/raid1/www/Hosts/bankrupt/TCR_Public/060718.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, July 18, 2006, Vol. 10, No. 169
Headlines
ADELPHIA COMMS: Court Confirms Century-TCI & Parnassos Ch. 11 Plan
AIRADIGM COMMS: Court Adjourns Disclosure Hearing to July 27
AIRADIGM COMMS: Gets Final Court Approval on Cash Collateral Use
AIRNET COMMS: U.S. Trustee Appoints Three-Member Official Panel
AIRNET COMMUNICATIONS: Files Schedules of Assets and Liabilities
ALASKA COMMUNICATIONS: Moody's Affirms B1 Senior Secured Rating
ALERIS INT'L: S&P Rates Proposed $650 Million Term Loan B at BB-
AMERICA CAPITAL: Files Schedules of Assets and Liabilities
AMERUS GROUP: Sells Assets to Aviva plc for $2.9 Billion in Cash
ANTHONY CHRISTOU: Case Summary & 20 Largest Unsecured Creditors
ASAT HOLDINGS: April 30 Stockholders' Deficit Tops $53.2 Million
ATMEL CORP: Sells Atmel Grenoble to e2v for $140 Million Cash
BANKUNITED FINANCIAL: Earns $23.8 Million in Third Quarter of 2006
BETH ISRAEL: Organization Meeting Scheduled on July 26
BODIES IN MOTION: Wants Court Approval on Levene Neale as Counsel
BODIES IN MOTION: Has Until July 21 to File Schedules & Statements
CARDSYSTEMS SOLUTIONS: Cumis Wants Bar Date Extended to January 15
CARRAMERICA REALTY: Moody's Pares Senior Unsecured Ratings to Ba3
CHARTERMAC: Moody's Rates $500 Million Senior Facility at Ba3
CHC HELICOPTER: Earns CDN$10.8 Million in Quarter Ended April 30
COMMUNICATIONS CORP: A&M Continues to Provide Management Services
CONSECO INC: Declares Dividend on Class B Preferred Stock
CORUS ENTERTAINMENT: Earns CDN$23.2 Mil. in Quarter Ended May 31
CRESCENT JEWELERS: Judge Jellen Confirms Second Amended Plan
DANA CORP: Clarifies Terms of Supply Pact with U.S. Manufacturing
DELPHI CORP: Tells Court it Will Assume Sun Software Contract
EL PASO: Inks $500 Million Credit Facility Pact with Deutsche Bank
EMMIS COMMUNICATION: Sells KKFR-FM to Bonneville for $77.5 Million
ENTERPRISE PRODUCTS: Fitch Rates $300 Million Sub. Notes at BB+
FINANCIAL MEDIA: May 31 Balance Sheet Upside-Down by $2.3 Million
FOAMEX INTERNATIONAL: Has Until Oct. 16 to Decide on Leases
FOAMEX INTERNATIONAL: Panel Opposes Equity Committee Appointment
FORD MOTOR: High Fuel Prices Cue Moody's to Downgrade Ratings
GALAXY NUTRITIONAL: BDO Seidman Raises Going Concern Doubt
GENERAL MOTORS: Reviewing Nissan-Renault Deal; Toyota Might Bid
HAPPY KIDS: Inability to Reorganize Prompts Court to Dismiss Cases
HOLLINGER INC: Chairman and CRO Resigns From Hollinger Int'l Board
HOLLINGER INC: Reports $40.7 Million Cash On Hand as of July 7
HOME PRODUCTS: Weak Credit Metrics Cue Moody's to Junk Ratings
HONEY STOP: Case Summary & 20 Largest Unsecured Creditors
HVHC INC: Moody's Rates Proposed $180 Mil. Sr. Facilities at Ba3
INT'L PAPER: Board Approves $3 Billion Share Repurchase Program
ITC HOMES: Disclosure Statement Hearing Set for August 2
ITC HOMES: Gedalias Criticize Plan, Asks to End Exclusivity
ITEN CHEVROLET: Section 341(a) Meeting Slated for August 15
J. CREW: Makes $35 Mil. Voluntary PrePayment of Credit Agreement
J. CREW: IPO Completion Prompts Moody's to Upgrade Ratings
JACOB DEN HOLLANDER: Case Summary & 15 Largest Unsecured Creditors
JAY-MAX ENTERPRISES: Case Summary & 20 Largest Unsecured Creditors
KAISER ALUMINUM: Court Sets Aug. 5 as Admin. Claims Bar Date
KAISER ALUMINUM: Wants $32 Mil. Deal with TIG Insurance Approved
KMART CORP: Wants Court to Compel Discovery from Ashland
KMART CORP: Wants Unclaimed Shares Reverted for Redistribution
KNOLL INC: S&P Raises Corporate Credit & Bank Loan Ratings to BB
LANCE JOHNSON: Voluntary Chapter 11 Case Summary
LIGAND PHARMA: March 31 Balance Sheet Upside-Down by $224 Million
LONGBILT LLC: Voluntary Chapter 11 Case Summary
LORBER INDUSTRIES: Files Amended Plan and Disclosure Statement
MADDIX DELUXE: Case Summary & 20 Largest Unsecured Creditors
MANITOWOC CO: Offers Revised Non-Binding Proposal to Enodis plc
MAPCO EXPRESS: Credit Facility Increase Cues S&P to Affirm Ratings
MESABA AIRLINES: AMFA to Appeal Court Ruling On Labor Contracts
MESABA AIRLINES: Pilots Balk at Court Ruling on Labor Contracts
NAKOMA LAND: Trustee Can Borrow $100,000 from Investors Financial
NALCO FINANCE: Fitch Affirms Junk Rating on Senior Discount Notes
NEWPAGE CORP: Commences Tender Offer for Outstanding Notes
NORTHWEST AIRLINES: Reaches Labor Deal with Flight Attendants
OCA INC: Idaho Unit Files Schedules of Assets and Liabilities
OWENS CORNING: Court Okays Compromise on 37 Asbestos PD Claims
OWENS CORNING: Court Approval on Settlement Ends Tobacco Dispute
PETCO ANIMAL: Acquisition Prompts S&P's Negative Watch
PRESIDENT CASINOS: Pinnacle Inks Agreement With Official Committee
PINNACLE ENT: Enters Pact with President Casinos' Official Panel
RELIANT ENERGY: Moody's Holds Caa1 Senior Subordinated Ratings
RIM SEMICONDUCTOR: Restates 2005 & 2006 Financial Statements
RIO MORALES: Case Summary & 20 Largest Unsecured Creditors
RIVERSTONE NETWORKS: Files Ch. 11 Plan & Disclosure Statement
RLC INDUSTRIES: Strong Performance Cues Moody's to Lift Ratings
SILICON GRAPHICS: Closes Lease Settlement to Restructure Debts
SILICON GRAPHICS: Panel Banned in Providing Access to Information
SPI PETROLEUM: S&P Rates Proposed $155 Mil. First-Lien Loan at B
SPORT SUPPLY: Minority Shareholders Sue Collegiate Pacific
SMART ONLINE: Audit Committee Wraps Internal Stock Probe
SMART ONLINE: Sherb & Co. Raises Going Concern Doubt
STAR GAS: Recapitalization Prompts Fitch to Upgrade Ratings
TCR I: Files Disclosure Statement in E.D. Virginia
TFS ACQUISTION: Moody's Junks Rating on Proposed $190 Mil. Notes
TKO SPORTS: Plans to Pay Unsec. Creditors 15% of Claims in 3 Yrs.
TOYS 'R' US: Fitch Rates Unit's New $1 Bil. Debt Facility at CCC+
TRUEYOU.COM INC: April 1 Balance Sheet Upside-Down by $346.9 Mil.
U.S. TELEPACIFIC: S&P Rates Proposed $205 Million Debts at B-
UNIVERSAL MORTGAGE: Case Summary & Two Largest Unsecured Creditors
W.R. GRACE: Asbestos PD Panel Wants Access to Litigation Files
W.R. GRACE: Citadel Entities Want to Buy 1,000,000 Common Shares
WERNER LADDER: Court Postpones DIP Financing Hearing to July 25
WERNER LADDER: Judge Defers Cash Collateral Hearing to July 25
WILLIAM LEAHY: Case Summary & Eight Largest Unsecured Creditors
* Large Companies with Insolvent Balance Sheets
*********
ADELPHIA COMMS: Court Confirms Century-TCI & Parnassos Ch. 11 Plan
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
entered a formal order confirming the Third Modified Fourth
Amended Joint Plan of Reorganization for the Century-TCI Debtors
and the Parnassos Debtors on June 29, 2006.
The Century-TCI Debtors and the Parnassos Debtors are debtor-
affiliates of Adelphia Communications Corporation.
The Century-TCI Debtors are comprised of:
* Century-TCI California, L.P.,
* Century-TCI California Communications, L.P.,
* Century-TCI Distribution Company, LLC, and
* Century-TCI Holdings, LLC,
The Parnassos Debtors are comprised of:
* Parnassos Communications, L.P.,
* Parnassos Distribution Company I, LLC,
* Parnassos Distribution Company II, LLC,
* Parnassos, L.P.,
* Parnassos Holdings, LLC, and
* Western NY Cablevision, L.P.
The Hon. Robert D. Gerber finds that the Joint Venture Plan
satisfies the 13 statutory requirements under Section 1129(a) of
the Bankruptcy Code.
Judge Gerber clarifies that the confirmation or consummation of
the Joint Venture Plan will not have any probative effect,
evidentiary value or affect the rights, claims or defenses of the
Debtors or any parties-in-interest with respect to any plan for
the Affiliated Debtors.
Specifically, Judge Gerber rules that confirmation or
consummation of the Joint Venture Plan will have no impact with
respect to the Bank Lender Avoidance Complaint unless expressly
resolved by the Plan and the parties reserve all their rights,
claims, defenses and arguments.
Judge Gerber further rules that the Official Committee of
Unsecured Creditors' pending Holdback Motion and Estimation
Motion will be deemed withdrawn with prejudice as of the
Effective Date solely in respect of distributions in respect of
the Bank Claims, the Bank Lender Fee Claims and the Bank Lender
Post-Effective Date Fee Claims in Class P-Bank and Class-TCI
Bank. Each of the Holdback Motion and the Estimation Motion
otherwise will remain pending and unaffected by the Joint Venture
Plan and the Confirmation Order with respect to the other ACOM
Debtors.
With respect to the Securities Class Action, the issue of whether
the releases provided by Section 12.08(b)(vi) of the Joint
Venture Plan are permissible under applicable law will be subject
to further Court decision.
A full-text copy of the Confirmation Order is available for free
at http://ResearchArchives.com/t/s?d9e
Based in Coudersport, Pa., Adelphia Communications Corporation
(OTC: ADELQ) -- 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.
(Adelphia Bankruptcy News, Issue No. 139; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
AIRADIGM COMMS: Court Adjourns Disclosure Hearing to July 27
------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Wisconsin
adjourned until, 9:30 a.m. on July 27, 2006, the hearing to
consider the adequacy of information contained in the Second
Amended Disclosure Statement explaining Chapter 11 Plan of
Reorganization filed by Airadigm Communications, Inc.
Previous Chapter 11 Case
The Debtor previously filed for chapter 11 protection in 1999.
The Federal Communications Commission automatically cancelled the
Debtor's Licenses after it filed for bankruptcy. The Debtor
relates that in 2000, the Court confirmed a plan of reorganization
that provided for the sale of the Debtor's assets, including its
Licenses, to Telephone and Data Systems, Inc., and Telecorp
Communications Corp.
The Debtor says that the proceeds of those sales would have been
sufficient to pay in full all claims of creditors in the 1999
case, including the FCC, and to make a distribution to the owners
of the equity interests. However, the Debtor says it was unable
to complete the sale of its assets owing to the fact that the FCC
did not rule on its request to reinstate its Licenses until 2003.
The Debtor relates that in the nearly three-year period from the
confirmation of the plan to the FCC's decision on the Licenses,
the obligations of TDS and Telecorp to purchase its assets expired
and the value of the Licenses fell. The Debtor says that the
FCC's actions and delay made it impossible to implement the 2000
Plan.
New Chapter 11 Case
Because of the decline in the value of the Licenses, the Debtor
claims it was forced to filed another chapter 11 case on May 8,
2006. The Debtor relates that when it filed for bankruptcy:
* it owed the FCC about $64 million for the balance of the
purchase price of the Licenses;
* its indebtedness to TDS was approximately $136 million; and
* the Debtor's value as a going concern was far less that the
indebtedness, thus it couldn't refinance its debts.
The Debtor discloses that it can't pay the debts on their
respective terms and if it defaults on the FCC debt, then it will
lose its Licenses and will be unable to continue as a going
concern.
The Debtor tells the Court that it is currently not servicing its
secured debt, and has a sufficient amount of cash for its day-to-
day operations. The Debtor says its operations are constrained by
its cash flow but it has been operating on a cash available basis
since 1999.
The Debtor argues that if FCC's claim was reduced to the value of
the Licenses, it would be able to obtain the financing needed to
pay TDS' claim. The Debtor discloses that TDS has indicated its
willingness to restructure its claims.
Overview of the 2006 Plan
The 2006 Plan provides for the restructuring of the FCC and TDS
indebtedness, and payment of all unsecured claims of $10,000 or
less in full. The Debtor says that without the restructuring, it
would be unable to make payments to the FCC and TDS, resulting in
the loss of its Licenses and other assets and its inability to
continue as a going concern.
In any liquidation, the FCC and TDS, as the senior secured
creditors with liens on all assets, would be entitled to payment
before any other creditor. The Debtor asserts that since it
doesn't have enough assets to satisfy FCC's $64,219,424 claim or
TDS' 136,652,535 claim, unsecured creditors would receive nothing
in a liquidation.
On the other hand, if the 2006 Plan is confirmed, the Debtor says
that it will continue to operate and expects to be a profitable
enterprise that will continue to provide service to its customers
and to pay its employees, suppliers, roaming partners, lessors and
all other creditors in full in the ordinary course of business.
Plan Funding
The Debtor tells the Court that payments required under the 2006
Plan will be made from the Reorganized Debtor's cash on hand.
However, if the Reorganized Debtor has insufficient cash or
reserves, the 2006 Plan provides that TDS or its designee will
make a confirmation loan in order to advance sufficient funds to
the Reorganized Debtor. The Confirmation Loan will be combined
with the allowed Secured Claim amounts owed to TDS, and will be
paid in accordance with the 2006 Plan's treatment of TDS' Secured
Claim. The 2006 Plan also includes the conversion of FCC and TDS'
unsecured claims to equity in the Reorganized Debtor.
Treatment of Claims
Under the 2006 Plan, these claims will be paid in full:
* administrative expense claims aggregating $164,000,
* miscellaneous secured claims the total of which the Debtor
does not yet know, and
* convenience claims amounting to $60,000.
The Debtor says that the amount of FCC's Secured Claim will be
determined by the Court and will receive these treatments:
(1) the Reorganized Debtor will determine no later than the
eleventh day after the Confirmation Date which Licenses or
Partial Licenses it elects to retain and which it elects
to surrender; provided that any election is subject to the
approval of TDS. All Licenses and Partial Licenses will
either be paid or surrendered;
(2) with respect to each License that the Reorganized Debtor
elects to retain, it will pay the holder of the claim the
full amount of that claim, without interest, except as
provided in Section 506(b) of the Bankruptcy Code, in cash
on the Payment Date, less a credit for the full amount of
payments made by the Debtor on account of the License
before filing the new bankruptcy case;
(3) with respect to each Partial License that the Reorganized
Debtor elects to retain, it will pay the claim secured by
the License from which the Partial License was Partitioned
or Disaggregated an amount equal to the Retained Pro Rata
Portion of that claim, without interest, except as
provided in Section 506(b) of the Bankruptcy Code, in cash
on the Payment Date, less a credit for the full amount of
payments made by the Debtor on account of the entire
License before filing the new bankruptcy case;
(4) with respect to each License that the Reorganized Debtor
elects to surrender, the Reorganized Debtor will surrender
that License on the Payment Date to the holder of the
claim secured by that License and will receive a credit
against any claim held by the holder in an amount equal to
the greater of:
(a) the current market value of the License as determined
by the Court, or
(b) the net original bid price for that License, plus the
amount of any other payments made by the Debtor on
account of the License before filing the new
bankruptcy case;
(5) with respect to each Partial License that the Reorganized
Debtor elects to surrender, the Reorganized Debtor will
surrender that Partial License on the Payment Date to the
holder of the claim secured by the License from which the
Partial License was Partitioned or Disaggregated and will
receive a credit against any claim held by the holder in
an amount equal to the Surrendered Pro Rata Portion of
the greater of either:
(a) the current market value of the License as determined
by the Court, or
(b) the net original bid price for that License.
The Debtor tells the Court pursuant to the Plan, upon satisfaction
of FCC's Secured Claims, the Liens in the Licenses securing the
Claims will be released, and the Reorganized Debtor will own any
Licenses or Partial Licenses it has retained free and clear of all
liens, claims or encumbrances.
The Debtor says that if the holder of a FCC Secured Claim makes
the election described in Section 1111(b) of the Bankruptcy Code,
treating its entire Claim as a Secured Claim, then:
(i) the holder of the claim will retain its Lien to the extent
of the allowed amount of the Secured Claim, and
(ii) the Reorganized Debtor will satisfy the Secured Claim with
respect to which the election is made by investing the
cash amount that would otherwise be payable, if no Section
1111(b) election had been made, under Section 1111(a) to
purchase, for the benefit of the holder, either, at
the election of the Reorganized Debtor:
(x) a security representing either an obligation of the
United States or an obligation guaranteed by an
agency of the United States and backed by the full
faith and credit of the United States, or
(y) an annuity contract issued by an insurance company
having an "A" rating or better from A.M. Best Company
or Standard & Poor's. The terms of such security or
annuity shall be such that the FCC will receive, in
no more than 30 years, deferred cash payments
totaling at least the full amount of its Secured
Claim, of a value, as of the effective date, of the
License or Partial License that secures such Secured
Claim.
TDS will retain it Liens until its Secured Claim is satisfied in
full. TDS' Secured Claim will receive these treatments:
(a) TDS' Secured Claim will bear interest from and after the
effective date at a certain percentage rate. Documents
filed with the Court did not state what that percentage
is;
(b) for the first three years after the effective date, the
Reorganized Debtor will pay only accrued interest in six
semi-annual payments, making the first such payment on the
first day of the seventh month following the month in
which the effective date occurs and each of the next five
interest payments on the first day of each sixth month
thereafter; and
(c) beginning on the first day of the forty-second month after
the month in which the effective date occurs, TDS' Secured
Claim will be amortized over a term of 84 months, and the
Reorganized Debtor will make equal semi-annual installment
payments of principal plus accrued interest, with a
balloon payment on the first day of the one-hundred-second
month after the month in which the effective date occurs
of the entire unpaid balance of principal and accrued
interest.
FCC and TDS' unsecured claims and other unsecured claims will be
converted to common shares of voting stock in the Reorganized
Debtor on the effective date.
Equity Interests in the Debtor will be cancelled on the effective
date.
A full-text copy of the Debtor's Disclosure Statement is available
for a fee at:
http://www.researcharchives.com/bin/download?id=060714235426
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 COMMS: Gets Final Court Approval on Cash Collateral Use
----------------------------------------------------------------
The Honorable Robert D. Martin of the U.S. Bankruptcy Court for
the Western District of Wisconsin allowed Airadigm Communications,
Inc., on a final basis, to use cash collateral securing repayment
of its debts to Telephone and Data Systems, Inc.
Kathryn A. Pamenter, Esq., at Goldberg, Kohn, Bell, Black,
Rosenbloom & Moritz, Ltd., in Chicago, Illinois, informed the
Court that the Debtor will use the cash collateral to fund its
reorganization and continuing business operations.
Ms. Pamenter told the Court that the Debtor previously filed for
bankruptcy on July 28, 1999. TDS, the Oneida Enterprise
Development Authority and Ericsson, Inc., held significant secured
claims against the Debtor in the prior bankruptcy case. In
November 2000, the W.D. of Wisconsin Bankruptcy Court confirmed a
plan of reorganization in the Debtor's first bankruptcy case.
In connection with the prior bankruptcy case and in accordance
with the 2000 Plan and other loan documents, TDS made advances to
the Debtor from time to time and acquired the secured claims of
OEDA and Ericsson.
When the Debtor filed its second chapter 11 petition, it owed TDS
approximately $136,652,535. Of the total prepetition
indebtedness, at least $96,652,535 is secured by security
interests in all of the Debtor's assets except for the Debtor's
licenses issued by the Federal Communications Commission. The
licenses are encumbered by liens securing indebtedness to the FCC
in the approximate amount of $64,000,000.
As adequate protection for its interests, the Court granted TDS
replacement liens and security interests to the extent of any
diminution in the value of its collateral.
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.
AIRNET COMMS: U.S. Trustee Appoints Three-Member Official Panel
---------------------------------------------------------------
The United States Trustee for Region 21 appointed three creditors
to serve on an Official Committee of Unsecured Creditors in AirNet
Communications Corporation's chapter 11 case:
1. Sanmina - SCI Corporation
c/o Steven Jackman
2700 North First Street
San Jose, California 95134
Tel: (408) 964-3617
Fax: (408) 964-3888
2. Arraycomm LLC
c/o David Bowman, General Counsel
2480 North First Street, Suite 200
San Jose, California 95131-1014
Tel: (630) 618-1701
Fax: (630) 413-5097
3. Decimal Engineering, Inc.
c/o Alan Garey
2640 North Powerline Road
Pompano Beach, Florida 33069
Tel: (954) 975-7992
Fax: (954) 975-7994
The Committee has selected the law firms Pachulski Stang Ziehl
Young Jones & Weintraub LLP and Carlton Fields, P.A., as
co-counsels to represent it in the Debtor's chapter 11 case.
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtors'
expense. They may investigate the Debtors' business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtors is impossible, the Committee will urge the
Bankruptcy Court to convert the chapter 11 cases to a liquidation
proceeding.
Headquartered in Melbourne, Florida, AirNet Communications
Corporation -- http://www.aircom.com/-- designs, manufactures,
and markets wireless infrastructure products and offers
infrastructure solutions for commercial GSM customers, and
government, defense, homeland security based agencies. The Debtor
filed for chapter 11 protection on May 22, 2006 (Bankr. M.D. Fla.
Case No. 06-01171). R. Scott Shuker, Esq., at Gronek & Latham,
LLP, represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed total
assets of $15,701,881 and total debts of $21,615,346.
AIRNET COMMUNICATIONS: Files Schedules of Assets and Liabilities
----------------------------------------------------------------
AirNet Communications Corp. delivered to the U. S. Bankruptcy
Court for the Middle District of Florida its schedules of assets
and liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ------ -----------
A. Real Property
B. Personal Property $17,739,167
C. Property Claimed
as Exempt
D. Creditors Holding
Unsecured Priority Claims $14,876,547
E. Creditors Holding Unsecured
Nonpriority Claims 517,101
F. Creditors Holding Unsecured
Nonpriority Claims 2,144,658
G. Executory Contracts and
Unexpired Leases
H. Codebtors
I. Current Income of
Individual Debtors
J. Current Expenditures of
Individual Debtors
----------- -----------
Total $17,739,167 $17,538,306
Headquartered in Melbourne, Florida, AirNet Communications
Corporation -- http://www.aircom.com/-- designs, manufactures,
and markets wireless infrastructure products and offers
infrastructure solutions for commercial GSM customers, and
government, defense, homeland security based agencies. The Debtor
filed for chapter 11 protection on May 22, 2006 (Bankr. M.D. Fla.
Case No. 06-01171). R. Scott Shuker, Esq., at Gronek & Latham,
LLP, represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed total
assets of $15,701,881 and total debts of $21,615,346.
ALASKA COMMUNICATIONS: Moody's Affirms B1 Senior Secured Rating
---------------------------------------------------------------
Moody's Investors Service affirmed the B1 Corporate Family Rating
and B1 Senior Secured rating of Alaska Communications Systems
Holdings, Inc. and changed the outlook to stable from negative.
The Senior Unsecured rating on the remaining $4 million of senior
notes was withdrawn at the company's request.
The outlook change to stable reflects Moody's expectation that
ACSH is likely to stop consuming cash beginning in 2007 as it
completes its growth capital expenditure programs, but that
further improvement in free cash flow is unlikely in our view
given the company's ongoing sizeable dividend levels relative to
operating cash flows.
Outlook Actions:
Issuer: Alaska Communications Systems Holdings, Inc.
* Outlook, Changed To Stable From Negative
Withdrawals:
Issuer: Alaska Communications Systems Holdings, Inc.
* Senior Unsecured Regular Bond/Debenture, Withdrawn,
previously rated B2
Alaska Communications Systems Holdings, Inc. is an integrated
telecommunications provider based in Anchorage, Alaska.
ALERIS INT'L: S&P Rates Proposed $650 Million Term Loan B at BB-
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB-' corporate
credit rating on Beachwood, Ohio-based Aleris International Inc.
and removed it from CreditWatch, where it was placed with negative
implications on March 21, 2006. The CreditWatch placement
followed Aleris' announcement that it would acquire the downstream
aluminum assets of Corus Group PLC (BB/Stable/B) for $880 million
in cash and assumed debt. The outlook is negative.
At the same time, Standard & Poor's assigned its 'BB-' and '2'
recovery ratings to the company's proposed $650 million senior
secured term loan B. The '2' recovery rating indicates the
expectation of a substantial recovery of principal in the event of
a payment default. The ratings are based on preliminary terms and
conditions and are predicated on the completion of the Corus
transaction and related financings substantially in the form
currently anticipated.
"The company's debt levels are relatively high, and we remain
concerned that management will continue to opportunistically make
cash-financed acquisitions," said Standard & Poor's credit analyst
Marie Shmaruk.
"However, Aleris' markets remain relatively healthy, which should
enable the company to reduce leverage to less than 4x. We could
change the outlook to stable if management reaches and maintains
more moderate debt levels. Ratings on Aleris could be pressured
if the company's debt levels remain high and performance weakens
materially because of intensified competition or weaker market
conditions."
The proceeds from the issue, along with proceeds from a revolving
credit facility and bridge loans, will primarily be used to
refinance existing debt, finance the acquisition, and fund working
capital and transactions costs.
Aleris is a vertically integrated manufacturer of aluminum sheet
for distributors and the transportation, construction, and
consumer durables end-user markets.
AMERICA CAPITAL: Files Schedules of Assets and Liabilities
----------------------------------------------------------
America Capital Corporation delivered to the U.S. Bankruptcy Court
for the Southern District of Florida its schedules of assets and
liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ------ -----------
A. Real Property
B. Personal Property $41,005,921
C. Property Claimed
as Exempt
D. Creditors Holding
Secured Claims $132,203,122
E. Creditors Holding
Unsecured Priority Claims $2,934,076
F. Creditors Holding $62,558,079
Unsecured Nonpriority
Claims
----------- ------------
Total $41,005,921 $196,695,277
In Schedule F of its Schedule of Assets and Liabilities the Debtor
disclosed that some amounts given did not include accrued
interest.
A full-text copy of the Debtor's Schedules of Assets and
Liabilities is available for free at:
http://ResearchArchives.com/t/s?dc4
Headquartered in Miami, Florida, American Capital Corporation
holds a 65.19% interest in TransCapital Financial Corporation.
TransCapital Financial is a holding and management company that
conducted substantially all of its operations through its wholly-
owned subsidiary, Transohio Savings Bank, FSB. Transohio Savings'
key activities as a savings and loans institution were banking and
lending and its primary lending activity was the originating and
purchasing of loans secured by mortgages on residential
properties. Transohio Savings also endeavored to generate
residential loan originations through branch personnel and real
estate brokers. Mobile home and home improvement loans were
generated through dealers and contractors and additionally,
Transohio Savings made construction loans generated by contractors
that usually extended to not more than one year in length.
American Capital filed for chapter 11 protection on June 19, 2006
(Bankr. S.D. Fla. Case No. 06-12645). Mindy A. Mora, Esq., at
Bilzin Sumberg Baena Price & Axelrod LLP, represents the Debtor.
When the Debtor filed for protection from its creditors, it listed
total assets of $52,005,000 and total debts of $207,170,268.
TransCapital Financial Corporation also filed for chapter 11
protection on June 19, 2006 (Bankr. S.D. Fla. Case No, 06-12644)
and is represented by Paul J. Battista, Esq., at Genovese Joblove
& Battista, P.A.
AMERUS GROUP: Sells Assets to Aviva plc for $2.9 Billion in Cash
----------------------------------------------------------------
AmerUs Group, Co. and Aviva plc reached a definitive agreement
under terms of which Aviva will acquire AmerUs Group for $69 per
share in cash for all outstanding shares of AmerUs Group. The
consideration represents a premium of 20%, based on the average
closing price of AmerUs Group's shares for the 30-day period prior
to this announcement. The total value of the transaction would be
approximately $2.9 billion.
The transaction, which was unanimously approved by the boards of
directors of Aviva and AmerUs Group, is subject to customary
closing conditions, including approval by AmerUs Group
shareholders and the receipt of government and regulatory
approvals, including the expiration of all waiting periods
required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976.
Upon completion of the transaction, AmerUs Group and Aviva's U.S.
operations will be combined and the business will operate under
the name of Aviva, headquartered in Des Moines, Iowa.
"AmerUs is a well-managed, innovative and fast-growing business.
This acquisition establishes a leadership position within a key
segment of the world's largest long-term savings market," Richard
Harvey, Group Chief Executive, Aviva plc, said. "In a single move
the combination of AmerUs' national distribution networks and the
resources and expertise of Aviva provide the platform for
significant profitable growth in the US."
Thomas C. Godlasky, chairman, president and chief executive
officer of AmerUs Group, who will become president and chief
executive officer of the new Aviva USA, said, "This transaction
enables both companies to fulfill their complementary business
visions faster than either company could separately. For AmerUs
Group, it means uniting our capabilities with an organization with
global brand recognition and the financial strength of an AA
credit rated insurer. Additionally, the combined U.S. operations
add further strength to the global marketing presence and diverse
distribution systems of Aviva. We look forward to working with
Aviva's excellent U.S. team.
"The combination of AmerUs and Aviva will open new opportunities
for our producers and customers by providing a broader product
portfolio. This further enhances our commitment to serving our
customers and communities. For Aviva, the transaction greatly
enhances their geographic reach throughout the U.S. market, where
demographic trends and longer life expectancies are creating a
growing need for savings, wealth preservation and retirement
products."
AmerUs Group expects to schedule a special meeting of its
shareholders during the fourth quarter of 2006 to vote on the
transaction. The companies currently expect the transaction to
close before Dec. 31, 2006.
JPMorgan Cazenove, Lazard & Co. Limited and Morgan Stanley & Co.
Limited are acting as joint financial advisers to Aviva. Goldman,
Sachs & Co. served as financial advisor to AmerUs Group and
Skadden, Arps, Slate, Meagher & Flom LLP provided legal counsel.
About Aviva
Headquartered in London, England, Aviva plc (LSE:AV) --
http://www.aviva.com/-- provides insurance services and life and
pension products in the U.S. and Europe, with substantial
positions in other markets around the world. Aviva's principal
business activities are long-term savings, fund management and
general insurance.
About AmerUs Group
Headquartered in Des Moines, Iowa, AmerUs Group Co. (NYSE:AMH) --
http://www.amerus.com/-- is a corporation engaged through its
subsidiaries in the business of marketing and distributing
individual life insurance and annuity products in 50 states, the
District of Columbia and the U.S. Virgin Islands. Its major
operating subsidiaries include AmerUs Life Insurance Company,
American Investors Life Insurance Company, Inc., Indianapolis Life
Insurance Company and Bankers Life Insurance Company of New York.
* * *
As reporter in the Troubled Company Reporter on March 20, 2006,
Moody's Investors Service affirmed the Baa3 senior debt rating of
AmerUs Group Company and changed the rating outlook for AmerUs
Group Company to stable from negative. The ratings of other
affiliated AmerUs companies were also affirmed, and their rating
outlook was also changed to stable from negative. The outlook
change reflected the recent settlement of a private class action
lawsuit in California at a modest cost, as well as Moody's
expectation that any additional legal settlements are likely to be
manageable.
ANTHONY CHRISTOU: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Anthony G. Christou
Maria T. Christou
1051 Redstone Lane
Dunwoody, Georgia 30338
Tel: (770) 331-0710
Bankruptcy Case No.: 06-68251
Chapter 11 Petition Date: July 13, 2006
Court: Northern District of Georgia (Atlanta)
Judge: Margaret Murphy
Debtors' Counsel: David G. Bisbee, Esq.
2929 Tall Pines Way
Atlanta, Georgia 30345
Tel: (770) 939-4881
Estimated Assets: $500,000 to $10 Million
Estimated Debts: $10 Million to $50 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Michael Abdalla Sr. $3,040,783
5960 Riverside Drive
Atlanta, GA 30328
Chris Salamone $2,543,000
4800 North Federal Highway
Suite 302A
Boca Raton, FL 33341
Bobby Haralambakis $2,000,000
3135 Caldwell Road
Atlanta, GA 30319
Aklzadeh, Bahmna & Bahram $1,550,000
2123 Dunwoody Glen
Dunwoody, GA 30338
Dennis Aklzadeh $1,454,400
7760 Blandford Place
Atlanta, GA 30350
John Sklouris $1,088,679
3127 Mayfield Avenue
Charlotte, NC 28209
Guthrie, Micki & David $929,330
1216 Pleasant Hill Road
Lawrenceville, GA 30044
Norman Zaplen $859,206
102 North Laurel Avenue
Greensboro, GA 30642
Miriam Taylor $796,146
2137 Rolstern Drive
Charlotte, NC 28207
Mark Gleason $712,682
P.O. Box 80805
Atlanta, GA 30366
Frank Moore $670,982
2525 Amberbrook Lane
Grayson, GA 30010
Geeslin/Wrigley Investments LLP $647,244
3674 North Peachtree Road
Chamblee, GA 30341
Conchel Aphronia $634,338
1707 Reverdy Oaks Drive
Matthews, NC 28105
Timis Samouris $594,830
2730 Clairmont Road
Atlanta, GA 30329
Jorje Rosado $570,000
4020 Wellington Mist Point
Duluth, GA 30097
Ken Henderson $562,038
404 Kitchen's Lane
Clayton, GA 30525
Rafik Cressaty $536,225
8150 Hewlett Road
Atlanta, GA 30350
Rusty Hilbun $533,250
100 Wesleyanne Court
Macon, GA 31210
Sheriff Cressaty $505,000
1925 Edenbridge Way
Nashville, TN 37215
SEPP $496,200
7 Old Tyler Court
Greenville, SC 29615
ASAT HOLDINGS: April 30 Stockholders' Deficit Tops $53.2 Million
----------------------------------------------------------------
ASAT Holdings Limited reported financial results for the fourth
quarter and fiscal year 2006 ended April 30, 2006.
Net revenue in the fourth quarter of fiscal 2006 was
$49.3 million, an increase of 2% compared with net revenue of
$48.2 million in the third quarter of fiscal 2006.
Net loss in the fourth quarter of fiscal 2006 was $17.1 million.
Fourth quarter net loss includes one-time related charges of
$3.9 million for the write-off of property, plant and equipment,
$2.7 million in reorganization charges, and $1 million in
relocation and facilities expenses associated with the Company's
move of its manufacturing operations to Dongguan, China.
Fourth quarter net loss compares with a third quarter net loss of
$5.9 million. Third quarter net loss included a $2.3 million
reversal to other income for the previously accrued write-off of
ASAT S.A., ASAT's business in France that was closed as part of
ASAT's global restructuring in November 2001.
"We have successfully closed our assembly and test operations in
Hong Kong and are completing our move to Dongguan, China," Robert
J. Gange, president and chief executive officer of ASAT Holdings
Limited said.
"The move was completed ahead of schedule with minimal disruption
to our overall business. Now that our manufacturing is in the new
low-cost facility, we expect the cost savings by operating in
Dongguan will be reflected in the October quarter results."
Fiscal 2006 Financial Results
Net revenue for fiscal 2006 was $182.1 million, compared with net
revenue of $194.4 million in fiscal 2005. Net loss for fiscal
2006 was $42.4 million. This compares with a net loss of
$60.4 million in fiscal 2005.
At April 30, 2006, the Company's balance sheet showed $181,461,000
in total assets, $230,575,000 in total liabilities and $4,143,000
in total redeemable convertible preferred shares, resulting in a
$53,257,000 shareholders' deficit. The Company also has a
$306,152,000 accumulated deficit at April 30, 2006.
Financing Commitment
The Company is in the process of obtaining external financing to
facilitate its required working capital needs. While ASAT
believes receipt of the financing is likely, there can be no
assurance that it will be obtained, and if such financing is not
obtained for any reason, unless alternate financing is obtained,
there may be questions regarding the Company's ability to continue
as a going concern.
First Quarter Fiscal 2007 Outlook and Guidance
"The July quarter will mark the end of our move to China," Mr.
Gange said. "During the last stage of the move some of our
equipment was not available for production. Since we were not
able to maximize our full revenue generating potential our July
quarter revenue results will be in line with the April quarter."
For the first quarter of fiscal 2007, ending July 31, 2006, the
Company expects revenue to be approximately flat with the April
quarter.
ASAT Holdings Limited
ASAT Holdings Limited (Nasdaq: ASTT) -- http://www.asat.com/-- is
a global provider of semiconductor package design, assembly and
test services. With more than 17 years of experience, the Company
offers a definitive selection of semiconductor packages and world-
class manufacturing lines. ASAT's advanced package portfolio
includes standard and high thermal performance ball grid arrays,
leadless plastic chip carriers, thin array plastic packages,
system-in-package and flip chip. ASAT was the first company to
develop moisture sensitive level one capability on standard leaded
products. The Company has operations in the United States, Asia
and Europe. ASAT, Inc. is a wholly owned subsidiary of ASAT
Holdings Limited and the exclusive representative of ASAT for
services in North America.
* * *
As reported in the Troubled Company Reporter on Nov. 10, 2005,
Standard & Poor's Ratings Services has affirmed ASAT Holdings
Ltd.'s 'B-' long-term corporate credit rating and removed the
rating from CreditWatch, where it was placed with negative
implications on Aug. 17, 2005. S&P said the outlook is negative.
Moody's also placed a Caa1 rating on ASAT Holdings' senior
unsecured debt on March 26, 2004.
ATMEL CORP: Sells Atmel Grenoble to e2v for $140 Million Cash
-------------------------------------------------------------
Atmel Corporation reported that it has signed an agreement to sell
its Grenoble, France subsidiary including the manufacturing
facility for approximately $140 million in cash to e2v
technologies plc.
The Company said, it will retain rights to its patented
fingerprint scanning recognition technology and that all other
Grenoble products including image sensors and aerospace qualified
microprocessors are included in the sale. The Company expects the
transaction to be completed during its third quarter.
The Company will provide additional details of the sale during its
Q2 earnings conference call on July 25, 2006.
About e2v
Headquartered in Chelmsford, UK, e2v - http://www.e2v.com-- is a
designer, developer and manufacturer of electronic tube and sensor
components & sub-systems that are supplied to niche markets within
the three core areas of Medical & Science, Aerospace & Defense and
Commercial & Industrial.
About Atmel
Atmel Corporation -- http://www.atmel.com-- (Nasdaq: ATML)
designs and manufactures microcontrollers, advanced logic, mixed-
signal, nonvolatile memory and radio frequency (RF) components.
Leveraging one of the industry's broadest intellectual property
(IP) technology portfolios, Atmel is able to provide the
electronics industry with complete system solutions. It is
focused on consumer, industrial, security, communications,
computing and automotive markets.
* * *
Standard & Poor's Rating Services assigned its single-B long-term
foreign issuer and long-term local issuer credit ratings to Atmel
Corp. on Oct. 24, 2001, and said the outlook, at that time, was
negative.
BANKUNITED FINANCIAL: Earns $23.8 Million in Third Quarter of 2006
------------------------------------------------------------------
BankUnited Financial Corporation, parent company of BankUnited
FSB, reported net income of $23.8 million for the quarter ended
June 30, 2006, compared to a net loss $14.8 million for the same
quarter last year.
Net income for the nine months ended June 30, 2006, was
$59.7 million, compared to $13.2 million for the same period in
the prior year.
The net loss for the quarter ended June 30, 2005, included an
after-tax charge of $24.6 million related to the company's
prepayment of Federal Home Loan Bank of Atlanta advances and the
settlement of related swaps. Excluding losses related to the FHLB
prepayments, BankUnited's net income for the quarter ended June
30, 2005, was $9.8 million. Excluding losses related to FHLB
prepayments, net income for the nine months ended June 30, 2005,
was $37.9 million.
"The dedicated effort of each and every member of the BankUnited
team has led to outstanding results this quarter," Alfred R.
Camner, BankUnited's chairman and chief executive officer said.
"Our double-digit growth in key financial measures is the result
of a focused daily effort and ongoing commitment to our customers.
Programs we implemented in previous quarters to improve margin,
reduce the rate of repayments and maximize loan sale opportunities
have all gained traction. Most importantly, our asset quality
continues to remain strong as the company grows."
"We have a lot to be proud of this quarter," Ramiro Ortiz,
BankUnited's president and chief operating officer, added.
"In addition to 34% year-over-year growth in our commercial,
commercial real estate and consumer portfolios, we hit new records
in several loan and deposit categories. On the retail side, as
larger out-of-state banks move into Florida, our micro-market
strategy differentiate us from the competition.
"By understanding and reacting to the unique needs of the
neighborhoods we serve, we are able to give consumers the products
and services they really want. Our branch expansion plans for the
next few quarters include movement into several new markets and
the addition of branches within our existing footprint. We are
confident that our new locations will contribute at the same pace
as the branches we have opened in the previous 12 months."
Net-Interest Margin
The net-interest margin improved to 2.18% this quarter from 2.07%
for the preceding quarter, and was up from 1.66% for the same
quarter last year. BankUnited's margin continued to expand due to
the success of the commercial banking strategies, the further
development of the mortgage product offerings and the execution of
programs implemented in prior quarters, including those relating
to prepayments.
The improvement in margin has continued even as the Federal
Reserve has increased rates. Should the Fed slow down or pause in
its increases, it is anticipated that BankUnited's net-interest
margin could significantly benefit from further upward re-pricing
of adjustable rate mortgages without a commensurate increased
pricing of the bank's liabilities.
Deposit Growth
Total deposits increased 39% to $5.9 billion at June 30, 2006, up
from $4.2 billion at June 30, 2005. Core deposits, which,
consistent with industry practice were redefined during the
quarter ended March 31, 2006, to include certificates of deposit
of $100,000 and less, increased to $4.2 billion at June 30, 2006,
up 35% from June 30, 2005. Non-interest bearing deposits rose to
$385 million at June 30, 2006, up 18% from June 30, 2005.
Loan Production and Balances
Total loan originations were $1.8 billion for the quarter, up 17%
over the third quarter of last year. Total loans grew by
$627 million, or 6%, during the quarter to $10.5 billion as of
June 30, 2006.
Residential mortgage loan originations, which include specialty
consumer mortgage loans originated through branch offices, were
$1.6 billion for the quarter, up 42% over the third quarter of
last year. Residential mortgage loan balances increased $633
million during the quarter to $8.9 billion at June 30, 2006.
Although the national housing market is showing signs of a
slowdown, BankUnited continues to experience strong loan
production.
During the quarter BankUnited originated $1.5 billion of Monthly
Treasury Average option ARM residential loans, an increase of 60%
over the third quarter of last year. For the quarter ended
June 30, 2006, option ARM loans comprised 92% of BankUnited's
residential loan production, compared to 82% during the third
quarter last year.
The majority of these loans contain payment options that enable
borrowers to select from different types of mortgage payments each
month. If the borrower selects a minimum payment option, interest
may be added to the original loan balance, which results in
negative amortization.
The average Loan-to-Value of BankUnited's MTA loans at inception
was 77%, as of June 30, 2006. The average LTV of the MTA
portfolio after the inclusion of the purchase mortgage insurance
was 73%.
In almost all circumstances, loans produced with LTVs greater than
80% require the purchase of mortgage insurance. Current LTVs may
actually be lower than stated due to appreciation of housing
markets as well as reduction of principal. The average balance of
an MTA loan in the portfolio as of June 30, 2006, was $299,000.
As of June 30, 2006, the portfolio of MTA loans of $6.0 billion
had negative amortization of $57 million, or 1%. As of June 30,
2006, less than 4% of MTA loans in the portfolio had negative
amortization greater than 3% of the original principal amount.
Consumer loan balances, which exclude specialty consumer mortgage
loans originated through branch offices, grew by $108 million, or
44%, to $354 million from June 30, 2005.
Commercial and commercial real estate loan balances grew to
$1.1 billion at June 30, 2006, up 32% from June 30th last year.
Non-Interest Income
Total non-interest income was $10.5 million for the quarter, up
183% from the same quarter last year.
Fee income, which includes loan fees, deposit fees and other fees,
excluding loan servicing fees, was $3 million for the third
quarter of fiscal 2006, up 35% from the same quarter last year.
As part of its ongoing strategic balance sheet management process
BankUnited sold $495 million of residential mortgage loans during
the quarter, which resulted in a gain of $5.0 million, up 168%
when compared to loans sales of $424 million with a gain of
$1.9 million for the quarter ended March 31, 2006. The increase
in both volume and gain on loan sales reflect the markets'
favorable perception of BankUnited's mortgage products and
underwriting standards.
BankUnited's portfolio of residential loans serviced for others
was $1.6 billion at June 30, 2006. Servicing and ancillary fees,
net of amortization, resulted in fee income of $983,000 for the
quarter, compared to a loss of $140,000 for the same quarter in
2005. This portfolio had an impairment adjustment of $540,000
during the current quarter, compared to $130,000 for the same
quarter last year.
Expenses and Efficiency Ratio
Non-interest expense was $40.2 million for the quarter, compared
to $65.3 million for the same quarter in 2005. Excluding a
$36.5 million pre-tax prepayment fee on FHLB debt, non-interest
expense was $28.8 million for the quarter ended June 30, 2005.
Non-interest expense for the quarter ended June 30, 2006,
increased 40% from the quarter ended June 30, 2005, excluding the
FHLB prepayment fees. This increase reflects the company's
aggressive expansion in its branch network, operations and support
areas.
The efficiency ratio for the quarter was 52%, a decrease from
153.8% for the same quarter last year. Excluding the FHLB
prepayment fees, the efficiency ratio for the quarter ended
June 30, 2005, would have been 62.8%.
Asset Quality
Non-performing assets as a percentage of total assets increased
slightly to 0.11% from the 0.09% for the previous quarter, and
from 0.10% for the quarter ended June 30, 2005. There is no
guarantee that BankUnited's low levels of non-performing assets
will be sustainable in the future. The allowance for loan losses
as a percentage of total loans was 0.31% as of June 30, 2006,
compared to 0.33% as of June 30, 2005, and 0.31% as of March 31,
2006.
Capital
BankUnited FSB continues to maintain its strong capital position
in excess of regulatory requirements. Core and risk-based capital
ratios were 7.13% and 14.02%, respectively, at June 30, 2006.
BankUnited's board of directors declared and paid its sixth
consecutive cash dividend of $0.005 per share of its Class A
Common Stock on June 30, 2006, to stockholders of record as of
June 15, 2006.
About BankUnited
Based in Coral Gables, Fla., BankUnited Financial Corp. (NASDAQ:
BKUNA) -- http://www.bankunited.com/-- is the holding company for
BankUnited FSB, the largest banking institution headquartered in
Florida. BankUnited had assets of $12.9 billion at June 30, 2006.
Serving customers through 73 branches in 11 coastal counties,
including Miami-Dade, Broward, Palm Beach, Martin, St. Lucie,
Collier, Charlotte, Manatee, Hillsborough, Sarasota and Lee,
BankUnited offers a full spectrum of consumer and commercial
banking products and services.
* * *
As reported in the Troubled Company Reporter on Feb. 26, 2004,
Fitch Ratings assigned a 'BB+' rating to BankUnited Financial
Corporation's $100 million of senior unsecured convertible notes
due 2034. Fitch also assigned a 'BB+' rating on BankUnited's
long-term senior convertible notes. Fitch said its rating outlook
is stable.
BETH ISRAEL: Organization Meeting Scheduled on July 26
------------------------------------------------------
The U.S. Trustee for Region 3 will hold an organizational meeting
to appoint an official committee of unsecured creditors in Beth
Israel Hospital Association of Passaic's at 11:00 a.m., July 26,
2006, at the U.S. Trustee's Office, One Newark Center, 14th Floor,
Room 1401 in Newark, New Jersey.
The sole purpose of the meeting will be to form a committee or
committees of unsecured creditors in the Debtor's case. The
meeting is not the meeting of creditors pursuant to Section 341
of the Bankruptcy Code. However, a representative of the Debtors
will attend and provide background information regarding the
cases.
Creditors interested in serving on a Committee should complete
and return to the U.S. Trustee a statement indicating their
willingness to serve on an official committee.
Official creditors' committees, constituted under Section 1102 of
the Bankruptcy Code, ordinarily consist of the seven largest
creditors who are willing to serve on a committee. In some
Chapter 11 cases, the U.S. Trustee is persuaded to appoint
multiple creditors' committees.
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtors'
expense. They may investigate the Debtors' business and
financial affairs. Importantly, official committees serve as
fiduciaries to the general population of creditors they
represent. Those committees will also attempt to negotiate the
terms of a consensual Chapter 11 plan -- almost always subject to
the terms of strict confidentiality agreements with the Debtors
and other core parties-in-interest. If negotiations break down,
the Committee may ask the Bankruptcy Court to replace management
with an independent trustee. If the Committee concludes that the
reorganization of the Debtors is impossible, the Committee will
urge the Bankruptcy Court to convert the Chapter 11 cases to a
liquidation proceeding.
Headquartered in Passaic, New Jersey, Beth Israel Hospital
Association of Passaic, dba PBI Regional Medical Center --
http://www.pbih.org/-- is a 264-bed, non-profit acute care
hospital located in the City of Passaic, New Jersey. The Medical
Center represents the consolidation of two significant hospitals,
namely Passaic Beth Israel Hospital and the General Hospital
Center of Passaic, and provides medical and health services
including comprehensive cardiac services program, bypass surgery,
electrophysiology, off pump surgery, and others.
The Company filed for chapter 11 protection on July 10, 2006
(Bankr. D. N.J. Case No. 06-16186). Mark J. Politan, Esq., and
Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman &
Leonard, P.A., represent the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it
estimated assets and debts between $50 million and $100 million.
BODIES IN MOTION: Wants Court Approval on Levene Neale as Counsel
-----------------------------------------------------------------
Bodies in Motion asks the U.S. Bankruptcy Court for the Central
District of California for permission to employ Levene, Neale,
Bender, Rankin & Brill, L.L.P., as its bankruptcy counsel.
Levene Neale will:
a. advise the Debtor with regard to the requirements of the
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 its bankruptcy estate and the rights, claims
and interest of creditors;
c. represent the Debtor in any proceeding or hearing in the
bankruptcy Court involving its estate unless the Debtor is
represented in a proceeding or hearing by other special
counsel;
d. conduct examinations of witnesses, claimants or adverse
parties or adverse parties and represent the Debtor in any
adversary proceeding except to the extent that any
adversary proceeding is in an area of Levene Neale's
expertise or staffing capabilities;
e. prepare and assist the Debtor in the preparation of
reports, applications, pleadings and orders including, but
not limited to, applications to employ professionals,
interim statements and operating reports, initial filing
requirements, schedules and statement of financial affairs,
lease pleadings, cash collateral pleadings, financing
pleading, and pleadings with respect to the Debtor's use,
sale or lease of property outside the ordinary course of
business and assist and represent the Debtor with all
respect to all aspects of all the foregoing;
f. represent the Debtor with regard to obtaining use of
debtor-in-financing or cash collateral including, but not
limited to, negotiating and seeking Court approval of any
debtor-in-possession financing or cash collateral pleading
or stipulation and prepare any pleadings relating to
obtaining the use of debtor-in-possession financing or cash
collateral;
g. assist the Debtor in the negotiation, formulation,
preparation and confirmation of a plan of reorganization
and the preparation and approval of a disclosure statement
in respect of the plan; and
h. perform any other services which may be appropriate in
Levene Neale's representation of the Debtor during its
bankruptcy proceeding.
Ron Bender, Esq., a partner at Levene Neale, tells the Court that
he will bill $495 per hour for this engagement. Mr. Bender says
that Monica Y. Kim, Esq., and Juliet Y. Oh, Esq., will also be
rendering their expertise in the Debtor's chapter 11 case. Ms.
Kim bills $465 per hour while Ms. Oh bills $350 per hour.
Mr. Bender discloses that the firm's other professionals bill:
Professional Hourly Rate
------------ -----------
David W. Levene, Esq. $565
Martin J. Brill, Esq. $565
David L. Neale, Esq. $495
Craig M. Rankin, Esq. $495
Anne E. Wells, Esq. $465
Daniel H. Reiss, Esq. $465
David B. Golubchik, Esq. $465
Beth Ann R. Young, Esq. $465
Jacqueline L. Rodriguez, Esq. $375
Susan K. Seflin, Esq. $350
Ovsanna Takvoryan, Esq. $310
Todd M. Arnold, Esq. $295
Paraprofessionals $180
Mr. Bender assures the Court that his firm is "disinterested" as
that term is defined in Section 101(14) of the Bankruptcy Code.
Mr. Bender can be reached at
Ron Bender, Esq.
Levene, Neale, Bender, Rankin & Brill, L.L.P.
10250 Constellation Boulevard, Suite 1700
Los Angeles, California 90067
Tel: (310) 229-1234
Fax: (310) 229-1244
http://www.lnbrb.com/
Headquartered in North Hills, California, Bodies in Motion Inc. --
http://www.bodiesinmotion.com/-- operates a chain of private
fitness facilities offering boxing, yoga, personal training, and
other physical fitness programs. The Company filed for chapter 11
protection on June 20, 2006 (Bankr. C.D. Calif. Case No.
06-10931). Ron Bender, Esq., at Levene, Neale, Bender, Rankin &
Brill, LLP, represents the Debtor. When the Debtor filed for
protection from its creditors, it estimated assets and debts
between $10 million and $50 million.
BODIES IN MOTION: Has Until July 21 to File Schedules & Statements
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
gave Bodies in Motion Inc. until July 21, 2006, to file its
Schedules of Assets and Liabilities and Statement of Financial
Affairs.
The Debtor tells the Court that since filing for bankruptcy, its
key personnel and professionals have been working diligently to
address Chapter 11 transition issues. The Debtor says that it
also has to confront and respond to various demands related to the
daily management and administration of its business.
The Debtor contends that the time demands of its chapter 11 case
is exacerbated due to:
* a large number of creditors, vendors and membership holders
involved,
* the numerous locations from which the Debtor operates its
business,
* the current state of the Debtor's books and records, and
* the limited accounting and operations staff available to
perform and oversee all of the Debtor's reporting
obligations.
The Debtor further argues that if it had forced itself to file its
Schedules and Statement on the July 5, 2006, deadline, the
additional time and effort spent by its staff and professionals
would have increased the administrative expenses of its estate.
Headquartered in North Hills, California, Bodies in Motion Inc. --
http://www.bodiesinmotion.com/-- operates a chain of private
fitness facilities offering boxing, yoga, personal training, and
other physical fitness programs. The Company filed for chapter 11
protection on June 20, 2006 (Bankr. C.D. Calif. Case No.
06-10931). Ron Bender, Esq., at Levene, Neale, Bender, Rankin &
Brill, LLP, represents the Debtor. When the Debtor filed for
protection from its creditors, it estimated assets and debts
between $10 million and $50 million.
CARDSYSTEMS SOLUTIONS: Cumis Wants Bar Date Extended to January 15
------------------------------------------------------------------
Cumis Insurance Society Inc. asks the U.S. Bankruptcy Court for
the District of Arizona to move the deadline for filing proofs of
claim against Cardsystems Solutions Inc. from July 14, 2006, to
January 15, 2007.
Cumis needs the extension to:
a) determine the full amount of its claim based upon
previously paid losses;
b) provide more than 100 omitted credit unions notice of the
bankruptcy and the opportunity to file claims; and
c) allow Cumis and previously notified credit unions it
insures the opportunity to investigate and determine the
full extent of their claims.
Cumis told the Court that at least 297 credit unions may have
suffered losses stemming from the security breach at the Debtor in
May 2005, affecting Visa and MasterCard holders. Of the 297
credit unions, only 163 appear to have received notice of the
Debtor's bankruptcy based upon the Debtor's schedules and
corresponding mailing matrix.
Cumis explained that it has already incurred certain losses for
which it has claims against the Debtor and that it may continue to
pay or become liable for additional losses as claims are made
against the issuing banks.
Cumis provides insurance to credit unions that issue debit and
credit cards, and indemnifies its insured credit unions for losses
arising from unauthorized use of plastic cards.
The Court will conduct a hearing at 11:00 a.m. on July 27, 2006 in
Courtroom 430, No. 38, S. Scott Avenue in Tucson, Arizona to
consider Cumis' request.
Headquartered in Sonoita, Arizona, Cardsystems Solutions, Inc.
-- http://www.cardsystems.com/-- was acquired by Pay By Touch
Payment Solutions, LLC -- http://www.paybytouch.com/-- a
biometric authentication, loyalty, membership, payment and other
electronic transaction solutions provider. The Company filed for
bankruptcy protection on May 12, 2006 (Bankr. D. Ariz. Case No.
06-00515). Frederick J. Petersen, Esq., at Mesch, Clark &
Rothschild, P.C., represent the Debtor in its restructuring
efforts. No Official Committee of Unsecured Creditors has been
appointed in the Debtor's case. When the Debtor filed for
bankruptcy protection, it disclosed assets amounting to
$13,087,515 and debts totaling $23,860,343.
CARRAMERICA REALTY: Moody's Pares Senior Unsecured Ratings to Ba3
-----------------------------------------------------------------
Moody's Investors Service lowered the senior unsecured ratings on
notes of CarrAmerica Realty Corporation and CarrAmerica Realty
Operating Partnership LP to Ba3 from Baa2. The rating agency also
withdrew CarrAmerica's preferred stock rating. CarrAmerica has
been acquired by affiliates of The Blackstone Group, an investment
and advisory firm. This concludes Moody's review; the outlook is
stable.
Moody's action reflects significant use of secured debt and the
considerably diminished claim of the unsecured debt holders in the
new capital structure. In addition, unencumbered assets will be
practically non-existent in the structure. As a result of the
tender and consent offer, standard REIT covenants pertaining to
the unsecured notes have been removed. Finally, given that
CarrAmerica has been acquired by and merged into entities
controlled by the private entity, Blackstone, Moody's anticipates
considerably less transparency with respect to the financial,
structural and operational aspects of the firm.
Moody's indicated that an upgrade of CarrAmerica's ratings is
unlikely given this strategic turn of events. The ratings agency
has withdrawn the ratings on the shelf registrations given that
they have been terminated and the REIT is no longer listed.
These ratings were lowered with a stable outlook:
CarrAmerica Realty Corporation
* Senior unsecured to Ba3 from Baa2
CarrAmerica Realty Operating Partnership LP
* Senior unsecured to Ba3 from Baa2
These ratings were withdrawn:
CarrAmerica Realty Corporation
* Preferred stock at Baa3;
* senior secured shelf at (P)Baa2;
* subordinate debt shelf at (P)Baa3;
* preferred stock shelf at (P)Baa3
CarrAmerica Realty Operating Partnership, L.P.
* Senior unsecured shelf at (P)Baa2;
* subordinate debt shelf at (P)Baa3
In its most recent rating action with respect to CarrAmerica,
Moody's placed the REIT under review for downgrade in March 2006.
CarrAmerica owns, develops and operates office properties in 12
markets throughout the United States. The company has become one
of America's leading office companies by meeting the needs of its
customers with superior service, a large portfolio of quality
office properties and extraordinary development capabilities.
Currently, CarrAmerica and its affiliates own, directly or through
joint ventures, interests in a portfolio of 287 operating office
properties, totaling approximately 26.4 million square feet.
CarrAmerica's markets include Austin, Chicago, Dallas, Denver, Los
Angeles, Orange County, Portland, Salt Lake City, San Diego, San
Francisco Bay Area, Seattle and metropolitan Washington, D.C.
The Blackstone Group, a global private investment and advisory
firm with offices in New York, Atlanta, Boston, Los Angeles,
London, Hamburg, Mumbai and Paris, was founded in 1985.
Blackstone's real estate group has raised approximately
$13 billion for real estate investing and has a long track
record of investing in office buildings, hotels and other
commercial properties. In addition to Real Estate, The
Blackstone Group's core businesses include Private Equity,
Corporate Debt Investing, Marketable Alternative Asset Management,
Mergers and Acquisitions Advisory, and Restructuring and
Reorganization Advisory.
CHARTERMAC: Moody's Rates $500 Million Senior Facility at Ba3
-------------------------------------------------------------
Moody's Investors Service assigned a rating of Ba3 to the
$500 million CharterMac guaranteed senior credit facility which
the company is issuing to acquire ARCap Investors, LLC, a private
real estate finance company specializing in high yield CMBS. In
addition, Moody's assigned CharterMac a corporate family rating of
Ba3. The outlook is stable. The credit facility consists of a
three-year $150 million revolver and a six-year $350 million term
loan.
According to the ratings agency, the firm's investor client
concentrations and investments in riskier assets are attenuated by
its affordable housing franchise. ARCap will provide CharterMac
an industry-leading servicing platform as well as greater
diversification of product offerings and asset classes.
This represents the first time Moody's has assigned a rating to
CharterMac.
Moody's sees strength in CharterMac's long and successful track
record in providing financing to real estate developers and owners
with a historical core focus on affordable housing through its
three main business lines: qualified tax-exempt lending, tax
credit equity and mortgage banking services. The ARCap transaction
is the latest in a series of acquisitions in which CharterMac is
seeking to grow and diversify the means by which it serves both
its investors and borrowers, a credit positive.
Furthermore, CharterMac sees greater stability in moving its
business focus from direct investing towards fund management, a
view shared by Moody's. ARCap enjoys a reputation among the best
in the servicing industry, which should enhance CharterMac's
franchise. Finally, the firm has demonstrated sufficient
alternative liquidity to fund its business while sustaining very
low credit loss.
Conversely, Moody's sees the tax credit business -- while today
politically popular and part of the tax code -- as subject to
legislative risk. CharterMac's businesses are also significantly
dependent upon Fannie Mae and Freddie Mac, as both are significant
investors in the firm's tax credit funds, as well as drivers of
its mortgage banking business. Additionally, most of the
investments made by CharterMac and its affiliates, including
ARCap, are non-investment grade or non-rated real estate loans,
which engenders asset quality concerns. Finally, given the recent
number of acquisitions, integration risk is present.
The stable outlook is based on Moody's expectations that
CharterMac will maintain its market share in affordable housing
finance while growing its credit enhancement, pension advisory and
mortgage banking businesses without any deterioration in asset
quality as evidenced by higher credit losses. A successful
integration of ARCap and prior acquisitions is also anticipated.
A higher rating would be considered should CharterMac strengthen
its balance sheet by reducing leverage below 55% and increase
coverage above 3 times, in addition to growing its liquid assets
to above 80% of total assets. In the absence of meaningful shifts
in the balance sheet, rating improvements would depend on
successful execution of the ARCap acquisition and integration of
the two business platforms, the combined firm's continued success
and growth in its franchise businesses of tax-exempt lending, tax
credit equity, mortgage banking, as well as subordinate CMBS
investing and servicing. In addition, meaningful growth in the
areas of credit enhancement and pension advisory would also create
positive ratings momentum.
The ratings agency would expect to take negative ratings action
should leverage increase above 75% or coverage decline below 2X.
Weakening franchise in the affordable housing sphere or sustained
credit losses in excess of 25 basis points of the portfolio over a
one year period would also point to a downgrade.
These ratings were assigned with a stable outlook:
CharterMac
* Corporate Family Rating and Guaranteed Senior Unsecured
Credit Facility, Ba3.
CharterMac (NYSE: CHC) is based in New York City, New York, USA.
Through its subsidiaries, CharterMac is one of the nation's
leading full-service real estate finance companies, with a strong
core focus on the multifamily industry. CharterMac offers capital
solutions to developers and owners of multifamily and commercial
real estate throughout the country and quality investment products
to institutional and retail investors.
ARCap Investors, LLC, based in Irving, Texas, USA is a private
REIT and an industry-leading investor in high yield Commercial
Mortgage Backed Securities. ARCap manages over $2.3 billion face
value CMBS rated BBB- and lower, owned directly and through a
family of funds. ARCap also acts as Special Servicer for each of
the transactions in which it invests, currently servicing almost
$48 billion of mortgages throughout the United States.
CHC HELICOPTER: Earns CDN$10.8 Million in Quarter Ended April 30
----------------------------------------------------------------
CHC Helicopter Corporation reports unaudited financial results for
the three months and year ended April 30, 2006.
Highlights
-- Continued year-over-year growth in the fourth quarter
contributed to annual revenue of over CDN$1 billion, the
highest in the Company's history; and
-- During the fourth quarter, revenue increased in all
operating segments excluding the negative impact of foreign
exchange. Segment EBITDAR (excluding FX) also increased in
all operating segments despite increased expenditures
related to future growth and restructuring activities.
As demand for helicopters continues to grow both in the North Sea
oil and gas sector and elsewhere, the Company has continued to
invest in future growth through the recruitment, hiring and
training of new employees, financing of new aircraft and aircraft
deposits, business development, and other related activities. The
Company continued to be negatively impacted by the strengthening
Canadian dollar in the fourth quarter, consistent with previously
reported quarters.
-- Revenue (excluding FX) increased CDN$36.4 million for the
quarter and CDN$142.7 million for the year for a 15%
increase in the fourth quarter and the fiscal year compared
to previous periods. Revenue was negatively impacted by FX
of CDN$28.1 million in the fourth quarter and
CDN$98.4 million for the year ended April 30, 2006;
-- Revenue (excluding FX) in all operating segments increased
from the fourth quarter of last year. Revenue increases
were most significant in Global Operations where revenue
increased by approximately 26% (excluding FX);
-- Segment EBITDAR increased in European Operations and Global
Operations by approximately 17% and 6%, respectively, from
the fourth quarter of last year (excluding FX); and
-- Net earnings from continuing operations for the fourth
quarter were CDN$10.8 million, a decrease of CDN$3.3 million
from the fourth quarter of last year. Major items impacting
current year fourth quarter earnings from continuing
operations are (all amounts are pre-tax):
a) Operating costs
-- Costs of approximately CDN$2.9 million incurred to
support future growth including recruiting,
relocation, training, business development and
aircraft introduction;
-- Segment support and general and administration cost
savings of approximately CDN$3.1 million due to
current restructuring initiatives;
-- Transitional expenses including support, general and
administrative and direct costs of approximately
CDN$1.7 million incurred during the restructuring
process. It is expected that these costs will be
reduced or eliminated throughout fiscal 2007; and
-- Restructuring expenses of approximately
CDN$3.6 million. Restructuring activities are now
essentially complete.
b) Other costs
-- During the fourth quarter, the Company entered into
discussions with two unaffiliated private equity firms
regarding the potential acquisition of the Company.
These discussions terminated near the end of the
fourth quarter with no offer made to shareholders.
The Company incurred legal, advisory and other costs
of approximately CDN$1.0 million relating to this
event;
-- During the fourth quarter the Company recorded
additional payroll taxes and related penalties,
interest and other costs associated with activities in
various foreign jurisdictions of approximately
CDN$1.2 million; and
-- Lease expense increases of approximately
CDN$1.7 million as a result of higher interest rates.
c) Financing costs
--Interest expense increases of approximately
CDN$2.0 million primarily as a result of higher
debt levels related to investment in fleet and working
capital, net of the benefit of FX; and
-- Foreign exchange losses of approximately
CDN$1.2 million on foreign currency denominated
monetary items.
d) FX impact
-- A negative FX impact (net of hedging gains) on
operating income of approximately CDN$2.2 million due
to the strengthening of the Canadian dollar in
relation to the functional currencies of the Company's
subsidiaries.
Subsequent Events
The Company was awarded a contract renewal by the Irish Minister
for Transport for the continued provision of marine Search and
Rescue services in Ireland from July 2007 to July 2010, plus three
option years. The contract is anticipated to generate revenue of
approximately CDN$74 million over the fixed three-year term.
BHS-Brazilian Helicopter Services Taxi Aereo Ltd. was awarded a
new five-year contract for the provision of eight Sikorsky S-76C+
helicopters in support of Petrobras' operations in the Brazilian
offshore sector, commencing in January 2007. Total revenue from
this contract is estimated at approximately CDN$170 million over
five years. The Company has exercised its option to acquire a
significant equity position in BHS. The acquisition is expected
to close in the second quarter of fiscal 2007.
The Company was awarded one three-year contract and two five-year
contracts by Statoil for the provision of helicopter services in
the Norwegian Sea. These new contracts commence in mid-2007 and
are anticipated to generate incremental revenue of approximately
$200 million over the fixed terms of the contracts.
CHC Helicopter Corporation (TSX: FLY.A and FLY.B; NYSE: FLI) --
http://www.chc.ca/-- is the world's largest provider of
helicopter services to the global offshore oil and gas industry
with aircraft operating in more than 30 countries.
* * *
As reported in the Troubled Company Reporter on March 17, 2005,
Moody's Investors Service assigned a B2 rating to CHC Helicopter
Corp.'s $100 million senior subordinated note add-on to the
existing 7.375% senior subordinated notes issue. Moody's also
affirmed the ratings on its existing $250 million senior
subordinated notes due 2014 at B2; senior implied rating at Ba3;
and issuer rating at B1. Moody's also changed the outlook to
stable from positive.
COMMUNICATIONS CORP: A&M Continues to Provide Management Services
-----------------------------------------------------------------
Communications Corp. and its debtor-affiliates and White Knight
Holdings, Inc., and its debtor-affiliates, obtained permission
from the U.S. Bankruptcy Court to continue the engagement of
Alvarez & Marsal, LLC, to provide restructuring management
services to the Debtors.
The Debtors say that Alvarez & Marsal has provided their services
since July 2005. The Debtors disclose that Alvarez & Marsal will
staff this engagement with:
* Dean Swick, a Managing Director with Alvarez & Marsal,
* Terry Hamilton, a Managing Director with Alvarez & Marsal,
* Daniel Ehrmann, a Senior Director with Alvarez & Marsal, and
* John Underwood, a Director with Alvarez & Marsal.
Alvarez & Marsal is expected to:
(i) assist with financial reporting to creditors and other
parties in interest, including the preparation and
evaluation of cash flow forecast, projections and budgets;
(ii) assist in the review of the Company's business plan
including preparation and evaluation of revenue and cash
flow projections;
(iii) assist with ongoing monitoring of the Company's
performance relative to its business plans and forecasts
including assistance in the preparation of monitoring
reports and liaison with creditors and other parties in
interest;
(iv) assist with financing and other transactional issues
including monitoring of the sale process of the Debtors
and some or all of their assets;
(v) assist in preparation of reports, presentations, and
communication and negotiation with creditors and other
parties in interest;
(vi) assist management and the Debtors' advisors in the
planning, preparation and execution of bankruptcy if
necessary, including assistance in the administration of a
bankruptcy, evaluation, development and implementation of
reorganization options, the development and negotiation of
a plan of reorganization, communications with creditors
and other parties of interest, and providing expert
testimony and other services as may be requested by the
Debtors and as acceptable to Alvarez & Marsal; and
(vii) other activities as reasonably requested by either
Company's Chief Executive Officer or either Company's
Board of Directors and agreed to by Alvarez & Marsal.
The Debtors tell the Court that Alvarez & Marsal's professionals
bill:
Profession Hourly Rate
---------- -----------
Managing Directors $500 - $675
Directors $375 - $475
Associates $275 - $375
Analysts $150 - $300
About White Knight
Headquartered in Lafayette, Louisiana, White Knight Holdings,
Inc., is a media, television and broadcasting company.
White Knight entered into commercial inventory agreements, joint
sales agreements, and shared services agreements with
Communications Corporation of America. However, both entities are
independent companies and are not affiliates of each other. Along
with Communications Corp., White Knight operates around 23 TV
stations.
White Knight and five of its affiliates filed for chapter 11
protection on June 7, 2006 (Bankr. W.D. La. Case Nos. 06-50422
through 06-50427). R. Patrick Vance, Esq., and Matthew T. Brown,
Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
LLP, represents White Knight and its debtor-affiliates in their
restructuring efforts. White Knight and its debtor-affiliates'
chapter 11 cases are jointly administered under Communication
Corporation of America's chapter 11 case.
When the Debtors filed for protection from their creditor, they
estimated less than $50,000 in assets and estimated debts between
$100,000 and $500,000.
About Communications Corp. of America
Headquartered in Lafayette, Louisiana, Communications Corporation
of America, is a media and broadcasting company. Along with media
company White Knight Holdings, Inc., it owns and operates around
23 TV stations in Indiana, Texas and Louisiana. Communications
Corporation and 10 of its affiliates filed for bankruptcy
protection on June 7, 2006 (Bankr. W.D. La. Case Nos. 06-50410
through 06-50421). Douglas S. Draper, Esq., William H. Patrick
III, Esq., and Tristan Manthey, Esq., at Heller, Draper, Hayden,
Patrick & Horn, LLC, represents Communications Corporation and its
debtor-affiliates. When Communications Corporation and its
debtor-affiliates filed for protection from their creditors, they
estimated assets and debts of more than $100 million.
CONSECO INC: Declares Dividend on Class B Preferred Stock
---------------------------------------------------------
Conseco, Inc., declared a dividend on the outstanding shares of
its Class B 5.50% Mandatorily Convertible Preferred Stock (NYSE:
CNO PrB) of $0.34375 per share. The dividend is payable on
Aug. 15, 2006 to the holders of record at the close of business
on Aug. 1, 2006.
Based in Carmel, Indiana, Conseco, Inc. (NYSE:CNO) --
http://www.conseco.com/-- through its subsidiaries, engages in
the development, marketing, and administration of supplemental
health insurance, annuity, individual life insurance, and other
insurance products throughout the United States. The company
operates in two segments, Bankers Life and Conseco Insurance. The
Bankers Life segment markets and distributes Medicare supplement
insurance, life insurance, long term care insurance, and certain
annuity products to the senior market.
* * *
As reported in the Troubled Company Reporter on May 8, 2006,
Standard & Poor's Ratings Services affirmed its 'BB+' counterparty
credit and financial strength ratings on Conseco Inc.'s core
insurance companies and its 'BB-' counterparty credit rating
on Conseco Inc.
Standard & Poor's also said that the outlook on Conseco Inc. is
stable, and the outlook on the operating companies is positive.
CORUS ENTERTAINMENT: Earns CDN$23.2 Mil. in Quarter Ended May 31
----------------------------------------------------------------
Corus Entertainment Inc. reported third quarter financial results
with continued strong operating results.
"We had another excellent quarter with particularly strong results
for Television. Ad markets continue to be strong in both our core
segments of specialty television and radio and our pay subscribers
continue to expand, responding well to programming and marketing
investments," John Cassaday, president and chief executive officer
of Corus Entertainment Inc., said.
Third Quarter Results
Consolidated revenues for the third quarter ended May 31, 2006
were CDN$181.6 million, up 6% from CDN$171.9 million last year.
Consolidated segment profit was CDN$57.7 million, up 10% from
CDN$52.4 million last year. Net income for the quarter was
CDN$23.2 million, as compared to income of CDN$19.4 million last
year.
Corus Television contributed quarterly revenues of
CDN$99.0 million, up 9% from CDN$90.5 million last year, led by
specialty ad growth of 11% and subscriber growth of 10%.
Quarterly segment profit increased to CDN$41.7 million, up 20%
from CDN$34.7 million last year.
Corus Radio revenues were CDN$71.9 million, up 5% from
CDN$68.3 million last year. Segment profit was CDN$21.1 million,
down 5% from CDN$22.2 million last year. Revenues and segment
profit were impacted by the sale of Corus' Red Deer assets and the
multi-station swap in the province of Qu,bec. On a same station
basis, revenues were up 3% and segment profit was up by
approximately 3%.
Corus Content revenues were CDN$12.6 million, down 14% from
CDN$14.6 million last year. Segment profit was CDN$500,000
compared to CDN$100,000 last year. Revenues were down in the
quarter as fewer episodes were delivered and Beyblade
merchandising revenue declined.
Year-to-Date Results
Consolidated revenues for the nine months ended May 31, 2006, were
CDN$541.3 million, up 7% from CDN$507.8 million last year.
Consolidated segment profit was CDN$169.6 million, up 11% from
CDN$152.7 million last year. Net loss for the nine months was
CDN$11.2 million, as compared to income of CDN$61.5 million last
year, as the Company recorded a CDN$132 million pre-tax debt
refinancing charge related to the purchase of the Senior
Subordinated Notes and the termination of cross-currency
agreements associated with those notes in the second quarter.
Corus Television contributed nine-month revenues of
CDN$298.7 million, up 10% from CDN$270.8 million last year led by
specialty ad growth of 13% and subscriber growth of 9%. Corus'
pay television assets increased their subscriber base from 748,000
at Aug. 31, 2005, to 822,000 at the end of the third quarter.
Nine-month segment profit increased to CDN$130.1 million, up 18%
from CDN$110.0 million last year.
Corus Radio revenues were CDN$202.1 million, up 8% from
CDN$187.4 million last year. Segment profit was CDN$52.5 million,
down 1% from CDN$53.2 million last year. Revenue and segment
profit were impacted by the sale of Corus' Red Deer assets and the
multi-station swap in the province of Quebec. On a same station
basis, revenues were up 6% and segment profit was up by
approximately 8%.
Corus Content revenues were CDN$45.4 million, down 17% from
CDN$54.4 million last year. Segment profit was CDN$2.9 million
compared to CDN$1.8 million last year. Revenues were down in the
first nine months as fewer episodes were delivered and the
Beyblade merchandising revenues declined. Production is on
schedule to deliver approximately the same number of episodes as
last year by the end of the fiscal year. The division continues
to generate positive cash flow.
Corus has continued to purchase shares under its Normal Course
Issuer Bid announced in December 2005. At the end of May 2006,
the Company had purchased for cancellation 776,800 Class B Non-
Voting Shares at an average price of CDN$35.28 per share.
"Our strong brands continue to lead the way in what is turning out
to be another very strong year for Corus. We are very pleased to
be announcing a significant increase to our dividend," Heather
Shaw, Executive Chair, Corus Entertainment Inc., said.
About Corus Entertainment
Corus Entertainment Inc. (TSX: CJR.B; NYSE: CJR) --
http://www.corusent.com/-- is a Canadian-based media and
entertainment company. Corus is a market leader in specialty
television and radio with additional assets in pay television,
advertising and digital audio services, television broadcasting,
children's book publishing and children's animation.
The company's multimedia entertainment brands include YTV,
Treehouse, W Network, Movie Central, Nelvana, Kids Can Press and
radio stations including CKNW, CKOI and Q107. Corus creates
engaging branded entertainment experiences for its audiences
across multiple platforms. A publicly traded company, Corus is
listed on the Toronto (CJR.B) and New York (CJR) exchanges.
* * *
As reported in the Troubled Company Reporter on June 16, 2005,
Standard & Poor's Ratings Services revised its outlook on Corus
Entertainment Inc. to stable from negative and affirmed its 'BB'
long-term corporate credit rating on the company.
Dominion Bond Rating Service confirmed Corus Entertainment Inc.'s
issuer rating at BBp on Aug. 5, 2005. On this date, DBRS said the
trend was stable.
CRESCENT JEWELERS: Judge Jellen Confirms Second Amended Plan
------------------------------------------------------------
The Honorable Edward D. Jellen of the U.S. Bankruptcy Court for
the Northern District of California in Oakland confirmed the
Second Amended Plan of Reorganization of Crescent Jewelers, Inc.,
on July 13, 2006.
Judge Jellen determined that the Plan complies with the 13
standards imposed by Section 1129(a) of the Bankruptcy Code.
Overview of the Plan
As reported in the Troubled Company Reporter on June 12, 2006, the
Debtor told the Court that on the effective date, Harbinger
Capital Partners Master Fund I, Ltd., will cause the Plan
Investors to deposit the General Unsecured Distribution Amount in
the Plan Trustee Funding Account. The distributions to holders of
general unsecured claims to be made by the Plan Trustee in cash
under the Plan, other than distributions under the Plan of the
Estate Litigation Proceeds and the Post-Effective Date Fund
Excess, will be satisfied from the Plan Trustee Funding Account.
Reorganized Crescent will make all other distributions.
The Effective Date is around July 25, 2006, Lee R. Bogdanoff,
Esq., at Klee, Tuchin, Bogdanoff and Stern told David Elman of the
The Deal.
Treatment of Claims
Under the second amended plan, administrative claims and secured
tax claims will be paid in full.
Priority Tax Claims will be paid in full in five annual
installments.
Priority Claims, other than Priority Tax Claims, will be paid in
full, in cash, without interest.
The Debtor told the Court that Residual Consignment Inventory
Claims consist of Memo Merchandise that remains unsold and in
Crescent's actual possession on the effective date. Holders of
these claims will receive, at Reorganized Crescent's option:
* return of the inventory, or
* payment in full and in cash of their allowed claims.
Holders of Other Secured Claims, at Reorganized Crescent's option,
will:
a. receive payment of their claim in cash;
b. have the collateral securing the claim abandoned; or
c. have their legal, equitable, and contractual rights
reinstated.
General Unsecured Claimholders will receive, on the distribution
date, their pro rate share of the General Unsecured Distribution
Amount. In addition, holders of general unsecured claims will be
entitled to their pro rata share, if any, of the Estate Litigation
Proceeds and Post-Effective Date Fund Excess.
Holders of Harbinger Capital's Acquired Claim and Friedman's
Inc.'s Claims Interests, will receive shares of the New Common
Stock and will also be entitled to a share, if any, of the Estate
Litigation Proceeds.
Holders of Crescent Jewelers Inc.'s Stock Claims, Preferred Stock
Claims and Claims Subordinated Under Section 510 of the Bankruptcy
Code, will not receive anything under the second amended plan.
Existing Crescent Jewelers Inc.'s Stocks and Subordinated
Interests will be cancelled and holders of these interests will
receive nothing under the second amended plan.
A full-text copy of the Debtor's Second Amended Plan of
Reorganization is available for a fee at:
http://www.researcharchives.com/bin/download?id=060609215701
Headquartered in Oakland, California, Crescent Jewelers, Inc. --
http://www.crescentonline.com/-- sells jewelry and operates over
160 stores in six western states. The Company filed for chapter
11 protection on Aug. 11, 2004 (Bankr. N.D. Cal. Case No. 04-
44416). Lee R. Bogdanoff, Esq. at Klee, Tuchin, Bogdanoff and
Stern represents the Debtor in its chapter 11 case. John D.
Fiero, Esq., Kenneth H. Brown, Esq., and Tobias S. Keller, Esq.,
at Pachulski, Stang, Ziehl, Young and Jones represent the Official
Committee of Unsecured Creditors. In its April 2006 Monthly
Operating Report, the Debtor reported $77,372,000 in total assets
and $134,972,000 in total debts.
DANA CORP: Clarifies Terms of Supply Pact with U.S. Manufacturing
-----------------------------------------------------------------
Dana Corporation and its debtor-affiliates have agreed with U.S.
Manufacturing Corp. upon the form of exhibit to the Second Interim
Supplement to resolve certain ambiguities in the terms of the
parties' agreement.
The Debtors continue to believe that the assumption of the USM
Agreement as modified by the Second Interim Supplement is in the
best interests of their estates and creditors.
A full-text copy of the Second Interim Supplement to the USM
Supply Agreement is available for free at:
http://researcharchives.com/t/s?dc9
The Debtors were previously authorized by the U.S. Bankruptcy
Court for the Southern District of New York to assume their
executory contracts with:
1. Haas TCM, Inc.,
2. Houghton Fluidcare, Inc., and
3. Moore's Machine Company of Chatham County.
As reported in the Troubled Company Reporter on June 13, 2006,
the Debtors are parties to these executory contracts:
(A) USM Agreement
The Debtors are party to a supply agreement with U.S.
Manufacturing Corporation dated September 5, 2002, whereby
U.S. Manufacturing supplies parts to the Debtors for
specified prices. The USM Agreement has a 10-year term and
will expire in September 2012. The annual amount of
purchases made by the Debtors under the USM Agreement total
approximately $100,000,000.
The Debtors want to assume the USM Agreement and pay a
$3,994,195 cure amount, which is subject to reconciliation,
resulting in the full payment of all prepetition amounts owed
to U.S. Manufacturing. In exchange, the Debtors will receive
a reduction in the prices paid under the USM Agreement of
around 2.3%, with the potential for an additional price
reduction if certain modifications to the manufacturing
process utilized by U.S. Manufacturing, described as the
variable wall tubing alternative, is implemented.
(B) The Nationwide Agreement
The Debtors are party to a supply agreement with Nationwide
Precision Products Corporation dated February 7, 2000,
pursuant to which, Nationwide purchases components to be
integrated into axle parts manufactured by the Debtors.
Nationwide performs machining services on those components
prior to selling them to the Debtors. The Nationwide
Agreement is scheduled to expire on December 31, 2006. The
annual dollar amount of purchases made by the Debtors under
the Nationwide Agreement is around $25,000,000.
The Debtors want to assume the Nationwide Agreement and pay
a $1,005,440 cure amount, which subject to reconciliation,
resulting in the payment to Nationwide of 40% of the
prepetition claims not entitled to priority under Section
503(b)(9) of the Bankruptcy Code. Nationwide reserves its
rights to assert the remaining 60% as general unsecured
claims or as reclamation claims. In exchange, Nationwide has
agreed to enter into a supply agreement with the Debtors for
year 2007.
(C) The Haas Agreement
The Debtors are party to a Corporate Account Agreement for
Chemical Management Services with Haas TCM, Inc., dated
August 1, 2004. Under the Haas Agreement, Haas is
responsible for procuring, delivering, managing and disposing
of various chemicals to the Debtors' facilities.
The Haas Agreement is scheduled to expire on July 31, 2006,
and, by its terms, is terminable by Haas upon 90 days' notice
to the Debtors. The annual dollar amount paid to Haas under
the Haas Agreement exceeds $15,000,000.
The Debtors want to assume the Haas Agreement and pay a
$631,609 cure amount, of which $464,733 is to be paid on
assumption and $166,875 is to be paid prior to the effective
date of the Debtors' reorganization plan. In exchange, Haas
has agreed to, among other things:
* refrain from exercising any termination rights it has under
the Haas Agreement through August 1, 2007;
* convert a 5% cost savings goals for the contract year
August 1, 2006, through July 31, 2007, into a cost savings
guarantee;
* provide the Debtors with a one-year option to extend the
term of the agreement and related statements of work
through July 31, 2008, with an additional 5% guaranteed
minimum savings for that contract year; and
* provide other contract modifications that likely will
result in cost savings for the Debtors.
(D) The Houghton Agreement
The Debtors are also party to a Corporate Account Agreement
with Houghton Fluidcare, Inc., dated July 15, 2004, under
which Houghton provides chemical management services to 18 of
the Debtors' facilities.
The Houghton Agreement is scheduled to expire on July 14,
2006 and, by its terms, is terminable by Houghton upon 90
days' notice to the Debtors. The annual dollar amount paid
to Houghton under the Houghton Agreement exceeds $10,000,000.
The Debtors want to assume the Houghton Agreement and pay a
Proposed Cure Amount in two portions:
(i) an estimated cure payment of $1,100,000; and
(ii) the payment of an additional amount of around $375,000
contingent upon Houghton providing certain cost
savings under the Houghton Agreement.
In exchange, Houghton has agreed to, among other things:
* refrain from exercising any termination rights it has under
the Houghton Agreement through July 15, 2007;
* convert a 5% cost savings goals for the contract year July
15, 2006, through July 14, 2007 into a cost savings
guarantee; and
* provide the Debtors with a current extension of the
Agreement and related statements of work through July 14,
2008, and with a further one-year option to extend the term
of the agreement through July 14, 2009, with an additional
5% guaranteed minimum year-over-year cost savings for each
those contract years.
(E) The Moore's Machine Agreement
The Debtors are party to a supply agreement with Moore's
Machine Company of Chatham County, Inc., dated February 9,
2004, pursuant to which Moore's Machine manufactures more
than 100 part numbers utilized by the Debtors in their
manufacturing operations. The Moore's Machine Agreement is
scheduled to expire on January 31, 2007, with the Debtors
possessing two one-year options to extend the term of the
agreement through January of 2008 or 2009.
The Debtors want to assume the Moore's Machine Agreement and
pay a $590,000 cure amount, subject to reconciliation,
resulting in the payment to Moore's Machine of 55% of the
prepetition claims not entitled to priority under Section
503(b)(9) of the Bankruptcy Code, with the remainder to be
asserted only as general unsecured claims in the Debtors'
bankruptcy cases. In addition, the Debtors have agreed to
purchase a portion of the raw material inventory of Moore's
Machine in certain circumstances.
In exchange, Moore's Machine has agreed to permit the Debtors
to re-source certain parts presently supplied by Moore's
Machine in the event that Moore's Machine is no longer
competitive with respect to those parts.
With respect to the Contracts to be assumed, the Debtors have
assessed the relevant markets and their business operations
and have made a preliminary determination that they would be
unable to find a replacement supplier on terms as favorable as
those in the Contracts, as modified.
The Debtors believe that most of the Contracts will be
of long term benefit to their operations and restructuring
efforts and therefore likely would be assumed later in the
Chapter 11 process even if the concessions created by the
proposed modifications had not been obtained.
About Dana Corporation
Headquartered in Toledo, Ohio, Dana Corporation --
http://www.dana.com/-- designs and manufactures products for
every major vehicle producer in the world, and supplies
drivetrain, chassis, structural, and engine technologies to those
companies. Dana employs 46,000 people in 28 countries. Dana is
focused on being an essential partner to automotive, commercial,
and off-highway vehicle customers, which collectively produce more
than 60 million vehicles annually. The company and its affiliates
filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y.
Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman,
Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey
B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at
Jones Day in Cleveland, Ohio, represent the Debtors. Henry S.
Miller at Miller Buckfire & Co., LLC, serves as the Debtors'
financial advisor and investment banker. Ted Stenger from
AlixPartners serves as Dana's Chief Restructuring Officer. Thomas
Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP,
represents the Official Committee of Unsecured Creditors. When
the Debtors filed for protection from their creditors, they listed
$7.9 billion in assets and $6.8 billion in liabilities as of Sept.
30, 2005. (Dana Corporation Bankruptcy News, Issue No. 15;
Bankruptcy Creditors' Service, Inc., 215/945-7000).
The Debtors' consolidated balance sheet at March 31, 2006, showed
a $456,000,000 total shareholder' equity resulting from total
assets of $7,788,000,000 and total liabilities of $7,332,000,000.
DELPHI CORP: Tells Court it Will Assume Sun Software Contract
-------------------------------------------------------------
Delphi Corporation and its debtor-affiliates notify the U.S.
Bankruptcy Court for the Southern District of New York that they
will assume, among other contracts, a Java Software contract with
Sun Microsystems Inc.
The Debtors did not disclose in the notice if Sun consents to the
assumption.
Sun had asked the Court to deny the Debtor's request to assume and
assign any executory contract, to which it is a party, related to
the proposed sale of MobileAria Inc. Sun argued that the Debtors
have failed to provide sufficient information to determine the Sun
contracts that they seek to assume and assign in connection with
the MobileAria sale.
A 392-page updated list of contracts to be assumed and assigned
pursuant to the MobileAria Inc. sale is available for free at:
http://bankrupt.com/misc/mobilearia-contracts2.pdf
Based in Troy, Mich., Delphi Corporation -- http://www.delphi.com/
-- is the single largest global supplier of vehicle electronics,
transportation components, integrated systems and modules, and
other electronic technology. The Company's technology and
products are present in more than 75 million vehicles on the road
worldwide. The Company filed for chapter 11 protection on Oct. 8,
2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler
Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell
A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins
LLP, represents the Official Committee of Unsecured Creditors.
As of Aug. 31, 2005, the Debtors' balance sheet showed
$17,098,734,530 in total assets and $22,166,280,476 in total
debts. (Delphi Bankruptcy News, Issue No. 32; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
EL PASO: Inks $500 Million Credit Facility Pact with Deutsche Bank
------------------------------------------------------------------
As part of a plan to refinance its corporate credit facilities,
El Paso Corporation intends to enter into a new five-year,
$500-million revolving credit facility with Deutsche Bank AG New
York Branch as initial lender. El Paso anticipates that the
facility will permit up to $500 million in revolving loans and
letters of credit for general corporate purposes. Borrowings
under the facility will be unsecured and will not be guaranteed by
El Paso's subsidiaries. This new facility is the first step in an
anticipated restructuring and renewal of El Paso's credit
facilities.
Deutsche Bank advised El Paso that Deutsche Bank intends to hedge
its exposure with respect to the new facility through a stand-by
assignment agreement with the El Paso Performance-Linked Trust,
which will issue Trust Securities to certain investors in a
private transaction. The El Paso Performance-Linked Trust is a
Delaware statutory trust created on June 21, 2006 for which
Deutsche Bank Trust Company Delaware, an affiliate of Deutsche
Bank, serves as trustee. As a result of the stand-by assignment,
yield certificates to be issued by the Trust will be linked to the
credit of El Paso.
Headquartered in Houston, Texas, El Paso Corporation (NYSE:EP) --
http://www.elpaso.com/-- provides natural gas and related energy
products in a safe, efficient, and dependable manner.
* * *
As reported in the Troubled Company Reporter on July 12, 2006,
Moody's Investors Service assigned a B2 senior unsecured rating
with a positive outlook to the proposed $500 million Trust
Securities issue by the El Paso Performance-Linked Trust. Moddy's
said that the rating reflected its expectation that the Trust
Securities will be structured so that they will effectively have
the same credit exposure as senior unsecured obligations of El
Paso Corporation.
EMMIS COMMUNICATION: Sells KKFR-FM to Bonneville for $77.5 Million
------------------------------------------------------------------
Emmis Communications Corporation reported that it closed, on
July 11, 2006, an agreement to sell substantially all of the
assets of KKFR-FM to Bonneville International Corporation and
Bonneville Holding Company for $77.5 million. The Company said
that the net proceeds of approximately $76.3 million will be used
to repay outstanding indebtedness.
Based in Indianapolis, Indiana, Emmis Communications Corporation
(NASDAQ: EMMS) -- http://www.emmis.com/-- is a diversified
media firm with radio broadcasting, television broadcasting and
magazine publishing operations. Emmis owns 22 FM and 2 AM
domestic radio stations serving New York, Los Angeles and Chicago
as well as St. Louis, Austin, Indianapolis and Terre Haute, Ind.
In addition, Emmis owns a radio network, international radio
interests, two television stations, regional and specialty
magazines, and ancillary businesses in broadcast sales and
publishing.
In May 2005, Emmis planned to seek strategic alternatives for its
16 television stations, and the Company has sold or signed
definitive agreements to sell 14 of them.
* * *
On May 11, 2005, Standard & Poor's assigned B+ ratings to Emmis
Communications' long-term local and foreign issuer credits.
In August 2005, Moody's placed the Company's long-term corporate
family rating at Ba3 with a negative outlook.
ENTERPRISE PRODUCTS: Fitch Rates $300 Million Sub. Notes at BB+
---------------------------------------------------------------
Fitch Ratings assigned a 'BB+' rating to $300 million of 8.375%
fixed/floating rate junior subordinated notes due 2066 to be
issued by Enterprise Products Operating L.P. Interest on the LoTS
is fixed through July 2016 and thereafter adjusted quarterly.
EPOLP is the operating limited partnership of Enterprise Products
Partners, L.P., a leading publicly traded master limited
partnership engaged primarily in natural gas liquids and natural
gas midstream services. EPOLP's senior unsecured debt and issuer
default rating is 'BBB-' and the Rating Outlook for EPOLP's debt
securities is Stable.
The LoTS are believed to be the first hybrid securities to be
offered publicly by an MLP. Based upon Fitch's rating criteria,
these securities have a high equity component; Fitch will allocate
the principal 75% to adjusted equity and 25% to adjusted debt in
evaluating the financial leverage of EPD.
In assigning its rating, Fitch considered the structure and terms
of the securities, the amount of the offering, their ranking in
EPD's capital structure, and the overall effect of the offering on
the company's financial profile. For EPD, the LoTS provide
funding diversification, a favorable consideration given the scale
of its growth capital expenditure budget which could approach
$2 billion in 2006. Given their initial fixed coupon rate and
equity content the cost of capital for the LoTS should over time
be lower than the traditional mix of EPD's debt and equity
securities.
In addition, EPD's credit profile is not materially changed by
their issuance which will constitute approximately 5% of EPD's
capitalization. Due to its ambitious expansion budget, debt-to-
EBITDA is expected to end 2006 above 4.0x which is at the high end
for the rating category but credit ratios should strengthen
beginning in early 2007 as internal growth initiatives generate
incremental EBITDA.
Key elements of the LoTS include:
* a term of 60 years;
* optional redemption after 10 years at 100% of the principal
amount plus accrued interest or prior to that period at a
make-whole price;
* the LoTS are subordinated to all senior indebtedness of EPOLP
and senior to EPD's common units; and
* EPLOP will have the option to defer payment on LoTS' interest
for up to 10 years, in which case, neither EPD or EPOLP will
make distributions on its more junior or equal ranking
securities.
In addition, EPOLP will enter into a replacement capital covenant
for the benefit of its other debt holders that it will not redeem
the LoTS on or before 2036 unless, during the 180 days prior to
the redemption, EPD or one of its subsidiaries has received a
specified amount of proceeds from the sale of securities that are
the same or more equity-like than the LoTS.
FINANCIAL MEDIA: May 31 Balance Sheet Upside-Down by $2.3 Million
-----------------------------------------------------------------
Financial Media Group, Inc., fka Giant Jr. Investments Corp.,
reported a net income of $621,370 for the three months ended
May 31, 2006 and a net loss of $228,862 for the nine months
periods ending May 31, 2006, compared to net incomes of $380,240
and $243,425 for the same periods in 2005.
Revenues for the three months and nine months periods ended May
31, 2006 were $2,685,336 and $5,603,808 compared to $1,214,745 and
$1,472,202 for the same periods in 2005. Revenues increased by
121% and 281% during the three months and nine months periods due
to the Company's expanded effort in marketing its services and
gaining clients.
At May 31, 2006, the Company's balance sheet showed $5,463,205 in
total assets and $7,840,529 in total liabilities, resulting in a
stockholders' deficit of $2,377,324. Accumulated deficit at May
31 was $3,115,805.
A full-text copy of the Company's quarterly report is available
for free at http://researcharchives.com/t/s?dce
Going Concern Doubt
Kabani & Company, Inc., expressed substantial doubt about
Financial Media's ability to continue as a going concern after
auditing the Company's financial statements for the fiscal years
ended Aug. 31, 2005 and 2004. The auditing firm pointed to the
Company's accumulated deficit of $5,917,151 as of Aug. 31, 2005
and net losses of $308,830 and $4,902,984 for the years ended
Aug. 31, 2005 and 2004.
Financial Media Group, Inc., operates through its wholly owned
subsidiary WallStreet Direct, Inc. WallStreet owns and operates
http://www.wallst.net/-- an online provider of financial news,
media, tools and community-driven applications for investors.
WallStreet also organizes investor conferences, publishes a
newspaper, and provides multimedia advertising solutions to small
and mid-sized publicly traded companies.
FOAMEX INTERNATIONAL: Has Until Oct. 16 to Decide on Leases
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware extended
the deadline by which Foamex International Inc. and its debtor-
affiliates must assume or reject all their unexpired non-
residential real property leases until Oct. 16, 2006.
As reported in the Troubled Company Reporter in July 3, 2006,
Joseph M. Barry, Esq., at Young Conaway Stargatt & Taylor LLP, in
Wilmington, Delaware, explained that the Debtors need additional
time to complete their evaluation of 16 remaining unexpired
leases. The Debtors were still in the process of determining,
which, if any, of the leases will be rejected through their Plan
of Reorganization.
Headquartered in Linwood, Pa., Foamex International Inc. --
http://www.foamex.com/-- is the world's leading producer of
comfort cushioning for bedding, furniture, carpet cushion and
automotive markets. The Company also manufactures high-
performance polymers for diverse applications in the industrial,
aerospace, defense, electronics and computer industries. The
Company and eight affiliates filed for chapter 11 protection on
Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693).
Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP,
represent the Debtors in their restructuring efforts. Houlihan,
Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the
ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen,
Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and
Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the
Official Committee of Unsecured Creditors. As of July 3,
2005, the Debtors reported $620,826,000 in total assets and
$744,757,000 in total debts. (Foamex International Bankruptcy
News, Issue No. 22; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
FOAMEX INTERNATIONAL: Panel Opposes Equity Committee Appointment
----------------------------------------------------------------
The Official Committee of Unsecured Creditors asks the U.S.
Bankruptcy Court for the District of Delaware to deny, without
prejudice, D.E. Shaw Laminar Portfolios, LLC's request to compel
the U.S. Trustee to appoint an official committee of equity
security holders in the Debtors' cases.
Donald J. Detweiler, Esq., Saul Ewing LLP, in Wilmington,
Delaware, says that there is no basis to appoint an equity
committee at this juncture in the cases.
Mr. Detweiler asserts that D.E. Shaw has not demonstrated that
there is substantial likelihood of a meaningful distribution to
equity holders. He notes that only six months ago, the Debtors
filed a plan of reorganization that valued their businesses at a
midpoint value of $460,000,000, which is approximately
$406,000,000 less than the approximate $866,000,000 hurdle
necessary to begin to give equity a stake in their Chapter 11
cases.
D.E. Shaw's argument relies upon a fatally flawed analysis of the
value of the Debtors' businesses, Mr. Detweiler adds. D.E. Shaw
claims that there is a substantial likelihood of a meaningful
distribution to equity holders based upon Imperial Capital, LLC's
Preliminary Analysis of Equity Value dated April 2006.
D.E. Shaw attached the Imperial Report to its April 25, 2006
letter to the U.S. Trustee requesting for an appointment of an
official equity committee. A full text copy of the Imperial
Report is available for free at:
http://researcharchives.com/t/s?dd7
The Imperial Report concludes that the Debtors' enterprise value
is between $1,000,000,000 and $1,700,000,000 based on the
assertion that Earnings Before Interest, Taxes, Depreciation and
Amortization margins extrapolated from the period 1999-2001, which
saw some of the highest EBITDA margins in the Debtors' history due
to unsustainable chemical cost advantages, represents a
"normalized" range of operating results, Mr. Detweiler relates.
Applying the Debtors' peak margins to adduce value based on a
"normalized" range is simply misleading, Mr. Detweiler asserts.
He notes that the Imperial Report fails to:
-- explain why the period from 1999 to 2001 is a period of
"normalized" EBITDA or why Imperial chose to ignore the
downward trend in profitability between 2002 and 2005 in
assessing the Debtors' capability of generating cash flow;
-- explain how the current operating environment differs from
the recent past and how these alleged differences result
in a sudden and drastic sustainable improvement in the
Debtors' financial performance and cash flow generating
Capability;
-- address the fact that chemical pricing and supply continue
to remain highly uncertain and outside of the Debtors'
control;
-- account for the highly competitive market in which the
Debtors continue to operate; and
-- provide any empirical evidence suggesting that the
Debtors have improved their ability to predict chemical
pricing trends.
The Creditors Committee maintains that until it is clear that
equity has a meaningful economic stake in the Debtors' cases, the
Court should not require the Debtors' estates to pay D.E. Shaw's
legal and other advisors' fees.
Mr. Detweiler also argues that D.E. Shaw's and other equity
holders' interests are adequately represented even without an
official equity committee.
The Debtors' board of directors has a duty to represent the
interests of the equity holders and the record in the case
demonstrates that the board is fulfilling its obligation,
Mr. Detweiler notes.
Contrary to D.E. Shaw's assertion that the equity holders are not
represented in negotiations over a revised reorganization plan,
the Debtors have included equity holders in the Chapter 11
process. The Debtors, according to Mr. Detweiler, have provided
the equity holders with confidential financial and operational
information.
The efforts of the Creditors Committee and the Ad Hoc Committee of
Senior Secured Noteholders to maximize value for all creditors
will benefit equity holders as well, Mr. Detweiler says.
At best, D.E. Shaw's request is a transparent effort to shift to
the Debtors' estates the burden of paying the expenses associated
with negotiating equity's treatment in the Debtors' Plan,
Mr. Detweiler contends.
The appointment of an equity committee is not necessary to assure
that the interests of equity holders will be adequately
represented, Mr. Detweiler further contends. He notes that D.E.
Shaw is a large, well financed and sophisticated institutional
investor, which purchased a majority of its 18.8% equity stake on
or about April 20, 2006 for 30 cents per share from the Bank of
Nova Scotia. D.E. Shaw clearly has the ability, resources and
motive to represent its interest in these cases without the
Debtors paying for its professional fees, he argues.
D.E. Shaw, Mr. Detweiler notes, has the legal right to participate
in the Debtors' cases and if its efforts actually result in a
benefit to the estates, it can seek reimbursement of its fees and
costs through a substantial contribution request under Section
503(b)(3)(D) of the Bankruptcy Code.
Headquartered in Linwood, Pa., Foamex International Inc. --
http://www.foamex.com/-- is the world's leading producer of
comfort cushioning for bedding, furniture, carpet cushion and
automotive markets. The Company also manufactures high-
performance polymers for diverse applications in the industrial,
aerospace, defense, electronics and computer industries. The
Company and eight affiliates filed for chapter 11 protection on
Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693).
Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP,
represent the Debtors in their restructuring efforts. Houlihan,
Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the
ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen,
Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and
Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the
Official Committee of Unsecured Creditors. As of July 3,
2005, the Debtors reported $620,826,000 in total assets and
$744,757,000 in total debts. (Foamex International Bankruptcy
News, Issue No. 22; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
FORD MOTOR: High Fuel Prices Cue Moody's to Downgrade Ratings
-------------------------------------------------------------
Moody's Investors Service lowered the Corporate Family and senior
unsecured ratings of Ford Motor Company to B2 from Ba3 and the
senior unsecured rating of Ford Motor Credit to Ba3 from Ba2. The
Speculative Grade Liquidity rating of Ford has been affirmed at
SGL-1, indicating very good liquidity over the coming 12 month
period. The outlook for the ratings is negative.
The downgrade of the Ford ratings reflects Moody's expectation
that the company's performance in North America will face
considerable additional stress due to high fuel prices and the
resulting shift in consumer preference away from the very
profitable SUV segment. During the six months through June 2006
Ford's sales of mid-size SUVs fell by 24.7% and sales of large
SUVs declined by 32.1%.
Despite the fact that solid market acceptance of Ford's new mid-
size and full-size cars has helped maintain US market share above
18%, the dramatic shift away from the SUV segment undermines
prospects that Ford's Way Forward restructuring program will
materially strengthen its weak credit metrics before 2008.
Bruce Clark, a senior vice president with Moody's, said "The
strong performance of Ford's new cars is certainly a positive.
But the profitability of these vehicles doesn't come close to what
the company had been earning on Explorers and Expeditions. This
market shift is really hurting Ford and is pushing out the time
frame during which the restructuring plan might contribute to any
meaningful improvement in its credit ratios."
In addition to the market shift from SUVs, Ford faces considerable
challenges in other areas. These include implementing its
extensive Way Forward restructuring initiative, reversing the
chronically poor performance of Jaguar, contending with the
ongoing erosion of its domestic supplier base, addressing the
growing competitiveness and share gains of Asian manufacturers,
and preparing for the renegotiation of its UAW contract in late
2007.
As part of these contract negotiations it will be critical for
Ford to achieve a material degree of relief in the areas of health
care costs for active workers and the JOBs bank program. The
decision by Ford's board of directors to cut both the company's
dividend and director fees by half will have minimal impact on
Ford's cash flow, but may contribute the constructive character of
the dialogue with the UAW.
Ford's negative outlook reflects the fact that the company is
weakly positioned within the B2 rating category, and any shortfall
in contending with the array of challenges that it faces could
result in further pressure on the rating. Ford's liquidity
position remains strong with $24 billion in cash and short-term
VEBA balances, and the company's Speculative Grade Liquidity
Rating has been affirmed at SGL-1. Nevertheless, the company's
weak operating and competitive position limits its capacity to
absorb additional stress. For the LTM through March 2006, Ford's
automotive business had an operating margin of negative 2.8%,
interest coverage well below 1x, and free cash flow of negative
$2.8 billion.
The downgrade of Ford Credit's long-term rating to Ba3, with a
negative outlook, considers the firm's ownership by, and
concentrated operating relationship with, Ford Motor. This
connection results in a ratings linkage between the two firms.
Ford Credit's rating already incorporated expectations that
declining portfolio balances, higher borrowing costs, and a
leveling of credit quality improvements are likely to constrain
the company's profitability in coming periods.
However, in Moody's view, Ford's deeper operating challenges
and longer turnaround horizon could have further negative
implications for Ford Credit's results and financial condition,
including its origination volumes, asset quality, profits and
liquidity, thus negatively affecting its stand-alone credit
profile.
The one notch downgrade of Ford Credit's long-term rating widens
the differential from Ford's rating to two notches from one. This
notching differential continues to reflect Moody's view that loss
severity in the event of default for Ford Credit would be
meaningfully lower than for Ford. At the lower extremity of
Moody's rating scale, the same difference in expected loss results
in a greater differential between the two firms' ratings.
While Moody's also believes Ford Credit's probability of default
is lower than its parent's, there remains uncertainty by virtue of
Ford's ownership and control that limits the potential ratings
differential between the two firms.
"We believe Ford is economically motivated to maintain Ford
Credit's operating strengths and enterprise value, but it could
direct the company to take actions that, while seen by Ford's
board to be beneficial for the consolidated Ford enterprise, are
nevertheless adverse to Ford Credit's profile," said Mark Wasden,
a Moody's Senior Credit Officer.
Ford Motor Company, headquartered in Dearborn, Michigan, is the
world's third largest automobile manufacturer. Ford Motor Credit
Company, also headquartered in Dearborn, Michigan, is the world's
largest auto finance company.
GALAXY NUTRITIONAL: BDO Seidman Raises Going Concern Doubt
----------------------------------------------------------
Galaxy Nutritional Foods, Inc., reported its operating results for
the fiscal year 2006 ended March 31, 2006.
For the three months ended March 31, 2006, the Company reported a
net loss of $1,833,320 on net sales of approximately $8.4 million.
These results compared with a net loss of $2,545,790 and net sales
of approximately $10.8 million, in the fourth quarter of the
previous fiscal year.
For the twelve months ended March 31, 2006, net sales approximated
$37.8 million, versus net sales of approximately $44.5 million in
FY2005.
The Company reported a net loss to common stockholders of
$24,148,553 in the most recent fiscal year, compared with a net
loss to common stockholders of $4,261,855 in the fiscal year ended
March 31, 2005.
Operating results for FY2006 included non-cash expenses of
$10.1 million related to a reserve on a non-recourse stockholder
note, $1.6 million associated with disposal activities, and
$7.9 million in asset impairment charges.
The declines in net sales during the quarter and fiscal year ended
March 31, 2006 were primarily due to:
(1) a reduction in private label sales to Wal-Mart; and
(2) customer resistance to multiple price increases that were
implemented in late fiscal year 2005 and early fiscal year
2006 in response to rising raw material and other
production costs.
Gross margin improved to 26% of sales in fiscal year 2006, from
22% in fiscal year 2005. For the quarter ended March 31, 2006,
gross margin reached 34% of sales, compared with 18% in the fourth
quarter of fiscal year 2005.
"Our operations have stabilized significantly in the past several
months, as the outsourcing of our production and distribution
activities has begun to reflect itself in lower manufacturing,
inventory, distribution and overhead costs," Michael E. Broll,
chief executive officer of Galaxy Nutritional Foods, Inc., stated.
"Our financial results continued to be significantly impacted by
non-standard costs in the fourth quarter, when 100% of our
operating loss was due to costs related to disposal activities and
strategic alternatives, as well as a further non-cash charge
associated with the previously disclosed default by a stockholder
on a non-recourse note receivable."
"I am particularly pleased with the improvement in our gross
margin to 34% of sales in the fourth quarter of fiscal 2006,
compared with 26% for the full year and 18% in the fourth quarter
of fiscal 2005," Broll continued.
"During the current fiscal year, we plan to reduce marginally
profitable private label and Galaxy imitation sales in order to
improve our gross margin further. Thus, while we expect sales to
decline in fiscal 2007, our goal is to restore the Company to
profitability and generate positive cash flow from operations. In
addition to further reductions in corporate overhead, we expect
consulting, legal and audit expenses related to major contracts
and review of strategic alternatives to decline significantly
during fiscal 2007. Our financial goals appear realistic based on
currently available information."
Going Concern Doubt
Auditors working for BDO Seidman, LLP, in Atlanta, Georgia, raised
substantive doubt as to Galaxy Nutritional Foods, Inc.'s ability
to continue as a going concern after auditing the Company's
financial statements for the years ended March 31, 2006, and 2005.
The auditors pointed to the Company's default of its notes
payable, recurring operating losses from operations, negative
working capital and stockholders' deficiencies.
Management intends to address the auditors' concerns by:
-- refinancing the $2.4 million in short-term notes, which
became due June 15, 2006, and
-- outsourcing its manufacturing and distribution functions to
receive positive cash flow from operations as a result of
its recent changes to the Company's operations.
If the Company is not successful in refinancing the short-term
notes or entering into a financing, sale, or business transaction
that infuses sufficient cash resources into the Company in the
near future, management believes that it may no longer be able to
continue the implementation of its current business plan and that
there would be a material adverse affect on the liquidity and
financial condition of the Company.
A full-text copy of the annual report is available for free at
http://ResearchArchives.com/t/s?dd4
About Galaxy Nutritional Foods
headquartered in Orlando, Florida, Galaxy Nutritional Foods, Inc.
(OTCBB: GXYF) -- http://www.galaxyfoods.com/-- develops and
globally markets plant-based cheese and dairy alternatives, as
well as processed organic cheese and cheese food to grocery and
natural foods retailers, mass merchandisers and foodservice
accounts. Veggie, the leading brand in the grocery cheese
alternative category and the Company's top selling product group,
is primarily merchandised in the produce section and provides
calcium and protein without cholesterol, saturated fat or trans-
fat. Other popular brands include: Rice, Veggy, Vegan, and
Wholesome Valley. Galaxy Nutritional Foods, Inc. is dedicated to
developing nutritious products to meet the taste and dietary needs
of today's increasingly health conscious consumers.
GENERAL MOTORS: Reviewing Nissan-Renault Deal; Toyota Might Bid
---------------------------------------------------------------
General Motors Corporation and Nissan-Renault are reviewing a
proposed three-way alliance for 90 days, published reports say.
Renault-Nissan is a collaboration between Nissan Motor Co., Ltd.,
and Renault S.A. A GM shareholder, Kirk Kerkorian, broached the
idea of pulling in GM into the two-way tie-up. Mr. Kerkorian owns
9.9% equity stake in GM through his investment firm Tracinda
Corporation.
Toyota Motor Corporation, USA, however, might throw a wrench to
the possible deal as it is likely to throw in a bid to ally with
GM, the Business Week reports. But, as reported in CNN Money,
Toyota was quick to quell rumors that it's interested in GM.
GM and Toyota jointly operate an assembly plant in Freemont,
California. GM Chairman and CEO G. Richard Wagoner, Jr., said a
deal with another automaker besides Renault-Nissan was possible,
according to Automotive News; a likely possibility since the
$3-billion proposed alliance is seen as a hostile move by
some of GM's management even after Renault-Nissan's President and
CEO Carlos Ghosn publicly declared that the ball is in GM's hands.
Though Mr. Ghosn received a go signal from Renault-Nissan's board
to negotiate a deal, Mr. Ghosn said GM has to initiate the
three-way alliance. Mr. Ghosn also clarified that he's not after
Mr. Wagoner's job.
Talks of a possible alliance surfaced amidst GM's troubles as it
faces market, production and cost issues. GM is currently
implementing a turnaround plan that involves plant closures and
job cuts. Analysts opined that all these talks about alliances
are just distracting GM from doing what it should be doing: create
a good product and increase market share.
Though still number one in the world, GM's market share is
continually eroding. Based on 2005 new vehicles sales, GM sold
14.2% of the total number of vehicles sold. Toyota has 13%. Ford
comes in third with 12.4%. Renault-Nissan has 9.6% of the pie.
About General Motors
General Motors Corp. -- http://www.gm.com/-- the world's largest
automaker, has been the global industry sales leader for 75 years.
Founded in 1908, GM today employs about 327,000 people around the
world. With global headquarters in Detroit, GM manufactures its
cars and trucks in 33 countries including Mexico. In 2005, 9.17
million GM cars and trucks were sold globally under the following
brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden,
HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. GM operates one
of the world's leading finance companies, GMAC Financial Services,
which offers automotive, residential and commercial financing and
insurance. GM's OnStar subsidiary is the industry leader in
vehicle safety, security and information services.
* * *
As reported in the Troubled Company Reporter on June 30, 2006,
Standard & Poor's Ratings Services held all its ratings on General
Motors Corp. -- including the 'B' corporate credit rating and the
'B+' bank loan rating, but excluding the '1' recovery rating -- on
CreditWatch with negative implications, where they were placed
March 29, 2006.
As reported in the Troubled Company Reporter on June 22, 2006,
Fitch assigned a rating of 'BB' and a Recovery Rating of 'RR1' to
General Motor's new $4.48 billion senior secured bank facility.
The 'RR1' is based on the collateral package and other protections
that are expected to provide full recovery in the event of a
bankruptcy filing.
HAPPY KIDS: Inability to Reorganize Prompts Court to Dismiss Cases
------------------------------------------------------------------
The Honorable Stuart M. Bernstein of the U.S. Bankruptcy Court for
the Southern District of New York dismissed the chapter 11 cases
of Happy Kids Inc. and its debtor-affiliates on July 13, 2006.
Sheldon I. Hirshon, Esq., at Proskauer Rose LLP, told the Court
that after paying the proceeds from the sale of substantially all
of their assets to The CIT Group/Commercial Services, Inc., there
will not be enough funds or assets available to pay Deutsche Bank
Trust Company Americas' prepetition claim.
Mr. Hirshon gave the Court three reasons why the chapter 11 cases
should be dismissed:
a) the Debtors have sold substantially all of their assets;
b) the Debtors failed to effectuate a chapter 11 plan;
c) the Debtors are unable to pay allowed administrative claims
in full or make any distributions to any prepetition
creditors or equity holders.
The Debtors also sought the Court's dismissal order to include
terminating Donlin Recano & Company, Inc.'s retention as the their
claims agent as well as disbanding the Official Committee of
Unsecured Creditors.
Headquartered in New York, New York, Happy Kids Inc. and its
affiliates are leading designers and marketers of licensed,
branded and private label garments in the children's apparel
industry. The Debtors' current portfolio of licenses includes
Izod (TM), Calvin Klein (TM) and And1 (TM). The Company and its
debtor-affiliates filed for chapter 11 protection on Jan. 3, 2005
(Bankr. S.D.N.Y. Case No. 05-10016). Sheldon I. Hirshon, Esq., at
Proskauer Rose LLP, represents the Debtors in their restructuring
efforts. Andrea Fischer, Esq., at Olshan Grundman Frome
Rosenzweig & Wolosky, LLP, represents the Official Committee of
Unsecured Creditors. When the Debtor filed for protection from
its creditors, it listed total assets of $54,719,000 and total
debts of $82,108,000.
HOLLINGER INC: Chairman and CRO Resigns From Hollinger Int'l Board
------------------------------------------------------------------
The Board of Directors of Hollinger Inc. directed the Company's
Chairman, Stanley Beck, and its Chief Restructuring Officer,
Randall Benson, to resign their positions as the Company's
representatives on the Board of Directors of Hollinger
International Inc., effective on July 13, 2006.
At a previous meeting of the Board, Hollinger's Board of Directors
determined it was no longer appropriate for Mr. Beck and Mr.
Benson to serve on the board of Hollinger International, given the
counterclaim the Company has filed against International.
Hollinger may consider at a later time whether to nominate
replacement directors to the International Board.
The resignations have been submitted to Hollinger International.
Hollinger may consider at a later time whether to nominate
replacement directors to the Hollinger International Board.
Ontario Trial
By decision released on July 12, 2006, the Ontario Superior Court
has ordered a trial of an issue to determine whether the Court
should vary the July 8, 2005, Consent Order made in respect of
five previous Hollinger directors. The Ontario Superior Court
ruled there will have to be a "factual determination of the
fairness and reasonability" of the commitments that the Interim
Directors made on behalf of Hollinger and for their own benefit,
and asked for submissions regarding the process of that inquiry.
The Court also ruled that the Interim Directors are not entitled
to indemnification from Hollinger for their legal costs for the
trial of issue unless and until that proceeding is decided in
their favour.
Hollinger and its related companies announced on July 6, 2006,
that they were in the process of serving a Statement of Claim on
The Ravelston Corporation Limited and a number of related parties
including Conrad Black, Barbara Amiel-Black, David Radler, John
Boultbee, and Peter Atkinson.
Hollinger is asking the Ontario Superior Court of Justice for 17
distinct forms of relief, including:
-- $500 million in damages for breach of contract, conspiracy,
negligence, breach of fiduciary duty, unjust enrichment and
unlawful interference with the Hollinger Group's economic
interest;
-- additional damages totaling approximately US$200 million;
-- contribution and indemnity with respect to any judgment or
order obtained against the Hollinger Group from certain
legal proceedings;
-- relief under the Canada Business Corporations Act, an order
for compensation for oppressive conduct, and;
-- a minimum of $5 million in punitive or exemplary damages.
Counterclaim Against Hollinger International
Hollinger also filed on July 6, 2006, a counterclaim against
Hollinger International in the U.S. District Court for the
Northern District of Illinois, Eastern Division. Hollinger is
seeking a judgment against Hollinger International, and
compensatory and punitive damages to be determined at trial, for:
-- fraud in connection with the transfer of The Daily Telegraph
in 1995 and several Canadian newspapers in 1997 from
Hollinger to International;
-- conspiracy to defraud Hollinger;
-- unjust enrichment by International in its acquisition of
assets from Hollinger;
-- unlawful interference with the economic interests of
Hollinger;
-- aiding and abetting in fraud against Hollinger, and;
-- aiding and abetting a breach of fiduciary duty against
Hollinger.
By Order made June 30, 2006, the Ontario Superior Court extended
the time for Hollinger to call an Annual General Meeting of
Shareholders to Aug. 15, 2006. It is anticipated that a hearing
for a further extension will be held at that time.
On June 28, 2006, Judge Coar of the U.S. Court dismissed six of
eight counts in a securities class action complaint filed by
several plaintiffs against Hollinger and other defendants. The
Court has allowed the plaintiffs until Aug. 14, 2006, to file an
amended complaint.
Financial Statements
Hollinger has been unable to file its annual financial statements,
Management's Discussion & Analysis and Annual Information Form for
the years ended Dec. 31, 2003, 2004 and 2005 on a timely basis as
required by Canadian securities legislation. Hollinger has not
filed its interim financial statements for the fiscal quarters
ended March 31, June 30 and September 30 in each of its 2004 and
2005 fiscal years. Also, Hollinger has not filed its financial
statements for the period ended March 31, 2006. The Audit
Committee is working with the auditors, and discussing with
regulators, various alternatives to return its financial reporting
requirements to current status.
Ravelston Receivership and CCAA Proceedings
On April 20, 2005, the Court issued two orders by which The
Ravelston Corporation Limited and Ravelston Management Inc. were:
(i) placed in receivership pursuant to the Bankruptcy and
Insolvency Act (Canada) and the Courts of Justice Act
(Ontario); and
(ii) granted protection pursuant to the Companies' Creditors
Arrangement Act (Canada).
Pursuant Ravelston Receivership and CCAA Proceedings, RSM Richter
Inc. was appointed receiver and manager of all of the property,
assets and undertakings of Ravelston and RMI.
Ravelston holds approximately 16.5% of the outstanding Retractable
Common Shares of Hollinger. On May 18, 2005, the Court further
ordered that the Receivership Order and the CCAA Order be extended
to include Argus Corporation Limited and its five subsidiary
companies which collectively own, directly or indirectly, 61.8% of
the outstanding Retractable Common Shares and approximately 4% of
the Series II Preference Shares of Hollinger. On June 12, 2006,
the Court appointed Richter as receiver and manager and interim
receiver of all the property, assets and undertaking of Argent
News Inc., a wholly owned subsidiary of Ravelston. The Ravelston
Entities own, in aggregate, approximately 78% of the outstanding
Retractable Common Shares and approximately 4% of the Series II
Preference Shares of Hollinger. The Court has extended the stay
of proceedings against the Ravelston Entities to Sept. 29, 2006.
About Hollinger Inc.
Hollinger Inc.'s (TSX: HLG.C)(TSX: HLG.PR.B) --
http://www.hollingerinc.com/-- principal asset is its 66.8%
voting and 17.4% equity interest in Hollinger International, a
newspaper publisher with assets, which include the Chicago Sun-
Times and a large number of community newspapers in the Chicago
area. Hollinger also owns a portfolio of commercial real estate
in Canada.
Litigation Risks
Hollinger, Inc., faces various court cases and investigations:
(1) a consolidated class action complaint filed in Chicago,
Illinois;
(2) a class action lawsuit that was filed in the Saskatchewan
Court of Queen's Bench on September 7, 2004;
(3) a US$425,000,000 fraud and damage suit filed in the State
of Illinois by International;
(4) a lawsuit seeking enforcement of a November 15, 2003,
restructuring proposal to uphold a Shareholders' Rights
Plan, a declaration that corporate by-laws were invalid and
to prevent the closing of a certain transaction;
(5) a lawsuit filed by International seeking injunctive relief
for the return of documents of which it claims ownership;
(6) a US$5,000,000 damage action commenced by a lessor of an
aircraft lease, in which Hollinger was the guarantor;
(7) an action commenced by the United States Securities and
Exchange Commission on November 15, 2004, seeking
injunctive, monetary and other equitable relief; and
(8) investigation by the enforcement division of the OSC.
HOLLINGER INC: Reports $40.7 Million Cash On Hand as of July 7
--------------------------------------------------------------
As of the close of business on July 7, 2006, Hollinger and its
subsidiaries -- other than Hollinger International and its
subsidiaries -- had approximately $40.7 million of cash or cash
equivalents on hand, including restricted cash.
At that date, Hollinger owned, directly or indirectly, 782,923
shares of Class A Common Stock and 14,990,000 shares of Class B
Common Stock of Hollinger International. Based on the July 7, 2006
closing price of the shares of Class A Common Stock of Hollinger
International on the New York Stock Exchange of $8.03, the market
value of Hollinger's direct and indirect holdings in Hollinger
International was $126.7 million. All of Hollinger's direct and
indirect interest in the shares of Class A Common Stock of
Hollinger International is being held in escrow in support of
future retractions of its Series II Preference Shares. All of
Hollinger's direct and indirect interest in the shares of Class B
Common Stock of Hollinger International is pledged as security in
connection with the senior notes and the second senior notes. In
addition to the cash or cash equivalents on hand noted above,
Hollinger has previously deposited approximately C$8.8 million in
trust with the law firm of Aird & Berlis LLP, as trustee, in
support of Hollinger's indemnification obligations to six former
independent directors and two current officers. In addition,
C$752,000 has been deposited in escrow with the law firm of Davies
Ward Phillips & Vineberg LLP in support of the obligations of a
certain Hollinger subsidiary.
As of July 7, 2006, there was approximately $120.4 million
aggregate collateral securing the $78 million principal amount of
the Senior Notes and the $15 million principal amount of the
Second Senior Notes outstanding.
Ravelston Receivership and CCAA Proceedings
On April 20, 2005, the Court issued two orders by which The
Ravelston Corporation Limited and Ravelston Management Inc. were:
(i) placed in receivership pursuant to the Bankruptcy and
Insolvency Act (Canada) and the Courts of Justice Act
(Ontario); and
(ii) granted protection pursuant to the Companies' Creditors
Arrangement Act (Canada).
Pursuant Ravelston Receivership and CCAA Proceedings, RSM Richter
Inc. was appointed receiver and manager of all of the property,
assets and undertakings of Ravelston and RMI.
Ravelston holds approximately 16.5% of the outstanding Retractable
Common Shares of Hollinger. On May 18, 2005, the Court further
ordered that the Receivership Order and the CCAA Order be extended
to include Argus Corporation Limited and its five subsidiary
companies which collectively own, directly or indirectly, 61.8% of
the outstanding Retractable Common Shares and approximately 4% of
the Series II Preference Shares of Hollinger. On June 12, 2006,
the Court appointed Richter as receiver and manager and interim
receiver of all the property, assets and undertaking of Argent
News Inc., a wholly owned subsidiary of Ravelston. The Ravelston
Entities own, in aggregate, approximately 78% of the outstanding
Retractable Common Shares and approximately 4% of the Series II
Preference Shares of Hollinger. The Court has extended the stay
of proceedings against the Ravelston Entities to Sept. 29, 2006.
About Hollinger Inc.
Hollinger Inc.'s (TSX: HLG.C)(TSX: HLG.PR.B) --
http://www.hollingerinc.com/-- principal asset is its 66.8%
voting and 17.4% equity interest in Hollinger International, a
newspaper publisher with assets, which include the Chicago Sun-
Times and a large number of community newspapers in the Chicago
area. Hollinger also owns a portfolio of commercial real estate
in Canada.
Litigation Risks
Hollinger, Inc., faces various court cases and investigations:
(1) a consolidated class action complaint filed in Chicago,
Illinois;
(2) a class action lawsuit that was filed in the Saskatchewan
Court of Queen's Bench on September 7, 2004;
(3) a $425,000,000 fraud and damage suit filed in the State
of Illinois by International;
(4) a lawsuit seeking enforcement of a November 15, 2003,
restructuring proposal to uphold a Shareholders' Rights
Plan, a declaration that corporate by-laws were invalid and
to prevent the closing of a certain transaction;
(5) a lawsuit filed by International seeking injunctive relief
for the return of documents of which it claims ownership;
(6) a $5,000,000 damage action commenced by a lessor of an
aircraft lease, in which Hollinger was the guarantor;
(7) an action commenced by the United States Securities and
Exchange Commission on November 15, 2004, seeking
injunctive, monetary and other equitable relief; and
(8) investigation by the enforcement division of the OSC.
HOME PRODUCTS: Weak Credit Metrics Cue Moody's to Junk Ratings
--------------------------------------------------------------
Moody's Investors Service lowered Home Product International,
Inc.'s corporate family rating to Caa1 from B2, and its senior
subordinated notes rating to Caa3 from Caa2.
The rating action was prompted by HPI's weak credit metrics for
the ratings category, stemming from the continued negative impact
of escalated plastic resin costs on the company's earnings and
cash flows, and the company's inability to fully offset these with
price increases, as well as the company's limited financial
flexibility.
The ratings outlook remains negative, reflecting Moody's concern
that elevated material costs and challenging market conditions
will continue to pressure HPI's operating performance, resulting
in the likelihood for continued weak credit metrics.
HPI's Caa1 corporate family rating is primarily driven by the
company's high leverage with credit metrics that are largely
consistent with a Caa credit profile. The rating is also driven
by the company's exposure to volatile plastic resin prices,
manufacturing assets that are largely domiciled in a high-labor
cost region (United States), modest size, narrow product focus on
housewares, high customer concentration, and limited pricing
leverage given the fierce competition within the category.
Notwithstanding these concerns, the ratings also consider the
company's leading market positions within niche product
categories, strong service capabilities, continued efforts to
streamline its manufacturing footprint, good product development
capabilities, long-standing relationships with key customers K-
Mart and Wal-Mart, and continued support from its senior lenders
as evidenced by the flexible financial covenants that were enacted
as part of the December 2005 amendment.
Home Products International, Inc., supplies value-priced laundry
management products, general storage products, closet storage
products, bathware products and kitchen storage products to large
national retailers. The company reported revenues of over
$200 million in 2005.
HONEY STOP: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Honey Stop Food Marts, Inc.
fka Honey Stop Properties, Inc.
P.O. Box 31
Longview, Texas 75606
Bankruptcy Case No.: 06-60387
Type of Business: The Debtor operates a group ofconvenience
stores in Longview, Texas.
Chapter 11 Petition Date: July 17, 2006
Court: Eastern District of Texas (Tyler)
Debtor's Counsel: Jason R. Searcy, Esq.
Jason R. Searcy, P.C.
P.O. Box 3929
Longview, Texas 75606
Tel: (903) 757-3399
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $10 Million to $50 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Longtex Fuel Company Fuel $4,069,635
P.O. Box 31
Longview, TX 75606
Core-Mark Midcontinent, Inc. $61,537
P.O. Box 2547
Fort Worth, Texas 76113
Budweiser $26,366
P.O. Box 3244
Longview, TX 75606
CD Hartnet Company, Inc. $14,851
P.O. Box 289
Weatherford, TX 76086
Coors/Stroh of Longview $12,602
P.O. Box 2264
Longview, TX 75606
Made Rite $12,236
Giglio Distr. Co., Inc. $9,722
Tyler Newspapers $9,512
Pepsi Cola $6,253
Frito Lay $5,844
Clouds Food Service, Inc. $3,757
Bordens, Inc. $2,996
Maxwell Distributors, Inc. $2,628
Penco Oil Co., Inc. $2,538
Toba Sales $2,487
Ben E. Keith $2,428
Icee USA $2,077
ABC Auto Parts $1,975
Lynn Adams Dist. Co. $1,709
Longview Newspapers, Inc. $1,407
HVHC INC: Moody's Rates Proposed $180 Mil. Sr. Facilities at Ba3
----------------------------------------------------------------
Moody's Investors Service rated the proposed new bank loan of HVHC
Inc. at Ba3 and assigned a liquidity rating of SGL-2. Moody's
also assigned a corporate family rating of Ba3. HVHC is a holding
company that distributes eyeglass frames, operates optical retail
stores, and administers employee vision care benefit programs
through operating subsidiaries.
Proceeds from the new bank loan, together with incremental equity
investment from owner Highmark Inc., will be used to fund the
purchase of the optical retailer Eye Care Centers of America, Inc
and to replace the existing bank loan. Moody's rates HVHC on a
stand-alone basis without benefit of ownership by financially
stronger Highmark or of any potential support from the newly
acquired subsidiary ECCA. This is the first time that Moody's has
rated HVHC Inc.
Ratings assigned are:
* $180 million senior secured bank credit facilities at Ba3,
* Corporate family rating at Ba3, and
* Speculative grade liquidity rating at SGL-2.
The Ba3 corporate family rating for HVHC balances certain aspects
of the company's franchise that have low investment grade
characteristics against its aggressive financial policy, weak free
cash flow, and relatively small size for a rated issuer.
Weighting down the overall rating with B characteristics are the
company's aggressive financial policy in which HVHC is increasing
leverage in order to finance the ECCA acquisition and the weak
pro-forma cash flow arising from substantial capital investment,
seasonal working capital fluctuations, and increased interest
costs.
Moody's also believes that the ongoing fashion challenges in
matching short-term consumer preferences for retail and wholesale
also score at the Ba level, which is partially balanced by the
history of revenue stability in its important segment of employee
vision care benefit administration. However, supporting the
ratings are the moderate leverage and solid interest coverage that
have low investment grade/high non-investment grade
characteristics; the potential for meaningful post-merger
operating efficiencies; and the favorable demographics for
continued growth in vision correction.
The stable outlook anticipates that the company will steadily grow
revenue and cash flow. The outlook also considers Moody's
expectation that the company's policy with respect to uses of
discretionary cash flow will be measured, resulting in balance
sheet improvement. In addition, Moody's also expects that the
company will maintain solid liquidity through moderation of
planned growth capital investment if operating results fall below
plan.
Debt protection measures on average are appropriate for a Ba rated
credit. Ratings could eventually move upward once the company
establishes a track record of steady retail sales growth,
stability in its wholesale eyeglass frame distribution segment,
and additional vision benefit account wins; if the company
achieves a material part of anticipated post-merger operating
synergies; and if financial flexibility sustainably strengthens
such that EBIT coverage of interest expense exceeds 3 times,
leverage remains below 4 times, and Free Cash to Debt approaches
10% on a sustainable basis.
A permanent decline in cash balances or revolving credit facility
availability, inability to improve operating margins, or an
aggressive financial policy action could cause the ratings to be
lowered. Specifically, an increase in debt to EBITDA above 4
times, EBIT to interest expense falling below 2.5 times, or free
cash flow to debt remaining below break-even for an extended
period would cause ratings to be lowered.
HVHC Inc., with executive headquarters in Pittsburgh,
Pennsylvania, owns Davis Vision, Inc and Viva Optique, Inc.
Davis administers employee vision care benefit programs and
operates 89 retail stores, while Viva distributes eyeglass
frames in more than 60 countries. The company, a wholly-owned
subsidiary of Highmark Inc., is acquiring Eye Care Centers of
America, Inc. Revenue for the twelve months ending March 31, 2006
was approximately $500 million.
INT'L PAPER: Board Approves $3 Billion Share Repurchase Program
---------------------------------------------------------------
International Paper Company disclosed that its board of directors
has authorized a share repurchase program to acquire up to
$3 billion of the company's stock.
The Company said the $3 billion share repurchase amounts to
approximately 20% of its outstanding shares. It plans to begin
the program in the third quarter of 2006 and it intends to
complete the program before the end of 2007.
Balance Sheet Strengthening
The Company plans to spend approximately $6 billion to $7 billion
to strengthen its balance sheet, through debt repayment and
voluntary cash contributions to its U.S. pension fund in the range
of $500 million to $1 billion. As of the end of the first quarter
of 2006, the Company said it had reduced its debt by approximately
$600 million to approximately $11.5 billion and further expects to
reduce its annual interest expense by about $350 million.
The Company is exploring to sell its Tres Lagoas forestlands and
mill site in Brazil and build one or two 220,000 ton-per-year
uncoated paper machines on the Tres Lagoas site, at a cost of less
than $300 million each. It expects to make a decision on this
opportunity by the end of 2006.
The Company has completed the sale of its majority share of Carter
Holt Harvey Ltd and reported it has entered into sale agreements
for 5.7 million acres of U.S. forestland and its coated papers and
kraft papers businesses, expected to close in the second half of
2006 with expected proceeds of approximately $9.3 billion.
The Company's other business units being evaluated for possible
sale include its beverage packaging, wood products and Arizona
Chemical businesses, as well as its Inpacel assets in Brazil. It
expects total divestiture proceeds to exceed $11 billion.
About International Paper
Based in Stamford, Connecticut, International Paper Company
(NYSE: IP) -- http://www.internationalpaper.com/-- is in the
forest products industry for more than 100 years. The company is
currently transforming its operations to focus on its global
uncoated papers and packaging businesses, which operate and serve
customers in the U.S., Europe, South America and Asia. These
businesses are complemented by an extensive North American
merchant distribution system. International Paper is committed to
environmental, economic and social sustainability, and has a long-
standing policy of using no wood from endangered forests.
* * *
Moody's Investors Service assigned a Ba1 senior subordinate rating
and Ba2 Preferred Stock rating on International Paper Company in
Dec. 5, 2005.
ITC HOMES: Disclosure Statement Hearing Set for August 2
--------------------------------------------------------
The U.S. Bankruptcy Court for the District of Arizona will convene
a hearing at 9:30 a.m., on Aug. 2, 2006, to consider the adequacy
of the Disclosure Statement explaining ITC Homes, Inc.'s Plan or
Reorganization. The Disclosure Statement hearing will be held at
Courtroom 446, 38 S. Scott Avenue in Tucson, Arizona.
Under ITC Homes' Plan, submitted on June 26, 2006, ownership of
the estate assets will be vested in the Debtor on the effective
date. The Debtor will continue to build, sell and close homes to
third party purchasers under the control of its sole shareholder,
Doron Amiran. Payments due under the Plan will be funded from the
Debtor's continued operations.
The Debtor will also be authorized to continue a pending
litigation against M & S Unlimited, LLC, and its owners, Moshe and
Susie Gedalia.
The Debtors and the Gedalias are parties to an agreement to
develop a tract of land in Vail, Arizona, named Santa Rita Acres
Estate. Mr. Amiran formed ITC Homes for the sole purpose of
developing that property and funded the project development
through a loan from First National Bank of Arizona. The Gedalias
guaranteed repayment of the FNBA loan.
As reported in the Troubled Company Reporter on March 28, 2006,
the Gedalias commenced an action in the Nevada state court against
Mr. Amiran seeking emergency relief to stop the alleged diversion
of the assets of the real estate development and permanent relief
for an accounting and for damages. The state court subsequently
entered an order enjoining any further payments to Mr. Amiran and
further ordering an accounting. The Nevada court also appointed
retired Brigadier General Ashley Hall as independent receiver for
the Santa Rita assets. Pursuant to the bankruptcy court's
turnover order, the receiver turned over operational control of
the business to the Debtor.
Treatment of Claims
The Debtor's Plan divides all claims against its estate into eight
separate classes:
Class 1 claims, consisting of all administrative claims, are
unimpaired and will be paid in full on the effective date of the
Plan.
Priority claims under Class 2 will be paid in full, in quarterly
installments, when funds are available in the Debtor's non-
collateral account. Payments under this class will be completed
not later than three years after the effective date of the Plan.
Class 3 allowed secured claim holders, whose claims are primarily
secured by liens on vehicles or equipment owned by the Debtors,
will retain their liens and security interests in and to the
assets of the Debtor. Holders will be paid in accordance with the
terms and conditions of the original documents.
Holders of general unsecured claims classified under Class 4 will
be paid, pro rata, in deferred payments, without interest, over a
period not to exceed three years. However, payments due to
general unsecured creditors will only commence after the Class 2
claimholders are paid in full. The non-insider unsecured claims
against the Debtor consist of the claims of certain professionals,
which amount is estimated to be approximately $800,000.
The claim of FNBA, the Debtor's primary secured lender, will be
paid in full and in cash, in accordance with the loan and security
documents evidencing the loan, as modified pursuant to the Cash
Collateral Stipulation. The Debtor says it is required to pay
FNBA's Class 5 claim in full within 18 months following the
effective date of the Plan.
M & S's general unsecured insider claim, classified under Class 6,
will be paid in full and without interest after all Class 1 to
Class 5 claims are paid in full. Payments for M & S's Class 6
claim will be made in accordance with the loan documents
evidencing the claim. All payments will be made when funds are
available in the Debtor's non-collateral account. In addition,
all payments made for Class 6 claims will be held in an interest
bearing account until a final adjudication is made n the claims
and counterclaims by and between M & S and the Debtor.
The contingent and unliquidated insider claims of the Gedalias
under Class 7 will not be allowed and the Gedalias will get
nothing under the Plan.
Doron Amiran will not receive any distribution on account of his
interest unless and until all sums due all other classes are paid
in full pursuant to the Plan.
A copy of the Debtor's Plan is available for fee at:
http://www.researcharchives.com/bin/download?id=060717211018
Headquartered in Vail, Arizona, ITC Homes, Inc. --
http://www.itchomesinc.net/-- develops residential real estates.
The Company filed for chapter 11 protection on Jan. 26, 2006
(Bankr. D. Ariz. Case No. 06-00053). Scott D. Gibson, Esq., at
Gibson, Nakamura & Decker, PLLC, represents the Debtor. When the
Debtor filed for protection from its creditors, it estimated
assets and debts of $10 million to $50 million.
ITC HOMES: Gedalias Criticize Plan, Asks to End Exclusivity
-----------------------------------------------------------
Moshe and Susie Gedalia, the owners of M & S Unlimited, LLC, ask
the U.S. Bankruptcy Court for the District of Arizona to terminate
ITC Homes, Inc.'s exclusive period to file a Chapter 11 Plan so
that they can file a competing plan.
The Gedalias say that their competing plan will allow all
creditors to recover their claims in full on the effective date
and will leave unaltered the legal and equitable rights of First
National Bank of Arizona.
The Debtors and the Gedalias are parties to an agreement to
develop a tract of land in Vail, Arizona, named Santa Rita Acres
Estate. Mr. Amiran formed ITC Homes for the sole purpose of
developing that property and funded the project development
through a loan from First National Bank of Arizona. The Gedalias
guaranteed repayment of the FNBA loan.
On June 26, 2006, the Debtor submitted a plan classifying M & S
claim as an insider claim and the disallowing the Gedalias'
contingent and unliquidated insider claims. The Plan also calls
for the full payment of FNBA's claim in full within 18 months
following the effective date of the Plan.
Michael McGrath, Esq., at Mesch, Clark & Rothschild, PC, tells the
Court that the Debtor's Plan is unfair, inequitable, and violates
the express provisions of the Bankruptcy Code.
According to Mr. McGrath, the Debtor's Plan gerrymanders M & S's
claim to that of an "insider" which it is not. He said the
Gedalias will oppose the "draconian" treatment of the M & S claim
under the Debtor's Plan. Mr. McGrath reminds the Court that M & S
is the Debtor's largest creditor and will hold the vast majority
of the claims against the estate when the FNBA claim and claims to
be paid via construction financing are satisfied.
Mr. McGrath also pointed out that the Plan violates section
1129(b)(2)(B) of the Bankruptcy Code because it allows equity
interest holders to retain their interest in the Debtor while more
senior classes of unsecured creditors are not paid in full. He
adds that without paying the allowed claims of the Gedalias,
equity holders retain their interests, which is a violation of the
absolute priority rule.
The Court will consider the Gedalias' request during the hearing
to consider approval of the Debtor's Disclosure Statement at
9:30 a.m., on Aug. 2, 2006.
Headquartered in Vail, Arizona, ITC Homes, Inc. --
http://www.itchomesinc.net/-- develops residential real estates.
The Company filed for chapter 11 protection on Jan. 26, 2006
(Bankr. D. Ariz. Case No. 06-00053). Scott D. Gibson, Esq., at
Gibson, Nakamura & Decker, PLLC, represents the Debtor. When the
Debtor filed for protection from its creditors, it estimated
assets and debts of $10 million to $50 million.
ITEN CHEVROLET: Section 341(a) Meeting Slated for August 15
-----------------------------------------------------------
The U.S. Trustee for Region 12 will convene a meeting of Iten
Chevrolet Company Inc.'s creditors at 2:00 p.m., on Aug. 15, 2006,
at the U.S. Courthouse, Room 1017, 300 South 4th Street in
Minneapolis, Minnesota. 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 Brooklyn Center, Minnesota, Iten Chevrolet Company, Inc.
-- http://www.gmbuypower.com/-- operates a General Motors
Corporation automobile dealerships in Minnesota. The Company
filed for chapter 11 protection on June 28, 2006 (Bankr. D. Minn.
Case No. 06-41259). Mary Jo A. Jensen-Carter, Esq., at Buckley
and Jensen, represents the Debtor. When the Debtor filed for
protection from its creditors, it listed assets of $16,083,417 and
debts of $17,703,249.
J. CREW: Makes $35 Mil. Voluntary PrePayment of Credit Agreement
----------------------------------------------------------------
J. Crew Group, Inc. and its debtor-affiliates made a $35 million
voluntary prepayment of their Credit and Guaranty Agreement on
July 12, 2006.
The credit and guarantee agreement with their lenders have Goldman
Sachs Credit Partners L.P. and Bear, Stearns & Co. Inc. as joint
lead arrangers and joint bookrunners, Goldman Sachs Credit
Partners L.P. as administrative agent and collateral agent, Bear
Stearns Corporate Lending Inc. as syndication agent and Wachovia
Bank, National Association as documentation agent.
In addition the Company disclosed that it redeemed all
$92.8 million liquidation value of its Series A 14-1/2% Cumulative
Preferred Stock and all $32.5 million liquidation value of its
Series B 14-1/2% Cumulative Redeemable Preferred Stock at 100% of
liquidation value, as well as paid accumulated and unpaid
dividends of $306.4 million on the Preferred Stock.
Series A Preferred Stock held by TPG Partners II, L.P., TPG
Parallel II, L.P. and TPG Investors II, L.P., affiliates of the
Texas Pacific Group, the Company's largest shareholder, was
redeemed with 3.7 million shares of the Company's common stock.
New York City-based J. Crew Group, Inc. -- http://www.jcrew.com/
-- is a fully integrated multi-channel specialty retailer of
women's and men's apparel and accessories. J.Crew products are
distributed through the Company's 166 retail and 49 factory
stores, the J. Crew catalog, and the Company's Internet website.
J. CREW: IPO Completion Prompts Moody's to Upgrade Ratings
----------------------------------------------------------
Moody's Investors Service upgraded the ratings of J. Crew
Operating Corp. following the company's successful completion of
an initial public offering the proceeds from which, along with the
proceeds of $73.5 million of its common stock to Texas Pacific
Group, were used to redeem of all of its Series A and Series B
preferred stock on July 13, 2006. The terms of the preferred had
created a debt heavy capital structure. The upgrade reflects the
company's significantly stronger balance sheet and corresponding
improved credit metrics as a result of the redemption of the
Series A and Series B preferred stock. This rating action
concludes the review for possible upgrade initiated on June 19,
2006.
These ratings were upgraded:
* Corporate family rating to Ba3 from B2;
* $250 million senior secured term loan due 2012 to Ba3 from
B2.
The rating outlook is stable.
In addition to repaying the Series A and Series B preferred stock,
the company used the proceeds from the initial public offering to
repay $35 million of its term loan thus reducing the facility from
$285 million to $250 million. Also, in conjunction with the
initial public offering, $23.5 million of notes payable converted
to equity.
The Ba3 corporate family rating and stable outlook balances the
company's high business risk and small scale, which correlate to
the B rating category, with its significantly improved credit
metrics pro forma for the initial public offering, solid execution
skills, and credible market position, which correlate to an
investment grade rating category. The rating category is also
supported by J. Crew's geographic diversification with
210 total stores within in the United States which scores at
the Ba level. The company maintains healthy on balance sheet cash
levels and external liquidity consisting of a $170 million asset
based revolver that is only used for letters of credit and is
reflective of Ba rated company.
Upward rating pressure could develop should the company's
operating performance continue to improve such that Debt is
sustained below 3.5 times, EBITA is sustained above 3.75, and
as reported operating margins are sustained above 10%. Downward
rating pressure could develop should the company's operating
performance deteriorate such that Debt is sustained above
5.25 times, EBITA fall below 1.75 times, or should the company's
liquidity position weaken or its financial policies become more
aggressive.
J. Crew Operating Corp., headquartered in New York, is a multi-
channel apparel retailer who operates 165 retail stores,
46 factory outlet stores, a catalogue, and website under the name
J. Crew. Revenues for LTM period ended April 29, 2006 were
approximately $983 million.
JACOB DEN HOLLANDER: Case Summary & 15 Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: Jacob den Hollander, Jr.
aka Jay Den Hollander
dba Den Hollander Roofing
aka Den Hollander Construction
dba DJ Trading
1662 Parkland Trail Northwest
Grand Rapids, Michigan 49534
Bankruptcy Case No.: 06-03214
Type of Business: The Debtor is engaged in roofing and
construction business.
Chapter 11 Petition Date: July 13, 2006
Court: Western District of Michigan (Grand Rapids)
Judge: Jo Ann C. Stevenson
Debtor's Counsel: Martin L. Rogalski, Esq.
Martin L. Rogalski, P.C.
1881 Georgetown Center
Jenison, Michigan 49428
Tel: (616) 457-4410
Fax: (616) 457-6944
Total Assets: $2,766,977
Total Debts: $2,084,281
Debtor's 15 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
MBNA Business Credit Card $43,356
P.O. Box 15026
Wilmington, DE 19850-5026
Bank of America Business Credit Card $42,873
P.O. Box 1390
Norfolk, VA 23501-1390
ABC Supply Inc. Commercial Roofing $40,000
125 East Columbia Avenue
Pontiac, MI 48340
Home Depot Credit Service Building Supplies $22,451
P.O. Box 9122
Des Moines, IA 50368-9122
Auto Owners Business Insurance $20,384
Central Mercantile
Coll. Services
822 East Grand River
Brighton, MI 48116-1895
Plymouth Christian School Tuition $10,363
Ottawa County Treasurer Back Property Taxes on $9,735
1662 Parkland Trail
Northwest
Grand Rapids, MI 49534
Chase Business Credit Card $9,565
Kent County Back Property Taxes on $8,657
437 Lake Michigan Drive
Grand Rapids, MI
Calhoun County Treasurer 2005 Back Taxes on $2,179
47 South Wabash Avenue
Battle Creek, MI
2005 Back Taxes on $2,090
144 Cherry Street
Battle Creek, MI
2005 Back Taxes on $1,249
51 South Wabash Avenue
Battle Creek, MI
American Express Business Credit Card $5,366
Rehman Robson Accounting Services $4,715
Home Depot Business Purchases $4,439
Barry County Treasurer 2005 Back Taxes on $1,829
979 Gerke Drive
Hastings, MI 49058
2005 Back Taxes on $2,316
6235 Oakwood
Delton, MI 49046
Menards Business Credit Card $3,819
JAY-MAX ENTERPRISES: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: Jay-Max Enterprises, Inc.
1300 Green Acres Drive
Kokomo, Indiana 46901
Bankruptcy Case No.: 06-03830
Chapter 11 Petition Date: July 14, 2006
Court: Southern District of Indiana (Indianapolis)
Judge: James K. Coachys
Debtor's Counsel: Steven P. Taylor, Esq.
Steven P. Taylor, P.C.
6100 North Keystone Avenue, Suite 116
Indianapolis, Indiana 46220
Tel: (317) 475-1570
Fax: (317) 475-1697
Total Assets: $1,542,364
Total Debts: $1,096,170
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Earl Howard Jr. Promissory Note $50,000
107 East Walnut Street
Apartment 2B
Kokomo, IN 46901
Beneficial Consumer Credit $22,243
Bankruptcy Department
3708 South Reed Road
Kokomo, IN 46902
Howard County Treasurer Property Taxes - $11,747
226 North Main Street 1300 Green Acres Drive
Kokomo, IN 46901 Green Acres Golf Club
Lesco Purchases $6,652
P.O. Box 4596
Carol Stream, IL 60197-4596
Citi Card Consumer Credit $6,528
P.O. Box 6000
The Lakes, NV 89163-6000
BCR CPA Group Tax Services $3,983
Frontier Co-Op Services $3,566
Taylor Made Golf Co. Services and Supplies $2,382
Elan Financial Services Consumer Credit $2,248
Midwest Golf & Turf Equipment Repair $1,996
Cardmember Services Consumer Credit $1,672
Coca Cola Bottling Delivery Services $1,512
Callaway Golf Supplies $1,414
Seed Solutions Services $1,354
Fore! Reservations Inc. Supplies $1,202
Hornung's Golf Products, In. Golf Supplies $1,175
On-Site Services Repair Services $600
Pinecrest Mills Inc. Supplies $579
R&R Products Inc. Maintenance Supplies $486
NHImedia Advertising Services $427
KAISER ALUMINUM: Court Sets Aug. 5 as Admin. Claims Bar Date
------------------------------------------------------------
In light of the emergence from bankruptcy of Kaiser Aluminum
Corporation, Kaiser Aluminum and Chemical Corp. and their debtor-
affiliates on July 6, 2006, Judge Fitzgerald orders that:
(i) requests for payments of administrative claims must be
filed by August 5, 2006; and
(ii) applications for final allowance of claims for pre-
Effective Date services rendered by professions to the
Reorganizing Debtors must be filed by September 4, 2006.
Parties failing to file their fee applications or administrative
claim requests with the U.S. Bankruptcy Court for the District of
Delaware and serve on the Reorganized Debtors and other parties on
or before the Bar Dates will be forever barred from asserting
their claims.
Objections to payment requests of administrative claims or any
professional fee claims must be filed and served on the
Reorganized Debtors and other interested parties by the later of:
(a) October 4, 2006; or
(b) 30 days after the filing of the applicable request for
payment of the administrative or professional fee claims.
The Court also orders that claims for damages arising from the
rejection of executory contracts pursuant to Section 6.3 of the
Second Amended Plan of Reorganization must be filed by August 5,
2006.
The proofs of claim must be filed with Logan & Company, Inc., the
Reorganized Debtors' claims and noticing agent, and served on the
Reorganized Debtors and other parties.
Headquartered in Foothill Ranch, California, Kaiser Aluminum
Corporation -- http://www.kaiseraluminum.com/-- is a leading
producer of fabricated aluminum products for aerospace and high-
strength, general engineering, automotive, and custom industrial
applications. The Company filed for chapter 11 protection on Feb.
12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a
number of its commodity businesses during course of its cases.
Corinne Ball, Esq., at Jones Day, represents the Debtors in their
restructuring efforts. Lazard Freres & Co. serves as the Debtors'
financial advisor. Lisa G. Beckerman, Esq., H. Rey Stroube, III,
Esq., and Henry J. Kaim, Esq., at Akin, Gump, Strauss, Hauer &
Feld, LLP, and William P. Bowden, Esq., at Ashby & Geddes
represent the Debtors' Official Committee of Unsecured Creditors.
The Debtors' Chapter 11 Plan became effective on July 6, 2006. On
June 30, 2004, the Debtors listed $1.619 billion in assets and
$3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 101;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
KAISER ALUMINUM: Wants $32 Mil. Deal with TIG Insurance Approved
----------------------------------------------------------------
Kaiser Aluminum & Chemical Corporation asks the U.S. Bankruptcy
Court for the District of Delaware to:
(i) approve its settlement agreement with TIG Insurance
Company;
(ii) authorize the sale of certain TIG-issued insurance
policies back to TIG free and clear or liens, claims,
encumbrances or other interests; and
(iii) enjoin all claims against TIG relating to the policies.
TIG, as successor by mergers to International Insurance Company
and International Surplus Lines Insurance Company, issued certain
policies to KACC with policy periods covering between 1976 and
1982.
The TIG policies are at issue in KACC's insurance coverage action
against certain insurers, including TIG, pending before the
Superior Court of California for the County of San Francisco.
In the Products Coverage Action, KACC is seeking:
-- a declaratory judgment that the insurers are obligated to
cover the asbestos-related bodily injury products
liability claims that have been asserted against KACC; and
-- damages for breach of contract and breach of the covenant
of good faith and fair dealing against several of the
insurers.
Kimberly D. Newmarch, Esq., at Richards, Layton & Finger, in
Wilmington, Delaware, relates that KACC and TIG have engaged in
negotiations to resolve all claims with respect to the Subject
Policies and other insurance policies issued by TIG to KACC.
Under the Settlement Agreement, TIG will make a $32,200,000
settlement payment before July 15 of each year at these amounts:
(a) $2,415,000 from 2006 to 2008;
(b) $3,220,000 from 2009 to 2012; and
(c) $4,025,000 from 2013 to 2015.
Payment of the settlement amounts will be made to U.S. Bank
National Association, as settlement account agent, unless a
Trigger Date has occurred, in which case, to Wells Fargo Bank,
N.A., as insurance escrow agent, for distribution to the Funding
Vehicle Trust. The Trigger Date is the day that the last of these
events has occurred:
(1) the order approving the settlement agreement becomes a
Final Order;
(2) the Confirmation Order becomes final; and
(3) the occurrence of the Plan Effective Date.
Other terms of the Settlement Agreement are:
(a) TIG will receive all benefits of being designated as a
Settling Insurance Company in the Plan of Reorganization,
including the benefits of the Personal Injury Channeling
Injunctions;
(b) KACC releases all its rights with respect to the Subject
Policies and other rights under additional policies issued
by TIG, and will dismiss TIG from the Products Coverage
Action;
(c) KACC will sell the Subject Policies back to TIG, and TIG
will buy back the Policies free and clear of all liens,
claims, or interests, with TIG's payment of the settlement
amount constituting the consideration for the buy-back;
(d) If any claim is brought against TIG that is subject to a
PI Channeling Injunction, the Funding Vehicle Trust will
exercise all reasonable efforts to establish that the
claim is enjoined as to TIG; and
(e) TIG will not seek from any entity other than its
reinsurers or retrocessionaires:
* reimbursement of any payments that it is obligated
to make under the Settlement Agreement;
* any other payments TIG has made to or for the benefit
of KACC or, upon its creation, the Funding Vehicle
Trust, under the Subject Policies, whether by way of
contribution, subrogation, indemnification or otherwise.
In no event will TIG make any claim for or relating to
the insurance, reinsurance or retrocession against any
KACC Party.
The Settlement Agreement also contains certain rights to
adjustment of the settlement amount if asbestos legislation is
enacted into law prior to the time that the last scheduled payment
is due from TIG.
If the legislation eliminates the obligation of the Funding
Vehicle Trust, the Asbestos PI Trust and the KACC Parties to make
payments to all holders of Asbestos PI Claims, then TIG will have
no obligation to make any additional payments not yet due under
the Settlement Agreement. However, TIG must continue to make
payments equivalent to 6% of the amount owed to the Silica PI
claims, unless the asbestos legislation also eliminates the
obligation of the Silica PI Trust, the Funding Vehicle Trust and
KACC.
If the asbestos legislation is enacted then ceases to be in force
and effect, TIG's obligation to pay the remaining settlement
amount will be reinstated nunc pro tunc to the time of the
enactment, unless TIG demonstrates to the Court that the balance
should be adjusted.
Headquartered in Foothill Ranch, California, Kaiser Aluminum
Corporation -- http://www.kaiseraluminum.com/-- is a leading
producer of fabricated aluminum products for aerospace and high-
strength, general engineering, automotive, and custom industrial
applications. The Company filed for chapter 11 protection on Feb.
12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a
number of its commodity businesses during course of its cases.
Corinne Ball, Esq., at Jones Day, represents the Debtors in their
restructuring efforts. Lazard Freres & Co. serves as the Debtors'
financial advisor. Lisa G. Beckerman, Esq., H. Rey Stroube, III,
Esq., and Henry J. Kaim, Esq., at Akin, Gump, Strauss, Hauer &
Feld, LLP, and William P. Bowden, Esq., at Ashby & Geddes
represent the Debtors' Official Committee of Unsecured Creditors.
The Debtors' Chapter 11 Plan became effective on July 6, 2006. On
June 30, 2004, the Debtors listed $1.619 billion in assets and
$3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 101;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
KMART CORP: Wants Court to Compel Discovery from Ashland
--------------------------------------------------------
On April 30, 2002, Ashland, Inc., filed Claim No. 14688 for
$1,303,004 against Kmart Corp. for goods sold.
The Debtors objected to the claim. The Objection was continued,
creating a contested matter and entitling the parties to
conduct discovery in accordance with the Federal Rules of
Bankruptcy Procedure.
Kmart served its first set of interrogatories on Ashland on
April 18, 2006. Responses were due by May 18.
On May 22, 2006, Kmart asked Ashland to respond to the Discovery
Requests. Kmart further advised that if Ashland failed to
respond by June 1, Kmart would file a motion to compel compliance
with the Discovery Requests and seek appropriate remedy,
including total disallowance of the Claim.
Ashland failed to respond.
Kmart again advised Ashland on June 15, 2006, that if it did not
respond by June 20, Kmart would file the motion to compel
discovery.
Kmart has not since received a response to its correspondence.
For this reason, Kmart asks the U.S. Bankruptcy Court for the
Northern District of Illinois to compel Ashland to answer
the First Set of Interrogatories and comply with the request for
production of documents.
If the Court approves the discovery request, and Ashland fails to
comply, Kmart asks the Court strike Ashland's claim and enter
summary judgment in its favor.
About Kmart Corp.
Headquartered in Troy, Michigan, Kmart Corporation nka KMART
Holding Corporation -- http://www.bluelight.com/-- operates
approximately 2,114 stores, primarily under the Big Kmart or Kmart
Supercenter format, in all 50 United States, Puerto Rico, the U.S.
Virgin Islands and Guam. The Company filed for chapter 11
protection on January 22, 2002 (Bankr. N.D. Ill. Case No.
02-02474). Kmart emerged from chapter 11 protection on May 6,
2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, represented the retailer in its restructuring
efforts. The Company's balance sheet showed $16,287,000,000 in
assets and $10,348,000,000 in debts when it sought chapter 11
protection. Kmart bought Sears, Roebuck & Co., for $11 billion to
create the third-largest U.S. retailer, behind Wal-Mart and
Target, and generate $55 billion in annual revenues. The waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act
expired on Jan. 27, without complaint by the Department of
Justice. (Kmart Bankruptcy News, Issue No. 113; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
KMART CORP: Wants Unclaimed Shares Reverted for Redistribution
--------------------------------------------------------------
On June 23, 2006, Kmart Corp. delivered to the U.S. Bankruptcy
Court for the Northern District of Illinois a status report
indicating the names of the Unclaimed Distribution Claimholders
who have claimed their Unclaimed Shares, as of June 20, from the
Account.
William J. Barrett, Esq., at Barack Ferrazzano Kirschbaum Perlman
& Nagelberg LLP, in Chicago, Illinois, discloses that the Status
Report informs all parties what relief Kmart intends to seek at
the July omnibus hearing with respect the Unclaimed Shares.
By the Status Report, Kmart asks the Court to provide that the
Unclaimed Shares, which have not been claimed, be deemed to
revert back to the Reorganized Debtors for redistribution to
other holders of allowed Class 5 claims as part of the final
distribution to be made at the conclusion of the claims
reconciliation process.
Mr. Barrett notes that 142,308 Unclaimed Shares fall within the
relief sought.
Kmart agrees to hold the stock reversion process in abeyance
until July 17, 2006, to allow Unclaimed Distribution Claimholders
a final opportunity to effectuate the transfer or sale of their
Unclaimed Shares.
A complete list of Claimholders who have claimed the Unclaimed
Shares or who have contacted Kmart or Computershare, Ltd., to
begin transferring the Unclaimed Shares is available for free at:
http://researcharchives.com/t/s?dcf
A complete list of Claimholders who have not claimed the
Unclaimed Shares is available for free at:
http://researcharchives.com/t/s?dd0
Objections
(A) 7UP Companies
7UP RC Bottling Companies of Southern California and Seven Up
Bottling Company of Fresno collectively hold 1,378 shares of
stock in Sears Holding Corporation on account of their claim
against Kmart Corporation.
7UP California is entitled to receive 760 shares of the Stock.
Seven Up Fresno is entitled to receive 618 shares of the Stock.
The 7UP Companies object to the Reorganized Debtors' request.
According to the 7UP Companies, they are in the process of
transferring the Stock from Computershare to their personal
brokerage accounts.
In this regard, the 7UP Companies ask the Court to:
-- direct the Reorganized Debtors to remove their Stock from
the Status Report as "Unclaimed Shares;" and
-- rule that their Stock is not deemed reverted back to the
Reorganized Debtors.
(B) Revenue Management
Liquidity Solutions, Inc., doing business as Revenue Management,
is the holder of certain claims implicated in the Status Report:
* Claim No. 474 for $84,062, as assignee of Colomer & Suarez,
Inc.; and
* Claim No. 19856 for $37,948, as assignee of Trimfoot Co.,
doing business as Wee Kids.
According to the Status Report, Revenue Management is to receive
643 shares of stock in Sears Holding Corporation on account of
its Claims, specifically, 375 shares for Claim No. 474 and 268
shares for Claim No. 19856.
Jay Elrich, Esq., at Jay Elrich & Associates, in Chicago,
Illinois, informs the Court that the notices of transfer of claim
in connection with Revenue Management's Claims were just recently
filed and the objection period with respect to both transfers
will not expire until July 28, 2006.
Mr. Elrich assures the Court that upon the passage of the
Transfer Objection Deadline, Revenue Management will take all
necessary steps to ensure that its Stock is transferred to its
account.
Thus, Revenue Management asks the Court to either deny the
request in the Status Report to designate its shares as Unclaimed
Shares, or remove it's shares from the list of Unclaimed Shares
deemed to revert back to the Reorganized Debtors.
(C) USA Today
Gregory Mascitti, Esq., at Nixon Peabody LLP, in Rochester, New
York, notes that although USA Today is correctly listed under
"Claimed Shares", the number of shares distributed to, and being
claimed by USA Today, is incorrect.
The Status Report states that USA Today is claiming 339 shares.
Mr. Mascitti relates that pursuant to Kmart's Plan of
Reorganization, USA Today is claiming 586 shares in satisfaction
of its Allowed Class 5 Claim.
About Kmart Corp.
Headquartered in Troy, Michigan, Kmart Corporation nka KMART
Holding Corporation -- http://www.bluelight.com/-- operates
approximately 2,114 stores, primarily under the Big Kmart or Kmart
Supercenter format, in all 50 United States, Puerto Rico, the U.S.
Virgin Islands and Guam. The Company filed for chapter 11
protection on January 22, 2002 (Bankr. N.D. Ill. Case No.
02-02474). Kmart emerged from chapter 11 protection on May 6,
2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, represented the retailer in its restructuring
efforts. The Company's balance sheet showed $16,287,000,000 in
assets and $10,348,000,000 in debts when it sought chapter 11
protection. Kmart bought Sears, Roebuck & Co., for $11 billion to
create the third-largest U.S. retailer, behind Wal-Mart and
Target, and generate $55 billion in annual revenues. The waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act
expired on Jan. 27, without complaint by the Department of
Justice. (Kmart Bankruptcy News, Issue No. 113; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
KNOLL INC: S&P Raises Corporate Credit & Bank Loan Ratings to BB
----------------------------------------------------------------
Standard & Poor's Ratings Services took action on office furniture
and systems company, Knoll Inc., based on continued improvements
in operating performance and strengthening of credit protection
measures.
The ratings on East Greenville, Pennsylvania-based office
furniture manufacturer Knoll Inc., including its corporate credit
rating and senior secured bank loan ratings, were raised to 'BB'
from 'BB-'. The outlook is revised to stable from positive.
Approximately $332.4 million of total debt was outstanding at
Knoll on March 31, 2006.
"These actions reflect the companies' continued improvement in
operating performance and strengthening of credit protection
measures, and our more favorable view of the industry following
the completion of our industry review," said Standard & Poor's
credit analyst David Kang.
The office furniture industry is influenced by a variety of
cyclical macroeconomic factors such as corporate profitability,
capital spending, employment growth and unemployment rates, and
commercial office construction. However, near-term growth
prospects remain favorable.
After three-years of contraction, the U.S. office furniture
industry grew by 5% in 2004, 12.7% in 2005, according to the
Business and Institutional Furniture Manufacturer's Association,
and is expected to continue to grow at a double digit rate in
2006.
LANCE JOHNSON: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Lance Johnson
29 Haines Boulevard
Port Chester, New York 10573
Bankruptcy Case No.: 06-22440
Chapter 11 Petition Date: July 14, 2006
Court: Southern District of New York (White Plains)
Judge: Adlai S. Hardin Jr.
Debtor's Counsel: Timothy W. Walsh, Esq.
DLA Piper Rudnick Gray Cary US LLP
1251 Avenue of the Americas
New York, New York 10020-1104
Tel: (212) 835-6216
Fax: (212) 835-6001
Estimated Assets: $500,000 to $1 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 largest unsecured
creditors.
LIGAND PHARMA: March 31 Balance Sheet Upside-Down by $224 Million
-----------------------------------------------------------------
Ligand Pharmaceuticals Incorporated reported a $142.2 million net
loss for the three months ended March 31, 2006, compared to
$18.5 million for the same 2005 period.
Total revenues for the three months ended March 31, 2006 were
$51 million, compared to $37 million for the same 2005 period.
Loss from operations was $137.1 million for the three months ended
March 31, 2006 compared to $15.8 million for the same 2005 period.
Gross margin on product sales was 79.7% for the three months ended
March 31, 2006 compared to 68.4% for the same 2005 period. Gross
margin for the three months ended March 31, 2006 compared to the
same 2005 period was positively impacted by a 7% AVINZA price
increase effective April 1, 2005; a 7% price increase for
oncology products effective Jan. 1, 2005; and a 4% and 5% price
increase for ONTAK and Targretin, respectively, effective
July 1, 2005.
At March 31, 2006, the Company's balance sheet showed a
$224,358,000 stockholders' deficit compared to a $110,419,000
stockholders' deficit at Dec. 31, 2005.
A full-text copy of the Company's quarterly report is available
for free at http://researcharchives.com/t/s?dd1
AVINZA Rights Agreement
Ligand entered into a termination and return of AVINZA rights
agreement with Organon in January 2006. Co-promote termination
charges represent the cost associated with the termination
agreement totaling $132.9 million, and is comprised of a
$37.75 million payment the Company agreed to make to Organon in
October 2006 and the fair value of subsequent quarterly payments,
estimated at approximately $95.2 million as of Jan. 1, 2006, that
it will make to Organon based on net product sales of AVINZA,
through November 2017. The co-promote termination liability as of
March 31, 2006 also includes approximately $3.3 million of
accretion expense to reflect the net present value of the
liability as of that date which is included in interest expense.
About Ligand Pharmaceuticals
Ligand Pharmaceuticals Incorporated -- http://www.ligand.com/--
discovers, develops and markets new drugs that address critical
unmet medical needs of patients in the areas of cancer, pain, skin
diseases, men's and women's hormone-related diseases,
osteoporosis, metabolic disorders, and cardiovascular and
inflammatory diseases. Ligand's proprietary drug discovery and
development programs are based on gene transcription technology,
primarily related to intracellular receptors.
LONGBILT LLC: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Longbilt, LLC
3539 Highway 11 South
Riceville, Tennessee 37370
Bankruptcy Case No.: 06-12178
Type of Business: The Debtor manufactures fabricated
structural metal.
Chapter 11 Petition Date: July 14, 2006
Court: Eastern District of Tennessee (Chattanooga)
Judge: R. Thomas Stinnett
Debtor's Counsel: Richard L. Banks, Esq.
Richard Banks & Associates, P.C.
620 Church Street, P.O. Box 1515
Cleveland, Tennessee 37364-1515
Tel: (423) 479-4188
Estimated Assets: $100,000 to $500,000
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 largest unsecured
creditors.
LORBER INDUSTRIES: Files Amended Plan and Disclosure Statement
--------------------------------------------------------------
Lorber Industries of California filed an Amended Disclosure
Statement explaining its Amended Plan of Reorganization with the
U.S. Bankruptcy Court for the Central District of California in
Los Angeles on July 11, 2006.
The Debtor says that the Official Committee of Unsecured Creditors
supports its Amended Plan.
Plan Funding
The Plan, which undertakes the liquidation of the Company, will be
funded by:
-- cash on hand as of the Effective Date,
-- the proceeds of the ongoing liquidation of the Debtor's
assets, and
-- any proceeds received on account of the prosecution of the
Recovery Rights.
Recovery Rights against third parties are preserved under the Plan
for the benefit of the Liquidating Trust and its beneficiaries.
Treatment of Claims
Allowed Administrative Claims totaling approximately $650,000 will
be paid in full by the Administrative Reserve, and if not
sufficient, by the Liquidating Trust, on the Effective Date or on
the date the Claim is allowed.
Allowed Priority Tax Claims totaling approximately $28,000 will be
paid in full by the Liquidating Trust on the Effective Date or on
the date the creditor becomes the holder of an Allowed Priority
Tax Claims.
Allowed Class 1 Priority Claims, with principal totaling $110,000,
will be paid in full on the effective date or as soon as
practicable.
The Allowed Class 2 and Class 3 Secured Claims held by CIT and
Anita Lorber, respectively, are secured by substantially all of
the Debtor's assets, except:
(a) all or a portion of the Recovery Rights,
(b) Debtor's real property leases, and
(c) an outstanding insurance claim.
On the Effective Date, the unpaid portion of these Secured Claims
will be paid as soon as practicable from the proceeds realized
from the disposition of the Debtor's assets, which are subject of
the Claims.
If the sale proceeds, the Estate, and the Liquidating Trust are
not sufficient to pay CIT's Allowed Secured Claim in full, the
deficiency will be a superpriority Administrative Claim.
If the sale proceeds, the Estate, and the Liquidating Trust are
not sufficient to pay Anita Lorber's Allowed Secured Claim in
full, the deficiency will be included in Class 5 Unsecured Claim
under the Plan.
Distributions to Unsecured Creditors will come from:
-- amounts realized on account of the Recovery Rights;
-- any sale of the Debtor's real property leases; and
-- any net proceeds received on account of the casualty
insurance claim.
Allowed Class 5 Unsecured Claim will received a periodic pro rata
distribution depending on the sole discretion of the Liquidating
Trustee.
Under the Plan, Class 6 Interests will not receive any
distribution.
Administrative Reserve
On the Effective Date, the Debtor will transfer to its counsel --
Jeffer, Mangels, Butler & Marmaro LLP -- sufficient amount of
money to establish the Administrative Reserve. Jeffer Mangels
will maintain the amount in an interest bearing account. Any
balance will be given to the Liquidating Trust.
Liquidating Trust
The Liquidating Trust is deemed established on the Effective Date.
On that date, all unliquidated property of the Estate will be
transferred to the Liquidating Trust.
On the Effective Date, the Liquidating Trustee will manage,
conduct and effectuate the liquidation and winding up of the
Debtor's operations and financial affairs.
The Creditors Committee has selected Leslie Gladstone as the
Liquidating Trustee.
Headquartered in Gardena, California, Lorber Industries of
California -- http://www.lorberind.com/-- manufactures texturized
and knitted fabrics. The company filed for chapter 11 protection
on Feb. 10, 2006 (Bankr. C.D. Calif. Case No. 06-10399). Joseph
P. Eisenberg, Esq., at Jeffer, Mangels, Butler & Marmaro LLP,
represents the Debtor in its restructuring efforts. Reem J.
Bello, Esq., at Weiland, Golden, Smiley, Wang Ekvall & Strok, LLP
represents the Official Committee of Unsecured Creditors. The
Debtor's schedules show $25,580,387 in assets and $24,740,726 in
liabilities.
MADDIX DELUXE: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Maddix Deluxe Inc.
dba Metropolitan Deluxe
1034 North Highland Avenue
Atlanta, GA 30306
Bankruptcy Case No.: 06-68321
Type of Business: The Debtor manufactures custom-designed
furniture, ottomans, headboards, and wall
upholstery, and offers custom window treatments,
slip covering, re-upholstery and beddings.
See http://www.metropolitandeluxe.com/
Chapter 11 Petition Date: July 14, 2006
Court: Northern District of Georgia (Atlanta)
Debtor's Counsel: G. Frank Nason, IV, Esq.
Lamberth, Cifelli, Stokes & Stout, P.A.
Suite 550, 3343 Peachtree Road, Northeast
Atlanta, Georgia 30326
Tel: (404) 262-7373
Fax: (404) 262-9911
Debtor's Total Assets and Liabilities as of May 31, 2006:
Total Assets: $0
Total Debts: $1,963,364
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Bank of America Visa Credit Card Account $169,377
P.O. Box 60073
City of Industry, CA 91716
Midwest of Cannon Falls Trade Account $58,019
4334 Collection Center Drive
Chicago, IL 60693-0043
American Express Business Credit Card Account $55,423
Capital L
P.O. Box 360001
Fort Lauderdale, FL 33336-0001
Chronicle Books Trade Account $48,668
Department 44493
P.0. Box 44000
San Francisco, CA 94114
Three Hands Corporation Trade Account $40,753
13259 Ralston Avenue
Sylmar, CA 91342
Capital One Credit Card Account $40,000
Kikkerland Design, Inc. Trade Account $35,005
Russ Berrie & Company Trade Account $32,435
Rowe Furniture Inc. Trade Account $31,959
Celerant Technology Corp. Trade Account $29,089
Georgia Retail Packaging Trade Account $27,954
Department 56 Trade Account $24,000
Trade Associates Group, Ltd. Trade Account $23,856
Transpac Imports, Inc. Trade Account $22,662
India Handicrafts, Inc. Trade Account $19,850
December Diamonds Trade Account $18,789
Penguin Group, Inc. Trade Account $18,095
Sourcebooks, Inc. Trade Account $17,088
Pacifica Inc. Trade Account $16,663
AEC One Stop Group, Inc. Trade Account $16,025
MANITOWOC CO: Offers Revised Non-Binding Proposal to Enodis plc
---------------------------------------------------------------
The Manitowoc Company, Inc., has submitted to the Board of
Directors of Enodis plc a revised indicative, non-binding
proposal. This proposal is subject to certain conditions, which
include due diligence, a recommendation by the Enodis' Board, and
final financing arrangements.
"This possible offer is consistent with the strategic direction of
Manitowoc's Foodservice segment," Terry D. Growcock, Manitowoc's
chairman and chief executive officer, said.
Manitowoc reserves the right to waive all or any of the
preconditions set out in this announcement. This announcement
does not amount to a firm intention to make an offer or pre-
conditional offer. Accordingly, there can be no certainty that an
offer or pre-conditional offer will be made or of the terms
relating to such an offer or pre-conditional offer.
Headquartered in Maniwotoc, Wisconsin, The Manitowoc Company, Inc.
(NYSE: MTW) -- http://www.manitowoc.com/-- provides lifting
equipment for the global construction industry, including lattice-
boom cranes, tower cranes, mobile telescopic cranes, and boom
trucks. As a leading manufacturer of ice-cube machines,
ice/beverage dispensers, and commercial refrigeration equipment,
the company offers the broadest line of cold-focused equipment in
the foodservice industry. In addition, the company is a leading
provider of shipbuilding, ship repair, and conversion services for
government, military, and commercial customers throughout the
maritime industry.
* * *
As reported in the Troubled Company Reporter on May 25, 2006,
Moody's Investors Service affirmed the debt ratings of The
Manitowoc Company, Inc. -- Corporate Family Rating at Ba3, Senior
Unsecured Notes at B1, and Senior Subordinate Notes at B2.
Moody's said the outlook is changed to positive from stable.
As reported in the Troubled Company Reporter on March 27, 2006,
Standard & Poor's Ratings Services raised its ratings on
The Manitowoc Co. Inc., including its corporate credit rating to
'BB' from 'BB-'.
MAPCO EXPRESS: Credit Facility Increase Cues S&P to Affirm Ratings
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating on Franklin, Tennessee-based MAPCO Express Inc.
At the same time, Standard & Poor's affirmed the 'B+' senior
secured rating on the company's bank loan facility and recovery
rating of '2', reflecting its expectations of a substantial
recovery of principal in the event of a payment default.
"This action follows the company's $50 million increase in its
revolving credit facility to $120 million," said Standard & Poor's
credit analyst Stella Kapur.
The outlook remains negative.
On July 13, 2006, MAPCO completed the purchase of 40 retail fuel
and convenience stores located in northwest Georgia and southeast
Tennessee, from Fast Petroleum Inc., for approximately $42 million
(excluding inventory). The initial merger agreement was for 43
stores. The company anticipates obtaining the third-party
consents necessary to complete the purchase of the remaining three
stores in the near term.
The acquisition was financed with cash proceeds from Delek's
recently completed IPO and MAPCO's revolving credit facility. Pro
forma for this transaction, Standard & Poor's estimates total debt
outstanding will increase to $228 million. Credit metrics are
anticipated to remain weak for current ratings with lease-adjusted
debt to EBITDA in the low 5x area.
The ratings reflect:
* MAPCO's participation as a relatively small regional player
in the competitive and highly fragmented convenience store
industry;
* significant exposure to the volatility of gasoline prices;
and
* concentration in a few key markets in the Southeastern U.S.
where economic slowdowns can affect operations.
The company also is highly leveraged, and has a relatively small
EBITDA base.
Pro forma for the acquisition, MAPCO operates roughly 400
convenience stores throughout the Southeastern U.S. with
geographic concentration in Tennessee and Alabama. Stores
primarily operate under the MAPCO Express, MAPCO Mart, East Coast,
and Discount Food Mart brands. MAPCO is a wholly owned subsidiary
of Delek US Holdings Inc., which is part of The Delek Group, an
Israel-based conglomerate.
MESABA AIRLINES: AMFA to Appeal Court Ruling On Labor Contracts
---------------------------------------------------------------
The Aircraft Mechanics Fraternal Association is willing to
continue negotiations with Mesaba Aviation, Inc., dba Mesaba
Airlines, but will immediately appeal the U.S. Bankruptcy Court
for the District of Minnesota's ruling on July 14, 2006, allowing
Mesaba to reject its contracts with its unions.
As reported in the Troubled Company Reporter on July 17, 2006, the
Court granted Mesaba's request for authority to reject its
contract with flight attendants, pilots and mechanics. The ruling
only authorized Mesaba to make changes to its collective
bargaining agreements at a time that it determines to be
appropriate and does not mean changes are imposed automatically.
The Court also directed Mesaba to give the labor groups a 10-day
notice before rejecting the contracts and imposing new terms.
"The guiding principle of AMFA's efforts in the Mesaba bankruptcy
has been to reach a consensual agreement with the company, because
that is the only route that will allow both the employees and the
company to move forward over difficult times," According to Kevin
Wildermuth, AMFA negotiating committee chairman. "Prior to
yesterday's ruling, AMFA negotiated all week with the company.
Going forward, AMFA will continue to negotiate toward a consensual
agreement. AMFA has put significant money on the table and has
offered meaningful and painful compromises in order to accommodate
the company's distressed condition. Now, a consensual agreement
will occur only when the company begins to compromise its demands
to meet the fair and equitable needs of its employees. In sum,
AMFA members are willing to make sacrifices to help save Mesaba
but they are not willing to subsidize corporate profits at their
expense. If a consensual agreement is not reached, it will not be
the fault of AMFA."
Mr. Wildermuth said AMFA will immediately appeal the order
allowing the rejection and will seek an expedited process for the
appeal.
If the company imposes a contract, he said, AMFA leadership
intends to assert rejection claims for the value of its contract.
It also anticipates mass individual employee resignations. "AMFA
reserves the right to exercise all legal options, up to and
including a strike. No strike will commence, however, without a
call to strike issued by the AMFA National Director or Acting
National Director," Mr. Wildermuth said.
About Mesaba Aviation
Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba
Mesaba Airlines -- http://www.mesaba.com/-- operates as a
Northwest Airlink affiliate under code-sharing agreements with
Northwest Airlines. The Company filed for chapter 11 protection
on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L.
Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA,
represents the Debtor in its restructuring efforts. Craig D.
Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the
Official Committee of Unsecured Creditors. When the Debtor filed
for protection from its creditors, it listed total assets of
$108,540,000 and total debts of $87,000,000.
MESABA AIRLINES: Pilots Balk at Court Ruling on Labor Contracts
---------------------------------------------------------------
In the wake of the U.S. Bankruptcy Court for the District of
Minnesota's decision granting Mesaba Aviation, Inc., dba Mesaba
Airlines, management's motion for authority to reject the
collective bargaining agreements, Mesaba pilots have unequivocally
restated their commitment to either reach a consensual agreement
or go on strike.
As reported in the Troubled Company Reporter on July 17, 2006, the
Court granted Mesaba's request for authority to reject its
contract with flight attendants, pilots and mechanics. The ruling
only authorized Mesaba to make changes to its collective
bargaining agreements at a time that it determines to be
appropriate and does not mean changes are imposed automatically.
The Court also directed Mesaba to give the labor groups a 10-day
notice before rejecting the contracts and imposing new terms.
Pilot leaders have unanimously rejected management's call to
impose wages that would put its pilots at rates below virtually
every other pilot in the United States, and in many cases, even
below the federal poverty guidelines. Air Line Pilots
Association, International leaders are making plans to file an
immediate appeal.
"We said it before and will say it again; we are in this fight
until the end," declared Captain Tom Wychor, chairman of the ALPA
unit at Mesaba. "If management refuses to compromise, they may be
triggering the end of Mesaba. We simply will not work under the
terms management seeks to impose."
Pursuant to the court order, management must provide 10 business
days' notice of its intent to abrogate the current Mesaba labor
contracts and impose new terms. "If management does elect to
impose new terms unilaterally, the pilots of Mesaba will strike,"
Mr. Wychor affirmed. "In that case, no one should plan to travel
on Northwest Airlink for the remainder of the summer."
ALPA's national leadership has pledged all of its resources to
support the Mesaba pilots in this dispute. The circumstances
surrounding Mesaba's bankruptcy are unique in that Mesaba
upstreamed all of its profits in recent years to its holding
company, MAIR Holdings. At the time of the bankruptcy filing,
MAIR Holdings (Nasdaq: MAIR) had $120 million in cash and
equivalents.
"Mesaba's demand for wages far below industry norms is a moral
outrage, particularly when considered in light of the corporate
shell game that is masking Mesaba's profits from view," said ALPA
President Captain Duane Woerth. Mr. Woerth noted that none of the
airlines that have declared bankruptcy since 9/11 hid cash
reserves in a holding company. "In each and every other case,
ALPA has been able to reach a consensual agreement with management
through good faith negotiations," Mr. Woerth continued. "That's
the difference here: any commitment from management to bargain in
good faith."
"I speak for all of Mesaba's pilots when I say that we are proud
to have built an airline with a truly sterling record -- both in
terms of safety and operational performance. We want nothing more
than to see our carrier survive and thrive," said Mr. Wychor.
"But not at any cost. The fact that Mesaba may face liquidation
at the hands of a management team who just took more than
$2 million in bonuses for themselves this June, yet does not
recognize the need for its employees to provide for their families
is tragic at best."
Air Line Pilots Association -- http://www.alpa.org/-- celebrates
its 75th anniversary this year representing 62,000 pilots,
including 850 Mesaba pilots, at 40 airlines in the U.S. and
Canada.
About Mesaba Aviation
Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba
Mesaba Airlines -- http://www.mesaba.com/-- operates as a
Northwest Airlink affiliate under code-sharing agreements with
Northwest Airlines. The Company filed for chapter 11 protection
on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L.
Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA,
represents the Debtor in its restructuring efforts. Craig D.
Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the
Official Committee of Unsecured Creditors. When the Debtor filed
for protection from its creditors, it listed total assets of
$108,540,000 and total debts of $87,000,000.
NAKOMA LAND: Trustee Can Borrow $100,000 from Investors Financial
-----------------------------------------------------------------
The Honorable Gregg W. Zive of the U.S. Bankruptcy Court for the
District of Nevada allowed Angelique Clark, the chapter 11 trustee
appointed in the chapter 11 cases of Nakoma Land, Inc., and its
debtor-affiliates, to borrow $100,000 from Investors Financial,
LLC, on an emergency basis.
The chapter 11 trustee needs the money to pay:
(a) liability and hazard insurance,
(b) necessary water and power bills required to sustain the
Debtors' real and personal properties,
(c) payroll for a limited staff to secure the Debtors' real and
personal property; and
(d) to continue the Debtors' business operations.
Before the Debtors filed for bankruptcy, they borrowed around
$15 million from 59 lenders, with Investors Financial as agent.
The loan is secured by several of the Debtors' real properties.
The chapter 11 trustee plans to borrow additional funds of up to
$2 million from Investors Financial.
Judge Zive granted Investors Financial superpriority
administrative status on its claim based on the $100,000 loan.
Headquartered in Reno, Nevada, Nakoma Land, Inc., operates the
Nakoma Resort in Plumas County, California. The Debtor along with
its affiliates filed for chapter 11 protection on May 19, 2005
(Bankr. D. Nev. Case No. 05-51556). Alan R. Smith, Esq., at the
Law Offices of Alan R. Smith represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
its creditors, they listed total assets of $18,000,000 and total
debts of $15,252,580.
NALCO FINANCE: Fitch Affirms Junk Rating on Senior Discount Notes
-----------------------------------------------------------------
Fitch took these rating actions on Nalco Company:
Nalco:
-- Senior unsecured debt upgraded to 'BB/RR1' from 'B+/RR3';
-- Senior secured credit facility and term loans affirmed at
'BB/RR1';
-- Senior subordinated notes affirmed at 'B-/RR5'; and
-- Issuer Default Rating affirmed at 'B'.
Nalco Finance Holdings Inc.:
-- Senior discount notes affirmed at 'CCC+/RR6'.
Fitch also assigned a 'B' IDR to Nalco Finance Holdings, Inc. The
Rating Outlook remains Stable.
The upgrade of the senior unsecured notes is a result of increased
recovery and overall debt repayment in the last 18 months of
approximately $185 million since Dec. 31, 2004. The majority of
this debt repayment was at the Term Loan A level.
Fitch's Recovery Ratings incorporate an evaluation using a
distressed EBITDA and a derived multiple reflecting scorecard
characteristics for the company and industry; the going concern
value remains higher than the asset liquidation value. Recovery
prospects for Nalco's senior secured revolving credit facility,
senior secured term loan and senior unsecured notes continue to
be outstanding according to Fitch's 'RR1' Recovery Ratings Scale.
The 'RR1' reflects the very high principal recovery expected for
the senior secured credit facilities and unsecured notes.
The Stable Rating Outlook reflects the improvement in Nalco's
businesses and the strengthening of the economies around the
world. Margins have declined slightly in 2005 and continued
downward into 2006 due to higher raw material, energy and
transportation costs, but are expected to strengthen as price
increases continue to take effect and as the market fundamentals
strengthen.
Fitch remains moderately concerned about increasing energy costs
and the overall effect of high raw material prices on demand.
However, with water becoming a scarce commodity in some parts of
the globe, it is expected that water treatment and water treatment
products will likely see a major increase in demand in the coming
years.
As of March 31, 2006, Nalco's balance sheet debt plus accounts
receivable program balance totaled $3.228 billion. Nalco had a
total debt-to-Operating EBITDA of 5.5x including the senior
discount notes for the latest 12 months ending March 31, 2006.
Operating EBITDA to gross interest incurred was 2.26x for the same
period.
Balance sheet debt consists of:
* $1.145 billion in senior secured term loans,
* $906.9 million in senior unsecured notes,
* $706.9 million in senior subordinated notes, and
* $361.3 million in senior discount notes.
In addition, Nalco's $100 million A/R program had a balance of
$78.6 million at year end.
Nalco has a modest maturity schedule, with approximately $3.8
million due in 2006 and $96 million due in 2007. Nalco is
expected to have the financial flexibility to repay and/or replace
such debt maturities given Fitch's base case projections for
operating cash flow, access to the debt market, and adequate
availability under its credit facility.
The ratings are supported by Nalco's:
* leading market position;
* broad product offerings;
* geographical reach; and
* strong customer retention.
Concerns include a highly leveraged capital structure, and the
majority of assets are intangibles.
Growth rates in the water treatment segment are modest and tend to
track gross domestic product, however growth rates vary by end-use
segment and region. Fitch estimates growth in North America in
2006 to be in the 3 to 4 percent range. Emerging markets such as
Latin America, Eastern Europe and Pacific region are likely to
grow at 3.5% to 6% per year. Therefore, Nalco is likely to
realize more volume growth in emerging markets. Fitch estimates
overall sales growth for Nalco in 2006 to be close to 4%.
Nalco is a leading global provider of integrated water treatment
and process improvement services, chemicals and equipment programs
for industrial and institutional applications. Nalco's products
and services are typically used in water treatment applications to
prevent corrosion, contamination and the buildup of harmful
deposits, or in production processes to enhance process efficiency
and improve the customers' end products.
Nalco generated Operating EBITDA of $597 million on $3.3 billion
in sales in 2005. North America accounts for 48% of sales with
the rest of the world making up the balance. They are organized
into three divisions which correspond to the end markets they
serve: Industrial and Institutional Services, Energy Services and
Paper Services.
NEWPAGE CORP: Commences Tender Offer for Outstanding Notes
----------------------------------------------------------
NewPage Corporation commenced a cash tender offer to purchase
certain of its outstanding Notes. The tender offer will expire at
12:00 Midnight, New York City time, on Aug. 4, 2006, unless
extended or earlier terminated.
Under the terms of the Offer to Purchase dated July 10, 2006,
NewPage offered to purchase an amount of its outstanding Notes
such that the amount NewPage would be required to pay for purchase
of the Notes, excluding accrued and unpaid interest, would not
exceed $255,000,000. Each series of Notes tendered by holders
will be accepted in order of the acceptance priority level, up to
the Principal Purchase Amount for that series and the overall
Maximum Purchase Amount.
Principal Acceptance Principal
CUSIP Title Amount Priority Purchase
Number of Security Outstanding Level Amount
------ ----------- ----------- ----- ------
651715-AA-2 12% Senior $200,000,000 1 $60,000,000
U65174-AA-9 Subordinated
Notes due 2013
651715-AC-8 Floating Rate $225,000,000 2 $150,000,000
U65174-AB-7 Senior Secured
Notes due 2012
651715-AE-4 10% Senior $350,000,000 3 $350,000,000
U65174-AC-5 Secured Notes
due 2012
Early
CUSIP Tender Offer Tender Total
Number Consideration Premium Consideration
------ ------------- ------- -------------
651715-AA-2 $1,080.00 $20 $1,100.00
U65174-AA-9
651715-AC-8 $1,112.50 $20 $1,132.50
U65174-AB-7
651715-AE-4 $1,062.50 $20 $1,082.50
U65174-AC-5
Holders who tender their Notes before 5:00 p.m., New York City
time, on July 21, 2006, will, upon acceptance, receive the total
consideration, which includes an early participation premium of
$20 per $1,000 principal amount of Notes purchased. Holders
who tender their Notes after the Early Participation Time but
before the Expiration Time will, upon acceptance, receive the
tender offer consideration but not the early participation
premium. In all cases, holders of tendered Notes will receive
accrued and unpaid interest from the last interest payment date
through the day prior to the date the Notes are purchased.
Payment for tendered Notes will be made in same day funds as soon
as practicable after they are accepted for payment.
NewPage may increase the Maximum Purchase Amount or the Principal
Purchase Amount for any series of Notes, and may extend the Early
Participation Time or the Expiration Time or terminate the offer
at any time, subject to applicable law.
If the aggregate principal amount of Notes of any series validly
tendered and not withdrawn at the Expiration Time exceeds the
applicable Principal Purchase Amount for that series, NewPage will
accept Notes of that series for purchase on a pro rata basis
subject to the terms of the Offer to Purchase. Except as stated
in the Offer to Purchase or as required by applicable law, Notes
tendered prior to the Early Participation Time may only be
withdrawn in writing and before the Early Participation Time, and
Notes tendered after the Early Participation Time and before the
Expiration Time may not be withdrawn.
In conjunction with the Offer to Purchase, NewPage is also
soliciting consents to the adoption of proposed amendments to the
indentures governing the Floating Rate Senior Secured Notes due
2012 and the 10% Senior Secured Notes due 2012. Holders may not
tender Consent Notes without delivering consents and may not
deliver consents without tendering Consent Notes.
Among other conditions described in the Offer to Purchase, NewPage
is obligated to accept for payment and purchase the Notes in the
tender offer, and pay for the related consents, only if NewPage's
parent, NewPage Holding Corporation, completes its proposed
initial public offering and only if NewPage completes its proposed
new senior secured credit facility.
NewPage has retained Goldman, Sachs & Co. to serve as the dealer
manager for the tender offer and the consent solicitation.
Questions regarding the tender offer and the consent solicitation
may be directed to:
Goldman, Sachs & Co.
Telephone (212) 357-7867
Toll Free (800) 828-3182
Requests for documents in connection with the tender offer and the
consent solicitation may be directed to the information agent for
the tender offer and the consent solicitation at:
Global Bondholder Services Corporation
Telephone (212) 430-3774
Toll Free (866) 470- 3700
About NewPage Corporation
Headquartered in Dayton, Ohio, NewPage Corporation --
http://www.newpagecorp.com/-- produces coated papers in North
America. With more than 4,300 employees, the company operates
four integrated pulp and paper manufacturing mills located in
Escanaba, Michigan; Luke, Maryland; Rumford, Maine; and Wickliffe,
Kentucky.
* * *
As reported in the Troubled Company Reporter on July 13, 2006,
Moody's Investors Service rated NewPage Corporation's new
$750 million term loan Ba3 and affirmed NewPage's SGL-2
speculative grade liquidity rating. Concurrently, Moody's
placed the company's corporate family rating and ratings on its
existing debt securities on review for possible upgrade.
NORTHWEST AIRLINES: Reaches Labor Deal with Flight Attendants
-------------------------------------------------------------
After a week of intense bargaining and a final, marathon session,
the Association of Flight Attendants-CWA and Northwest Airlines
reached a new tentative agreement on July 17, 2006. Negotiators
reached the agreement in time to avoid rejection of the existing
flight attendant contract, as had been authorized by the
bankruptcy court.
"With the airline in bankruptcy, this deal was always going to be
about survival," said Mollie Reiley, Northwest Interim Master
Executive Council President. "We left no stone unturned and have
made a significant difference together, but this is not a day that
we celebrate. We have an agreement that will give flight
attendants hope for the future and one that allows us to fight
another day."
Flight attendants voted down a previous tentative agreement by an
overwhelming margin. AFA-CWA, who was elected as the new union
for the Northwest flight attendants less than 10 days ago, went to
work immediately, restarting negotiations that led to this
tentative agreement.
"Our flight attendants rightfully demanded to see improvements in
the terms of the previous tentative agreement," said Ms. Reiley.
"We have addressed the areas that caused the greatest concern in
order to make this agreement one that we can live with today and
build upon in future better times at Northwest Airlines."
The tentative agreement will next be submitted to the Northwest
MEC. The MEC, made up of local presidents from each base in the
Northwest system, decides whether to accept the tentative
agreement and send it out for membership ratification. That
meeting will take place in the next few days.
For over 60 years, the Association of Flight Attendants --
http://www.nwaafa.org/-- has been serving as the voice for flight
attendants in the workplace, in the aviation industry, in the
media and on Capitol Hill. More than 55,000 flight attendant,
including 9,200 at Northwest, come together to form AFA-CWA. AFA
is part of the 700,000-member strong Communications Workers of
America (CWA), AFL-CIO.
About Northwest Airlines
Northwest Airlines Corporation (OTC: NWACQ) -- http://www.nwa.com/
-- is the world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and
approximately 1,400 daily departures. Northwest is a member of
SkyTeam, an airline alliance that offers customers one of the
world's most extensive global networks. Northwest and its travel
partners serve more than 900 cities in excess of 160 countries on
six continents. The Company and 12 affiliates filed for chapter
11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No.
05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq.,
at Cadwalader, Wickersham & Taft LLP in New York, and Mark C.
Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in
Washington represent the Debtors in their restructuring efforts.
The Official Committee of Unsecured Creditors has retained Akin
Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the
Debtors' chapter 11 cases. When the Debtors filed for protection
from their creditors, they listed $14.4 billion in total assets
and $17.9 billion in total debts.
OCA INC: Idaho Unit Files Schedules of Assets and Liabilities
-------------------------------------------------------------
Orthodontic Centers of Idaho, Inc, Oca, Inc.'s debtor-affiliate,
delivered to the U.S. Bankruptcy Court for the Eastern District of
Louisiana its schedules of assets and liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ------ -----------
A. Real Property
B. Personal Property
C. Property Claimed
as Exempt
D. Creditors Holding
Secured Claims $92,255,022
E. Creditors Holding
Unsecured Priority Claims
F. Creditors Holding
Unsecured Nonpriority
Claims
--- -----------
Total $0 $92,255,022
A copy of the 22-page document containing the schedules is
available for free at http://ResearchArchives.com/t/s?dd3
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 Debtor's client practices provide
treatment to patients throughout the United States and in Japan,
Mexico, Spain, Brazil and Puerto Rico.
The Debtor and its debtor-affiliates filed for Chapter 11
protection on March 14, 2006 (Bankr. E.D. La. Case No.
06-10179). Three Debtors also filed for bankruptcy protection on
June 1, 2006 (Bankr. E.D. La. Case No. 06-10503). 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. Carmen H. Lonstein,
Esq., at Bell Boyd & Lloyd LLC and Robin B. Cheatham, Esq., at
Adams and Reese LLP represent the Official Committee of Equity
Security Holders. When the Debtors filed for protection from
their creditors, they listed $545,220,000 in total assets and
$196,337,000 in total debts.
OWENS CORNING: Court Okays Compromise on 37 Asbestos PD Claims
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved
settlements compromising 37 asbestos property damage claims held
by these claimants against Owens Corning and Fibreboard
Corporation:
Owens Corning Fibreboard
Claimant Claim No. Claim No.
-------- ------------- ----------
880 Third Avenue 8609 8362
Altoonal School District 8752 9557
Anderson Memorial Hospital 8822 8795
Athens Board of Education 8687 8809
Clara Mass Hospital 8648 8500
Clarksville-Montgomery Board 8727 8831
Fair Lawn Professional Center 8628 8441
Garrison Public School 8783 8926
Green Bay Area Public Schools 8709 8871
Hall County School District 8771 9573
Jacksonville City Hall 8608 8357
Kindred Public School Dist. 2 8886
Langley Professional Office 8596 8328
One Liberty Plaza 8576 8299
Presbyterian Church of Jamesburg 8573 8271
Saint Peter & Paul Congregation 8683 8633
The City of Rock Hill Buildings 8735 8959
Wauwatosa School District 8678 9556
Winneconne Public School Dist. 8677 9555
Pursuant to the Settlements, the Debtors and the claimants agree
to resolve the Property Damage Claims on these terms:
a. Each of the Property Damage Claims against Owens Corning
will be allowed as a general unsecured non-priority claim
for $5,000. The Claim will be paid as a Convenience Claim
pursuant to the Debtors' Fifth Amended Plan of
Reorganization.
b. Each of the Property Damage Claims against Fibreboard will
be allowed as a general unsecured non-priority claim for
$5,000, which will be paid by Fibreboard's property damage
insurers on the Initial Distribution Date under the Plan.
c. As a precondition to receiving the payments, each of the
claimants will release Owens Corning and Fibreboard from
any liability associated with the Claims.
Owens Corning (OTC: 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. 134; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
OWENS CORNING: Court Approval on Settlement Ends Tobacco Dispute
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved
the settlement agreement among Owens Corning and its debtor-
affiliates, tobacco companies and other tobacco industry
defendants.
Before the Debtors filed for bankruptcy, Debtors Owens Corning and
Fibreboard pursued litigation against tobacco companies and other
tobacco industry defendants before the Circuit Court for Jefferson
County, Mississippi, and the Superior Court of California, County
of Alameda.
The Debtors asserted claims for indemnification, unjust
enrichment restitution, fraud and violations of state antitrust
and unfair competition laws. The Debtors sought payment of
monetary damages, including punitive damages, for payments they
made to asbestos claimants who have used tobacco products and
allegedly developed smoking-related diseases.
In June 2001, the Jefferson County court granted the defendants'
request for summary judgment dismissing Owens Corning's claims.
The Jefferson County court held that Owens Corning's claims were
indirect and too remote under Mississippi law to allow recovery.
Owens Corning took an appeal to the Supreme Court of Mississippi.
The defendants in the California Litigation also sought summary
judgment to dismiss Owens Corning's claims, citing the Jefferson
County court's ruling. However, the California court denied the
motions to dismiss and stayed litigation pending the outcome of
Owens Corning's appeal in the Mississippi case.
In March 2004, the Supreme Court of Mississippi upheld the
summary judgment against Owens Corning.
Defendants' Claims
The Tobacco defendants are:
1. R.J. Reynolds Tobacco Company;
2. British American Tobacco (Investments) Limited, formerly
known as British American Tobacco Company Limited;
3. Brown & Williams Tobacco Corporation, individually and as
successor by merger to the American Tobacco Company;
4. Philip Morris USA, Inc., formerly known as Philip Morris
Incorporated;
5. Liggett Group, Inc.; and
6. Lorillard Tobacco Company
Certain of the defendants filed claims against the Debtors for
the costs and expenses they incurred in the California and
Mississippi actions:
Defendant Amount Status Debtor
--------- ------ ------ ------
R.J. Reynolds $11,860 Unsecured, Owens Corning,
Non-priority et al.
Philip Morris USA $48,714 Secured Owens Corning,
et al.
Lorillard Tobacco $12,785 Secured Owens Corning,
et al.
Liggett Group unliquidated Unsecured, Fibreboard
Non-priority
Unliquidated Unsecured, Owens Corning
Non-priority
The Lorillard Claim was later reclassified as unsecured, non-
priority claims pursuant to the Bankruptcy Court's orders
granting the Debtors' Non-Substantive Objection to Claims.
Settlement Agreement
The Debtors and the Defendants engaged in discussions with
respect to the California Litigation and the Claims.
Subsequently, the parties agreed to dismiss the California
Litigation and the Claims on the terms set forth in an Agreement
to Dismiss Suit and Related Claims dated as of May 10, 2006.
The parties will execute mutual releases from the claims,
liabilities and demands related to the Mississippi and California
actions. Each party will shoulder its attorney's fees and other
costs in connection with the Mississippi and California cases.
The Agreement to Dismiss will not affect an $8,400 claim filed by
RJR Packaging Co. against Debtor Exterior Systems, Inc.
Owens Corning (OTC: 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. 134; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
PETCO ANIMAL: Acquisition Prompts S&P's Negative Watch
------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings, including
its 'BB' corporate credit rating on San Diego, California-based
PETCO Animal Supplies Inc. on CreditWatch with negative
implications.
The CreditWatch listing follows the company's announcement that it
has agreed to be acquired by private equity investors Leonard
Green & Partners L.P. and Texas Pacific Group for $1.8 billion
including the assumption of debt.
"We could lower the ratings," said Standard & Poor's credit
analyst Robert Lichtenstein, "as debt leverage is likely to
increase substantially in this transaction to go private."
PRESIDENT CASINOS: Pinnacle Inks Agreement With Official Committee
------------------------------------------------------------------
Pinnacle Entertainment entered into an agreement with members of
the Official Committee of Unsecured Creditors in President Casinos
Inc.'s chapter 11 case, to make a tender offer for all the
outstanding 13% senior exchange notes and 12% notes of President
Casinos. Pinnacle also will offer to purchase all other
prepetition general unsecured claims allowed as of July 12, 2006,
asserted against President Riverboat Casino-Missouri, Inc., in an
amount not to exceed $2 million.
As reported in the Troubled Company Reporter on June 2, 2006,
Pinnacle agreed to acquire President Riverboat Casino-Missouri,
Inc., which does business as President Casino St. Louis
Riverfront, for $31.5 million subject to a working capital
adjustment. The completion of the acquisition is subject to
licensing by the Missouri Gaming Commission, as well as the
implementation of a bankruptcy-court reorganization plan for
President Casinos and/or PRC-MO.
Members of the creditors' committee, including the two major
holders of President Casinos' notes and who hold or control more
than 80% of the note claims outstanding, have agreed to tender
their notes to Pinnacle. Pinnacle will begin the note tender
within the next few days, and will begin the offer to purchase the
unsecured claims shortly thereafter. Under the agreement with the
major noteholders and other members of the creditors' committee,
the offers must be closed by Aug. 18, 2006.
The tender offer for the notes will be at $809.07 per $1,000
original principal amount in cash, and the other offer will be
at 100% of the allowed amount of each general unsecured claim.
If the two offers are fully subscribed, Pinnacle would pay
approximately $62.6 million. At May 31, 2006, PRC-MO listed in
a bankruptcy filing a cash balance of approximately $29 million
and post-petition liabilities of approximately $6 million. The
holders of the bonds, which pursuant to the tender offer should
include Pinnacle, are expected to receive a large portion of the
distribution to creditors in the final plan of reorganization.
"We're pleased to take this step to facilitate our acquisition of
the President Casino St. Louis Riverfront," said Daniel R. Lee,
Pinnacle's Chairman and Chief Executive Officer. "By acquiring
these debt claims, we can help support a planned bankruptcy-court
reorganization." Pinnacle anticipates closing the transaction in
the second half of 2006.
Holders of the President Casinos notes are urged to read the
tender offer documents when they are available. Investors may
obtain a copy of the tender offer documents by directing a request
to:
Pinnacle Entertainment, Inc.
Attention: Investor Relations
3800 Howard Hughes Parkway
Las Vegas, NV 89109
About Pinnacle
Headquartered in Las Vegas, Nevada, Pinnacle Entertainment, Inc.
(NYSE: PNK) -- http://www.pnkinc.com/-- owns and operates casinos
in Nevada, Louisiana, Indiana and Argentina, owns a hotel in
Missouri, receives lease income from two card club casinos in the
Los Angeles metropolitan area, has been licensed to operate a
small casino in the Bahamas, and owns a casino site and has
significant insurance claims related to a hurricane-damaged casino
previously operated in Biloxi, Mississippi. Pinnacle opened a
major casino resort in Lake Charles, Louisiana in May 2005 and a
new replacement casino in Neuquen, Argentina in July 2005.
About President Casinos
Headquartered in St. Louis, Missouri, President Casinos Inc. --
http://www.presidentcasino.com/-- currently owns and operates a
dockside gaming casino in St. Louis, Missouri through its wholly
owned subsidiary, President Missouri. The Debtor filed for
chapter 11 protection on June 20, 2002 (Bankr. S.D. Miss. Case No.
02-53055). On July 11, 2002, substantially all of Debtor's other
operating subsidiaries filed for chapter 11 protection in the same
Court. The Honorable Judge Edward Gaines ordered the transfer of
President Casino's chapter 11 cases from Mississippi to Missouri.
The case was reopened on Nov. 5, 2002 (Bankr. E.D. Mo. Case No.
02-53005). Brian Wade Hockett, Esq., at Hockett Thompson Coburn
LLP, represents the Debtors in their restructuring efforts. David
A. Warfield, Esq., at Blackwell Sanders Peper Martin LLP,
represents the Official Committee of Unsecured Creditors. The
Company's balance sheet at Nov. 30, 2005 showed assets totaling
$66,292,000 and debts totaling $75,531,000.
* * *
As reported in the Troubled Company Reporter on June 14, 2006,
Deloitte & Touche LLP, in St. Louis, Missouri, raised substantial
doubt about President Casinos, Inc.'s ability to continue as a
going concern after auditing the Company's consolidated financial
statements for the year ended Feb. 28, 2006. The auditor pointed
to the Company's recurring losses from operations, negative
working capital and stockholders' capital deficiency.
PINNACLE ENT: Enters Pact with President Casinos' Official Panel
----------------------------------------------------------------
Pinnacle Entertainment entered into an agreement with members of
the Official Committee of Unsecured Creditors in President Casinos
Inc.'s chapter 11 case, to make a tender offer for all the
outstanding 13% senior exchange notes and 12% notes of President
Casinos. Pinnacle also will offer to purchase all other
prepetition general unsecured claims allowed as of July 12, 2006,
asserted against President Riverboat Casino-Missouri, Inc., in an
amount not to exceed $2 million.
As reported in the Troubled Company Reporter on June 2, 2006,
Pinnacle agreed to acquire President Riverboat Casino-Missouri,
Inc., which does business as President Casino St. Louis
Riverfront, for $31.5 million subject to a working capital
adjustment. The completion of the acquisition is subject to
licensing by the Missouri Gaming Commission, as well as the
implementation of a bankruptcy-court reorganization plan for
President Casinos and/or PRC-MO.
Members of the creditors' committee, including the two major
holders of President Casinos' notes and who hold or control more
than 80% of the note claims outstanding, have agreed to tender
their notes to Pinnacle. Pinnacle will begin the note tender
within the next few days, and will begin the offer to purchase the
unsecured claims shortly thereafter. Under the agreement with the
major noteholders and other members of the creditors' committee,
the offers must be closed by Aug. 18, 2006.
The tender offer for the notes will be at $809.07 per $1,000
original principal amount in cash, and the other offer will be
at 100% of the allowed amount of each general unsecured claim.
If the two offers are fully subscribed, Pinnacle would pay
approximately $62.6 million. At May 31, 2006, PRC-MO listed in
a bankruptcy filing a cash balance of approximately $29 million
and post-petition liabilities of approximately $6 million. The
holders of the bonds, which pursuant to the tender offer should
include Pinnacle, are expected to receive a large portion of the
distribution to creditors in the final plan of reorganization.
"We're pleased to take this step to facilitate our acquisition of
the President Casino St. Louis Riverfront," said Daniel R. Lee,
Pinnacle's Chairman and Chief Executive Officer. "By acquiring
these debt claims, we can help support a planned bankruptcy-court
reorganization." Pinnacle anticipates closing the transaction in
the second half of 2006.
Holders of the President Casinos notes are urged to read the
tender offer documents when they are available. Investors may
obtain a copy of the tender offer documents by directing a request
to:
Pinnacle Entertainment, Inc.
Attention: Investor Relations
3800 Howard Hughes Parkway
Las Vegas, NV 89109
About President Casinos
Headquartered in St. Louis, Missouri, President Casinos Inc. --
http://www.presidentcasino.com/-- currently owns and operates a
dockside gaming casino in St. Louis, Missouri through its wholly
owned subsidiary, President Missouri. The Debtor filed for
chapter 11 protection on June 20, 2002 (Bankr. S.D. Miss. Case No.
02-53055). On July 11, 2002, substantially all of Debtor's other
operating subsidiaries filed for chapter 11 protection in the same
Court. The Honorable Judge Edward Gaines ordered the transfer of
President Casino's chapter 11 cases from Mississippi to Missouri.
The case was reopened on Nov. 5, 2002 (Bankr. E.D. Mo. Case No.
02-53005). Brian Wade Hockett, Esq., at Hockett Thompson Coburn
LLP, represents the Debtors in their restructuring efforts. David
A. Warfield, Esq., at Blackwell Sanders Peper Martin LLP,
represents the Official Committee of Unsecured Creditors. The
Company's balance sheet at Nov. 30, 2005 showed assets totaling
$66,292,000 and debts totaling $75,531,000.
About Pinnacle
Headquartered in Las Vegas, Nevada, Pinnacle Entertainment, Inc.
(NYSE: PNK) -- http://www.pnkinc.com/-- owns and operates casinos
in Nevada, Louisiana, Indiana and Argentina, owns a hotel in
Missouri, receives lease income from two card club casinos in the
Los Angeles metropolitan area, has been licensed to operate a
small casino in the Bahamas, and owns a casino site and has
significant insurance claims related to a hurricane-damaged casino
previously operated in Biloxi, Mississippi. Pinnacle opened a
major casino resort in Lake Charles, Louisiana in May 2005 and a
new replacement casino in Neuquen, Argentina in July 2005.
* * *
As reported in the Troubled Company Reporter on May 24, 2006,
Standard & Poor's Ratings Services revised its CreditWatch
implications on Las Vegas-based casino owner and operator Pinnacle
Entertainment Inc. to positive from negative.
As reported in the Troubled Company Reporter on March 20, 2006,
Moody's Investors Service placed the ratings of Pinnacle
Entertainment, Inc. on review for possible upgrade. Pinnacle
ratings affected include its B2 corporate family rating, B1 senior
secured bank loan rating, and Caa1 senior subordinated debt
rating.
As reported in the Troubled Company Reporter on Mar. 15, 2006,
Fitch Ratings has placed the ratings of Pinnacle Entertainment on
Rating Watch Negative. The ratings affected include 'B' issuer
default rating; 'BB/RR1' senior secured credit facility rating;
and 'CCC+/RR6' senior subordinated note rating.
RELIANT ENERGY: Moody's Holds Caa1 Senior Subordinated Ratings
--------------------------------------------------------------
Moody's Investors Service confirmed Reliant Energy's B2 corporate
family, B2 senior secured, B3 long-term issuer and Caa1 senior
subordinated ratings. In addition, Moody's confirmed the B3
senior unsecured rating for Orion Power Holdings and the B2 senior
secured rating for Reliant Energy Mid-Atlantic Holdings. These
rating actions conclude the review for possible downgrade that
commenced on March 13, 2006.
The rating outlook for Reliant, Orion and REMA is stable.
Reliant's B2 corporate family rating reflects the company's
relatively weak financial profile given its high business and
operating risks. The company's projected earnings are
increasingly exposed to volatile commodity prices, as well as
numerous other market related conditions that are beyond
management's control. The rating incorporates Moody's view that
the company will generate sufficient earnings and cash flow over
the near-term, primarily from its retail electric provider
operations, that will allow the company to pursue its enhanced
liquidity structure, modestly reduce outstanding debt and,
potentially, recapitalize the company.
The stable rating outlook incorporates our view that Reliant will
be successful with its goal to execute an enhanced liquidity
structure with a higher rated counterparty. Consequently, Moody's
incorporates a view that there will be a substantial collateral
return in 2006, a modest reduction in debt and the potential to
reduce over-all liquidity needs into our rating and rating
outlook.
The B3 senior unsecured rating and stable rating outlook for Orion
and the B2 senior secured rating and stable rating outlook for
REMA primarily reflect the ratings and rating outlook for the
parent company, Reliant Energy. Although these operating units
are separate legal entities with more robust collateral coverage,
and, in some cases, better financial credit metrics, it is our
opinion that the assets and operations will continue to be managed
in a consolidated manner due to their strategic significance to
the parent.
In addition, Moody's affirmed Reliant's SGL-4 speculative grade
liquidity rating. The SGL-4 rating reflects Reliant's over-all
weak liquidity position given its modest cash flow generation
expected over the next 12 months, the available liquidity capacity
under its $1.7 billion revolver, the modest EBITDA headroom
associated with its financial covenants and its alternative
sources of liquidity, such as additional asset sales.
In Moody's opinion, upon the announcement of an enhanced liquidity
structure with a higher rated counterparty, the SGL-4 rating could
be upgraded, but from a liquidity perspective, Moody's does not
reflect the potential for this structure into the existing
liquidity rating.
Reliant Energy is a merchant generator and a retail electric
provider that is headquartered in Houston, Texas. The company
reported $9.7 billion of revenues in 2005.
Outlook Actions:
Issuer: Orion Power Holdings, Inc.
* Outlook, Changed To Stable From Rating Under Review
Issuer: Reliant Energy Inc.
* Outlook, Changed To Stable From Rating Under Review
Issuer: Reliant Energy Mid-Atlantic Power Hldgs., LLC
* Outlook, Changed To Stable From Rating Under Review
Confirmations:
Issuer: Orion Power Holdings, Inc.
* Senior Unsecured Regular Bond/Debenture, Confirmed at B3
Issuer: Pennsylvania Economic Dev. Fin. Auth.
* Senior Secured Revenue Bonds, Confirmed at B2
Issuer: Reliant Energy Inc.
* Corporate Family Rating, Confirmed at B2
* Issuer Rating, Confirmed at B3
* Preferred Stock Shelf, Confirmed at (P)Caa1
* Preferred Stock 2 Shelf, Confirmed at (P)Caa1
* Senior Secured Bank Credit Facility, Confirmed at B2
* Senior Secured Regular Bond/Debenture, Confirmed at B2
* Senior Secured Shelf, Confirmed at (P)B2
* Senior Subordinated Conv./Exch. Bond, Confirmed at Caa1
* Senior Unsecured Shelf, Confirmed at (P)B3
* Subordinated Shelf, Confirmed at (P)Caa1
Issuer: Reliant Energy Mid-Atlantic Power Hldgs., LLC
* Senior Secured Pass-Through, Confirmed at B2
RIM SEMICONDUCTOR: Restates 2005 & 2006 Financial Statements
------------------------------------------------------------
The Board of Directors of RIM Semiconductor Company disclosed its
consolidated financial statements for the fiscal year ended
Oct. 31, 2005 and for the periods ended July 31, 2005, Jan. 31,
2006 and April 30, 2006 are being restated.
The restatement is to correct the accounting for the warrants,
issued in connection with the Company's 2005 and 2006 convertible
debentures, as derivative liabilities. The Company's board
concluded that the classification of warrants was not in
accordance with interpretations of Emerging Issues Task Force
Issue No. 00-19, after consultations by its management and the
Audit Committee with the Company's independent registered public
accounting firm.
The restatements do not affect the Company's cash position. The
restatements results in increases in the Company's net loss and
total liabilities as of and for the periods ended Jan. 31, 2006
and April 30, 2006, and in decreases in the Company's net loss and
total liabilities as of and for the period ended July 31, 2005 and
the fiscal year ended Oct. 31, 2005.
The restatement adjustments also resulted in decreases in the
Company's stockholders' equity at July 31, 2005, Jan. 31, 2006
and April 30, 2006, and in an increase in stockholders' equity at
Oct. 31, 2005.
Going Concern Doubt
As reported in the Troubled Company Reporter on Feb. 2, 2006,
Marcum & Kliegman LLP expressed substantial doubt about Rim
Semiconductor's ability to continue as a going concern after it
audited the Company's financial statements for the fiscal years
ended Oct. 31, 2005, and 2004. The auditing firm pointed to the
Company's $3,145,391 working capital deficiency at Oct. 31, 2005.
The Company's October 31 balance sheet showed strained liquidity
with $407,512 in current assets available to pay $3,552,903 of
current liabilities coming due within the next 12 months.
About Rim Semiconductor
Headquartered in Portland, Oregon, Rim Semiconductor Company fka
New Visual Corporation -- http://www.rimsemi.com/-- is an
emerging fabless communications semiconductor company. It has
made available an advanced technology that allows data to be
transmitted at greater speed and across extended distances over
existing copper wire.
RIO MORALES: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Rio Antonio Morales
Dana Patricia Morales
aka BOSS Accessories
1240 Promontory Point Drive
El Dorado Hills, California 95762
Bankruptcy Case No.: 06-22532
Type of Business: The Debtors are members and managers of TCF
Holdings, LLC, which filed for chapter 11
protection on May 18, 2006 (Bankr. E.D. Calif.
Case No. 06-21651).
Chapter 11 Petition Date: July 13, 2006
Court: Eastern District of California (Sacramento)
Judge: Thomas Holman
Debtors' Counsel: Gerald B. Glazer, Esq.
Robert Craig Iseley, Esq.
660 J Street, Suite 380
Sacramento, California 95814
Tel: (916) 442-3111
Fax: (916) 442-6524
Total Assets: $1,273,650
Total Debts: $2,000,518
Debtors' 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Mr. and Mrs. Guynn $50,000
c/o David Frenznick
Wilke Fleury Hoffelt Gould & Birney
400 Capitol Mall 22nd Floor
Sacramento, CA 95814
GEMB Lending, Inc. $42,207
P.O. Box 57091
Irvine, CA 92619
CitiCorp Vendor Finances Inc. $40,904
P.O. Box 7247-0371
Philadelphia, PA 19170
MBNA America $32,124
P.O. Bpx 15137
Wilmington, DE 19886-5137
Internal Revenue Service $24,000
P.O. Box 21126
Philadelphia, PA 19114
Ava Enterprises $20,500
Department of Industrial Relations $20,100
American Express $11,254
Discover Card $10,258
Wells Fargo Card Services $10,080
FedEx Freight West $8,217
Citi Cards $6,235
American Express $6,081
UPS $5,588
County of Santa Clara $5,287
Employment Development Department $4,925
SST Card Services $4,432
American Express $3,098
County of Sacramento Utilities $2,906
J.C. Penney $2,728
RIVERSTONE NETWORKS: Files Ch. 11 Plan & Disclosure Statement
-------------------------------------------------------------
RNI Wind Down Corporation, fka Riverstone Networks, Inc., its
debtor-affiliates and filed with the U.S. Bankruptcy Court
for the District of Delaware a Joint Plan of Reorganization
and Liquidation and an accompanying Disclosure Statement on
July 7, 2006.
Under the Joint Plan, these classes of claims are unimpaired and
will be paid in full:
(a) administrative claims,
(b) unclassified priority tax claims,
(c) the secured claims of:
-- Riverstone Networks, Inc.,
-- The OASys Group, Inc.,
-- Riverstone Networks SPC, Inc.,
-- Pipal Systems, Inc.,
-- Blue Coast, Inc.,
(d) the priority claims of:
-- Riverstone Networks, Inc.,
-- The OASys Group, Inc.,
-- Riverstone Networks SPC, Inc.,
-- Pipal Systems, Inc.,
-- Blue Coast, Inc.,
(e) personal injury and other insured claims against Riverstone
Networks, Inc.
Holders of general unsecured claims and indemnification claims
will be paid in full over time and their claims will earn a 5%
interest per annum until fully paid.
Each holder of the Debtors' bonds will be paid a pro-rata share of
the allowed aggregate bondholder claim.
Holders of equity interests will get nothing.
A copy of the Disclosure Statement is available for a fee at:
http://www.researcharchives.com/bin/download?id=060717211521
Based in Santa Clara, California, Riverstone Networks, Inc.
-- http://www.riverstonenet.com/-- provides carrier Ethernet
infrastructure solutions for business and residential
communications services. The company and four of its affiliates
filed for chapter 11 protection on Feb. 7, 2006 (Bankr. D. Del.
Case Nos. 06-10110 through 06-10114). Edmon L. Morton, Esq., and
Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP,
represent the Debtors. Kerri K. Mumford, Esq., at Landis Rath &
Cobb LLP, represents the Official Committee of Unsecured
Creditors. The firm Brown Rudnick Berlack Israels LLP serves as
counsel to the Official Committee of Equity Security Holders. As
of Dec. 24, 2005, the Debtors reported assets totaling $98,341,134
and debts totaling $130,071,947. The Plan is scheduled for review
by the Bankruptcy Court in mid-September and distributions to
creditors and stockholders are expected to be made by the end of
September.
RLC INDUSTRIES: Strong Performance Cues Moody's to Lift Ratings
---------------------------------------------------------------
Moody's Investors Service upgraded the ratings of RLC Industries,
Co. and maintained a stable outlook. Over the past year, RLC has
demonstrated sustainable credit metrics, which reflect strong
operating performance, strong cash flows and lower debt levels
that warrant a one notch upgrade. The ratings also consider the
tremendous asset value of RLC's timberlands and the expectation
that the company will continue to outperform the ratings with
strong credit metrics.
At the same time, the ratings reflect the commodity focus of RLC's
products, the challenges of producing more value-added products
through potential acquisitions, significant competitive pressures
from market leaders with substantially greater scale and capital
resources, and the potential event risk related to the buyout of a
minority holder.
Ratings upgraded:
* Corporate family rating upgraded to Ba2 from Ba3;
* Gtd senior secured revolving credit facility upgraded to Ba2
from Ba3; and
* Gtd senior secured term loan B upgraded to Ba2 from Ba3.
The outlook for the ratings is stable and reflects Moody's view
that credit metrics will continue to remain elevated relative to
the rating. Specifically, that RCF will be above 20% and Debt
will be below 3x on an adjusted basis over the intermediate term.
Key factors influencing RLC's ratings and outlook are:
i) The company's modest size, one product line, and operations
in one geography.
ii) Credit protection measures that are far superior to its Ba2
corporate family rating.
iii) Vertical integration represents a positive factor for the
company's rating. Moreover, operational efficiency and
margin stability have been relatively stable and superior
to the company's Ba2 rating.
iv) Timberlands valued at approximately $1.8 billion; a portion
of the potential sale proceeds could be used to reduce
debt.
v) Qualitative factors that concern Moody's are RLC's
concentrated ownership and board of directors, relatively
weak corporate governance, and acquisition risk. Even
though Moody's anticipates potential acquisitions and
modest distributions over the intermediate term that would
increase debt levels, Moody's believes RLC's credit metrics
will still support its current ratings.
The most recent prior rating action for RLC occurred on June 30,
2005. Moody's upgraded the ratings based on RLC's stronger credit
metrics, which reflected improved operating performance, stronger
cash flows, and lower debt levels. Moody's stated that factors
that could positively impact the ratings and outlook would be
continued improvement in operating performance, a greater
percentage of revenues derived from more value-added products, and
further debt reduction below current levels on a sustained basis.
RLC Industries Co., headquartered in Roseburg, Oregon, is an
integrated forest products company engaged in the growing and
harvesting of timber and the manufacturing of wood products,
including lumber, plywood, veneer, particleboard, specialty
panels, laminated veneer lumber, I-joists, and pulp chips.
SILICON GRAPHICS: Closes Lease Settlement to Restructure Debts
--------------------------------------------------------------
Pursuant to an order by the U.S. Bankruptcy Court for the Southern
District of New York that became final on June 26, 2006, Silicon
Graphics, Inc., and its debtor-affiliates closed on the settlement
to restructure its lease obligations at the Amphitheatre
Technology Center and Crittenden Technology Center campuses
located in Mountain View, California, Barry Weinert, vice
president and general counsel of Silicon Graphics, Inc., disclosed
in a regulatory filing with the Securities and Exchange
Commission.
Mr. Weinert relates that under the Lease Modification and
Termination Agreement dated June 15, 2006, between the Debtors and
WXIII/Crittenden Realty A/B, L.L.C., WXIII/Crittenden Realty C,
L.L.C. and WXIII/Crittenden Realty D, L.L.C. and
WXIII/Amphitheatre Realty, L.L.C.:
* three leases covering the ATC and CTC campuses will be
terminated or amended;
* the Debtors are obligated to vacate the premises under:
-- two leases by June, of which an ATC campus had already
been vacated and subleased to Google, Inc.; and
-- a third lease by November 30, 2006; and
* the Landlords are permitted to immediately draw $24,550,000
on a letter of credit securing the lease of the ATC campus
and required to cause the return and cancellation of the
remaining $8,706,234 letter of credit.
Upon vacating the premises prior to June 30, 2006, the Landlords
caused:
(i) the return and cancellation of a letter of credit for
$6,000,000; and
(ii) return of a security deposit for $265,000 securing
obligations under the corresponding lease.
Upon the Debtors' vacating the final premises by November 30,
2006, the Landlords are obligated to return and cancel a letter of
credit for $4,500,000 securing obligations under the lease.
Silicon Graphics, Inc.'s rent and other obligations under the
Leases terminate upon vacating the premises, Mr. Weinert explains.
A full-text copy of the Lease Modification and Termination
Agreement is available for free at:
http://researcharchives.com/t/s?dc1
Headquartered in Mountain View, California, Silicon Graphics, Inc.
(OTC: SGID) -- http://www.sgi.com/-- offers high-performance
computing. SGI helps customers solve their computing challenges,
whether it's sharing images to aid in brain surgery, finding oil
more efficiently, studying global climate, providing technologies
for homeland security and defense, enabling the transition from
analog to digital broadcasting, or helping enterprises manage
large data. The Debtor and 13 of its affiliates filed for chapter
11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977
through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq.,
at Weil Gotshal & Manges LLP, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed total assets of $369,416,815 and
total debts of $664,268,602. (Silicon Graphics Bankruptcy News,
Issue No. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000)
SILICON GRAPHICS: Panel Banned in Providing Access to Information
-----------------------------------------------------------------
The Honorable Burton R. Lifland of the U.S. Bankruptcy Court for
the Southern District of New York grants Silicon Graphics, Inc.,
and its debtor-affiliates' request and declares that any official
committee appointed in the Debtors' Chapter 11 cases -- including
the Official Committee of Unsecured Creditors -- is not authorized
or required to provide access to any confidential information to
any creditor it represents who is not an official committee
member.
Judge Lifland permits, but does not require, an official committee
to provide access to Privileged Information to any party so long
as:
(a) the Privileged Information is not, and does not, contain
Confidential Information; and
(b) the relevant privilege is held and controlled solely by
that Official Committee.
Bankruptcy Services, LLC, the Debtors' official noticing and
claims agent, is authorized and directed to establish the Web site
for the Official Committee of Unsecured Creditors. Bankruptcy
Services will maintain the Web site according to the terms and
conditions set forth by the Court.
Headquartered in Mountain View, California, Silicon Graphics, Inc.
(OTC: SGID) -- http://www.sgi.com/-- offers high-performance
computing. SGI helps customers solve their computing challenges,
whether it's sharing images to aid in brain surgery, finding oil
more efficiently, studying global climate, providing technologies
for homeland security and defense, enabling the transition from
analog to digital broadcasting, or helping enterprises manage
large data. The Debtor and 13 of its affiliates filed for chapter
11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977
through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq.,
at Weil Gotshal & Manges LLP, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed total assets of $369,416,815 and
total debts of $664,268,602. (Silicon Graphics Bankruptcy News,
Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000)
SPI PETROLEUM: S&P Rates Proposed $155 Mil. First-Lien Loan at B
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to wholesale refined products distribution company
SPI Petroleum LLC.
At the same time, Standard & Poor's assigned its 'B' senior
secured rating and its '4' recovery rating to the company's
proposed $155 million first-lien term loan B, which will be used
to help fund the proposed acquisition of 2 privately held
distribution companies.
The outlook is stable. Pro forma the proposed financing, SPI
Petroleum is expected to have approximately $230 million of debt
outstanding.
The ratings on SPI Petroleum reflect its participation in the very
fragmented refined product distribution market typified by slim
operating margins and commodity price volatility.
"With its acquisitive growth strategy, SPI will face high debt
leverage and integration risk, which offsets favorable near-term
market conditions," said Standard & Poor's credit analyst Paul
Harvey.
The stable outlook reflects expectations for near-term debt
repayment and the successful integration of the planned
acquisitions.
SPORT SUPPLY: Minority Shareholders Sue Collegiate Pacific
----------------------------------------------------------
Costa Brava Partnership III L.P., Greenwood Capital L.P., and
Greenwood Investors, L.P., who are substantial shareholders of
Sport Supply Group, Inc. (OTC:SSPY.PK), have filed a lawsuit
seeking to recover damages for breaches of fiduciary duty from
SSG's controlling shareholder, Collegiate Pacific, Inc. (AMEX:
BOO), and from past and present directors and officers of SSG.
The individuals named as defendants are Geoffrey P. Jurick, Thomas
P. Triechler, Peter Bunger, and Terrence Babilla.
The complaint, filed in the Delaware Court of Chancery, New Castle
County, on Friday, July 14, 2006, alleges that the individual
defendants breached their fiduciary duties to SSG's shareholders
by improperly diverting Collegiate's interest in a merger
transaction with all SSG shareholders into a separate stock-
purchase transaction that only benefited one shareholder, Emerson
Radio Corp. In particular, the complaint alleges that defendant
Jurick disregarded a series of irreconcilable conflicts of
interest as an officer and director of both SSG and its then-
controlling shareholder Emerson and manipulated the negotiations
with Collegiate so as to facilitate the sale of his own holdings
in Emerson, in order to repay a $16 million short-term personal
loan from Seng Heng Bank Ltd. of Macau originally due on July 20,
2005. The complaint alleges that the other individual defendants
facilitated this course of conduct by failing to protect the
interests of all SSG shareholders.
The complaint also alleges that Collegiate knowingly aided and
abetted these breaches of fiduciary duty in order to obtain
control of SSG. Thus, as the complaint alleges, Emerson
ultimately sold its SSG stock to Collegiate, in a transaction
announced on July 5, 2005, for $6.74 a share -- an 80% premium to
the then-current stock price. As a result of the defendants'
alleged breaches, SSG shareholders, including Costa Brava and
Greenwood, say that instead of benefiting from the premium
transaction for all of SSG that Collegiate had originally desired,
they were denied their right to participate in this transaction.
Douglas Gleason, Costa Brava's in-house legal expert, said "The
complaint presents serious and detailed allegations that Geoffrey
P. Jurick and the other individual defendants breached their
fiduciary duties to SSG stockholders, and that Collegiate Pacific
knowingly aided and abetted those breaches to further its own
interests. We anticipate that other SSG shareholders will examine
these allegations closely. We look forward to presenting our
claims and vindicating our rights as shareholders in the Delaware
Court of Chancery."
A full-text copy of the Agreement and Plan of Merger dated
September 7, 2005, by and among Collegiate Pacific Inc., CP Merger
Sub, Inc., and Sport Supply Group, Inc., is available at no charge
at http://ResearchArchives.com/t/s?ddb
In connection with the merger transaction, Collegiate Pacific Inc.
is represented by:
Alan J. Bogdanow, Esq.
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
and Sport Supply Group, Inc., is represented by:
Glen Hettinger, Esq.
Fulbright & Jaworski L.L.P.
2200 Ross Avenue, Suite 2800
Dallas, Texas 75201
The Merger Agreement relates that a Special Committee of Sport
Supply's Board of Directors received a written opinion, dated
September 7, 2005, from Marshall & Stevens, Inc., to the effect
that, as of September 7, 2005, the Transactions are fair to the
Public Stockholders from a financial point of view pursuant to the
terms and subject to the conditions set forth in the Merger
Agreement.
About Costa Brava
Costa Brava Partnership III LP is a Boston-based investment fund.
About Greenwood Capital
Greenwood Capital LP and Greenwood Investors LP are value-oriented
event-driven funds that focus on undervalued and mispriced public
equity securities.
About Sport Supply
Sport Supply Group -- http://www.sportsupplygroup.com/-- is a
leading manufacturer and distributor of sporting goods equipment
and physical education products to the institutional and youth
sports market place. Athletes, coaches and instructors in
schools, colleges, universities, governmental agencies, camps and
youth organizations across the country use SSG's products.
SMART ONLINE: Audit Committee Wraps Internal Stock Probe
--------------------------------------------------------
The Audit Committee of Smart Online Inc.'s Board of Directors
concluded that none of the Company's officers or directors engaged
in fraudulent or criminal activity. The Audit Committee's
investigation however revealed that the Company lacked an adequate
control environment.
The Securities and Exchange Commission temporarily suspended the
trading of the Smart Online's securities on Jan. 17, 2006, due to
a lack of current and accurate information concerning the
Company's securities because of possible manipulative conduct
occurring in the market for the Company's stock. The SEC
subsequently initiated a non-public investigation of the Company.
In March 2006, the Board directed its Audit Committee to conduct
an internal investigation of matters relating to the SEC probe.
The Audit Committee retained independent outside legal counsel to
assist in conducting the investigation. The independent outside
legal counsel shared final findings with the Audit Committee and
the Company's Board on July 7, 2006.
As one of the results of these findings, Mr. Jeffrey LeRose was
appointed to the position of non-executive Chairman of the Board
of Directors to separate the leadership of the Board of Directors
from the management of the Company, which is a recommended best
practice for solid corporate governance. Mr. Nouri has stepped
down as Chairman of the Board of Directors, but will continue to
serve as our President, Chief Executive Officer and as a member of
the Board of Directors.
In commenting on the final findings, Mr. Nouri stated, "I would
like to thank Mr. LeRose for accepting this additional
responsibility, which will take more time and effort on his
behalf. The Company and I are focused on and committed to
improving the corporate governance and compliance practices
throughout the Company."
Mr. LeRose added, "In order to achieve Smart Online's significant
potential, we will be implementing additional changes to our
controls and procedures to address the issues raised during the
investigation. This, in combination with previously planned
actions, will assist the Company in complying with Section 404 of
the Sarbanes-Oxley Act, which compliance is required by non-
accelerated filers, such as Smart Online, by the end of 2007."
Smart Online Inc. -- http://www.SmartOnline.com-- develops and
markets Internet-delivered Software-as-Service software
applications and data resources to start, run, protect and grow
small businesses.
SMART ONLINE: Sherb & Co. Raises Going Concern Doubt
----------------------------------------------------
Sherb & Co., LLP, expressed substantial doubt about Smart Online,
Inc.'s ability to continue as a going concern after auditing the
Company's financial statements for the years ended Dec. 31, 2005
and 2004. The auditing firm pointed to the Company's recurring
losses from operations and working capital deficit.
At Dec. 31, 2005, the Company's balance sheet showed $14,558,079
in total assets and $7,885,448 in total liabilities. The Company
had current assets of $2,615,290 available to pay current
liabilities of $4,922,159 as of Dec. 31.
For the twelve months ended Dec. 31, 2005, Smart Online Inc.'s
revenue increased to $2,701,976 compared to $1,002,970 for the
same period in 2004. Gross margins improved from 79% of revenue
to 85%.
Net loss attributable to common shareholders was $15,590,609,
compared to a loss of $2,671,929 for the same period in 2004. Of
the twelve months ended December 31, 2005 loss, $9,737,500 was a
non-cash charge related to common shares issued for certain
investor relations services. Acquisitions closed in the fourth
quarter accounted for $1,348,869 or 50% of consolidated revenue
for the twelve months ended Dec. 31, 2005.
For the fourth quarter of 2005, revenue increased to $1,697,930
compared to $279,852 for the same period in 2004. Gross margins
were 81% for the fourth quarter for both 2005 and 2004. Net loss
attributable to common stockholders for the quarter was
$12,254,789, compared to $296,691, in the fourth quarter of 2004.
Of the fourth quarter loss, $9,737,500 was a non-cash charge
related to common shares issued for certain investor relations
services. Acquisitions closed in the fourth quarter accounted for
$1,348,869 or 79% of consolidated fourth quarter revenue.
"The fourth quarter was a growth period for Smart Online during
which we continued to execute our strategy to take advantage of
the growing small business software-as-a-services sector," said
Michael Nouri, president and chief executive officer of Smart
Online. "Our team has worked tirelessly to continue to build out
our broad suite of applications with the recent launch of our new
Sales Force Automation product. We believe this effort is further
validation to our commitment to provide our small business
customers a full suite of daily use software-as-a-service
applications to manage their money, customers, and employees."
A full-text copy of the Company's annual report on Form 10-K is
available fro free at http://researcharchives.com/t/s?dc8
BDO Seidman Payments
Smart Online entered into a letter agreement, effective June 29,
2006, with its former independent certified public accountants,
BDO Seidman, LLP. Under the terms of the letter agreement, Smart
Online agreed to pay BDO a total of $120,000 in 12 equal monthly
installments beginning June 30, 2006. These payments are being
made in settlement of $246,855 that BDO claims is owed by the
Company in connection with audit services performed by BDO under a
letter agreement between BDO and Smart Online, dated May 27, 2004.
Smart Online's Audit Committee dismissed BDO in November 2005.
The Company says there were no disagreements or reportable events
with BDO at any time during the year ended Dec. 31, 2003 and
Dec. 31, 2004 and the period from Jan. 1, 2005 to Sept. 30, 2005.
Smart Online Inc. -- http://www.SmartOnline.com-- develops and
markets Internet-delivered Software-as-Service software
applications and data resources to start, run, protect and grow
small businesses.
STAR GAS: Recapitalization Prompts Fitch to Upgrade Ratings
-----------------------------------------------------------
Fitch upgraded Star Gas Partners, L.P.:
-- Issuer Default Rating to 'B-' from 'CCC'; and
-- Outstanding 10.25% senior unsecured notes due 2013, co-
issued with its special purpose financing subsidiary Star
Gas Finance Company, to 'B/RR3' from 'CCC/RR4'.
The notes are removed from Rating Watch Positive where they were
placed on March 31, 2006, following a favorable assessment by
Fitch of Star Gas' then proposed plan of recapitalization. The
notes have a Recovery Rating of 'RR3', indicating good recovery,
and the Rating Outlook is Stable. Approximately $172 million of
notes remain outstanding.
The rating upgrades primarily reflect the benefits of the
recapitalization of Star Gas that was completed on April 28, 2006,
under which Kestrel Energy Partners, LLC became general partner of
Star Gas. In a multi-step transaction Star Gas received an
aggregate of $57.7 million in new equity from the sale common
units and a rights offering. Using equity proceeds and other
funds Star Gas repurchased $65.3 of outstanding notes and
converted $26.9 million of notes for new common units.
In its rating analysis Fitch considered the improved consolidated
credit metrics resulting directly from:
* the nearly $100 million reduction in Star Gas notes, an
adequate near-term liquidity position provided under its
operating subsidiary, Petroleum Heat and Power Co.'s;
* $260 million secured revolving credit facility; and
* management's efforts to gradually stabilize operating
performance.
The rating for the notes also reflects its subordinated position
to the Petro credit facility. Fitch's Recovery Rating for the
outstanding notes, a relative indicator of creditor recovery on a
given obligation in the event of a default, improved to 'RR3 from
'RR4' as a result of the debt reduction. 'RR3' indicates an
estimated recovery level of between 50% and 70% in event of a
default.
Fitch has some general concerns as to the challenging business
fundamentals of the home heating oil delivery industry which
continues to lose market share in its traditional northeast
stronghold. Specific credit concerns include:
* management's ability to improve customer satisfaction levels
and reduce customer attrition at Petro;
* the potential negative effect of high and volatile wholesale
home heating oil prices on usage and profits; and
* the ongoing sensitivity of sales volumes to winter weather
conditions.
Net customer losses at Petro in 2005 were equal to 7.1% of its
customer base, which is unacceptable over the longer term. While
management has been gradually returning to a decentralized service
system after experiencing poor service quality and high costs
under a centralized system, it is too early to tell how successful
these efforts will be in retaining customers.
However, some of the more recent customer losses have been
attributed by management to tightened credit standards instituted
by the company and efforts to maintain profit margins in spite of
competitive pricing pressures. In this regard, margins
strengthened significantly this past winter. It is likely that
any future rating upgrades for Star Gas will be the result of
sustained improvements in operating performance. An inability to
lessen customer losses could result in negative rating actions.
TCR I: Files Disclosure Statement in E.D. Virginia
--------------------------------------------------
TCR I, Inc., and Charles V. Rice filed with the U.S. Bankruptcy
Court for the Eastern District of Virginia a disclosure statement
explaining their Joint Chapter 11 Plan of Reorganization.
Funds from the Facilities
The Debtor reminds that Court that it functions as a management
organization for seven assisted living facilities and is also a
holding company that owns, directly or indirectly, six assisted
living facilities. These assisted living facilities, generally
known as Amerisist Facilities, are currently comprised of:
-- a 27-bed in each Culpeper and Front Royal, Virginia;
-- a 46-bed in Warrenton, Virginia;
-- a 31-bed in Orange, Virginia;
-- a 27-bed in Manassas, virginia;
-- a 46-bed in Stephens City, Virginia; and
-- a 31-bed in Louisa, Virginia;
Mr. Rice has owned and operated, through his companies,
assisted living facilities in Virginia.
The Debtors tell the Court that the Plan will be funded from
normal cash flow of the operation of the Debtors' business.
The Debtors say that 50% of the net cash flow from the facilities
will be placed in the Plan Funds to pay creditors. The funds from
Louisa will go to the Rice Plan Fund while the funds from the six
facilities will be placed in the TCR Plan Fund.
Treatment of Claims
Under the Debtors' Plan, all administrative claims will be paid in
full.
Priority Tax Claims from the Internal Revenue Service amounting
$9,847 plus statutory interest will be paid equal quarterly
installments of principal and interest at the statutory rate over
a one year period until paid in full.
Union Bank & Trust holding Secured Claims totaling $800,000 plus
interest will receive in full payment, with interest:
* $2,400 monthly payment will be applied to the $375,000 note
held by Union Bank; and
* secured by a first deed of trust on Mr. Rice's residence.
Creditors holding Unsecured Claims against TCR and Mr. Rice will
be paid annually over five years, 30 days after each anniversary
of the Effective Date. Payments will be comprised of 50% of the
net cash flow from the TCR and Rice Assets, which amounts will be
placed into the TCR and the Rice Plan Fund and paid annually to
the TCR and Rice creditors.
Interest Holders will receive no distribution under the Plan.
TCR I, Inc., filed for chapter 11 protection on September 8, 2005
(Bankr. E.D. Va. Case No. 05-13450). Bruce W. Henry, Esq., at
Henry, O'Donnell, Dahnke & Walther, PC, represents the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed $6,980,559 in assets and $37,059,268
in debts.
TFS ACQUISTION: Moody's Junks Rating on Proposed $190 Mil. Notes
----------------------------------------------------------------
Moody's Investors Service assigned first time ratings to
TFS Acquisition Corporation in connection with its pending
acquisition by an affiliate of Platinum Equity Advisors, LLC.
Moody's assigned these ratings to the proposed debt financing:
(i) B2 to TFS' proposed $325 million senior secured term loan,
due 2013; and
(ii) Caa1 to its proposed $190 million senior secured notes,
due 2016.
Moody's assigned a SGL-3 liquidity rating, reflecting adequate
liquidity and expected covenant compliance. The ratings outlook
is stable. The ratings are subject to confirmation of the final
financing documentation.
These first time ratings were assigned:
* B2 for the corporate family rating;
* B2 for the $325 million senior secured term loan, due 2013;
* Caa1 for the $190 million senior secured notes, due 2016.
* Speculative Grade Liquidity rating of SGL-3.
The rating outlook is stable.
TFS is a former subsidiary of Textron Inc. In June 2006, Platinum
entered into an agreement to purchase TFS from Textron for total
cash consideration of approximately $630 million plus the
assumption of certain liabilities, excluding fees and expenses.
The acquisition is expected to be financed with approximately $550
million of newly issued funded debt and a
$160 million cash equity investment from Platinum.
The ratings reflect:
(1) TFS' high adjusted leverage and Moody's expectation of
modest free cash flow generation and de-leveraging over
the near-term;
(2) the Company's fixed cost structure, which should benefit
the Company in the periods of high production levels and
strong demand, but could have a material negative impact
on earnings and cash flow should demand decline;
(3) TFS' high customer concentration and significant end-
market exposure to the automotive and heavy truck
industries, which combined represent close to two-thirds
of fiscal 2005 revenues, and
(4) Moody's concern that as a stand-alone company with a
highly leveraged capital structure, TFS' significantly
increased interest expense obligations may adversely
restrict its flexibility in responding to unanticipated
competitive or other pressures.
The primary factors supporting TFS' ratings are:
(1) TFS' strong competitive position as a proven supplier with
both a global footprint and with sufficient scale to
provide cost-efficient solutions to its long-standing
customers in the mechanical fastener sector;
(2) the anticipated benefits of the Company's now completed
restructuring efforts in which the Company has invested
over $160 million in restructuring and other non-recurring
costs from fiscal 2003 through fiscal 2005; and
(3) the Company's broad geographic diversification which could
reduce the impact of regional demand volatility.
The proposed $325 million senior secured term loan will be secured
by:
(1) a first priority lien on the Company's PP&E and
substantially all other tangible and intangible assets
and
(2) a second priority lien on the North American accounts
receivable and inventories.
The B2 rating on the facility reflects:
(1) its effective subordination to the proposed $175 million
asset-based revolving credit facility with respect to the
Company's North American receivables and inventories and
(2) the term loan's size relative to Moody's assessment of the
potential range of values of the remaining collateral in a
distressed scenario.
The proposed $190 million of senior secured notes due 2016 will be
secured by:
(1) a second priority lien on the Company's PP&E and
substantially all other tangible and intangible assets and
(2) a third priority lien on the North American accounts
receivable and inventories.
The Caa1 rating on the facility reflects:
(1) its junior position in the capital structure and effective
subordination to the revolving credit facility and term
loan with respect substantially all assets and
(2) Moody's view of an increased likelihood of financial loss
in the event of default.
Moody's has assigned an SGL-3 rating to TFS reflecting adequate
near-term liquidity as the Company should have approximately
$95 million of availability at closing under the borrowing base of
the revolver and approximately $15 million in cash.
Textron Fastening Systems, headquartered in Troy, Michigan, is a
global provider of integrated fastening solutions and offers a
broad range of fastening technologies, including fasteners,
engineered assemblies and automation equipment. Revenues for the
year ended December 31, 2005 totaled approximately $1.8 billion.
TKO SPORTS: Plans to Pay Unsec. Creditors 15% of Claims in 3 Yrs.
-----------------------------------------------------------------
TKO Sports Group USA, Limited, filed its plan of reorganization
and an accompanying disclosure statement with U.S. Bankruptcy
Court for the Southern District of Texas.
Edward L. Rothberg, Esq., at Weycer, Kaplan, Pulaski & Zuber,
P.C., in Houston, Texas, tells the Court that the Debtor has, as
its principal asset, its reputation in the industry gained from
its licensed use of the "TKO" brand-name.
The Plan is the result of negotiations among the Debtor and
various other parties. The secured lender, Bank of Montreal,
pursuant to a global settlement reached with the Debtor and the
Official Committee of Unsecured Creditors accepted a payment
of $2.45 million in satisfaction of the first lien claim of
$5.2 million. The global settlement also provided for the
reallocation of funds for the benefit of general unsecured
creditors holding allowed claims.
Under the Plan, Holders of administrative claims will be paid in
cash in full. Holders of priority claims will be paid in full
either in cash or with interest over 60 months. Holders of
secured claims, other than Bank of Montreal, will be paid the
value of their collateral in cash or the collateral will be
abandoned in satisfaction of the claim.
Holders of allowed general unsecured claims would be paid 15% of
their claims without interest, payable in installments twice a
year for three years. The vast majority of intercompany claims
will be waived.
A full-text copy of the Disclosure Statement is available for a
fee at:
http://www.researcharchives.com/bin/download?id=060717211948
Headquartered in Houston, Texas, TKO Sports Group USA Limited,
aka TKO Sports Group, Inc. -- http://www.strengthtko.com/--
manufactures sporting goods and fitness equipment. The Company
filed for chapter 11 protection on Oct. 11, 2005 (Bankr. S.D. Tex.
Case No. 05-48509). Edward L. Rothberg, Esq., at Weycer, Kaplan,
Pulaski & Zuber, P.C., represents the Debtor in its restructuring
efforts. Andrew I. Silfen, Esq., and Schuyler G. Carroll, Esq.,
at Arent Fox, PLLC, represent the Official Committee of Unsecured
Creditors. When the Debtor filed for protection from its
creditors, it listed $8,193,809 in assets and $10,571,610 in
debts.
TOYS 'R' US: Fitch Rates Unit's New $1 Bil. Debt Facility at CCC+
-----------------------------------------------------------------
Fitch Ratings assigned a rating of 'CCC+/RR5' to the $1 billion
senior secured credit facility of Toys 'R' Us -Delaware, Inc, a
subsidiary of Toys 'R' Us, Inc. Fitch has also withdrawn the
'CCC/RR6' rating of the unsecured bridge facility of Toys
Delaware. Additionally, Fitch has lowered the rating of the $1.6
billion of senior notes at TOY to 'CCC-/RR6' from 'CCC/RR6'.
Fitch rates TOY's Issuer Default Rating (IDR) 'B-' with a Negative
Rating Outlook. The rating reflects TOY's highly leveraged
balance sheet and the weak performance of its core U.S. toy
segment, offset in part by steady performance from its Babies 'R'
Us and international toy segments.
The rating of the new $1 billion senior secured credit facility of
Toys Delaware reflects its secured position in the capital
structure. However, the collateral assigned to this facility
yields a below average recovery (10-30%) in a distressed scenario.
The facility consists of an $800 million term loan maturing in
2012 and a $200 million asset sale facility maturing in 2008. The
proceeds from the facility will be used to repay the $973 million
outstanding on the unsecured bridge facility at Toys Delaware.
The downgrade of the senior notes at the TOY holding company level
reflects the addition of new secured debt in the capital
structure, lowering the potential recovery for these notes. These
notes are assumed to have poor recovery prospects (0-10%) in a
distressed scenario.
TRUEYOU.COM INC: April 1 Balance Sheet Upside-Down by $346.9 Mil.
-----------------------------------------------------------------
TrueYou.Com, Inc., incurred a $154.3 million net loss applicable
to common stockholders for the quarter ended April 1, 2006,
compared to $4.6 million for the quarter ended March 31, 2005.
Included in the current net loss is $6.5 million of operating
loss, and $147 million in unrealized loss on convertible
securities.
Total revenue for the quarter ended April 1, 2006 was
$10.5 million compared to $8.8 million for the quarter ended March
31, 2005. Retail revenue, comprised of the sale of retail
products and wholesale products totaling $4 million, increased
significantly in the quarter compared to last year due to the
launch of Cosmedicine product line. Service revenue comprised of
Spa and Salon services and medical services totaling $6.5 million
for quarter ended April 1, 2006, decreased in the quarter compared
to last year due to remodeling activities in some of the Company's
facilities.
At April 1, 2006, TrueYou.Com's balance sheet showed $43.9 million
in total assets, $390.8 million in total liabilities and minority
interest of $135,000, resulting in total shareholders' deficit of
$346.9 million.
TrueYou.Com, Inc. -- http://www.trueyou.com/-- offers both
cosmetic services and medical procedures to customers under one
delivery system and brings cosmetic surgery, cosmetic dentistry
and dermatology, and salon and spa services together under a
single brand. The Company has developed a skin care line of
products called Cosmedicine which is being distributed through
Sephora USA, Inc. stores and the Company's own facilities. The
Company is the owner of the Cosmedicine trademark. The Company
co-brands its trade name with the trade names of the salons and
spas that it has acquired. The Company's salons and spas share
certain corporate resources such as senior management and
administrative services. As of April 1, 2006, the Company had 527
employees.
U.S. TELEPACIFIC: S&P Rates Proposed $205 Million Debts at B-
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' corporate
credit rating to U.S. TelePacific Holdings Corp., a Los Angeles-
based competitive local exchange carrier. The outlook is stable.
In addition, Standard & Poor's assigned a 'B-' rating to wholly
owned U.S. TelePacific Corp.'s proposed $175 million first-lien
term loan and $30 million revolver. The recovery rating for the
first-lien facility is '5', suggesting negligible (0%-25%)
recovery in the event of payment default or bankruptcy.
TelePacific is also obtaining a $100 million second-lien term
loan, which is not rated. The bank loan rating is based on
preliminary documentation subject to receipt of final information.
Pro forma total debt is approximately $359 million on an operating
lease-adjusted basis.
Total bank proceeds of $275 million, combined with $10 million of
new equity and $13 million of existing cash, will be used to:
* fund the $205 million acquisition of Mpower Communications;
* refinance $71.5 million of existing TelePacific debt; and
* pay related transaction fees and expenses.
"The ratings on TelePacific reflect a vulnerable business risk
profile due to significant competition from larger, better-
capitalized telecom operators, integration risks associated
with the acquisition, the lack of any sustainable competitive
advantages, low barriers to entry, vulnerability to potential
regulatory changes, and a lack of geographic diversity," said
Standard & Poor's credit analyst Allyn Arden.
The CLEC industry has a high degree of business risk,
characterized by intense competition, price compression, and
technology shifts. TelePacific competes with Verizon
Communications Inc. and AT&T Inc. in California and Embarq Corp.
in Nevada as well as with other CLECs.
While TelePacific has demonstrated success in growing its client
base both organically and through acquisitions by providing
excellent customer service and offering a moderate discount to
the incumbent, longer-term prospects are highly uncertain given
the potential for increased price-based competition from the
incumbents. Tempering factors include TelePacific's operations in
fast-growing markets in California and Nevada, the potential for
meaningful operating and capex synergies, and low churn.
UNIVERSAL MORTGAGE: Case Summary & Two Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: Universal Mortgage Group, Inc.
P.O. Box 3582
West Columbia, South Carolina 29171
Bankruptcy Case No.: 06-02986
Type of Business: The Debtor offers financial services.
Chapter 11 Petition Date: July 17, 2006
Court: District of South Carolina (Columbia)
Debtor's Counsel: Nancy E. Johnson, Esq.
William E. Calloway, Esq.
Robinson Barton McCarthy & Calloway
1715 Pickens Street, P.O. Box 12287
Columbia, South Carolina 29211-2287
Tel: (803) 256-6400
Total Assets: $371,781
Total Debts: $1,714,012
Debtor's Two Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
NBANK N.A. $1,335,650
Larry Cole, E.V.P.
135 Bolton Drive
P.O. Box 210
Commerce, GA 30529
Bayview Financial Corporation $218,362
4425 Ponce de Leon Boulevard
4th Floor
Coral Gables, FL 33416
W.R. GRACE: Asbestos PD Panel Wants Access to Litigation Files
--------------------------------------------------------------
The Official Committee of Asbestos Property Damage Claimants asks
the U.S. Bankruptcy Court for the District of Delaware to compel
production of documents concerning litigation between W.R. Grace &
Co. and plaintiffs who sought relief based on allegations that
their property was damaged as a result of installation of various
Grace products.
Theodore Tacconelli, Esq., at Ferry, Joseph & Pearce, P.A., in
Wilmington, Delaware, tells Judge Fitzgerald that the PD
Committee must know the details of Grace's prepetition valuation
to estimate asbestos property damage liabilities in the Debtors'
Chapter 11 cases.
"The amount paid by Grace for the prepetition settlement or
resolution of PD Claims is highly material to an estimation of
the cost of the outstanding postpetition PD Claims," Mr.
Tacconelli says.
First Set of Requested Documents
Mr. Tacconelli relates that in November 2005, the PD Committee
asked Grace to produce original documents for inspection and
copying in connection with the estimation of the PD Claims.
The Requested Documents, which are within Grace's "possession,
custody, or control" and were created during the period from 1950
to present, include:
-- all documents by, between or about any holder of an
asbestos PD Claim including, but not limited to, the sale,
installation or delivery of any asbestos-containing
products to any holder or property owner identified in
any PD Claim;
-- documents relating to asbestos contamination or release
of asbestos fibers within any building or property; and
-- all documents pertaining to organization, membership,
funding, marketing efforts, and activities of the Safe
Building Alliance and the Alliance for Safe Buildings
that relate to asbestos products or PD claims, or the
maintenance of asbestos in buildings located in the
United States or Canada.
A full-text copy of the PD Committee's first set of Requested
Documents is available at no charge at:
http://ResearchArchives.com/t/s?ddd
James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young Jones &
Weintraub, P.C., in Wilmington, Delaware, opposed the PD
Committee's request to the extent it sought information or
identification of documents beyond the permissible scope of
discovery under the Federal Rules of Civil Procedure.
Mr. O'Neill further argued that the PD Committee's inquiry is
premature.
A full-text copy of Grace's responses to each of the Requested
Documents is available at no charge at:
http://ResearchArchives.com/t/s?dde
Production of Litigation Files is Appropriate
Mr. Tacconelli asserts that "Grace's unsupported, blanket
objections cannot excuse compliance" with the PD Committee's
request for production or the Rules of Civil Procedure.
According to Mr. Tacconelli, Grace is the only party responsible
for the production of documents because the Litigation Files
cannot reasonably be obtained from any other source and the PD
Committee should not be required to seek them elsewhere.
Mr. Tacconelli avers that the information contained in public
court files across the country is incomplete and obtaining these
records would place undue burden on the PD Committee.
Furthermore, Mr. Tacconelli contends that Grace's objections are
particularly baseless since Grace has already acknowledged and
identified the universe of claims and lawsuits that comprise the
Litigation Files in correspondence between the parties.
Moreover, Mr. Tacconelli insists that a privilege review is not
an overwhelming task. If the documents are filed by ordinary
litigation methods, most should require only a cursory review.
The Bankruptcy Court decided the matter in chambers.
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. --
http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally. The Company and its debtor-
affiliates filed for chapter 11 protection on April 2, 2001
(Bankr. D. Del. Case No. 01-01139). James H.M. Sprayregen, Esq.,
at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the
Debtors in their restructuring efforts. The Debtors hired
Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan LLP represent the Official Committee of
Unsecured Creditors. The Creditors Committee tapped Capstone
Corporate Recovery LLC for financial advice. David T. Austern,
the legal representative of future asbestos personal injury
claimants, is represented by Orrick Herrington & Sutcliffe LLP and
Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., and
Nathan D. Finch, Esq., at Caplin & Drysdale represent the
Official Committee of Asbestos Personal Injury Claimants.
The Asbestos Committee of Property Damage Claimants tapped
Scott L. Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin
Sumberg Baena Price & Axelrod LLP to represent it. Lexecon,
LLP, provided asbestos claims consulting services to the Official
Committee of Equity Security Holders.
W.R. GRACE: Citadel Entities Want to Buy 1,000,000 Common Shares
----------------------------------------------------------------
Citadel Equity Fund Ltd. and its affiliates intend to purchase,
acquire or otherwise accumulate, in one or a series of
transactions, up to an additional 1,000,000 shares of equity
securities of W.R. Grace & Co., or options to acquire more
shares.
The Affiliates are:
* Citadel Limited Partnership,
* Citadel Investment Group, L.L.C.,
* Kenneth Griffin,
* Citadel Wellington LLC, and
* Citadel Kensington Global Strategies Fund, Ltd.
Currently, the Equity Holders beneficially own 3,062,060 shares
of Grace's common stock.
The Equity Holders held 3,457,668 shares of Grace stock as of
March 2006. Citadel disposed off the shares in a series of
transactions in March and April.
Matthew Hinerfield, Citadel's managing director and deputy
general counsel, in Chicago, Illinois, relates that if the
Proposed Transfer is permitted to occur, the Equity Holders will
beneficially own 4,062,060 shares of Equity Securities after the
transfer.
In a regulatory filing with the Securities and Exchange
Commission, Grace disclosed that 67,848,221 shares of Common
Stock, $0.01 par value, were outstanding at April 30, 2006.
The Debtors will have until July 16, 2006, to object to the
Proposed Transfer, otherwise, it may proceed after expiration of
the 10-day objection period pursuant to the Bankruptcy Court's
January 2005 order limiting the transfer of the Debtors' equity
securities and approving related notice procedures.
About W.R. Grace
Headquartered in Columbia, Maryland, W.R. Grace & Co. --
http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally. The Company and its debtor-
affiliates filed for chapter 11 protection on April 2, 2001
(Bankr. D. Del. Case No. 01-01139). James H.M. Sprayregen, Esq.,
at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the
Debtors in their restructuring efforts. The Debtors hired
Blackstone Group, L.P., for financial advice.
PricewaterhouseCoopers LLP is the Debtors' accountant.
Stroock & Stroock & Lavan LLP represent the Official Committee of
Unsecured Creditors. The Creditors Committee tapped Capstone
Corporate Recovery LLC for financial advice. David T. Austern,
the legal representative of future asbestos personal injury
claimants, is represented by Orrick Herrington & Sutcliffe LLP and
Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., and
Nathan D. Finch, Esq., at Caplin & Drysdale represent the
Official Committee of Asbestos Personal Injury Claimants.
The Asbestos Committee of Property Damage Claimants tapped
Scott L. Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin
Sumberg Baena Price & Axelrod LLP to represent it. Lexecon,
LLP, provided asbestos claims consulting services to the Official
Committee of Equity Security Holders.
WERNER LADDER: Court Postpones DIP Financing Hearing to July 25
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware adjourned
to July 25, 2006 at 4:00 p.m. EST, the final hearing on the
request of Werner Holding Co. (DE), Inc., aka Werner Ladder
Company, and its debtor-affiliates to obtain a $99,000,000 secured
credit facility from a group of lenders led by Black
Diamond Commercial Finance LLC, The CIT Group/Business Credit
Group, and Morgan Stanley Senior Funding.
The deadline of the Official Committee of Unsecured Creditors,
the First Lien Lenders and Second Lien Lenders to file objections
to the Debtors' request is extended to July 19, 2006, at 12:00
noon.
Headquartered in Greenville, Pennsylvania, Werner Co. --
http://www.wernerladder.com/-- manufactures and distributes
ladders, climbing equipment and ladder accessories. The company
and three of its affiliates filed for chapter 11 protection on
June 12, 2006 (Bankr. D. Del. Case No. 06-10578). Kara Hammond
Coyle, Esq., Matthew Barry Lunn, Esq., and Robert S. Brady, Esq.,
Young, Conaway, Stargatt & Taylor, LLP, serves as the Debtors'
counsel. The firm of Willkie Farr & Gallagher LLP represents the
Debtors as its co-counsel. The Debtors have retained Rothschild
Inc. as their financial advisor and investment banker. At March
31, 2006, the Debtors reported total assets of $201,042,000 and
total debts of $473,447,000. (Werner Ladder Bankruptcy News,
Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000)
WERNER LADDER: Judge Defers Cash Collateral Hearing to July 25
--------------------------------------------------------------
The Hon. Kevin J. Carey of the U.S. Bankruptcy Court for the
District of Delaware adjourns to July 25, 2006 at 4:00 p.m. EST,
the final hearing on the request of Werner Holding Co. (DE), Inc.,
aka Werner Ladder Company, and its debtor-affiliates to use the
cash collateral of the First Lien Lenders and Second Lien Lenders.
The deadline of the Official Committee of Unsecured Creditors,
the First Lien Lenders and Second Lien Lenders to file objections
to the Debtors' request is extended to July 19, 2006 at 12:00
noon.
Headquartered in Greenville, Pennsylvania, Werner Co. --
http://www.wernerladder.com/-- manufactures and distributes
ladders, climbing equipment and ladder accessories. The company
and three of its affiliates filed for chapter 11 protection on
June 12, 2006 (Bankr. D. Del. Case No. 06-10578). Kara Hammond
Coyle, Esq., Matthew Barry Lunn, Esq., and Robert S. Brady, Esq.,
Young, Conaway, Stargatt & Taylor, LLP, serves as the Debtors'
counsel. The firm of Willkie Farr & Gallagher LLP represents the
Debtors as its co-counsel. The Debtors have retained Rothschild
Inc. as their financial advisor and investment banker. At March
31, 2006, the Debtors reported total assets of $201,042,000 and
total debts of $473,447,000. (Werner Ladder Bankruptcy News,
Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000)
WILLIAM LEAHY: Case Summary & Eight Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: William Leahy
425 Woodside Avenue
Buffalo, New York 14220
Bankruptcy Case No.: 06-01962
Chapter 11 Petition Date: July 14, 2006
Court: Western District of New York (Buffalo)
Judge: Carl L. Bucki
Debtor's Counsel: Arthur G. Baumeister, Jr., Esq.
Amigone, Sanchez, Mattrey & Marshall LLP
1300 Main Place Tower
350 Main Street
Buffalo, New York 14202
Tel: (716) 852-1300
Total Assets: $91,601
Total Debts: $1,336,643
Debtor's Eight Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
M & T Bank Personal Guaranty $659,670
P.O. Box 1302
Buffalo, NY 14240
Second Mortgage $35,500
Credit Line $356
Overdrawn Checking $148
Account
Deficiency on $1
Repossession
Mark J. Ogiony Promissory Note $474,293
445 North Forest Road
Williamsville, NY 14421
Loan $55,000
SallieMae Student Loan $19,338
P.O. Box 9500
Wilkea-Barre, PA 18773-9500
MBNA America Credit Card $15,880
P.O. Box 15137
Wilmington, DE 19886-5137
American Express $8,708
P.O. Box 360001
Fort Lauderdale, FL 33336-0001
LVNV Funding, LLC Credit Card $6,209
Discover Card Credit Card $4,281
Nextel Utility Bills $257
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Abraxas Petro ABP (22) 125 (6)
AFC Enterprises AFCE (44) 176 31
Alaska Comm Sys ALSK (29) 550 12
Alliance Imaging AIQ (29) 683 19
AMR Corp. AMR (1,272) 29,918 (1,924)
Atherogenics Inc. AGIX (114) 227 182
Bally Total Fitn BFT (1,430) 452 (430)
Biomarin Pharmac BMRN 46 488 322
Blount International BLT (134) 462 129
CableVision System CVC (2,468) 12,832 2,643
CCC Information CCCG (95) 112 34
Centennial Comm CYCL (1,069) 1,409 32
Cenveo Inc CVO (56) 1,045 157
Choice Hotels CHH (148) 274 (68)
Cincinnati Bell CBB (727) 1,888 33
Clorox Co. CLX (427) 3,622 (258)
Cogdell Spencer CSA 133 378 N.A.
Columbia Laborat CBRX 11 43 24
Compass Minerals CMP (59) 702 171
Crown Holdings I CCK 46 6,885 171
Crown Media HL CRWN (165) 1,229 93
Deluxe Corp DLX (71) 1,394 (264)
Denny's Corporation DENN (261) 505 (75)
Domino's Pizza DPZ (632) 387 (10)
Echostar Comm DISH (690) 8,935 1,438
Emeritus Corp. ESC (105) 725 (19)
Emisphere Tech EMIS (26) 13 (11)
Empire Resorts I NYNY (28) 57 (5)
Encysive Pharm ENCY (38) 119 82
Foster Wheeler FWLT (239) 2,032 (52)
Gencorp Inc. GY (88) 990 (28)
Graftech International GTI (175) 919 286
H&E Equipment HEES 204 667 13
Hollinger Int'l HLR (198) 1,038 (271)
I2 Technologies ITWO (65) 195 (20)
ICOS Corp ICOS (51) 248 121
IMAX Corp IMAX (25) 238 33
Incyte Corp. INCY (38) 399 189
Indevus Pharma IDEV (134) 86 50
J Crew Group Inc. JCG (489) 353 97
Koppers Holdings KOP (100) 556 150
Kulicke & Soffa KLIC 46 399 204
Labopharm Inc. DDS (8) 46 9
Level 3 Comm. Inc. LVLT (546) 8,284 713
Ligand Pharm LGND (212) 289 (144)
Lodgenet Entertainment LNET (70) 261 7
Maxxam Inc. MXM (661) 1,048 101
Maytag Corp. MYG (187) 2,954 150
McDermott Int'l MDR 50 3,160 277
McMoran Exploration MMR (38) 411 (1)
Movie Gallery MOVI (171) 1,248 (843)
NPS Pharm Inc. NPSP (129) 287 212
New River Pharma NRPH 3 96 82
Omnova Solutions OMN (6) 366 67
ON Semiconductor ONNN (224) 1,211 251
Qwest Communication Q (3,060) 21,126 (923)
Riviera Holdings RIV (30) 219 7
Rural/Metro Corp. RURL (93) 302 50
Sepracor Inc. SEPR (128) 1,284 906
St. John Knits Inc. SJKI (52) 213 80
Sulphco Inc. SUF 31 42 32
Sun Healthcare SUNH 1 531 (46)
Tivo Inc. TIVO (33) 143 19
USG Corp. USG (496) 6,522 1,956
Vertrue Inc. VTRU (24) 466 (78)
Weight Watchers WTW (42) 856 (69)
WR Grace & Co. GRA (548) 3,506 881
*********
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, Robert Max Victor M. Quiblat II,
Shimero R. Jainga, Joel Anthony G. 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.
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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 ***