreign and U.S. carriers sub-services on schedules routes. The Debtor and its affiliate, MAJEL Aircraft Leasing Corp., filed for chapter 11 protection on May 10, 2006 (Bankr. S.D. Fla. Case Nos. 06-11877 & 06-11878). Brian G. Rich, Esq., at Berger Singerman, P.A., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. FDL INC: Objects to Fifth Third's Trustee Appointment Motion ------------------------------------------------------------ FDL, Inc., objects to Fifth Third Bank's motion to appoint a chapter 11 trustee or examiner. In light of the sale of substantially all of Debtor's assets scheduled for May 30, 2006, the appointment of a trustee or an examiner would not be warranted at this time, Erick P. Knoblock, Esq., at Dale & Eke, P.C., tells the U.S. Bankruptcy Court for the Southern District of Indiana, in Indianapolis. As reported in the Troubled Company Reporter on April 24, 2006, G. Ronald Heath, Esq., at Hoover Hull LLP, counsel of Firth Third, tells the Court that it wants a chapter 11 Trustee or Examiner to investigate the Debtor's purported dishonest practices. According to Mr. Heath, the Debtor: -- submitted cash flow projections in support of its Cash Collateral motion that contained misrepresentations of facts about its alleged agreements with Fifth Third; -- violated its credit agreement with Fifth Third by concealing the existence of an operating account at Regions Bank; and -- misappropriated pre-petition funds that should have been paid to Fifth Third. 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. Elliott D. Levin, Esq., at Rubin & Levin, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it did not state its assets but estimated debts between $10 million and $50 million. FDL INC: Committee Withholds Position on Trustee's Appointment -------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in FDL, Inc.'s chapter 11 case responded to Fifth Third Bank's motion to appoint a chapter 11 trustee or examiner. The Committee said that it cannot take a position concerning the appropriateness of appointing a trustee or an examiner in the Debtor's case because it has not yet completed its investigation of the Debtor. The Committee reserves the right to challenge the request for appointment of a trustee or examiner, James E. Rossow, Jr., Esq., at Rubin & Levin, P.C., tells the U.S. Bankruptcy Court for the Southern District of Indiana, in Indianapolis. The Committee understands that Fifth Third Bank is not presently pursuing appointment of a trustee or an examiner in light of the May 30 auction. Accordingly, neither Fifth Third Bank nor any other party is prejudiced from the Committee's withholding of its position. As reported in the Troubled Company Reporter on April 24, 2006, G. Ronald Heath, Esq., at Hoover Hull LLP, counsel of Firth Third, tells the Court that it wants a chapter 11 Trustee or Examiner to investigate the Debtor's purported dishonest practices. According to Mr. Heath, the Debtor: -- submitted cash flow projections in support of its Cash Collateral motion that contained misrepresentations of facts about its alleged agreements with Fifth Third; -- violated its credit agreement with Fifth Third by concealing the existence of an operating account at Regions Bank; and -- misappropriated pre-petition funds that should have been paid to Fifth Third. 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. Elliott D. Levin, Esq., at Rubin & Levin, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it did not state its assets but estimated debts between $10 million and $50 million. FEP TRUST: Moody's Junks Rating on Four Classes of Notes -------------------------------------------------------- Moody's Investors Service downgraded these classes of notes of FEP Receivables Trust 2001-1: * Class A Notes, downgraded to Caa3 from B1 * Class B Notes, downgraded to Ca from Caa2 * Class A-3L Notes, downgraded to Caa2 from B2 * Class BL Notes, downgraded to Ca from Caa2 The cash flows supporting these Notes are various future fees generated by equity and debt mutual funds. The credit quality of a security backed by mutual fund fees depends on the likely fees to be generated by the mutual funds during the life of the security, and the potential variability of such collections. Expected future fees are highly dependent upon forecast values of the mutual funds, which, in turn, are linked to current values and informed by historical performance. The future fee revenues also depend upon the fee schedules relating to the mutual fund pools from which fees are generated. Fees providing cash flows to these transactions include: CDSC fees, based on a 6-7 year declining scale and assessed upon redemption of mutual fund shares, and 12b-1 fees, charged for the first 8-12 years of share ownership. Both types of fees are linked to the Net Asset Values of mutual fund positions. The remaining classes of notes in this transaction are expected to experience continued declines in cashflows, due to graduation off of fee schedules and possibly due to potential volatility in the underlying mutual fund values. FORD MOTOR: Board Approves Terms of President's Retirement ---------------------------------------------------------- As reported in the Troubled Company Reporter on April 11, 2006, James J. Padilla, Ford Motor Company's President and Chief Operating Officer, will retire effective July 1, 2006. On May 10, 2006, the Compensation Committee of the Board of Directors of the Company approved the terms of Mr. Padilla's retirement arrangement under the terms of the Select Retirement Plan, which requires that he sign a separation waiver agreement. This arrangement will be confirmed in an agreement between the Company and Mr. Padilla. He will be entitled to retirement benefits under that plan as designated for a Company President and Chief Operating Officer. He also will be eligible for the same post-retirement benefits, like health care and life insurance on the same terms and conditions as other Company salaried employees retiring at the same time. He also will be eligible for two executive vehicles under the Executive Evaluation Vehicle Program, consistent with standard benefits under that program. In connection with his retirement arrangement, Mr. Padilla will agree not to enter into any arrangement that would be competitive with the Company or any subsidiaries and to maintain confidentiality on all Company matters, refrain from engaging in inimical conduct toward the Company and assist in litigation on the Company's behalf. In addition, Mr. Padilla will be eligible to receive a performance-based Restricted Stock Equivalent award for his 2006 performance and to receive non-prorated Final Awards for his outstanding Performance Stock Rights. Further, restrictions on his Restricted Stock Equivalents award for 2005 performance will lapse as of July 1, 2006. Mr. Padilla will be deemed to have met the minimum holding period requirements for any of his stock-based awards. In order to provide for a smooth transition of Mr. Padilla's duties, the Compensation Committee approved the terms of a consulting agreement to be entered into between the Company and Mr. Padilla. Under the agreement, Mr. Padilla will agree to be available to serve as a consultant on special assignment to the Chairman and Chief Executive Officer commencing on July 1, 2006 and ending June 30, 2007. Mr. Padilla's consulting fee will be $592,080, paid $148,020 for each three-month period in advance. The fee will be pro-rated if the agreement is terminated prior to the end of any such three- month period. During the term of the agreement, Mr. Padilla will be reimbursed for customary and reasonable business-related expenses and travel that he is authorized to take, consistent with Company policies and procedures. During the term of the agreement, Mr. Padilla will be provided with an office and computer support when in Dearborn and will be provided travel support services by the Company in making aircraft travel arrangements in connection with services to be provided under the agreement. He will not be entitled to use the Company aircraft. He also will be provided a laptop computer, software, a docking station with monitor, printer, fax machine and wireless support, email, internet connection, and phone service for use during the term of the agreement. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Company -- http://www.ford.com/-- is the world's third largest automobile manufacturer. The Company manufactures and distributes automobiles in 200 markets across six continents. With more than 324,000 employees worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Motor Credit Company and The Hertz Corporation. * * * As reported in the Troubled Company Reporter on Jan. 13, 2006, Moody's Investors Service lowered its ratings on Ford Motor Company (Corporate Family and long-term to Ba3 from Ba1). The rating outlook for Ford Motor is negative. As reported in the Troubled Company Reporter on Jan. 9, 2006, Standard & Poor's Ratings Services lowered its corporate credit ratings on Ford Motor Co., Ford Motor Credit Co. (Ford Credit), and all related entities to 'BB-/B-2' from 'BB+/B-1' and removed them from CreditWatch, where they were placed on Oct. 3, 2005, with negative implications. S&P said the outlook is negative. FORD MOTOR: S&P Places BB- Long-Term Rating on Negative Watch ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB-' long-term and 'B-2' short-term ratings on Ford Motor Co., Ford Motor Credit Co., and related entities -- except FCE Bank PLC -- on CreditWatch with negative implications. The 'BB-' long-term rating on FCE Bank PLC, Ford Credit's European bank, was placed on CreditWatch with developing implications, while its 'B-2' short-term rating was placed on CreditWatch with negative implications. The Ford CreditWatch placement reflects Standard & Poor's increasing concerns about Ford's performance in 2006 amid deteriorating product mix and market share in North America and persistently high commodity costs generally. Standard & Poor's currently plans to resolve both of these reviews by the end of June. "We will consider the effect of the continuing pressure on Ford's midsize SUVs, as well as prospects for the health of the crucial full-size pickup segment," said Standard & Poor's credit analyst Robert Schulz. "The remainder of Ford's automotive operations and Ford Credit are performing in line with our expectations and so are not central factors in this review. But, the performance of these units is not sufficient to offset the problems the company faces in its North American operations," he continued. The developing CreditWatch on FCE Bank PLC's long-term rating reflects Standard & Poor's intention to reassess the protections afforded FCE's creditors, given the regulation of FCE by the U.K. Financial Services Authority. Any rating differentiation of FCE's rating from that on Ford Motor Credit Co. would likely be limited to one notch, as is the case with several other captive finance subsidiaries of major European automotive groups. As part of this review, Standard & Poor's will assess Ford's sales performance for the remainder of 2006 and will meet with Ford's management to discuss the company's plans to address the heightened challenges it faces in North America. FUTURE MEDIA: Court Approves Levene Neale as Bankruptcy Counsel --------------------------------------------------------------- The Honorable Geraldine Mund of the U.S. Bankruptcy Court for the Central District of California, San Fernando Valley Division, gave Future Media Productions, Inc., authority to employ Levene, Neale, Bender, Rankin & Brill, LLP, as its bankruptcy counsel. Levene Neale will: a) advise the Debtor with regard to the requirements of the Bankruptcy Court, Bankruptcy Code, Bankruptcy Rules, and the Office of the U.S. Trustee as they pertain to the Debtor; b) advise the Debtor with regard to certain rights and remedies of the Debtors bankruptcy estate and the rights, claims and interests of its creditors; d) represent the Debtor in any proceeding or hearing in the Bankruptcy Court involving the Debtors' estate unless the Debtor is represented in the proceeding by other special counsel; e) conduct examination of witnesses, claimants or adverse parties and represent the Debtor in any adversary proceeding except to the extent that the adversary proceeding is in an area outside of the firm's experience and capabilities; f) assist the Debtor in the preparation of reports, applications, pleadings and orders; g) assist the Debtor in the negotiation, formulation, preparation and confirmation of a plan or plans of reorganization and the preparation and approval of a disclosure statement; and h) perform other necessary and appropriate services as requested by the Debtor. The hourly rate for Levene Neale's professionals are: Professional Hourly Rate ------------ ----------- David W. Levene, Esq. $565 Martin J. Brill, Esq. $565 David L. Neale, Esq. $495 Ron Bender, Esq. $495 Craig M. Rankin, Esq. $495 Anne E. Wells, Esq. $465 Daniel H. Reiss, , Esq. $465 Monica Y. Kim, Esq. $465 David B. Golubchik, Esq. $465 Beth Ann R. Young, Esq. $465 Jacqueline L. Rodriguez, Esq. $375 Juliet Y. Oh, Esq. $350 Ovsanna Takvoryan, Esq. $310 Todd M. Arnold, Esq. $295 Paraprofessionals $180 David I. Neale, Esq., leads the engagement and assures the Bankruptcy Court that he, his partners and his Firm are disinterested. Mr. Neale discloses that, in June 2005, the Debtor paid a $10,000 retainer to Levene Neale for services rendered in connection with its efforts to restructure its financial affairs. He adds that his firm received a $140,000 prepetition retainer in contemplation of the Debtors bankruptcy filing. The firm has used $33,575 of the retainer to pay for prepetition services, leaving $116,427 retainer balance. Headquartered in Valencia, California, Future Media Productions, Inc. -- http://www.fmpi.com/-- provides CD and DVD replication and packaging services on the West Coast. The Company filed for chapter 11 protection on Feb. 14, 2006 (Bankr. C. D. Calif. Case No. 06-10170). David I. Neale, Esq. at Levene, Neale, Bender, Rankin & Brill, LLP, represent the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed. When the Debtor filed for protection from its creditors, it listed $12,370,783 in total assets and $30,650,669 in total debts. FUTURE MEDIA: Court Approves Atala LLC as Financial Consultant -------------------------------------------------------------- The Honorable Geraldine Mund of the U.S. Bankruptcy Court for the Central District of California, San Fernando Valley Division, gave Future Media Productions, Inc., authority to employ Atala, LLC, as its financial consultant. Atala will: (a) assist the Debtor in preparing its Schedules of Assets and Liabilities, SOFA, Monthly Operating Reports, and any other reports that may be required by the Office of the United States Trustee during the pendency of the Debtor's bankruptcy case; (b) designate a member of Atala to serve as a representative of the Debtor for purposes of general administration matters pertaining to the Debtor's bankruptcy case; (c) assist the Debtor in preparing correspondence, analyses, documents, reports, summaries, financials, and other financial information as may be necessary to aid the Debtor in its bankruptcy proceeding; (d) assist the Debtor and its counsel regarding existing litigation and any adversary proceedings initiated in the Debtor's bankruptcy case; (e) advise and assist the Debtor and its counsel in the preparation and confirmation of any plan of reorganization and any disclosure statement; and (f) perform any other services, which may be appropriate in Atala's capacity as the Debtor's financial consultant during the Debtor's bankruptcy proceeding. Sachi Naganao, a member of the Firm, discloses that Atala will bill $30,000 per month under Section 328 of the Bankruptcy Code and will maintain detailed time records. Atala is also entitled to receive contingent fees of: -- 1% of the gross purchase price for the first $5 million of the proceeds in the sale of substantially all of the Debtor's assets, plus -- 2% of the gross purchase prices of any amount over $5 million of the sale proceeds. Ms. Nagano further discloses that the Firm received a $90,000 prepetition retainer representing advance payments for three months. Atala will seek Court authority to be paid for any fess and expenses incurred in excess of the retainer and the contingent fees. Ms. Nagano assures the Court that Atala does not hold or represent any interest materially adverse to the Debtor's estate and is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Valencia, California, Future Media Productions, Inc. -- http://www.fmpi.com/-- provides CD and DVD replication and packaging services on the West Coast. The Company filed for chapter 11 protection on Feb. 14, 2006 (Bankr. C. D. Calif. Case No. 06-10170). David I. Neale, Esq. at Levene, Neale, Bender, Rankin & Brill, LLP, represent the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed. When the Debtor filed for protection from its creditors, it listed $12,370,783 in total assets and $30,650,669 in total debts. GMAC COMMERCIAL: Moody's Holds Caa2 Rating on $5.2MM of Certs. -------------------------------------------------------------- Moody's Investors Service upgraded the ratings of six classes and affirmed the ratings of fourteen classes of GMAC Commercial Mortgage Securities, Inc., Mortgage Pass-Through Certificates, Series 2003-C1: * Class A-1, $181,634,360, Fixed, affirmed at Aaa * Class A-1A, $234,717,403, Fixed, affirmed at Aaa * Class A-2, $392,556,000, Fixed, affirmed at Aaa * Class X-1, Notional, affirmed at Aaa * Class X-2, Notional, affirmed at Aaa * Class B, $39,409,000, Fixed, upgraded to Aaa from Aa2 * Class C, $11,822,000, Fixed, upgraded to Aa1 from Aa3 * Class D, $22,332,000, Fixed, upgraded to Aa3 from A2 * Class E, $15,763,000, Fixed, upgraded to A2 from A3 * Class F, $11,823,000, Fixed, upgraded to A3 from Baa1 * Class G, $11,823,000, Fixed, upgraded to Baa1 from Baa2 * Class H, $11,822,000, Fixed, affirmed at Baa3 * Class J, $22,332,000, Fixed, affirmed at Ba1 * Class K, $10,509,000, Fixed, affirmed at Ba2 * Class L, $7,882,000, Fixed, affirmed at Ba3 * Class M, $5,254,000, Fixed, affirmed at B1 * Class N-1, $6,463,000, Fixed, affirmed at B2 * Class N-2, $1,420,000, Fixed, affirmed at B2 * Class O, $2,627,000, Fixed, affirmed at B3 * Class P, $5,255,000, Fixed, affirmed at Caa2 As of the May 6, 2006 distribution date, the transaction's aggregate principal balance has decreased by approximately 4.0% to $1.01 billion from $1.05 billion at securitization. The Certificates are collateralized by 104 loans, ranging in size from less than 1.0% to 5.6% of the pool, with the top ten loans representing 39.9% of the pool. The pool includes an investment grade shadow rated component, which represents 11.0% of the pool. Twenty-nine loans, representing 18.1% of the pool, have defeased and are collateralized with U.S. Government securities. The defeased loans include two of the pool's top 10 loans -- Empirian at North Ridge and Fairway Preserve at Olde Cypress. The pool has not experienced any losses since securitization and currently there are no loans in special servicing. Twelve loans, representing 12.7% 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 100.0% and 61.9% of the pool, respectively. Moody's weighted average loan to value ratio for the conduit component is 86.8%, compared to 92.1% at securitization. The upgrade of Classes B, C, D, E, F and G is due to a high percentage of defeased loans, improved overall pool performance and increased credit support. The largest shadow rated loan is the Oakbrook Center Loan, which represents a participation interest in a $227.4 million mortgage loan. The loan is secured by a mixed-use property located in Oak Brook, Illinois that consists of an open-air regional mall, three office buildings and a ground lease to a hotel and a theater. Oakbrook Center totals approximately 2.4 million square feet. The mall is anchored by Lord & Taylor, Marshall Field's, Neiman Marcus, Bloomingdale's Home, Nordstrom, and Sears. The mall's in- line occupancy is 93.4%, compared to 94.5% at securitization and the office buildings' occupancy is 76.6%, compared to 75.5% at securitization. The loan sponsors are CalPERS and General Growth Properties, Inc. Moody's current shadow rating is A1, compared to A3 at securitization. The second largest shadow rated loan is the Chandler Fashion Center Loan, which represents a participation interest in a $106.7 million mortgage loan. The loan is secured by a 1.3 million square foot super regional mall located in Chandler, Arizona. The center is anchored by Dillard's, Robinson-May, Nordstrom and Sears. None of the anchors are owned by the borrower. The in-line shops are 97.8% occupied, the same as at securitization. The loan sponsor is The Macerich Company. The property is also encumbered by a $72.0 million subordinate loan that is held outside the trust. Moody's current shadow rating is Aa2, the same as at securitization. The top three conduit loans represent 12.9% of the pool. The largest conduit loan is the 3535 Market Street Loan, which is secured by a 435,000 square foot Class B office building located in downtown Philadelphia, Pennsylvania. The property is 95.3% occupied, compared to 89.2% at securitization. The largest tenants are Children's Hospital of Philadelphia and the University of Pennsylvania. Moody's LTV is 92.3%, compared to 95.9% at securitization. The second largest conduit loan is the Renaissance at Columbia Loan, which is secured by a 625,000 square foot office and warehouse/distribution facility located in Columbia, Maryland. The warehouse portion has 34-foot ceilings and is mostly used as a warehouse/distribution facility by the largest tenant, Alpharma. The largest office tenant is AT&T. The property is 96.8% occupied, compared to 82.5% at securitization. Moody's LTV is 91.0%, compared to 98.7% at securitization. The third largest conduit loan is the Town Plaza, South Gate Loan, which is secured by a 300,000 square foot retail center located in Los Angeles, California. The major tenants are Edwards Cinema and the department store La Curacoa. The center is 95.0% occupied, compared to 100.0% at securitization. Property performance has declined due to decreased rental rates and increased operating expenses. The loan is on the master servicer's watchlist due to a decline in debt service coverage. Moody's LTV is 99.6%, compared to 88.5% at securitization. The pool's collateral is a mix of retail, office and mixed-use, U.S. Government securities, multifamily, industrial and self storage and lodging. The properties are located in 29 states. The highest state concentrations are California, Pennsylvania, Maryland, Massachusetts and North Carolina. All of the loans are fixed rate. GMAC COMMERCIAL: S&P Affirms Six Cert. Classes' Low-B Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on seven classes of GMAC Commercial Mortgage Securities Inc.'s commercial mortgage pass-through certificates from series 2003-C2. At the same time, the ratings on 10 other classes from the same transaction are affirmed. The upgrades and affirmations reflect credit enhancement levels that provide adequate support for the ratings, as well as $193.9 million in defeasance. As of May 10, 2006, the trust collateral consisted of 86 whole loans, two pari passu participations in whole loans, and one pari passu participation in an A note for which the B note is held outside the trust. The trust collateral has a pool balance of $1.2 billion, down from $1.3 billion at issuance. The master servicer, Capmark Finance Inc., reported primarily full-year 2004 or 2005 financial information for 92.7% of the pool. Based on this information, Standard & Poor's calculated a weighted average net cash flow debt service coverage ratio of 1.57x, up from 1.44x at issuance. The current DSC figure excludes seven loans that have been defeased, including the largest loan in the trust. The top 10 exposures secured by real estate collateral have an outstanding trust balance of $407.4 million. These exposures have a weighted average DSC of 1.45x, down from 1.66x at issuance. However, the Boulevard Mall, which had a 2.78x DSC at issuance, is excluded from the current DSC calculation because it is not required to report financials. As part of its surveillance review, Standard & Poor's reviewed recent property inspections provided by the master servicer, and all of the underlying properties were characterized as "good" or "excellent." This excludes the Boulevard Mall, for which a recent property inspection was not available. None of the top 10 loans are in special servicing, but the River Oaks West Apartments loan is on the master servicer's watchlist. There are 12 loans with an aggregate balance of $163.4 million on Capmark's watchlist. The second-largest loan in the trust has a $46.5 million balance and is secured by a 420-unit multifamily property in Novi, Michigan. The loan reported a 2004 DSC of 1.38x, a figure that had declined to 1.15x for the year to date through September 2005. This loan is on the watchlist due to an occupancy decline to 59.0% as of February 2006, from 88.0% at issuance. Three loans with an aggregate balance of $46.2 million will be removed from Capmark's June watchlist, and the remaining eight loans on the watchlist appear there primarily due to debt service coverage or occupancy issues. Standard & Poor's stressed the loans on the watchlist and other loans with credit issues in its analysis. The resultant credit enhancement levels adequately support the raised and affirmed ratings. Ratings Raised: GMAC Commercial Mortgage Securities Inc. Commercial mortgage pass-through certificates series 2003-C2 Class To From Credit enhancement ----- -- ---- ------------------ B AAA AA 15.30% C AAA AA- 13.99% D AA A 11.51% E AA- A- 10.20% F A BBB+ 8.50% G A- BBB 7.58% H BBB+ BBB- 6.28% Ratings Affirmed: GMAC Commercial Mortgage Securities Inc. Commercial mortgage pass-through certificates series 2003-C2 Class Rating Credit enhancement ----- ------ ------------------ A-1 AAA 18.56% A-2 AAA 18.56% J BB+ 0.58% K BB 3.92% L BB- 3.27% M B+ 2.48% N B 2.09% O B- 1.70% X-1 AAA N/A X-2 AAA N/A GRAFTECH INT'L: Hires Mark Widmar as Chief Financial Officer ------------------------------------------------------------ Mark Widmar joined GrafTech International Ltd. as Chief Financial Officer and Vice President on May 8, 2006. Mr. Widmar served as Corporate Controller of NCR, Inc., a $6 billion company, from March 2005 to April 2006. His responsibilities included financial planning and analysis, consolidations, internal controls, accounting policy and external financial reporting. From November 2002 to March 2005, he was a Business Unit Chief Financial Officer for NCR, with responsibility for setting financial vision and strategy for a $2 billion global business, including research and development, manufacturing, product management, sales and marketing. The Company and Mr. Widmar has entered into an offer letter pursuant to which Mr. Widmar will be entitled to a minimum annual base salary of $325,000, will be eligible to participate in GrafTech's Incentive Compensation Plan and will receive 75,000 shares of restricted stock under GrafTech's 2005 Equity Incentive Plan, one-third of which will vest on each of the first, second and third anniversaries of his employment with the Company. Upon Mr. Widmar's commencement of employment with the Company, he became entitled to a signing bonus of $75,000 and entered into a change of control severance agreement with the Company, with the terms that are the same as those applicable to all of the Company's named executive officers, as described in the Company's Proxy Statement for the Annual Meeting of Stockholders dated April 12, 2006. Mr. Widmar will also be eligible to participate in the Company's relocation and other employee benefit plans, in accordance with their terms. GrafTech International Ltd. -- http://www.graftech.com/-- is one of the world's largest manufacturers and providers of high quality synthetic and natural graphite and carbon based products and technical and research and development services. Graftech manufactures graphite electrodes and cathodes, products essential to the production of electric arc furnace steel and aluminum. Graftech also manufactures thermal management, fuel cell and other specialty graphite and carbon products for, and provide services to, the electronics, power generation, semiconductor, transportation, petrochemical and other metals markets. At Dec. 31, 2005, GrafTech International Ltd.'s balance sheet showed total assets of $886.8 million and $1.1 billion in total liabilities, resulting in a $209.6 million stockholders' deficit. GRAHAM PACKAGING: Fitch Puts CCC Rating on Sr. Subordinated Notes ----------------------------------------------------------------- Fitch Ratings initiated these ratings for Graham Packaging Company, L.P. and its subsidiary GPC Capital Corp. I: -- Issuer default rating 'B-' -- Senior secured credit facility 'B+/Recovery Rating 2' -- Second lien credit facility 'CCC+/RR5' -- Senior unsecured notes 'CCC+/RR5' -- Senior subordinated notes 'CCC/RR6' Approximately $2.6 billion of debt is covered by the ratings. The Rating Outlook is Stable. The ratings reflect: * Graham's leading market shares across its product categories; * strong customer relationships; * on-site integration with many customers; * investment in proprietary technology; and * favorable product packaging trends toward plastics. Also supporting the ratings is Fitch's view that the resin pricing environment is improving, although some pricing volatility remains. Rating concerns include: * high leverage; * negative free cash flow; * resin price volatility; * customer concentration; * the risk of customer vertical integration; and * moderate or declining sales growth in three out of four product categories. The Stable Outlook reflects the relatively steady demand in Graham's key end-markets, including the food and beverage markets. The Outlook also reflects Fitch's expectation of an improving resin pricing environment and continued conversions to value-added packaging, particularly for food and beverage products. The RRs and notching in the debt structure reflect Fitch's recovery expectations under a scenario in which distressed enterprise value is allocated to the various debt classes. The RRs for Graham's senior secured credit facility, consisting of a revolving credit facility and a Term Loan B ('RR2'; expected 71%- 90% recovery) reflect significant expected recovery due to security from substantially all assets, as well as substantial cushions of unsecured debt and subordinated debt. With most of the estimated distressed enterprise value being distributed to the senior secured creditors, Fitch estimates that recoveries for all other debt classes would be low in a reorganization. The second lien credit facility recovery rating ('RR5'; expected 11%-30% recovery) reflects these limited recovery prospects in a distressed scenario. The Recovery Rating for Graham's senior unsecured notes ('RR5'; expected 11%-30% recovery) also reflects the expectation of limited recovery prospects in a distressed case and also considers the lack of security for the notes. The recovery ratings for the senior subordinated notes ('RR6'; expected 0%-10% recovery) reflects the poor recovery prospects for these notes, and also considers their contractual subordination. Graham Packaging Company, L.P. is an operating company which along with its subsidiaries manufactures plastic packaging and containers. Graham and its subsidiary, GPC Capital Corp. I, are co-issuers and co-obligors on all outstanding debt. Graham is owned by Graham Packaging Holdings, a private holding company whose primary asset is its 100% direct ownership of Graham. Holdings is a guarantor on all indebtedness. The senior secured credit facility carries restrictive financial covenants including a maximum leverage ratio of 6.50x and minimum interest coverage of 2.0x as of the end of fiscal 2006. There is also a cap on capital expenditures for 2006 of $346 million (increased from $270 million due to carryover from the previous year). The senior unsecured and senior subordinated notes permit additional debt so long as the pro-forma fixed-charge coverage would be greater than 2x. Both notes contain change of control put provisions at 101%, and an equity claw-back provision of 40% at par plus the annual coupon for each note. The notes are guaranteed by Holdings and the operating company's domestic guarantor subsidiaries on an unsecured basis. The EBITDA calculation used in determining covenant compliance includes: * significant adjustments for nonrecurring items; * project start-up costs; and * pro-forma items related to acquisitions. The company has operated in a challenging raw materials environment for several years as resin prices have risen dramatically, and resin volatility continues to be an issue for Graham. On a latest 12-months basis as of March 31, 2006, operating EBITDA (adjusted for certain nonrecurring items) declined by about $30 million from the fiscal year-end level of $392 million to $361 million. This represented a 130-basis point contraction in EBITDA margin and was largely driven by the affects of hurricanes Katrina and Rita in late 2005 with their impact on resin pricing and availability. Fitch believes that the loss of resin production resulting from the hurricanes is no longer an issue, and inventories at resin suppliers are rebounding. Further, additional capacity for PET, the company's primary resin, is expected to be coming online in late 2006. Fitch believes resin price volatility will moderate for the remainder of the year. However, pricing is difficult to predict and may continue to increase for certain resins. The company made a sizable acquisition in October 2004 when it purchased Owens-Illinois' plastic packaging business for about $1.2 billion. The acquisition caused some margin contraction as the O-I business generated lower margins than Graham's existing business. Some integration expenditures were also required. The integration continues, and should be completed in 2006. Graham has been making significant capital investments to accommodate new business, resulting in negative free cash flow for the past several years. The aggressive expenditures are a result of the company's strategy to take advantage of the current trend toward value-added, innovative packaging solutions. It is important to note that capital expenditures are largely made based on contracted business, not on a speculative basis. Fitch estimates that the company would have positive free cash flow excluding the discretionary, growth capital expenditures. Fitch believes that Graham is well positioned to create and take advantage of new opportunities for customized packaging across several product lines. Additionally, if resin prices continue to moderate in late 2006 and into 2007, Fitch estimates that the company should begin to see gross margin and EBITDA margin expansion. Strong growth in food and beverage packaging will likely more than offset the expected declines in the automotive lubricants category for the foreseeable future. The O-I plastics acquisition is largely integrated and the additional scale and product diversification will likely be a stabilizing factor through the economic cycle. Liquidity as of March 31, 2006, adjusted for the April 18 credit agreement amendment, was approximately $180 million, consisting of $15 million of cash and an estimated $165 million in revolving credit facility availability. Debt maturities are modest in the next several years. Fitch's ratings for Graham incorporate expectations for continued capital expenditures to take advantage of growth opportunities, and Fitch expects acquisition activity to be modest. Graham's leverage utilizing debt-to-adjusted operating EBITDA (adjusted for one-time charges) was 7.1x for the LTM period ended March 31, 2006, an increase versus 6.7x for the fiscal year ended Dec. 31, 2005. Graham's interest coverage utilizing adjusted operating EBITDA-to-interest expense was 1.9x for the LTM ended March 31, 2006, remaining stable versus 1.9x in fiscal 2005. Due to Graham's large amount of floating-rate debt, rising interest rates are likely to cause Graham's interest expense to increase in the coming year, although sizable interest rate swaps partially mitigate interest rate changes. Note that the EBITDA Fitch uses in these calculations does not include all of the adjustments that are included in Graham's covenant compliance EBITDA calculations. GREENS WORLDWIDE: Posts $5.9 Mil. Net Loss in 2006 1st Fiscal Qtr. ------------------------------------------------------------------ Greens Worldwide Incorporated filed its first quarter financial statements for the three months ended March 31, 2006, with the Securities and Exchange Commission on May 19, 2006. The Company reported a $5,955,143 net loss on $117,609 of revenues for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $6,066,415 in total assets, $3,446,001 in total liabilities, and $2,620,414 in stockholders' equity. The Company's March 31 balance sheet also showed strained liquidity with $1,455,335 in total current assets available to pay $2,487,970 in total current liabilities coming due within the next 12 months. A full-text copy of the Company's financial statements for the three months ended March 31, 2006, are available for free at http://ResearchArchives.com/t/s?9e4 Going Concern Doubt Most & Company, LLP, in New York, raised substantial doubt about Greens Worldwide Incorporated's ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's stockholders' deficiency, and operating losses and negative operating cash flow since inception. Greens Worldwide Incorporated, through its wholly owned subsidiary, US Pro Golf Tour, operates an intermediary professional golf tour conducting events for former PGA Tour professionals preparing for the Champions Tour, non-exempt professionals on the Champions Tour, and celebrity challengers and professionals 18 years old and up preparing for the PGA Tour. The Company also conducts a Pro Net competition for players of all skill levels 18 years of age and older who will compete for substantial prize money with their handicaps in Tour events. The Company's tournaments are week-long events with Junior Clinics, pro-ams, entertainment, leader boards and hospitality, with local market charities benefiting from the event. Events have been televised on The Golf Channel through the Tour's show, "54 Holes to Sunday" and in 2006 the events will be telecast on Fox Sports Net. HASTINGS MANUFACTURING: Court Converts Case to Ch. 7 Liquidation ---------------------------------------------------------------- The Honorable Jo Ann C. Stevenson of the U.S. Bankruptcy Court for the Western District of Michigan, Grand Rapids Division, approved the conversion of Hastings Manufacturing Company's bankruptcy case from a chapter 11 reorganization to a chapter 7 liquidation proceeding. Judge Stevenson appointed Thomas Bruinsma to serve as the Debtor's interim chapter 7 trustee. Headquartered in Hastings, Michigan, Hastings Manufacturing Company -- http://www.hastingsmanufacturing.com/-- makes piston rings for the automotive aftermarket and for OEM's. Through a joint venture, the Company sells additives for engines, transmissions, and cooling systems under the Casite brand name. Hastings Manufacturing distributes its products throughout the US and Canada. The Company filed for chapter 11 protection on Sept. 14, 2005 (Bankr. W.D. Mich. Case No. 05-13047). Stephen B. Grow, Esq., at Warner Norcross & Judd, LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $26,797,631 and total debts of $28,625,099. On April 18, 2006, Judge Stevenson converted the Debtor's case to a chapter 7 proceeding and appointed Thomas Bruinsma to serve as the Debtor's interim chapter 7 trustee. HCA INC: S&P Assigns BB+ Rating to Sr. Unsecured Debt Securities ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'BB+' rating to HCA Inc.'s senior unsecured debt securities registered as a Rule 415 shelf filing. This filing falls under the SEC's well-known seasoned issuer rules, which do not require a dollar amount of securities issued. The corporate credit rating on HCA is 'BB+'. The outlook is stable. The speculative-grade rating reflects key industry risks, such as uncertain third-party reimbursement and rising bad debt. These factors are mitigated by the generally strong cash-generating nature of HCA's extensive hospital operations. The rating also reflects the company's aggressive financial policy, which is inconsistent with an investment-grade rating. These factors are mitigated by the generally strong cash-generating nature of HCA's diverse hospital operations. HCA, the largest U.S. owner and operator of acute-care hospitals, has a large portfolio of 176 hospitals and 94 ambulatory surgery centers in 22 states, the U.K., and Switzerland. Five of the hospitals are in the process of being sold to LifePoint Hospitals Inc. With strong positions in several of its markets (including the key states of Florida and Texas), HCA currently enjoys relatively favorable overall reimbursement. Ratings List: HCA Inc.: Corporate credit rating: BB+/Stable/-- Senior unsecured debt: BB+ Rating Assigned: WKSI shelf debt (prelim): BB+ HOLLINGER INT'L: Settles Tweedy Browne Lawsuit for $3.5 Million --------------------------------------------------------------- Hollinger International Inc. agreed to a settlement of litigation initiated by Tweedy, Browne Global Value Fund and Tweedy, Browne Company, LLC, on May 23, 2006. The lawsuit, filed against the Company in the Court of Chancery for the State of Delaware in and for New Castle County in December 2003, sought to recover attorneys' fees and costs in connection with informal inquiries and other investigations performed on behalf of Tweedy concerning conduct that was subsequently investigated by the Special Committee of the Company's Board of Directors. Under the settlement, the Company is paying a total of $3.5 million to Tweedy's attorneys. Tweedy will not receive any portion of the settlement proceeds and, in exchange for the payment by the Company, Tweedy and its counsel have agreed to release the Company from further liability regarding the matter and to seek a dismissal of the lawsuit. Based in New York City, Hollinger International Inc. (NYSE: HLR) -- http://www.hollingerinternational.com/-- is a newspaper publisher whose assets include The Chicago Sun-Times and a large number of community newspapers in the Chicago area. As of March 31, 2006, the Company's equity deficit widened to $197,737,000 from a $169,851,000 deficit at December 31, 2005. INTELSAT LTD: Names New Sr. Management Members to Finance Team -------------------------------------------------------------- Intelsat Ltd. disclosed senior management appointments to its finance organization made by Jeff Freimark, Intelsat's Chief Financial Officer and Executive Vice President Finance and Information Technology. Anita Beier, formerly of US Airways, will serve in the role of Senior Vice President and Controller, reporting to Mr. Freimark. At US Airways, Ms. Beier held the position of Senior Vice President and Controller, where she was responsible for all accounting functions. Prior to US Airways, Ms. Beier held various management level positions at CSX Corporation and American Commercial Lines. Her responsibilities and areas of oversight at Intelsat will include revenue control, accounting operations, financial reporting, financial information systems and payroll. Tim Carnahan, formerly with Shop Rite Supermarkets, Inc. has been appointed to the position of Vice President, Financial Operations. Mr. Carnahan will play an integral role in tightening processes and procedures with an eye toward improving efficiencies and effectuating integration requirements. He will oversee procurement, financial processes and financial integration. Prior to his work at Shop Rite, Mr. Carnahan served in a number of management positions at Grand Union Company and Office Depot. The new appointees will join the rest of the Company's finance team, including Linda Kokal, Vice President and Treasurer, Dianne VanBeber, Vice President Investor Relations and Corporate Communications, Tim Kraus, Vice President, Corporate Tax, and Adam Levy, Vice President, Information Systems. "We're very excited to have both Anita and Tim on board," said Jeff Freimark, CFO of Intelsat. "The wealth of experience they bring to the table will play a significant role in strengthening Intelsat's financial controls and processes and we look forward to having them on the team." Noah Asher, Intelsat's Senior Vice President of Finance, will retain his position through the end of the year, during which he will continue to oversee the budgets and financial planning functions in order to assist with the PanAmSat acquisition financing and to ensure a smooth transition. Intelsat, Ltd. - http://www.intelsat.com/-- offers telephony, corporate network, video and Internet solutions around the globe via capacity on 25 geosynchronous satellites in prime orbital locations. Customers in approximately 200 countries rely on Intelsat's global satellite, teleport and fiber network for high- quality connections, global reach and reliability. * * * As reported in the Troubled Company Reporter on April 11, 2006, Standard & Poor's Ratings Services held all ratings on fixed satellite services provider Intelsat Ltd. (BB-/Watch Neg/--) on CreditWatch with negative implications. INVERNESS MEDICAL: Buying 49% of TechLab Stock ---------------------------------------------- Inverness Medical Innovations, Inc., disclosed that it will acquire 49% of the capital stock of TechLab, Inc., a privately held diagnostics company, in exchange for 303,417 shares of Inverness common stock. TechLab develops, manufactures, and distributes rapid non-invasive intestinal diagnostics tests in the areas of intestinal inflammation, antibiotic associated diarrhea and parasitology. The transaction provides Inverness, whose Wampole subsidiary already distributes TechLab's products in the United States, with exclusive global distribution rights to TechLab's market leading line of enteric disease testing products, as well as future human medical diagnostic products, as TechLab's existing global distribution relationships lapse. These products include both ELISA and rapid format assays for the detection of C. Difficile Toxins A&B, a rapidly growing worldwide market segment. TechLab works with major universities in the development of new tests for intestinal parasites for use in both industrialized and developing countries. TechLab has developed and now, with access to Inverness' intellectual property, expects to commence selling the only US FDA-cleared rapid membrane assay to detect fecal lactoferrin, a test that can help differentiate bacterial enteric infections and inflammatory bowel diseases from maladies such as irritable bowel syndrome and diverticulitis. In the US alone, there are over 3 million cases of Crohn's Disease, 4 million cases of ulcerative colitis and 10 million cases of irritable bowel syndrome reported annually. Additionally, TechLab has a pipeline of products in development which represent opportunities for Inverness in both the professional and consumer marketplaces. TechLab will continue to operate with the current executive management team of Tracy Wilkins, Ph.D. as president, David Lyerly, Ph.D. as Vice President of Research and Development and David Wall as VP of Operations. The agreement includes an option for Inverness to acquire any shares of TechLab offered for sale to third parties by the existing shareholders. About Inverness Medical Headquartered in Waltham, Massachusetts, Inverness Medical Innovations, Inc. (Amex: IMA) -- http://www.invernessmedical.com/ -- is a leading global developer of advanced diagnostic devices and is presently exploring new opportunities for its proprietary electrochemical and other technologies in a variety of professional diagnostic and consumer-oriented applications including immuno-diagnostics with a focus on women's health and cardiology. * * * As reported in the Troubled Company Reporter on July 7, 2005, Moody's Investors Service downgraded Inverness Medical Innovations, Inc.'s Corporate Family Rating to B3 from B2; $150 million Senior Subordinated Notes to Caa3 from Caa1; and Senior Unsecured Issuer Rating to Caa1 from B3. Moody's said the outlook remains negative. As reported in the Troubled Company Reporter on Apr. 6, 2005, Standard & Poor's Ratings Services lowered its ratings on Inverness Medical Innovations Inc., including the corporate credit rating to 'B' from 'B+'. S&P said the outlook is stable. JAMES ACHEY: Case Summary & 19 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: James Lee Achey Saranne Achey dba ScanGraphics, Inc. 4149 120th Street Urbandale, Iowa 50323 Bankruptcy Case No.: 06-00992 Type of Business: The Debtors operate a printing company. See http://showcase.netins.net/web/scangraphics/home.htm Chapter 11 Petition Date: May 26, 2006 Court: Southern District of Iowa (Des Moines) Debtors' Counsel: Jeffrey D. Goetz, Esq. Donald F. Neiman, Esq. Bradshaw, Fowler, Proctor & Fairgrave, P.C. 801 Grand Avenue, Suite 3700 Des Moines, Iowa 50309-8004 Tel: (515) 246-5817 Fax: (515) 246-5808 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtors' 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Diversified Graphics Trade Debt $36,274 1633 Momentum Place Chicago, IL 60689-5316 GM Mastercard Credit Card $33,240 Cardmember Services Department 9600 Carol Stream, IL 60128-9600 H&R Accounts, Inc. Judgment $18,108 for Tri-City Electric Co. c/o Thomas C. Hill, Esq. 1987 Spruce Hills Drive Bettendorf, IA 52722 ABC Electric Trade Debt $18,108 P.O. Box 71099 Des Moines, IA 50325 Wells Fargo Credit Card $16,312 HSBC NV Credit Card $16,001 Wells Fargo Card Services Credit Card $15,796 Chase Credit Card $15,598 Discover Card Services Credit Card $13,298 Relationship Marketing Trade Debt $12,910 Allied Insurance Business Insurance $12,524 Bindery One Trade Debt $10,184 Blanchard Systems Trade Debt $9,576 Mid American Energy Utilities $8,776 Capital One Bank Credit Card $7,743 Pitman Company Judgment $7,509 Target National Bank Credit Card $7,209 Younkers Credit Card $4,437 Silicon Graphics, Inc. Trade Debt $4,268 KENT FUNDING: Moody's Puts Rating on $3 Mil. Class E Notes at Ba1 ----------------------------------------------------------------- Moody's Investors Service announced that it assigned the following ratings to the notes issued by Kent Funding II Ltd: (1) Aaa to the $8,000,000 Class X Senior Secured Notes Due 2011; (2) Aaa to the $1,100,000,000 Class A-1A Senior Secured Floating Rate Notes Due 2046; (3) Aaa to the $63,000,000 Class A-2 Senior Secured Floating Rate Notes Due 2046; (4) Aa2 to the $51,700,000 Class B Senior Secured Floating Rate Notes Due 2046; (5) A2 to the $16,700,000 Class C Secured Floating Rate Deferrable Notes Due 2046; (6) Baa2 to the $8,250,000 Class D Floating Rate Deferrable Notes Due 2046 and (7) Ba1 to the $3,100,000 Class E Floating Rate Deferrable Notes Due 2046. The ratings address the ultimate cash receipt for each class of the notes of all interest and principal payments required by the governing documents. The ratings assigned to the notes are based on the expected loss posed to holders of the notes relative to the promise of receiving the present value of such payments. The rating of the Class A-1A Notes is also linked to the credit quality of Bank of America, N.A. as SWAP counterparty and accordingly, any downgrade in the rating of BANA may cause a downgrade in the rating of the Class A1-A Notes. The ratings are also based upon the transaction's legal structure and the characteristics of the collateral pool. The collateral manager is Declaration Management & Research LLC. KL INDUSTRIES: Court Okays Shaw Gussis as Bankruptcy Counsel ------------------------------------------------------------ KL Industries, Inc., obtained authority from the U.S. Bankruptcy Court for the Northern District of Illinois to retain Shaw Gussis Fishman Glantz Wolfston & Towbin LLC, as its bankruptcy counsel. As reported in the Troubled Company Reporter on May 23, 2006, Shaw Gussis is expected to: a. give the Debtors legal advice with respect to its rights, powers and duties as debtor-in-possession in connection with the administration of its estates and disposition of its property; b. take action as necessary with respect to claims that may be asserted against the Debtor and property of its estates; c. prepare applications, motion, complaints, orders and other legal documents as may be necessary in connection with the appropriate administration of the Debtor's case; d. represent the Debtor with respect to inquiries and negotiations concerning creditors of their estates and property of their estates; e. initiate, defend or otherwise participate on behalf of the Debtor in all proceedings before the bankruptcy court or any other court of competent jurisdiction; and f. perform any and all other legal services on behalf of the Debtor which may be required to aid in the proper administration of its estates. The Debtors tell the Court that members at the firm bill between $380 to $525 per hour, while associates bill between $220 to $325 per hour. Steven B. Towbin, Esq., a member at Shaw Gussis, assures the Court that his firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Addison, Illinois, KL Industries, Inc., manufactures springs, assemblies and other products for the automotive and electronic markets. The Company does business as KL Spring & Stamping Division, KL Spring Division, KL Stamping Division, KL Assembly Division and American Metal Forming Division. The Company filed for bankruptcy protection on May 2, 2006 (Bankr. N.D. Ill. Case No. 06-04882). Peter J. Roberts, Esq., and Steven B. Towbin, Esq., at Shaw Gussis Fishman Glantz Wolfson & Towbin LLC represent the Debtor in its restructuring efforts. The Official Committee of Unsecured Creditors has retained Winston & Strawn LLP, to represent it in the Debtor's case. When the Debtor filed for bankruptcy protection, it reported assets totaling between $1 million and $10 million and debts amounting between $10 million to $50 million. KL INDUSTRIES: Panel Hires Winston & Strawn as Bankruptcy Counsel ----------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in KL Industries, Inc.'s chapter 11 case obtained authority from the U.S. Bankruptcy Court for the Northern District of Illinois to employ Winston & Strawn LLP, as its bankruptcy counsel. Winston & Strawn is expected to: a. consult with the Debtor's professionals and representatives concerning the administration of the case; b. prepare and review pleadings, motions and correspondence; c. appear at and be involved in proceedings held before the Court; d. provide legal counsel to the Committee in its investigation of the acts, conduct, assets, liabilities and financial condition of the Debtor, the operation of the Debtor's businesses, and any other matters relevant to the case; e. examine and investigate claims asserted against the Debtor; f. confer and negotiate with the Debtor, other parties in interest, and their respective attorneys and other professionals concerning the Debtor's businesses and properties, financing, chapter 11 plan, claims, liens, and other aspects of the Debtor's chapter 11 case; g. confer with and assist the Debtor in the sale of the Debtor's assets, negotiate with the Debtor, and other parties in interest regarding the allocation of the purchase price for that sale, and the disposition of the proceeds from that sale; h. appropriate, examine, investigate and prosecute preference claims, fraudulent conveyance claims and other claims under Section 544 through 550 of the bankruptcy Code; and i. provide the Committee with other services, including but not limited to, those enumerated in Section 1103(c) of the Bankruptcy Code, as the Committee may request. Daniel J. McGuire, Esq., a partner at Winston & Strawn, tells the Court that the Firm's professionals bill: Professional Hourly Rate ------------ ----------- Partners $365 - $800 Counsel and Associates $200 - $485 Paraprofessionals $100 - $260 Mr. McGuire assures the Court that his firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Addison, Illinois, KL Industries, Inc., manufactures springs, assemblies and other products for the automotive and electronic markets. The Company does business as KL Spring & Stamping Division, KL Spring Division, KL Stamping Division, KL Assembly Division and American Metal Forming Division. The Company filed for bankruptcy protection on May 2, 2006 (Bankr. N.D. Ill. Case No. 06-04882). Peter J. Roberts, Esq., and Steven B. Towbin, Esq., at Shaw Gussis Fishman Glantz Wolfson & Towbin LLC represent the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy protection, it reported assets totaling between $1 million and $10 million and debts amounting between $10 million to $50 million. LAND O'LAKES: MoArk Unit Sells Part of Assets to Golden Oval Eggs ----------------------------------------------------------------- Golden Oval Eggs, LLC, and MoArk, LLC, a wholly owned subsidiary of Land O'Lakes, signed an agreement for Golden Oval to purchase the liquid egg processing assets of the Egg Products Division of MoArk. The parties expect to complete the transaction on or about July 1, 2006. MoArk, LLC will continue to operate its primary business, which is the production and marketing of shell eggs. The transaction involves all five MoArk liquid egg products processing facilities, associated inventory, and other related assets. The facilities are located in Norco and Vernon, California; Millersburg, Ohio; Abbeville, Alabama; and Neosho, Missouri. A supply agreement for shell eggs from MoArk facilities and a licensing agreement for the use of the LAND O LAKES brand on liquid egg products are also included in the transaction. "With this expansion into the further processed egg products business, Golden Oval Eggs will be better positioned for continued strategic growth, to provide greater shareholder value, and to offer expanded quality products and services," Dana Persson, President and Chief Executive Officer of Golden Oval Eggs, LLC, said. "With both companies' commitment to customers and employees, combined with the experienced management and employees of MoArk, customers can expect business as usual and a seamless transition." "We are pleased to have reached an agreement with Golden Oval Eggs, LLC as the purchaser of the assets of our Egg Products Division and we view the transaction as a natural fit for both companies," MoArk President and Chief Executive Officer Craig Willardson said. "We have had a successful business relationship with Golden Oval Eggs over the past several years and recognize their ability to grow the business going forward." According to Mr. Persson, "This acquisition is a logical progression in Golden Oval Eggs' growth plan. Together with MoArk's expertise in further processing and marketing, we look forward to offering expanded products, services and opportunities for our customers. We are excited and eager to take advantage of the tremendous opportunities for all the stakeholders in this business." Golden Oval Eggs, LLC, -- http://www.goldenovaleggs.com/-- was established in 1994 as a new-generation value-added cooperative, created, owned, and directed by agricultural producers. The Company is a leader in the liquid egg industry, ranked among the top 10 producers and processors, serving customers throughout the United States and Canada. MoArk, LLC, -- http://www.moarkllc.com/-- a wholly owned subsidiary of Land O'Lakes, is the nation's third-largest producer and marketer of shell eggs including branded and specialty eggs. MoArk does business in 45 states and has annual sales of about $500 million. Headquartered in Arden Hills, Minnesota, Land O'Lakes, Inc. -- http://www.landolakesinc.com/-- is a national farmer-owned food and agricultural cooperative with annual sales of more than $7 billion. Land O'Lakes does business in all fifty states and more than fifty countries. It is a leading marketer of a full line of dairy-based consumer, foodservice and food ingredient products across the United States; serves its international customers with a variety of food and animal feed ingredients; and provides farmers and ranchers with an extensive line of agricultural supplies (feed, seed, crop nutrients and crop protection products) and services. * * * As reported in the Troubled Company Reporter on Nov. 21, 2005, Moody's Investors Service upgraded Land O'Lakes, Inc.'s long-term ratings (corporate family rating to B1 from B2) with a positive rating outlook and affirmed the cooperative's SGL-2 speculative grade liquidity rating. Ratings upgraded are: Land O'Lakes, Inc.: * $200 million senior secured revolving credit facility to Ba3 from B1 * $175 million 9.0% senior secured 2nd lien notes to B1 from B2 * $350 million 8.75% senior unsecured notes to B2 from B3 * Corporate family rating to B1 from B2 Land O'Lakes Capital Trust I: * $191 million 7.45% capital securities to B3 from Caa1 Ratings affirmed are: Land O'Lakes, Inc.: * Speculative grade liquidity rating at SGL-2. LARRY'S MARKETS: Section 341(a) Meeting Scheduled for June 12 ------------------------------------------------------------- The U.S. Trustee for Region 18 will convene a meeting of Larry's Markets, Inc.'s creditors at 1:00 p.m., on June 12, 2006, at the U.S. Courthouse, Room 4107, 700 Stewart Street in Seattle, Washington. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Kirklan, Washington, Larry's Markets, Inc. -- http://www.larrysmarkets.com/-- operates several supermarkets and department stores in the U.S. Northwest. The company filed for chapter 11 protection on May 7, 2006 (Bankr. W.D. Wash. Case No. 06-11378). Armand J. Kornfeld, Esq., at Bush Strout & Kornfeld, represents the Debtor. The Official Committee of Unsecured Creditors is represented by Marc L. Barreca, Esq., and Michael J. Gearin, Esq., at Preston Gates & Ellis LLP. When the Debtor filed for protection from its creditors, it listed total assets of $12,574,695 and total debts of $21,489,800. LEHMAN ABS: S&P Puts Class B-1 Debt's CCC Rating on Negative Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings on nine classes from Lehman ABS Manufactured Housing Contract Senior/Subordinate Asset-Backed Series 2001-B on CreditWatch with negative implications. At the same time, the rating on class A-7 from this transaction is affirmed, as it benefits from an insurance policy issued by Ambac Assurance Corp. The CreditWatch placements reflect the worse-than-expected performance trends displayed by the underlying pool of manufactured housing contracts, which were originated by CIT Group/Sales Financing Inc., and the resulting deterioration of credit enhancement. The performance trends associated with the pool of manufacturing housing contracts, which support the rated certificates, have continued to deteriorate since Standard & Poor's lowered the ratings on the classes in December 2004. With a pool factor of approximately 53.65%, the trust has experienced cumulative net losses of 9.61% after 55 months of performance. In addition, repossession inventory (as a percentage of the current pool balance) is significant at 4.99%. Furthermore, 10.09% of the loans in the collateral pool are 30 or more days delinquent (excluding accounts already in repossession inventory) and 4.55% is 90 or more days delinquent. Moreover, the high level of monthly losses and insufficient excess spread have completely depleted overcollateralization, and the class B-2 certificate has been written down to nearly half of its original principal balance. Standard & Poor's will complete a detailed review of the credit performance of the transactions relative to the remaining credit support within the next two months. Ratings Placed On Creditwatch Negative: Lehman ABS Manufactured Housing Contract Senior/Subordinate Asset-Backed Series 2001-B Rating ------ Class To From ----- -- ---- A-1 AA+/Watch Neg. AA+ A-2 AA+/Watch Neg. AA+ A-3 AA+/Watch Neg. AA+ A-4 AA+/Watch Neg. AA+ A-5 AA+/Watch Neg. AA+ A-6 AA+/Watch Neg. AA+ M-1 A-/Watch Neg. A- M-2 BB/Watch Neg. BB B-1 CCC/Watch Neg. CCC Rating Affirmed: Lehman ABS Manufactured Housing Contract Senior/Subordinate Asset-Backed Series 2001-B Class Rating ----- ------ A-7 AAA LIFECARE HOLDINGS: S&P Affirms Notes' B Rating With Neg. Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on three long-term acute care hospitals: * LifeCare Holdings Inc. ('B' corporate credit rating); * Select Medical Corp. ('B+'); and * Triumph HealthCare Holdings Inc. ('B'). The ratings were removed from CreditWatch, where they were placed with negative implications Jan. 23, 2006, due to proposed Medicare reimbursement cuts. The rating outlook on all three companies is negative. "The ratings affirmation reflects the early May announcement by the Centers of Medicare and Medicaid Services of its final rule for reimbursement for long-term acute care hospitals beginning July 1, 2006," said Standard & Poor's credit analyst David Peknay. "The reduction in reimbursement is much less severe than in CMS's original proposal in January 2006. We believe that the magnitude of the reimbursement reduction does not warrant a ratings downgrade at this time, but the potential for lower ratings remains, depending on the success of the companies' efforts to lessen the impact." LOVESAC CORP: Seeks Court Nod to Reject Pittsburgh Mills Lease -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave The LoveSac Corporation and its debtor-affiliates authority to reject the Pittsburgh Mills Lease as of April 30, 2006. On July 14, 2005, the Debtors entered into a lease with Pittsburgh Mills Limited Partnership. The lease was for Store #401 in the Galleria at Pittsburgh Mills, in Tarentum, Pennsylvania. According to the Debtors, they are in the process of reducing the number of retail locations that they operate. The Debtors believe that the lease is not necessary for an effective reorganization but instead will be a burden to the Debtors' estates because of the administrative expenses arising from the lease. Headquartered in Salt Lake City, Utah, The LoveSac Corporation -- http://www.lovesac.com/-- operates and franchises retail stores selling beanbags furniture. The LoveSac Corp. and three affiliates filed for chapter 11 protection on Jan. 30, 2006 (Bankr. D. Del. Case No. 06-10080). Anthony M. Saccullo, Esq., and Charlene D. Davis, Esq., at The Bayard Firm and P. Casey Coston, Esq., at Squire, Sanders & Dempsey LLP represent the Debtors in their restructuring efforts. Michael W. Yurkewicz, Esq., at Klehr Harrison Harvey Branzburg & Ellers represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. MAXXAM INC: Palco Provides Asset Information to Potential Lenders ----------------------------------------------------------------- MAXXAM Inc.'s indirect wholly owned subsidiary, The Pacific Lumber Company, is pursuing efforts to increase its liquidity. As part of its initiative to pursue discussions with potential lenders, Palco submitted to the Securities and Exchange Commission a summary of certain information being made available to potential lenders by Palco in connection with a proposed new $75 million senior secured term loan facility and a proposed new $60 million senior secured revolving credit facility. The new debt facilities are intended to refinance and replace Palco's existing credit facilities, as well as to provide additional funds for capital expenditures and working capital. A table estimating ranges of market values and replacement costs of certain assets of Palco and its subsidiaries, exclusive of Palco's interest in MAXXAM is available for free at: http://researcharchives.com/t/s?9ea Palco advises potential lenders that it has underway efforts to monetize during the next three to five years certain of the real estate assets included in the table, whose aggregate values or replacement costs are estimated to be approximately $75 million. About MAXXAM Inc. MAXXAM Inc. (AMEX: MXM) is engaged in a wide range of businesses from aluminum and timber products to real estate and horse racing. The Company's timber subsidiary, Pacific Lumber, owns about 205,000 acres of old-growth redwood and Douglas fir timberlands in Humboldt County, California. MAXXAM's real estate interests include commercial and residential properties in Arizona, California, and Texas, and Puerto Rico. The company also owns the Sam Houston Race Park, a horseracing track near Houston. At Dec. 31, 2005, the company's stockholders' deficit widened to $661,300,000 from a $657,100,000 deficit at Dec. 31, 2004. * * * As reported in the Troubled Company Reporter on April 5, 2006, Deloitte & Touche LLP in Houston, Texas, raised substantial doubt about MAXXAM Inc. and its subsidiaries' ability to continue as a going concern. Deloitte pointed to the difficulties of: -- MAXXAM Inc. and its subsidiaries in realizing their timber-related assets and discharge their timber-related liabilities in the normal course of business; -- The Pacific Lumber Company, an indirect subsidiary, in meeting its loan agreement covenants; and -- Scotia Pacific Company LLC, an indirect subsidiary, in paying the interest on the timber notes. MERIDIAN AUTOMOTIVE: Files Amended Plan of Reorganization --------------------------------------------------------- Meridian Automotive Systems, Inc., filed, on May 26, 2006, its First Amended Joint Plan of Reorganization and a Disclosure Statement with the U.S. Bankruptcy Court for the District of Delaware. Meridian, together with certain of its secured creditors, originally filed a plan of reorganization on March 30, 2006. Those same secured creditors as well as the Official Committee of Unsecured Creditors are co-proponents of the Amended Plan. Meridian has asked the Bankruptcy Court to schedule a hearing in June to approve the Disclosure Statement. "We are very pleased that our restructuring plan is supported by both a significant group of our secured creditors and the Official Committee of Unsecured Creditors," Richard E. Newsted, Meridian's President and CEO, said. "Filing a Disclosure Statement is a major step towards our exit from Chapter 11, which we are committed to doing as quickly and efficiently as possible." About Meridian Automotive Based in Dearborn, Michigan, Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. MERRILL LYNCH: Fitch Affirms Class B-2 Loan's BB Rating ------------------------------------------------------- Fitch Ratings took rating actions on these Merrill Lynch Bank issues: MLB USA Series 2001-A: -- Class A affirmed at 'AAA' -- Class M-1 upgraded to 'AA+' from 'AA' -- Class M-2 upgraded to 'AA-' from 'A' -- Class B-1 affirmed at 'BBB' -- Class B-2 affirmed at 'BB' The affirmations reflect credit enhancement consistent with future loss expectations and affect approximately $153.06 million in outstanding principal. The upgrades reflect an improvement in the relationship of CE to future loss expectations and affect $14.27 million of outstanding certificates. The CE levels for classes M-1 and M-2 have more than doubled the original enhancement levels at closing date. They currently benefit from 9.53% (originally 4.75%) and 5.52% (originally 2.75%) subordination, respectively. To date there has been less than 2 basis points of realized losses when compared to the original principal balance of the collateral ($648 million) and the 90+ delinquencies (including bankruptcy, foreclosure, and REO) is only 1.66% of the current collateral balance. In contrast to most prime residential transactions, the trust does benefit from excess interest in protection against losses resulting from liquidated loans. The collateral consists of high balance, adjustable rate mortgage loans secured by first liens on one- to four-family residential properties, condominiums and shares issued by private non-profit housing corporations and related proprietary leases or occupancy agreements. Merrill Lynch Credit Corporation originated or acquired all of the mortgage loans. The loans are currently being serviced by PHH Mortgage Corp., rated 'RPS1' by Fitch. At issuance, the mortgage loans had a weighted average FICO of 692 and a weighted average loan-to-value ratio of 85%. All of the loans have stated maturities of 25 years. MERRILL LYNCH: DBRS Holds Low-B Rating on 6 Certificate Classes --------------------------------------------------------------- Dominion Bond Rating Service upgraded Class B to AAA from AA (high) of Merrill Lynch Financial Assets Inc. Commercial Mortgage Pass-Through Certificates, Series 2003-Canada 9. Class A, Class XC-1, Class XC-2, Class XP-1, and Class XP-2 have been confirmed at AAA and the remaining classes have been confirmed: * Class A Confirmed AAA Stb * Class XP-1 Confirmed AAA Stb * Class XP-2 Confirmed AAA Stb * Class XC-1 Confirmed AAA Stb * Class XC-2 Confirmed AAA Stb * Class B Upgraded AAA Stb * Class C Confirmed AA (low) * Class D-1 Confirmed A (low) * Class D-2 Confirmed A (low) Stb * Class E Confirmed BBB (high) Stb * Class F Confirmed BBB (low) Stb * Class G Confirmed BB Stb * Class H Confirmed BB (low) Stb * Class J Confirmed B Stb * Class K Confirmed B (low) Stb The upgrade follows the defeasance of the eighth-largest loan, Calgary Medical Centre, along with the 8% paydown and stable performance of underlying loans. The pool consists of 63 loans, with a total balance of Cdn$303,237,009. The weighted average debt service coverage ratio for the pool has improved to 1.56 times from 1.51x at issuance and the weighted average loan-to-value has improved from 64.1% at issuance to 51.5%. The deal is highly concentrated in properties located in the province of Ontario and has limited loan diversity, with the largest loan representing 11.5% of the pool and the top ten loans representing 45.5% of the pool. Forty-four of the loans provide recourse to the borrower/guarantor, excluding the defeased loans. One loan is on the DBRS HotList. The loan was added to the HotList because the year-end 2004 DSCR is below 1.0 times and revenue declined while occupancy remained stable. NASH FINCH: S&P Affirms B+ Corporate Credit & Bank Loan Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including its 'B+' corporate credit rating, on Minneapolis, Minnesota-based Nash Finch Co. and removed them from CreditWatch, where they were placed with negative implications on Feb. 16, 2006. At the same time, the senior secured bank loan rating was affirmed at 'B+', with a recovery rating of '2' indicating expectations for a substantial (80%-100%) recovery of principal in the event of a payment default. The outlook is stable. "These actions reflect the company's adequate credit metrics, which are better than average for current ratings levels and provide room to withstand anticipated continued weakness in the retail operations and challenges and costs in integrating two acquired distribution centers," said Standard & Poor's credit analyst Stella Kapur. Current ratings also provide some cushion to incorporate the uncertainty surrounding the ongoing SEC inquiry into management's trading of company stock. The ratings were initially placed on CreditWatch after the resignation of the company's CEO and general counsel following an internal review of trading in the company's stock during 2005. While the investigation has not yet been completed, the company has hired a new CEO. Standard & Poor's does not anticipate the company will face a material penalty as a result of the inquiry. However, as the investigation continues, there is the possibility that other management executives could also be asked to leave the company. For the first quarter of fiscal 2006, Nash Finch reported a 6% decline in EBITDA from a year earlier, to $22 million. This primarily reflected weaker performance at its retail operations, which saw a net decrease of 13 stores since the first quarter of 2005, and a 4.1% drop in same-store sales. Results also reflected weaker profitability levels at the distribution operations due to increased margin pressures and higher costs associated with the integration of two acquired distribution facilities. Despite the EBITDA decline, credit metrics remain above average for current ratings. At March 25, 2006, lease-adjusted debt to EBITDA was roughly 3.4x and EBITDA coverage of interest was around 4x. These ratios are not adjusted for postretirement obligations. NBC/AUSTIN WINDRIDGE: Taps Fuqua & Keim as Bankruptcy Counsel ------------------------------------------------------------- NBC/Austin Windridge, Ltd., asks the U.S. Bankruptcy Court for the Southern District for permission to employ Fuqua & Keim, L.L.P., as its bankruptcy counsel. Fuqua & Keim will: (a) provide the Debtor legal advice with respect to its powers and duties as a debtor-in-possession in the continued operation of its business, and management of its property; (b) prepare all pleadings on behalf of the Debtor, as debtor- in-possession, as necessary; (c) negotiate and submit a potential plan of arrangement satisfactory to the Debtor, its estate, and the creditors at large; and (d) perform all other legal services for the Debtor as a debtor-in-possession which may become necessary in the Debtor's bankruptcy proceedings. The Debtor tells the Court that Richard L. Fuqua, Esq., an attorney at the Fuqua & Keim, will serve as lead counsel for this engagement and bills $400 per hour. The Debtor discloses that the firm's other professionals bill: Professional Hourly Rate ------------ ----------- Other Partners and Shareholders $300 Associates $120 - $175 Law Clerks and Legal Assistants $60 - $75 To the best of Debtor's knowledge, the firm represents no interest adverse to the Debtor or its estate. Mr. Fuqua can be reached at: Richard L. Fuqua, Esq. Fuqua & Keim, L.L.P. 2777 Allen Parkway, Suite 480 Houston, Texas 77019 Tel: (713) 960-0277 Fax: (713) 960-1064 Headquartered in Houston, Texas, NBC/Austin Windridge, Ltd., and its debtor-affiliate, NBC Las Brisas, Ltd., filed for chapter 11 protection on May 2, 2006 (Bankr. S.D. Tex. Case Nos. 06-31901 & 06-80154). Richard L. Fuqua, II, Esq., at Fuqua & Keim, LLP, represents the Debtors. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. NBC/AUSTIN WINDRIDGE: Files Schedules of Assets and Liabilities --------------------------------------------------------------- NBC/Austin Windridge, Ltd., delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the Southern District of Texas disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $30,000,000 B. Personal Property $452,439 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $25,000,000 E. Creditors Holding Unsecured Priority Claims $504,603 F. Creditors Holding $327,012 Unsecured Nonpriority Claims ----------- ----------- Total $30,452,439 $25,831,615 Headquartered in Houston, Texas, NBC/Austin Windridge, Ltd., and its debtor-affiliate, NBC Las Brisas, Ltd., filed for chapter 11 protection on May 2, 2006 (Bankr. S.D. Tex. Case Nos. 06-31901 & 06-80154). Richard L. Fuqua, II, Esq., at Fuqua & Keim, LLP, represents the Debtors. When the Debtors filed for protectection from their creditors, they estimated assets and debts between $10 million and $50 million. NICKOLAS ENVIRONMENTAL: Involuntary Chapter 11 Case Summary ----------------------------------------------------------- Alleged Debtor: Nickolas Environmental, Inc. 3945 Doniphan Park Circle, Suite D El Paso, Texas 79922 Case Number: 06-30530 Involuntary Petition Date: May 26, 2006 Chapter: 11 Court: Western District of Texas (El Paso) Judge: Larry E. Kelly Petitioners' Counsel: Wiley France James, III James & Haugland, P.C. P.O. Box 1770 El Paso, Texas 79949-1770 Tel: (915) 532-3911 Fax: (915) 541-6440 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Teresa M. Self Unpaid invoices $50 2708 Anise Drive for work performed El Paso, Texas 79936 Horseshoe Mechanical Unpaid invoices $7,500 c/o Arturo Carmona, Owner for work performed 1305 Edith Northeast Albuquerque, New Mexico 87102 Keers Environmental Judgment obtained $4,963 c/o Priscilla Imel, Comptroller on unpaid invoice 5904 Florence Northeast for work performed Albuquerque, New Mexico 87123 OCA INC: Court OKs William Steffes as Committee's Local Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors of OCA, Inc., and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Eastern District of Louisiana for authority to retain William E. Steffes, Esq., and the law firm of Steffes, Vingiello & McKenzie, LLC, as its local counsel, nunc pro tunc to March 30, 2006. Steffes Vingiello is expected to assist the Committee in performing its duties in the Debtors' Chapter 11 cases and will take any action necessary or required to represent the Committee's interests. The firm will work with Jenner & Block, LLP, of Chicago, Illinois, which serves as the Committee's national counsel. The Committee did not disclose how much Steffes Vingiello charges for its services. Mr. Steffes assures the Bankruptcy Court that his firm does not hold any interest adverse to the Debtors' estates. About Steffes, Vingiello & McKenzie Steffes, Vingiello & McKenzie, LLC -- http://www.steffeslaw.com/ -- is an eight-attorney law firm with offices in Baton Rouge and New Orleans, Louisiana. The firm concentrates in complex bankruptcies, workouts, reorganizations, insolvency matters, banking and commercial litigation. Mr. Steffes can be reached at: William E. Steffes, Esq. Steffes, Vingiello & McKenzie, LLC 13702 Coursey Boulevard, Building 3 Baton Rouge, LA 70817 About OCA 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's client practices provide treatment to patients throughout the United States and in Japan, Mexico, Spain, Brazil and Puerto Rico. 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. Patrick S. Garrity, Esq., and William E. Steffes, Esq., at Steffes Vingiello & McKenzie LLC represent the Official Committee of Unsecured Creditors. 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: Completes $105 Mil. Purchase of LSI Logic Unit ---------------------------------------------------------------- ON Semiconductor reported that its primary operating subsidiary, Semiconductor Components Industries, LLC, has completed the purchase of LSI Logic Corporation's Gresham, Ore., wafer fabrication facility and certain other semiconductor manufacturing equipment for a total price of approximately $105 million, under the terms of a definitive agreement executed on April 5, 2006. The Company paid LSI Logic approximately $90 million in proceeds to date, with the balance due within 90 days of closing according to the agreement. ON Semiconductor has hired substantially all of the LSI manufacturing employees currently working at the Gresham facility. The purchase of the Gresham wafer facility significantly enhances ON Semiconductor's internal manufacturing capabilities. With the completion of the this transaction, the Company has gained the skilled process development engineers, operational expertise and process development know-how to help enable it to develop a larger mix of high volume, low cost, high-performance submicron analog and digital power products down to the 0.18 micron (�) level, with toolset capabilities down to the 0.13� level in the future. ON Semiconductor Corp. (Nasdaq: ONNN) -- 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. OWENS CORNING: Asks Court to OK J.P. Morgan Equity Commitment Pact ------------------------------------------------------------------ Owens Corning and its debtor-affiliates seek the U.S. Bankruptcy Court for the District of Delaware's permission to: a. enter into an Equity Commitment Agreement, dated May 10, 2006, between Owens Corning and J.P. Morgan Securities Inc.; b. pay the fees and expenses expressly provided in the Equity Commitment Agreement; and c. furnish the indemnities set forth in Agreement. The Equity Commitment Agreement is an integral part of the settlement term sheet among the Debtors, the Asbestos Claimants Committee, the Future Claimants Representative, the bondholders and trade creditors, the Ad Hoc Bondholders' Committee and the Ad Hoc Equity Holders Committee, with respect to a consensual plan of reorganization, Norman L. Pernick, Esq., at Saul Ewing LLP, in Wilmington, Delaware, says. The Settlement Term Sheet provides holders of Bondholder Claims in Classes A5, A6-A and A6-B of the Fifth Amended Plan, the right to purchase 72,900,000 shares in reorganized Owens Corning at $30 per share. Under the Equity Commitment Agreement, J.P. Morgan will backstop the rights offering. The Debtors contend that the Equity Committee Agreement is indispensable to their prompt and successful reorganization and the implementation of their Sixth Amended Plan. The salient terms of the Equity Commitment Agreement are: Investor J.P. Morgan Securities Inc. Backstop Commitment To purchase, for $30 per share, any of the 72,900,000 shares of New Common Stock not purchased pursuant to the Rights Offering. Rights Terms Each Eligible Holder will have until the 20th calendar day after distribution of the ballots for voting on the Sixth Amended Plan to purchase up to its pro rata share of 72,900,000 shares. Owens Corning will deliver, reasonably in advance of the Effective Date of the Sixth Amended Plan, a Purchase Notice indicating the number of the shares not purchased by the Eligible Holders pursuant to the Rights Offering. J.P. Morgan will purchase a number of shares of New Common Stock equal to the number of shares set forth on the Purchase Notice. Conditions to Backstop Commitment The Equity Commitment Agreement is conditioned on, among others: (1) J.P. Morgan will have approved the Sixth Amended Plan and Confirmation Order to the extent they are consistent in all material respects with the Settlement Term Sheet and the Equity Commitment Agreement; (2) Owens Corning will not have publicly supported or entered into a competing transaction; (3) the Confirmation Order will have been entered; (4) the Debtors' shelf registration statement becoming effective by the Agreement Effective Date; (5) fees and other amounts payable under the Equity Commitment Agreement will have been paid; (6) New Common Stock will be exchange- listed; (7) J.P. Morgan will have received an opinion of Owens' counsel relating to the Registration Statement and Prospectus; and (8) Owens Corning will file with the Bankruptcy Court definitive Put Agreements and Call Agreements reasonably satisfactory to J.P. Morgan. Termination Right of Investor J.P. Morgan will terminate its commitment to backstop the rights offering: (1) on or after June 30, 2006, if the the Court has not approved the Agreement; (2) on or after October 31, 2006, with the opportunity to extend the deadline to December 15, 2006, upon Owens Corning's satisfaction of certain conditions and payment of a $30,000,000 Extension Fee; (3) Owens Corning's failure to satisfy conditions precedent set forth in the Equity Commitment Agreement or pay the Extension Fee, if any, when due; and (4) Owens Corning publicly supports or enters into a Competing Transaction. Termination Right of Debtor Prior to Court approval, Owens Corning notifies J.P. Morgan that it has no intent to proceed with the deal. Owens Corning, however, will pay a $20,000,000. Backstop Commitment Fee $100,000,000, plus Transaction Expenses. OC Representations Limited representations similar to, but in many respects diluted from, those given in an underwriting agreement for a public offering of stock. OC Covenants Owens Corning covenants with J.P. Morgan to: (1) file Court papers seeking approval of, and use reasonable best efforts to support, the Equity Commitment Agreement and entry of the Agreement Order; (2) file the Sixth Amended Plan consistent with the Settlement Term Sheet; (3) make necessary filings pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976; (4) prepare and file a shelf registration statement; (5) create a clear market for 180 days after the Closing Date; and (6) file forms of the Put Agreements, the Call Agreements and the Registration Rights Agreement. Indemnification The Debtors will indemnify and hold harmless J.P. Morgan, the ultimate stock purchasers, and certain affiliates with respect to claims, liabilities and expenses related to transactions contemplated in the Equity Commitment Agreement absent a judicial determination of bad faith, gross negligence or willful misconduct. A full-text copy of the Equity Commitment Agreement is available for free at http://ResearchArchives.com/t/s?9ff The Equity Commitment Agreement is a commitment of enormous magnitude, in size, duration and complexity, Mr. Pernick asserts. The Debtors anticipate that the 72,900,00 shares covered in the Agreement will constitute approximately 55% of the fully diluted equity of reorganized Owens Corning. In the event that none of the eligible creditors were to purchase the shares offered, J.P. Morgan will purchase all shares and pay Owens Corning $2,187,000,000 in cash to fund the Sixth Amended Plan. Ultimately, Mr. Pernick points out, this will provide the Debtors with the level of economic certainty desired to proceed toward Plan confirmation. For purposes of Section 1129(a)(1) of the Bankruptcy Code, the Debtors believe that the Equity Commitment Agreement has the additional benefit of evidencing feasibility of the Sixth Amended Plan. Mr. Pernick assures the Court that the parties agreed the proposed compensation and inducement to or for the benefit of J.P. Morgan after substantial negotiations on an arm's-length basis. According to Mr. Pernick, the parties negotiated the compensation structure with reference to the equity rights offering approved by the Court in USG Corporation's Chapter 11 case. In USG, the debtor inked an equity commitment with Berkshire Hathaway Inc., its largest shareholder. Berkshire pledged to buy shares of USG stock not purchased through a $1,800,000,000 rights offering. USG agreed to pay a $67,000,000 commitment fee to Berkshire. Syndication Agreement The Debtors further ask the Court to approve a syndication agreement between J.P. Morgan and some investor parties including D. E. Shaw Laminar Portfolios, L.L.C. and Plainfield Special Situations Master Fund Limited. The Debtors are not parties to the Syndication Agreement. The Investor Parties were members of the Ad Hoc Bondholders' Committee and heavily involved in the negotiation of the Settlement Term Sheet. The Debtors believe that majority of the Investor Parties are creditors in Class A5 as of May 10, 2006, and some of them hold other positions within the Debtors' capital structure. The Syndication Agreement sets forth the terms and conditions by which the Investor Parties have committed to purchase from J.P. Morgan any unsubscribed shared of reorganized Owens Corning that it purchased under the Equity Commitment Agreement. In obligating itself under the Commitment Agreement, J.P. Morgan relies on the Investor Parties' obligations, representations and warranties as provided in the Syndication Agreement. Therefore, the execution and delivery of the Syndication Agreement is a condition precedent to J.P. Morgan 's obligations under the Equity Commitment Agreement. Specifically, the Syndication Agreement provides that to the extent J.P. Morgan will purchase the unsubscribed shares under the Commitment Agreement, it will sell to each Investor Party, for $30 per share, the party's pro rata share of the aggregate amount of the unsubscribed shares. Pro Rata Share will mean, for each Investor Party, the fraction equal to: * the investor's purchase commitment specified in writing by J.P. Morgan; divided by * $2,187,000,000, with appropriate rounding. For the Investor Parties' commitment, J.P. Morgan will share with them a material portion of the Backstop Fee. J.P. Morgan's delivery of purchased shares to each Investor Party will be effected through the facilities of Depository Trust Company. J.P. Morgan contends that some provisions of the Syndication Agreement addressing fee sharing, as well as references to the identity of some of the Investor Parties and the magnitude of their commitments, are commercial, sensitive and proprietary information. Therefore, the Debtors seek the Court's permission to file under seal the unredacted version of the Syndication Agreement. A full-text copy of a redacted version of the Syndication Agreement is available for free at: http://ResearchArchives.com/t/s?a00 Owens Corning (OTC: OWENQ.OB) (BULLETIN BOARD: OWENQ.OB) -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. Headquartered in Toledo, Ohio, the Company filed for chapter 11 protection on Oct. 5, 2000 (Bankr. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at Saul Ewing LLP, represents the Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Asbestos Creditors. James J. McMonagle serves as the Legal Representative for Future Claimants and is represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP. (Owens Corning Bankruptcy News, Issue No. 131; Bankruptcy Creditors' Service, Inc., 215/945-7000). PHOTOWORKS INC: Posts $933,000 Net Loss in 2006 Second Quarter -------------------------------------------------------------- PhotoWorks, Inc., reported results for the second quarter of fiscal year 2006 ended March 25, 2006. -- Digital sales increased 107% over same period last year to $1.3 Million; -- 35 mm processing and other traditional revenue declined 49% to $1.2 Million; and -- Gross Margin jumped to 37.3% compared to 30.1% same period last year. "PhotoWorks is continuing to show strong demand for its online digital photography services," said Philippe Sanchez, President and CEO of PhotoWorks. "Our restructuring and investments in our new digital product line are beginning to show good results". The Company reported a net loss of $933,000 compared to a net loss of $1,551,000 in the second quarter of fiscal year 2005. For the fiscal year to date, the Company reduced its net loss to $1,261,000 from $2,542,000 over the same period last year, a 50.4% improvement. Digital revenue totaled $1,351,000, an increase of 107% from $652,000 over the same quarter of 2005. For the fiscal year to date, digital revenue totaled $3,675,000, an increase of 86% over the same period last year of $1,975,000. Traditional 35mm film processing revenue totaled $1,174,000 for the quarter, a 49% decline from $2,282,000 over the same period last year. For the fiscal year to date, traditional film revenues were $2,815,000, a 46% decline from $5,178,000. "We are particularly pleased that our higher margin digital revenue now represents over the majority of total revenue, and we look forward to further gains in this area." Sanchez said. Going Concern Doubt Williams & Webster, PS, expressed substantial doubt about the Company's ability to continue as a going concern after it audited the financial statements for the year ending Sept. 30, 2005. The auditing firm pointed to the Company's net losses and cash flow shortages. PhotoWorks(R), Inc. (OTCBB:FOTO) -- http://www.photoworks.com/-- is an online photography services company. Every day, photographers send film, memory cards and CDs, or go to the Company's website to upload, organize and email their pictures, order prints, and create Signature Photo Cards and Custom Photo Books. PLAINS EXPLORATION: S&P Holds BB Corp. Credit Rating on Neg. Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services held its 'BB' corporate credit rating on Plains Exploration & Production Co. on CreditWatch with negative implications. The CreditWatch update follows Energy Partners Ltd.'s announcement that it has made an offer to Stone Energy Corp.'s board of directors to purchase all of its outstanding stock at $52 per share. The rating on Plains was placed on CreditWatch April 26, 2006, following its announcement that it had entered into a definitive agreement to acquire Stone Energy for $1.88 billion (including assumed debt) and would be restructuring its hedge positions in 2007 and 2008. Energy Partners' offer for Stone Energy is $10 per share higher than Plains' offer. The CreditWatch listing for Plains reflects the likelihood that ratings will be either affirmed or lowered in the near term. "We expect to resolve the CreditWatch after we gain greater clarity as to the new developments regarding the Stone Energy acquisition," said Standard & Poor's credit analyst Jeffrey Morrison. For Plains, the acquisition of Stone Energy could yield increased scale, further reserve diversification, and a more balanced production profile through the addition of faster-producing natural gas assets in the U.S. Gulf of Mexico. In addition, the acquisition would also increase Plains' presence in the U.S. Rockies. PLIANT CORP: All Voting Classes Approve Plan of Reorganization -------------------------------------------------------------- Pliant Corporation reported, on May 26, 2006, voting results for the company's proposed Plan of Reorganization. The results demonstrate overwhelming approval by all classes of creditors and shareholders entitled to vote on the Plan, including a majority in number of those voting in each creditor class. Among those who voted, results by amount for each class were: -- Revolving Credit Facility 100% approval -- 13% Senior Subordinated Notes 94%+ approval -- Intercompany Claims 100% approval -- Series A Preferred Stock 99%+ approval -- Series B Preferred Stock 100% approval -- Outstanding Common Stock 97%+ approval The results have been certified by the company's independent balloting agent and submitted to the U.S. Bankruptcy Court. The financial restructuring would significantly increase Pliant's free cash flow, significantly reduce the company's debt, and eliminate all existing mandatory redeemable equity through an exchange with the company's Series A Preferred shareholders, Series B Preferred shareholders, Outstanding Common Stockholders, and 13% Senior Subordinated Noteholders. All other creditor claims would be honored in accordance with their terms, including payment of all outstanding pre-petition trade vendor claims. "Many people have worked very hard to improve Pliant's balance sheet and free cash flow," Harold Bevis, President and CEO, said. "We are pleased that our Plan has received overwhelming approval by the company's creditors and shareholders. These voting results demonstrate strong support for our Plan, and keep Pliant on-track to gain court confirmation." A hearing to consider confirmation of Pliant's proposed Plan of Reorganization is scheduled for May 31, 2006 and, if the Plan is confirmed, the company expects to emerge from Chapter 11 shortly thereafter. About Pliant Corp. 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. Kenneth A. Rosen, Esq., at Lowenstein Sandler, P.C., serves as counsel to the Official Committee of Unsecured Creditors. Don A. Beskrone, Esq., at Ashby & Geddes, P.A., is local counsel to the Creditors' Committee. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. POGO PRODUCING: S&P Holds BB Corp. Credit Rating With Neg. Outlook ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating on oil and gas exploration and production company Pogo Producing Co. and removed the rating from CreditWatch with negative implications. The outlook is negative. As of March 31, 2006, Houston, Texas-based Pogo had $1.6 billion of debt outstanding. The rating affirmation incorporates Pogo's acquisition of Latigo's onshore long-lived Permian Basin properties as well as the anticipated sale of Pogo's 50% interest in its offshore Gulf of Mexico assets, which should improve Pogo's overall business risk profile. "The negative outlook incorporates Pogo's high debt leverage for the recent acquisitions combined with its most recent subpar operational results, high cost structure, and poor reserve replacement through the drill bit in 2005," said Standard & Poor's credit analyst Brian Janiak. Furthermore, Standard & Poor's said that it has heightened concern on the company's ability to successfully integrate the Northrock and Latigo acquisitions and improve operational results, while also meeting its increased capital expenditures and reducing its leverage to levels that are more appropriate for the current ratings. "Failure to do so over the next 12 months would warrant lower ratings," said Mr. Janiak. PULL'R HOLDINGS: Wants Robinson Diamant as Bankruptcy Counsel ------------------------------------------------------------- Pull'R Holdings LLC asks the U.S. Bankruptcy Court for the Central District of California for permission to employ Robinson, Diamant & Wolkowitz, as its bankruptcy counsel. Robinson Diamant will: a. provide the Debtor with legal advice and guidance with respect to its powers, duties, rights and obligations as a debtor-in-possession; b. assist in the preparation of a plan of reorganization, a disclosure statement for that plan, and all legal documents necessary; and c. perform additional legal services as required in the Debtor's chapter 11 case. Philip A. Gasteier, Esq., a member at Robinson Diamant, tells the Court that he bills $495 per hour for his services. Mr. Gasteier discloses that the Firm's attorneys and paralegals bill: Professional Hourly Rate ------------ ----------- Lawrence A. Diamant, Esq. $535 Edward M. Wolkowitz, Esq. $520 Irving M. Gross, Esq. $495 Douglas D. Kappler, Esq. $475 Sandford L. Frey, Esq. $490 Timothy J. Yoo, Esq. $445 Robyn B. Sokol, Esq. $430 Jeremy W. faith Esq. $340 Carmela Maria Z. Tan, Esq. $280 Todd A. Frealy, Esq. $280 Melanie C. Scott, Esq. $185 Yves Derac $175 Myrna R. Richardson $175 Ann Sokolowski $175 Mr. Gasteier assures the Court that his firm is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Gasteier can be reached at: Philip A. Gasteier, Esq. Robinson, Diamant & Wolkowitz 1888 Century Park East, Suite 1500 Los Angeles, California 90067 Tel: (310) 277-7400 Fax: (310) 277-7584 Headquartered in Santa Fe Springs, California, Pull'R Holdings LLC -- http://www.pullr.com/-- sell contractors' equipment and tools. They are known for brands such as Bucket Boss, Dead On Tools, and the Maasdam Pow'R-Pull line. The Company and its affiliate, Maasdam Pow'r Pull Inc., filed for bankruptcy protection on April 27, 2006 (Bankr. C.D. Calif. Case No. 06-11669). Lawrence Diamant, Esq., at Robinson, Diamant & Wolkowitz, APC, represent the Debtors in their restructuring efforts. An Official Committee of Unsecured Creditors has not yet been appointed. When the Debtors filed for bankruptcy, they reported $1 million to $10 million in total assets and $10 million to $50 million in total debts. Q TELEVISION: Signal Broadcasting Programming Terminated -------------------------------------------------------- On May 25, 2006, Triangle Multi-Media Limited (PINKSHEETS: QBID) and its wholly owned subsidiary the Q Television Network reported that Q Television Network is no more. Effective 5:30 p.m., Central time, the Q Television Network signal broadcasting programming was shut down. Previously, the entire Q Television Network staff had been terminated. Chairman and CEO Lloyd Fan stated that he was unable to secure funding for the network and therefore unable to meet the financial obligations of the company. "When I took over control of the network on March 7, 2006, the company was roughly 7 million dollars behind in payments to vendors; numerous lawsuits had been filed against the company and over $600,000 was owed to former employees. The financial challenges that the network faced proved too difficult and I was simply unable to turn around the network." Mr. Fan added, "Given the GLBT demographic and the success the network had experienced in distribution, I thought securing funding would be easy -- I was wrong. I am deeply disappointed that the network failed. Many talented people devoted themselves to saving the network and it is sad that it has come to this end. "I would like to thank the cable affiliates, our uplink provider, all the vendors and the staff that supported my takeover. I had hoped to make good on all the debts incurred and owed by the former management team and truly thought that the new team, with proper funding, could make Q Television Network a success. My sincere apologies to all individuals and businesses that have suffered because of their affiliation with Q Television Network." A full forensic accounting and bankruptcy proceedings will follow. About Q Television Network Headquartered in Burbank, California, Q Television Network -- http://www.qtelevision.com/-- is a 100% wholly owned subsidiary of Triangle Multi-Media Limited. This 24/7, premium television network is organized to create, develop and feature television programming for the gay and lesbian community, including live & interactive content every weeknight, plus sports, information and entertainment. While the company expects much of its subscriber base to be comprised of members of the gay and lesbian population, management also believes that quality programming about the gay and lesbian experience, designed to entertain, educate and inform, will attract many other segments of the viewing public. RAPID PAYROLL: Section 341(a) Meeting Scheduled for June 21 ----------------------------------------------------------- The U.S. Trustee for Region 16 will convene a meeting of Rapid Payroll, Inc.'s creditors at 10:00 a.m., on June 21, 2006, at 411 West Fourth Street, Room 1-159 in Santa Ana, California. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Orange, California, Rapid Payroll Inc., filed for chapter 11 protection on May 4, 2006 (Bankr. C.D. Calif. Case No. 06-10631). Jeffrey M. Reisner, Esq., at Irell & Manella LLP, represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets between $1 million and $10 million and estimated debts between $10 million and $50 million. REXNORD CORP: S&P Maintains B+ Rating & Revises Watch to Negative ----------------------------------------------------------------- Standard & Poor's Ratings Services held its ratings on Rexnord Corp., including the 'B+' corporate credit rating, on CreditWatch, but the implications have been revised to negative from developing. The ratings were originally placed on CreditWatch on Feb. 3, 2006, following the announcement of the company's plan to issue shares in an IPO. "Today's CreditWatch revision follows the announcement that Rexnord's current equity sponsor will sell the company to buyout firm Apollo Management LP for $1.8 billion in a leveraged transaction," said Standard & Poor's credit analyst Clarence Smith. Standard & Poor's will meet with management to discuss: * Rexnord's business strategy; * Prospects; * Liquidity; * anticipated capital structure; and * the impact each may have on the company's ratings. A review could result in a downgrade, or if leverage does not significantly increase, an affirmation of the existing ratings. Milwaukee, Wisconsin-based Rexnord manufacturers a broad range of mechanical power transmission components for the general industrial markets. The company had revenue of $1.1 billion for the fiscal year ended March 31, 2006. ROCK-TENN: Moody's Confirms Corporate Family Rating at Ba2 ---------------------------------------------------------- Moody's Investors Service confirmed Rock-Tenn Company's long term debt ratings and restored the outlook to stable. The rating action concludes a review initiated on February 13. In turn, "the review was prompted by ongoing margin pressure that, given the background of increased debt levels as a consequence of an acquisition that was completed last year, has caused credit protection measures to lag those appropriate for the current rating". In the interim, profit margins for companies such as Rock-Tenn that manufacture recycled fiber-based paperboard have stabilized as input costs for natural gas and old corrugated containers have moderated. In addition, very recent announcements indicate that the pace of relevant capacity rationalization has accelerated, suggesting that pricing pressure may also be abating. Lastly, Rock-Tenn has been rationalizing its' box plant network. This should also assist with margin improvement over time. With these factors, and given Rock-Tenn's commitment to debt reduction, Moody's expects Rock-Tenn's credit protection measures to stabilize in a range supportive of the existing ratings. Outlook actions: Outlook: Changed To Stable from Rating Under Review From Stable Rating confirmations: * Corporate Family Rating: Confirmed at Ba2 * Senior Unsecured Bank Credit Facility: Confirmed at Ba2 * Senior Unsecured Regular Bond/Debenture: Confirmed at Ba3 Headquartered in Norcross, Georgia, Rock-Tenn Company, provides marketing and packaging solutions to consumer products companies from operating locations in the United States, Canada, Mexico, Argentina and Chile. ROO GROUP: Losses & Negative Cash Flows Spur Going Concern Doubt ---------------------------------------------------------------- Moore Stephens, P.C., in New York, raised substantial doubt about ROO Group, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring losses and negative cash flows from operations. The Company reported a $8,957,000 net loss on $6,619,000 of revenues for the year ended Dec. 31, 2005. At Dec. 31, 2005, the Company's balance sheet showed $11,230,000 in total assets, $2,143,000 in total liabilities, and $89,000 in minority interest, and $8,998,000 in stockholders' equity. A full-text copy of the Company's 2005 Annual Report is available for free at http://ResearchArchives.com/t/s?9e5 ROO Group, Inc. -- http://www.roo.com/-- is a global provider of digital media solutions and technology that enables the activation, marketing and distribution of digital media video content over the Internet and emerging broadcasting platforms such as set top boxes and wireless. ROO offers turnkey video solutions for businesses seeking to improve their web presence with video broadcasts or broadcast their own latest video clips. ROO helps business advertise their latest offering with interactive advertising solutions, 15-30 second video commercials with a linked call to action and played simultaneously with topical video content in a television style format over the Internet. ROTECH HEALTHCARE: S&P Lowers Rating to B- With Negative Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Orlando, Florida-based home respiratory care and durable medical equipment and services provider Rotech Healthcare Inc. The corporate credit rating was lowered to 'B-' from 'B+'. The outlook is negative. "The rating action reflects additional concerns over the company's cash flows and the potential for further reimbursement cuts for some of Rotech's key drugs," explained Standard & Poor's credit analyst Alain Pelanne. This follows the rating action taken on April 21, 2006 (when the corporate credit rating was cut to 'B+' from 'BB-') after Rotech's announcement that new Medicare reimbursement rates for the chemical compounded budesonide would reduce the company's 2006 revenues by approximately $30 million. Rotech emerged from its parent's bankruptcy as an independent company in March 2002. The ratings reflect the company's more clouded operating prospects, given the greater-than-anticipated impact of Medicare reimbursement reductions for respiratory drugs in 2006. The ratings also reflect Rotech's narrow business focus, vulnerability to third-party reimbursement and regulatory reform, and severely weakened financial profile. These challenges are partially offset by the company's position as the third-largest provider in its niche industry segment. Rotech provides home respiratory care services (about 88% of revenues) and durable medical equipment (about 12%) to patients with breathing disorders. The company currently operates approximately 485 centers, principally in non-urban markets throughout the U.S. Rotech's lack of meaningful diversity across disease states exposes the company to changes in the respiratory care field, including reimbursement pressures. Medicare, Medicaid, and other federally funded programs constituted 67% of the company's reimbursement payors in 2005. SCRIP ADVANTAGE: Secured Creditors Forecloses Operating Assets -------------------------------------------------------------- Scrip Advantage, Inc., a publicly-traded California corporation that previously reported on April 6 that it was temporarily ceasing operations, reported that its secured creditors have exercised their legal rights and foreclosed on the operating assets of the company. The remaining assets of the company are a series of potentially valuable security claims related to unfunded subscription agreements. The board of directors negotiated funding from the secured creditors for legal counsel to research the value of these claims. SAI is now pursuing those claims for the benefit of the company by retaining a respected attorney experienced in such cases. The evaluation has begun and SAI will report back to the creditors and shareholders as the case progresses. About Scrip Advantage Headquartered in Fresno, California, Scrip Advantage, Inc. -- http://www.scripadvantage.com/-- is a specialized marketing company, selling gift certificates at a discount to face value to non-profit organizations, primarily parochial schools and sports leagues, for their fundraising efforts. SAI launched in February 1999 and exhibited a compound annual growth rate of 90% from June 2000 through 2004 when its annualized revenue approached $200 million. SEALY CORP: Improved Performance Cues S&P to Raise Rating to BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services raised all of its outstanding ratings on Trinity, North Carolina-based mattress and bedding products manufacturer Sealy Corp., including the corporate credit rating, which was raised to 'BB-' from 'B+'. The outlook is stable. Sealy Corp. had about $961 million of total reported debt at February 26, 2006. Standard & Poor's estimates the company has about $828 million of total reported debt pro forma for the recent IPO and subsequent debt reduction. "Our upgrade for Sealy reflects its stronger than anticipated credit protection measures from its continued strong operating performance, coupled with some debt reduction following its recent IPO," said Standard & Poor's credit analyst David Kang. While Standard & Poor's previously said it did not expect the proposed reduction in debt from its planned IPO to have a material effect on Sealy's credit protection measures, this, and the company's continued strong operating performance through its fiscal first quarter ended Feb. 26, 2006, resulted in credit protection measures stronger than the rating agency's previous expectations. Furthermore, the IPO gives Sealy greater access to equity capital and reduces its financial sponsor's ownership stake to just over 50%. Standard & Poor's expects management to adhere to a less aggressive financial policy over the intermediate term, specifically to maintain lease and pension-adjusted total debt to EBITDA in the 3x range. The speculative-grade ratings on Sealy Corp. reflect its narrow business focus and highly leveraged financial profile. Somewhat mitigating these factors are the company's well-recognized brands, leading market position, and the mattress industry's relatively stable demand and significant barriers to entry. (Sealy Corp. is the parent company of Sealy Mattress Co. For analytical purposes, Standard & Poor's views Sealy Corp. and Sealy Mattress Co. as one economic entity.) SKIN NUVO: Nevada Court Approves Amended Disclosure Statement ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Nevada approved the Amended Disclosure Statement explaining Skin Nuvo International, LLC, and its debtor-affiliates' Amended Joint Plan of Liquidation. The Debtors remind the Court that during their chapter 11 case, they have consummated the sale of substantially all of their tangible assets. The Debtors say that a portion of the sale proceeds have already been used to pay costs of administering their chapter 11 cases including the costs of maintaining the Debtors' respective business operations pending those sales. As a result, the Debtors will not have any business operation. Terms of the Plan The Plan provides for liquidation of the business and distributions of the cash sale proceeds in accordance with the priorities under the Bankruptcy Code. Under the plan, any remaining assets will also be liquidated and distributed, as will estate assets, including avoidance actions and other causes. The plan also appoints Greg Murray as chief executive officer of the Reorganized Debtor and will have the authority to take all actions necessary to effectuate the plan. Treatment of Claims Under the Plan, only Allowed Customer Claims are unimpaired. Allowed Customer Claims, estimated to be $12 million, will be paid the value of their claims in services to be provided by GRF Delaware MedSpa Holdings, LLC, which has assumed the obligation to provide those services. Allowed Priority Unsecured Claims will: (i) be paid in one cash payment on the later of: (1) the effective date (or as soon as reasonably practicable thereafter) and (2) 15 business days following the date the Claim is allowed by Final Order, or (ii) receive such other less favorable treatment that may be agreed upon in writing by the Chief Executive Officer and such holder. If cash is insufficient to pay Allowed Priority Unsecured Claims in full, the holders of these claims will be paid on a pro rata basis. If a Buyer has assumed a claim, the holder of the claim will look solely to the Buyer for payment and will receive nothing from the Debtors or the estates. Secured Creditors, holding an estimated $1.8 million of claims will have their collateral returned, except Syneron Inc. Deficiency in the claims will be treated as an Allowed General Unsecured Claim. Syneron will receive the return of the Syneron Equipment and will have an Allowed Secured Claim of $2,239,733.02 and an Allowed Unsecured Claim of $300,000. Allowed General Unsecured Claims, estimated to be $39 million, will receive a Pro Rata share of the Sale Proceeds and Estate Assets. Holders of General Unsecured Claims having claims of less than $50 will receive nothing under the plan. Allowed Insurance Claims, estimated to be $10 million, will receive a Pro Rata share of the Sale Proceeds and Estate Assets. Holders of Allowed Insurance Claims having claims of less than $50 will receive nothing under the plan. Allowed Customer Claims, estimated to be $12 million, will be paid the value of the claims in services to be provided by MedSpa. Holders of Allowed Subordinated Claims and Allowed Interests will receive nothing under the Plan. About Skin Nuvo Headquartered in Henderson, Nevada, Skin Nuvo International, LLC, dba Nuvo International, LLC, and dba A&E Aesthetics, LLC -- http://www.nuvointernational.com/-- specializes in offering progressive anti-aging treatments and top quality products and the first medical cosmetic company to launch a chain of retail skin care clinics in shopping malls throughout the United States. Keith M. Aurzada, Esq., at Hance Scarborough Wright Ginsberg & Brusilow, LLP and Nile Leatham, Esq. & James B. MacRobbie, Esq., at Kolesar & Leatham, Chtd., represent the Debtors. The Company and its debtor-affiliates filed for chapter 11 protection on March 7, 2005 (Bankr. D. Nev. Case No. 05-50463). When the Debtors filed for protection from their creditors, they estimated assets and debts of $10 million to $50 million. SOUTHERN UNION: Moves Schedule for Remarketing of 2.75% Sr. Notes ----------------------------------------------------------------- Southern Union Company reported that the remarketing of its 2.75% Senior Notes due Aug. 16, 2006, will be rescheduled to a subsequent remarketing period referenced in the forward stock purchase agreement. The initial remarketing period indicated in the forward stock purchase contract agreement was May 11, 2006. Southern Union issued $125 million aggregate principal amount of the 2.75% Senior Notes when it issued 2.5 million Equity Units in June 2003. Each Equity Unit currently consists of a $50 principal amount of the 2.75% Senior Notes and a forward stock purchase contract that obligates the holder to purchase Southern Union Company common stock on August 16, 2006. There is currently $125 million aggregate principal amount of the 2.75% Senior Notes outstanding. About Southern Union Southern Union Company (NYSE: SUG) -- http://www.sug.com/-- is engaged primarily in the transportation, storage and distribution of natural gas. Through Panhandle Energy, the Company owns and operates 100% of Panhandle Eastern Pipe Line Company, Trunkline Gas Company, Sea Robin Pipeline Company, Southwest Gas Storage Company and Trunkline LNG Company - one of North America's largest liquefied natural gas import terminals. Through CCE Holdings, LLC, Southern Union also owns a 50% interest in and operates the CrossCountry Energy pipelines, which include 100% of Transwestern Pipeline Company and 50% of Citrus Corp. Citrus Corp. owns 100% of the Florida Gas Transmission pipeline system. Through its local distribution companies, Missouri Gas Energy, PG Energy and New England Gas Company, Southern Union also serves approximately one million natural gas end-user customers in Missouri, Pennsylvania, Rhode Island and Massachusetts. * * * As reported in the Troubled Company Reporter on Feb. 27, 2006, Moody's Investors Service confirmed the Baa3 senior unsecured debt ratings of Southern Union Company with negative outlook and its transportation and storage subsidiary, Panhandle Eastern Pipe Line Company, LLC, with stable outlook. Moody's also confirmed the Ba2 rating on Southern Union Company's non-cumulative perpetual preferred securities. STIRLING COOKE: Scheme Creditors' Meeting Set on July 5 ------------------------------------------------------- The High Court of Justice, Chancery Division, set at 2:00 p.m. on July 5, 2006, as the meeting of all Scheme Creditors in Stirling Cooke Brown Insurance Brokers Limited's case to be held at Plumtree Court in London. All Scheme Creditors are requested to attend in person or by proxy. The Scheme Creditors will be asked to consider the approval of a Scheme of Arrangement pursuant to Section 425 of the Companies Act 1985. The Court has appointed Paul Anthony Brereton Evans, or "failing him" Dan Yoram Schwarzmann, to act as Chairman of the Scheme Meeting and directed Mr. Evans to report the result of the meeting to the Court. The proposed Scheme is available on the Company's Web site. Stirling Cooke Brown Insurance Brokers Limited -- http://www.stirlingcookebrown.co.uk -- was a medium sized Lloyds broker which operated in a number of areas including the U.S. Workers' Compensation insurance market. On July 17, 2003, the High Court of Justice, Chancery Division, appointed Paul Anthony Brereton Evans and Dan Yoram Schwarzmann as the Debtor's Joint Administrators. SURGILIGHT INC: March 31 Balance Sheet Upside Down by $925,230 -------------------------------------------------------------- SurgiLight, Inc., filed its first quarter financial statements for the three months ended March 31, 2006, with the Securities and Exchange Commission on May 19, 2006. The Company reported a $294,845 net loss with no revenue for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $5,060,530 in total assets, $4,135,300 in total liabilities, and $925,230 in total stockholders' equity. The Company's March 31 balance sheet also showed strained liquidity with $788,558 in total current assets available to pay $4,135,300 in total current liabilities coming due within the next 12 months. A full-text copy of the Company's financial statements for the three months ended March 31, 2006, are available for free http://ResearchArchives.com/t/s?9e1 Going Concern Doubt Richard L. Brown & Company, P.A., in Tampa, Florida, raised substantial doubt about SurgiLight, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's losses from operations and accumulated deficiency. SurgiLight, Inc., sells ophthalmic lasers and related products and services based on its own and licensed intellectual property, primarily for use in refractive and presbyopia procedures. SYBRON DENTAL: Closed Acquisition Cues S&P to Withdraw BB+ Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services removed its ratings on Sybron Dental Specialties Inc. and Sybron Dental Management Inc. from CreditWatch (including the 'BB+' corporate credit rating) and subsequently withdrew them. The ratings were placed on CreditWatch with positive implications April 12, 2006, following the announcement that Danaher Corp. was acquiring Sybron. The ratings were withdrawn due to the closing of the acquisition. TENSAR CORP: Tensar Group Acquisition Cues S&P to Affirm B- Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings on Atlanta, Georgia-based Tensar Corp. (B-/Stable/--). The affirmation follows the acquisition by Tensar's affiliate, TCO Funding Corp., of unrated Tensar Group Ltd. and its subsidiaries, including Tensar International Ltd. for approximately $ 130 million. Standard & Poor's also affirmed TCO's 'B-' bank loan rating. The acquisition will be financed with: * proceeds from TCO's incremental $55 million first-lien term loan; * a $26.5 million add-on to TCO's unrated-second-lien notes; * a $16.5 million add-on to the payment-in-kind subordinated notes at unrated TCH Funding Corp.; and * an equity contribution of about $40 million to be made to Tensar's parent company, unrated Tensar Holdings Inc. TCO, a special-purpose entity formed for the sole purpose of entering into the credit agreement and a sale-leaseback arrangement with Tensar, will then lease the TIL assets back to a Luxembourg-based subsidiary of Tensar (Luxco) pursuant to a $55 million lease/purchase agreement. This structure is similar to the company's current financing. At March 31, 2006, pro forma for the acquisition of TIL, Tensar had total debt, including capitalized operating leases, of $389 million. "The affirmation reflects our assessment that, although the acquisition of TIL, based in the U.K., provides Tensar with greater geographic diversity and the ownership of key patents that were previously licensed, the company will remain very highly leveraged, with pro forma debt to EBITDA of more than 6x," said Standard & Poor's credit analyst Kenneth L. Farer. "In addition, Tensar will continue to have a small sales base relative to its total debt burden, modest product diversity, limited liquidity, and a small number of production facilities." Tensar primarily converts polyethylene and polypropylene materials into structural products that stabilize soil, provide building and roadway foundation support, and control erosion. Favorable industry demand should lead to higher volumes and good operating profitability for Tensar over the near term. "However," Mr. Farer said, "we could revise the outlook to negative if rising raw-material costs, competitive pricing pressures, or a slowdown in construction activity squeezes earnings and cash flow, if capital spending results in tighter liquidity than expected in 2006, or if performance deteriorates because of issues associated with the integration of Tensar and TIL. We could revise the outlook to positive if the company's products gain greater acceptance or do so at a pace faster than we currently incorporates in our ratings, leading to a slightly improved business profile, stronger cash flow, and meaningful debt reduction." THINKPATH INC: Posts $371,656 Net Loss in 2006 1st Fiscal Quarter ----------------------------------------------------------------- Thinkpath Inc. filed its first quarter financial statements for the three months ended March 31, 2006, with the Securities and Exchange Commission on May 19, 2006. The Company reported a $371,656 net loss on $2,910,314 of revenues for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $5,278,705 in total assets, $3,622,725 in total liabilities, and $1,655,980 in total stockholders' equity. The Company's March 31 balance sheet also showed strained liquidity with $1,979,782 in total current assets available to pay $3,080,921 in total current liabilities coming due within the next 12 months. A full-text copy of the Company's financial statements for the three months ended March 31, 2006, are available for free at http://ResearchArchives.com/t/s?9e2 Going Concern Doubt As reported in the Troubled Company Reporter on May 16, 2006, Schwartz Levitsky Feldman LLP, Chartered Accountants, in Toronto, Ontario, Canada, raised substantial doubt about Thinkpath Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the years ended Dec. 31, 2005, and 2004. The auditor pointed to the Company's recurring losses from operations and negative working capital. Thinkpath Inc. (OTCBB: THTHF) is a global provider of technological solutions and services in engineering knowledge management, including design, drafting, technical publishing, and consulting. Thinkpath enables corporations to reinvent themselves structurally; drive strategies of innovation, speed to market, globalization and focus in new and bold ways. TRINITY INDUSTRIES: Moody's Holds Corporate Family Rating at Ba2 ---------------------------------------------------------------- Moody's Investors Service affirmed the corporate family rating of Trinity Industries, Inc. at Ba2, and changed the rating outlook to positive. In related rating actions, Moody's assigned a Ba2 rating to the bank credit facility due 2010, and raised the senior unsecured rating to Ba2 from Ba3. In Moody's view, Trinity is well positioned to accelerate near term profit growth given its record backlog of railcar orders, combined with the ability to now pass through to customers the sharp increases in steel prices that has restrained margin expansion. Just to deliver the backlog in place, Trinity's manufacturing capacity will likely operate near full capacity through mid 2007 at least. Trinity Industries is the largest rail car builder in the North American market; railcar demand is sharply cyclical and the Ba2 corporate family rating heavily weighs the impact of cycles on the company's profits and cash flow. Free Cash Flow is expected to be considerably negative during the current up-cycle as Trinity is likely to provide customer financing for up to half of the deliveries from the backlog. Growth in the lease portfolio is expected to be debt funded. The long-term nature of the leases being added should add to cash flow stability, although the ability to improve portfolio quality could be challenged during a rapid expansion. The change to a positive outlook anticipates a meaningful near- term increase in profitability from the railcar manufacturing unit together with stronger earnings contribution from its non-railcar business, and steady growth in lease revenue. Trinity should be able to produce peak-cycle profitability with solid debt protection measures. Debt is expected to increase to support core business objectives of financing a portion of Trinity's own manufacturing production, rather than any material shareholder enhancement programs or acquisitions. The positive outlook also anticipates Trinity will maintain high quality alternate liquidity, through a substantial committed bank credit agreement and warehousing facility. The rating could be raised if Trinity can demonstrate discipline in the debt financed expansion of its leasing portfolio to preserve debt to EBITDA below 4.0 times and sustain EBIT to Interest Expense greater than 4.5 times over the cycle, and maintain very strong alternate liquidity to carry the company through the next down-cycle in the railcar production. The rating could be pressured downward if any expansion plans are meaningfully away from its core business of building and financing railcars, or if adequate returns do not materialize during the current up-cycle, resulting in a decline in the EBITDA margin. The senior unsecured rating was raised one notch to the corporate family rating of Ba2 to reflect that the senior unsecured notes are no longer effectively subordinated to the bank credit facilities. Earlier, the bank syndicate released the collateral in exchange for a reduction in the leverage test, and the bank facility is no longer secured. The senior unsecured notes and the bank credit facility now rank equally in priority of claim, and both benefit from upstream guarantees from Trinity's domestic subsidiaries. Ratings affected Trinity Industries, Inc. corporate family rating affirmed at Ba2; senior unsecured to Ba2 from Ba3; bank credit facility due 2010 assigned at Ba2, and rating of the refinanced bank agreement withdrawn Trinity Industries, Inc., based in Dallas, Texas, is the largest North American builder of rail cars, has interests in barge construction and highway construction, and owns and manages a portfolio of leased railroad cars. UNITED COMPONENTS: Earns $4.8 Million During 2006 First Quarter --------------------------------------------------------------- United Components, Inc., reported results for the quarter ended March 31, 2006. Revenue increased to $263.7 million, 7.4% over the year-ago quarter, with increases in the retail, heavy duty and original equipment sales channels and declines in the traditional and original equipment service channels. Net income for the quarter was $4.8 million, up from $2.7 million for the first quarter of 2005. Earnings before interest, taxes, depreciation and amortization, or EBITDA, as adjusted pursuant to the company's credit agreement for its senior credit facilities, was $29.5 million for the first quarter, an increase of 19.9% over EBITDA of $24.6 million for the year-ago quarter. "We are extremely pleased with our strong start to 2006," said Bruce Zorich, Chief Executive Officer of UCI. "We saw some very tangible results this quarter from the investment we've made throughout 2005, and continue to make, in revenue and profitability initiatives." "Our new business development efforts were reflected in our first quarter revenue improvement, particularly in the retail channel," continued Zorich. "And our operational improvements helped to offset the continuing increases in raw material and energy costs." UCI continues to work toward completing its previously announced acquisition of ASC Industries, Inc. The regulatory clearance necessary for the transaction has been obtained, and the company currently anticipates completing the acquisition by the end of May 2006. UCI plans to fund the acquisition through an amendment to its existing senior credit facilities, including additional borrowings of approximately $115 million. UCI generated $18.9 million of cash in the quarter, ending the quarter with $45.1 million in cash. As of March 31, 2006, the company's debt stood at $443 million, down from $581 million in June 2003 when the acquisition occurred. About United Components United Components, Inc. -- http://www.ucinc.com/-- is among North America's largest and most diversified companies servicing the vehicle replacement parts market. The company supplies a broad range of products to the automotive, trucking, marine, mining, construction, agricultural and industrial vehicle markets. The company's customer base includes leading aftermarket companies as well as a diverse group of original equipment manufacturers. * * * As reported in the Troubled Company Reporter on April 26, 2006, Moody's Investors Service lowered the ratings of United Components, Inc. -- Corporate Family, to B2 from B1; senior secured revolving credit to B2 from B1, and senior subordinated notes, to Caa1 from B3. Moody's also assigned a B2 rating to the company's new $330 million senior secured term loan D. The downgrade reflected Moody's expectation that UCI's credit metrics, which eroded during 2005 as a result of higher raw material costs, lower production volumes, other product mix issues will come under further pressure with the acquisition of water pump manufacturer ASC Industries, Inc. As reported in the Troubled Company Reporter on April 24, 2006, Standard & Poor's Ratings Services lowered its corporate credit rating on United Components Inc. to 'B+' from 'BB-' and its rating on UCI's $230 million senior subordinated notes to 'B-' from 'B'. Standard & Poor's also assigned its 'BB-' rating to UCI's proposed $330 million term loan D senior secured credit facility and assigned a recovery rating of '1'. The ratings were removed from CreditWatch, where they had been placed on March 9 with negative implications. USG CORP: Wants to Enter into $2.8-Bil. Exit Financing Facilities ----------------------------------------------------------------- USG Corporation and its debtor-affiliates determined that they require senior credit facilities to meet potential obligations under their first amended joint plan of reorganization after reaching an agreement with the Official Committee of Asbestos Personal Injury Claimants and Dean Trafelet, the representative for future asbestos claimants their cases. Payments Due Under the Plan Pursuant to the Asbestos PI Agreement, the Debtors will create and fund a trust pursuant to Section 524(g) of the Bankruptcy Code, which will assume all of the Debtors' current and future asbestos- related personal injury liabilities. In addition to the payments to the PI Trust, the Debtors' Plan potentially provides to creditors approximately $5,500,000,000 of cash payments, which include in excess of $2,500,000,000 on or after the Plan's effective date. Around $900,000,000 will be paid to the PI Trust and the remainder will be used to make principal and postpetition interest payments to the Debtors' general unsecured, non-asbestos related creditors, as well as any payments required to be made to holders of asbestos property damage claims. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, tells the Bankruptcy Court that should the legislation creating a national trust or similar fund not be enacted on or before the date that is 10 days after final adjournment sine die of the 109th Congress of the United States, or should it be enacted but not survive constitutional challenge, the Debtors will be required to make additional cash payments into the PI Trust of $3,050,000,000 over a six-month period. As of March 31, 2006, the Debtors and their non-Debtor affiliates had a $1,500,000,000 cash balance on a consolidated basis. In addition, the Debtors expect to raise $1,800,000,000 from the proceeds of a rights offering made to their existing shareholders. According to Mr. DeFranceschi, the Debtors' cash-on-hand and the proceeds of the Rights Offering will provide sufficient liquidity to allow the Debtors to satisfy their Plan obligations as of the Effective Date. Should the Asbestos Legislation not be enacted by the Expiration Date or if it does not survive constitutional challenge, however, the Debtors will require approximately $2,100,000,000 of additional cash to make payments under the Plan. USG Wants Access to More Cash The Debtors contemplate entering into a Term Loan Facility, which allows them to borrow up to $1,000,000,000. The Debtors will use the proceeds to satisfy, in part, their obligations under a $3,050,000,000 contingent payment note to the PI Trust. The Debtors also plan to enter into a Tax Bridge Facility, which will provide a $1,150,000,000 bridge loan, to satisfy, together with the Term Loan Facility, the Debtors' obligations under the Contingent Note. The Debtors expect to receive tax refunds equal to $l,100,000,000 as a result, in part, of payments made to the PI Trust. The proceeds of those refunds will be used to repay the borrowings under the Tax Bridge Facility. Commitment and Fee Letters The Debtors seek the Bankruptcy Court's authority, pursuant to Section 363(b) of the Bankruptcy Code, to: (i) incur obligations under and accept the terms of: (a) a commitment letter, dated May 12, 2006, including a term sheet among USG Corporation and JPMorgan Chase Bank, N.A., J.P. Morgan Securities, Inc., and Goldman Sachs Credit Partners LP; (b) a fee letter, dated May 12, 2006, among USG and the Commitment Parties; and (c) an administrative agent fee letter, dated May 12, 2006, between USG and JPMorgan; and (ii) grant the liens, if necessary, contemplated by the Commitment Letter and the Fee Letters and otherwise perform their obligations. Subject to the Commitment Parties Fee Letter, the principal terms of the Exit Financing Facilities are: (1) Borrower, Guarantors, and Lenders USG Corporation will act as the borrower and its material domestic direct and indirect subsidiaries will serve as the guarantors. JPMorgan, as the administrative agent, and Goldman Sachs will syndicate a group of lenders acceptable to the administrative agent and USG. J.P. Morgan Securities and Goldman Sachs will be the co-lead arrangers and joint bookrunners. (2) Revolving Credit Facility The parties agree to a $650,000,000 revolving credit line, with a sub-limit of $250,000,000 for letters of credit, and a swingline facility under which USG may make short- term borrowings of up to an amount to be agreed upon. Two options -- either competitive advance or revolving credit -- will be available under the Revolving Credit Facility. Maturing on the fifth anniversary of the Closing Date, the Revolving Facility Commitments and any outstanding Revolving Credit loans are not subject to amortization and mandatory prepayments. (3) Term Loan Facility A term loan will be made to USG in a single drawing in a principal amount of up to $1,000,000,000 -- at USG's request to be made by January 31, 2007. In the event the Asbestos Legislation has been enacted but remains subject to a challenge, the Draw Period Expiration Date may be extended, at USG's option, for successive six-month periods, but in no event may be extended to a date occurring after the second anniversary of the Closing Date. The Term Loans will mature on the fifth anniversary of the Closing Date. If, on the Closing Date, USG's corporate credit ratings are lower than Bal or BB+ by Moody's and Standard & Poor, the Term Loan Facility will amortize in equal quarterly installments of 1% of the original principal amount of the Term Loan Facility per annum, with the balance becoming due and payable on the Term Loan Maturity Date. Otherwise, the entire unpaid principal balance of the Term Loan Facility will be due and payable on the Term Loan Maturity Date. USG may be required to make prepayments from the net cash proceeds of assets sales and issuances of debt obligations, and a portion of excess cash flow, to the extent provided in the Term Sheet. There will be no premium, penalty or fee for any voluntary or mandatory prepayment of the Term Loan. (4) Tax Bridge Facility A term loan will be made to USG in a single drawing in a principal amount of up to $1,150,000,000 upon USG's request made by the Draw Period Expiration Date. In the event, however, that the Asbestos Legislation has been enacted but remains subject to a Challenge, the Draw Period Expiration Date may be extended, at USG's option, for successive six-month periods, but in no event may be extended to a date occurring after the date that is 18 months after the Closing Date. The entire unpaid principal balance of the Tax Bridge Loan will be due and payable in a single installment on the date that is two years and six months after the Closing Date. USG may be required to make prepayments from the net cash proceeds of assets sales and issuances of debt obligations and a portion of excess cash flow, as and to the extent provided in the Commitment Letter. USG will also be required to prepay the principal of the Tax Bridge Loan with, and in the amount of, federal income tax refund proceeds received by USG as a result of payments made to the PI Trust, within 15 days after USG's receipt. There will be no premium, penalty or fee for any voluntary or mandatory prepayment of the Tax Bridge Loan. (5) Interest Borrowings under the Revolving Credit Facility will bear interest, at the Debtors' option, based on either in the case of: -- competitive advance option, at rates obtained from bids selected through the administrative agent's standard CAF auction procedures; or -- Revolving Loans, the applicable LIBOR Spread or ABR Spread indicated in a pricing grid on the Term Sheet plus the current LIBOR or ABR, as applicable. Borrowings under the Term Loan Facility and the Tax Bridge Facility will bear interest based on the applicable LIBOR Spread or ABR Spread provided in the Pricing Grid plus the current LIBOR or ABR, as applicable. (6) Fees These fees, to be determined based on the Pricing Grid, will accrue and be payable from and after the Closing Date: * a Revolving Facility Fee, * an undrawn Term Loan Ticking Fee, * undrawn Tax Bridge Loan Ticking Fee, and * an undrawn Letter of Credit Fee. (7) Security If, on the Closing Date, USG's corporate credit ratings are Bal or better and BB+ or better by Moody's and S&P, the facilities will be unsecured. Otherwise, all amounts will be secured by a perfected first priority pledge of all the capital stock of any material subsidiary held by USG or any Guarantor. In the case of capital stock of any foreign subsidiaries, that pledge will not include more than 65% of the voting stock of a foreign subsidiary. (8) Events of Default The Exit Financing Facilities are subject to events of default customarily found in loan agreements as more fully described in the Term Sheet. (9) Representations, Warranties and Covenants Customary representations, warranties, and affirmative and negative covenants for exit financing is more fully described in the Term Sheet. In addition, these financial covenants on a consolidated basis apply: -- if USG's corporate credit ratings on the Closing Date are Baa3 and BBB or better by Moody's and S&P, a Total Debt to Capitalization Ratio not to exceed 0.65:1.00, otherwise a maximum leverage ratio not to exceed 4.50:1.00; -- minimum interest coverage ratio not to be less than 2.00:1.00; and -- if USG's corporate credit ratings on the Closing Date are lower than Bal or BB+ by Moody's and S&P, annual capital expenditures not to exceed $630,000,000, subject to one-year carryover provisions to be agreed. (10) Indemnification USG will indemnify the lenders, arrangers, agents and their affiliates and their officers, and other individuals and hold them harmless from and against all claims and damages of any indemnified person arising out of or relating to the Plan. (11) Reimbursement of Expenses USG will reimburse: -- all reasonable out-of-pocket expenses associated with the syndication of the Exit Financing Facilities and the preparation, execution and delivery, administration, waiver or modification and enforcement of a Credit Agreement; and -- costs and documentary taxes associated with the Exit Financing Facilities. (12) Conditions to the Commitment The Commitment Letter provides that the commitments of the arrangers is subject to: (i) prior to and during the syndication of the Exit Financing Facilities, no competing issues of USG or its subsidiaries' securities or credit facilities that could impair the syndication of the Exit Financing Facilities; (ii) a reasonable syndication period of not less than 30 days following the date on which the Commitment Parties receive the confidential information Memoranda, as defined in the Commitment Letter; (iii) Plan consummation, without any modification that is materially adverse to the Lenders without the arrangers' consent; (iv) USG's having received no less than $1,700,000,000 gross cash proceeds from the Rights Offering; and (v) there not having occurred any change or proposed change in applicable law or regulation that could reasonably be expected to materially and adversely affect the availability or amount of the anticipated federal tax refund the Debtors expect to receive as a result of the funding of the PI Trust under the Plan. (13) Conditions to Closing The effectiveness of the Exit Financing Facilities and Funding on the Closing Date will be subject to satisfaction of these conditions: (i) The Administrative Agent will have received a certified copy of a Bankruptcy Court order confirming the Plan, which will be consistent in all material respects with the Commitment Letter and the Fee Letters. The Confirmation Order will be valid and continuing and will not have been reversed, modified or amended in a manner that is materially adverse to the Lenders without the arrangers' consent. If subject to appeal, the Confirmation Order will not have been stayed pending that appeal. (ii) JPMorgan will have received either the Confirmation Order or a copy of Bankruptcy Court order issued contemporaneously with the Confirmation Order, in either case, granting the Debtors' financing request. (iii) On or before 120 days after the entry of the Confirmation Order, all conditions precedent to the confirmation of the Plan and the Effective Date will have been met, the Effective Date will have occurred or will be scheduled to occur, and the Plan and the financing authorization will be in full force and effect. The Commitment Letter provides, among other things, that on or before the closing of the Exit Financing Facilities, the Commitment Parties will have received a copy of a Court order granting the Debtors' request. No fees or expenses are due and payable under the Commitment Letter or the Fee Letters until the Closing Date, which is anticipated to occur after the Effective Date. A full-text copy of the Commitment Letter is available at no charge at http://bankrupt.com/misc/usgdebtorscommitmentletter.pdf Consummation of Exit Financing Facilities is Necessary The Debtors assert that the entry into the Commitment Letter and the Fee Letters with the Commitment Parties and the ultimate consummation of the Exit Financing Facilities is in the best interests of their estates and creditors because: (a) the Debtors require a binding commitment for the Exit Financing Facilities to implement the Plan's terms and to reorganize successfully; and (b) the Debtors' estates require the availability of additional funding to meet potential Plan obligations should the Asbestos Legislation not be enacted by the Expiration Date or should it be enacted but not survive constitutional challenge. The Debtors further insist that the payment of the fees provided in the Fee Letters is reasonable under the circumstances and is consistent with similar commercial lending transactions. USG Wants to File Fee Letters Under Seal The Debtors seek Judge Fitzgerald's permission to file the Fee Letters under seal because they contain highly confidential commercial information. Paul Heath, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, discloses that the Commitment Parties Fee Letter contains provisions allowing the arrangers to increase the interest rates and fees to ensure a successful syndication of the Exit Facilities. Mr. Heath contends that the public disclosure of the terms of the Pricing Flex and the circumstances under which they are operative would likely impair the arrangers' and the Debtors' ability to syndicate the Exit Facilities at the more favorable pricing levels, to the detriment of both the Debtors and their other creditors. 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. 111; Bankruptcy Creditors' Service, Inc., 215/945-7000) VERIDIEN CORP: March 31 Balance Sheet Upside Down By $5.9 Million ----------------------------------------------------------------- Veridien Corporation filed its first quarter financial statements for the three months ended March 31, 2006, with the Securities and Exchange Commission on May 19, 2006. The Company reported a $347,272 net loss on $155,123 of revenues for the three months ended March 31, 2006. At march 31, 2006, the Company's balance sheet showed $1,642,353 in total assets, $7,495,341 in total liabilities, and $125,968 in minority interest, resulting in a $5,978,956 stockholders' deficit. The Company's March 31 balance sheet also showed strained liquidity with $887,346 in total current assets available to pay $4,534,530 in total current liabilities coming due within the next 12 months. A full-text copy of the Company's financial statements for the three months ended March 31, 2006, are available for free at http://ResearchArchives.com/t/s?9e0 Going Concern Doubt Malone & Bailey, PC, in Houston, Texas, raised substantial doubt about Veridien Corporation's ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring losses from operations, negative cash flow from operations, and accumulated deficit. Veridien Corporation - http://www.vrde.com/-- is a life sciences company, focused on infection control, healthy lifestyle products and diagnostic products. Over the Company's history it has invented, developed and patented its own unique products, sourced and marketed inventive products developed by others and in more recent times partnered with innovative pioneers to pursue development of proprietary technology. VILLAJE DEL RIO: Files Schedules of Assets and Liabilities ---------------------------------------------------------- Villaje Del Rio, Ltd., delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the Western District of Texas disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $581 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $25,528,073 E. Creditors Holding Unsecured Priority Claims F. Creditors Holding $1,647,792 Unsecured Nonpriority Claims ---- ----------- Total $581 $27,175,865 Headquartered in San Antonio, Texas, Villaje Del Rio, Ltd., is a real estate developer. The company filed for chapter 11 protection on May 1, 2006 (Bankr. W.D. Tex. Case No. 06-50797). Eric J. Taube, Esq., at Hohmann, Taube & Summers, L.L.P., represents the Debtor. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it estimated assets of less the $50,000 and estimated debts between $10 million and $50 million. VISTEON CORP: S&P Assigns B+ Rating to New $800 Million Term Loan ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' bank loan rating and recovery rating of '2' to Visteon Corp.'s new seven- year $800 million term loan, indicating the expectation for substantial (80%-100%) recovery of principal in the event of a payment default. The proceeds from the new term loan will be used to: * pay off two existing term loans totaling $591 million; and * to repay borrowings under its revolving credit facility. The revolving credit facility will be downsized to $500 million from $772 million. In addition, Standard & Poor's affirmed its 'B+' long-term and 'B- 2' short-term corporate credit ratings on the global automotive supplier. Van Buren Township, Michigan-based Visteon has total debt of $2.3 billion, and underfunded employee benefit liabilities of about $1.7 billion. The rating outlook is negative. In separate transactions expected to occur in the next few months, Visteon will establish two new five-year revolving credit facilities for the U.S. and Europe totaling $700 million, and cancel its existing revolving credit facility. The new revolving credit facilities will be unrated. The new financing transactions will improve Visteon's liquidity and financial flexibility. "But these improvements are more than offset by the business challenges Visteon faces as it attempts to improve its poor earnings and cash flow amid difficult industry conditions," said Standard & Poor's credit analyst Martin King. Although Visteon's first quarter results were stronger than expected, margins remain very low. Visteon's financial performance should improve during the next few years as it gains the benefits from various restructuring actions, but Standard & Poor's expects profits to remain low and cash flow generation to be neutral or negative during the next year. In addition, Visteon's performance is dependent upon conditions in the automotive industry, which remains unsettled after several years of turmoil. WARNER MUSIC: Fitch Assigns BB- Issuer Default Rating ----------------------------------------------------- Fitch assigned initial ratings on Warner Music Group Corp. and its subsidiaries: Warner Music Group: -- Issuer Default Rating 'BB-' WMG Acquisition Corp: -- IDR 'BB-' -- Secured 'BB' -- Subordinated 'B+' WMG Holdings Corp: -- IDR 'BB-' -- Unsecured 'B' The Rating Outlook is Stable. The ratings are supported by: * the company's global footprint; * diversified and established content library; * solid credit metrics; * leadership in the digital music space; * adequate liquidity position; and * strong covenant package that gives creditors a substantial amount of control over leverage, dividends and event risk. Credit concerns include: * substantial challenges facing the music industry related to piracy; * substantial returns of capital and dividends to the company's equity sponsors prior to its public offering; and * Fitch's belief that equity returns will continue to be a major focus from the Board of Directors. In addition, while acquisition risk remains a concern, Fitch believes this risk is somewhat mitigated by lender covenant controls and the likelihood that any acquisition will be cash flow positive. Credit concerns also include the company's internal controls weakness related to financial reporting. The Stable Outlook is supported by: * the company's adequate liquidity position; * recent stabilization of industry sales; * the increasing proliferation and acceptance of legitimate online music sites; and * WMG's early success within the digital music landscape. According to the IFPI, total industry global recording sales for the year-ended 2005 were relatively flat versus 2004 at approximately $33.5 billion. While total retail sales have dropped significantly from its peak in the late 1990s, overall sales are stabilizing as digital downloads are starting to offset a large portion of decreases in recorded physical sales. Digital music sales for the industry nearly tripled in 2005 to $1.1 billion. To date, there are over 300 legitimate global online sites that allow the consumer to download music onto a computer and/or portable device, as well as mobile downloads available in select countries. The continued acceptance of these sites benefits the music content owners (e.g., Warner Music) as it results in additional outlets for them to distribute their content at no additional fixed cost. However, despite a successful global campaign over the last few years to promote consumer awareness, as well as positive court rulings in the second half of 2005, Fitch believes piracy will continue to be a major issue for the music industry over the long- term. Fitch also recognizes the risk related to pricing and infrastructure uncertainties as the industry continues to transition to an increasingly digital business model. Fitch believes the company's credit metrics and financial policies are consistent with a 'BB-' IDR. The company's cash debt service ratio (defined as EBITDA divided by cash interest expense and principal debt amortization) of approximately 3.5x is appropriate for the rating; however, Fitch expects consolidated cash interest at WMG to increase beyond the next three to four years as WMG Holdings is required to pay annual cash interest of approximately $25 million beginning June 2010. However Fitch believes the company's cash debt service ratio should still remain strong as future growth in operations should be able to offset increases in interest expense. Fitch calculates EBITDA for the latest twelve month period ended March 31, 2006 at approximately $505 million with a total gross leverage (including WMG Holdings discount notes) of approximately 4.4x based on consolidated debt of $2.2 billion. Fitch assesses the company's liquidity position based on the operating entity, WMG Acquisition Corp. As such, liquidity is adequate and comprises $338 million of cash and marketable securities at March 31, 2006 and available credit revolver of $248 million ($250 million revolver less $2 million outstanding letters of credit). Liquidity is also supported by free cash flow which Fitch estimates will be in excess of $100 million annually after deducting for common dividends. The company's credit revolver matures February 2010. Due to low capital expenditure requirements, the company's cash from operations divided by capital expenditures is strong at approximately 9x. The company's bank debt contains strict covenants related to change of control, financial metrics, additional indebtedness and dividends, which Fitch believes substantially reduce financial and event risk for these lenders. This includes a maximum net leverage covenant that decreases from 4.75x at year-end 2007 to 3.5x in 2010. For the twelve month period ended March 31, 2006, Fitch estimates this ratio as calculated by the covenants to be approximately 3.9x. The indenture related to WMG Acquisition Corp.'s subordinated notes have a cross-acceleration feature with the bank debt and contain less-restrictive covenants related to change of control and additional indebtedness, which Fitch does not believe provides a significant amount of creditor protection. The indenture does, however, provide adequate protection related to dividends out of WMG Acquisition Corp. Further, WMG Holdings Corp.'s indenture for the unsecured notes provides fairly limited restrictions on additional indebtedness, change of control and dividends, all mainly governed by a 2x minimum fixed charge coverage. WESTLAND HOLDINGS: Moody's Puts Low-B Rating on Planned Term Loans ------------------------------------------------------------------ Moody's Investors Service assigned first-time ratings to Westland Holdings, LLC, including a B1 to the proposed first-lien senior secured term loan, a B2 to the proposed second-lien senior secured term loan, and a B2 corporate family rating. The rating outlook is stable. The stable rating outlook is based on Moody's expectation that the funds set aside in the interest reserve account plus the cash from the transaction to be used for general corporate purposes will carry Westland, an Albuquerque, New Mexico-based land development company, through its initial ramp up phase until it becomes free cash flow positive in 2009. Westland is a new, separate entity being established by Jim Rhodes, owner of The Rhodes Companies, LLC, to acquire Westland Development Company, Inc. and its 55,000 acres of developable land near the central business district of Albuquerque, New Mexico. The ratings reflect the necessary ramp up period before Westland can become free cash flow positive; the considerable geographic concentration of the company; its non-investment grade ownership/sponsorship; that the majority of future lot sales are not yet under contract; that approximately $62 million of the $175 million first-lien term loan and the entire $50 million of the second-lien term loan will need to be refinanced at or before their respective maturity dates; the absence of a separate revolving credit facility that would bolster liquidity; and the cyclical nature of the land development business. At the same time, the ratings acknowledge the significant underlying asset value in the transaction; the opportunity to develop the largest single block of privately-held land in the fast-growing Albuquerque metropolitan market area; and the successful track record of Jim Rhodes and The Rhodes Companies, LLC in the Las Vegas market in developing large tracts of land into successful master-planned communities. The rating assignments: * B1 on the $175 million, 5.5-year, first-lien senior secured term loan; * B2 on the $50 million, 6.5-year, second-lien senior secured term loan; and * B2 corporate family rating. In the past two years, Moody's has rated a large number of land development transactions in which the corporate family ratings have ranged from a low of B3 to as high as Ba2. There are at least four characteristics that distinguish the projects rated in the Ba category from those that were placed in the B category: (i) Sponsorship/ownership -- In the case of the Ba rated projects, some or most of the sponsor/owners were rated investment grade, including some as high as Aaa. The B rated projects have tended to have all or a substantial majority of non-investment grade sponsorship/ownership. By this measure, Westland falls into the B category. (ii) Presales vs. spec sales -- The Ba rated projects have tended to have substantially all, or even 100%, contractual advance sales of the lots to be developed, generally to strong counterparties. The B rated projects have tended to rely largely on spec sales of the lots that were being developed. While Westland does have some lot sales in backlog, most of its potential future lot sales are not under contract, thus placing it again in the B category by this measure. (iii) Inflection point in the development cycle -- The higher rated projects have either been at, or close to, the inflection point in their development cycles, with sharply positive free cash flow generation close at hand. The lower rated projects have tended to have inflection points that were several years away. Westland will not be free cash flow positive until 2009. By this measure, the company again falls into the B category. (iv) Capital withdrawals -- The higher rated projects have not had dividends as part of the rated transaction, i.e., there was no return of a substantial portion of the invested capital. The lower rated ones have had, in most cases, substantial dividends paid out as part of the transaction. Westland will not be withdrawing any capital as part of this transaction, placing it into the Ba category by this measure. The overwhelming majority of land transactions rated by Moody's that were in the B category were rated B2, as is Westland. For Westland to have received a B1 rating, it would have needed more of the Ba characteristics listed above or it would have had to have possessed some of the characteristics of the B1 rated homebuilders, such as size, scale, diversification, measurable tangible net worth, and a solid track record. Going forward, the ratings could benefit from a more rapid sale of lots and at higher prices than projected and more rapid pay down of debt than anticipated. Conversely, the ratings could be pressured from slower-than-expected absorption rates of lots, from considerably weaker pricing than forecasted, and/or from any perceived difficulties in arranging refinancing as the respective maturity dates draw near. Westland Holdings, LLC, a newly-formed and separate entity of The Rhodes Companies, LLC, will be buying Westland Development Company, Inc. for $211.6 million. Westland Development Company, Inc. is a privately-held but publicly registered land development firm whose real estate holdings, currently comprising 55,000 mainly contiguous acres near the Albuquerque, New Mexico central business district, originated as a land grant from the king of Spain in 1692. Westland Development Company has an established land development platform in Albuquerque. Previous projects include single family and multi-family residential communities and commercial developments. The purchase price, plus the funding of a $46.5 million interest reserve and a $35 million general corporate reserve, will be financed with $75 million of cash equity from Jim Rhodes plus the $225 million of first- and second-lien term loans. WESTPORT COMMUNITY: Section 341(a) Meeting Scheduled for June 14 ---------------------------------------------------------------- The U.S. Trustee for Region 13 will convene a meeting of Westport Community Secondary Schools, Inc.'s creditors at 2:00 p.m., on June 14, 2006, at the U.S. Courthouse, Room 2110A, 400 East 9th Street in Kansas City, Missouri. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Based in Kansas City, Missouri, Westport Community Secondary Schools, Inc., filed for chapter 11 protection on May 4, 2006 (Bankr. W.D. Mo. Case No. 06-41077). Gregory S. Gerstner, Esq., at Seigfreid, Bingham, Levy Selzer & Gee, P.C., represents the Debtor. When the Debtor filed for protection from its creditors, it listed total assets of $10,888,574 and total liabilities of $8,200,000. WILLIAMS COS: Building New Pipelines Under ONEOK Joint Venture -------------------------------------------------------------- A unit of Williams and an affiliate of ONEOK, Inc., have entered into an agreement to form a joint venture that will develop new pipeline capacity for transporting natural gas liquids from production areas in southwestern Wyoming to central Kansas, home to one of the nation's largest NGL storage and distribution hubs. Natural gas liquids include fuels such as ethane, propane and butane that are used in petroleum refining, home heating, and as industrial feedstock to manufacture plastics. "This project is a great industry solution to accommodate the growth of NGL volumes from the Rockies," Alan Armstrong, president of Williams' Midstream business, said. "We're committed to finding ways to get new supplies of energy into the marketplace more efficiently and more economically." Williams initiated the 750-mile project - known as Overland Pass Pipeline Company, LLC. - last year to provide an additional outlet for NGL supplies produced at the company's two natural gas processing plants in Wyoming. Williams is a major producer and owner of NGL supply through these operations near the towns of Opal and Wamsutter. The company retains equity volumes of NGL as payment-in-kind under certain processing contracts. ONEOK's affiliate, Northern Border Partners, L.P., has agreed to reimburse Williams' development costs to date for the proposed pipeline and initially will own 99% of Overland Pass Pipeline. Subsidiaries of Northern Border Partners will manage the construction project and operate the pipeline. Williams is retaining a 1% interest in Overland Pass Pipeline Company and has the option to increase its ownership to 50% and become the operator within two years of the pipeline becoming operational. Start-up is tentatively planned for early 2008. Additionally, Williams has agreed to dedicate its equity NGL volumes from its two Wyoming plants for transport on Overland Pass Pipeline under a long-term shipping agreement. The terms represent significant savings to Williams compared with the existing tariff it pays and other alternatives the company considered. Subsidiaries of Northern Border Partners also will provide other downstream services that will ultimately give Williams access to another major demand hub in Mont Belvieu, Texas, for finished NGL products. "Overland Pass is ideal for Williams and other energy producers that we serve in Wyoming," Armstrong added. "This will give our customers at Opal and Wamsutter a more direct route for moving their liquids into Mid-Continent NGL markets." From a technical standpoint, the new pipeline is designed to minimize the operating cost of transporting NGL volumes out of the Rockies by taking advantage of the gravity that results from the elevation difference between Wyoming and Kansas. The joint venture and related commercial agreements are subject to approval by Williams' board of directors. About Williams Companies Headquartered in Tulsa, Oklahoma, The Williams Companies, Inc. -- http://www.williams.com/-- through its subsidiaries, primarily finds, produces, gathers, processes and transports natural gas. The company also manages a wholesale power business. Williams' operations are concentrated in the Pacific Northwest, Rocky Mountains, Gulf Coast, Southern California and Eastern Seaboard. * * * As reported in the Troubled Company Reporter on May 8, 2006, Standard & Poor's Ratings Services raised to 'BB-' from 'B+' The Williams Cos. Inc.'s corporate credit rating, including Northwest Pipeline Corp., Transcontinental Gas Pipe Line Corp., and Williams Production RMT Co. The outlook is positive. WILLIAMS PARTNERS: Fitch Rates Proposed $150 Million Notes at BB ---------------------------------------------------------------- Fitch Ratings initiated coverage and assigned a 'BB' Issuer Default Rating to Williams Partners, L.P. and a 'BB' rating to WPZ's proposed offering of up to $150 million of senior unsecured notes. The Rating Outlook is Stable. WPZ is the publicly traded master limited partnership affiliate of The Williams Companies, Inc. (WMB; IDR 'BB+' by Fitch) and is engaged primarily in the: * gathering, transporting, and processing of natural gas; and * fractionation and storage of natural gas liquids. WMB's current ownership in WPZ consists of a 2% general partner interest and a 59% limited partner interest. In assigning the initial ratings for WPZ, Fitch considered WPZ's functional ties with WMB as well as the partnership's standalone operating and financial profile, including the credit implications of the pending acquisition of a 25.1% interest in Williams Four Corners, LLC, an integrated natural gas gathering and processing system located in the San Juan Basin of Colorado and New Mexico, from WMB for a cash consideration of $360 million. WPZ plans to fund the Four Corners acquisition with the proposed $150 million note offering and the remainder from publicly issued common units. WPZ's ratings reflect: * the partnership's close operating and financial ties with WMB; * a growing portfolio of primarily fee-based natural gas and NGL midstream business activities; * the geographic and cash flow diversity provided by the pending Four Corners purchase; and * the expectation for credit ratios to remain consistent with the parameters targeted for WPZ's initial rating level. Key risk factors incorporated into the rating analysis include: * moderate commodity price risk; * WPZ's reliance on upstream cash distributions from assets held on a minority basis; and * the ongoing financing and execution risk associated with WPZ's near-term growth strategy, which contemplates the acquisition of additional assets from WMB. The partnership's current asset portfolio includes offshore Gulf of Mexico natural gas gathering and processing activities and the storage and fractionation of NGLs in Conway, Kansas -- the primary mid-continent trading hub for NGL products. These activities are predominately fee-based and are generally backed by contracts and/or reserve dedications from well capitalized producers and creditworthy counterparties. At the same time, there is a moderate degree of commodity price risk embedded in these activities, as both the absolute value of natural gas and the relationship between NGLs and natural gas can influence the ultimate level of volumes flowing through WPZ's systems. Fitch believes the pending Four Corners acquisition has positive implications for the partnership's business risk profile. In addition to expanding WPZ's portfolio of fee-based gathering activities, the acquisition diversifies WPZ's cash flow away from the potentially unstable Gulf of Mexico region. As part of its analysis, Fitch considered WPZ's dependence on upstream subsidiary distributions to meet ongoing debt service requirements. In particular, WPZ's two primary cash generating assets on a pro forma basis consist of minority ownership interests in: * Discovery (40%), and * Four Corners (initially 25.1%). As such, the ultimate cash WPZ derives from these operations is subject to the distribution parameters outlined in the respective partnership agreements of Discovery and Four Corners. In general, available cash from these two entities is defined as operating cash flow less maintenance capital expenditures as well as any cash reserves deemed appropriate by the respective management committee. Although, both Discovery and Four Corners are not prohibited from incurring debt, any debt raised at the underlying partnership level would require the unanimous consent of the respective partners, which include WMB. Moreover, given WMB's asset dropdown strategy, Fitch believes that WPZ could ultimately own greater than 50% of Four Corners, thus giving it greater control over those particular cash flows. Fitch expects WPZ's credit measures to remain consistent with the initial rating, although there could be some moderate variability due to commodity price volatility and resulting effect on natural gas/NGL volumes transported, processed and stored by WPZ. In addition, future funding strategies for additional WMB dropdown acquisitions will influence the partnership's ongoing leverage ratios. Under a scenario which assumes that ongoing acquisitions are financed with a minimum 50% equity component, WPZ's debt leverage, as measured by total debt to adjusted EBITDA should remain at or slightly below 4x with EBITDA/Interest exceeding 3.5x. Fitch notes that WPZ's ability to issue equity directly to WMB as opposed to the public to fund future dropdowns provides additional financing flexibility. Although WMB's limited partner interest in WPZ will decline as WPZ further accesses the public MLP equity markets, retaining the 2% general partner interest provides WMB with effective control of WPZ, including broad discretion over distribution policy, acquisitions, and other important matters involving the business strategy of the partnership. In particular, Fitch expects WMB to continue to utilize WPZ as an alternative source of cost capital to help fund WMB's corporate level growth aspirations. In addition, WMB and WPZ remain closely tied due to WPZ's status as an eligible borrower under WMB's corporate revolving credit facility. Specifically, WPZ has up to $75 million of availability under WMB's $1.5 billion corporate revolver, the borrowings under which are unconditionally guarantee by WMB. The Stable Rating Outlook reflects Fitch's expectation that WPZ's credit and financial profile will remain consistent with the 'BB' rating. Factors leading to potential rating improvement over time would include an upgrade of WMB's rating and/or the successful integration of the remaining interest in Four Corners. At the same time, adoption of a more leveraged acquisition strategy would likely place downward pressure on WPZ's rating and/or Outlook. X-RITE INC: S&P Assigns B+ Rating to Proposed $160 Million Loan --------------------------------------------------------------- Standard & Poor's Rating Services assigned its 'B+' corporate credit rating to Grandville, Michigan-based X-Rite Inc. The outlook is stable. At the same time, Standard & Poor's assigned a 'B+' rating and a recovery rating of '2' to the company's proposed first-lien loan, which amounts to $160 million (a term loan of $120 million and an undrawn revolving credit facility of $40 million). "The recovery rating on the first lien indicates expectations for substantial recovery (80% to 100%) of principal in the event of a payment default," said Standard & Poor's credit analyst Stephanie Crane. The $60 million second-lien term loan has been assigned a B-, and received a recovery rating of '5'. The recovery rating on the second lien loan, reflect the rating agency's expectation of negligible (0%-25%) recovery of principal by creditors in the event of a payment default or bankruptcy. Proceeds of the facility, totaling $180 million in first and second lien term loans, in conjunction with $46 million of existing cash and $93 million in equity, will be used to fund the acquisition of Amazys Holding, a public holding company based in Switzerland that owns Gretagmacbeth. The acquisition will total about $318.6 million (inclusive of fees and expenses). Both X-Rite and Amazys provide color management/metric hardware, software, and service solutions, with over three quarters of revenue tailored to the Graphic Arts and Industrial industries, with a diversified base of products into 13 vertical industries. The rating on X-Rite reflects: * the company's narrow business profile geared toward a niche market; * a long expected period of integration; and * high leverage. These factors are partially offset by a leading position in a niche market and high barriers to entry. XYBERNAUT CORP: Fails to Attract Qualified Bids for IP Assets ------------------------------------------------------------- Xybernaut Corporation and its affiliate, Xybernaut Solutions, Inc., withdrew their motion to approve the sale of their wireless intellectual property assets on May 23, 2006. The U.S. Bankruptcy Court for the Eastern District of Virginia had previously approved bidding procedures for the sale of the specified assets. In a Securities and Exchange Commission filing, the Debtors disclosed that as of May 19, 2006, they received one bid for the assets. This bid did not meet the minimum requirements for a qualifying bid. IP Assets The Debtors have developed a portfolio of approximately 166 issued patents, with an additional 558 patent applications pending worldwide, as the core of its intellectual property protection for its mobile and wearable computing and communications, and related software solutions. In addition, the Debtors have developed a significant amount of knowledge, proprietary know-how, and expertise, which adds substantial value to its intellectual property portfolio. The Wireless IP Assets consist of these patents: -- U.S. 6,377,793 "System and Method of Accessing and Recording Messages at Coordinate Way Points" -- U.S. 6,480,713 "System and Method of Accessing and Recording Messages at Coordinate Way Points" -- U.S. 6,681,107 "System and Method of Accessing and Recording Messages at Coordinate Way Points" -- U.S. Patent Application Serial Number 10/760,095 "System and Method of Accessing and Recording Messages at Coordinate Way Points" John H. Maddock III, Esq., at McGUIREWOODS LLP said the IP assets represent the Debtors' most significant asset and potential source of revenue. To fund the their on-going business and provide the necessary run- way to achieve the best possible sale of the IP Assets, the Debtors obtained secured debtor in possession financing, initially from LC Capital Master Fund, Ltd., which was subsequently replaced by East River Capital, LLC. The Debtors retained Technology Option Capital, LLC, and SSG Capital Advisors, L.P., to market and sell the IP Assets. ERC Discussions The Debtors say that they are in talks with East River, about other options available to the Company. The Debtors further admitted that they continue to face a severe liquidity crisis as well as possible insolvency and liquidation. Headquartered in Fairfax, Virginia, Xybernaut Corporation, develops and markets small, wearable, mobile computing and communications devices and a variety of other innovative products and services all over the world. The corporation never turned a profit in its 15-year history. The Company and its affiliate, Xybernaut Solutions, Inc., filed for chapter 11 protection on July 25, 2005 (Bankr. E.D. Va. Case Nos. 05-12801 and 05-12802). John H. Maddock III, Esq., at McGuireWoods LLP, represents the Debtors in their chapter 11 proceedings. Paul M. Sweeney, Esq., at Linowes & Blocher LLP, represents the Official Committee of Unsecured Creditors. Craig Benson Young, Esq., at Connolly Bove Lodge & Hutz, represents the Official Committee of Equity Security Holders. When the Debtors filed for protection from their creditors, they listed $40 million in total assets and $3.2 million in total debts. YUKOS OIL: Sells 53.7% Mazeikiu Stake to PKN Orlen for $1.49BB -------------------------------------------------------------- Yukos Oil Company is selling its 53.7% stake in Mazeikiu Nafta AB to PKN Orlen S.A., Poland's largest oil refiner, for $1.49 billion. The parties signed a Share Sale and Purchase Agreement Friday, May 26, a day after the U.S. Bankruptcy Court for the Southern District of New York lifted an order barring Yukos from selling its controlling stake in the Lithuanian oil refinery. At the same time, PKN Orlen will purchase the Lithuanian government's 30.66% stake in Mazeikiu. "After 10 months of effort, intensive negotiations, and talks held with both the Lithuanian Government and Yukos International UK BV, the acquisition of Mazeikiu Nafta has become a fact," PKN Orlen said in its press release. "This largest foreign investment in Poland's history leads towards the creation of the biggest concern in Central Europe measured by the amount of oil processed and revenues. The transaction is also a great success for Lithuania, because it finalizes a long and difficult privatization process. The Lithuanian Government's decision allows MN to gain a credible and stable investor." The Lithuanian government has already launched procedures that would allow it, with Parliament's approval, to countersign the agreement. Terms of the Agreement According to the agreements, Lithuania will keep a 10% stake in Mazeikiu and will have a five-year option to put those shares to PKN Orlen, where the offered price for the projects is to decrease from $284 million to $278 million after three years. Immediately after signing the agreement with Yukos, PKN Orlen will submit the application to the European Commission seeking consent for the transactions. At the same time, the fuel concern will seek the consent of the Government of Lithuania for the transaction with Yukos. The Agreement will be presented to the government, which will have 30 days from delivery of the Agreement to exercise its right of first refusal. From the initial agreement it seems that the Government will not exercise this right. Once the closing conditions are satisfied, the simultaneous closing of both transactions is expected in the first quarter of 2007. The next step will be the calling by PKN Orlen for a mandatory tender offer for 5.76% shares of Mazeikiu Nafta, which is quoted on the Vilnius Stock Exchange. Transaction Details PKN Orlen will purchase from Yukos International UK B.V. 379,918,411 shares of the company, constituting 53.7% of all assets, at US$3.927 per share. The sales price is not adjusted at the closing. Basing on the sales agreement signed by PKN Orlen on May 19, the Group agreed to buy from the government of the Republic of Lithuania 216,915,941 shares of the company, constituting 30.66% of all the company's shares for a total amount of US$852 million. Similarly to the case of transaction with Yukos, the sale price is fixed and is not adjusted at closing. The share sale agreement, including the put option agreement, agreement among shareholders and deed of termination and release of all parties' obligations, were signed by PKN Orlen on May 19 and deposited with the Government of Lithuania after approval from the Lithuanian Parliament for the conclusion of the transaction. Implementation of the transaction on the basis of the share sale agreement with Yukos International is dependent on the meeting of several conditions. These include: -- obtaining approval of the European Commission; -- obtaining by PKN ORLEN certainty that the transaction conditions are not harmful for creditors of Yukos International; and -- non-performance by the Lithuanian Government of the pre- emption right: * obtaining the consent from the Government of the Republic of Lithuania for PKN ORLEN to take over Yukos' right ensuing from privatization agreements of 1992 and 2002 and also the binding agreement of the shareholders; and * conclusion of the agreement to sell 30.66% of the company shares between PKN Orlen; -- the Government of the Republic of Lithuania. In addition, the transaction with the Government of the Republic of Lithuania will depend on meeting specified conditions. They include: -- being granted consent from the European Commission; -- closure of the transaction of purchase of 53.7% of Mazeikiu Nafta share from Yukos; -- entering into a new agreement by shareholders as well as the deed of termination and release of all parties' obligations concerning the privatization agreements of 1999 and 2002; and -- the binding shareholders' agreement. The new agreement between shareholders and the Lithuanian government assumes that if the Parliament consents to the transaction with PKN Orlen, the shareholder agreement in force will be substituted by a new agreement wherein PKN Orlen gains full operational control over Mazeikiu. In line with provisions of the new agreement, the Lithuanian Government will have the right to appoint one member of the Supervisory Board and one member of the Management Board in Mazeikiu Nafta. Moreover the Lithuania government will have the right to demand the repeal of decisions made by the governing bodies of Mazeikiu, if those decisions might threaten the national security or energy security of Lithuania. The Lithuanian Government will have the right to demand from PKN Orlen the sale of all shares in Mazeikiu Nafta in the following cases: (a) if Mozejki records a loss for five years in a row; (b) components of the assets of Mazeikiu Nafta with the value exceeding US$200 million will be taken over due to enforcement measures; or (c) in the case when the right to exercise over 50% of the voting rights at the general Assembly of PKN Orlen will be gained by an entity, which in the reasonable opinion of the Government of the Republic of Lithuania constitutes a threat to national security of Lithuania. Moreover the provisions of the new agreement state that the sale of shares in Mazeikiu Nafta by PKN Orlen or the Government of the Republic of Lithuania is covered by the pre-emption right of the other party. Financing PKN Orlen will use its own funds, existing credit lines and new indebtedness to finance the transaction. The main sources of funding are: loans, subsequently refinanced from the issuance of bonds on the Polish and European markets, and a new bank loan. Based on internal analyses and the opinions of external advisors, PKN Orlen is aware of the increase in indebtedness related to the financing of the transaction, and it will make it the top policy priority in this respect to gradually lower indebtedness. The management is determined to gradually reduce indebtedness measures to the level of 1.5 x consolidated EBITDA with a view to maintaining the investment rating. To this end, PKN Orlen announced a new dividend policy based on FCFE. The Group is also continuing with the sale of assets unrelated to its main line of business and the optimization of investment outlays. The sale agreement bested three other oil firms eyeing to take over Mazeikiu: -- Russia's Lukoil and TNK-BP; and -- Kazakhstan's KazMunaiGas. Headquartered in Moscow, Russia, Yukos Oil -- http://yukos.com/ -- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for Chapter 11 protection Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742), but the case was dismissed on Feb. 24, 2005, by the Hon. Letitia Z. Clark. A few days after, the Government sold its main production unit Yugansk, to a little-known firm Baikalfinansgroup for US$9.35 billion, as payment for US$27.5 billion in tax arrears for 2000- 2003. Yugansk eventually was bought by state-owned Rosneft, which is now claiming more than US$12 billion from Yukos. On March 10, a 14-bank consortium led by Societe Generale filed bankruptcy suit in the Moscow Arbitration Court in an attempt to recover the remainder of a US$1 billion debt under outstanding loan agreements. The banks, however, sold the claim to Rosneft, prompting the Court to replace them with the state-owned oil company as plaintiff. On April 13, court-appointed external manager Eduard Rebgun filed a chapter 15 petition in the U.S. Bankruptcy Court for the Southern District of New York (Bankr. S.D.N.Y. Case No. 06- 10775), in an attempt to halt the sale of Yukos' 53.7% ownership interest in Lithuanian AB Mazeikiu Nafta. Published reports suggest that the Company's stake may have a value at around US$1.2 billion to US$1.4 billion. * Bill Donohue Joins Alvarez & Marsal as Managing Director in NY ---------------------------------------------------------------- Alvarez & Marsal Real Estate Advisory Services, a division of global professional services firm Alvarez & Marsal, reported that William P. Donohue, Jr. has joined the firm as a managing director. He is based in New York. With more than 17 years of real estate consulting, acquisition, finance and management experience, Mr. Donohue focuses on providing real estate restructuring, transaction, strategic planning and interim management services. Over the course of his career, he has served as the lead real estate advisor in numerous successful corporate reorganizations, including Kmart Corp., Friedman's Jewelers and Comdisco, Inc. and assisted debtors and creditors in preserving and maximizing the value of real estate assets during Chapter 11 proceedings. Mr. Donohue's background also includes providing due diligence and valuation services and developing and implementing cost-saving and strategic planning initiatives for major corporate and public sector clients. "Bill brings a long and successful track record working with financial services firms, corporate clients, real estate funds and private real estate investors," William W. "Biff" McGuire, head of Alvarez & Marsal Real Estate Advisory Services, said. "His depth and breadth of expertise further enhances our ability to serve corporate clients involved in turnarounds and restructurings, assist portfolio managers seeking to improve underperforming assets and advise organizations involved in complex real estate transactions and other strategic initiatives. We are pleased to welcome him to the team." Prior to joining A&M, Mr. Donohue was a principal of Gemini Realty Advisors LLC and Gemini Realty Asset Management LLC, which he co-founded. Mr. Donohue has also held management positions in the real estate advisory groups of NAI D.G. Hart Associates, Inc. and Coopers & Lybrand LLP. Earlier in his career, he was vice president of acquisitions for Manhattan Capital Partners, Inc., a New York City-based real estate merchant bank. Mr. Donohue holds a bachelor's degree in politics from Princeton University and a master's degree in business administration, with concentrations in finance and accounting, from New York University's Leonard Stern School of Business. He is a member of the American Seniors Housing Association, the Turnaround Management Association and the International Council of Shopping Centers. Alvarez & Marsal Real Estate Advisory Services, LLC Alvarez & Marsal Real Estate Advisory Services, LLC advises owners, investors, lenders, and users of real estate throughout the real estate lifecycle. Alvarez & Marsal Real Estate Advisory Services professionals align their interests with those of their clients, and are committed to providing senior-level attention, the right resources, objective advice and flawless execution to every engagement. Building on Alvarez & Marsal's operational and problem-solving heritage, the Alvarez & Marsal Real Estate Advisory Services team develops and implements detailed real estate plans that improve operations, unlock value and minimize risk. Alvarez & Marsal Real Estate Advisory services include: Restructuring Advisory, Litigation Advisory, Strategy and Operations Consulting, Corporate Finance, Transaction Advisory, Public Sector Advisory, Hospitality Advisory, and Latin America Advisory. Alvarez & Marsal Real Estate Advisory Services, LLC is an affiliate of Alvarez & Marsal, a premier global turnaround and professional services firm that excels in problem solving and value creation. * FTI Hires Kevin Shultz, Terry Orr, Craig Earnshaw & Bruce Benson ------------------------------------------------------------------ FTI Consulting, Inc., appointed four new senior professionals. Kevin Shultz joins FTI Capital Advisors, LLC, Terry Orr joins the FTI Forensic and Litigation Consulting practice, Craig Earnshaw joins the FTI Technology practice and Bruce Benson joins the FTI Economic Consulting practice. Commenting on the new appointments, Dominic DiNapoli, FTI's chief operating officer, said, "With every professional we hire, FTI is demonstrating its commitment to hiring the best talent. The additions of Kevin, Terry, Craig and Bruce reflect that commitment." New Appointments Kevin Shultz joins FTI Capital Advisors, LLC, the company's wholly owned investment banking subsidiary as senior managing director in the Los Angeles office. Mr. Shultz brings nearly 25 years of investment banking and strategic consulting experience to both middle market and larger corporations alike, both domestically and overseas. As an investment banker and consultant, Mr. Shultz has been involved in mergers and acquisitions, management buyouts, private and public financings, valuations and fairness opinions for clients ranging from multibillion dollar conglomerates to early stage companies. At FTI Capital Advisors, he will focus on middle market companies in all aspects of mergers and acquisitions, corporate sales, divestitures and raising capital on the convergence of technology, multimedia and networking sectors. Prior to joining FTI Capital Advisors, Mr. Shultz founded a consulting firm where he acted as an advisor to several companies, including one of the country's leading provider of services to the internet, a major provider of payroll services to the entertainment industry and the nation's premier independent talk radio syndication company. Mr. Shultz has worked for Drexel Burnham Lambert, where he directed the West Coast corporate sale and divestiture effort, Prudential Securities and at McKinsey & Company, where he worked in the firm's acquisition advisory practice. Mr. Shultz holds a BA in Economics, summa cum laude, from the University of California at Santa Barbara and an MBA from the Harvard Graduate School of Business Administration. Terry Orr joins FTI's Forensic and Litigation Consulting practice as senior managing director in FTI's Dallas office. With over 25 years of audit experience as a certified public accountant, Mr. Orr has an extensive background in auditing and reviewing financial statements. He also has significant experience advising clients in the preparation and review of various types of SEC and other regulatory filings where he practiced before the SEC. At FTI, he will focus on providing forensic accounting and investigation services as well as accounting and damages expertise in commercial matters such as post-acquisition disputes. Prior to joining FTI, Mr. Orr was a partner with BDO Seidman, LLP, and has previously worked for a Big Four accounting firm. Mr. Orr's work has specialized in the manufacturing and distribution, real estate, high tech, hospitality, energy, healthcare and gaming industries. Mr. Orr holds a BS in Accounting and Business Administration from Brigham Young University, is a member of the American Institute of Certified Public Accountants and is a licensed CPA in the states of Texas and Nevada. Craig Earnshaw joins FTI's Technology as managing director in the rapidly expanding London office. Mr. Earnshaw has more than eight years of experience specializing in forensic computing and electronic evidence. He will counsel clients in the areas of European Union-based electronic discovery and disclosure, computer-based forensics and electronic data hosting for litigation. Mr. Earnshaw will serve as a key contributor as FTI Consulting expands all aspects of its electronic evidence offering for litigations, disputes and investigations throughout Europe. Prior to joining FTI, Mr. Earnshaw was the head of the CRA International forensic computing services group where he was responsible for all forensic computing practice engagements and practice development. Immediately prior, he was employed by Lee & Allen in its forensic computing services group. His engagement experience includes fraud, electronic disclosure and discovery, intellectual property, accounting systems and insolvency. He has provided expert testimony in the High Court in London and has testified at depositions in the US. He regularly presents and has published numerous articles on forensic computing and electronic evidence. Mr. Earnshaw is a member of the British Computer Society, an associate of the Institute of Analysts and Programmers, board member of the Institute of Computer Forensic Professionals and member of the Fraud Advisory Panel CyberCrime Working Party. He holds a B.Sc. Computer Science from the University of Durham. Bruce Benson joins FTI's Economic Consulting practice as senior managing director in the New York office. Mr. Benson brings more than 20 years of entertainment and media expertise, including a proven record of accelerating global profits and growth in leading international media, entertainment and consulting companies. He is an entrepreneurial leader with an exceptional understanding of advanced media technologies. He will assist FTI's studio, broadcast, newspaper and book publishing clients to develop revenue and growth strategies, enhance competitive positioning, maximize digital content revenue streams and create portfolio management strategies. Prior to joining FTI, Mr. Benson was an entertainment and media industry principal with SAP North America where he was responsible for industry sales leadership, thought leadership and co-managing the development of entertainment and media related software in Germany. In this and other positions, Mr. Benson has demonstrated skills in strategic planning, profit and loss management and global business management. In addition, Mr. Benson held various executive positions at Young & Rubicam, Sony Entertainment and was a partner at PriceWaterhouse. Mr. Benson holds a BS in Mathematics from the University of Houston. About FTI Capital FTI Capital Advisors, LLC (NYSE: FCN) serves its clients by advising on debt and equity private placements, providing sell- side and buy-side acquisition advisory services, delivering fairness opinions and valuation engagements. The investment bank advises both healthy and distressed public and privately held companies, as well as organizations in "special situations", with a particular focus on several industries, including telecommunications, healthcare, retail, real estate, consumer food or restaurants and basic services, and manufacturing. FTI Capital Advisors, LLC is a member of the NASD and SIPC. About FTI Consulting Strategically located in 25 of the major US cities, London and Melbourne, FTI -- http://www.fticonsulting.com/-- is a premier provider of problem-solving consulting and technology services to major corporations, financial institutions and law firms when confronting critical issues that shape their future and the future of their clients, such as financial and operational improvement, major litigation, mergers and acquisitions and regulatory issues. * BOND PRICING: For the week of May 22 - May 26, 2006 ----------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- ABC Rail Product 10.500% 01/15/04 0 ABC Rail Product 10.500% 12/31/04 0 Adelphia Comm. 3.250% 05/01/21 1 Adelphia Comm. 6.000% 02/15/06 0 Adelphia Comm. 7.500% 01/15/04 48 Adelphia Comm. 7.750% 01/15/09 49 Adelphia Comm. 7.875% 05/01/09 48 Adelphia Comm. 8.125% 07/15/03 48 Adelphia Comm. 8.375% 02/01/08 48 Adelphia Comm. 9.250% 10/01/02 48 Adelphia Comm. 9.375% 11/15/09 52 Adelphia Comm. 9.500% 02/15/04 50 Adelphia Comm. 9.875% 03/01/05 46 Adelphia Comm. 9.875% 03/01/07 48 Adelphia Comm. 10.250% 06/15/11 53 Adelphia Comm. 10.250% 11/01/06 48 Adelphia Comm. 10.500% 07/15/04 50 Adelphia Comm. 10.875% 10/01/10 48 Aetna Industries 11.875% 10/01/06 8 Allegiance Tel. 11.750% 02/15/08 38 Allegiance Tel. 12.875% 05/15/08 46 Amer & Forgn Pwr 5.000% 03/01/30 66 Amer Color Graph 10.000% 06/15/10 68 Amer Plumbing 11.625% 10/15/08 18 Antigenics 5.250% 02/01/25 58 Anvil Knitwear 10.875% 03/15/07 56 Arvin Capital I 9.500% 02/01/27 70 At Home Corp. 0.525% 12/28/18 2 At Home Corp. 4.750% 12/15/06 4 Atlantic Coast 6.000% 02/15/34 21 Atlas Air Inc 8.010% 01/02/10 73 Atlas Air Inc 9.702% 01/02/08 74 Autocam Corp. 10.875% 06/15/14 60 Aviation Sales 8.125% 02/15/08 44 Banctec Inc 7.500% 06/01/08 74 Bank New England 8.750% 04/01/99 6 BBN Corp 6.000% 04/01/12 0 Builders Transpt 6.500% 05/01/11 1 Burlington North 3.200% 01/01/45 54 CCH II/CCH II CP 10.250% 01/15/10 74 Charter Comm Hld 10.000% 05/15/11 61 Charter Comm Hld 11.125% 01/15/11 64 Charter Comm Inc 5.875% 11/19/09 73 Cherokee Int'l 5.250% 11/01/08 70 Chic East Ill RR 5.000% 01/01/54 61 CIH 9.920% 04/01/14 62 CIH 10.000% 05/15/14 62 CIH 11.125% 01/15/14 64 Clark Material 10.750% 11/15/06 0 CMI Industries 9.500% 10/01/03 0 Collins & Aikman 10.750% 12/31/11 37 Comcast Corp. 2.000% 10/15/29 40 Concentric Network 12.750% 12/15/07 0 CPNL-Dflt12/05 4.000% 12/26/06 27 CPNL-Dflt12/05 4.750% 11/15/23 37 CPNL-Dflt12/05 6.000% 09/30/14 29 CPNL-Dflt12/05 7.625% 04/15/06 56 CPNL-Dflt12/05 7.750% 04/15/09 57 CPNL-Dflt12/05 7.750% 06/01/15 28 CPNL-Dflt12/05 7.875% 04/01/08 56 CPNL-Dflt12/05 8.500% 02/15/11 41 CPNL-Dflt12/05 8.625% 08/15/10 40 CPNL-Dflt12/05 8.750% 07/15/07 58 CPNL-Dflt12/05 10.500% 05/15/06 56 Cray Research 6.125% 02/01/11 12 Curagen Corp. 4.000% 02/15/11 72 Curative Health 10.750% 05/01/11 53 Dal-Dflt09/05 9.000% 05/15/16 27 Delco Remy Intl 9.375% 04/15/12 56 Delco Remy Intl 11.000% 05/01/09 58 Delphi Auto Sys 7.125% 05/01/29 74 Delphi Corp 6.500% 08/15/13 74 Delphi Trust II 6.197% 11/15/33 51 Delta Air Lines 2.875% 02/18/24 26 Delta Air Lines 7.700% 12/15/05 26 Delta Air Lines 7.900% 12/15/09 27 Delta Air Lines 8.000% 06/03/23 27 Delta Air Lines 8.187% 10/11/17 36 Delta Air Lines 8.270% 09/23/07 74 Delta Air Lines 8.300% 12/15/29 28 Delta Air Lines 8.540% 01/02/07 71 Delta Air Lines 9.200% 09/23/14 69 Delta Air Lines 9.250% 03/15/22 28 Delta Air Lines 9.320% 01/02/09 72 Delta Air Lines 9.375% 09/11/07 73 Delta Air Lines 9.480% 06/05/06 58 Delta Air Lines 9.590% 01/12/17 67 Delta Air Lines 9.750% 05/15/21 26 Delta Air Lines 9.950% 06/01/06 70 Delta Air Lines 9.950% 06/01/06 70 Delta Air Lines 10.000% 06/01/07 66 Delta Air Lines 10.000% 06/01/08 66 Delta Air Lines 10.000% 06/01/09 66 Delta Air Lines 10.000% 06/01/10 66 Delta Air Lines 10.000% 06/01/10 67 Delta Air Lines 10.000% 06/01/11 51 Delta Air Lines 10.000% 06/01/12 62 Delta Air Lines 10.000% 08/15/08 29 Delta Air Lines 10.060% 01/02/16 74 Delta Air Lines 10.080% 06/16/07 59 Delta Air Lines 10.125% 05/15/10 27 Delta Air Lines 10.125% 06/16/10 60 Delta Air Lines 10.375% 02/01/11 28 Delta Air Lines 10.375% 12/15/22 30 Delta Air Lines 10.500% 04/30/16 75 Deutsche Bank NY 8.500% 11/15/16 65 Diva Systems 12.625% 03/01/08 1 Dov Pharmaceutic 2.500% 01/15/25 61 Dura Operating 9.000% 05/01/09 57 Dura Operating 9.000% 05/01/09 58 DVI Inc 9.875% 02/01/04 13 Dyersburg Corp 9.750% 09/01/07 0 Eagle-Picher Inc 9.750% 09/01/13 66 Emergent Group 10.750% 09/15/04 0 Encysive Pharmacy 2.500% 03/15/12 67 Encysive Pharmacy 2.500% 03/15/12 66 Epix Medical Inc. 3.000% 06/15/24 67 Exodus Comm. Inc. 5.250% 02/15/08 0 Exodus Comm. Inc. 11.250% 07/01/08 0 Falcon Products 11.375% 06/15/09 2 Federal-Mogul Co. 7.375% 01/15/06 61 Federal-Mogul Co. 7.500% 01/15/09 61 Federal-Mogul Co. 8.160% 03/06/03 52 Federal-Mogul Co. 8.250% 03/03/05 63 Federal-Mogul Co. 8.330% 11/15/01 47 Federal-Mogul Co. 8.370% 11/15/01 57 Federal-Mogul Co. 8.370% 11/15/01 58 Federal-Mogul Co. 8.800% 04/15/07 63 Finova Group 7.500% 11/15/09 32 Ford Motor Co 6.500% 08/01/18 68 Ford Motor Co 6.625% 02/15/28 67 Ford Motor Co 7.125% 11/15/25 69 Ford Motor Co 7.400% 11/01/46 68 Ford Motor Co 7.500% 08/01/26 70 Ford Motor Co 7.700% 05/15/97 69 Ford Motor Co 7.750% 06/15/43 68 Ford Motor Cred 5.650% 01/21/14 73 Ford Motor Cred 5.750% 01/21/14 73 Ford Motor Cred 5.750% 02/20/14 73 Ford Motor Cred 5.750% 02/20/14 71 Ford Motor Cred 6.000% 03/20/14 75 Ford Motor Cred 6.000% 03/20/14 74 Ford Motor Cred 6.000% 03/20/14 74 Ford Motor Cred 6.000% 03/20/14 75 Ford Motor Cred 6.000% 11/20/14 74 Ford Motor Cred 6.000% 01/20/15 72 Ford Motor Cred 6.000% 11/20/14 73 Ford Motor Cred 6.000% 11/20/14 74 Ford Motor Cred 6.000% 02/20/15 75 Ford Motor Cred 6.050% 02/20/15 73 Ford Motor Cred 6.050% 04/21/14 75 Ford Motor Cred 6.050% 12/22/14 73 Ford Motor Cred 6.050% 12/22/14 73 Ford Motor Cred 6.100% 02/20/15 73 Ford Motor Cred 6.150% 01/20/15 75 Ford Motor Cred 6.200% 03/20/15 74 Ford Motor Cred 6.250% 03/20/15 74 Ford Motor Cred 7.500% 08/20/32 73 Gateway Inc. 2.000% 12/31/11 72 GB Property Fndg 11.000% 09/29/05 62 General Motors 7.400% 09/01/25 68 General Motors 7.700% 04/15/16 73 General Motors 8.100% 06/15/24 69 General Motors 8.250% 07/15/23 73 General Motors 8.375% 07/15/23 74 General Motors 8.800% 03/01/21 75 Glenoit Corp 11.000% 04/15/07 0 Global Health SC 11.000% 05/01/08 2 GMAC 5.750% 01/15/14 75 GMAC 5.900% 01/15/19 73 GMAC 5.900% 01/15/19 74 GMAC 5.900% 02/15/19 74 GMAC 5.900% 10/15/19 73 GMAC 6.000% 02/15/19 74 GMAC 6.000% 02/15/19 74 GMAC 6.000% 03/15/19 74 GMAC 6.000% 03/15/19 74 GMAC 6.000% 03/15/19 74 GMAC 6.000% 03/15/19 74 GMAC 6.000% 04/15/19 74 GMAC 6.000% 09/15/19 74 GMAC 6.050% 08/15/19 73 GMAC 6.050% 10/15/19 74 GMAC 6.100% 09/15/19 75 GMAC 6.150% 10/15/19 75 GMAC 6.250% 05/15/19 74 GMAC 6.500% 02/15/20 74 GMAC 7.000% 07/15/17 71 Golden Books Pub 10.750% 12/31/04 0 Graftech Intl 1.625% 01/15/24 74 Graftech Intl 1.625% 01/15/24 71 GST Network Fndg 10.500% 05/01/08 0 Gulf States STL 13.500% 04/15/03 0 HNG Internorth 9.625% 03/15/06 30 Imperial Credit 9.875% 01/15/07 0 Inland Fiber 9.625% 11/15/07 62 Insight Health 9.875% 11/01/11 47 Iridium LLC/CAP 10.875% 07/15/05 29 Iridium LLC/CAP 11.250% 07/15/05 32 Iridium LLC/CAP 13.000% 07/15/05 31 Iridium LLC/CAP 14.000% 07/15/05 31 Isolagen Inc. 3.500% 11/01/24 57 Isolagen Inc. 3.500% 11/01/24 54 JL French Auto 11.500% 06/01/09 0 Kaiser Aluminum & Chem. 9.875% 02/15/02 54 Kaiser Aluminum & Chem. 10.875% 10/15/06 56 Kaiser Aluminum & Chem. 10.875% 10/15/06 55 Kaiser Aluminum & Chem. 12.750% 02/01/03 12 Kellstrom Inds 5.500% 06/15/03 0 Kellstrom Inds 5.750% 10/15/02 0 Kevco Inc 10.375% 12/01/07 0 Kmart Corp. 8.990% 07/05/10 7 Kmart Corp. 9.780% 01/05/20 10 Kmart Funding 8.800% 07/01/10 75 Kmart Funding 9.440% 07/01/18 43 Lehman Bros Hldg 10.000% 10/30/13 72 Lehman Bros Hldg 11.000% 10/25/17 75 Liberty Media 3.250% 03/15/31 75 Liberty Media 3.750% 02/15/30 59 Liberty Media 4.000% 11/15/29 64 Lifecare Holding 9.250% 08/15/13 72 Macsaver Financl 7.400% 02/15/02 2 Macsaver Financl 7.600% 08/01/07 3 Macsaver Financl 7.875% 08/01/03 0 Merisant Co 9.500% 07/15/13 68 Metamor WorldWide 2.940% 08/15/04 1 Metricom Inc 13.000% 02/15/10 0 Missouri Pac RR 5.000% 01/01/45 74 Movie Gallery 11.000% 05/01/12 73 MSX Int'l Inc. 11.375% 01/15/08 64 Muzak LLC 9.875% 03/15/09 56 New Orl Grt N RR 5.000% 07/01/32 67 Northern Pacific RY 3.000% 01/01/47 53 Northern Pacific RY 3.000% 01/01/47 53 Northwest Airlines 6.625% 05/15/23 51 Northwest Airlines 7.039% 01/02/06 5 Northwest Airlines 7.625% 11/15/23 51 Northwest Airlines 7.875% 03/15/08 52 Northwest Airlines 8.130% 02/01/14 73 Northwest Airlines 8.700% 03/15/07 51 Northwest Airlines 8.875% 06/01/06 50 Northwest Airlines 9.179% 04/01/10 25 Northwest Airlines 9.875% 03/15/07 52 Northwest Airlines 10.000% 02/01/09 51 Nutritional Src. 10.125% 08/01/09 65 NWA Trust 11.300% 12/21/12 69 O'Sullivan Ind 10.630% 10/01/08 58 Oakwood Homes 8.125% 03/01/09 10 Oscient Pharm 3.500% 04/15/11 71 OSU-DFLT10/05 13.375% 10/15/09 0 Outboard Marine 10.750% 06/01/08 7 Overstock.com 3.750% 12/01/11 69 Overstock.com 3.750% 12/01/11 69 PCA LLC/PCA Fin 11.875% 08/01/09 21 Pegasus Satellite 9.625% 10/15/49 10 Pegasus Satellite 12.375% 08/01/06 10 Pegasus Satellite 12.500% 08/01/07 10 Phar-Mor Inc 11.720% 09/11/02 1 Piedmont Aviat 9.900% 11/08/06 0 Pixelworks Inc. 1.750% 05/15/24 73 Pliant-DFLT/06 13.000% 06/01/10 47 Pliant-DFLT/06 13.000% 06/01/10 47 Polaroid Corp. 6.750% 01/15/02 0 Polaroid Corp. 7.250% 01/15/07 0 Polaroid Corp. 11.500% 02/15/06 0 Primedex Health 11.500% 06/30/08 64 Primus Telecom 3.750% 09/15/10 47 Primus Telecom 8.000% 01/15/14 70 Radnor Holdings 11.000% 03/15/10 66 Read-Rite Corp. 6.500% 09/01/04 9 Reliance Group Holdings 9.000% 11/15/00 20 Reliance Group Holdings 9.750% 11/15/03 1 RJ Tower Corp 12.000% 06/01/13 70 Salton Inc. 12.250% 04/15/08 72 Silicon Graphics 6.500% 06/01/09 72 Solectron Corp. 0.500% 02/15/34 70 Spinnaker Inds 10.750% 10/15/06 0 Tom's Foods Inc 10.500% 11/01/04 9 Toys R Us 7.375% 10/15/18 74 Transtexas Gas 15.000% 03/15/05 0 Tribune Co 2.000% 05/15/29 70 Trism Inc 12.000% 02/15/05 1 Triton Pcs Inc. 8.750% 11/15/11 74 Triton Pcs Inc. 9.375% 02/01/11 74 United Air Lines 7.270% 01/30/13 50 United Air Lines 9.020% 04/19/12 55 United Air Lines 9.350% 04/07/16 29 United Air Lines 9.560% 10/19/18 55 United Air Lines 10.360% 11/13/12 5 Univ Health Svcs 0.426% 06/23/20 58 US Air Inc. 10.250% 01/15/49 6 US Air Inc. 10.250% 01/15/49 11 US Air Inc. 10.250% 01/15/49 6 US Air Inc. 10.300% 01/15/49 1 US Air Inc. 10.550% 01/15/49 1 US Air Inc. 10.610% 06/27/07 0 US Air Inc. 10.680% 06/27/08 2 US Air Inc. 10.700% 01/01/49 20 US Air Inc. 10.850% 01/01/49 48 US Air Inc. 11.200% 03/19/05 0 Venture Hldgs 12.000% 06/01/09 0 Werner Holdings 10.000% 11/15/07 32 Westpoint Steven 7.875% 06/15/05 0 Winsloew Furniture 12.750% 08/15/07 20 Winstar Comm Inc 10.000% 03/15/08 0 Winstar Comm Inc 14.000% 10/15/05 0 World Access Inc. 4.500% 10/01/02 4 World Access Inc. 13.250% 01/15/08 4 ********* 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, Joel Anthony Lopez, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Christian Q. Salta, Jason A. Nieva, Lucilo M. Pinili, Jr., 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 publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $725 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***