/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/060810.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, August 10, 2006, Vol. 10, No. 189 Headlines A.B. DICK: Files Fifth Modified Chapter 11 Plan of Liquidation ABB LUMMUS: Has Until September 15 to Remove Civil Actions ACXIOM CORP: ValueAct Capital Managing Partner Joins Board ADSERO CORP: Receives $2.8 Million from Turbon Transaction AES CORPORATION: Earns $169 Million in 2006 Second Quarter ALASKA COMMS: June 30 Balance Sheet Upside-Down by $17.4 Million ALERIS INT'L: Moody's Puts Rating on Review for Possible Downgrade AMERICAN CELLULAR: Obtains New $250 Million Senior Credit Facility AMERICAN REPROGRAPHICS: S&P Raises Corporate Credit Rating to BB AMERISOURCEBERGEN CORP: Earns $188.8 Mil. in Fiscal Third Quarter ANCHOR GLASS: District Court Rules on Encore's Appeal ANCHOR GLASS: District Court Reverses Order on Naimoli Complaint ANCHOR GLASS: Asks Court to Disallow 43 Retiree Claims AOL LLC: Eyes 5,000 Job Cuts Over Next Six Months, Report Says ARAMARK CORP: Fitch Downgrades Sr. Unsecured Debt Ratings to BB- ARAMARK CORP: S&P Lowers Corporate Credit Rating to BB+ from BBB- ARCH CAPITAL: Reports $142.9 Million Net Income in Second Quarter ASARCO LLC: Wants to Hire Hydrometrics for Remediation Services ASARCO LLC: Seeks Court's Approval for EPA & Point Ruston Accords BAKER & TAYLOR: Moody's Rates $165 Million Senior Notes at B3 BALLY TOTAL: Names Ronald G. Eidell as Senior VP and CFO BALLY TOTAL: Moody's Holds $300 Million Sr. Notes' Rating at Ca BIO-RAD LAB: Generates $317.7 Mil. of Revenues in 2006 Second Qtr. BOYD GAMING: Purchases 3,447,501 Shares from Michael J. Gaughan BROOKS SAND: Ch. 11 Trustee Selling All Assets for at Least $6.7M BTAC MERGER: Moody's Withdraws B3 Rating on $200 Million Sr. Notes CABLEVISION SYSTEMS: DBRS Reviews Low-B Ratings on Senior Notes CARAUSTAR INDUSTRIES: Ceases Coated Recycled Paperboard Production CATHOLIC CHURCH: Portland Can't Use Endowment Fund to Pay Claims CATHOLIC CHURCH: Portland Settles Gripes on Appraisers' Retention CENTURY ALUMINUM: Earns $45.8 Million in Second Quarter of 2006 CHC HELICOPTER: Investing $30 Million in New Helicopter Facility CHENIERE ENERGY: Suppliers Accept CCTP Purchase Orders for Pipes CHOICE HOTELS: June 30 Balance Sheet Upside-Down by $118 Million CINEMARK USA: S&P Places B+ Corp. Credit Rating on Negative Watch COLUMBUS MCKINNON: Earns $5.6 Million in 2007 1st Fiscal Quarter COMMERCIAL CAPITAL: Fitch Affirms Class G Loan's Junk Rating COMMSCOPE INC: Andrew Merger Prompts Moody's to Review Ratings COMPLETE RETREATS: Gets Interim OK for Continued Utility Services COMPLETE RETREATS: Paying $140,000 of Foreign Creditors' Claims CORNING INC: Earns $514 Million in Second Quarter of 2006 CORRECTIONS CORPORATION: Board Approves 3-for-2 Stock Split DADE BEHRING: Earns $37.6 Million in Quarter Ended June 30 DANA CORP: Equity Panel Questions Need to Modify Retiree Benefits DANA CORP: Wants American Axle Settlement Pact Approved DELTA AIR: Asks Bankr. Court to Terminate Pilots Retirement Plan DELUXE CORP: Moody's Downgrades Senior Unsecured Ratings to Ba2 DIALOG GROUP: Restates 2005 Financial Statements DOBSON COMMUNICATIONS: Posts $8.4 Million Net Loss in 2nd Quarter ENTERPRISE PRODUCTS: Earns $126 Million in 2006 Second Quarter EVERGREEN INT'L: Receives Required Consents for 12% Senior Notes EXIDE TECH: Amends Proxy Statement for Aug. 22 Shareholders' Meet FALCONBRIDGE LTD: Board Urges Shareholders to Take Xstrata's Offer FASSBERG CONSTRUCTION: Files Second Amended Disclosure Statement FLYI INC: Creditor Objects to Employee Incentive Plan Extension FLYI INC: Can Sell Dulles Hangar Lease to MWAA for $7.6 Million FORD MOTOR: To Invest $1 Billion in Michigan Facilities FRESH DEL MONTE: Incurs $17.8 Million Net Loss in 2006 Second Qtr. GENERAL MOTORS: Likely to Reach Job Cuts Targets Ahead of Schedule GRUPO TMM: Shareholders to Approve $200 Million Securitization GSI GROUP: Earns $6.2 Million in Second Quarter Ended June 30 HOME PRODUCTS: Atlas Partners Reports Sale of Georgia Facility HONEY CREEK: MuniMae Asks Ct. to Determine Value of Apartments INTERSTATE BAKERIES: Wants Joint Interest Pact With Panel Approved INTERSTATE BAKERIES: Works on Overdue Annual & Quarterly Reports JOY GLOBAL: ERISA Didn't Preempt Beloit Workers' Severance Claims KAISER ALUMINUM: Salaried VEBA Trust Discloses 44% Equity Stake LAND O'LAKES: Earns $34.8 Million in the Second Quarter of 2006 LUCENT TECH: Gets Autorite Des Marches Financiers' Approval Visa MERIDIAN AUTOMOTIVE: Seeks Sept. 30 Plan-Filing Period Extension MILLENIUM NEW: Moody's Junks Proposed $40 Mil. Secured Term Loan MILLIPORE CORP: Earns $29.1 Million in Quarter Ended July 1 MITTAL STEEL: Moody's Confirms Ba1 Senior Unsecured Ratings MUSICLAND HOLDING: Paul Weiss Hired as Trade Vendors Panel Counsel NAVIGATOR GAS: Emerges from Chapter 11 Protection OMI CORP: Earns $131.8 Million in 2006 Second Quarter O'SULLIVAN IND: Hires BDO Seidman as Independent Accountants OVERSEAS SHIPHOLDING: Earns $60.2 Million in Second Quarter 2006 OWENS CORNING: Balance Sheet Upside Down by $7.82 Bil. at June 30 OWENS CORNING: Wants to Pay Back Asbestos Trustees & Panel Members PARAMOUNT RESOURCES: Moody's Junks Rating on $150 Million loan PERKINELMER INC: Earns $35.7 Million in Quarter Ended July 2 PERKINELMER INC: Board Declares $0.07 Dividend Per Share PETCO ANIMAL: Moody's Reviews Low-B Ratings for Possible Downgrade PLIANT CORP: Plans $35 Mil. Issue of 13% Senior Notes Due 2010 PLIANT CORP: Enters into $200-Mil. Credit Pact with Merrill Lynch PRESIDENT CASINOS: Taps Saul Leonard as Gaming Consultant PROGRESS SOFTWARE: Delinquent Form 10-Q Prompts Delisting Notice REFCO INC: Eight Refco LLC Claimants Can File Consolidated Claim REFCO INC: Customers Want Rule 2004 Examination on Refco F/X RENT-A-CENTER INC: S&P Puts BB+ Corp. Credit Rating on Neg. Watch RENT-WAY INC: Acquisition Plan Prompts Moody's to Review Ratings RF MICRO: Earns $14 Million in First Fiscal Quarter of 2007 SAINT VINCENTS: Plan-Filing Period Intact Until Further Ct. Ruling SAINT VINCENTS: Agrees to Pay $3.6 Mil. Cure Amount for CBAs SCHUFF INTERNATIONAL: S&P Affirms B- Rating & Revises Outlook SILICON GRAPHICS: Wants to Enter Into Backstop Agreements SILICON GRAPHICS: LGE Wants Stay Lifted to Pursue Dist. Ct. Action STERLING FINANCIAL: Earns $10.3 Million in Quarter Ended June 30 TATER TIME: Files 3rd Amended Disclosure Statement in Washington TENFOLD CORP: Posts $1.6 Million Net Loss in Second Quarter TOWER AUTOMOTIVE: Wants Exclusive Period Extended to October 25 UNITY VIRGINIA: Wants to Hire Mullins Harris as Special Counsel VESTA INSURANCE: District Court Appoints Subsidiaries' Liquidator VESTA INSURANCE: Judge Bennett Converts Case to Chapter 11 W.R. GRACE: Has Until September 11 to File Plan of Reorganization W.R. GRACE: Receives $2.54 Mil. from Mass. under Settlement Pact WINN-DIXIE: Judge Funk Approves Solicitation Procedures WINN-DIXIE: Inks Fifth Revision of DIP Financing Credit Agreement WORLD HEALTH: Carve-Out Does Not Violate Absolute Priority Rule XEROX CORP: Earns $260 Million in Second Quarter of 2006 XEROX CORP: Fitch Raises Trust Preferred Securities' Rating to BB YUKOS OIL: Russian Prosecutors Begin Bankruptcy Fraud Probe * Christopher Fagan Joins Seneca Financial as Financial Analyst * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* A.B. DICK: Files Fifth Modified Chapter 11 Plan of Liquidation -------------------------------------------------------------- A.B. Dick Company, nka Blake of Chicago, Corp., and its debtor- affiliates filed with the U.S. Bankruptcy Court for the Central District of California their Fifth Modified Chapter 11 Plan of Liquidation on Aug. 4, 2006. Terms of the Plan The Plan provides for the transfer of the Debtors' cash and other remaining assets, including all causes of action and avoidance claims, to liquidating trusts that will be formed for the benefit of holders of unsecured and subordinated claims. The Blake Liquidating Trust will be set-up to handle claims against Blake of Chicago. The Paragon Liquidating Trust will be set-up to handle claims against Paragon Corporate Holdings, Inc. As reported in the Troubled Company Reporter on Nov. 8, 2004, Presstek, Inc., bought substantially all of the Debtors' assets for $40 million. The Debtors are still in the process of selling their remaining assets including a facility in Rexdale, Ontario. Proceeds from the sale of Blake's assets will be used to satisfy claims against Blake's estate. Proceeds from the sale of Paragon's assets will be used to satisfy Paragon claims against Paragon. Holders of unsecured claims against Blake, owed $23,250,000, are projected to recover 25.8% of their claims. Subordinated claim holders will get any cash left over after unsecured claims are fully satisfied. Holders of Blake equity interests get nothing under the Plan. Holders of unsecured claims against Paragon, owed $6,974,000, are projected to recover 1.35% of their claims. Subordinated claim holders will get any cash left over after unsecured claims are fully satisfied. Holders of Paragon equity interests get nothing under the Plan. The Liquidating Trust will delegate the obligation to recover preference and fraudulent transfers and other recoverable assets to an oversight committee. The Oversight Committee will be composed of members of the Official Committee of Unsecured Creditors, plus any members the Court may appoint. Treatment of Claims Under the Debtor's Plan, all Allowed Administrative Expenses and Tax Claims will either be: a) paid in full on the Effective Date; or b) provided other treatment to which any holder and the Consolidated Estate will have agreed to in writing. Holders of Secured Claims will receive either: a) the collateral in which it has a valid, perfected, and enforceable security interest (subject to any senior interests in that collateral under applicable law or contract) in full satisfaction of Allowed Secured Claim; or b) the proceeds of the liquidation of the claim holder's collateral up to the full amount of the holder's Allowed Secured Claim unless otherwise ordered by the Bankruptcy Court or agreed to by the holder. If any Allowed Priority Claims have not been satisfied prior to the Effective Date, unless the holder of that Claim has agreed otherwise, the Disbursing Agent will pay all remaining Allowed Class 2 Claims in full on the Effective Date. MHR Fund holding MHR Monitoring Note Claim will receive in full satisfaction a Pro Rata share of any distribution made by the Blake Creditor Trust to holders of Allowed Class 3 Claims. Holders of 2001 Note Claims will be entitled to their Pro Rata share of any distributions after the MHR Monitoring Note has been satisfied. General Unsecured Claims Holders will receive a Pro Rata share in full satisfaction of their claims. A full-text copy of A.B. Dick's Modified Chapter 11 Plan of Liquidation is available for a fee at: http://www.researcharchives.com/bin/download?id=060809224009 Headquartered in Niles, Illinois, A.B. Dick Company -- http://www.abdick.com/-- is a global supplier to the graphic arts and printing industry, manufacturing and marketing equipment and supplies for the global quick print and small commercial printing markets. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Del. Lead Case No. 04-12002) on July 13, 2004. Frederick B. Rosner, Esq., at Jaspan Schlesinger Hoffman, LLP, and H. Jeffrey Schwartz, Esq., at Benesch, Friedlander, Coplan & Aronoff, LLP, represent the Debtors in their restructuring efforts. Richard J. Mason, Esq., at McGuireWoods, LLP, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed over $50 million in estimated assets and over $100 million in estimated liabilities. A.B. Dick Company changed its name to Blake of Chicago, Corp., on Dec. 8, 2004, as required by the terms of the APA with Presstek. ABB LUMMUS: Has Until September 15 to Remove Civil Actions ---------------------------------------------------------- The Honorable Judith K. Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware extended, through Sept. 15, 2006, the period within which ABB Lummus Global Inc. may remove actions pursuant to Title 28, Section 1452 of the U.S. Code and Federal Rules of Bankruptcy Procedure 9006 and 9027. The Debtor does not anticipate that it will seek to remove any civil actions, but asked for an extension to preserve its rights to remove any civil action pending as of its bankruptcy filing. Headquartered in Houston, Texas, ABB Lummus Global Inc. -- http://www.abb.com/lummus/-- offers advanced process technologies, project management, engineering, procurement and construction-related services for the oil and gas, petroleum refining and petrochemical process industries. The group oversees the construction of process plants and offshore facilities. The company filed for chapter 11 protection on Apr. 21, 2006 (Bankr. D. Del. Case No. 06-10401). Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart Nicholson Graham LLP, represents the Debtor. Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl Young, Jones & Weintraub, LLP, serves as the Debtor's co-counsel. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it estimated more than $100 million in assets and debts. ACXIOM CORP: ValueAct Capital Managing Partner Joins Board ---------------------------------------------------------- Acxiom Corporation and ValueAct Capital have reached an agreement, under which ValueAct Capital managing partner Jeffrey W. Ubben will join the Company's board. The agreement ends ValueAct Capital's attempt to elect its three- person alternative slate to the Company's board of directors. Under the terms of the agreement: -- ValueAct Capital will vote its shares in favor of the Company's slate of board nominees - chairman and company leader Charles D. Morgan, Ann Die Hasselmo, William J. Henderson and Michael J. Durham - and terminates its proxy solicitation. -- Mr. Ubben has been appointed to the Company's board of directors for a two-year term, effective immediately, and will become a member of the board's corporate governance committee and the newly created finance committee. -- A second, ValueAct Capital selected, independent candidate for the board will be nominated for a two-year term, increasing the size of the Company's board of directors to 11. Mr. Ubben and the second candidate will be eligible for election to three-year terms in 2008. The Company also disclosed that it seeks to repurchase $300 million of it shares, in the range of $25 to $27, per share through a modified "Dutch auction" self-tender offer. Mr. Ubben, a ValueAct managing partner, said, "ValueAct Capital has been investing in Acxiom since 2003, and today is the company's largest shareholder, because we understand the value the company delivers and its competitive advantage in the marketplace and are committed to helping it deliver even greater value," About ValueAct Capital ValueAct Capital(R), with approximately $3.7 billion in investments, seeks to make active strategic-block value investments in a limited number of public companies. The Principals have demonstrated expertise in sourcing investments in companies they believe to be fundamentally undervalued, and then working with management and/or the company's board to implement strategies that generate superior returns on invested capital. ValueAct concentrates primarily on acquiring significant ownership stakes in publicly traded companies, and a select number of control investments, through both open-market purchases and negotiated transactions. About Acxiom Corporation Based in Little Rock, Arkansas, Acxiom Corporation (Nasdaq: ACXM) -- http://www.acxiom.com/-- integrates data, services and technology to create and deliver customer and information management solutions for many of the largest, most respected companies in the world. The core components of Acxiom's innovative solutions are Customer Data Integration technology, data, database services, IT outsourcing, consulting and analytics, and privacy leadership. Founded in 1969, Acxiom has locations throughout the United States, Europe, Australia and China. * * * Standard & Poor's Ratings Services assigned its 'BB' long term issuer ratings on Acxiom, effective Aug. 8, 2006. The outlook is Stable. ADSERO CORP: Receives $2.8 Million from Turbon Transaction ---------------------------------------------------------- ADSERO Corp. has closed a previously announced transaction with Turbon in relation to selling certain customer accounts and related inventory and fixed assets. Turbon paid an aggregate of approximately $2,800,000 of which approximately $1,920,000 reduced the outstanding balance due to Turbon under the supply credit facility between the Company and Turbon. The balance of the purchase price in the amount of approximately $880,000 was paid to National Bank of Canada to reduce the Company's outstanding loan balance with National Bank of Canada. The Company also reported that it has signed a term sheet, with a U.S. based fund, for a financing in the amount of $2.5 million in order to replace the current senior lender and provide working capital. The term sheet is subject to due diligence and is targeted to close today. In addition, the Company also said it has signed a standstill agreement with its senior lender to extend the time to pay the loan out in full until tomorrow, August 11. ADSERO Corp. (OTCBB:ADSO) -- http://www.adserocorp.com/--, through its wholly owned subsidiary Teckn-O-Laser Global Company, is a North American printer cartridge re-manufacturer. The company manufactures and distributes re-manufactured toner cartridges and inkjet cartridges. These products are sold to a variety of channels such as distributors and retail office supply stores, both domestically and internationally. Going Concern Doubt Marcum & Kliegman, LLP, in New York, raised substantial doubt about ADSERO Corp.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring operating losses and accumulated deficit of $19,376,401. AES CORPORATION: Earns $169 Million in 2006 Second Quarter ---------------------------------------------------------- The AES Corporation's net income for the second quarter of 2006 increased 99% to $169 million, compared to $85 million in the prior year quarter. Revenues for the second quarter of 2006 increased 15% to $3 billion, compared to $2.6 billion for the same quarter last year. Net cash from operating activities increased 32% to $434 million in the second quarter, compared to $328 million last year, while free cash flow increased 34% to $243 million compared to $182 million last year. Net income for the six-months ended June 30, 2006 was $520 million on revenues of $6 billion, compared to net income of $209 million on revenues of $5.3 billion for the same period in 2005. Net cash from operating activities for the six months ended June 30, 2006 was $977 million, versus $845 million for the same period in the prior year. "We had a strong quarter and AES continues to perform well," Paul Hanrahan, president and chief executive officer, said. "Earnings continued to benefit from solid operating price and volume trends. The good earnings gains were also reflected in solid cash flow growth, consistent with our guidance. In the area of business development, we increased our presence in alternative energy by expanding into some of the fastest growing markets for wind generation in the U.S. and Europe, and through the recent creation of AES AgriVerde -- our first significant business venture in the greenhouse gas offset production sector -- which should allow us to capitalize on the growing market for greenhouse gas emissions reductions." Results for the second quarter reflect the Company's plans to sell its 140 MW Indian Queens power generation plant in the U.K. and Eden, a regulated utility in Argentina. The operations have been recorded as discontinued operations in the second quarter 2006 results. AES Corp. (NYSE:AES) -- http://www.aes.com/-- is a global power company. The Company operates in 26 countries on five continents. Generating 44,000 megawatts of electricity through 122 power facilities, the Company's 14 regulated utilities amass annual sales of over 82,000 GWh. * * * As reported in the Troubled Company Reporter on May 25, 2006, Fitch affirmed The AES Corp.'s Issuer Default Rating at 'B+'. Fitch also affirmed and withdrew the ratings for the company's junior convertible debt. Fitch said the Rating Outlook for all remaining instruments is stable. As reported in the Troubled Company Reporter on March 31, 2006, Standard & Poor's Ratings Services raised its corporate credit rating on energy company The AES Corp. to 'BB-' from 'B+'. S&P said the outlook is stable. As reported in the Troubled Company Reporter on Jan. 11, 2006, Moody's affirmed the ratings of The AES Corporation, including its Ba3 Corporate Family Rating and the B1 rating on its senior unsecured debt. Moody's said the rating outlook is stable. ALASKA COMMS: June 30 Balance Sheet Upside-Down by $17.4 Million ---------------------------------------------------------------- Alaska Communications Systems Group, Inc.'s balance sheet at June 30, 2006, showed total assets of $565.2 million and total liabilities of $582.6 million, resulting in a stockholders' deficit of $17.4 million. The Company reported a $29.1 million stockholders' deficit at March 31, 2006. The Company posted net profit of $13.5 million from total operating revenues of $85 million for the three months ended June 30, 2006, compared to a net loss of $312,000 on total operating revenues of $81 million for the same period in 2005. For the six-months period ending June 30, 2006, the Company reported a net loss of $15.96 million on total operating revenues of $167.7 million, versus net loss of $44 million from total operating revenues of $158.6 million for the same period in the prior year. A full-text copy of Alaska Communication's quarterly report is available for free at http://ResearchArchives.com/t/s?f1d Alaska Communications -- http://www.alsk.com/-- is an integrated communications provider in Alaska, offering local telephone service, wireless, long distance, data, and Internet services to business and residential customers. ALERIS INT'L: Moody's Puts Rating on Review for Possible Downgrade ------------------------------------------------------------------ Moody's Investors Service placed Aleris International Inc.'s ratings under review for possible downgrade. This review is prompted by the company's August 8 announcement of a merger agreement with Texas Pacific Group. The agreement provides for TPG to acquire Aleris in a transaction valued at roughly $3.3 billion, including existing debt to be assumed or repaid of $1.6 billion. Ratings placed under review: On Review for Possible Downgrade: Issuer: Aleris Deutschland Holding GMBH * Senior Secured Bank Credit Facility, Placed on Review for Possible Downgrade, currently Ba3 Issuer: Aleris International, Inc. * Corporate Family Rating, Placed on Review for Possible Downgrade, currently B1 * Senior Secured Bank Credit Facility, Placed on Review for Possible Downgrade, currently Ba3 Outlook Actions: Issuer: Aleris Deutschland Holding GMBH * Outlook, Changed To Rating Under Review From Negative Issuer: Aleris International, Inc. * Outlook, Changed To Rating Under Review From Negative Moody's review will focus on the capital structure of Aleris post merger, the additional debt that might be incurred to finance the transaction and the company's debt servicing capabilities. Moody's review will also focus on the strategic business impact that might result and the growth objectives of the company going forward. The transaction, which remains subject to regulatory, shareholder and other approvals, is not expected to close until early 2007. Aleris, headquartered in Beachwood, Ohio, had revenues of $2.4 billion in 2005. LTM March 31, 2006 pro-forma revenues for the acquisitions made by Aleris in late 2005 and for the acquisition of select aluminum assets of Corus Group plc were $4.7 billion. AMERICAN CELLULAR: Obtains New $250 Million Senior Credit Facility ------------------------------------------------------------------ American Cellular Corporation, a subsidiary of Dobson Communications Corporation, has entered into a senior secured credit facility that enables it to borrow up to $250 million from a group of lenders. Borrowings under the credit facility will bear interest at a rate per annum equal to LIBOR plus an initial 2.25% spread. The new senior secured credit facility consists of: -- A 5-year, $50.0 million senior secured revolving credit facility; -- A 7-year, $100.0 million senior secured multiple draw term loan facility; and -- A 7-year, $100.0 million senior secured delayed draw term loan facility. The credit facility is guaranteed by ACC Holdings, LLC, American Cellular's direct parent, and by each of American Cellular's direct domestic subsidiaries (other than Alton CellTel Co. Partnership) and is secured by a first priority security interest in substantially all of the tangible and intangible assets of American Cellular, its direct domestic subsidiaries (other than Alton CellTel Co. Partnership) and ACC Holdings, LLC, as well as by a pledge of American Cellular's capital stock and the capital stock of its subsidiaries. American Cellular intends to use borrowings under the credit facility for general corporate purposes. The multiple draw term loan facility is available as: (i) $50 million was drawn down at the closing of the credit agreement; and (ii) the remaining $50 million may be drawn no later than Sept. 30, 2006. The delayed draw term loan facility may be drawn in as many as three draws prior to the first anniversary after the credit agreement closing. Under specified terms and conditions, including covenant compliance, the amount available under the credit facility may be increased by an incremental facility so long as: (i) American Cellular's ratio of consolidated secured debt to EBITDA does not exceed 2.75 to 1.00; and (ii) American Cellular's ratio of consolidated debt to EBITDA does not exceed 6.50 to 1.00. Under the credit facility, there are mandatory scheduled principal or amortization payments of the term loan facilities and no reductions in commitments under the revolving credit facility. Each term loan facility will amortize in an amount equal to 0.25% per quarter, starting with the quarter ending Dec. 31, 2006 and quarterly through June 30, 2013, with the balance due at maturity. The revolving credit facility is scheduled to mature in August 2011 and the term loan facilities are scheduled to mature in August 2013. However, if American Cellular has not refinanced or repaid its 10% Senior Notes by February 1, 2011, then the revolving credit facility and the term loan facilities will mature on Feb. 1, 2011. American Cellular is also required to make mandatory reductions of the credit facilities with the net cash proceeds received from certain issuances of debt and upon any material sale of assets by it and its subsidiaries, subject to an 18-month reinvestment provision. Borrowings are subject to American Cellular's satisfaction of various conditions at the time of borrowing. The credit agreement contains customary financial covenants and events of default. American Cellular Corporation is a rural and suburban provider of wireless communications services in the United States. American Cellular Corporation provides wireless telephone service in portions of Illinois, Kansas, Kentucky, Michigan, Minnesota, New York, Ohio, Oklahoma, Pennsylvania, West Virginia and Wisconsin. American Cellular Corporation and ACC Holdings, LLC are owned by Dobson Communications. * * * As reported in the Troubled Company Reporter on July 25, 2006, Moody's Investors Service assigned a B1 rating to American Cellular Corporations' proposed senior secured bank facility. At the same time, Moody's affirmed all existing ratings of ACC, Dobson Cellular Systems, Inc. and their parent company, Dobson Communications Corporation, including Dobson's B3 Corporate Family Rating and SGL-2 speculative grade liquidity rating. The outlook is stable. AMERICAN REPROGRAPHICS: S&P Raises Corporate Credit Rating to BB ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit and senior secured ratings on Glendale, California-based American Reprographics Co. LLC to 'BB' from 'BB-'. The outlook is stable. "The upgrade reflects the company's meaningfully improved credit measures, due to continued debt reduction, and our expectation that credit measures will remain consistent with the new rating over the commercial construction cycle, notwithstanding the company's aggressive acquisition strategy," said Standard & Poor's credit analyst Emile Courtney. EBITDA for the 12 months ended June 30, 2006, was approximately $120 million, up 25% compared with the prior 12-month period. This was a result of increased commercial construction spending and acquisitions completed in 2005. The company's refinancing of its first-lien credit facility in December 2005 resulted in a decrease of annual interest expense by approximately $8 million. Given expectations for growth in the commercial construction industry in 2006, Standard & Poor's expects ARC's credit measures to continue strengthening over the intermediate term. AMERISOURCEBERGEN CORP: Earns $188.8 Mil. in Fiscal Third Quarter ----------------------------------------------------------------- AmerisourceBergen Corporation reported operating revenue of $14.4 billion for its fiscal third quarter ended June 30, 2006, compared to $12.6 billion for the same period last year. Consolidated operating income in the fiscal 2006 third quarter increased 12% to $188.8 million. Consolidated operating income was positively impacted by a gain in gross profit of $4.6 million from pharmaceutical manufacturer antitrust litigation cases. "Our June quarter results were excellent with pharmaceutical distribution continuing its strong performance and PharMerica improving," said R. David Yost, AmerisourceBergen's Chief Executive Officer. "Our record operating revenue was again above our expectations, and our outstanding earnings per share performance was driven by solid results in pharmaceutical distribution, including continued strong growth in our specialty business, improvement in PharMerica and our significant reduction in interest expense. With nearly $1.7 billion in cash, our balance sheet continues to be strong and our financial flexibility significant." The Company repurchased $374 million of its stock in the June quarter, and in the first nine months of fiscal 2006 has repurchased $506 million of its stock, exceeding its target for the fiscal year of $400 million to $450 million. Cash generated from operations in the third quarter of fiscal year 2006 was $178 million and in the first nine months of fiscal 2006 was $881 million. For the first nine months of fiscal 2006, AmerisourceBergen's operating revenue was $42 billion compared to $37 billion for the same period last year, a 13% increase. Consolidated operating income in the first nine months of the fiscal year increased 15% over the previous fiscal year's nine- month period to $553.4 million primarily due to strong revenue growth in both segments. "In the quarter, another solid performance in Pharmaceutical Distribution was aided by improving performance in PharMerica," said Kurt J. Hilzinger, AmerisourceBergen's President and Chief Operating Officer. "Drug Corporation's revenue growth was again driven by our larger, lower-margin customers and new business, while contributions from our fee-for-service agreements and generic pharmaceuticals programs continued to be the primary drivers of gross margin. Our Canadian operations also contributed to performance, and AmerisourceBergen Canada announced an agreement to purchase Rep-Pharm, Inc., a distributor whose addition is expected to increase annual Canadian operating revenue to $1.4 billion, making the Company the second largest distributor in Canada. "Optimiz(R), our program to enhance the efficiency of our distribution center network, continued to improve our cost structure, and the last of six new large distribution centers under the program became operational in Bethlehem, PA, during the quarter. Our customer-focused Transform program to improve value to the customer and deliver better margins for the Drug Corporation also aided performance. "Our Specialty Group, which had more than $9 billion in revenue over the last twelve months, continued to grow faster than the broader pharmaceutical marketplace. Its market-leading oncology businesses continued their strong revenue and earnings performance, while the Group's other distribution businesses benefited from, among other things, new distribution agreements for biotech drugs. "The Packaging Group continued to expand its growing pipeline of contract packaging programs for manufacturers and to broaden its compliance packaging solutions for healthcare providers. The integration of Brecon Pharmaceuticals Limited, a contract and clinical trials packager located in Wales, United Kingdom, which was acquired in the previous quarter, is proceeding smoothly. Brecon expands the Group's geographical reach to include packaging for the European and Asian markets. "Our PharMerica segment improved in the third quarter even as its long-term care pharmacy business continues to be in a transition year due to the implementation of Medicare Part D. Revenues increased 8% over the previous fiscal year's third quarter, due to the long-term care business's ability to capitalize on its national footprint and deploy new technology offerings to customers." "We expect the fiscal year 2006 operating revenue growth to be in a range of 12% to 13%, an increase from our previous range of 10% to 12%, which assumes 9% to 11% growth in the fiscal fourth quarter," said Mr. Yost. "Our expected slower growth in the coming quarter partially reflects the loss of two accounts totaling $1.5 billion in annualized revenue which moved to another distributor sooner than expected after they were acquired by a company supplied by a competitor. "We also are increasing, as well as narrowing, the range on our expectations for diluted earnings per share on a GAAP basis in the 2006 fiscal year to a range of $2.16 to $2.24 from the previous range of $2.06 to $2.21. This fiscal 2006 guidance assumes a fiscal fourth quarter range of $0.51 to $0.59 with no net impact from special items in the quarter. The new fiscal year guidance range also reflects the net benefit of $0.11 from special items including litigation gains; facility consolidations, severance and other costs; and the fiscal second quarter tax adjustments and investment gains, all recognized in the first nine months of fiscal 2006. Expectations for fiscal 2006 diluted earnings per share continue to include the impact of $0.04 to $0.05 for equity compensation expense. For fiscal 2006, we expect operating margins from the Pharmaceutical Distribution segment to be at the lower end of our previously stated range of 1.15% to 1.25% due to customer mix. "Our expectation for cash flow from operations for fiscal 2006 is being raised to a range of $700 million to $800 million from the previous estimate of $600 million to $700 million. "We repurchased $506 million of our stock during the first nine months of fiscal 2006, exceeding our target for the fiscal year. With $244 million remaining on our current share repurchase program, we expect to continue to be active, depending on market conditions, during the fourth fiscal quarter." Mr. Yost concluded, "As is our normal practice, we will provide guidance for fiscal year 2007 in early November when we release the results for fiscal year 2006." Headquartered in Valley Forge, Pa., AmerisourceBergen Corp. (NYSE:ABC) -- http://www.amerisourcebergen.com/-- is one of the world's largest pharmaceutical services companies serving the United States and Canada. Servicing both pharmaceutical manufacturers and healthcare providers in the pharmaceutical supply channel, the Company provides drug distribution and related services designed to reduce costs and improve patient outcomes. AmerisourceBergen's service solutions range from pharmacy automation and pharmaceutical packaging to pharmacy services for skilled nursing and assisted living facilities, reimbursement and pharmaceutical consulting services, and physician education. With more than $59 billion in annualized revenues, and employs more than 13,000 people. AmerisourceBergen is ranked #27 on the Fortune 500 list. * * * As reported in the Troubled Company Reporter on June 5, 2006, Moody's Investors Service upgraded AmerisourceBergen Corporation's Corporate Family Rating to Ba1 from Ba2. The Company's rating for its senior unsecured notes was upgraded to Ba1 from Ba2. The speculative grade liquidity rating of SGL-1 is affirmed. Moody's said the rating outlook is stable. ANCHOR GLASS: District Court Rules on Encore's Appeal ----------------------------------------------------- Within the course of Anchor Glass Container Corporation' 2002 bankruptcy case, Encore Glass, Inc., filed a claim for $6,838,905. Anchor Glass objected to Encore's claim. Encore subsequently filed an appeal to the United States District Court for the Middle District of Florida, Tampa Division, on the Bankruptcy Court's order granting Anchor Glass' Motion for Summary Judgment as to the contested matter. Encore argued that the Bankruptcy Court erred by failing to properly apply California law. By ignoring California law, Encore asserted that the Bankruptcy Court erred in determining that the Amended Agreement was an unenforceable indefinite quantity supply contract. Encore further argued that the Bankruptcy Court erroneously concluded that the Amended Agreement restricted manufacture of the product at the Lavington Plant and that the sale of the Lavington Plant excused Anchor Glass' performance under the Amended Agreement. The Honorable Susan Bucklew finds that the Bankruptcy Court's legal conclusions adhere to basic principles of contract law and would have been the same under California law. Judge Bucklew also affirms the Bankruptcy Court's findings that: -- the Amended Agreement is not a requirements contract. Rather, the Amended Agreement is an unenforceable quantities contract since the parties have not contracted to buy or sell a readily ascertainable quantity; and -- Anchor Glass cannot perform under the Amended Agreement because of the sale of the Lavington Plant. Judge Bucklew points out that the sale of the Lavington Plant is beyond Anchor Glass' control. Accordingly, Judge Bucklew: (a) denies Encore's request for oral argument; (b) affirms the Bankruptcy Court's decision; and (c) directs the Clerk of the Court to close the case. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents Anchor Glass in its restructuring efforts. Edward J. Peterson, III, Esq., at Bracewell & Guiliani, represents the Official Committee of Unsecured Creditors. When Anchor Glass filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. The Court confirmed Anchor Glass' second Amended Plan of Reorganization on April 18, 2006. Anchor Glass emerged from Chapter 11 protection on May 3, 2006. (Anchor Glass Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: District Court Reverses Order on Naimoli Complaint ---------------------------------------------------------------- The Honorable James S. Moody, Jr., of the U.S. District Court for the Middle District of Florida, Tampa Division, reversed an order handed by the U.S. Bankruptcy Court for the Middle District of Florida in Tampa dismissing a complaint filed by Vincent J. Naimoli. The District Court remands the Plaintiffs' cause for further proceedings. Mr. Naimoli, individually and on behalf of a class of retirees, filed a complaint in the Bankruptcy Court against: * Anchor Glass Container Corporation, * The Service Retirement Plan Committee, * The Retirement Plan for Salaried Employees Committee, * Mark A. Kirk, * Carl H. Young III, * Jeffrey Tennyson, * Robert McGrew, and * John Ghaznavi. Each of the Plaintiffs was a participant in a retirement benefit plan for salaried workers. Mr. Naimoli was the president and chief operating officer of the old Anchor Glass until 1989. At retirement, his pension benefit should have been $6,488 per month. When Pension Benefit Guaranty Corporation took over the Salaried Employees Plans, Mr. Naimoli received only $3,514 per month. Rebecca H. Steel, Esq., in Tampa, Florida relates that in 1989, Vitro S.A. acquired substantially all of the original Anchor Glass assets. After Vitro's acquisition, old Anchor Glass did not prosper and subsequently filed for a Chapter 11 bankruptcy petition in 1996 in the United States Bankruptcy Court for the District of Delaware. During that period, in addition to the Salaried Employees Plan, Anchor Glass maintained benefit plans for its hourly workers. The Hourly Workers Plans were heavily under funded by the end of 1996. In 1997, substantially all of the old Anchor Glass assets were sold to a group of purchasers, forming Anchor Glass Container Corporation. Mr. Ghaznavi became the chairman, chief executive officer and director of the new Anchor Glass. The Hourly Workers Plans remained under funded at the time the old Anchor Glass was sold, Ms. Steele relates. Thus, Anchor Glass and Mr. Ghaznavi needed to develop a plan to reduce their pension obligations. Subsequently, Anchor Glass decided to merge the Salaried Employees Plans and the Hourly Workers Plans in 1998. The Employee Retirement Income Security Act of 1974 and the Internal Revenue Code mandate that a pension plan may not merge one defined benefit plan with another unless each participant would receive the same benefit immediately after the merger that the participant would have received if the plan had terminated on the date of the merger, Ms. Steel points out. These statutes required the Plans to calculate the amount of participants' benefits on a termination basis. However, Anchor Glass did not use the PBGC rates in calculating the termination basis of benefits. Instead, Anchor Glass used discount rates that unreasonably made the plans seem more fully funded than they actually were, Ms. Steel says. In July 2002, the Plans were terminated due to under funding problems. PBGC assumed responsibility for the Plans. PBGC estimated that the Plans had $336,000,000 in assets to cover approximately $555,000,000 in benefit liabilities. Under the Complaint, Mr. Naimoli asserted three causes of action against Anchor Glass and its officers and the Plans Committees: 1. The Defendants breached their fiduciary duties by: * failing to adequately fund the Plans; * using unreasonable actuarial assumptions during the merger of the Plans; * using the assets of the Salaried Employees Plans for Anchor Glass' corporate interests and Mr. Ghaznavi's personal financial enrichment; and * related acts and omissions. 2. Anchor Glass and Mr. Ghaznavi violated their duties to comply with ERISA requirements regarding plan mergers by purporting to merge the Salaried Employees Plan into the Hourly Workers Plans when they knew that they would cause the Hourly Workers Plans to fail to fulfill its pension obligations. 3. The Defendants failed to provide plan documents as requested by Mr. Naimoli. In June 2005, the Bankruptcy Court dismissed the Naimoli Complaint. In September 2005, Mr. Naimoli filed an appeal to the United States District Court for the Middle District of Florida, Tampa Division, on the Bankruptcy Court's order granting dismissal of the Naimoli Complaint and the order denying a motion for reconsideration and rehearing. District Court Rules on Appeal District Court Judge James Moody notes that the Plaintiffs contended that the plan fiduciaries had overfunded the salaried plan and underfunded two other plans for hourly workers. Basically, the Plaintiffs argued that the Salaried Plan participants have an available remedy to avoid any losses that might be occasioned by the underfunded status created by the merger of the plans. On the other hand, the Defendants argued that Anchor Glass was not a proper party to the Naimoli Complaint because once the plans were merged and then terminated by the PBGC, neither Anchor Glass nor any of the Defendants had any authority or power to affect the Plaintiffs' retirement benefits because the PBGC now controls the retirement benefits. The District Court holds that granting the PBGC "the power to commence, prosecute or defend on behalf of the plan any suit or proceeding involving the plan" does not eliminate a participant's existing right to bring suit, a right specifically granted to plan participants under Section 1132(a)(2) of the Labor Code. The District Court opines that while it is true that the decision to merge plans may be an administrative decision rather than a fiduciary one, it does not avoid a fiduciary's responsibility to exercise loyalty to plan participants and protect their benefits. The Naimoli Complaint asserted that the Defendants continue to underfund the plan after the merger, which if proven would constitute additional breaches of fiduciary duty, Judge Moody says. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents Anchor Glass in its restructuring efforts. Edward J. Peterson, III, Esq., at Bracewell & Guiliani, represents the Official Committee of Unsecured Creditors. When Anchor Glass filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. The Court confirmed Anchor Glass' second Amended Plan of Reorganization on April 18, 2006. Anchor Glass emerged from Chapter 11 protection on May 3, 2006. (Anchor Glass Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Asks Court to Disallow 43 Retiree Claims ------------------------------------------------------ Certain retirees and beneficiaries filed 43 claims arising from Anchor Glass Container Corporation's life insurance policy, medical insurance premium, pension payments and salaried employees' savings plan. Reorganized Anchor Glass asserts that the Retiree Claims are invalid for one or more of these reasons: (a) The 2nd Amended Plan of Reorganization did not affect the life insurance policy, the medical premium payments and the salaried employees' savings plan; (b) The claimants receive pension payments from Pension Benefit Guaranty Corporation; or (c) The retirement benefits agreements with some claimants were rejected by the company. Several of the claimants also filed multiple claims asserting different statuses, Robert A. Soriano, Esq., at Shutts & Bowen LLP, in Tampa, Florida, notes. Accordingly, Reorganized Anchor Glass asks the U.S. Bankruptcy Court for the Middle District of Florida to disallow 43 Retiree Claims. Among the largest Retiree Claims are: Claimant Claim No. Claim Amount -------- --------- ------------ Clifford Jones 1581 $1,879,085 Larry Jones 1161 93,776 Elizabeth Rondi 1048 81,183 Francis Wishart 1043 55,680 Geneva Poole 1507 44,660 Cyril Kurtz 1231 20,000 Judith Willison 35 17,000 Paul Willison 36 17,500 Ernest Enocksen (deceased) 194 16,000 Sharon Enocksen 195 16,000 Lucille Podlucky 504 12,500 Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents Anchor Glass in its restructuring efforts. Edward J. Peterson, III, Esq., at Bracewell & Guiliani, represents the Official Committee of Unsecured Creditors. When Anchor Glass filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. The Court confirmed Anchor Glass' second Amended Plan of Reorganization on April 18, 2006. Anchor Glass emerged from Chapter 11 protection on May 3, 2006. (Anchor Glass Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) AOL LLC: Eyes 5,000 Job Cuts Over Next Six Months, Report Says -------------------------------------------------------------- AOL LLC is expected to reduce more than a quarter of its current 19,000 head count as it struggles to transform itself into a major broadband provider, Antony Savvas writes for ComputerWeekly.com. According to the report, around 5,000 employees will be affected by the planned job cuts that will hit AOL operations worldwide over the next six months. The redundancies were announced during a Web cast last week but did not specify what positions would be eliminated, Megan Kuhn of Leesburg Today relates. Mr. Savvas says AOL is expected to sell its European internet access business as it concentrates more on offering free services to help generate greater advertising revenues to its web portal business. According to Ms. Kuhn, AOL and France-based Neuf Cegetel are negotiating the sale of AOL's French Access Services, which includes its narrowband and broadband Internet Access operations and a customer service in Marseille. The transaction is expected to close by the end of the year, the paper relates. Headquartered in Dulles, Virginia, AOL LLC (fka America Online, Inc.) is an online service provider, bulletin board system, and media company operated by Time Warner. In June, the company launched portals in the UK, France and Germany. AOL also offers access and Web services in Canada. In 2000, AOL and Time Warner announced plans to merge, in a deal approved by the Federal Trade Commission on Jan. 11, 2001. Since its merger with Time Warner, the value of AOL has dropped from its US$200 billion high and it has seen similar losses among its subscription rate. ARAMARK CORP: Fitch Downgrades Sr. Unsecured Debt Ratings to BB- ---------------------------------------------------------------- Fitch downgraded the Issuer Default Rating and senior unsecured debt ratings for both ARAMARK Corporation and its wholly owned subsidiary, Aramark Services, Inc., to 'BB-' from 'BBB'. The ratings remain on Rating Watch Negative. The company disclosed that its board of directors agreed to accept a management buyout offer from a group of investors led by chairman and CEO, Joseph Neubauer, for $33.80 per share in cash. The deal is still subject to stockholder and regulatory approval. The transaction is to be financed through equity commitments by the investors, as well as approximately $6.3 billion of debt financing led by Goldman Sachs Credit Partners L.P. and J.P. Morgan Securities, Inc. The transaction is valued at approximately $8.3 billion, including the assumption of approximately $2.0 billion in debt. Given the information available at this time, Fitch believes the rating will be no higher than 'BB-' and could likely be downgraded further; a multiple-notch downgrade upon closing of the transaction is possible. The resolution of Fitch's Rating Watch will be determined by an evaluation of the ultimate financing of the purchase price, overall mix of securities in the capital structure, and free cash flow generating ability of the post-acquired entity. As part of its rating evaluation, Fitch anticipates reviewing the company's financial and operating strategies with ARAMARK's management. As this transaction demonstrates, existing language in the 2002 indenture does not protect bondholders from a change- in-control event and does not limit the company's ability to incur additional indebtedness. The indentures do have covenants that have limitations on secured debt provisions. ARAMARK CORP: S&P Lowers Corporate Credit Rating to BB+ from BBB- ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Philadelphia-based ARAMARK Corp. and its subsidiary, Aramark Services Inc., including its corporate credit rating to 'BB+' from 'BBB-'. All ratings remain on CreditWatch with negative implications where they were placed on May 1, 2006, following an announcement that ARAMARK's board of directors had received a proposal from a group of investors led by its Chairman and CEO, Joseph Neubauer, to acquire all of the outstanding shares of the company, for $32 per share in cash. This proposal included commitments from certain investment banking firms stating that they were confident about raising the approximately $6.25 billion of debt financing necessary to complete the transaction. The downgrade reflects Standard & Poor's assessment that ARAMARK no longer possesses an investment-grade financial policy following today's announcement that it has signed a definitive merger agreement under which a group of investors including Joseph Neubauer will acquire ARAMARK for $33.80 per share, plus the assumption or repayment of approximately $2.0 billion of debt in a transaction valued at approximately $8.3 billion. The CreditWatch listing reflects Standard & Poor's expectation that leverage for ARAMARK will increase substantially after effecting the acquisition. While financing details have yet to be disclosed, a significant amount of the transaction is likely to be financed with debt, and the corporate credit rating is likely to fall to the 'B' rating category. The transaction, which is expected to be completed by late 2006 or early 2007, is subject to receipt of stockholder and regulatory approvals, as well as satisfaction of other customary closing conditions. To resolve the CreditWatch listing, Standard & Poor's will continue to monitor developments, will meet with management to discuss financial policies and operating strategies, and evaluate the ultimate financing and terms of this going-private transaction, including the implications to ARAMARK's existing senior unsecured debt rating. ARCH CAPITAL: Reports $142.9 Million Net Income in Second Quarter ----------------------------------------------------------------- Arch Capital Group Ltd. filed its financial results for the second quarter ended June 30, 2006, with the Securities and Exchange Commission on Aug. 4, 2006. For the three months ended June 30, 2006, the Company earned $142.9 million of net income on $859.2 million of net revenues, compared with $125.9 million of net income on $796.7 million of net revenues in 2005. At June 30, 2006, the Company's capital of $3.32 billion consisted of $300 million of senior notes, representing 9% of the total, $325 million of preferred shares, representing 9.8% of the total, and common shareholders' equity of $2.69 billion, representing the balance compared to the Company's capital of $2.78 billion consisted of senior notes of $300 million, representing 10.8% of the total, and common shareholders' equity of $2.48 billion, representing the balance at Dec. 31, 2005. The increase in capital during 2006 of $535.3 million was primarily attributable to the issuance of preferred shares and net income for the six months ended June 30, 2006, partially offset by an after-tax decline in the market value of our investment portfolio of $64.3 million, which was primarily due to an increase in the level of interest rates. A full-text copy of the Company's Quarterly Report is available for free at http://researcharchives.com/t/s?f27 Arch Capital Group Ltd. (NASDAQ: ACGL) is a Bermuda public limited liability company with approximately $3.32 billion in capital at June 30, 2006 and, through operations in Bermuda, the United States, Europe and Canada, writes insurance and reinsurance on a worldwide basis. * * * As reported in the Troubled Company Reporter on July 4, 2006, Standard & Poor's Ratings Services assigned its preliminary 'BBB' senior debt, 'BBB-' subordinated debt, and 'BB+' preferred stock ratings to Arch Capital Group Ltd.'s recently filed universal shelf registration. ASARCO LLC: Wants to Hire Hydrometrics for Remediation Services --------------------------------------------------------------- ASARCO LLC seeks authority from the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to enter into contracts with Hydrometrics, Inc., for remediation work at the East Helena, Montana lead smelter plant. ASARCO obtained the Court's permission to enter into a demolition pact to satisfy the Environmental Protection Agency and the Montana Department of Environmental Quality's requirement to clean up the East Helena Facility by the end of 2006. In conjunction with the demolition process, ASARCO contacted Hydrometrics regarding three projects dealing with the waste from the Facility's demolition: 1. Corrective Action Management Unit Project Hydrometrics will submit a proposal for the design of the second phase of a Corrective Action Management Unit, which will be filled with construction debris from the smelter. In relation to this, Hydrometrics will: -- conduct a site geotechnical investigation; -- prepare a preliminary design to submit for regulatory review; -- respond to comments on the design; and -- make the necessary changes for inclusion in a final construction bid package. This project will take approximately five months to finish and is estimated to cost approximately $76,000. 2. Remediation Cap Design Hydrometrics will design the remediation cap components for the smelter site, for use once the demolition is completed. The project will involve: -- conducting a site survey; -- preparing a preliminary design to submit for regulatory review; -- responding to comments on the design; and -- making the necessary changes for inclusion in a final construction bid package. The project will take approximately six months to finish and will cost approximately $99,000. 3. Interim Measures Project Hydrometrics will provide ASARCO with certain technical support for 2006 interim measure and groundwater sampling activities at the Facility. The project will include ongoing groundwater and surface water monitoring, and field and technical support for site characterization activities associated with design and implementation of remedial action measures. The total cost for the project will not exceed $101,000. Payments will be made based on the actual hours performed and invoices, according to Hydrometrics' hourly rates. Tony M. Davis, Esq., at Baker Botts L.L.P., in Houston, Texas, relates that Hydrometrics has previously worked on the Facility. Hydrometrics designed the Phase I CAMU cell for the Facility, which was completed in 2001. Hydrometrics also designed the cap for the Tacoma, Washington smelter. Mr. Davis adds that Hydrometrics' previous experience with landfill design at the Facility will save on redundant engineering costs. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Seeks Court's Approval for EPA & Point Ruston Accords ------------------------------------------------------------------ ASARCO LLC asks the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to approve the Environmental Protection Agency Agreement and the Second Amendment to the Tacoma Smelter Consent Decree. In January 2006, the Court authorized ASARCO LLC to sell approximately 97 acres of real property in Tacoma and Ruston, Washington, to MC Construction Consultants, Inc. MC Construction subsequently assigned its rights under the Tacoma Purchase Agreement to Point Ruston LLC. Tony Davis, Esq., at Bakers Botts L.L.P., in Houston Texas, relates that the Property was subject to remediation in accordance with a consent decree dated Jan. 3, 1997, issued by the United States District Court for the Western District of Washington in the case United States v. Asarco, Inc., No. 91-5528B, and the amendments thereto. The United States Environmental Protection Agency has a lien on the Property, Mr. Davis says. The Sale Order provides that the Sale will not become effective and the Closing will not occur until: -- an agreement resolving the EPA Lien is approved by the Bankruptcy Court; and -- the EPA and Ruston Point have entered into an amended Consent Decree that has been approved and entered by the Washington District Court. Accordingly, to resolve the EPA Lien, ASARCO and the EPA agree that: (a) Ruston Point will pay $1,500,000, from the Property's $6,220,000 Purchase Price, directly to the EPA at Closing; (b) ASARCO will receive a minimum payment of $7,500,000. When ASARCO receives the payments, 1/3 of each payment will be paid directly to the EPA and 2/3 of each payment will be paid to ASARCO until the EPA has received $2,500,000; (c) any contingent payout will be split evenly between ASARCO and the EPA until the EPA receives $1,500,000; (d) ASARCO will grant to the EPA a security interest in the payments due, owing or payable to ASARCO under the Tacoma Purchase Agreement and Development Pay-out Agreement only to the extent of the payments required to be paid to the EPA; and (e) immediately after receipt of the $1,500,000 payment, the EPA will remove and release its Lien on the Property. A full-text copy of the EPA Settlement Agreement is available for free at http://ResearchArchives.com/t/s?f21 The EPA and Ruston Point also amended the Tacoma Smelter Consent Decree to include Ruston Point as a new party to the Consent Decree. The Second Amendment provides that Ruston Point will be responsible for the clean-up of the Tacoma smelter and its adjacent properties. The Amendment therefore suspends ASARCO's obligations pending satisfactory completion of Ruston Point's performance obligations. A full-text copy of the 2nd Amended Tacoma Smelter Consent Decree is available for free at http://ResearchArchives.com/t/s?f20 EPA's Statement The federal government reached an agreement that will help to protect the health and the environment of Tacoma and Ruston-area citizens by expediting the estimated $28 million cleanup of the Asarco Smelter Site in Tacoma and Ruston, Washington. The agreement will allow Asarco to sell the Asarco Smelter property, which is part of the Commencement Bay Nearshore/Tideflats Superfund Site, to Lacey Washington-based developer Point Ruston LLC. This ensures that the cleanup work required on the approximately 97 acquired acres of contaminated land will be completed. Under this agreement, Point Ruston will assume all cleanup obligations on the property owned by Asarco and assume significant cleanup obligations on adjacent land which was also contaminated by Asarco's past operations. "[This] action marks significant progress in the ongoing remediation of this site and reaffirms our continued commitment to ensuring that hazardous waste sites are cleaned up," Matt McKeown, principal deputy assistant attorney general for the Justice Department's Environment and Natural Resources Division, said. "We are pleased that the amended consent decree will provide a positive outcome for all parties involved and most importantly will expedite the start of the cleanup and remediation of the site." According to Granta Y. Nakayama, EPA's assistant administrator for Enforcement and Compliance Assurance, "This agreement is a giant step in transforming this site from a highly contaminated former smelting facility to a residential development. The cleanup and redevelopment of this land is a win all around. It enhances the environment, improves the local community, and promotes economic development." Point Ruston intends to undertake residential and commercial development on the purchased property and will clean up the land to residential environmental standards. Along with the purchased property, Point Ruston has agreed to clean up the non-residential adjacent, contaminated property, which due to the development will have significant public access. The land is the former site of a smelting facility operated by Asarco from 1912 to 1985. A byproduct of the smelting process, called slag, was used by Asarco as fill material throughout the facility and was also poured into Commencement Bay to extend the shoreline of the smelter site by approximately 500 feet. Slag and other wastes from past smelter operations contaminate the property, and are a continuing source of contamination of groundwater below the site and to marine sediments offshore of the smelter property. According to current estimate, as much as 15 million tons of slag exists on the site today. In 1997, a consent decree between EPA and Asarco mandated cleanup of the uplands portions of the smelter property and the adjacent properties. In 2000, EPA issued an administrative order requiring Asarco to perform the sediment and groundwater work. While Asarco has performed a substantial amount of the work required, much of the cleanup has yet to be implemented. On Aug. 9, 2005, Asarco filed for bankruptcy protection under chapter 11 of the bankruptcy code in the United States Court for the Southern District of Texas. On Jan. 30, 2006, the Bankruptcy Court approved the sale of the property to MC Construction and the sale agreement was subsequently assigned to Point Ruston. As part of pre-conditions of the sale set forth by the Bankruptcy Court, Point Ruston was required to reach an agreement with the Environmental Protection Agency regarding the cleanup of the property it is attempting to purchase. The United States has also agreed to release a CERCLA lien against the property in exchange for $1.5 million at closing and contingent payments over time that may reach $4 million so that the property can be sold free and clear of any encumbrances. These funds will be placed into a special account to be used to clean up contaminated sediments in areas not covered by this agreement. As part of the settlement, Point Ruston will also pay EPA's oversight costs. Residential yards in north Tacoma, Wash., which were contaminated by the fallout from the Asarco Smelter are not covered in this agreement. The cleanup of these yards is being funded from a Trust Fund using money from a previous settlement with Asarco. The Department of Justice lodged the amendment to the existing consent decree in the United States District Court for the Western District of Washington. The consent decree will be subject to a 30-day public comment period and subsequent judicial approval. It is available on the Justice Department Web site http://www.usdoj.gov/enrd/Consent_Decrees.html Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000). BAKER & TAYLOR: Moody's Rates $165 Million Senior Notes at B3 ------------------------------------------------------------- Moody's Investors Service assigned ratings to Baker & Taylor Acquisitions Corporation, the surviving entity, following its merger with BTAC Merger Corp. The merger occurred upon the successful completion of the acquisition of BTAC Merger Corp. by private equity sponsor Castle Harlan. These ratings are assigned: Baker & Taylor Acquisitions Corporation: * Corporate family rating of B2, * $165 million senior secured second lien notes of B3. The outlook is stable. These ratings are withdrawn: BTAC Merger Corporation: * Corporate family rating at B2; * $200 million senior unsecured notes at B3. The B2 corporate family rating is primarily driven by the company's weak credit metrics and an aggressive financial policy all of which constrain the rating category despite numerous qualitative factors that support a higher rating. Baker & Taylor's sizable market share and efficient distribution network are more indicative of an investment grade company; while its scale, geographic and segmental diversification, and organic revenue growth point to a Ba rating; however, its sizable customer concentration is more reflective of a B rating. The rating outlook is stable. A positive outlook could be assigned should the company sustain FCF above 5% and EBIT above 1.5x. Negative rating pressure could develop should the company's liquidity deteriorate or operating performance decline such that free cash flow remains consistently negative or should Debt rise above 6.5x and EBIT fall below 1x. The senior secured second lien notes are rated one notch below the corporate family rating reflecting their junior position to the secured first lien asset based revolving credit facility. The senior secured notes will be guaranteed by each subsidiary that is either a borrower or guarantor under the asset based revolving credit facility and will have a second lien on all assets behind the asset based revolving credit facility. Baker & Taylor Acquisitions Corp. is a holding company whose sole asset is Baker & Taylor Corporation which is a leading domestic and international distributor of books and entertainment products to libraries and retailers that is headquartered in Charlotte, North Carolina. BALLY TOTAL: Names Ronald G. Eidell as Senior VP and CFO -------------------------------------------------------- Bally Total Fitness Holding Corporation's Board of Directors named Ronald G. Eidell as senior vice president, chief financial officer and principal financial officer. The Company disclosed that it entered into an interim executive services agreement with Tatum LLC, pursuant to which Mr. Eidell, a partner of Tatum LLC, was engaged as the Company's Senior Vice President, Finance. Prior to joining Bally, Mr. Eidell, served as interim president and chief executive officer of NeoPharm, Inc. from March 2005 to October 2005. Mr. Eidell has been a partner with Tatum LLC, a national professional services firm, since October 2004. Prior to that he served as the chief financial officer of each of Esoterix, Inc., a provider of medical testing services, from 2001 to 2003, NovaMed, Inc., a healthcare provider, from 1998-2001, and Metromail Corporation, a provider of information services, from 1996-1998. He also serves as a director of NeoPharm, Inc., where he serves on the audit committee. Separate Agreement With Former CFO The Company also disclosed that Carl J. Landeck ceased serving as chief financial officer of the Company effective on April 13, 2006. In connection with Mr. Landeck's departure, the Company entered into a Separation Agreement with Mr. Landeck on Aug. 1, 2006. The separation agreement released the Company from any and all claims or causes of action that Mr. Landeck might have against the Company. Modification of Chairman and CEO's Employment Agreement The Company further disclosed that on August 6, 2006, the board of directors, with Mr. Toback recusing himself, approved a modification to the Employment Agreement with Paul A. Toback, the Company's Chairman and Chief Executive Officer, in exchange for Mr. Toback's agreement to resolve his various claims, including the Company's obligation to implement a supplemental retirement plan for his benefit. Certain directors dissented from the decision. A full text-copy of the agreements with Mr. Toback and Mr. Landeck may be viewed for free at http://ResearchArchives.com/t/s?f2a Bally Total Fitness Holding Corporation -- http://www.Ballyfitness.com/-- is the largest and only nationwide commercial operator of fitness centers, with over 400 facilities located in 29 states, Mexico, Canada, Korea, the Caribbean, and China under the Bally Total Fitness, Bally Sports Clubs and Sports Clubs of Canada brands. Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter on March 17, 2006, Standard & Poor's Ratings Services held its ratings on Bally Total Fitness Holding Corp., including the 'CCC' corporate credit rating, on CreditWatch with developing implications, where they were placed on Dec. 2, 2005. BALLY TOTAL: Moody's Holds $300 Million Sr. Notes' Rating at Ca --------------------------------------------------------------- Moody's Investors Service affirmed all the credit ratings of Bally Total Fitness Holding Corporation. The rating outlook remains negative. The rating action reflects: (1) significant near term debt maturities and a probable need for a recapitalization or sale of the company (2) negative free cash flow generation (3) litigation and regulatory risks and (4) extensive material weaknesses in internal controls. The ratings also reflect the company's recent filing of financial statements through the first quarter of 2006 with the Securities and Exchange Commission and business model changes implemented to address flat revenues and weak profitability. Moody's affirmed these ratings: * $143 million senior secured term loan B facility due 2009, rated B3 * $100 million senior secured revolving credit facility due 2008, rated B3 * $235 million 10.5% senior unsecured notes due 2011, rated Caa1 * $300 million 9.875% senior subordinated notes due 2007, rated Ca * Corporate family rating, rated Caa1 The negative rating outlook reflects Moody's expectation that, absent a sale of the company, Bally may need to restructure its debt to stabilize its capital structure. The outlook could be changed to stable or positive if: (i) the senior subordinated notes are refinanced on reasonable terms prior to April 15, 2007; (ii) adequate availability is maintained under the revolving credit facility; (iii) regulatory and legal risks are substantially reduced; (iv) material progress is made in remediating internal control weaknesses; and (iv) positive free cash flows are expected to be sustained. The rating could be downgraded if: (i) efforts to sell the company and refinance near term debt maturities are not successful and the probability of default increases or (ii) continued negative free cash flow generation results in a decrease in Moody's assessment of Bally's enterprise value at default. Bally, through its wholly owned subsidiaries, is one of the largest publicly traded commercial operators of fitness centers in North America. Revenues for the 12 month period ending March 31, 2006 were $1.1 billion. BIO-RAD LAB: Generates $317.7 Mil. of Revenues in 2006 Second Qtr. ------------------------------------------------------------------ Bio-Rad Laboratories, Inc., reported its financial results for the second quarter ended June 30, 2006. Second-quarter revenues from continuing operations were $317.7 million, up 9.1% compared to the $291.3 million reported for the second quarter of 2005. Included in this figure is one-time additional revenue of $11.7 million resulting from a licensing settlement agreement reached with bioMerieux, which had a favorable impact on both the second quarter and year-to-date figures for 2006. On a currency- neutral basis, revenues increased 9.7% compared to the same period last year or 5.6% excluding the settlement. This sales increase was the result of growth across product areas in both the Life Science and Clinical Diagnostics segments. Income from continuing operations for the quarter was $32.3 million compared to $18.4 million during the second quarter last year. At 58.1%, second-quarter gross margin from continuing operations was markedly higher than the 55.1% reported for the second quarter of 2005. Excluding the impact of the bioMerieux settlement, gross margin was 56.5%. Year-to-date revenues from continuing operations grew by 6% to $626.1 million compared to the same period last year. Normalizing for the impact of currency effects, growth was 9%. Income from continuing operations increased by 32.5% to $63.5 million, or $2.41 per share compared to $47.9 million for the first six months of 2005. Year-to-date gross margin was 57.5% compared to 55.4% in the same period last year. Second-Quarter Highlights Second-quarter basic earnings from continuing operations were $1.22 per share compared to $0.71 and $0.69, respectively, during the same period of last year. As a result of a settlement reached with bioMerieux, Bio-Rad reported additional revenue in the second quarter of $11.7 million in royalties and licensing fees. Life Science segment net sales for the quarter were $134.4 million, up somewhat from $133.1 million reported in the second quarter of last year. Sales in this area increased by 1.0% or 1.8% excluding currency effects over the same period last year. The Clinical Diagnostics segment reported sales of $180.2 million, a 16.1% increase over the same period last year of $155.2 million. On a currency-neutral basis, segment sales increased 16.6%. Excluding the bioMerieux settlement, currency-neutral sales increased by 8.9%. In April, the Company announced that it had signed a multi-year agreement in which Premier, one of the largest group purchasing organizations in the United States, had agreed to a three-year sole-source contract with Bio-Rad covering diabetes monitoring instrumentation and products. During the quarter, Cell Signaling Technology and Bio-Rad entered into a partnership agreement in which CST will develop a broad array of antibody assays that will run on the Bio-Plex(R) suspension array system. Life Science segment net sales for the quarter were $134.4 million, up 1% compared to $133.1 million in the second quarter last year. On a currency-neutral basis, sales increased by 1.8%. Performance in this segment was the result of a number of factors including sales of amplification reagents, process chromatography media and the Bio-Plex(R) suspension array system, which continue to show impressive growth worldwide. These results were somewhat tempered, however, by the continued erosion of BSE testing revenue as well as increased competition in real-time instrument sales worldwide. During the second quarter, the Company launched iQ-Check(R) tests, a series of rapid food diagnostic tests based on a quantitative PCR platform. The new tests are both sensitive and specific allowing for the detection of common food pathogens in less than 24 hours. The Clinical Diagnostics segment reported sales of $180.2 million, a 16.1% increase over the second quarter last year of $155.2 million. On a currency-neutral basis, segment sales increased 16.6%. These results are due in part to growth across the product line in addition to the bioMerieux settlement. In April, the Company introduced the Platelia Dengue NS1 Ag Assay for dengue screening. The test provides early diagnosis of dengue acute infections, a tropical disease transmitted to humans from mosquitoes. Also during April, the Company launched a diagnostic test for celiac disease, an autoimmune disorder characterized by individuals having abnormal reactions to gluten, a protein found in wheat, barley, and rye. "We are pleased to report overall solid financial performance during the first half of the year," said Norman Schwartz, Bio-Rad President and Chief Executive Officer. "As the year progresses, we will continue to pursue targeted opportunities to expand the business and improve operational efficiencies." Bio-Rad Laboratories, Inc. (AMEX: BIO) (AMEX: BIOb) -- http://www.bio-rad.com/-- is a multinational manufacturer and distributor of life science research products and clinical diagnostics. Based in Hercules, California, Bio-Rad serves more than 70,000 research and industry customers worldwide through a network of more than 30 wholly owned subsidiary offices. * * * As reported on the Troubled Company Reporter on June 2, 2006, Bio-Rad Laboratories, Inc.'s 7-1/2% Senior Subordinated Notes due 2013 carry Moody's Investors Service's Ba3 rating and Standard & Poor's BB- rating. BOYD GAMING: Purchases 3,447,501 Shares from Michael J. Gaughan --------------------------------------------------------------- Boyd Gaming Corporation purchased 3,447,501 shares of its common stock from Michael J. Gaughan. The Company disclosed it issued a primary share note to Mr. Gaughan, in the aggregate principal amount of $111,990,001.48, as consideration for the purchased shares. The Company's purchase of the shares and issuance of the Primary Share Note were consummated pursuant to the terms of the Stock Purchase Agreement it entered into on Aug. 1, 2006 with Mr. Gaughan. The purchased shares were retired and returned to authorized but unissued status. Pursuant to the Unit Purchase Agreement between Mr. Gaughan, the Company and certain Company affiliates, Mr. Gaughan has agreed to resign from the Company's board of directors, and from his positions with Coast Hotels and Casinos, Inc. and Coast Casinos, Inc., by September 6, 2006. However, he will remain the chief executive officer of the South Coast Hotel and Casino until the consummation of the sale of South Coast to him. The Company further disclosed that the sale by Mr. Gaughan of 11,842,504 aggregate shares of the Company's common stock to a group of underwriters in a registered public offering was consummated on Aug. 7, 2006. Based on the underwriting agreement the Company entered into on Aug. 1, 2006 and the approved $32.4844 price per share to Mr. Gaughan for the sale of his shares of the Company's common stock, the Company expects to record a non-cash, pre-tax charge in the third quarter of 2006 estimated to be approximately $65 million to write-down South Coast to its fair value less costs to sell. Deutsche Bank Securities Inc. and Lehman Brothers Inc. were joint book-running managers of the offering. Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) -- http://www.boydgaming.com/-- is an owner and operator of 19 gaming entertainment properties located in Nevada, New Jersey, Mississippi, Illinois, Indiana and Louisiana. The Company is also developing Echelon Place, a world-class destination on the Las Vegas Strip, expected to open in early 2010. * * * As reported in the Troubled Company Reporter on Jan. 30, 2006, Standard & Poor's Ratings Services placed a 'B+' rating on Boyd Gaming Corp.'s $250 million senior subordinated notes due 2016 and affirmed its existing ratings on the Company, including its 'BB' issuer credit rating. S&P said the outlook is stable. As reported in the Troubled Company Reporter on Jan. 27, 2006, Moody's Investors Service assigned a B1 to Boyd Gaming Corporation's new $250 million senior subordinated notes due 2016. Fitch Ratings assigned a 'B+' rating to Boyd Gaming Corporation's $250 million senior subordinated notes. BROOKS SAND: Ch. 11 Trustee Selling All Assets for at Least $6.7M ----------------------------------------------------------------- Kenneth C. Henry, the chapter 11 appointed in Brooks Sand & Gravel, LLC's bankruptcy case, asks the U.S. Bankruptcy Court for the Western District of Kentucky for permission to sell substantially all of the Debtors assets to Johnson Materials, LLC, subject to better and higher offers. Johnson Materials is offering to buy the Debtor's assets for $6.7 million in cash and the assumption of certain liabilities. It is entitled to a $335,000 break-up fees in case another entity wins the auction for the assets. Interested bidders must file a competing bid on or before Aug. 25, 2006. Competing bids must equal or exceed the sum of the purchase price, the break-up fee, recoverable costs and $150,000. Interested bidders must also tender to the Chapter 11 Trustee a $100,000 good faith cash deposit. If there will be a qualifying overbid, the Chapter 11 Trustee will conduct an auction in Courtroom #1, Fifth Floor, United States Courthouse, 601 West Broadway, Louisville, Kentucky 40202 at 9:30 a.m. on Wednesday, Aug. 30, 2006. Dean A. Langdon, Esq., at Wise Delcotto PLLC, in Lexington, Ky., told the Court that selling the Debtor's assets as a going concern maximizes benefits to creditors. Headquartered in Louisville, Kentucky, Brooks Sand and Gravel LLC leases an 184-acre sand reserve and processing plant in Bethlehem, Indiana, in Clark County and employs about 15 people. Smith Mining and Materials LLC owns a 226-acre limestone quarry in Brooks, Kentucky, in Bullitt County and employs about 25 people. Brooks Sand and Smith Mining filed for chapter 11 protection on Feb. 9, 2006 (Bankr. W.D. Ky. Case No. 06-30259). Dean A. Langdon, Esq., and Laura Day DelCotto, Esq., at Wise DelCotto PLLC represented the Debtors. No Official Committee of Unsecured Creditors has been appointed in this case. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. Judge Cooper approved the appointment of Kenneth C. Henry as chapter 11 trustee. J. Bruce Miller, Esq., and his firm, J. Bruce Miller Law Group represent the chapter 11 trustee. BTAC MERGER: Moody's Withdraws B3 Rating on $200 Million Sr. Notes ------------------------------------------------------------------ Moody's Investors Service assigned ratings to Baker & Taylor Acquisitions Corporation, the surviving entity, following its merger with BTAC Merger Corp. The merger occurred upon the successful completion of the acquisition of BTAC Merger Corp. by private equity sponsor Castle Harlan. These ratings are assigned: Baker & Taylor Acquisitions Corporation: * Corporate family rating of B2, * $165 million senior secured second lien notes of B3. The outlook is stable. These ratings are withdrawn: BTAC Merger Corporation: * Corporate family rating at B2; * $200 million senior unsecured notes at B3. The B2 corporate family rating is primarily driven by the company's weak credit metrics and an aggressive financial policy all of which constrain the rating category despite numerous qualitative factors that support a higher rating. Baker & Taylor's sizable market share and efficient distribution network are more indicative of an investment grade company; while its scale, geographic and segmental diversification, and organic revenue growth point to a Ba rating; however, its sizable customer concentration is more reflective of a B rating. The rating outlook is stable. A positive outlook could be assigned should the company sustain FCF above 5% and EBIT above 1.5x. Negative rating pressure could develop should the company's liquidity deteriorate or operating performance decline such that free cash flow remains consistently negative or should Debt rise above 6.5x and EBIT fall below 1x. The senior secured second lien notes are rated one notch below the corporate family rating reflecting their junior position to the secured first lien asset based revolving credit facility. The senior secured notes will be guaranteed by each subsidiary that is either a borrower or guarantor under the asset based revolving credit facility and will have a second lien on all assets behind the asset based revolving credit facility. Baker & Taylor Acquisitions Corp. is a holding company whose sole asset is Baker & Taylor Corporation which is a leading domestic and international distributor of books and entertainment products to libraries and retailers that is headquartered in Charlotte, North Carolina. CABLEVISION SYSTEMS: DBRS Reviews Low-B Ratings on Senior Notes --------------------------------------------------------------- Dominion Bond Rating Service placed the ratings of Cablevision Systems Corporation -- B (low) and its wholly-owned subsidiary, CSC Holdings, Inc. -- BB (low) and B (high) Under Review with Developing Implications following the Company's announcement that it intends to restate its financial results related to stock options and stock appreciation rights for the 1997-2002 period. This is as a result of a voluntary review that the Company initiated to explore its past accounting treatment of these options and rights. * Bank Debt Under Review - Developing BB (low) * Senior Notes and Debentures Under Review - Developing B (high) -- Aug. 8, 2006 * Senior Notes Under Review - Developing B (low) DBRS expects the adjustment to be relatively modest to the Company's overall financial position. Despite this, DBRS's review is expected to focus on two factors. Firstly, the Company's ability to attain waivers from debtholders and other required parties as DBRS expects it will not be in a position to file financial statements for some time -- until its review and the necessary adjustments are made. Secondly, while the Company is expected to generate positive free cash flow for 2006, DBRS will focus on the Company's liquidity position as this is mainly in the form of unutilized credit facilities. DBRS notes that the Company's cable operations continue to remain strong with a stable business risk profile. Although limited Q2 2006 results were released, the Company reported good subscriber growth in all of its services as a result of its successful triple-play bundling strategy. This has allowed the Company to maintain its industry-leading service penetration levels and ARPU and led it to increase its cable subscriber and revenue guidance for 2006. CARAUSTAR INDUSTRIES: Ceases Coated Recycled Paperboard Production ------------------------------------------------------------------ Caraustar Industries, Inc. ceased coated recycled paperboard production at its Rittman Paperboard facility in Rittman, Ohio. The step was made by the Company to exit the CRB business. It will incur approximately $1.7 million in severance and other costs associated with the decision, which will be reported in discontinued operations. Approximately 125 salaried and hourly employees will be affected by the cease of CRB operations. It will provide the employees with transition services, including severance pay, limited benefits continuation, and out placement assistance. Although CRB operations will cease, limited activities will continue at the facility. Restructuring of Tube, Core Segment The Company also disclosed on Aug. 2, its decision to restructure certain aspects of its Tube, Core, and Composite Container segment. The restructuring will allow the Company to better streamline sales, outsource certain engineering costs, and close duplicative administrative offices. Caraustar will incur approximately $1.7 million in costs associated with the restructuring, of which, approximately $1.4 million will be cash costs, consisting of severance and other employee related costs, costs associated with lease buy out, and costs associated with relocating equipment. The remaining $0.3 million will be non-cash costs associated with asset impairment charges. Approximately 27 salaried and hourly employees will be affected by the decision and is expected to result in approximately $3 million in annual savings. The Company will also provide the employees with transition services. Caraustar Industries, Inc. (Nasdaq: CSAR) -- http://www.caraustar.com/-- is an integrated manufacturer of converted recycled paperboard. Caraustar serves the four principal recycled boxboard product end- use markets: tubes, cores and composite cans; folding cartons; gypsum facing paper and miscellaneous other specialty paperboard products. * * * The Company's $200 million 7.375% Senior Notes due June 1, 2009 and $29 million 7.25% Senior Notes due May 1, 2010, carry Standard & Poor's B+ rating. The Company's $285 million 9.875% Senior Subordinated Notes due April 1, 2011, carry S&P's B- rating. Those ratings were assigned on May 9, 2006. CATHOLIC CHURCH: Portland Can't Use Endowment Fund to Pay Claims ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Oregon rules that the $36,000,000 Perpetual Endowment Fund listed by the Archdiocese of Portland in Oregon in its Statement of Financial Affairs is not property of the bankruptcy estate. The Archdiocese holds legal, but not the entire equitable title to that Fund, Judge Perris says. Hence, the Fund is not available to pay the obligations Portland may owe to the tort claimants. According to Judge Perris, there is no evidence or argument that the Archdiocese created the Fund with the intent of shielding its assets from the claims of creditors. The Fund is held in a valid, charitable trust wherein the Archdiocese is not the sole beneficiary, but is one of the multiple beneficiaries. The Perpetual Endowment Fund was created in 1981 by a Declaration of Trust, more than 20 years before the Archdiocese filed for bankruptcy. The Archdiocese of Portland in Oregon, as a non- profit Oregon corporation incorporated in 1909, established the Fund. The 1909 corporation merged with the Roman Catholic Archbishop of Portland in Oregon, as the surviving corporation in 1991. The Fund was originally made up of the proceeds from the sale of certain land owned by the 1909 corporation. Judge Perris relates that there is no indication that the real property was a substantial portion of the real property used in the 1909 corporation's operations. Additions to the Fund included unrestricted gifts to the Archdiocese or the Archbishop, and the Fund's interest income. If there were indicators that the 1909 corporation had created the Fund to shield its assets from creditors, there might be theories available to support a claim for disregarding the trust, Judge Perris points out. But none of those arguments was made in the case. The Archdiocese has not retained complete control over the Fund, the Court says. The Archdiocese itself does not have the right to modify or amend the Fund, and the Fund is irrevocable. Contrary to the Tort Committee's arguments, the Archdiocese does not have a right to use the principal for whatever uses it desires. The Declaration of Trust provides for the Archdiocese's right to distribute the Funds' income "only." While the Archdiocese's power to distribute the Fund's income is property of the estate, Judge Perris says that power may be exercised only: * as provided or limited by the Declaration of Trust; and * in accordance with the Uniform Trustees' Powers Act. The Court agrees with the Archdiocese's arguments that the Fund is similar to the fund that was found to be a charitable trust and so excluded from the debtor's estate in In re Parkview Hosp., 211 B.R. 619 (Bankr. N.D. Ohio 1997). In Parkview Hospital, a non-profit hospital established a development fund for use in furthering the hospital's research and staff development activities. The hospital solicited donations for the fund and also placed unrestricted donations in the fund. Only the income could be used to further the purposes of the fund; the principal was to remain untouched. When the hospital ceased operation and filed for bankruptcy, the Chapter 11 trustee argued that the fund was property of the estate and should be available to pay the claims of the hospital's creditors. The Ohio bankruptcy court concluded that the fund was a restricted charitable trust, and so was not property of the bankruptcy estate. The Tort Committee has argued that the Perpetual Endowment is different from the fund in Parkview Hospital because: -- the hospital's solicitation of funds specified that the use of the contributions would be restricted; and -- the purpose of the charitable trust was not to benefit the hospital. There are many similarities between Parkview Hospital and the Archdiocese's case, Judge Perris says. In both cases: * the non-profit organization created the fund and acted as its trustee in administering the fund; * unrestricted gifts to the organization were placed in the fund, wherein the principal may not be touched, and only the income may be used to further the purposes of the fund. Although the Archdiocese did not specifically solicit donations for the Fund, Portland has a written trust document creating the Fund and showing its intent with regard to the Fund, Judge Perris points out. Thus, the Archdiocese's intent in creating the Fund can be determined from the trust document itself, rather than from looking at Portland's actions over a period of years. Judge Perris disagrees with the Tort Committee that the purpose of the Fund is solely to benefit the Archdiocese. The Archdiocese's purpose is to further the work of the church locally, nationally, and internationally. Thus, the purpose to benefit the public is similar to, not different from, the purpose of the fund in Parkview Hospital. Judge Perris further rules that the property of the estate, which includes the Archdiocese's beneficial interest in the Fund's income subject to whatever restrictions on its use, is enforceable under nonbankruptcy law. Thus, if income is distributed to the Archdiocese, subject to conditions on the use of the income in accordance with the Declaration of Trust, and those conditions are enforceable under nonbankruptcy law, the estate takes that income subject to the conditions on use, Judge Perris explains. Because the Fund is a valid charitable trust that is excluded from the estate, and the Archdiocese's powers, as trustee, must be exercised pursuant to the Declaration of Trust, Judge Perris says she would no longer consider the parties' arguments based on the First Amendment and the Religious Freedom Restoration Act. A full-text copy of Judge Perris' Memorandum Opinion determining that the Archdiocese's Perpetual Endowment Fund is not property of the bankruptcy estate, is available for free at http://researcharchives.com/t/s?f2b Portland's Statement The Bankruptcy Court issued an opinion holding that the Perpetual Endowment Fund for the Archdiocese of Portland in Oregon is not itself part of the Archdiocese's estate in bankruptcy subject to claims of creditors. The Archdiocese of Portland is pleased the Bankruptcy Court recognized that the Perpetual Endowment Fund is a charitable trust that can only be used in accordance with the provisions establishing the trust. Judge Elizabeth L. Perris stated that "the fund is intended to benefit not only the debtor, but also the community that is served by the religious, charitable, and educational programs of the debtor and the national and international church." The opinion continues: "I conclude that the Declaration of Trust created a valid, charitable trust, and that debtor is not the sole beneficiary of that charitable trust. Therefore, the fund itself is not property of the bankruptcy estate . . . " The litigation surrounding the Perpetual Endowment Fund was one part of very complicated proceedings in the Archdiocese's Chapter 11 process. While this issue may be resolved, the Archdiocese continues to work towards a fair, just and equitable resolution of pending claims and the confirmation of a Plan of Reorganization. Its goal is to emerge from bankruptcy as soon as possible so that it may continue the mission of the Church -- proclaiming the Gospel and performing charitable works -- without the distraction of legal proceedings. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Portland Settles Gripes on Appraisers' Retention ----------------------------------------------------------------- To resolve the objections related to the retention of appraisers, these parties entered into a stipulation: * Archdiocese of Portland in Oregon; * Tort Claimants Committee; * Committee of Catholic Parishes, Parishioners and Interested Parties; * Central Catholic High School Parents Association, and Central Catholic High School Alumni Association; * Friends of Regis High School and Regis High School Foundation; and * Marist Foundation and the Marist Parent and Alumni Service Club. The parties agree that: (a) the value of each parcel of real property, which was assigned to be appraised by Duncan & Brown, Inc., Skelte & Associates, Inc., or Powell Valuation, Inc., will be determined by those commercial appraisers. A full-text of the list of property assigned to each appraiser is available for free at: http://researcharchives.com/t/s?f2c (b) the value of each parcel of real property listed on Schedule A to the Archdiocese's Schedules of Assets or Exhibit 14 attached to Portland's Amended Second Statement of Financial Affairs that is not appraised will be determined by the current real market value on the most recent tax appraisal relating to that property; (c) except for the property listed to be appraised by the three commercial appraisers, the current real market value for each Tax Appraised Property will be the value for all purposes in the bankruptcy case through the entry of the Confirmation Order, except for purposes of: (1) the sale of the parcel of real property under Section 363 of the Bankruptcy Code; and (2) any claim brought by a parish, parishioner or high school relating to one or more parcels of Tax Appraised Property. (d) any party may ask the Court for authority to retain an appraiser to appraise any Tax Appraised Property so long as that request is filed before November 15, 2006, or 60 days prior to the hearing at which the appraisal is to be offered into evidence. The lack of an appraisal by a commercial appraiser will not be a basis for the continuance of any hearing. (e) except for property appraised by the three commercial, the real market value determined by a tax assessor will continue to be binding on all parties until an appraisal by a commercial appraiser is completed and admitted into evidence; (f) the Stipulation, the retention applications, or any objections relating to the Applications, will not have any bearing on whether all or any particular parcel of real property is integral to religious function or has any religious, charitable, or spiritual use or purpose; (g) all arguments with respect to any First Amendment, religious freedom, Religious Freedom Restoration Act, or any related claim, argument, or defense are reserved; and (h) the Tort Committee's Applications are granted insofar as to the properties to be appraised by the three commercial appraisers are concerned. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTURY ALUMINUM: Earns $45.8 Million in Second Quarter of 2006 --------------------------------------------------------------- Century Aluminum Company reported net income of $45.8 million for the second quarter of 2006, versus the second quarter of 2005 reported net income of $40.7 million. Sales in the second quarter of 2006 were $406 million, compared with $283.3 million in the second quarter of 2005. Shipments of primary aluminum for the quarter totaled 378.6 million pounds compared with 339.5 million pounds in the year-ago quarter, reflecting the impact of the Nordural expansion. For the first half of 2006 the company reported a net loss of $95.8 million, which includes an after-tax charge of $203 million for mark-to-market adjustments on forward contracts, compared with net income of $52.5 million in the year-ago period. Sales in the first six months of 2006 were $752.9 million compared with $568.7 million in the same period of 2005. Shipments of primary aluminum for the first six months of 2006 were 724.6 million pounds compared with 676.5 million pounds for the comparable 2005 period. The Company also disclosed that it has reached a labor agreement with the United Steelworkers at the Hawesville, Kentucky smelter and it has signed a memorandum of understanding with Icelandic power producers Hitaveita Sudurnesja and Orkuveita Reykjavikur, to purchase electrical energy for the greenfield smelter project in Helguvik, Iceland. The Company further disclosed reaching an agreement for a joint venture with Minmetals Aluminum Company, to explore the potential of developing a bauxite mine and associated 1.5 million mtpy alumina refining facility in Jamaica A full-text copy of Century Aluminum's quarterly report is available for free at http://ResearchArchives.com/t/s?f1e Headquartered in Monterey, California, Century Aluminum Company (NASDAQ:CENX) -- http://www.centuryca.com/-- owns and operates a 244,000 mtpy plant at Hawesville, Kentucky; a 170,000 mtpy plant at Ravenswood, West Virginia; and a 90,000 mtpy plant at Grundartangi, Iceland. The company also owns a 49.67% interest in a 222,000 mtpy reduction plant at Mt. Holly, South Carolina. ALCOA Inc. owns the remainder of the plant and is the operating partner. Century also holds a 50% share of the 1.25 million mtpy Gramercy Alumina refinery in Gramercy, Louisiana and related bauxite assets in Jamaica. * * * Moody's assigned Century Aluminum Company's senior secured debt and long-term corporate family ratings at B1. The ratings were placed on April 22, 2003, with a positive outlook. Standard & Poor's placed the Company's long-term local and foreign issuer credit ratings at BB- with a stable outlook on March 13, 2001. CHC HELICOPTER: Investing $30 Million in New Helicopter Facility ---------------------------------------------------------------- Heli-One, an operating subsidiary of CHC Helicopter Corporation, has established a new helicopter maintenance, repair and overhaul facility at Boundary Bay Airport in Delta, B.C., Canada. Heli-One will establish a 235,000 square-foot facility including aircraft hangar, workshops and office space, with completion anticipated in October 2007. This new facility will support a wide range of components, engines and aircraft types including AgustaWestland, Bell, Eurocopter and Sikorsky. CHC will invest approximately $30 million in establishing the new facility, which will allow Heli-One to provide total helicopter support and improved efficiency for CHC's rapidly expanding fleet of aircraft and for third-party customers around the world. The facility will consolidate Heli-One's existing workshops and facilities in the Vancouver area, and create additional capacity. This new facility will complement Heli-One's major European Repair and Overhaul center in Stavanger, Norway, which specializes in tip-to-tail support of Eurocopter aircraft. About Heli-One Heli-One is the world's largest independent helicopter support company, providing logistics, maintenance and power-by-the-hour support for 14 different aircraft types operated by customers around the world. About CHC Helicopter 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. * * * CHC's $250 million senior subordinated notes due 2014 carry Moody's B2 rating. CHENIERE ENERGY: Suppliers Accept CCTP Purchase Orders for Pipes ---------------------------------------------------------------- Cheniere Energy, Inc.'s wholly-owned subsidiary, Cheniere Creole Trail Pipeline, L.P., issued two purchase orders, which were accepted by the suppliers, for the procurement of pipes to construct the Creole Trail pipeline system. The Company disclosed CCTP entered into a purchase order with Corinth Pipeworks S.A. for the purchase of pipe at an aggregate cost of approximately $63.8 million, payable in increments beginning with a payment of approximately $6.38 million in August 2006. CCTP also entered into a purchase order with ILVA S.p.A. for the purchase of pipes at an aggregate cost of approximately $175.7 million. Milestone progress payments will be payable on a per lot basis. Within 10 days after the execution of the purchase order, CCTP will deliver a standby letter of credit to ILVA in the amount of approximately $88 million to secure CCTP's obligations under the purchase order. The letter of credit will require a deposit of $88 million with the issuer of the letter of credit. The procurement of the pipes is to construct the approximately 252 miles Creole Trail pipeline system, comprised of 117 miles of dual 42-inch diameter pipe and 18 miles of 42-inch diameter interconnection. The aggregate cost of these purchase orders is approximately $255,000,000. Full text-copies of the purchase orders may be viewed for free at http://ResearchArchives.com/t/s?f33 Based in Houston, Texas, Cheniere Energy, Inc., (AMEX:LNG) explores and produces oil. It also develops a liquefied natural gas receiving-terminal business. It operates a seismic database covering about 7,000 sq. mi. It also has a 9% interest in exploration and production affiliate Gryphon Exploration, which explores areas targeted by a seismic data licensed from Fairfield Industries. With proved reserves of 3,021 barrels of oil and 919.1 million cu. ft. of natural gas, it operates along the coast of Louisiana, both onshore and in the shallow waters along the Gulf of Mexico. In 2005, it acquired BPU LNG. * * * Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Cheniere Energy Inc. and affirmed its 'BB' rating on the $600 million term B bank loan at Cheniere LNG Holdings LLC, an indirectly owned, 100% subsidiary of Cheniere Energy. The outlook is stable. CHOICE HOTELS: June 30 Balance Sheet Upside-Down by $118 Million ---------------------------------------------------------------- For the second quarter of 2006, Choice Hotels International Inc. reported net income of $24.1 million, a 12% increase compared with $21.5 million in the second quarter of 2005. The Company's operating income increased 13% to $42.1 million, compared to $37.4 million for the same period in 2005. Total revenues increased 15% to $140.5 million compared to the second quarter of 2005. Choice Hotels' balance sheet at June 30, 2006, showed total shareholders' deficit of $118.023 million resulting from total assets of $280.276 million and total liabilities of $398.299 million. The Company's balance sheet also showed strained liquidity with $71,730,000 in total current assets and $129,507,000 in total current liabilities. Commenting on the results, Charles A. Ledsinger, Jr., the Company's president and chief executive officer, said "[w]e continue to focus on brand enhancements and are seeing strong growth in occupancy, average daily rate and RevPAR. We are pleased with the substantial increase in year-to-date sales of our new construction brands, most notably with our Cambria Suites and Comfort Suites offerings." "We believe that the inherent strength of our business model, the ongoing improvements to our core brands, and the expansion of our newest brands will enable us to drive top-line and bottom-line growth in a variety of economic cycles," Mr. Ledsinger added. "We are very pleased with the 13 percent increase in EBITDA over the prior year's second quarter and remain confident about the company's long-term prospects." Choice Hotels International -- http://www.choicehotels.com/-- franchises more than 5,200 hotels, representing more than 430,000 rooms, in the United States and more than 40 countries and territories. CINEMARK USA: S&P Places B+ Corp. Credit Rating on Negative Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed all its ratings on Cinemark Inc. and subsidiary company Cinemark USA Inc., which are analyzed on a consolidated basis, including the 'B+' corporate credit ratings, on CreditWatch with negative implications. The CreditWatch listing follows the company's announcement that it will be financing the acquisition of Century Theatres Inc. (B+/Negative/--) with a senior credit facility. Cinemark had $1 billion in debt and $846 million in present value of operating leases as of March 31, 2006. "Although Century's theaters are comparable to Cinemark's venues and the acquisition could produce some opportunities for cost reductions, we are concerned that credit statistics could worsen as a result of the debt-financed transaction," said Standard & Poor's credit analyst Tulip Lim. Also, Standard & Poor's is concerned about secular issues in this sector, including entertainment alternatives to moviegoing and shortening intervals between theatrical and DVD releases of movies. Standard & Poor's will resolve the CreditWatch listing after evaluating the new capital structure and future business strategies, including the potential for cost savings as a result of the acquisition. COLUMBUS MCKINNON: Earns $5.6 Million in 2007 1st Fiscal Quarter ---------------------------------------------------------------- For fiscal 2007 first quarter ended July 2, 2006, Columbus McKinnon Corporation reported net income of $5.6 million compared with fiscal 2006 first quarter net income of $7.3 million. Commenting on the results, Timothy T. Tevens, the Company's president and chief executive officer, said "[s]ales trends in our markets remain very favorable, and we continue to anticipate growth in Products segment sales in the mid-to-high single digit range as we convert our high level of orders to sales. The broad- based demand in our Products segment supports our belief that expansion is continuing in the industrial economy worldwide." Columbus McKinnon's operating income for the fiscal 2007 first quarter was $17.8 million, up 21.6% on a 4.1% increase in net sales to $146.7 million. Fiscal 2007 first quarter net sales were $146.7 million, an increase of $5.8 million, or 4.1%, over last year's first quarter net sales of $140.9 million. During the quarter, the Company reduced funded debt by $26.3 million to $183.4 million, resulting in a funded debt to total capitalization ratio of 46.1%. Debt, net of cash at July 2, 2006, was $163.5 million, a $89.5 million reduction from $253.0 million a year ago, representing 43.2% net debt to total capitalization. The Company's availability on its line of credit with its bank group at July 2, 2006, was $52.6 million. Net cash provided by operations was $4.8 million for the fiscal 2007 first quarter compared with $10.6 million in the fiscal 2006 first quarter, with the fluctuation a result of changes in working capital. Columbus McKinnon Corporation -- http://www.cmworks.com/-- designs, manufactures and markets material handling products, systems and services, including hoists, cranes, chain and forged attachments. * * * In November 2005, Standard & Poor's Ratings Services raised its corporate credit rating on Columbus McKinnon Corp. to 'B+' from 'B'. S&P also raised its senior secured debt ratings on the Company to 'B' from 'B-' and its subordinated debt rating to 'B-' from 'CCC+'. The outlook was stable. In August 2005, Moody's Investors Services upgraded Columbus McKinnon Corp.'s corporate family rating to B1 from B2 and $115 million senior secured (2nd lien) notes due 2010 to B2 from B3. Moody's also assigned a B3 rating to the Company's $136 million senior subordinated notes, due 2013. The rating outlook has been changed to stable from positive. COMMERCIAL CAPITAL: Fitch Affirms Class G Loan's Junk Rating ------------------------------------------------------------ Commercial Capital Access One, Inc.'s commercial mortgage series 3, is affirmed by Fitch Ratings: -- $140.8 million class A2 'AAA'; -- $43.4 million class B 'AAA'; -- $43.4 million class C 'A+'; -- $19.5 million class D 'BBB+'; -- $6.5 million class E 'BBB'; -- $100,000 class X 'AAA'; -- $10.8 million class F 'BB'; and -- $17.3 million class G 'CCC/DR2'. Fitch does not rate class H. Class A-1 has paid in full. The affirmations are the result of stable loan performance and minimal paydown since Fitch's last rating action. As of the July 2006 distribution report, the transaction has paid down 33.3% to $289 million from $433.7 million at issuance. There are two loans (12.6%) in special servicing. The largest loan in special servicing (12.1%) is secured by a 618,899 square foot office property located in St. Paul, Minnesota. The loan transferred to the special servicer due to monetary default. The special servicer foreclosed the asset in May of 2006 and is currently marketing the property for sale. Recent appraisal valuation indicates losses upon the disposition of this asset. The second largest asset in special servicing (0.5%) is secured by a golf course in East St. Louis, Illinois. The loan transferred to special servicer due to monetary default and is currently being reviewed by the special servicer. It is uncertain as to whether losses will be incurred upon the workout of this loan. 34% of the remaining pool is covered by a limited guaranty provided by Sun America, Inc. The guaranty requires Sun America to pay the special servicer, on behalf of the trustee, an amount equal to any realized losses arising from specially serviced loans, or to purchase the specially serviced loans directly from the trust. Prior losses have reduced the outstanding coverage from $14.4 million at issuance to approximately $11.3 million. The loans currently in special servicing are not covered by the guaranty. COMMSCOPE INC: Andrew Merger Prompts Moody's to Review Ratings -------------------------------------------------------------- Moody's Investors Service placed the ratings of CommScope, Inc. on review for possible downgrade following its announcement that it has placed an all cash bid to acquire Andrew Corporation for approximately $1.7 billion. This bid is a competing offer set to expire August 11th, 2006, with a 36% premium to that outstanding by ADC Telecommunications Inc. Moody's estimates that pro forma for the acquisition prior to cost savings from synergies, Commscope's financial leverage as measured by debt to TTM June 2006 EBITDA adjusted for capitalized operating leases would be increased from about 2.2x to more than 5x, which could potentially result in a multiple notch downgrade. Moody's review of CommScope will assess: (1) the challenges of integrating Andrew, a company that is roughly equal to CommScope's size in terms of revenue and EBITDA, (2) the combined company's prospects cost synergies, asset sales, and debt reduction, (3) plans for acquisitions, and (4) the quality of sources of liquidity. Ratings under review for downgrade include: * Corporate Family Rating -- Ba2 * Senior Subordinated Note $250 million due 2024 - B1 Headquartered in Hickory, North Carolina, CommScope is a provider of cable and connectivity solutions for enterprise, cable, and telecom industries. COMPLETE RETREATS: Gets Interim OK for Continued Utility Services ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Connecticut granted, on an interim basis, Complete Retreats LLC and its debtor- affiliates' request enjoining utility companies from discontinuing their services to the Debtors. The Troubled Company Reporter on Aug. 3, 2006 noted that the Debtors asked the Court to: (i) determine that the Utility Companies have been provided with adequate assurance of payment under Bankruptcy Code section 366; (ii) approve the Debtors' proposed offer of adequate assurance and procedures governing the Utility Companies' requests for additional or different adequate assurance; (iii) prohibit the Utility Companies from altering, refusing, or discontinuing services on account of prepetition amounts outstanding or on account of any perceived or alleged inadequacy of the proposed adequate assurance; (iv) establish procedures for the Utility Companies to seek to opt out of the proposed adequate assurance procedures; (v) determine that the Debtors are not required to provide any additional adequate assurance; (vi) set a final hearing on the proposed adequate assurance procedures on August 17, 2006; and (vii) provide for the return of the unused portions of all deposits shortly after the substantial consummation of any confirmed plan of reorganization in their cases. In connection with the operation of their business and management of their properties, the Debtors obtain electricity, gas, water, sewer, trash removal, telephone, Internet, cable television, and other utility services from various utility companies. A 14-page list of Utility Companies providing services to the Debtors is available for free at: http://researcharchives.com/t/s?ec4 Proposed Adequate Assurance The Debtors intend to pay all postpetition obligations owed to the Utility Companies. In addition, the Debtors propose to provide a deposit equal to two weeks of Utility Service to any Utility Company that requests a deposit in writing. However, no deposit will be given to a Utility Company that already holds a deposit equal to or greater than two weeks of Utility Services and that is paid in advance for its services. Upon acceptance of the Deposit, the Utility Company would be deemed to have stipulated that the Deposit constitutes adequate assurance of payment under Bankruptcy Code section 366 and would not be able to make an Additional Adequate Assurance Request. Proposed Adequate Assurance Procedures In light of the severe consequences to the Debtors of any interruption in services by the Utility Companies, but recognizing the right of the Utility Companies to evaluate the Proposed Adequate Assurance on a case-by-case basis, the Debtors propose that the Court approve and adopt these uniform procedures: a. If a Utility Company does not comply with the Adequate Assurance Procedures, it will be forbidden from discontinuing, altering, or refusing service. b. Any Utility Company requesting a Deposit must make a request in writing to: (i) the Debtors Tanner & Haley Resorts 285 Riverside Avenue, Suite 310 Westport, CT 06880 Attn: Jason I. Bitsky, Esq., and (ii) counsel to the Debtors Dechert LLP 30 Rockefeller Plaza New York, NY 10112 Attn: Joel H. Levitin, Esq., and David C. McGrail, Esq. c. If the requesting Utility Company satisfies the requirements, the Debtors would provide a deposit. d. Any Utility Company desiring additional adequate assurance of payment must serve its request on the Debtors and the Debtors' counsel. e. The Debtors have at least two weeks to reach a consensual agreement with the Utility Company resolving the Additional Adequate Assurance Request. f. The Debtors would be permitted to resolve any Additional Adequate Assurance Request by mutual agreement with the Utility Company and without further Court order. g. If the Debtors can't reach a timely consensual resolution with the Utility Company, a hearing will be held to determine the adequacy of adequate assurance of payment. h. Pending resolution of the Determination Hearing, that particular Utility Company would be prohibited from discontinuing, altering, or refusing service to the Debtors. Process for Opting Out A Chapter 11 debtor was historically able to place the burden on utility providers to prove that the adequate assurance offered by the debtor was insufficient. After recent amendments to Bankruptcy Code section 366, the burden has arguably shifted to debtors to provide adequate assurance that the utility providers find satisfactory and to seek court review if a utility provider does not accept the proposed adequate assurance. Under the new reading of Bankruptcy Code section 366, a Utility Company could, on the 29th day after the Petition Date, announce that the proposed adequate assurance is not acceptable, demand an unreasonably large deposit from the Debtors, and threaten to terminate Utility Service the next day unless satisfied. The Debtors believe it is prudent to require Utility Companies to raise any objections to the Adequate Assurance Procedures, so that those objections may be heard by the Court within 30 days of the Petition Date. The Debtors propose these uniform objection procedures: a. Any Utility Company that objects to the Adequate Assurance Procedures must to file a timely objection. b. Any Procedures Objection must, among others, be made in writing and set forth the reason why the Utility Company believes it should be exempted from the Adequate Assurance Procedures. c. The Debtors would be permitted to resolve any Procedures Objection by mutual agreement with the Utility Company and without further Court order. d. If no prompt consensual resolution is reached, the Procedures Objection would be heard at the Final Hearing. e. All Utility Companies that do not timely file a Procedures Objection would be deemed to consent to the Adequate Assurance Procedures. Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor- affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Connecticut, serves as counsel to the Official Committee of Unsecured Creditors. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. (Complete Retreats Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000). COMPLETE RETREATS: Paying $140,000 of Foreign Creditors' Claims --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Connecticut gave Complete Retreats LLC and its debtor-affiliates authority to pay, at their discretion, the prepetition claims of their foreign creditors, up to an aggregate amount of $140,000. The Court directed the Debtors to file a list, certified by an officer of the Debtors, of each Foreign Creditor whose prepetition claims have been or will be paid, including the amount of the claim. The Debtors and their foreign affiliates are parties to numerous agreements and leases with foreign creditors in Abaco, Bahamas; Cabo San Lucas, Mexico; Nevis, West Indies; and the Dominican Republic, among other foreign locations. The Troubled Company Reporter on Aug. 2, 2006, noted that certain Foreign Creditors have already taken, or threatened to take, actions against the Debtors, including refusing to provide essential goods and services to the Debtors or their affiliates until their claims are paid. In many instances, the Debtors told the Court that they would not be able to locate replacement providers in time to avoid disrupting service to their members. Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor- affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Connecticut, serves as counsel to the Official Committee of Unsecured Creditors. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. (Complete Retreats Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000). CORNING INC: Earns $514 Million in Second Quarter of 2006 --------------------------------------------------------- Corning Inc. informed the Securities and Exchange Commission in a Form 10-Q filing that for the three months ended June 30, 2006, it generated a $514 million net income compared with a $165 million net income for the same period in 2005. The improvement in net income was due largely to these items: -- strong volume growth in the Company's Display Technologies and Telecommunications operating segments; -- an increase in equity earnings which included a gain of $33 million related to Dow Corning's settlement with the IRS regarding liabilities for tax years 1992 to 2003. This settlement resolves all Federal tax issues related to Dow Corning's implant settlement; -- asbestos settlement gain of $61 million compared to expense of $143 million for the same period last year resulting from the change in fair value of Corning's asbestos settlement liability. The change in fair value for the second quarter of 2006 is due primarily to the decrease in the value of 25 million shares of Corning's common stock to be contributed to the proposed settlement. Financial Health The Company's management said the Company's balance sheet remains strong. The Company continued to generate positive cash flows from operating activities. Significant activities during the second quarter of 2006 were: -- the Company reduced its long-term debt in these transactions: * the Company redeemed $97 million of its 6.25% Euro notes, due in 2010; * the Company repurchased $96 million of its 6.3% notes due in 2009; and * the Company redeemed $125 million of its 8.3% medium-term notes due in 2025. -- the Company's debt to capital ratio declined to 18%; -- the Company received $134 million in deposits against orders relating to its multi-year supply agreements with customers in the Display Technologies segment; -- the Company ended the second quarter of 2006 with $2.5 billion in cash and short-term investments. Operating cash flow in the second quarter more than offset its capital spending. At June 30, 2006, the Company's remaining capacity under its shelf registration was approximately $2.1 billion. Capital Spending Capital spending totaled $554 million and $698 million during the six months ended June 30, 2006, and 2005. The Company's 2006 capital spending program is expected to be in the range of $1.3 billion to $1.5 billion. Of this amount, approximately $900 million to $1.1 billion will be used to expand manufacturing capacity for LCD glass substrates in the Display Technologies segment and approximately $200 million will be directed toward its Environmental Technologies segment. Management Assessment of Liquidity A major source of funding for 2006 and beyond is the Company's existing balance of cash, cash equivalents and short-term investments. From time to time, the Company may also issue debt or equity securities for general corporate purposes. The Company's management believes that the Company has sufficient liquidity for the next several years to fund operations, restructuring, the asbestos settlement, research and development, capital expenditures and scheduled debt repayments. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?f1f About Corning Headquartered in Corning, New York, Corning Inc. is a global, technology-based corporation that operates in four reportable business segments: Display Technologies, Telecommunications, Environmental Technologies, and Life Sciences. * * * Moody's Investors Service upgraded the long-term debt rating of Corning Incorporated in September 2005. Moody's said the rating outlook is stable. Corning Inc.'s senior unsecured notes, debentures, and IRBs were raised to Baa3 from Ba2. Corning's senior unsecured securities were raised to (P)Baa3 from (P)Ba2 while its preferred stock, issued pursuant to its 415 universal shelf registration, was raised to (P)Ba2 from (P)B1. CORRECTIONS CORPORATION: Board Approves 3-for-2 Stock Split ----------------------------------------------------------- Corrections Corporation of America reported its financial results for the three-month and six-month periods ended June 30, 2006. The Company's Board of Directors also approved a 3-for-2 stock split to be effected in the form of a 50% stock dividend on its common stock, payable on September 13, 2006. The Company's Board of Directors declared a 3-for-2 stock split to be effected in the form of a 50% stock dividend on its common stock. The stock dividend will be payable on Sept. 13, 2006, to stockholders of record on Sept. 1, 2006. Each shareholder of record at the close of business on the record date will receive one additional share of the Company's common stock for every two shares of common stock held. The stock split will increase the number of shares of common stock outstanding to approximately 60.4 million shares. Financial Review 2006 and 2005 Second Quarter Comparison For the three months ended June 30, 2006, the Company reported net income of $25.6 million compared with net income of $14.9 million for the 2005 comparable period. Operating income for the second quarter of 2006 was $55.1 million, compared with $38.2 million for the same period in the prior year. EBITDA, adjusted for refinancing charges, increased 35.4% to $71.5 million during the second quarter of 2006, from $52.8 million during the second quarter of 2005. The financial results for the quarter ended June 30, 2006, were positively impacted by increased populations at a number of the Company's facilities, most notably the Northeast Ohio Correctional Center, where the Company benefited from a full quarter of operating results from a contract with the Federal Bureau of Prisons that commenced in June 2005. Also of note was the commencement of a new contract with the U.S. Immigration and Customs Enforcement at the T. Don Hutto Residential Center in May 2006. Total portfolio occupancy increased from 90.1% during the second quarter of 2005 to 94.8% during the second quarter of 2006, with compensated man-days increasing 8.1%, from 5.67 million to 6.12 million. The increases in operating income and Adjusted EBITDA are net of an increase in general and administrative expenses of $2.4 million, of which $1.3 million resulted from an increase in stock-based compensation primarily resulting from a new accounting pronouncement effective Jan. 1, 2006. Adjusted Free Cash Flow, which does not include special charges, increased by $16.6 million to $44.0 million during the second quarter of 2006 from $27.4 million generated during the same period in 2005. The increase in Adjusted Free Cash Flow was primarily brought about by the increase in operating income and a reduction in interest expense resulting from the Company's refinancing activities, partially offset by modest increases in maintenance capital expenditures and income tax payments. 2006 and 2005 First Six Months Comparison For the six months ended June 30, 2006, the Company generated net income of $47.0 million compared with $5.9 million for the six months ended June 30, 2005. Financial results for the first six months of 2005 included a pre-tax charge of $35.3 million for refinancing transactions completed during the first and second quarters of 2005. Operating income for the first six months of 2006 increased to $105 million compared with $77.8 million for the first six months of 2005. Adjusted EBITDA also increased for the six months ended June 30, 2006, to $137.2 million compared with $106.6 million during the same period in 2005. The financial results for the six months ended June 30, 2006, were substantially the result of higher inmate populations at a number of the Company's facilities as well as the commencement of new management contracts. Adjusted Free Cash Flow increased $43.9 million during the first six months of 2006 to $87.0 million compared with $43.1 million during the first six months of 2005. Although strong operating results contributed significantly to the increase in Adjusted Free Cash Flow, the prior year period was negatively impacted by $15.5 million in income tax payments primarily for the repayment of taxes associated with excess refunds received by the Company in 2002 and 2003, as described in the Company's fourth quarter 2004 earnings release. Excluding these tax payments, Adjusted Free Cash Flow increased $28.9 million. Headquartered in Nashville, Tennessee, Corrections Corporation of America (NYSE: CXW) -- http://www.correctionscorp.com/-- is the nation's largest owner and operator of privatized correctional and detention facilities and one of the largest prison operators in the United States, behind only the federal government and three states. CCA currently operates 63 facilities, including 39 company-owned facilities, with a total design capacity of approximately 71,000 beds in 19 states and the District of Columbia. CCA specializes in owning, operating and managing prisons and other correctional facilities; and providing inmate residential and prisoner transportation services for governmental agencies. * * * As reported in the Troubled Company Reporter on Jan. 20, 2006, Moody's Investors Service assigned a Ba3 rating to Correction Corporations of America's $150 million new senior unsecured notes due 2014. The outlook for all of the firm's ratings was revised to positive, from stable. According to Moody's, this outlook revision reflects a substantially reduced secured debt burden as well as improving leverage and coverage statistics. DADE BEHRING: Earns $37.6 Million in Quarter Ended June 30 ---------------------------------------------------------- Dade Behring Holdings, Inc., reported second quarter net income of $37.6 million, compared with $17.1 million of net income earned during the same period in the prior year. The Company generated revenue of $445 million, an increase of 5% on both a reported and constant currency(1) basis. Revenue for the six months ended June 30, 2006, increased $24 million or 3% to $860 million. "Our strong and consistent financial performance is directly related to the ability of our people to effectively execute our customer excellence business strategy," Jim Reid-Anderson, chairman, president, and chief executive officer of Dade Behring, said. "We are highly focused on providing practical, relevant solutions to meet the needs of clinical laboratory customers around the globe, which positions us well for long-term growth." The company's worldwide installed base of instruments grew to 39,300 as of June 30, 2006, a 1.3% increase for the quarter and a year-over-year increase of 7.5%. Cash flow from operations, after investing activities and excess tax benefits from stock-based compensation, was $20 million for the second quarter and $66 million June year-to-date. The company paid a cash dividend of $0.05 per common share totaling $4.3 million during the quarter and repurchased $57 million of its common stock. During the last four quarters the company has repurchased $234 million of its common stock. The first six months of spending for research and development increased $11 million or 15% over the same period last year, and represented 9.1% of revenue. "An ongoing driver of our success has been new product introductions," said John Duffey, Chief Financial Officer and Senior Vice President, Dade Behring. "Investing in new technology is a high priority for us, given our goal of creating incremental value for shareholders." About Dade Behring With 2005 revenue of nearly $1.7 billion, Dade Behring -- http://www.dadebehring.com/-- is the world's largest company solely dedicated to clinical diagnostics. It offers a wide range of products, systems and services designed to meet the day-to-day needs of laboratories, delivering innovative solutions to customers and enhancing the quality of life for patients. * * * Dade Behring Holdings, Inc.'s Senior Subordinated Debt carry Fitch Ratings BB+ rating. DANA CORP: Equity Panel Questions Need to Modify Retiree Benefits ----------------------------------------------------------------- In Dana Corp. and its debtor-affiliates' request for appointment of an official committee of retired employees, they admit that they have not made any determination with respect to whether the retiree benefits must be modified or the impact of any modifications would have on their estates, Gregg Weiner, Esq., at Fried, Frank, Harris, Shriver & Jacobson, LLP, in New York, tells the Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York. The Debtors sought appointment of a Retiree Committee to act as the authorized representative of persons receiving certain retiree benefits that are not covered by an active or expired collective bargaining agreement. The Debtors currently sponsor at least 50 different Retiree Benefit Plans for hourly and salaried retirees and their spouses and eligible dependents, and that approximately 17,200 individuals currently receive Retiree Benefits under collective bargaining agreements that were negotiated with unions. According to Mr. Weiner, the Debtors have stated that it will be several months before they have finalized a business plan setting forth management's views with respect to the future prospects of the Debtors' businesses, and consideration of modifying the Retiree Benefits can only be done in the context of understanding the Debtors' business plan. The Official Committee of Equity Security Holders agrees with the Debtors that it is too early to determine whether the Retiree Benefits should be modified, or whether the Debtors could satisfy the rigorous requirements of Section 1114 of the Bankruptcy Code if it were to modify the Retiree Benefits over the opposition of the retirees. However, Mr. Weiner tells the Court that the Equity Committee has reservations as to whether there is a need for the Debtors to modify the Retiree Benefits at all. While the Equity Committee recognizes that, on an annual basis, the Debtors spend substantial amounts on account of their Retiree Benefits, modifications to the benefits may worsen the situation. Wholesale modifications to the Retiree Benefits could result in accelerating the Debtors' liabilities, which potentially could saddle the Debtors' estates with between $1,000,000,000 and $2,000,000,000 of additional claims that must be satisfied, Mr. Weiner points out. The Equity Committee contends that the Debtors should not take any precipitous action that results in burdening a solvent estate with $1,000,000,000 to $2,000,000,000 of claims. Mr. Weiner says the Equity Committee trusts and expects that the determinations with respect to whether any modifications are appropriate will be collaborative among the Debtors and their key constituents. The Equity Committee also trusts and expects if there are discussions with the Retiree Committee, the Equity Committee will have a seat at the table and the Debtors will not attempt to act unilaterally. Given this backdrop, the Equity Committee says it will work cooperatively with the Debtors in analyzing whether any modifications should be sought with respect to the Retiree Benefits and in negotiating with the Retiree Committee should the Debtors and the committees collectively determine that modifications are appropriate. On important issues, the Equity Committee says the Debtors should ensure that the official committees, as statutory fiduciaries, are included from the outset so as to avoid any unnecessary future contested proceedings. About Dana Corporation Toledo, OH-based Dana Corp. -- 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. 18; 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. DANA CORP: Wants American Axle Settlement Pact Approved ------------------------------------------------------- In 1998, Dana Corporation filed a lawsuit against American Axle & Manufacturing, Inc., in the United States District Court for the Eastern District of Michigan, Southern Division. Dana has alleged that American Axle is infringing certain of Dana's patents in connection with the production of driveline assemblies. In the 1998 Action, Dana has sought monetary damages ranging from $2,500,000 to $7,700,000 for infringement of the Patents-in-Suit, and an injunction preventing further infringement by American Axle. American Axle objected that any damages would be, at most, $165,000. American Axle asserted counterclaims alleging, among other things, that the Patents-in-Suit are not valid because they were not timely filed, and that no infringement has occurred. In 2000, the District Court found Dana's Patents-in-Suit to be invalid and granted summary judgment to American Axle. Dana filed another lawsuit against American Axle in the District Court to add an antitrust counterclaim in the 1998 Action. The United States Court of Appeals for the Federal Circuit, however, vacated the District Court's summary judgment order and remanded the case to the District Court for a determination regarding infringement. Based on a finding of non-infringement, in 2003, the District Court granted American Axle's second motion for summary judgment. The Federal Circuit then vacated the second summary judgment order on the basis that the District Court's construction of a disputed patent claim term was incorrect. The Federal Circuit furnished a different definition for that term and remanded the case to the District Court for a new trial. In May 2005, American Axle filed a third motion for summary judgment, which the District Court denied. In May 2006, the Bankruptcy Court modified the automatic stay to allow American Axle to pursue its Counterclaims. However, the Court denied American Axle's request to pursue a reexamination in the PTO. Dana and its debtor-affiliates believe that they have a meritorious case and could prevail in the litigation of the Actions, however, Corinne Ball, Esq., at Jones Day, in New York, points out that: (1) the Actions have been vigorously contested for nearly eight years; (2) litigating the Actions to the ultimate conclusion would be expensive and time consuming, (3) the outcome of litigation is uncertain; and (4) even if Dana were successful in litigation at trial, it would still have to collect any judgments rendered in the 1998 Action and could face the further costs and delays of appeals. Ms. Ball adds that even if the Debtors are successful in proving that American Axle had infringed one or more claims of the Patents-in-Suit, there is a risk that American Axle would prevail on its Counterclaims that one or more of the infringed patents was invalid. American Axle could then move to have the case declared exceptional and seek its own attorneys' fees and costs from Dana, which the Debtors estimate could exceed $2,000,000, Ms. Ball further points out. Accordingly, while the final trial preparations were underway in the 1998 Action, the Debtors and American Axle began negotiating a settlement. The District Court agreed to a 60-day stay of the proceeding to permit the parties to finalize the settlement. The salient terms of the Settlement Agreement are: (a) American Axle will pay to Dana a lump sum cash of $1,625,000 by wire transfer. (b) Dana will grant to American Axle a perpetual, fully paid license under the Licensed Dana Patents to make vehicle driveline assemblies. The Licensed Dana Patents include the Patents-in-Suit and other patents owned by or licensed to Dana that are necessary for making driveline assemblies with reduced diameter portions. (c) American Axle will grant to Dana a perpetual, fully paid license under the Licensed AAM Patent to make Licensed Products for programs in commercial production. (d) The Licenses may be sublicensed to Dana or American Axle's affiliates, but may not be sublicensed to other third parties without the licensor's consent provided that the assignee agrees to be bound by the terms and conditions of the Settlement Agreement. The licenses also will survive a change of control of the licensee. (e) The Actions will be dismissed with prejudice immediately after American Axle pays the Settlement Amount. (f) The parties will mutually release each other from certain liabilities for the period through the License Effective Date, including those claims asserted in the Actions, that were required to be asserted in the Actions or that are based on the Dana Licensed Patents or the Licensed AAM Patent. The Settlement Agreement expressly authorizes Dana's use of the Licensed American Axle Patent in connection with programs already in commercial production. Ms. Ball contends that absent the licensed of the American Axle Patent, Dana's alleged used of these patent right could be prohibited or subject to further litigation. Ms. Ball further contends that the Settlement Agreement eliminates the risks and costs of ongoing litigation of the Actions and provides for the prompt payment of $1,625,000 in cash into the Debtors' estates. Although the Debtors estimate that the judgment, if they prevailed at trial, could be more than twice the Settlement Amount, Ms. Ball argues that there is no assurance of prevailing at trial or being able to collect any judgment promptly. About Dana Corporation Toledo, OH-based Dana Corp. -- 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. 18; 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. DELTA AIR: Asks Bankr. Court to Terminate Pilots Retirement Plan ---------------------------------------------------------------- Delta Air Lines took the next step toward termination of the Delta Pilots Retirement Plan by filing a motion seeking U.S. Bankruptcy Court approval of the termination. The Air Line Pilots Association, the union representing more than 6,800 Delta pilots, does not oppose the termination of the plan. Delta's other defined benefit pension plan, covering approximately 91,000 active and retired flight attendant and ground employees, is not affected by this action. Delta reported its intent to seek to terminate the pilot plan, citing a financial and operational crisis from which it could not recover should the plan remain in effect. On June 19, 2006, Delta provided its active and retired pilots with a Notice of Intent to Terminate the pilot plan. Delta also served notice at that time to the Pension Benefit Guaranty Corporation, the federal agency which insures defined benefit pension plans. The plan covers more than 13,000 active and retired Delta pilots and their beneficiaries. The proposed effective date of termination of the plan is Sept. 2, 2006. Delta stated it was seeking the distress termination of the pilot plan because the plan's costs are unaffordable and would prevent the company from successfully reorganizing and emerging from bankruptcy. The company said the pilot plan's costs are expected to exceed $1 billion in the near term alone, even if pension reform legislation passed by Congress is signed into law. Delta voluntarily filed for Chapter 11 reorganization under the U.S. Bankruptcy Code on September 2005. Barring any disruptions, the company is on track to achieve more than 70% of its business plan's benefits by the end of this year, with the goal of successfully emerging from bankruptcy in the first half of 2007. About Delta Air Headquartered in Atlanta, Georgia, Delta Air Lines (OTC:DALRQ) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. DELUXE CORP: Moody's Downgrades Senior Unsecured Ratings to Ba2 --------------------------------------------------------------- Moody's Investors Service downgraded Deluxe Corporation's senior unsecured ratings to Ba2 from Baa3 and the commercial paper rating to Not Prime from Prime-3. Moody's also assigned Deluxe a Ba2 Corporate Family Rating. The rating outlook is negative. Downgrades: Issuer: Deluxe Corporation * Senior Unsecured Commercial Paper, Downgraded to NP from P-3 * Senior Unsecured Medium-Term Note Program, Downgraded to Ba2 from Baa3 * Senior Unsecured Regular Bond/Debenture, Downgraded to Ba2 from Baa3 * Senior Unsecured Shelf, Downgraded to (P)Ba2 from (P)Baa3 Assignments: Issuer: Deluxe Corporation * Corporate Family Rating, Assigned Ba2 Outlook Actions: Issuer: Deluxe Corporation * Outlook, Changed To Negative From Rating Under Review The downgrade reflects the ongoing and significant deterioration in the company's revenue base and operating margins. Moody's is concerned that the company's overall business risk is increasing as the ongoing shift toward electronic payments and forms processing creates price, volume and adverse product mix pressure on the company's mature print-based product lines. Operating performance in 2006 is particularly weak due to greater-than- anticipated pricing pressure in Deluxe's consumer check businesses and investments in sales force and training to build the Small Business Services segment that are yielding smaller revenue gains than the company expected. Moody's expects these pressures will challenge the company's ability to reverse the deterioration in operating performance and debt leverage relative to EBITDA and free cash flow. Moody's believes that the company's $150 million cost reduction plan and 37% reduction in the dividend have the potential to alleviate some of the intense margin and cash flow pressure, but do not remedy the fundamental concern over the revenue base erosion. The negative rating outlook reflects the execution risk associated with the company's plans to reduce costs and stabilize revenues and margins, the potential for increasing conditionality to access the two credit facilities resulting from the declining margin of compliance under the 3x EBIT to interest covenant requirement, and the refinancing risk presented by the $50 million September 2006 and $325 million October 2007 debt maturities. Deluxe Corporation, headquartered in St. Paul, Minnesota, uses direct marketing, distributors and a North American sales force to provide a wide range of customized products and services: personalized printed items, promotional products and merchandising materials, fraud prevention services, and customer retention programs. DIALOG GROUP: Restates 2005 Financial Statements ------------------------------------------------ Dialog Group, Inc., filed its annual report on Form 10-KSB/A to amend its financial statements for the fiscal year ended Dec. 31, 2005, with the Securities and Exchange Commission on July 28, 2006. The amended annual report restates the Company's financial statements and Management's Discussion and Analysis or Plan of Operations relating to the sale of AdValiant, Inc. The original Income Statement contained three errors: 1) inter-company accounts between the Company and AdValiant, which aggregated approximately $220,000, were not eliminated, 2) the investment in AdValiant was not reduced by its impairment for the losses incurred in the operation of AdValiant before its elimination upon the sale, and 3) adjustments for accounts receivable and bad debt reserves were not properly created. The originally reported Loss on Discontinued Operations included only approximately $490,000 of losses incurred in operating AdValiant during the time it was owned by the Company. In addition, it should have reflected approximately $140,000 incurred in the settlement of two lawsuits against a former subsidiary. This later amount was originally reported as part of Gain on Sale of Discontinued Operations. The Gain on Sale of Discontinued Operations is the excess of the consideration received for the sale of AdValiant over the sum of the original investment (as reduced by the loss incurred in operating AdValiant), the net of all inter-company accounts between AdValiant and the Company, including its subsidiaries, and the book value of all stock cancelled as part of the transaction. Amended Financial Statements The Company reported a $1,781,957 net loss on $6,722,703 of revenues for the year ended Dec. 31, 2005. At Dec. 31, 2005, the Company's balance sheet showed $1,596,195 in total assets and $5,720,200 in total liabilities, resulting in a $4,124,005 stockholders' deficit. The Company's Dec. 31 balance sheet also showed strained liquidity with $973,986 in total current assets available to pay $4,010,909 in total current liabilities coming due within the next 12 months. A full-text copy of the Company's 2005 Amended Annual Report is available at: http://researcharchives.com/t/s?f23 About Dialog Group Headquartered in New York, N.Y., Dialog Group, Inc., provides a combination of traditional advertising (print, broadcast) and marketing services (broadcast, new media, and internet-based promotional venues), as well as a broad spectrum of proprietary and exclusive databases for healthcare, pharmaceutical, consumer and business-to-business market clients. The Company and imx-eti LifePartners, Inc., its wholly owned subsidiary, filed for chapter 11 protection on Nov. 20, 2000 (Bankr. S.D. Fla. Case No. 00-35217). The Bankruptcy Court confirmed the Company's Third Amended Plan of Reorganization on Oct. 11, 2001, and that Plan took effect on Dec. 11, 2001. The Bankruptcy Court finally closed the Company's cases on Oct. 24, 2002. DOBSON COMMUNICATIONS: Posts $8.4 Million Net Loss in 2nd Quarter ----------------------------------------------------------------- Dobson Communications Corporation today reported sequential growth in sales, roaming revenue, EBITDA and EBITDA margin for the second quarter of 2006, compared with the first quarter of 2006. The Company reported approximately 127,900 total gross subscriber additions for the second quarter of 2006, an increase of 2.1% over the 125,300 total gross additions in the first quarter of 2006. Postpaid sales grew at a faster rate of 5.7% to 89,600 in the second quarter of 2006, versus 84,800 in the first quarter of 2006. The Company reported 131,500 total gross additions and 87,600 postpaid gross additions for the second quarter of 2005. Postpaid customer churn continued its recent positive trend, declining to 1.84% in the second quarter of 2006, compared with 2.25% in the second quarter of 2005, 2.82% in the third quarter of 2005, 2.62% in the fourth quarter of 2005 and 2.08% in the first quarter of 2006. As a result, Dobson reported 17,300 net subscriber additions for the second quarter of 2006, which included 13,800 postpaid customers, 7,700 prepaid customers, and a reduction of 4,200 reseller customers. Dobson reported 2,500 net subscriber additions for the first quarter of 2006, which was the first time in six quarters that the Company had grown its subscriber base. In the second quarter of 2005, the Company reported a reduction of 1,100 customers. For the second quarter ended June 30, 2006, Dobson reported a net loss applicable to common shareholders of $8.4 million, which included a $12.7 million loss from extinguishment of debt. For the second quarter of 2005, Dobson reported a net loss applicable to common shareholders of $12.2 million. Service revenue for the second quarter of 2006 was $223.3 million, compared with $216.0 million for the second quarter of 2005. Dobson reported $47.89 average revenue per unit for the second quarter of 2006, compared with ARPU of $45.28 for the second quarter of 2005. Dobson reported second quarter 2006 roaming revenue of $71.0 million, compared with $61.1 million for the second quarter of 2005. The Company's new roaming agreement with its principal roaming partner, Cingular, was applied initially to the second quarter results for 2005. Dobson also signed a new roaming agreement in the fourth quarter of 2005 with T-Mobile America, its second largest roaming partner. Second quarter 2006 roaming revenue reflected 676 million roaming minutes of use, a 31% increase over the 517 million MOUs reported for the second quarter of 2005. Roaming yield was 10.5 cents per MOU for the second quarter of 2006, versus 11.8 cents for the second quarter last year. Equipment and other revenue was $17.8 million for the second quarter of 2006, compared with $20.5 million in the second quarter of 2005. However, equipment and other revenue for the second quarter of 2005 included a prior-period payment of $5.8 million as part of a settlement under various agreements between Dobson and the former AT&T Wireless. Second quarter 2006 operating expenses were generally in line with the Company's expectations. Cost of service for the second quarter of 2006 increased by $12.5 million to $81.5 million, as compared with the second quarter of 2005. Incollect costs contributed $5.3 million of this increase -- higher off-network usage by the Company's growing GSM subscriber base was partially offset by lower off-network per-minute rates, which were negotiated in the Company's new roaming agreements that it signed last year. Higher cell site costs contributed an additional $3.6 million to the year-over-year increase in cost of service. Cell site costs increased due to new cell sites added over the last year and due to the sale of most of the Company's owned towers in 2005. Cell site expense for the second quarter of 2006 included the lease cost for these sites. In the same quarter last year, there was no lease cost on these towers, because they had not yet been sold. Dobson reduced general and administrative expense by $2.6 million to $46.7 million for the second quarter of 2006, compared with $49.3 million in the second quarter of 2005. Last year's G&A expense included a $2.8 million accrual related to closing the Frederick, Maryland call center, while this year's second quarter G&A expense included approximately $1.5 million related to the expensing of stock options associated with SFAS 123R, which were not expensed last year. (Dobson implemented SFAS 123R on Jan. 1, 2006. An additional $0.4 million for SFAS 123R stock options expense was recognized in other expense lines in the second quarter of 2006.) Aside from the call center charge last year and the implementation of SFAS 123R, the Company continued to see improvements in operations in the second quarter of 2006, most notably in bad debt and certain customer service operations. Dobson reported EBITDA of $107.3 million for the second quarter of 2006, compared with EBITDA of $109.3 million for the second quarter of 2005. As noted above, the year-over-year decline is primarily related to a $5.8 million prior-period payment received in last year's second quarter. The Company had 1,563,700 subscribers as of June 30, 2006, with approximately 82% on GSM calling plans. As of the same date, 87% of Dobson's postpaid customers were on G SM calling plans. Capital expenditures were $50.1 million in the second quarter of 2006, of which $31.6 million was reported by Dobson Cellular Systems and $18.4 million by American Cellular Corporation. In total, the Company added 73 cell sites during the second quarter of 2006, bringing its total cell sites to 2,679 at June 30, 2006. At June 30, 2006, Dobson's balance sheet included $116.4 million in unrestricted cash and cash equivalents, and $2.0 million in unrestricted short term investments; $4.4 million in restricted investments; $2.5 billion in long-term debt; and $135.7 million in preferred stock. Dobson Communications (Nasdaq: DCEL) -- http://www.bobson.net/-- provides wireless phone services to rural and suburban markets in the United States. Headquartered in Oklahoma City, the Company owns wireless operations in 16 states. * * * As reported in the Troubled Company Reporter on July 25, 2006, Standard & Poor's Ratings Services revised its outlook for Dobson Communications Corp. and its wholly owned operating subsidiary, American Cellular Corp. to developing from negative and affirmed the 'B-' corporate credit rating for both entities. ENTERPRISE PRODUCTS: Earns $126 Million in 2006 Second Quarter -------------------------------------------------------------- Enterprise Products Partners L.P. reported net income of $126 million for the second quarter of 2006 ended June 30, 2006, a 79% increase from net income of $71 million in the second quarter of 2005. Revenue for the second quarter of 2006 increased 32%, to $3.5 billion compared to $2.7 billion for the second quarter of 2005. Operating income for the second quarter of 2006 increased 48% to $186 million compared to $126 million for the second quarter of 2005. Gross operating margin increased 26% to $311 million for the second quarter of 2006 from $246 million for the same quarter in 2005. Earnings before interest, taxes, depreciation and amortization for the second quarter of 2006 increased 31% to $299 million from $229 million for the second quarter of 2005. "Enterprise reported exceptional results for the second quarter of 2006. In what is generally a seasonally weak quarter for our partnership, we posted one of the best quarters in Enterprise's history," said Robert G. Phillips, President and Chief Executive Officer of Enterprise. "Strong demand for natural gas, NGLs and crude oil resulted in our transporting over 1.8 million barrels per day of NGLs, crude oil and petrochemicals and approximately 7.4 billion cubic feet per day of natural gas through our pipelines during the second quarter of 2006." "The 26% increase in gross operating margin for the quarter was led by a record performance from our petrochemical services segment and strong results from our NGL pipeline and services segment, particularly from our natural gas processing business. The $40 million investment we made last year to modify our octane enhancement facility to produce isooctane generated significant returns during the second quarter as isooctane was in great demand to complement the growing use of ethanol in the production of motor gasoline. Overall, our NGL value chain benefited from strong demand for NGLs by the petrochemical and motor gasoline industries while our onshore natural gas pipelines delivered solid results and our offshore pipelines continue their recovery from last year's hurricanes," continued Mr. Phillips. Total debt outstanding at June 30, 2006 was approximately $4.8 billion. The partnership's debt to total capitalization at June 30, 2006 was 44.1%. Total capital spending in the second quarter of 2006 was $274 million, which includes $35 million of sustaining capital expenditures. At the end of the second quarter of 2006, Enterprise had total liquidity of approximately $700 million, which includes availability under the partnership's $1.25 billion credit facility and unrestricted cash. On July 18, 2006 Enterprise issued $300 million of Fixed/Floating Rate Junior Subordinated Notes due 2066. Net proceeds from the offering were used to temporarily reduce borrowings outstanding under our multi-year revolving credit facility. These notes pay interest at a fixed rate of 8.375% for the initial 10-year period, after which the interest rate will become floating. The rating agencies have assigned partial equity treatment to the notes, with Moody's and S&P each assigning 50% equity content, while Fitch Investors has assigned 75% equity content. Enterprise Products Partners L.P. -- http://www.epplp.com/-- provides midstream energy services to producers and consumers of natural gas, NGLs and crude oil. Enterprise transports natural gas, NGLs and crude oil through 33,100 miles of onshore and offshore pipelines and is an industry leader in the development of midstream infrastructure in the United States and the Gulf of Mexico. Services include natural gas transportation, gathering, processing and storage; NGL fractionation (or separation), transportation, storage, and import and export terminaling; crude oil transportation and offshore production platform services. * * * As reported in the Troubled Company Reporter on June 19, 2006, Standard & Poor's Ratings Services affirmed the 'BB+' corporate credit rating on master limited partnership Enterprise Products Partners L.P. and subsidiary Enterprise Products Operating L.P., as well as the 'B+' corporate credit on EPCO Holdings Inc. EVERGREEN INT'L: Receives Required Consents for 12% Senior Notes ---------------------------------------------------------------- Evergreen International Aviation, Inc., disclosed that more than a majority in aggregate principal amount of its outstanding 12% Senior Second Secured Notes Due 2010 (CUSIP No. 30024DAF7) have been validly tendered pursuant to the provisions of its tender offer and consent solicitation for any and all of its outstanding Notes. As of the expiration of the consent solicitation, holders of approximately 97.94% of the outstanding principal amount of the Notes had tendered and consented to the proposed amendments to the indenture governing the Notes. Subject to the satisfaction or waiver of the remaining conditions set forth in the Offer to Purchase and Consent Solicitation Statement dated July 20, 2006, Evergreen currently intends to accept the entire amount of Notes tendered pursuant to the tender offer and consent solicitation. Evergreen has received the requisite consents to certain proposed amendments to eliminate substantially all of the restrictive covenants in the indenture governing the Notes and certain other provisions. Upon the satisfaction or waiver of the remaining conditions set forth in the Statement, including the receipt of net cash proceeds sufficient to finance the tender offer and consent solicitation from its new Senior Secured Credit Facility, Evergreen intends to accept the Notes for purchase and payment pursuant to the tender offer and consent solicitation and execute the supplemental indenture effecting the amendments to the indenture. The consent solicitation expired at 5:00 p.m. New York City time, on Aug. 8, 2006. Holders of the Notes who validly tendered their Notes pursuant to the offer and validly delivered their consents pursuant to the solicitation by the Consent Date will receive total consideration of $1,080.00 per $1,000 principal amount of the Notes, which includes a consent payment of $30.00 per $1,000 principal amount of the Notes. Holders who tender their Notes after the Consent Date, but before the expiration of the tender offer will not receive the consent payment. The tender offer is scheduled to expire at 5:00 p.m., New York City time, on Aug. 21, 2006, unless otherwise extended or earlier terminated. Credit Suisse Securities (USA) LLC is serving as the exclusive Dealer Manager and Solicitation Agent for the tender offer and consent solicitation. Questions regarding the terms of the tender offer or consent solicitation should be directed to: Credit Suisse Securities (USA) LLC Attn: Liability Management Group Tel: (212) 325-7596 or (800) 820-1653. The Tender Agent and Information Agent is D.F. King & Co., Inc. Any questions or requests for assistance or additional copies of documents may be directed to the Information Agent toll free at (800) 290-6426 (bankers and brokers call collect at (212) 269- 5550). Evergreen International Aviation, Inc. is a portfolio of five diverse aviation companies headquartered in McMinnville, Oregon. With international operating authority and a network of global offices and affiliates, Evergreen consists of an international cargo airline that owns and operates a fleet of Boeing 747s, an unlimited aircraft maintenance, repair, and overhaul facility, a full-service helicopter company, an aircraft ground handling company, and an aircraft sales and leasing company. In addition to these endeavors, Evergreen owns and operates Evergreen Agricultural Enterprises and is headquartered near the not-for- profit Evergreen Aviation Museum, home of the Spruce Goose. * * * As reported in the Troubled Company Reporter on July 27, 2006, Moody's Investors Service assigned ratings to Evergreen International Aviation, Inc.'s new credit facilities. A rating of B1 was assigned to Evergreen's $350 million First Lien Senior Secured Credit Facility, comprised of a $50 million revolver and a $300 million term loan. Additionally, Moody's assigned a Caa1 to Evergreen's Second Lien Senior Secured Term Loan Facility. Standard & Poor's Ratings Services also assigned its 'B' rating to Evergreen Aviation International Inc.'s $350 million first-lien credit facility, consisting of a $50 million first-lien revolving credit facility maturing in 2011 and a $300 million first-lien term loan maturing in 2011. In addition, a 'CCC+' rating was assigned to the $50 million second-lien term loan maturing in 2013. EXIDE TECH: Amends Proxy Statement for Aug. 22 Shareholders' Meet ----------------------------------------------------------------- Exide Technologies filed an amendment to the Proxy Statement dated July 28, 2006, in connection with the annual meeting of the Company's shareholders scheduled to be held on Aug. 22, 2006, at 9:00 a.m., at the Hilton Garden Inn Atlanta North/Alpharetta at 4025 Windward Plaza Drive in Alpharetta, Georgia. During the meeting, shareholders will act on these matters: a) the election of seven directors; b) a proposal to approve * a $75,000,000 rights offering of 21,428,571 shares of common stock to the Company's shareholders at $3.50 per share, * the sale of any common stock not subscribed for in the rights offering to the standby purchasers and additional standby purchaser and the sale of another 14,285,714 shares for $50,000,000 to the standby purchasers at the same price, and * the related Standby Purchase Agreement and Registration Rights Agreement and the other transactions contemplated; c) a proposal to amend the Company's Certificate of Incorporation to increase our authorized shares of common stock to 100,000,000 and the aggregate number of shares of capital stock to 101,000,000; d) a proposal to approve an amendment the Company's 2004 Stock Incentive Plan; and e) a proposal to ratify the appointment of the Company's independent auditors for fiscal 2007. All holders of record of shares of the Company's common stock at the close of business on July 27, 2006, are entitled to vote at the meeting. A full-text copy of the proxy statement for the annual shareholders' meeting is available for free at http://researcharchives.com/t/s?f2e A full-text copy of the amendment is available for free at http://researcharchives.com/t/s?f30 Headquartered in Princeton, New Jersey, Exide Technologies (NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and distributes lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represented the Debtors in their successful restructuring. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. * * * As reported in the Troubled Company Reporter on July 5, 2006, PricewaterhouseCoopers LLP expressed substantial doubt about Exide Technologies' ability to continue as a going concern after auditing the Company's financial statements for the fiscal year ending March 31, 2006. PwC pointed to the Company's recurring losses and negative cash flows from operations. Additionally, given the Company's past financial performance in comparison to its budgets and forecasts there is no assurance the Company will be able to meet these budgets and forecasts and be in compliance through March 31, 2007, with one or more of the debt covenants of its senior secured credit facility. FALCONBRIDGE LTD: Board Urges Shareholders to Take Xstrata's Offer ------------------------------------------------------------------ The Board of Directors of Falconbridge Limited recommends that Falconbridge shareholders tender their shares to the offer made by the Anglo-Swiss mining company, Xstrata plc. Under the terms of its offer amended July 19, 2006, Xstrata offered to purchase all of the outstanding common shares of Falconbridge it does not already own for CDN$62.50 per Falconbridge share. The offer expires at 8:00 p.m. (Toronto time) on Aug. 14, 2006 and, among other things, remains conditional on approval from Xstrata shareholders. With the termination of the Support Agreement between Inco and Falconbridge, Falconbridge's Board of Directors examined alternatives for the Company, including the possibility of other potential acquirers of Falconbridge. The Board is satisfied that it is unlikely that an offer more attractive than Xstrata's will emerge. "Xstrata currently owns 24.5% of Falconbridge and since its offer is for any or all shares of Falconbridge, it appears likely that it will attract sufficient shares to gain effective control of Falconbridge on August 14," said Derek Pannell, Falconbridge's Chief Executive Officer. "Although Xstrata has consistently stated its desire to own 100% of Falconbridge, there can be no assurance that shareholders who do not accept the Xstrata offer on or before Aug. 14, 2006, will be able to sell their shares to Xstrata for cash at CDN$62.50 at some later date. Accordingly, the Falconbridge Board of Directors recommends that shareholders tender their shares to this offer in order to realize the value of their Falconbridge shares. "Furthermore, I believe Xstrata is a well-run company that values both the physical assets and the human expertise within Falconbridge. The commitments Xstrata announced on July 25 relating to locating Xstrata Nickel as well as copper and zinc offices in Toronto, job protection, research and development and continued investment in Canada are reassuring to Falconbridge employees." About Xstrata Xstrata plc (LSE: XTA) -- http://www.xstrata.com/-- is a major global diversified mining group, listed on the London and Swiss stock exchanges. The Group is and has approximately 24,000 employees worldwide, including contractors. Xstrata does business in six major international commodities markets: copper, coking coal, thermal coal, ferrochrome, vanadium and zinc, with additional exposures to gold, lead and silver. The Group's operations and projects span four continents and nine countries: Australia, South Africa, Spain, Germany, Argentina, Peru, Colombia, the U.K. and Canada. About Falconbridge Headquartered in Toronto, Ontario, Falconbridge Limited (TSX:FAL.LV)(NYSE: FAL) -- http://www.falconbridge.com/-- is a leading copper and nickel company with investments in fully integrated zinc and aluminum assets. Its primary focus is the identification and development of world-class copper and nickel orebodies. It employs 14,500 people at its operations and offices in 18 countries. The Company owns nickel mines in Canada and the Dominican Republic and operates a refinery and sulfuric acid plant in Norway. It is also a major producer of copper (38% of sales) through its Kidd mine in Canada and its stake in Chile's Collahuasi mine and Lomas Bayas mine. Its other products include cobalt, platinum group metals, and zinc. * * * As reported in the Troubled Company Reporter on Aug. 4, 2006, Standard & Poor's Ratings Services revised the CreditWatch implications on Inco Ltd. and Falconbridge Ltd. to positive from developing, where they were placed July 18, 2006. This action stems from the lower probability under all current takeover scenarios that ratings will be lowered into the speculative-grade category. The ratings on Falconbridge will likely be raised or affirmed at 'BBB-', assuming that Xstrata PLC (parent of Xstrata Queensland Ltd. (BBB+/Watch Neg/--)) is successful in acquiring Falconbridge on Aug. 14, 2006, which now appears highly probable after Inco dropped its bid last week. Falconbridge Ltd.'s CDN$0.9 Million Cumulative Preffered Shares Series 1, CDN$119.7 Million Cumulative Preferred Shares Series 2, and CDN$150 Million Preferred Shares Series H, all carry Standar & Poor's BB rating. FASSBERG CONSTRUCTION: Files Second Amended Disclosure Statement ---------------------------------------------------------------- Fassberg Construction Company delivered to the U.S. Bankruptcy Court for the Central District of California a second amended disclosure statement describing its chapter 11 plan of reorganization. The Court will convene a hearing to consider the adequacy of the Debtor's disclosure statement on Aug. 22, 2006, 10:00 a.m., at Court Room No. 303, Burbank Boulevard in Woodland Hills, California. Under the Amended Plan, distribution to the Debtor's creditors will be funded by: a) the Debtor from fees of its current projects; b) Fassberg Contracting Corp. -- as a newly created non-debtor corporate entity -- through continued operations of the Debtor's business, upon entry of a court order approving a proposed management agreement between the Debtor and Fassberg Contracting. Under the proposed management agreement, Fassberg Contracting will bid all construction work of the Debtor, and the Debtor will provide Fassberg Contracting with construction and management related services. Fassberg Contracting will operate pursuant to a budget that will be made available to the creditors and parties-in-interest of the Debtor's estate; c) Abraham Fassberg -- as existing shareholder -- through a $100,000 loan, which will fund Fassberg Contracting's operations; and d) Fidelity & Deposit Company of Maryland -- as a secured claim holder -- through bond payments or cash collateral released by Fidelity, disbursement of which will be made to cover Class 2 bonded claims and certain administrative claims of the estate. Treatment of Claims The priority tax claims of California FTB, IRS, and the City of Los Angeles are entitled to a present value of the claims in deferred cash payments, over a period not exceeding six years from the date of the tax assessment. Fidelity's secured claim is entitled to a total payout of $500,000 including an estimated $200,000 cash paid as reimbursement for legal fees. Fidelity's lien will be reduced by the Debtor's payments to sub-contractors as projects are completed. Holders of Class 2 Bonded Claims will be paid 30 days after the effective date of the Plan with a total payout of $371,756, while holders of Class 3 Non-Bonded Claims will receive a total payout of $500,000 through quarterly payments from Dec. 1, 2006 until Dec. 31, 2008. In consideration for the new value contributed, Mr. Fassberg will retain his 100% stock ownership in the Debtor. A full-text copy of the Debtor's second amended disclosure statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060809224753 Headquartered in Encino, California, Fassberg Construction Company is a full service general contracting and construction management firm. The Company filed for chapter 11 protection on April 1, 2005 (Bankr. C.D. Calif. Case No. 05-11957). Douglas M. Neistat, Esq., at the Law Offices of Greenberg & Bass, serves as counsel in the Debtor's bankruptcy case. David B Golubchik, Esq., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it had assets of $15,267,175 and debts of $6,758,113. FLYI INC: Creditor Objects to Employee Incentive Plan Extension --------------------------------------------------------------- FLYi, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve an Incentive Program pursuant to Sections 105(a), 363(b) and 503 of the Bankruptcy Code, as reported in the Troubled Company Reporter on Aug. 2, 2006. The Debtors had previously obtained the approval to implement a Wind-Down Employee Plan. The Wind-Down Employee Plan, which commenced on January 5, 2006, expired on July 7, 2006. M. Blake Cleary, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, told the Court that the Debtors will continue to need certain employees to assist them in winding down their affairs. Specifically, those employees will: * liquidate the Debtors' remaining assets; * review and resolve claims; and * prepare the appropriate records and reports for the Court and the Debtors' constituencies. Trident/BAE Objects Trident Turboprop Limited, BAE SYSTEMS Limited, and BAE Regional Aircraft, Inc., whose representative serves as chairperson of the Official Committee of Unsecured Creditors, assert that the process of filing and confirming a liquidation plan has lagged significantly behind the liquidation of the Debtors' assets. Barbara H. Stratton, Esq., at Knepper & Stratton, in Wilmington, Delaware, points out that the work that remains to be done in the Debtors' Chapter 11 cases should be performed under the auspices of a liquidating trustee under a plan of liquidation. Trident/BAE objects to the Motion to the extent that it will be implemented without the Trustee's consultation. As Committee Chairman, Trident/BAE has been involved in the process of interviewing potential Trustee candidates and the Committee has proposed the retention of Anthony H.N. Schnelling of Bridge Associates, LLC, to serve in the capacity as Trustee in FLYi's chapter 11 liquidating cases. Trident/BAE asserts that Mr. Schnelling's retention should be effective immediately on a consulting basis pre-confirmation so that he can participate in the formulation of the wind-down team and the wind-down plan, as well as assist the Committee with its investigation of potential causes of action. Ms. Stratton points out that it is not clear from the Motion that the proposed Incentive Program complies with Section 503(c) of the Bankruptcy Code. Ms. Stratton notes that it appears that the Debtors' proposed payments are being made to retain the affected employees. "As such, it appears that the Debtors would need to comply with section 503(c)(1)(A) [to] (C) rather than section 503(c)(2) of the Bankruptcy Code." Trident/BAE also contends that paying retention bonuses to employees that voluntarily terminate their employment is antithetical to a retention program. Moreover, there is not enough information or clarity contained in the Motion to allow creditors to reasonably evaluate the Incentive Program, or the wisdom of entering into it without consulting the Trustee, Ms. Stratton maintains. Therefore, Trident/BAE asks the Court to defer ruling on the Motion. Trident/BAE does not object to the concept of retaining certain of the Debtors' employees to assist the Trustee in winding up the Debtors' estates and appropriately compensating them for their services. However, Trident/BAE believes that retention bonus programs should be as cost-effective as possible and be formulated in consultation with the Trustee, Ms. Stratton says. Ms. Stratton comments that the Debtors have incurred more than $3,800,000 in estimated professional fees since January 2006, when they ceased operations. "Trident/BAE believes there is reason for concern regarding whether [the Debtors'] cases are proceeding as efficiently as possible." Headquartered in Dulles, Virginia, FLYi, Inc., aka Atlantic Coast Airlines Holdings, Inc. -- http://www.flyi.com/-- is the parent of Independence Air Inc., a small airline based at Washington Dulles International Airport. The Debtor and its six affiliates filed for chapter 11 protection on Nov. 7, 2005 (Bankr. D. Del. Case Nos. 05-20011 through 05-20017). Brendan Linehan Shannon, Esq., M. Blake Cleary, Esq., and Matthew Barry Lunn, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. Brett H. Miller, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represents the Official Committee of Unsecured Creditors. As of Sept. 30, 2005, the Debtors listed assets totaling $378,500,000 and debts totaling $455,400,000. (FLYi Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000). FLYI INC: Can Sell Dulles Hangar Lease to MWAA for $7.6 Million --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave FLYi, Inc., and its debtor-affiliates, authority to sell Independence Air, Inc.'s rights, title and privileges in a certain real property and the aircraft maintenance facility and related improvements -- Aircraft Maintenance Premises -- to Metropolitan Washington Airports Authority for $7,600,000, subject to higher and better offers, pursuant to a Court-approved Bidding Procedures Order. As reported in the Troubled Company Reporter on Aug. 2, 2006, Independence Air's rights and privileges in the Aircraft Maintenance Premises are subject of a Ground Lease Agreement -- the Hanger Lease -- dated as of June 23, 1997, between Independence Air, Inc., and the MWAA wherein the MWAA designs, constructs, operates and maintains an aircraft maintenance facility at Washington Dulles International Airport. Pursuant to the Hangar Lease, MWAA leases to the Debtors 6.96 acres of land at Washington Dulles International Airport. The term of the Lease expires on December 24, 2024. Under the Lease Terms, the Debtors pay a $17,000 monthly ground rent to MWAA and other related charges. The Debtors has made many substantial improvements to the Leased Premises, including the construction of an estimated 112,000 square foot hangar that they used in their airline operations prior to the shut-down. In consultation with the Official Committee of Unsecured Creditors, the Debtors determine that the MWAA's offer to purchase the Hanger Lease and the Aircraft Maintenance Premises was the highest and best bidder. M. Blake Cleary, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that there is no cure cost for the Assets. A full-text copy of the MWAA Asset Purchase Agreement is available for free at http://ResearchArchives.com/t/s?eaf Loudoun County Objects The County of Loudoun, Virginia, asserts that the Debtors, as lessee under the Hangar Lease, are responsible for the payment to Loudoun County of the ad valorem real estate taxes levied on its leasehold interest. Loudoun County maintains that as of July 17, 2006, there were unpaid real estate taxes against the Hangar Lease and the Aircraft Maintenance Premises for tax years 2005 and 2006. As provided in Section 58.1-3203 of the Code of Virginia, ad valorem real estate taxes are assessed as of January 1 of each tax year. Virginia law further provides that leasehold interests in real property, which is exempt from assessment for taxation to the owner, will be assessed for local taxation to the lessee. Karen J. Stapleton, Esq., in Leesburg, Virginia, tells the Court that Loudoun County has filed prepetition tax claims and administrative claim for postpetition real estate taxes. The alleged total amount of real estate taxes due to Loudoun County as of July 17, 2006, is $84,695. Loudoun County's Tax Claim is fully secured as to Debtors' leasehold interest in the Property, Ms. Stapleton asserts. Ms. Stapleton notes that the Debtors' Proposed Sale Order fails to specify that their claims and liens will attach to the proceeds of the sale with the same validity and priority as those liens had against the assets. Moreover, Loudoun County complains that the Purchase Agreement does not contain any statement with regard to the payment of real estate taxes owed to it with reference to the Debtors' leasehold interest in the Property. Accordingly, Loudoun County asks the Court to amend the Proposed Sale Order to provide that the secured, priority lien interests of its Tax Claim will attach to the sale proceeds of the Hangar Lease with the same validity and priority that those lien interests had against the Debtors' leasehold interest in the Property under Virginia law. Headquartered in Dulles, Virginia, FLYi, Inc., aka Atlantic Coast Airlines Holdings, Inc. -- http://www.flyi.com/-- is the parent of Independence Air Inc., a small airline based at Washington Dulles International Airport. The Debtor and its six affiliates filed for chapter 11 protection on Nov. 7, 2005 (Bankr. D. Del. Case Nos. 05-20011 through 05-20017). Brendan Linehan Shannon, Esq., M. Blake Cleary, Esq., and Matthew Barry Lunn, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. Brett H. Miller, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represents the Official Committee of Unsecured Creditors. As of Sept. 30, 2005, the Debtors listed assets totaling $378,500,000 and debts totaling $455,400,000. (FLYi Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000). FORD MOTOR: To Invest $1 Billion in Michigan Facilities ------------------------------------------------------- Ford Motor Company will increase the pace of new product introductions and respond to fast-changing consumer-buying trends as it accelerates its Way Forward turnaround plan and considers investing up to $1 billion in several of the company's Michigan facilities. Mark Fields, Ford's president of the Americas, disclosed, on Aug. 9, 2006, to industry leaders at the Center for Automotive Research's 41st annual Management Briefing Seminars. "We are rebuilding our business for the future with an emphasis on more new products faster -- and that includes more customer features and advanced technologies throughout our entire lineup," said Mr. Fields. "Even as we reduce our overall capacity in line with demand and make the tough but necessary cutbacks throughout our business to secure our future, we are not retreating one bit from the necessary investments to bring out more products for our customers. The competitive landscape and our future demand it." Investments on Manufacturing Expansion & New Products Ford's potential $1 billion investment would be dedicated to expanding flexible manufacturing at several Ford facilities in Michigan and be used for the research and development of future products, advanced powertrain technologies and hybrid vehicles. The investment is being considered in partnership with a Michigan Economic Development Corporation incentive package designed to encourage investment in the state and retain jobs. "Today, the auto industry represents the single greatest engine of economic activity in the world. And nowhere is the impact more profound than here in our back yard," Mr. Fields said. "Ford is proud to be part of Michigan, and our work to keep Ford's future part of this great state's future underscores our serious commitment to the people and the communities that have helped make us great for more than a century." The new investments are not yet finalized, Mr. Fields said, but Ford will continue to work with the state and the company's various facilities, and make decisions as part of its Way Forward turnaround plan. "There is no vision for Michigan's new economy that does not include Ford cars and trucks designed, engineered and made in Michigan," said Michigan Governor Jennifer M. Granholm. "For more than a century, Ford and the state of Michigan have been partners, and today we are affirming that our partnership will continue far into the future." More New Products Faster As part of plans to accelerate its turnaround, Ford will emphasize the introduction of new products as core to going "further and faster" throughout its business. "We'll have more to say on the specifics of what we're accelerating in September. But I can confirm that our plans include more new products, features and technologies throughout our lineup," said Mr. Fields. "We have nine new Ford and Lincoln Mercury products going on sale in the next six months alone, and we are rebuilding our business for the future with an emphasis on new products." Among the new products are the Ford Shelby GT -- on sale in January -- and Lincoln MKS flagship sedan, which will arrive in showrooms in 2008. Ford Shelby GT The 4.6-liter, 325-horsepower Ford Shelby GT will occupy a niche between the Mustang GT and the Ford Shelby GT500 both in performance and appearance. It is a retail version of the Ford Shelby GT-H Mustang developed for Hertz that was the surprise hit of the 2006 New York International Auto Show. "We know the combination of Mustang and Shelby is magic, and we proved it again when we revealed the Ford Shelby GT-H. The car received such rave reviews that our dealers and customers asked for a version of their own," Mr. Fields explained. "We listened, and we're delivering." The Ford Shelby GT will be on sale in January. Lincoln MKS The Lincoln MKS full-size flagship sedan will be based on the concept vehicle first shown at the North American International Auto Show in January. "The Lincoln MKS will take Lincoln craftsmanship and comfort beyond anything we've built before," Mr. Fields said. "Its design communicates power, motion and speed, and it will be packed with more technology and features than any Lincoln before it." One new technology on the Lincoln flagship comes straight from Ford racing and the Ford GT: a capless fuel filler. It eliminates the inconvenience of forgetting to put the gas cap back on after refueling and is better for the environment because no gas fumes escape. Ford's industry first technology that eliminates the fuel filler cap was originally put into production on the Ford GT and is set to debut across the company's product lineup starting with the 2008 Lincoln MKS. The capless system is a tangible example of how Ford is developing innovative product solutions to satisfy the unmet needs of consumers. The Lincoln MKS will be the next major step in establishing Lincoln as America's luxury brand. Lincoln is building momentum -- with retail sales up 8% for the first half of 2006. The new Lincoln MKS flagship is designed to continue to introduce a new face of Lincoln to the American public, building on the hallmarks of design, a business class experience and a smooth, confident ride. Fuel Economy Ford has identified two customer trends that will take future products across the auto industry into new directions. The first is a growing, worldwide demand for sustainability and a smart energy policy. The second is a set of profound demographic changes already affecting the auto industry that will accelerate during the next decade. "Consumers are speaking loud and clear. They're telling us that the social and environmental trade-offs associated with automobiles are increasingly unacceptable," said Mr. Fields. "They want cleaner, safer, more efficient vehicles that don't compromise on function or value. The auto companies best able to deliver vehicles that meet these needs will reap the rewards of increased market share and the financial rewards of technology innovation and leadership." Ford research shows that the percentage of Americans who say they are very concerned about the environment is approximately 70%, up nearly 10 points in the last five years. Fuel efficiency is now among the top three purchase drivers, along with quality and safety. The rapid rise of fuel prices also has accelerated another trend that began with the aging of the Baby Boomer generation, Mr. Fields said. "Baby Boomers are downsizing every aspect of their lives - including their homes - and they are moving to smaller cars, crossovers, small SUVs and small premium utilities," Mr. Fields added. "They're also buying fewer medium and large SUVs -- a trend that actually started in 2003 and accelerated last year, when gas prices increased." This population shift will result in dramatic growth for crossovers and small cars, as well as for premium utility vehicles, Fields explained. People-movers -- including medium and large SUVs and minivans -- will decline because there will be a smaller pool of family-oriented buyers purchasing vehicles that their aging parents had been driving. "The lesson we take from this tectonic shift is that listening to our customers has never been more important. We as an industry can't sit back and complain about these changes. We have to act on them - and quickly," Mr. Fields said. "The old saying 'If you build it, they will buy it' needs to be put to rest. 'If they will buy it, we will build it' is the way we need to approach the future." Products for New Customers and a Changing Marketplace With the fast-changing marketplace and the rise in demand for more fuel-efficient vehicles, Ford has kicked off its new-model year with a lineup of new cars, crossovers, hybrids, SUVs and trucks that puts the company in its best position ever to attract new customers. "Ford never has been in a better position than this model year to compete for customers in an environment of rising gas prices and higher demand for more power, more performance and more features," said Mr. Fields. "We're also leading the way with bold American designs and innovations in our new vehicles hitting the market this summer and fall." Key new products include: * Ford Edge and Lincoln MKX crossovers, which are expected to shake up this fast growing market when they go on sale in November. * Ford Shelby GT500, which is now on sale as the most powerful production Mustang ever. * Lincoln MKZ, with its new 3.5-liter V-6 engine -- which eventually will power one of every five Ford and Lincoln Mercury vehicles. * Ford Expedition, Expedition EL and Lincoln Navigator, which go on sale in September, and the new Lincoln Navigator L in December. The new SUVs offer more standard safety equipment, best-in-class towing for Expedition, a usable third row and additional cargo space. * Ford Explorer Sport Trac, which is now on sale with one of the segment's only V-8 engines. * Ford F-150 with increased towing to a best-in-class 10,500 pounds, new FX2 Sport edition and new 6.5-foot box for the Super Crew. * New all-wheel-drive versions of the popular Ford Fusion, Mercury Milan and Lincoln MKZ -- a technology that more than half of new buyers say they want in their next vehicle. Ford also this year is: delivering more standard safety equipment on more vehicles, with a focus on rapidly increasing standardization of side air bags and side air curtains; doubling the number of vehicles available with DVD-based navigation systems; and quadrupling the number of vehicles available with SIRIUS satellite radio. Drivers can now easily plug their iPod into the car thanks to new audio features being introduced in new 2007-model Ford and Lincoln Mercury vehicles. Ford also is responding to the skyrocketing customer demand to bring electronic devices into cars and trucks by building in iPod connectivity in half of the Ford and Lincoln Mercury lineup. The company predicts that iPod and other MP3 player sales will reach 132 million units in 2009 -- more than double the 57.7 million sold in 2005. For the 2007-model year, built-in auxiliary audio-input jacks will be offered on the Ford Edge, Explorer, Expedition, Mustang, Fusion, Sport Trac, Ranger, F-150, Mercury Milan, Mountaineer, Lincoln MKX, Lincoln MKZ, Navigator and Lincoln Mark LT. The jacks allow customers to bring any iPod or other MP3 player with a standard 3.5-millimeter audio output into their vehicle and play it through the audio system. In addition, early next year, Ford and Lincoln Mercury dealers throughout the U.S. will begin offering Ford's TripTunes Advanced audio system -- an iPod integration feature that provides drivers with top sound quality and recharging at the same time. TripTunes Advanced allows the driver to store the iPod in the vehicle's glove box and select music using the steering wheel or radio controls -- including shuffling songs and skipping between tracks and play lists. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Company (NYSE: F) -- http://www.ford.com/-- manufactures and distributes automobiles in 200 markets across six continents. With about 300,000 employees and more than 100 plants worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Motor Credit Company. * * * As reported in the Troubled Company Reporter on July 24, 2006, 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 Company to Ba3 from Ba2. The Speculative Grade Liquidity rating of Ford has been confirmed at SGL-1, indicating very good liquidity over the coming 12-month period. The outlook for the ratings is negative. FRESH DEL MONTE: Incurs $17.8 Million Net Loss in 2006 Second Qtr. ------------------------------------------------------------------ Fresh Del Monte Produce Inc. reported a net loss of $17.8 million for the second quarter of 2006, compared with net income of $46.5 million in the year-ago period. The second quarter results include charges totaling $33.2 million for asset impairment and other charges. For the first six months of 2006, the Company had a net loss of $1.6 million, due to increased production and transportation costs, along with asset impairment and other charges. Fresh Del Monte generated $907.1 million of net sales for the second quarter ended June 30, 2006, compared with $922.8 million in the second quarter of 2005. The decrease in net sales was mainly attributable to lower sales in the Company's other fresh produce business segment. For the first six months of 2006, net sales were $1.75 billion, compared with net sales of $1.76 billion for the same period in 2005. Gross profit for the second quarter of 2006 was $71.3 million, down 31 percent from the same period in 2005. Gross profit for the first six months was $139 million, compared with $220.5 million for the same period in 2005. The decrease in gross profit for both periods was the result of continued higher costs related to fuel, raw materials, packaging, labor and transportation as well as the impact of lower sales in the Company's other fresh produce and prepared food business segments. "Our earnings in the second quarter indicate that we are operating in what is the most difficult environment of the last ten years," said Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer. "However, we believe the steps taken over the past six months are preparing us for these changing times. Our ability to increase North America banana contract pricing, our aggressive implementation of cost-cutting programs, and our increased strategic investments in our business collectively assisted us in partially offsetting the impact of higher operating costs during the quarter. This demonstrates that our strategy to transform our organization into a leaner, more efficient, more profitable and more focused enterprise is working." He added, "There are a number of difficulties we believe will continue to affect our industry during the remainder of 2006, including fuel, transportation, and raw material costs. Even so, we have managed effectively through changing environments before, and we continue to be confident as we make advancements toward our long-term vision of becoming the world's leading supplier of healthful fresh and prepared food and beverages to consumers of all ages." A full-text copy of the Company's quarterly report on Form 6-K is available for free at http://researcharchives.com/t/s?f2d About Fresh Del Monte Fresh Del Monte Produce Inc. -- http://www.freshdelmonte.com/-- is one of the world's leading vertically integrated producers, marketers and distributors of high-quality fresh and fresh-cut fruit and vegetables, as well as a leading producer and distributor of prepared fruit and vegetables, juices, beverages, snacks and desserts in Europe, the Middle East and Africa. Fresh Del Monte markets its products worldwide under the Del Monte(R) brand, a symbol of product quality, freshness and reliability since 1892. * * * As reported in the Troubled Company Reporter on July 3, 2006, Standard & Poor's Ratings Services assigned its 'BB' bank loan rating and '2' recovery rating to Fresh Del Monte Produce, Inc.'s term loan, indicating an expected substantial recovery of principal in the event of a payment default, and a '2' recovery rating to the revolving credit facility. Standard & Poor's affirmed its 'BB' rating on Fresh Del Monte's senior secured credit facilities following the addition of a new $150 million term loan to its existing $600 million revolving credit facility. Existing ratings on the company, including its 'BB' corporate credit rating, have been affirmed. The outlook is negative. GENERAL MOTORS: Likely to Reach Job Cuts Targets Ahead of Schedule ------------------------------------------------------------------ General Motors Corporation expects to reach reduced employment level by Jan. 1, 2007, about two years ahead of its previously announced target, in its pursuit to return its North American operations to profitability and positive cash flow. GM's actions to reduce hourly headcount started in November 2005 when GM announced plans to idle 12 facilities and reduce manufacturing employment levels by approximately 30,000 employees by the end of 2008. During the first quarter of 2006, two assembly plants referred to in the original disclosure stopped production. On March 22, 2006, GM, the UAW, and Delphi announced they had entered into the UAW Attrition Agreement to reduce the number of hourly employees of GM and of Delphi through a special attrition program. In late June, GM announced that approximately 34,400 hourly employees (33,100 UAW-represented and 1,300 IUE-CWA- represented) would participate in the program. Other Cost-Reduction Efforts With regard to costs, the Company's primary goals were to address its legacy cost burden and reduce its structural costs in line with current levels of revenue. Legacy costs are primarily related to the cost of benefits provided to retired employees and their dependents, and costs associated with employees and their dependents of businesses divested by GM. Structural costs, such as the cost of unionized employees, are those costs that do not vary with production and include all costs other than material, freight, and policy and warranty costs. Some of these costs are within the Company's control, while others such as interest rates or return on investments (which influence the Company's pension and OPEB expenses) are more dependent on outside factors. To reduce legacy costs and structural costs, GM has taken action in a number of areas. To contain legacy health care costs for retired hourly employees, GM entered into the UAW Health Care Settlement Agreement, which received approval by the U.S. Bankruptcy Court for the Southern District of New York -- the Court handling Delphi Corp.'s chapter 11 case -- on March 31, 2006, and a tentative agreement with the IUE-CWA providing similar terms, which was announced on April 10, 2006. In addition, on February 7, 2006, GM announced it would cap its contributions to salaried retiree health care at the level of 2006 expenditures. To control pension costs, GM announced on March 7, 2006, that it would freeze accrued pension benefits for U.S. salaried employees and implement a new benefit structure for future accruals. Moves to Improve Liquidity GM has also taken actions to improve liquidity. In February 2006, GM's Board of Directors reduced the quarterly dividend by 50%, which will conserve about $500 million on an annual basis. Since the fourth quarter of 2005, the Company has sold all or part of its equity stakes in each of Fuji Heavy Industries, Isuzu and Suzuki, adding more than $3 billion to GM's liquidity. In addition to these actions, on July 20, 2006, GM executed a $4.63 billion amended and restated credit agreement with a syndicate of banks restating and amending the $5.6 billion unsecured line of credit. This agreement provides additional available liquidity that GM anticipates to draw on from time to time to fund working capital and other needs. Also, on April 2, 2006 GM entered into a definitive agreement to sell a 51% controlling interest in GMAC to a consortium of investors. GM's goal in selling the 51% interest in GMAC was improving GMAC's current credit rating position for GMAC's long term growth and provide a stronger foundation to support GM sales and dealers. The transaction also improves liquidity and results in total value of cash proceeds and distributions to GM of approximately $14 billion over three years, comprised of $7.4 billion purchase price, $4 billion of retained assets and $2.7 billion cash dividend. The Company expects to receive approximately $10 billion at closing. $1.4 billion will be invested by GM in new GMAC preferred equity. Near Term Issues with Delphi In addition to restoring GMNA operations to profitability, GM needs to address near term issues associated with its largest supplier, Delphi. On March 31, 2006 Delphi filed motions under the U.S. Bankruptcy Code seeking authority to reject its U.S. labor agreements and modify retiree welfare benefits. The unions and certain other parties have filed objections to these motions. Hearings on these motions were adjourned until tomorrow, Aug. 11, to allow Delphi, its unions and GM additional time to focus on reaching comprehensive consensual agreements. While Delphi has indicated to us that it expects no disruptions in its ability to continue supplying us with the systems, components, and parts that we need as Delphi pursues its bankruptcy restructuring plan, labor disruptions at Delphi resulting from Delphi's pursuit of a restructuring plan could seriously disrupt our North American operations, prevent us from executing our GMNA turnaround initiatives, and materially adversely impact our business. Accordingly, resolution of the Delphi related issues remains a critical near term priority. Delphi also filed on March 31, 2006 a motion under the U.S. Bankruptcy Code seeking authority to reject certain supply contracts with GM. A hearing on this motion was adjourned by the court until after the hearings related to Delphi's U.S. labor agreements and retiree welfare benefits are completed or otherwise resolved. Although Delphi has not rejected any GM contracts as of this time and has assured GM that it does not intend to disrupt production at GM assembly facilities, there is a risk that Delphi or one or more of its affiliates may reject or threaten to reject individual contracts with GM, either for the purpose of exiting specific lines of business or in an attempt to increase the price GM pays for certain parts and components. As a result, GM could be materially adversely affected by disruption in the supply of automotive systems, components and parts that could force the suspension of production at GM assembly facilities. About General Motors General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- the world's largest automaker, has been the global industry sales leader since 1931. Founded in 1908, GM employs about 317,000 people around the world. It has manufacturing operations in 32 countries and its vehicles are sold in 200 countries. * * * As reported in the Troubled Company Reporter on July 28, 2006, Standard & Poor's Ratings Services held all of its ratings on General Motors Corp. -- including the 'B' corporate credit rating, but excluding the '1' recovery rating -- on CreditWatch with negative implications, where they were placed March 29, 2006. The CreditWatch update followed GM's announcement of second quarter results and other recent developments involving its bank facility and progress on the GMAC sale. As reported in the Troubled Company Reporter on July 27, 2006, Dominion Bond Rating Service downgraded the long-term debt ratings of General Motors Corporation and General Motors of Canada Limited to B. The commercial paper ratings of both companies are also downgraded to R-3 (low) from R-3. 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. As reported in the Troubled Company Reporter on June 21, 2006, Moody's Investors Service assigned a B2 rating to the secured tranches of the amended and extended secured credit facility of up to $4.5 billion being proposed by General Motors Corporation, affirmed the company's B3 corporate family and SGL-3 speculative grade liquidity ratings, and lowered its senior unsecured rating to Caa1 from B3. The rating outlook is negative. GRUPO TMM: Shareholders to Approve $200 Million Securitization -------------------------------------------------------------- Grupo TMM, S.A. called a Shareholders Meeting to be held on Aug. 18, 2006, to propose the approval of the purported securitization of $200 million with Deutsche Bank. The proceeds from this transaction will be used to redeem its outstanding 2007 Senior Notes and to fund capital projects. Headquartered in Mexico City, Grupo TMM S.A. (NYSE: TMM)(MEX VALORIS: TMMA) -- http://www.grupotmm.com/-- is a Latin American multimodal transportation and logistics company. Through its branch offices and network of subsidiary companies, TMM provides a dynamic combination of ocean and land transportation services. * * * Standard & Poor's Ratings Services raised its corporate credit rating on Grupo TMM S.A. to 'B-' from 'CCC.' The rating was removed from Creditwatch, where it was placed on Dec. 15, 2004. S&P said the outlook is positive. GSI GROUP: Earns $6.2 Million in Second Quarter Ended June 30 ------------------------------------------------------------- For the second quarter ended June 30, 2006, GSI Group Inc. reported net income of $6.2 million compared with net income of $3.1 million for the same period in 2005. The Company's revenue for the quarter rose to $76.4 million, compared to revenue of $66.9 million for the same period of 2005. Year to date revenues of $152.5 million are up 16% from this time last year. GSI Group Inc. supplies precision technology to the global medical, electronics, and industrial markets and semiconductor systems. GSI Group's common shares are listed on Nasdaq (GSIG). * * * In May 2005, Moody's Investors Service assigned a B3 rating to the senior notes of The GSI Group, Inc. In addition, Moody's affirmed GSI's existing ratings, including its B2 senior implied rating, and assigned a speculative grade liquidity rating of SGL-2. Also in May 2005, Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to GSI Group and assigned its 'B-' senior secured rating to the $125 million senior unsecured notes due in 2013. The outlook was stable. HOME PRODUCTS: Atlas Partners Reports Sale of Georgia Facility -------------------------------------------------------------- Atlas Partners, LLC, reports that it completed the sale of Home Products International, Inc.'s 54,788 square-foot manufacturing plant located in Thomasville, Georgia. The sale price was not disclosed. In November 2005, the Troubled Company Reporter related that Home Products planned to: -- spend $10 million to expand and modernize its Chicago, Illinois, and El Paso, Texas, plastics manufacturing facilities, and -- consolidate its plastics manufacturing operations and close its Louisiana, Missouri, and Thomasville, Georgia, plants. "The consolidation of our facilities," Doug Ramsdale, Chief Executive Officer of Home Prodcucts explained at the time, "allows us to increase our capacity, raise the productivity of our manufacturing operations, and improve our service to our customers even further." "The difficult, but necessary, decision to close two of our plants better positions HPI for long-term growth and success," Mr. Ramsdale continued. Home Products International, Inc. -- http://www.hpii.com/and http://www.homz.biz/-- is an international consumer products company which designs and manufactures houseware products. The Company sells its products through national and regional discounters including Kmart, Wal-Mart and Target, hardware/home centers, food/drug stores, juvenile stores and specialty stores. As of Oct. 1, 2005, Home Products' balance sheet showed an $11,632,000 equity deficit. In January 2006, 94% of the holders of the Company's 9-5/8% Senior Subordinated Notes due 2008 agreed to amend the Indenture governing those notes to lift the requirement that the Company voluntarily file reports with the Securities and Exchange Commission that are required under Section 15(d) of the Exchange Act of 1934, as amended. As a result, Home Products has not released more current financial data. In December 2005, Home Products entered into a First Amendment to its Amended and Restated Loan and Security Agreement, dated as of December 21, 2005, with Bank of America, N.A., as successor-in- interest to Fleet Capital Corporation, as agent for Lenders thereunder. Subject to required reserves, that facility gives the company access to up to $60 million of debt financing. HONEY CREEK: MuniMae Asks Ct. to Determine Value of Apartments -------------------------------------------------------------- MuniMae Portfolio Services, LLC -- the authorized servicing agent for The Bank of New York Trust Company, N.A., as indenture trustee under a $20,485,000 bond issued by the Texas Department of Housing and Community Affairs to secure a loan owed by Honey Creek Kiwi LLC -- asks the U.S. Bankruptcy Court for the Northern District of Texas to determine the value of the Debtor's 656-unit apartment complex known as the Honey Creek Apartments for purposes of a chapter 11 plan. John N. Schwartz, Esq., at Fulbright & Jaworski L.L.P., in Dallas, Texas, tells the Court that the Debtor and MuniMae Portfolio Services substantially disagree about the value of the Real Property, the principal collateral for the Loan and the source of the Debtor's revenue. MuniMae's treatment under the Debtor's Plan depends heavily upon the valuation of the Real Property and the other Collateral. The Debtor proposes to set the principal amount of MuniMae's Series A Note under the Plan at $15.75 million, or the value of the collateral securing the MuniMae claim, as determined by the Court. Mr. Schwartz points out that it is apparent from the Debtor's Plan and its Disclosure Statement that the Debtor intends to advocate for a value of the Real Property that is artificially low. Although the Debtor's Plan contemplates that the CHDO Tax Abatement will continue (thereby relieving the Reorganized Debtor from the obligation to pay ad valorem real property taxes), the Debtor seeks a determination of value that assumes that there is no CHDO Tax Abatement applicable to the Real Property. As explained by the Debtor in its Disclosure Statement, the Debtor's sole equity holder, Alternative Building Concepts Group is a qualified Community Housing Development Organization. Its CHDO status at the time of its acquisition of the Real Property qualified the Debtor for its current 100% abatement from Ad Valorem real and personal property taxes, known as the "CHDO Tax Abatement." Treatment of MuniMae's Claim Under Debtor's Plan With respect to MuniMae, the Debtor's Initial Plan Documents provided two alternative treatments. Under MuniMae Alternative Treatment 1, MuniMae's secured claim was to be established in the amount of the value of MuniMae's collateral in the form of a modified "renewal note." Moreover, to the extent MuniMae's allowed claim was determined not to be fully secured, MuniMae would be entitled to an unsecured deficiency claim. Finally, the Debtor proposed an "equity auction" that would have occurred only if MuniMae Alternative Treatment 1 was in effect. MuniMae Alternative Treatment 2 was effective only if MuniMae made an election under Section 1111(b) of the Bankruptcy Code to have its entire claim treated as secured. MuniMae Alternative Treatment 2 would split MuniMae's allowed claim into: (1) a modified "Series A Note," which was to be established in the amount of the value of MuniMae's collateral and, among other modifications, would have reduced the interest rate to 6.0%; and (2) a "Series B Note" which was established in the amount of the difference, if any, between MuniMae's allowed claim and the face amount of the Series A Note. The Series B Note would neither accrue, nor pay, interest and it would be payable in 35 years or when the Real Property was refinanced or sold. MuniMae determined not to make an election under Section 1111(b), thereby choosing MuniMae Alternative Treatment 1 offered under the Initial Plan Documents. Based upon the express terms of the Initial Plan Documents, MuniMae believed that it had the option to choose its own treatment. However, on June 30, 2006 -- within a few days after MuniMae declined to elect treatment under Section 1111(b) -- the Debtor filed its First Modification of the Second Amended Plan of Reorganization and Supplemental Disclosure Statement, which, among other things, removed MuniMae Alternative Treatment 1 in its entirety. According to Mr. Schwartz, this maneuver purportedly left MuniMae without a deficiency claim and without the ability to bid for the equity interest in a competitive auction. The Debtor's modification also rendered meaningless much of the Court's consideration of the Initial Plan Documents during the hearing on the Debtor's Disclosure Statement. This prompted MuniMae to file its competing plan. Under the disclosure statement accompanying that plan, MuniMae disclosed that it engaged a professional appraiser, Ben Barnett of American Appraisal Associates, to value the Debtor's property -- a 656-unit apartment complex known as the Honey Creek Apartments. According to Mr. Barnett's report, the value of the Honey Creek Apartments is approximately $20,500,000 without the tax exemption from the Community Housing Development Corporation, and $27,000,000 with the CHDO Tax Exemption. Headquartered in Mesquite, Texas, Honey Creek Kiwi LLC owns a 656-unit apartment complex known as the Honey Creek Apartments. The company filed for chapter 11 protection on August 24, 2005 (Bankr. N.D. Tex. Case No. 05-39524). Richard G. Grant, Esq., at Roberts & Grant, P.C., represents 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 protection from its creditors, it estimated assets and debts between $10 million and $50 million. INTERSTATE BAKERIES: Wants Joint Interest Pact With Panel Approved ------------------------------------------------------------------ Interstate Bakeries Corporation and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Western District of Missouri to enter into a joint interest agreement with the Official Committee of Unsecured Creditors, for itself and on behalf of certain creditor parties. In fulfillment of their fiduciary obligations, the Debtors are investigating potential causes of action against third parties, including causes of action under Chapter 5 of the Bankruptcy Code, relating to the present circumstances and the events leading to their Chapter 11 cases. J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP, in New York, relates that the Official Committee of Unsecured Creditors has asked for information as part of its investigation of various aspects of the Debtors' businesses. Some of the requested information is sensitive to the Debtors' operation of their businesses, Mr. Ivester notes. Accordingly, the Debtors seek to establish a method by which both parties can fully coordinate and cooperate with numerous requests made by each other related to the Investigations without waiving the attorney-client privilege, the attorney work product doctrine, or any other privilege or protection attaching to any produced information through the disclosure. The Debtors and the Creditors Committee believe that it is in the best interests of the Debtors' estates to disclose confidential information related to the Investigations in order to keep them adequately apprized of the ongoing progress of the Debtors' and the Creditors Committee's investigations. The salient terms of the Joint Interest Agreement are: (a) The Debtors and the Creditors Committee may voluntarily share Information related to the Investigations among the Debtors and the creditor parties. The Creditor Parties may share and discuss Information with each other. The Creditor Parties may disclose Information as necessary in the ordinary course of their work to legal assistants, secretaries, or other non-staff professional staff, but will disclose information only to individuals who have a need to know the Information for purposes of participating in the Investigation; (b) All Information received by the Debtors and the Creditor Parties in connection with the Investigations will be held in strict confidence and used solely for purposes of the Investigations and any litigation subsequently authorized by the Court; (c) All Information provided to the Creditor Parties prior to the execution of the Joint Interest Agreement was provided in furtherance of the parties' common interest and is subject to the Interest Agreement; (d) The production of Information pursuant to the Agreement does not constitute a waiver of the attorney-client privilege, the attorney work product doctrine, or any other applicable privilege or protection; and (e) Nothing in the Agreement will expand, limit, modify or otherwise diminish the Debtors' or the Creditors Committee's rights and powers under applicable law. "The Debtors and the Creditors Committee believe that they share common interests in this regard, and intend through the Agreement that any and all sharing of information pursuant to the Agreement be protected pursuant to the 'common interest' or 'joint defense' doctrine, to the fullest extent that protection is available under applicable case law subject to the provisions of the Agreement," Mr. Ivester says. The Debtors further ask the Court to grant them a protective order with respect to information and documents produced pursuant to the Agreement. Even though the Debtors and the Creditors Committee are separate fiduciaries with distinct fiduciary duties, they share a common interest and fiduciary duty in preserving the continued confidentiality of the Information as an estate asset, Mr. Ivester says. The parties agree that the Debtors should be able to disclose the Information free from the risk that the Creditor Parties would be required to divulge the Information to third parties later and vice versa. To ensure flexibility, the parties agree that neither the Debtors nor the Creditors Committee are precluded from making future waivers of applicable privileges if those waivers are specific and narrowly tailored for the intended purpose. The Debtors ask the Court to retain jurisdiction over the matter. Given the nature of the information, any litigation arising in connection with the Joint Interest Agreement may be significant and time consuming, Mr. Ivester points out. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014 on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERSTATE BAKERIES: Works on Overdue Annual & Quarterly Reports ---------------------------------------------------------------- Interstate Bakeries Corporation continues to work towards completion of its Annual Reports on Form 10-K for the fiscal years ended May 29, 2004 and May 28, 2005, Quarterly Reports for the quarters ended August 21, 2004, November 13, 2004, and March 5, 2005, and is hopeful that those reports may be filed in the near term, the company reports in a press release. Upon completion and filings of those reports, IBC will be working expeditiously to complete and file other periodic reports that have not yet been filed. Despite IBC's desire to complete the reports and file them with the Securities and Exchange Commission, there can be no assurances as to the timing thereof or that these reports will be finalized and filed. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014 on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) JOY GLOBAL: ERISA Didn't Preempt Beloit Workers' Severance Claims ----------------------------------------------------------------- The Wisconsin Department of Workforce Development filed proofs of claims against Harnischfeger Industries, Inc. (nka Joy Global, Inc.) and Beloit Corporation on behalf of 378 former Beloit employees, seeking to recover severance pay allegedly owed to those employees under Wisconsin law. The U.S. District Court for the District of Delaware withdrew the reference of the State's claims to the Bankruptcy Court and in 2001, the Honorable Roderick R. McKelvie ruled against the State on its claims. Harnischfeger Indus., Inc. v. Wis. Dep't of Workforce Dev., 270 B.R. 188 (D. Del. 2001). The State appealed to the U.S. Court of Appeals for the Third Circuit. On appeal, Third Circuit concluded that the threshold issue of ERISA preemption should have been resolved prior to the Wisconsin state law issue. The Third Circuit explained that the preemption issue turns on whether Beloit's severance policy, which provided the basis for the DWD's claims, was an "employee benefit plan" under ERISA. The court went on to note that whether there was such a plan is a question of fact, "to be answered in light of all surrounding facts and circumstances. . . . " Accordingly, the Third Circuit vacated the judgment in part and remanded for a decision on whether the severance policy was an ERISA plan. In late-2005, the Honorable Kent A. Jordan conducted a two-day bench trial in the U.S. District Court on the issue of ERISA preemption. In a decision published at 2006 WL 2079141, Judge Jordan finds that the weight of the evidence shows that the severance policy was never treated like an ERISA plan and concludes that Beloit's severance policy was not an "employee benefit plan" under ERISA and, therefore, the DWD's claim is not preempted by ERISA. Bruce Grohsgal, Esq., and Scotta E. McFarland, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, and David F. Loeffler, Esq., at Krukowski & Costello, S.C., represented Joy Global in this matter. The Wisconsin Department of Workforce Development was represented by Richard B. Moriarty, Esq., and John R. Sweeney, Esq., from the Wisconsin Department of Justice. KAISER ALUMINUM: Salaried VEBA Trust Discloses 44% Equity Stake --------------------------------------------------------------- The Voluntary Employees' Beneficiary Association Trust for Salaried Retirees of Kaiser Aluminum Corp. is deemed to be the beneficial owner of 8,809,900 shares or 44% of KAC's common stock, with $.01 par value per share. Gary Chontos, director of client service for National City Bank, which serves as trustee of the Salaried VEBA Trust, discloses the information in a Form SC 13G filing with the U.S. Securities and Exchange Commission on July 24, 2006. The Salaried VEBA Trust does not have the power to vote nor dispose the shares it owns. 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) LAND O'LAKES: Earns $34.8 Million in the Second Quarter of 2006 --------------------------------------------------------------- Land O'Lakes Inc. reported sales of $1.7 billion and net earnings of $34.8 million for the second quarter of 2006, compared with $1.8 billion and $25.8 million for the second quarter of 2005. The Company also reported year-to-date sales of $3.8 billion and net earnings of $60.9 million, as compared to $3.8 billion and $50.1 million, respectively, a year ago. The Company's balance sheet at June 30, 2006, showed an improved Long-Term Debt to Capital ratio of 39.9% versus 48.0% as of June 30, 2005, and strong liquidity of $347 million in cash on hand and unused borrowing authority. Land O'Lakes Inc. -- http://www.landolakesinc.com/-- is a national farmer-owned food and agricultural cooperative, marketing dairy-based consumer, foodservice and food ingredient products. * * * In November 2005, Moody's Investors Service placed Land O'Lakes Inc.'s senior secured debt and long-term corporate family ratings at B1. Moody's also placed the Company's bank loan debt and senior unsecured debt ratings at Ba3 and B2 respectively. The outlook was positive. The Company's Long-term local and foreign issuer credits carry Standard & Poor's B+ ratings, which were placed Aug. 26, 2005, with a positive outlook. LUCENT TECH: Gets Autorite Des Marches Financiers' Approval Visa --------------------------------------------------------------- Lucent Technologies and Alcatel disclosed that the French securities regulator, the Autorite Des Marches Financiers, granted approval for Alcatel's French admission to trading prospectus relating to its new ordinary shares to be issued relative to the proposed merger transaction. The Note D'Operation, along with Alcatel's annual report dated March 31, 2006, constitute the prospectus regarding the issuance of new Alcatel ordinary shares and is available on the web sites of Alcatel and the AMF http://www.amf-france.org The Company also disclosed that on Aug. 4, 2006, the Securities and Exchange Commission declared effective the registration of Alcatel's ordinary shares with the SEC. The registration statement also included the Company's proxy statement for its special meeting of shareowners to be held on Sept. 7, 2006, at which shareowners will vote on a proposal to approve and adopt the merger agreement and the proposed merger transaction. The Company's shareowners with questions regarding the special meeting of shareowners or the voting of their shares may contact MacKenzie Partners, Inc., at 800-322-2885 or Morrow & Co., Inc., at 800-573-4370. About Alcatel Alcatel (NYSE:ALA) -- http://www.alcatel.com-- provides communications solutions to telecommunication carriers, Internet service providers and enterprises for delivery of voice, data and video applications to their customers or employees. With 58,000 employees in 2005, Alcatel operates in more than 130 countries. About Lucent Technologies Headquartered in Murray Hill, New Jersey, Lucent Technologies (NYSE: LU) -- http://www.lucent.com/-- designs and delivers the systems, services and software that drive next-generation communications networks. Backed by Bell Labs research and development, Lucent uses its strengths in mobility, optical, software, data and voice networking technologies, as well as services, to create new revenue-generating opportunities for its customers, while enabling them to quickly deploy and better manage their networks. Lucent's customer base includes communications service providers, governments and enterprises worldwide. * * * As reported in the Troubled Company Reporter on April 7, 2006, Moody's Investors Service placed Lucent Technologies, Inc.'s B1 corporate family rating, B1 senior unsecured rating, B3 subordinated rating, and B3 trust preferred rating under review for possible upgrade following the company's announcement of a definitive merger agreement with Alcatel. MERIDIAN AUTOMOTIVE: Seeks Sept. 30 Plan-Filing Period Extension ---------------------------------------------------------------- Meridian Automotive Systems, Inc., and its debtor-affiliates further ask the U.S. Bankruptcy Court for the District of Delaware to extend their Exclusive Filing Period through and including Sept. 30, 2006, and their Exclusive Solicitation Period through and including Nov. 30, 2006. The Debtors have worked strenuously to engage their principal creditor constituencies in negotiations that have resulted in the Conformed Third Amended Joint Plan of Reorganization, Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, tells the Court. The filing of the Third Amended Plan and the Court's approval of the Disclosure Statement on July 21, 2006, constitute significant milestones in the Debtors' steady march towards Plan confirmation, Mr. Brady says. Mr. Brady relates that the Plan is now supported by all of the Debtors' principal creditor constituencies, including the Informal Committee of First Lien Secured Lenders and the Official Committee of Unsecured Creditors. The Debtors are currently in the process of mailing Plan solicitation packages to all their creditors. The brief extension of the Exclusive Periods is intended to enable the Debtors to continue the Plan process in an orderly, efficient and cost-effective manner, Mr. Brady explains. To deny further extension of the Exclusive Periods at this stage would jeopardize the significant progress the Debtors have made toward Plan confirmation. The Court will convene a hearing on Aug. 15, 2006, to consider the Debtors' request. By application of Local Bankruptcy Rule 9006-2 for the District of Delaware, the Debtors' Exclusive Filing Period is automatically extended until the conclusion of that hearing. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000). MILLENIUM NEW: Moody's Junks Proposed $40 Mil. Secured Term Loan ---------------------------------------------------------------- Moody's Investors Service assigned a B2 corporate family rating to Millennium New Jersey Holdco, LLC. Additionally, Moody's assigned a B1 rating to the proposed $135 million first lien senior secured credit facility and a Caa1 rating to the proposed $40 million second lien secured 7-year term loan. Proceeds of the transaction will be used to refinance the company's existing facilities and distribute approximately $70 million to investors. This is the first time Moody's has assigned ratings to Millennium New Jersey Holdco, LLC. The rating outlook is stable. The B2 corporate family rating reflects Millennium's substantial debt to EBITDA leverage, limited scale and adequate asset coverage. The rating also incorporates the company's lack of geographic diversity, revenue concentration, the highly competitive nature of the radio industry, the inherent cyclicality of the advertising market, and Moody's belief that radio is a mature industry with modest growth prospects. Millennium's rating is supported by its strong EBITDA margins and dominant market share. The rating is further supported by the preponderance of local advertising in the company's revenues. Assignments: Issuer: Millennium New Jersey Holdco, LLC Corporate Family Rating, Assigned B2 * $15M First Lien Senior Secured Bank Credit Facility, Assigned B1 * $120M First Lien Senior Secured Bank Credit Facility, Assigned B1 * $40M Second Lien Secured Bank Credit Facility, Assigned Caa1 The Outlook is Stable. Millennium Radio Group, LLC, headquartered in Lawrenceville, New Jersey, is a radio broadcaster with twelve stations located throughout New Jersey. MILLIPORE CORP: Earns $29.1 Million in Quarter Ended July 1 ----------------------------------------------------------- Millipore Corporation's revenues for the second quarter ended July 1, 2006, grew 12% to $273.8 million. Changes in foreign exchange rates during the quarter had no impact on total revenue growth. Millipore's Bioprocess Division grew 13% in the second quarter and its Bioscience Division grew 10%. Excluding the impact of acquisitions, revenue growth in the second quarter was 8%. Millipore reported second quarter net income of $29.1 million, compared to net income of $24 million in the second quarter of 2005. Non-GAAP net income grew approximately 28% in the second quarter totaling $38.9 million, compared to non-GAAP net income of $30.3 million in the second quarter of 2005. "During the second quarter, our Bioscience Division continued to accelerate its performance due to improved execution and growth in international markets," said Martin Madaus, Chairman & CEO of Millipore. "The momentum of our Bioscience business is complementing the performance of our Bioprocess business, which is delivering solid growth due to the attractive fundamentals of the biopharmaceutical manufacturing market. Over the long-term, this balanced growth profile will help us to generate consistent results and drive higher levels of earnings and cash flow. "In addition to the strong quarterly performance of both of our divisions, our global supply chain initiatives contributed significantly to the 130 basis points of improvement in our non- GAAP gross profit margins and is ahead of schedule. We closed one facility in the second quarter and have transferred 36 product lines since we began this project. We are now at the mid-point of this program and we anticipate generating higher gross profit margins over the next three years." Millipore completed its previously announced acquisition of Serologicals Corporation on July 14, 2006, shortly after the close of the second quarter. With the addition of Serologicals' differentiated products, the Company will have a broad portfolio of high-margin consumable products to generate growth in revenues and profitability. Madaus added, "We are excited about the talent and differentiated product lines we are acquiring from Serologicals. We expect to build on our recent momentum by combining their products with our strong global sales organization. This combination will enable us to increase our market penetration in dynamic segments, such as cell culture supplements, nuclear function, and stem cell research." Second Quarter Highlights: -- Significant growth of the Company's laboratory water products and services in all geographic regions -- Strong growth in new Bioprocess products, including disposable technologies and virus filters -- Solid, balanced growth in Europe and the Americas -- GAAP earnings per share increase of 14%; Non-GAAP earnings per share increase of 20% Millipore Corporation, headquartered in Billerica, Massachusetts, is a bioprocess and bioscience products and services company. The Bioprocess division offers solutions that optimize development and manufacturing of biologics. The Bioscience division provides high performance products and application insights that improve laboratory productivity. * * * As reported in the Troubled Company Reporter on July 19, 2006, Moody's Investors Service downgraded the credit ratings of Millipore Corporation. The rating action concluded a rating review for possible downgrade initiated on April 27, 2006 following the announcement by Millipore that it entered into a definitive agreement to acquire all of the outstanding shares of Serologicals Corporation for $1.4 billion, including the assumption of about $100 million in Serologicals' debt. The Baa3 rating on the Company's $100 million senior unsecured notes, due 2007, was lowered to Ba2. The (P)Baa3 rating on the $300 Million Shelf Registration was also lowered to (P)Ba2. In addition Moody's assigned a Ba1 Corporate Family Rating to the Company. MITTAL STEEL: Moody's Confirms Ba1 Senior Unsecured Ratings ----------------------------------------------------------- Moody's Investors Service confirmed the Baa3 corporate family and senior unsecured issuer ratings of Mittal Steel Company N.V., the Baa3 rating of the guaranteed debt of Ispat Inland, ULC as well as the Ba1 senior unsecured rating of Mittal Steel U.S.A. Inc. and the Ba1 senior unsecured rating of bonds initially issued by Ispat Inland, Inc. In addition, Moody's downgraded the long-term rating of Arcelor Finance and Usinor, now Arcelor France, to Baa3 from Baa2 and the short-term rating of Arcelor Finance to Prime-3 from Prime-2. The outlook is stable for all ratings. The rating actions conclude the review for possible downgrade that was initiated on Mittal Steel and Arcelor's ratings on January 30 as a result of Mittal Steel's bid for Arcelor and follow the tender of 91.9% of Arcelor shares to Mittal Steel, paving the way for a merger of the two groups. Upon completion of the merger, the combined entity will be the world's leading steel producer with a steel-making capacity of 120 million tons p.a. and an unrivalled product and geographical coverage - key factors supporting the current ratings. The Baa3 ratings are also underpinned by the group's solid operational and cash flow profile, with financial metrics that Moody's expects to show a trend of de-leveraging following the transaction. Both Arcelor and Mittal have demonstrated strong performance over recent years, primarily as a result of the buoyancy in steel prices but also thanks to cost improvements, efficiencies in operations and, in the case of Mittal, better access to lower-cost raw materials. Cash flows from both companies are substantial in the context of legacy individual indebtedness and as such the individual company credit metrics were strong pre-transaction. As regards prospects for servicing the combined debt plus acquisition debt, it is Moody's central scenario that steel prices will remain robust over the next 12-18 months, thereby providing a window for speedy debt reduction from a peak of adjusted proforma US$36 billion. Pro-forma (2005) metrics for the transaction are: -- Operating Cash Flow less Dividends to Adjusted Debt of 21.8%; -- Free Cash Flow to Adjusted Debt of 9.3%; EBIT to Gross Interest of 7.9x; and -- Adjusted Debt / EBITDA of 2.3x. Moody's expects these metrics to develop as follows over the next two to three years: -- Operating Cash Flow less Dividends to Adjusted Debt in the high twenties; -- Free Cash Flow to Adjusted Debt in the mid teens; -- EBIT to Gross Interest above 6.0x; and -- Adjusted Debt / EBITDA below 2.5x. Moreover, Mittal's access to raw materials and its high levels of self-sufficiency should ensure that the group's exposure to volatile prices is minimized, thus maintaining a good cash cushion for variations in steel prices. Given the immediate risks associated with combining the entities at a relatively high point in the steel price cycle, and the need to conclude on a number of outstanding pre-merger issues - not least the likely sale of Dofasco, the possible buy-out of Arcelor's Brazilian minorities and the composition of the senior management roster. Moody's has set certain financial metrics as a threshold to maintaining investment grade, namely: -- Operating Cash Flow less Dividends to Adjusted Debt of at least 20%; -- Free Cash Flow to Adjusted Debt of at least 5%; EBIT to Gross Interest of at least 4x; and -- Adjusted Debt/EBITDA of below 3.5x. Any improvement in the ratings will primarily depend upon the success of the integration process and the performance of the combined entity over the next 12-18 months, most notably to reduce debt as expected. Moody's will continue to assess the evolution of the debt and capital structure of the combined entity. At the outset it is expected that the legacy debt outstanding at each entity will remain in place. Moreover, Moody's has not introduced any notching for any structural subordination given the position of the debt relative to the cash flow generation from the respective entities. The rating of Arcelor has therefore been aligned with Mittal's Baa3 rating. The stable outlook is based on Moody's expectation that the combined cash flows will remain above the threshold metrics and that the combined management of the two groups will be able to integrate operations with a common strategic direction. Ratings confirmed: Mittal Steel Company N.V. -- Baa3 Corporate Family Rating; and -- Baa3 Issuer Rating Mittal Steel USA, Inc. -- Ba1 Rating on the senior unsecured global notes Ispat Inland Inc. -- Ba1 Rating on the senior unsecured industrial revenue bonds; and -- Ba1 Rating on the senior unsecured pollution control bonds. Ispat Inland U.L.C. -- Baa3 rating on the guaranteed senior secured notes due 2010 (floating rate); and -- Baa3 rating on the guaranteed senior secured notes. Ratings downgraded: Arcelor Finance -- Senior Unsecured Rating, to Baa3 from Baa2; -- Short-Term Rating, to Prime-3 from Prime-2; and -- Baa3 Senior Unsecured Rating of Usinor, to Baa3 from Baa2. Mittal Steel Company N.V., the world's largest steel company, was formed from the combination of Ispat International N.V., LNM Holdings N.V. and ISG. For the fiscal year 2005, the company reported revenues of US$28 billion. Arcelor, based in Luxembourg, is the world's second-largest steel group with leading market positions in flat steel, long steel and stainless steel. In 2005 the group generated annual sales of EUR32 billion. MUSICLAND HOLDING: Paul Weiss Hired as Trade Vendors Panel Counsel ------------------------------------------------------------------ Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure, Andrew Rosenberg, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, in New York, discloses that his firm serves as counsel to these members of the Informal Committee of Secured Trade Vendors: (a) Bond Street Capital, LLC 700 Palisade Avenue Englewood Cliffs, NJ 07632 (b) Cargill Financial Services International, Inc., 12700 Whitewater Drive Minnetonka, MN 55343-9439 (c) Credit Suisse International 11 Madison Avenue New York, NY 10010 (d) Hain Capital Group, LLC Meadowland Office Complex 301 Route 17 Rutherford, NJ 07070 (e) Varde Investment Partners, LP 8500 Normandale Lake Boulevard, Suite 1570 Minneapolis, MN 55437 (f) Metro-Goldwyn-Mayer Home Entertainment LLC 10250 Constellation Boulevard, 10th Floor Los Angeles, CA 90067 (g) The Walt Disney Company 611 North Brand Boulevard, Suite 700 Glendale, CA 91203 Mr. Rosenberg relates that the nature of the claims held by members of the Informal Committee against Musicland Holding Corp. and its debtor-affiliates includes claims secured by certain Trade Collateral. Mr. Rosenberg discloses that his firm also represents Magazine Retail Enterprises, Inc., and its affiliates Time Direct Ventures, Inc., and Entertainment Weekly, Inc. Paul Weiss does not hold any other claims against or equity interests in the Debtors, Mr. Rosenberg assures the U.S. Bankruptcy Court for the Southern District of New York. Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. Mark T. Power, Esq., at Hahn & Hessen LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Musicland Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) NAVIGATOR GAS: Emerges from Chapter 11 Protection ------------------------------------------------- Navigator Gas Transport plc and its affiliated companies emerged, on Aug. 9, 2006, from chapter 11 by completing the reorganization provided for under the chapter 11 plan proposed by the Official Creditors Committee appointed in Navigator's chapter 11 case. The Committee's plan previously was approved by the U.S. Bankruptcy Court for the Southern District of New York. Under a July 4 order of an Isle of Man court the Navigator companies' emergence from chapter 11 also results in the permanent stay of companion winding-up proceedings against the Navigator companies that were brought in such jurisdiction by creditors when Navigator's principals, including Giovanni Mahler, violated the Bankruptcy Court's orders in an attempt to derail the creditor-led reorganization. Under the chapter 11 plan that became effective on Aug. 9, 2006, all of the equity in Navigator Holdings PLC will be transferred to the holders of Navigator's 10.5% First Priority Ship Mortgage Notes and 12% Second Priority Ship Mortgage Notes in exchange for the cancellation of such debt securities. Management of the Navigator companies, which had been subject to the control of a liquidator appointed by the Isle of Man court, will now report to a board of directors designated by the Creditors Committee. The companies' day-to-day operations will not be affected by the change in control effectuated by the chapter 11 plan. Mr. Mahler, a resident of Lugano, Switzerland, and various affiliated entities and individuals, including Cambridge Gas Transport Corporation and Navigator Gas Management Limited, remain in contempt of the Bankruptcy Court's orders and are liable for substantial unpaid judgments against them arising from their attempts to thwart recoveries due to Navigator's creditors. Headquartered in Castletown, Isle of Man, Navigator Gas Transport PLC, transports liquefied petroleum gases and petrochemical gases between ports throughout the world. The Company along with its debtor-affiliates filed for chapter 11 protection on Jan. 27, 2003 (Bankr. S.D.N.Y. Case No. 03-10471). Adam L. Shiff, Esq., at Kasowitz, Benson, Torres & Friedman LLP represents the Debtors in the United States. When the Company filed for protection, it listed $197,243,082 in total assets and $384,314,744 in total debts. OMI CORP: Earns $131.8 Million in 2006 Second Quarter ----------------------------------------------------- OMI Corporation reported record net income of $131,772,000, which included gain on disposal of vessels of $78,038,000, in the second quarter ended June 30, 2006, compared with net income of $47,136,000 for the second quarter ended June 30, 2005. For the six months ended June 30, 2006, net income was $195,335,000, which included gain on disposal of vessels of $78,038,000, compared to net income of $122,917,000 for the six months ended June 30, 2005, which included gain on disposal of vessels of $2,874,000. Revenue of $183,270,000 for the second quarter ended June 30, 2006 increased $34,796,000 or 23% compared to revenue of $148,474,000 for the second quarter ended June 30, 2005. Revenue of $376,462,000 for the six months ended June 30, 2006 increased $56,546,000 or 18% compared to revenue of $319,916,000 for the six months ended June 30, 2005. Revenue from the Company's product carriers increased primarily due to more operating days from vessels acquired and higher rates. The revenue from our Suezmax vessels increased because of 3 additional vessels in our Gemini Suezmax Pool, which was offset by the 2 Suezmax vessels sold in the fourth quarter of 2005. Craig H. Stevenson, Jr., Chairman and Chief Executive Officer commented that "On both a net income and earnings per share basis the quarter was the best in the Company's history. Even excluding gains from sales of vessels it was the best second quarter in our history. "The strong performance of the Company has allowed us to repurchase nearly 30% of our outstanding shares, reduce our net debt to total capitalization to 40% and to institute and increase our dividend. We continue to use the strong markets to further enhance our future revenue visibility with new time charters and synthetic time charters and therefore expect continued strong cash flows for years to come. Our best use of cash today is to repurchase our own shares. OMI's fleet is one of the youngest in the world and our share price is trading below our calculation of net asset value. That combined with our time charter revenue makes it a very compelling investment." Other second quarter highlights: -- Gain on sale of 3 Suezmax vessels of $78 million was recognized in the second quarter. Deferred gain on the sale leaseback of 1 Suezmax vessel of approximately $26.5 million was recorded. The vessel continues to be commercially managed by the Company through the Gemini Pool. -- The Company currently has approximately $701 million in time charter revenue contracts (excluding any potential profit sharing) for the period from July 2006 to May 2012, including 3 contracts for Suezmax vessels entered into during the second quarter, of which 2 of these Suezmax vessels will continue to operate in the Gemini Pool. -- During the second quarter, the Board declared a quarterly dividend of $0.10 per share. -- In April 2006, the Board authorized $70 million for the repurchase of common stock. -- In July 2006, the Company entered into 3 synthetic time charters (FFA contracts), 2 commenced July 2006, a three year contract for a Suezmax vessel (130,000 metric tons "mt") at $37,250 per day and a six month contract for 1/2 Suezmax vessel (65,000 mt) at $47,500 per day and 1 three year contract for a 1/4 Suezmax vessel (32,500 mt) at $40,000 per day will commence in October 2006. We currently have synthetic time charters of $116 million from July 1, 2006 through September 2009. -- In June 2006, contracted for sale of 1 product carrier for delivery in the third quarter, which will result in an estimated gain on sale of approximately $13 million. -- Took delivery of one 2006 built product carrier in May 2006, which completes the Company's newbuilding program. OMI Corporation is a seaborne transporter of crude oil and refined petroleum products operating in the international shipping markets. * * * Standard & Poor's Rating Services assigned OMI Corporation a BB corporate credit rating on Nov. 13, 2003, and has affirmed that rating, most recently in December 2004. O'SULLIVAN IND: Hires BDO Seidman as Independent Accountants ------------------------------------------------------------ In a Form 8-K filing with the Securities and Exchange Commission, O'Sullivan Industries Holdings, Inc., discloses that on July 20, 2006, it appointed BDO Seidman, LLP, as its new independent registered public accountants to audit the company's financial statements. President and Chief Executive Officer Rick A. Walters reports that during the company's past two most recent fiscal years, the company has not consulted BDO Seidman regarding either: (i) the application of accounting principles to a specified transaction, either completed or propose; (ii) the type of audit opinion that might be rendered on its financial statements; or (iii) any other matters or reportable events as described in Items 304(a)(2)(i) and (ii) of Regulation S-K. Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings, Inc. -- http://www.osullivan.com/-- designs, manufactures, and distributes ready-to-assemble furniture and related products, including desks, computer work centers, bookcases, filing cabinets, home entertainment centers, commercial furniture, garage storage units, television, audio, and night stands, dressers, and bedroom pieces. O'Sullivan sells its products primarily to large retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and Office Depot. The Company and its subsidiaries filed for chapter 11 protection on Oct. 14, 2005 (Bankr. N.D. Ga. Case No. 05- 83049). Joel H. Levitin, Esq., at Dechert LLP, represents the Debtors. Michael H. Goldstein, Esq., Eric D. Winston, Esq., and Christine M. Pajak, Esq., at Stutman, Treister & Glatt, P.C., represent the Official Committee of Unsecured Creditors. On Sept. 30, 2005, the Debtor listed $161,335,000 in assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) OVERSEAS SHIPHOLDING: Earns $60.2 Million in Second Quarter 2006 ---------------------------------------------------------------- Overseas Shipholding Group, Inc., reported results for the second fiscal quarter of 2006. For the quarter ended June 30, 2006, net income was $60.2 million, down 47% from $114.2 million in the same period a year earlier. The year ago quarter benefited from gains on vessel sales of $13.2 million, compared with a loss of $3.5 million, in the current quarter. EBITDA for the second quarter declined 38% to $109.1 million from $176.3 million in the second quarter of 2005. TCE revenues in the quarter decreased by 5% to $216.3 million from $228.6 million in the second quarter of 2005. For the six months ended June 30, 2006, the Company reported net income of $188.6 million, a 32% decline from net income of $279.1 million, recorded in the first half of 2005. Net income for the first half of 2005 benefited from gains on ship disposals of $26.1 million, compared with a loss of $3.6 million for the same period in fiscal 2006. EBITDA for the first six months of 2006 was $289.2 million, a 28% decrease from $399.7 million in the first half of 2005. TCE revenues for the six months of 2006 increased less than 1% to $496.4 million from $495.8 million in the first half of 2005. Morten Arntzen, president and chief executive officer, stated, "It was another quarter of strong performance in each of our sectors. In what is generally a seasonally weak quarter, our crude oil tanker fleet, which is entirely double hull, continued to benefit from the tanker market's greater discrimination against single hull tankers and from the tight oil markets across the globe. During the same period, we continued to produce steady results from our Product and U.S. segments, while also building a bigger book of longer term time charters." Mr. Arntzen continued, "We continue to generate strong cash flow, have nearly $350 million in cash and tax-effected Capital Construction Fund and $1.8 billion of credit, all available for future growth initiatives and our stock buyback program." Overseas Shipholding Group, Inc. (NYSE:OSG) --- http://www.osg.com/-- is one of the largest publicly traded tanker companies in the world with an owned, operated and newbuild fleet of 117 vessels, aggregating 13.0 million dwt and 865,000 cbm, as of June 30, 2006. As a market leader in global energy transportation services for crude oil and petroleum products in the U.S. and International Flag markets, the Company is committed to setting high standards of excellence for its quality, safety and environmental programs. OSG is recognized as one of the world's most customer-focused marine transportation companies, with offices in New York, Athens, London, Newcastle and Singapore. * * * As reported in the Troubled Company Reporter on Aug. 9, 2006, Moody's Investors Service affirmed the debt ratings of Overseas Shipholding Group, Inc.'s Senior Unsecured at Ba1. The outlook has been changed to stable from negative. OWENS CORNING: Balance Sheet Upside Down by $7.82 Bil. at June 30 ----------------------------------------------------------------- Owens Corning reported consolidated net sales and operating results for the second quarter and the first six months of 2006. The company reported quarterly consolidated net sales of $1.722 billion during the second quarter, compared with $1.590 billion in the second quarter of 2005, representing an 8.3 percent increase from the prior year. "We're pleased with the results of the second quarter that reflected an environment of strong demand for many of our products," said Dave Brown, president and chief executive officer. "While continued cost increases in energy-related commodities impacted most of our product lines, we were able to offset in part the impact of those higher costs through price increases and improved productivity. "We continue to make significant progress toward emergence from Chapter 11 in 2006," said Mr. Brown. "Reaching agreement with our creditors on a plan of reorganization and the Bankruptcy Court approval of our disclosure statement have paved the way for our company to exit Chapter 11. In preparation for emergence, Standard & Poor's (S&P) and Moody's both announced their intent to assign an investment-grade credit rating to Owens Corning, which affirms our company's strong balance sheet and market leadership. "We recently announced that we are in discussions with Saint- Gobain to form a reinforcement and composite fabrics joint venture that would better serve customers around the world," said Mr. Brown. "Combined with our planned acquisition of the Modulo(TM)/ParMur Group in Europe, these initiatives would further expand our company's global business." Highlights of Consolidated 2006 Second Quarter and Six-Month Results: -- Second quarter income from operations was $168 million, compared with $169 million for the same period of 2005. -- For the first six months, income from operations was $283 million, compared with a loss from operations of $4.112 billion for the same period of 2005. The loss from operations for the first six months of 2005 was primarily a result of an additional $4.342 billion provision for asbestos liability, which the company recognized in the first quarter of 2005. -- Net sales for the first six months were $3.323 billion, compared with $2.992 billion in the first six months of 2005, representing an 11.1 percent increase from the prior year. The increase was driven by strong demand for building materials products and improved prices for certain products. -- For the first six months, cash flow from operations totaled $79 million, compared with $54 million in the prior year period. The increase was due primarily to an increase in income from operations. -- For the first six months, the company's continued focus on employee safety resulted in a 17 percent reduction in injuries compared with the year ended December 31, 2005. Gross margin for the second quarter was 17.2 percent compared with 19.6 percent in the prior year period. While gross margin improved in Insulating Systems, it was more than offset by reductions due to inflation in material, energy and transportation costs, the temporary unavailability of manufacturing capacity in India and Brazil due to maintenance and expansion, and price reductions in other business segments. Selling, General and Administrative (SG&A) expenses, as a percentage of consolidated net sales for the second quarter, were 8.1 percent compared with 8.9 percent in the second quarter of 2005. For the first six months of 2006, SG&A expenses were 8.2 percent compared with 8.9 percent in the prior year period. The improvement in the expense ratio reflects the increase in the company's net sales. Second Quarter 2006 Business Segment Highlights: Insulating Systems -- Sales were $519 million, compared with $459 million in the second quarter of 2005, representing a 13.1 percent increase from the prior year. Sales were lifted by continued strong demand in the U.S. housing and remodeling, commercial and industrial markets. -- Income from operations increased 15.5 percent to $112 million, compared with $97 million in the prior year period. Favorable pricing, higher volumes and improved productivity offset higher costs. Roofing and Asphalt -- Sales were $501 million, compared with $473 million in the second quarter of 2005, representing a 5.9 percent increase from the prior year. The increase in sales was primarily the result of price increases, generally reflecting the pass through of higher energy, material and transportation costs, which offset volume declines. -- Income from operations decreased 5.9 percent to $48 million, compared with $51 million in the prior year period. Volume declines and significant raw material cost increases offset price increases and improved productivity. Other Building Materials and Services -- Sales were $346 million, compared with $326 million in the second quarter of 2005, representing a 6.1 percent increase from the prior year. Sales increased primarily due to higher volumes, particularly in the company's manufactured stone veneer and construction services businesses. -- Income from operations decreased 20 percent to $8 million, compared with $10 million in the prior year period. The decline was the result of higher costs in energy, materials, labor and transportation. Composite Solutions -- Sales were $411 million, compared with $384 million in the second quarter of 2005, representing a 7.0 percent increase from the prior year. The acquisition of a manufacturing facility from the Asahi Glass Co. Ltd. on May 1, 2006, contributed to an increase in sales. -- Income from operations increased 54.5 percent to $51 million, compared with $33 million in the prior year period. The increase reflects gains of $27 million from the replacement of metals used in certain production tooling and $8 million from insurance recoveries related to a flood at the company's Taloja, India plant in 2005. Without these two gains, income from operations would have declined by $17 million due to facility maintenance and expansion, lower prices, higher raw material costs, and increased transportation and energy costs. Business Outlook Although market demand for building materials products remained strong through the second quarter, recent increases in United States housing inventory and higher interest rates are expected to exert pressure on demand, which could impact prices for certain products. The Energy Policy Act of 2005 may somewhat offset this potential softening of demand and stimulate demand for some Owens Corning products in the United States due to the potential tax credits offered to home builders for the construction of more energy- efficient homes, and to homeowners for certain energy-efficient home improvements. Increased global demand for energy-related commodities and services has resulted in continued cost increases, which will require the company to continue to achieve additional productivity gains to sustain margins. Subsequent Events In July 2006, S&P and Moody's announced their intent to assign a BBB- and a Baa3 credit rating, respectively, to Owens Corning's credit facilities upon emergence from Chapter 11. The investment- grade credit ratings are based on a detailed analysis of the company's financial and market strength. Owens Corning also announced a purchase agreement on July 25, 2006, to acquire the Modulo/ParMur Group, a market-leading producer and distributor of manufactured stone veneer in Europe. The acquisition will further the global expansion of the Owens Corning manufactured stone veneer business in the European building products market. On July 27, 2006, Owens Corning announced that it was in discussions to merge its reinforcements business with Saint- Gobain's Reinforcement and Composites businesses into a new company to be called Owens Corning-Vetrotex Reinforcements. The combination would establish a new global company in reinforcement and composite fabrics products with annual sales of $1.8 billion. The new company would be majority owned by Owens Corning and serve customers with improved technology, an expanded product range and greater geographic reach. The transaction is expected to close by early 2007 and is subject to the negotiation and execution of definitive transaction documents, Board of Directors approval by the parent companies, and regulatory and antitrust approvals. Progress Toward Emergence in 2006 Continues Owens Corning announced on May 10, 2006, that it reached an agreement with the representatives of each of its key creditor groups on the terms of a Chapter 11 plan of reorganization. This represents a significant milestone in the company's Chapter 11 proceedings and, if confirmed, paves the way for Owens Corning to emerge from bankruptcy in 2006. The Disclosure Statement with respect to the Sixth Amended Joint Plan of Reorganization for Owens Corning was approved by the bankruptcy court on July 10, 2006. A Confirmation hearing on the Sixth Amended Joint Plan of Reorganization for Owens Corning and its Affiliated Debtors and Debtors-in- Possession is scheduled for September 18, 2006. A full-text copy of Owens Corning's Form 10-Q report is available for free at the Securities and Exchange Commission at http://ResearchArchives.com/t/s?f28 Owens Corning and Subsidiaries Consolidated Balance Sheets As of June 30, 2006 (In millions) ASSETS CURRENT Cash and cash equivalents $1,493 Receivables, less allowance of $19 million 826 Inventories 528 Other current assets 48 ----------- Total current 2,895 ----------- OTHER Restricted cash - asbestos & insurance related 204 Restricted cash, securities & other - Fibreboard 1,441 Deferred income taxes 1,653 Pension-related assets 441 Goodwill 215 Investment in affiliates 79 Other non-current assets 209 ----------- Total other 4,242 ----------- PLANT & EQUIPMENT, at cost Land 86 Buildings & leasehold improvements 813 Machinery & equipment 3,394 Construction in progress 203 ----------- 4,496 Accumulated depreciation (2,414) ----------- 2,082 ----------- TOTAL ASSETS $9,219 =========== LIABILITIES & STOCKHOLDERS' DEFICIT CURRENT Accounts payable & accrued liabilities $1,008 Accrued postpetition interest 890 Short-term debt 8 Long-term debt - current portion 13 ----------- Total current 1,919 ----------- Long-Term Debt 42 ----------- OTHER Pension plan liability 702 Other employee benefits liability 405 Other 215 ----------- Total other 1,322 ----------- LIABILITIES SUBJECT TO COMPROMISE 13,515 ----------- COMPANY OBLIGATED SECURITIES OF ENTITIES HOLDING SOLELY PARENT DEBENTURES - SUBJECT TO COMPROMISE 200 ----------- MINORITY INTEREST 48 ----------- STOCKHOLDERS' DEFICIT Preferred stock, no par value 8,000,000 shares authorized, none issued or outstanding - Common stock, part value $0.10 per share, 100,000,000 shares authorized, 55.3 issued and outstanding 6 Additional paid in capital 692 Accumulated deficit (8,232) Accumulated other comprehensive loss (292) Other (1) ----------- Total stockholders' deficit (7,827) ----------- TOTAL LIABILITIES & STOCKHOLDER'S DEFICIT $9,219 =========== Owens Corning and Subsidiaries Consolidated Statement of Operations For the Quarter Ended June 30, 2006 (In millions) NET SALES $1,722 COST OF SALES 1,426 ----------- Gross Margin 296 OPERATING EXPENSES Marketing & administrative expenses 140 Science & technology expenses 15 Chapter 11 related reorganization items 17 Provision for asbestos litigation claims, Owens - Provision for asbestos litigation claims, Fibreboard - Gain on sales of fixed assets and other (44) ----------- Total operating expenses 128 ----------- INCOME FROM OPERATIONS 168 Interest expense, net 86 ----------- INCOME BEFORE INCOME TAX BENEFIT 82 Income tax benefit (169) ----------- INCOME BEFORE MINORITY INTEREST & EQUITY IN NET EARNINGS OF AFFILIATES 251 Minority interest & equity in net earnings of affiliates - ----------- NET INCOME $251 =========== Owens Corning and Subsidiaries Consolidated Statement of Cash Flows Six Months Ended June 30, 2006 (In millions) NET CASH FLOW FROM OPERATIONS Net income $314 Reconciliation of net cash used for operations Non-cash items: Provision for asbestos litigation claim - Depreciation and amortization 124 Gain on sale of fixed assets (35) Impairment of fixed assets 2 Change in deferred income taxes (204) Provision for pension and other employee benefits 48 Provision for postpetition interest/fees 155 Increase in receivables (162) Increase in inventories (31) Decrease in accounts payable & accrued liabilities (95) Proceeds from insurance for asbestos litigation claims excluding Fibreboard 17 Pension fund contribution (5) Payments for other employee benefits liabilities (14) Increase in restricted cash - asbestos and insurance related (15) Increase in restricted cash, securities, and other - Fibreboard (9) Other (11) ---------- Net cash flow from operations 79 NET CASH FLOW FROM INVESTING Additions to plant and equipment (189) Investment in subsidiaries & affiliates, net of cash acquired (13) Proceeds from the sale of assets or affiliate 44 ---------- Net cash used for investing (158) ---------- NET CASH FLOW FROM FINANCING Proceeds from issuing long-term debt 10 Payments on long-term debt (4) Net increase in short-term debt 2 ---------- Net cash used for financing 8 ---------- Effect of exchange rate changes on cash 5 ---------- Net increase in cash and cash equivalents (66) Cash and cash equivalents at beginning of year 1,559 ---------- Cash and equivalents at end of period $1,493 ========== 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. 136; Bankruptcy Creditors' Service, Inc., 215/945-7000) OWENS CORNING: Wants to Pay Back Asbestos Trustees & Panel Members ------------------------------------------------------------------ The Sixth Amended Plan of Reorganization of Owens Corning and its debtor-affiliates provides for the establishment of a trust into which all asbestos-related personal injury claims will be channeled. Under the Plan, the occurrence of the "Effective Date" is subject to conditions precedent that, inter alia: -- trustees for the Asbestos Personal Injury Trust will have accepted their appointment as Asbestos Personal Injury Trustees and will have executed the Asbestos Personal Injury Trust Agreement; and -- the individuals designated to serve as members of the Trustee's Advisory Committee for the Trust will have accepted their appointment as TAC members. James J. McMonagle, the Court-appointed legal Future Claimants Representative in the Debtors' Chapter 11 cases, and the Official Committee of Asbestos Personal Injury Claimants have interviewed approximately 80 candidates to serve as prospective trustees and directors in several cases, including the Owens Corning cases, in connection with the formation of asbestos personal injury trusts. However, the Trustees have not yet been selected. Once selected, Marla R. Eskin, Esq., at Campbell & Levine LLC, at Wilmington, Delaware, tells the U.S. Bankruptcy Court for the District of Delaware that the Trustees will commence taking the steps necessary to have the Asbestos Personal Injury Trust operational and ready to receive, process and pay asbestos personal injury claims as soon as reasonably practicable after the Effective Date. The FCR and ACC expect that the Trustees will want to retain separate counsel in connection with carrying out their duties. Pursuant to the Asbestos Personal Injury Trust Agreement, the Trustees are required to consult with the TAC and the FCR on certain issues relating to the Asbestos Personal Injury Trust, including issues relating to the Trust's general implementation and administration. Each member of the TAC will be entitled to compensation from the Asbestos Personal Injury Trust in the form of a reasonable hourly rate set by the Trustees for attendance at meetings or other conduct of the Trust's business. The TAC members will also be reimbursed for reasonable out-of-pocket costs and expenses. The FCR and ACC want to have the Trustees and the TAC commence establishing the Asbestos Personal Injury Trust and taking the other steps necessary to have the Trust ready to be functioning by the Effective Date. As part of these preparations, the Trustees will be meeting with representatives of the Debtors, the FCR, the ACC and proposed TAC members. The FCR and ACC ask the Court to authorize the Debtors: a. to reimburse the Trustees for the reasonable attorneys' fees and out-of-pocket expenses incurred in connection with the establishment of the Asbestos Personal Injury Trust and other actions necessary to have the Trust ready to be operational by the Effective Date; b. if the TAC members undertake activities prior to confirmation, to reimburse those members for reasonable out-of-pocket expenses incurred in connection with the activities and pay the members a reasonable hourly rate established by the Trustees for meetings attended or other conduct of the Trust's business; c. pay the Trustees for meetings attended at the per diem rate as set forth in the Asbestos Personal Injury Trust Agreement and agreed on by the FCR and the FCC; and d. pay the premiums for errors and omissions insurance to be issued on the Trustees' behalf. Pursuant to the Asbestos Personal Injury Trust Agreement, each of the Trustees will be entitled to receive $60,000 per annum from the Asbestos Personal Injury Trust for their services. The Managing Trustee will receive $75,000 for his service, plus: -- a per diem allowance for telephonic meetings or other Asbestos Personal Injury Trust business performed for $1,500; -- a per diem allowance for in-person meetings for $2,500; and -- the reimbursement of reasonable out-of-pocket costs and expenses. Ms. Eskin points out that the reimbursable fees and expenses will be of no cost to the Debtors' estates since payment will be offset against the $1.25 billion payment to the Asbestos Personal Injury Trust on the Effective Date. The FCR and ACC further ask Judge Fitzgerald to authorize the Debtors to make the payments without further authorization of, or approval by, the Bankruptcy Court. "By authorizing the Debtors to reimburse the Trustees and the TAC members now . . . the Debtors will be in a position to consummate the Sixth Amended Plan shortly after confirmation," Ms. Eskin maintains. 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. 138; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARAMOUNT RESOURCES: Moody's Junks Rating on $150 Million loan -------------------------------------------------------------- Moody's Investors Service downgraded Paramount Resources' Corporate Family Rating to Caa1 from B3 and its senior note ratings to Caa2 from B3. Moody's also assigned a Caa1 rating to Paramount Resources' new $150 million senior secured term loan. The outlook is moved to stable from negative. Proceeds from the new term loan are being used to refinance existing borrowings under the revolver and for general corporate purposes. The term loan is secured by Paramount's 36% interest in North American Oil Sands Company. The term loan is not expected to amortize but there is a mandatory prepayment requirement if the shares are sold. Moody's downgraded Paramount Resources' Corporate Family Rating to reflect the company's very high leverage, high full-cycle costs, relatively weakened capital productivity, and the weak organic reserve and production growth. On these measures, Paramount Resources ranks among the weakest of all exploration and production companies rated by Moody's. The company has a total full-cycle cost structure in the high $40 per boe range. Contributing to the very high cost structure is the company's 3-year all-sources reserve replacement costs, driven by a reserve replacement cost in the $60 per boe range in 2005. Pro-forma for the new $150 million term loan and expected future borrowings to fund its capital expenditure program as it continues its pattern of outspending cash flow, Paramount's gross adjusted leverage per proven developed reserve will be in the mid-$20 range, which maps to the very high end of the Caa range. Leverage remains in the Caa range when factoring in collateral protection from the interest in North American Oil Sands securing the term loan and from the Trilogy Unit Trusts securing the senior notes. There is considerable uncertainty regarding future valuations of the collateral, especially in the event they are needed to cover the secured debt instruments. Based on the collateral protection offered to holders of the $150 million term loan by Paramount's stake in North American Oil Sands Company, Moody's believes it is appropriate to rate the term loan in line with the Caa1 Corporate Family Rating. Recently, Paramount transferred 50% of its SAGD oil sands joint venture to NAOSC for a 50% stake in the company. Paramount currently holds an approximate 36% stake in NAOSC after a recent private placement of the equity in the second quarter of 2006. Moody's note that the NAOSC is not generating cash flow and will have substantial capital expenditure needs; however, given the recent very strong valuations in oil sands properties, there currently appears to be significant value. The term loan is not notched up from the Corporate Family Rating as the underlying interests are a minority interest in a private company which is an illiquid investment and whose sole asset is undeveloped acreage that requires substantial capital spending to develop, and therefore could significantly impact valuations in a time of distress at Paramount. Moody's is downgrading the senior notes one notch below the Corporate Family Rating and the term loan. While the exact value of the collateral for the term loan remains questionable, there has been clear evidence of the fluctuating market values of the Trilogy Units relative to the senior notes. The value of the Units has greatly fluctuated in recent months, and, at one time, the collateral showed a 22% deficiency relative to the value of the senior notes including the make-whole premium. In addition, the units, if sold at once would put significant downward pressure on the Units. The introduction of the term loan also removes an asset providing some additional protection to note holders in the event of a collateral shortfall. Per Moody's Methodology, Paramount Resources maps to a Caa1 rating, among the lowest ratings for any exploration and production company. With the exceptions of a very borderline B rating on proved developed reserves and leveraged full-cycle ratio and Ba retained cash flow metric due to the recent strength in commodity prices, all other reserve and production characteristics, reinvestment risk characteristics, operating & capital efficiency characteristics, and leverage characteristics map to the Caa category. As a result, the overall methodology outcome is Caa1 based on some attribution for collateral securing the senior notes and the $150 million term loan. While the outlook is currently stable, the ratings could be further pressured if management were to take significant additional shareholder friendly action that further diminishes the collateral protection. In addition, further increases in leverage, diminishment in the Trilogy Unit collateral and value of oil sands interests, failure to reverse the negative production trend, or failure to reverse the poor reserve replacement rate could further pressure the ratings. Paramount Resources is headquartered in Calgary, Alberta, Canada. PERKINELMER INC: Earns $35.7 Million in Quarter Ended July 2 ------------------------------------------------------------ PerkinElmer, Inc., generated revenues of $377 million for the second quarter ended July 2, 2006. Second quarter 2006 revenue of $377 million increased 2% over the second quarter of 2005. Revenue growth was 3% in Life and Analytical Sciences and 1% in Optoelectronics compared to the same period last year. Second quarter 2006 revenue from Health Sciences end markets, representing 83% of total revenues for the quarter, increased 3% over the same period of 2005, while second quarter revenue from Photonics end markets increased 1% over the same period. GAAP operating profit during the second quarter of 2006 was $35.7 million, while GAAP operating margin for the same period was 9.5%. Second quarter 2006 operating profit excluding intangibles amortization of $7.8 million, stock option expense of $2.1 million and a restructuring reversal of $.3 million was $45.3 million, or 12.0% as a percentage of revenue for the quarter, representing an increase of 30 basis points compared to the same period of last year. Recently, the Company completed three acquisitions in the priority growth areas of screening, diagnostics and service. Within screening and diagnostics, the Company acquired the business and associated intellectual property of NTD Laboratories and Spectral Genomics. NTD Laboratories is a leading provider of first-trimester prenatal risk assessment, while Spectral Genomics is a leader in molecular karyotyping technology used to research chromosomal abnormalities. NTD Laboratories and Spectral Genomics provide additional technology and a broader platform to drive the Company's high growth screening and diagnostics strategies. Within service, the Company acquired Clinical & Analytical Services Solutions, an asset management firm that the Company expects will allow it to drive laboratory efficiency and cost savings for customers through asset management and expert maintenance. "We were pleased to deliver excellent cash EPS growth during the quarter, with strong performance in our key growth platforms of genetic screening, imaging and service," said Gregory L. Summe, chairman and CEO of the Company. "We remain focused on driving growth in these platforms as evidenced by our strategic acquisitions of NTD Laboratories, Spectral Genomics and C&A as well as our increased investment in R&D. We are committed to further increasing our investment in these attractive growth areas," added Mr. Summe. The Company generated operating cash flows of $53.2 million in the second quarter of 2006. Free cash flow for the second quarter of 2006, defined as operating cash flow of $53.2 million less capital expenditures of $12.2 million, was $41 million. This number includes a tax payment of $4.6 million related to the gain on the divestiture of Fluid Sciences. Free cash flow, net of divestiture taxes, was $45.6 million. Financial Guidance For the third quarter of 2006, the Company projects GAAP earnings per share from continuing operations of between $.22 and $.24. Excluding the impact of intangibles amortization and stock option expense, the Company projects earnings per share from continuing operations of between $.27 and $.29 for the third quarter of 2006, an increase of approximately 13% to 21% over the third quarter 2005. For the full year 2006, the Company projects GAAP earnings per share from continuing operations of between $.95 and $1.00, and earnings per share excluding intangibles amortization and stock option expense, of between $1.15 and $1.20 per share. This reflects approximately $.05 per share change in full year cash EPS guidance due to dilution from acquisitions and increased growth investments in the second half of 2006. About PerkinElmer PerkinElmer Inc. (NYSE: PKI) -- http://www.perkinelmer.com/-- is a global technology leader driving growth and innovation in Health Sciences and Photonics markets to improve the quality of life. PerkinElmer reported revenues of $1.5 billion in 2005, has 8,000 employees serving customers in more than 125 countries, and is a component of the S&P 500 Index. * * * PerkinElmer Inc.'s Long Term Subordinated Debt carry Moody's Investors Service's Ba1 rating. PERKINELMER INC: Board Declares $0.07 Dividend Per Share -------------------------------------------------------- The Board of Directors of PerkinElmer, Inc., has declared a regular quarterly dividend of $.07 per share of common stock. This dividend is payable on Nov. 10, 2006, to all shareholders of record at the close of business on Oct. 20, 2006. PerkinElmer Inc. (NYSE: PKI) -- http://www.perkinelmer.com/-- is a global technology leader driving growth and innovation in Health Sciences and Photonics markets to improve the quality of life. PerkinElmer reported revenues of $1.5 billion in 2005, has 8,000 employees serving customers in more than 125 countries, and is a component of the S&P 500 Index. * * * PerkinElmer Inc.'s Long Term Subordinated Debt carry Moody's Investors Service's Ba1 rating. PETCO ANIMAL: Moody's Reviews Low-B Ratings for Possible Downgrade ------------------------------------------------------------------ Moody's Investors Service placed all ratings of PETCO Animal Supplies, Inc under review for possible downgrade. The review is prompted by the announcement that PETCO intends to be acquired in a LBO privatization transaction by affiliates of Leonard Green and Texas Pacific Group for total consideration of about $1.8 billion. Moody's notes that the rated senior subordinated notes are puttable at 101% of par upon a change of control, and first become callable at 105.375% of par in November 2006. These ratings are placed under review for possible downgrade: * $89.3 million 10.75% senior subordinated note issue of B1, * Corporate family rating of Ba2. During the review, Moody's will consider: (1) specific financing plans for the transaction, keeping in mind that the fixed charge burden for debt service probably will increase, (2) the outcome of potential attempts to redeem the senior subordinated notes and (3) operating performance expectations for PETCO. If the transaction does not take place, then the ratings could be confirmed at current levels. PETCO Animal Supplies, Inc, with headquarters in San Diego, California, is a specialty retailer of premium supplies, food, and services for household pets. The company currently operates more than 800 stores in 49 states. Revenue for the twelve months ending April 29, 2006 was about $2 billion. PLIANT CORP: Plans $35 Mil. Issue of 13% Senior Notes Due 2010 -------------------------------------------------------------- Pliant Corporation, certain of its subsidiaries and The Bank of New York Trust Company, N.A., as trustee, entered into an Indenture dated as of July 18, 2006, with respect to the issuance of the company's 13% Senior Subordinated Notes Due 2010 in an aggregate principal amount of $35,000,000, Pliant Chief Financial Officer Joseph Kwederis reports in a filing with the Securities and Exchange Commission. The Indenture provides that interest will accrue on the New Subordinated Notes from the date of issuance at a rate of 13% per annum until maturity on July 15, 2010. According to Mr. Kwederis, the New Subordinated Notes are subject to the company's right, which will be assignable, to refinance the New Subordinated Notes during the first year after issuance by tendering to their holders cash equal to $20,000,000: (i) plus interest accrued at a rate of 13% per annum from the date of issuance through the date of payment on a principal amount of $20,000,000; (ii) minus any interest previously paid in cash on the New Subordinated Notes. Commencing on July 19, 2007, the company may redeem the New Subordinated Notes in whole or in part at a redemption price equal to 100% of the aggregate principal amount of the New Subordinated Notes plus accrued and unpaid interest to the redemption date. The Indenture also provides the holders of the New Subordinated Notes with the right to require the company to repurchase the New Subordinated Notes at a repurchase price equal to 101% of their aggregate principal amount plus accrued and unpaid interest upon a change of control of the company. The Indenture does not provide a sinking fund with respect to the New Subordinated Notes. A full-text copy of the 13% Senior Subordinated Notes Indenture Due 2010 is available for free at: http://ResearchArchives.com/t/s?f29 Headquartered in Schaumburg, Illinois, Pliant Corporation -- http://www.pliantcorp.com/-- produces value-added film and flexible packaging products for personal care, medical, food, industrial and agricultural markets. The Debtor and 10 of its affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy counsel. The Ontario Superior Court of Justice named RSM Richter, Inc., as the Debtors' information officer in their restructuring proceeding under Companies Creditors Arrangement Act in Canada. Kenneth A. Rosen, Esq., at Lowenstein Sandler, P.C., serves as counsel to the Official Committee of Unsecured Creditors. Don A. Beskrone, Esq., at Ashby & Geddes, P.A., is local counsel to the Creditors' Committee. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. The Debtors emerged from chapter 11 protection on July 19, 2006 (Pliant Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) PLIANT CORP: Enters into $200-Mil. Credit Pact with Merrill Lynch ----------------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, Joseph Kwederis, senior vice president and chief financial officer of Pliant Corporation, discloses that the company and certain of its subsidiaries have entered into two credit agreements, as contemplated in the Debtors' confirmed Fourth Amended Joint Plan of Reorganization: (1) Working Capital Credit Agreement, among the company, certain of its subsidiaries, certain lenders, Merrill Lynch Bank USA, as administrative agent, and Merrill Lynch Commercial Finance Corp., as sole lead arranger and book manager; and (2) Fixed Asset Credit Agreement, among Pliant Corporation Pty Ltd., Pliant Corporation of Canada Ltd., Pliant Film Products GmbH and Aspen Industrial, S.A. de C.V., as borrowers, certain lenders, Merrill Lynch Bank USA, as administrative agent, and Merrill Lynch Commercial Finance Corp., as sole lead arranger and book manager. According to Mr. Kwederis, the Credit Facilities provide up to $200,000,000 of total commitments, subject to a borrowing base and a required minimum availability amount of at least $10,000,000. The commitment fee for the unused portion of the Credit Facilities is 0.375% per annum. The Credit Facilities were funded on July 18, 2006, and replace the company's prior credit facilities, Mr. Kwederis reports. Headquartered in Schaumburg, Illinois, Pliant Corporation -- http://www.pliantcorp.com/-- produces value-added film and flexible packaging products for personal care, medical, food, industrial and agricultural markets. The Debtor and 10 of its affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy counsel. The Ontario Superior Court of Justice named RSM Richter, Inc., as the Debtors' information officer in their restructuring proceeding under Companies Creditors Arrangement Act in Canada. Kenneth A. Rosen, Esq., at Lowenstein Sandler, P.C., serves as counsel to the Official Committee of Unsecured Creditors. Don A. Beskrone, Esq., at Ashby & Geddes, P.A., is local counsel to the Creditors' Committee. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. The Debtors emerged from chapter 11 protection on July 19, 2006 (Pliant Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) PRESIDENT CASINOS: Taps Saul Leonard as Gaming Consultant --------------------------------------------------------- President Casinos Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Missouri for permission to retain Saul Leonard and the firm Saul F. Leonard Company, Inc., as its gaming consultant and expert witness. The Debtors want Saul Leonard's assistance in the evaluation of gaming issues presented in the preparation and litigation of the adversary proceeding pending against Columbia Sussex Corporation and Wimar Tahoe Corporation. Saul Leonard will: a) assist the Debtors in evaluating the applications of the Defendants for gaming license in Missouri; b) assist the Debtors in evaluating the applications of the Defendants for gaming license in jurisdiction other than Missouri; c) assist the Debtors in evaluating the gaming operation of the Defendants in jurisdiction other than Missouri and the potential purchase of additional gaming operation by Defendants; d) prepare an expert report on the impact of the Missouri Gaming Commission's investigation of the Defendants on the Defendants' gaming operation; and e) testify at depositions and at trial on the issues relating to gaming regulation and the impact of the Missouri Gaming Commission investigation of the Defendants on the Defendants' gaming operation, and, if appropriate, in rebuttal to any expert witness retained by Defendants. Mr. Leonard will bill $400 per hour for his services. Saul Leonard assures the Court that his firm is a "disinterested person" as that term is defined in Sections 101(14) and 1107(b) of the Bankruptcy Code. About Saul Leonard Leonard is a gaming industry consultant who works with companies on gaming and regulatory issues in the gaming industry. The company is a nationally recognized figure within the gaming, hospitality and leisure industry. 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. PROGRESS SOFTWARE: Delinquent Form 10-Q Prompts Delisting Notice ---------------------------------------------------------------- Progress Software Corporation disclosed that, as a result of the delay in filing its Quarterly Report on Form 10-Q for the three months ended May 31, 2006, it has received a Nasdaq Staff Determination Letter dated July 19, 2006 indicating that the company's common stock is subject to delisting from the Nasdaq Global Select Market pursuant to Nasdaq Marketplace Rule 4310(c)(14). That rule requires companies listed on Nasdaq to file on a timely basis all reports and other documents that are required to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. Progress Software is undertaking a voluntary review of its stock option practices. Because the option review is not yet complete and its impact on the stock-based compensation charges and related tax matters in the company's financial statements for the periods ended May 31, 2006 and 2005 has not yet been determined, the company has not been able to file its Quarterly Report on Form 10- Q for the period ended May 31, 2006 on a timely basis. Progress Software will appeal the Nasdaq Staff's determination by requesting a hearing before the Nasdaq Listing Qualifications Panel pursuant to Nasdaq Marketplace Rule 4805. The hearing request will automatically stay the delisting of the company's common stock pending the Panel's review and determination. About Progress Software Headquartered in Bedford, Mass., Progress Software Corporation (Nasdaq: PRGS) -- http://www.progress.com/-- provides application infrastructure software for all aspects of the development, deployment, integration and management of business applications. REFCO INC: Eight Refco LLC Claimants Can File Consolidated Claim ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorizes certain entities that expressed intent to file similar proofs of claim against Refco, LLC, to lodge a single master proof of claim that will be deemed to have been filed against the Debtor on their behalf. The Refco Claimants include: * Bersec International, LLC, * Cargill Investor Services Limited, * Haut Commodities, LLC, * Kroeck & Associates, LLC, * Lind-Waldock Financial Partners, LLC, * Lind-Waldock Securities LLC, * Marshall Metals, LLC, and * New Refco Group Ltd., LLC. Nothing will prohibit the Refco Claimants from filing individual proofs of claim in lieu of a Master Proof of Claim against Refco LLC. In a separate order, Judge Drain grants Skadden, Arps, Slate, Meagher & Flom LLP, until 5:00 p.m. on October 17, 2006, to file a proof of claim against Refco LLC for professional services rendered before November 25, 2005. About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). (Refco Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000). REFCO INC: Customers Want Rule 2004 Examination on Refco F/X ------------------------------------------------------------ Pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure, an ad hoc committee of Refco F/X Associates, LLC customers asks the U.S. Bankruptcy Court for the Southern District of New York to authorize and direct FXA to disclose names and contact information of each of its account holders who maintained trading accounts with a positive account balance as of Oct. 17, 2005. The Customer Committee is currently composed of around 200 FXA customers working to protect and advance the interests of the FXA customer body as a whole. The Customer Committee members believe that many additional customers would be interested in participating in the proceeding through the Committee if they were informed of the opportunity. By joining the Committee, the FXA customers will also be able to enhance the value of FXA's estate by, among other things, working with the Debtors and the Official Committee of Unsecured Creditors to increase the proceeds from the sale of FXA assets. Todd E. Duffy, Esq., at Duffy & Amedeo LLP, in New York, tells Judge Drain that the Customer Committee is entitled to customer information pursuant to the Bankruptcy Court's October 20, 2005 order and Bankruptcy Rule 1007(a)(1), which require FXA to file with its petition a list containing names and addresses of each of its creditors. Mr. Duffy ensures that the requested disclosure will preserve the FXA customers' rights. To the extent that a settlement between the Customer Committee and FXA is achieved, allowing more customers to participate in the settlement could benefit the estate and its creditors by satisfying a significant portion of FXA's creditor body and clearing the way for a more comprehensive plan of reorganization, Mr. Duffy states. About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). (Refco Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000). RENT-A-CENTER INC: S&P Puts BB+ Corp. Credit Rating on Neg. Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its debt ratings, including its 'BB+' corporate credit rating, on Plano, Texas-based Rent-A-Center Inc. on CreditWatch with negative implications. At the same time, Standard & Poor's placed its ratings, including the 'B+' corporate credit rating, on Erie, Pennsylvania-based Rent-Way Inc. on CreditWatch with positive implications. The rating actions follow Rent-A-Center's announcement that it had reached a definitive agreement to acquire Rent-Way, a major competitor, for about $567 million. The acquisition will be funded with an increase in Rent-A-Center's senior credit facility. Based on Rent-Way's estimated EBITDA of $60 million for 2006, the purchase price represents an approximate 9.5x multiple of EBITDA. "Although Rent-A-Center anticipates significant cost savings from the acquisition, we believe the transaction will weaken Rent-A- Center's financial profile," said Standard & Poor's credit analyst Robert Lichtenstein. Moreover, Rent-Way, with $530 million in revenue and $49 million in EBITDA, has been experiencing declining operating trends over the past 18 months. Standard & Poor's will consider the impact of the acquisition on Rent-A-Center's credit profile, including: * the integration of poorer performing stores; * the elimination of a significant competitor; * the opportunity for cost savings through the elimination of redundant expenses and store closures; and * an increase in debt leverage. The rating agency expects that any downgrade of the acquiring company will still leave the rating above the current rating for Rent-Way. RENT-WAY INC: Acquisition Plan Prompts Moody's to Review Ratings ---------------------------------------------------------------- Moody's Investors Service placed all ratings of Rent-Way, Inc., under review for possible upgrade. The review is prompted by the announcement that Rent-A-Center, Inc. intends to acquire complete ownership of Rent-Way. Moody's notes that the rated senior secured notes are redeemable at any time at the option of the company. These ratings are placed under review for possible upgrade: * $205 million 11.875% second-lien secured note issue of B3, * Corporate family rating of B3. During the review, Moody's will consider the position of Rent-Way within Rent-A-Center's corporate structure, the outcome of the redeemable senior secured notes and preferred stock, and the likelihood for post-transaction efficiencies and operating improvements, keeping in mind that Rent-A-Center has successfully integrated several previous acquisitions. The senior secured notes are redeemable at any time at a price based on the equivalent Treasury yield. If the transaction does not take place, then the ratings could be confirmed at current levels. Rent-Way, Inc., with headquarters in Erie, Pennsylvania, operates the third largest chain of consumer rental purchase stores with 792 stores in 34 states. Revenue for the twelve months ending March 31, 2006, was about $524 million. RF MICRO: Earns $14 Million in First Fiscal Quarter of 2007 ----------------------------------------------------------- For the fiscal 2007 first quarter ended June 30, 2006, RF Micro Devices Inc. reported revenues of $238.3 million, and operating income of $14 million on a GAAP basis. Commenting on the results, Bob Bruggeworth, RF Micro's president and chief executive officer, said, "RFMD is successfully executing on a plan to grow quarterly revenue and deliver improved quarterly operating income. During the June quarter, we took share in cellular transceivers and transmit modules, and we expect this trend to continue. In fact, we are currently booked for sequential revenue growth in the September quarter with the world's four largest handset manufacturers. In the second half of calendar year 2006, we expect revenue, margins and earnings will be favorably impacted by momentum at our leading customers, as well as strong handset demand, new product launches and continued design wins." Headquartered in Greensboro, North Carolina, RF Micro Devices, Inc. (Nasdaq: RFMD) -- http://www.rfmd.com/-- designs and manufactures radio systems and solutions for mobile communication applications. * * * In April 2005, Standard & Poor's Ratings Services revised its outlook on RF Micro Devices Inc. to negative from stable, following the Company's announcement that its March quarter earnings would be lower than expected because of increased inventory reserves and high product development expenses. The corporate credit rating was affirmed at 'B+', and the subordinated debt rating was affirmed at 'B-'. SAINT VINCENTS: Plan-Filing Period Intact Until Further Ct. Ruling ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York extends Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates' exclusive period to file a plan of reorganization until a ruling on the request is entered. A hearing is scheduled on Aug. 29, 2006, to consider the Debtors' request. The Debtors are asking the Court to further extend the period within which they have the exclusive right to: (a) file a plan of reorganization to Nov. 15, 2006; and (b) solicit acceptances of that plan to Feb. 1, 2007. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 31 Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: Agrees to Pay $3.6 Mil. Cure Amount for CBAs ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York approved a stipulation governing the assignment of certain of Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates' contracts and leases to Caritas Health Care Planning, Inc. The Debtors will assume and assign certain executory contracts and unexpired leases to Caritas, Wyckoff Heights Medical Center's affiliate, in connection with the sale of their Mary Immaculate Hospital and St. John's Queens Hospital and certain related assets located in Queens, New York. The Assumed Contracts and Leases include the collective bargaining agreements between the Debtors and 1199SEIU United Healthcare Workers East to the extent they cover 1199SEIU bargaining unit employees employed at the Queens Assets: (a) Brooklyn/Queens Central and Brooklyn/Queens Region CBAs, (b) St. John's Queens Hospital CBAs, (c) Mary Immaculate Hospital CBA, and (d) Monsignor Fitzpatrick Pavilion CBA. The CBAs between the Debtors and 1199SEIU will remain executory contracts, in full force and effect, as and to the extent they apply to the Debtors' non-Queens Assets employees, subject to the provisions of Sections 365, 1113 and 1114 of the Bankruptcy Code. The Debtors, 1199SEIU and 1199SEIU National Benefit and Pension Funds wish to resolve their disputes over the Cure Amounts for the CBAs related to the Queens Assets employees and other issues related to Sections 365, 1113 and 1114, without the cost and risk of litigation. The Debtors, 1199SEIU and 1199 Funds stipulate that: (a) The Debtors will pay these cure amounts for the CBAs: CBA Cure Amount --- ----------- B/Q CBAs $551,930 SJQ CBAs 2,103,758 MIH CBA 862,973 MFP CBA 84,313 --------- Total $3,602,975 (b) If the Debtors produce evidence reasonably acceptable to 1199 Funds of High Wage Earner Credits that have not been included in the Cure Amount, the Debtors may reduce the Cure Amount for the Brooklyn and Queens CBAs by an amount equal to the High Wage Earner Credits. (c) Payment of the Cure Amounts, as modified by the High Wage Earner Credits, will fully satisfy the requirements of Section 365(b) with regard to the CBAs. (d) The assignment of the CBAs to the Purchaser, to the extent they cover 1199SEIU bargaining unit employees at the Queens Assets, is acceptable. The Debtors and the Purchaser have provided adequate assurance of the Purchaser's future performance under the CBAs. (e) The Debtors will pay the Paul Schweigert Arbitration Award. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 30 Bankruptcy Creditors' Service, Inc., 215/945-7000) SCHUFF INTERNATIONAL: S&P Affirms B- Rating & Revises Outlook ------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Phoenix, Arizona-based construction and engineering company Schuff International to positive from stable. At the same time, Standard & Poor's affirmed its ratings on the company, including its 'B-' corporate credit rating. The company had about $82 million of lease-adjusted debt at June 30, 2006. "The outlook revision reflects the improvement in the company's recent operating and financial performance," said Standard & Poor's analyst Dan Picciotto. The company recently reported that second quarter revenues increased nearly 40% from year-ago levels and operating income grew by around 90%. A favorable rating action could follow if Schuff improves its cash flow generation or liquidity profile. A negative outlook or lower rating may result from delays in cash inflows if Schuff's top projects fall behind schedule, as these represent a meaningful concentration in revenue. Deterioration in liquidity from slowing markets or increased working capital requirements could also result in a lower outlook or rating. SILICON GRAPHICS: Wants to Enter Into Backstop Agreements --------------------------------------------------------- Silicon Graphics, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York's authority to enter into Backstop Commitment Agreements in connection with rights offering under their Plan of Reorganization. The Debtors' Plan of Reorganization contemplates that some of the New Common Stock to be issued by Reorganized Silicon Graphics will be issued pursuant to a rights offering. Under the Rights Offering, each holder of an Allowed Secured Note Claim will receive subscription rights entitling the holder to purchase its Ratable Proportion of 6,800,000 shares of the New Common Stock, while each holder of an Allowed Cray Unsecured Debenture Claim will receive subscription rights entitling the holder to purchase its Ratable Proportion of 700,000 shares of the New Common Stock, each at $6.67 per share. The Plan allows Lampe Conway & Co., LLC, to purchase any amount of New Common Stock not purchased pursuant to the Cray Rights, in accordance with the Global Settlement Agreement. The Plan also provides that any amount of New Common Stock not purchased pursuant to the subscription rights issued and the Lampe Option will be purchased at the same price provided in the Rights Offering by the "backstop purchasers" consisting of: -- QDRF Master Ltd., -- Encore Fund, L.P., -- Quadrangle Debt Recovery Income Fund Master, Ltd., -- Quadrangle Debt Opportunities Fund Master Ltd., -- Watershed Technology Holdings, LLC, -- Watershed Capital Partners, L.P., and -- Watershed Capital Institutional Partners, L.P., and -- Watershed Capital Partners (Offshore), Ltd. The Backstop Commitment Agreements The salient terms of each Backstop Commitment Agreement are: * Rights Offering: The Company will distribute subscription forms for the Rights and the Cray Rights as soon as reasonably practicable after the entry of orders approving the Backstop Commitment Agreement and the disclosure statement related to the Plan. The Rights and the Cray Rights may be exercised during a period commencing on the Distribution Date and ending on the date that is the deadline for voting on the Plan, as specified in the subscription form, but subject to the Company's right to extend the date with the Backstop Purchaser's consent. * Backstop Commitment: Each Backstop Purchaser agrees to purchase -- at $6.67 per share -- and at the aggregate Purchase Price, its Pro Rata Share of: (i) one share for each Right that was not properly exercised by its holder as of the Subscription Expiration Date subject to the maximum number of shares that may be purchased and the maximum number of shares identified in each Backstop Commitment Agreement; and (ii) one share for each Cray Right that was not properly exercised by their holders and not purchased by Lampe Conway, subject to the Cray Share Cap. With respect to the Notes held by the Backstop Purchaser on the Record Date, the Backstop Purchaser will exercise and purchase the Rights distributed with respect to the Notes. * Overallotment Shares: In exchange for the Backstop Commitment, the Backstop Purchaser will have subscription rights to purchase an additional 1,125,000 total shares of New Common Stock. * Backstop Fee: Silicon Graphics, Inc., will pay to the Backstop Purchasers a $1,000,000 fee, which may be allocated among the Backstop Purchasers. The Backstop Fee, which will be nonrefundable, will be paid to the Backstop Purchasers within two business days after the entry of the Court's order granting the Agreements. * Additional Fees: Upon entry of the Agreement Order, and upon demand, the Debtors will reimburse or pay within 10 days after presentation of an invoice approved by the Backstop Purchaser, without further Court approval, the reasonable fees and out-of-pocket expenses of Goodwin Procter LLC, incurred in connection with the Backstop Commitment Agreement. Goodwin Procter represents the ad hoc committee of certain holders of 6.50% Senior Secured Convertible Notes. The Debtors also agree to pay the filing fee required under the Hart-Scott-Rodino Antitrust Act or any equivalent period under applicable foreign antitrust laws on behalf of the Backstop Purchasers when filings under the HSR Act are made. * Conditions: The obligations of each Backstop Purchaser are subject to various conditions precedent including: -- entry of the Disclosure Statement Order; -- entry of the Agreement Order; -- approval by the Backstop Purchaser, prior to the hearing on the request, a draft of the Plan, the Disclosure Statement, the Confirmation Order, and any amendments or supplements; -- entry of the Confirmation Order on a date that is on or before 135 days from the Petition Date; -- entry of a non-appealable Confirmation Order, which have not been appealed within 10 calendar days of entry, or which have not been stayed pending appeal, and which have not been subject to any reversal, modification or vacatur order entered by any court of competent jurisdiction; -- satisfaction of the conditions to confirmation and conditions to the Effective Date of the Plan; -- commencement by Silicon of the Rights Offering in accordance with the terms of the Backstop Agreement; -- receipt by the Backstop Purchaser of the Backstop Fee; and -- the absence of a Material Adverse Effect following the execution and the delivery of the Backstop Commitment Agreement, prior to the Closing Date. * Indemnification: Regardless of whether the Rights Offering is consummated or whether the Backstop Commitment Agreement is terminated, the Debtors agree to indemnify the Backstop Purchaser and certain related parties from and against all losses arising in connection with the Rights Offering, the Backstop Commitment, the Backstop Commitment Agreement, the Plan, the Agreement Order, or the Confirmation Order. * Termination: The Backstop Purchaser may terminate the Backstop Commitment Agreement (i) on or after the business day following the date the Backstop Fee has become payable and has not been received by the Backstop Purchaser; (ii) on or after August 24, 2006, if the Agreement Order will not have been entered by the Court by that date; (iii) on or after October 31, 2006; (iv) upon failure by Silicon to pay the Backstop Fee when due; or (v) upon the failure of any of the conditions of the Backstop Commitment Agreement to be satisfied. Backstop Agreements are Necessary Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, in New York, explains that by entering into the Backstop Commitment Agreements, the Debtors can be sure that all of the Rights and the Cray Rights offered pursuant to the Rights Offering are subscribed and exercised, thus ensuring an infusion of funds of approximately $50,000,000. Moreover, Mr. Youngman informs the Court that the Backstop Commitment Agreements enable the Backstop Purchasers to purchase the Overallotment Shares, potentially netting the Debtors an additional $7,503,750. A full-text copy of the master form for the Backstop Commitment Agreements is available for free at: http://researcharchives.com/t/s?f32 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. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) SILICON GRAPHICS: LGE Wants Stay Lifted to Pursue Dist. Ct. Action ------------------------------------------------------------------ LG Electronics, Inc., asks the U.S. Bankruptcy Court for the Southern District of New York to lift the automatic stay to allow it to proceed against Silicon Graphics, Inc., in the appropriate district court for damages and injunctive relief related to historic, prepetition infringements of its patents. Lee S. Attanasio, Esq., at Sidley Austin LLP, in New York, relates that for six years, the Debtors have been on notice that certain of their products infringed several patents owned by LGE, including: * U.S. Patent No. 4,654,484 entitled "Video Compression and Expansion System"; and * U.S. Patent No. 4,747,070 entitled "Reconfigurable Memory System". The parties engaged in discussions regarding the appropriate licensing terms for the Patents. An agreement was not reached, however, and formal discussions between the parties were discontinued because the Debtors insisted on waiting for the outcome of then-pending patent lawsuits filed by LGE against third parties alleging infringement of most of the Patents. Since 2003, LGE has continued to provide the Debtors with notice regarding the status of the Infringement Actions and, in 2004, reiterated its charges of infringement against them. Ms. Attanasio asserts that the District Court will be able to provide a complete and efficient resolution of the issues between LGE and the Debtors. The District Court Action will involve the same factual circumstances, legal issues and witnesses for both the pre- and postpetition acts of infringement. If the stay is not lifted, both parties will be forced to try the same facts twice, once in District Court and once in the Bankruptcy Court. "The interests of judicial economy weigh heavily in favor of lifting the automatic stay so that both the pre and postpetition infringements of the Patents can be litigated at the same time," Ms. Attanasio notes. According to Ms. Attanasio, the District Court has the necessary expertise to resolve these highly specialized issues and is a universally recognized forum specializing in patent litigation. Moreover, Ms. Attanasio points out that the balance of harms weighs in favor of granting LGE relief from the stay because it (i) has a strong interest in ensuring that its property rights are protected from unauthorized use, and (ii) has the exclusive right to sell and use the technology embodied by the Patents. LGE wants the Court to declare that the stay does not restrict LGE's ability to commence a District Court Action as it relates to the Debtors' continuing, postpetition infringement. 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. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) STERLING FINANCIAL: Earns $10.3 Million in Quarter Ended June 30 ---------------------------------------------------------------- For the quarter ended June 30, 2006, Sterling Financial Corp. of Lancaster, Pennsylvania, reported net income of $10.3 million, an increase of $597,000, or 6.2% from the second quarter of 2005. Total revenue, comprised of net interest income and non-interest income excluding net gains on sale of securities, totaled $48.5 million for the second quarter of 2006, an increase of $3.1 million or 6.9% from the same period last year. Non-interest expense totaling $32.8 million for the second quarter of 2006 increased $2 million or 6.6% from the second quarter of 2005. Commenting on the results, J. Roger Moyer, Jr., the Company's president and chief executive officer, said "[w]e delivered another quarter of solid performance. While we have experienced some modest compression in our net interest margin, our company is well positioned to meet a challenging interest rate environment as we continue to focus on revenue growth by delivering a broad portfolio of complementary financial services through our banks and financial services group companies." Six Months Ended June 30, 2006 Sterling's net income for the six months ended June 30, 2006 was $20.4 million, an increase of $1.5 million, or 7.8% from the same period in 2005. Total revenue of $95.9 million for the first six months of 2006 increased $7.3 million or 8.3% from the same period last year and exceeded growth in expenses of $4.2 million or 6.8%, for the same comparison period. Sterling's net interest income improved from $55.9 million for the six months ended June 30, 2005 to $60.1 million in 2006, a 7.6% increase. About Sterling Based in Lancaster, Pennsylvania, Sterling Financial Corporation (NASDAQ: SLFI) -- http://www.sterlingfi.com/-- is a diversified financial services company. Sterling Banking Group affiliates offer a full range of banking services in south-central Pennsylvania, northern Maryland and northern Delaware; the group also offers correspondent banking services in the mid-Atlantic region to other companies within the financial services industry. Sterling Financial Services Group affiliates provide specialty commercial financing; fleet and equipment leasing; investment, trust and brokerage services; insurance services; and human resources consulting services. * * * Sterling Financial Corp.'s senior unsecured debt and short-term debt carry Fitch's BB+ and B ratings respectively. The ratings were placed on July 20, 2004 with a stable outlook. TATER TIME: Files 3rd Amended Disclosure Statement in Washington ---------------------------------------------------------------- In a third amended disclosure statement explaining their plan of reorganization, Tater Time Potato Company LLC and its debtor- affiliates tell the U.S. Bankruptcy Court for the Eastern District of Washington that they propose to pay, in full plus interest, the claims of: a) Grant County, State of Washington; and b) Internal Revenue Service, Department of Labor & Industries, Employment Security Department The claims of MONY Life Insurance Company or Mutual Life Insurance Company of New York and Washington Mutual Savings Bank will be paid in full, with interest from the sale of Cissne Family LLC's 1290-Acre farm. If Washington Bank is not paid as stated, its claim will be allowed in the amount of $4,418,585. Additionally, should Washington Bank not be paid in full by Feb. 28, 2007, the automatic stay will be lifted to permit Washington Bank to exercise its rights granted by state law against its collateral. The Class 9 Claim of Banner Bank will also be paid from the sale of the 1290-Acre farm. The claims of Fin-Ag, Inc. and Cenex Harvest States, Inc. or CHS Inc. will be paid in full, as follows: -- the allowed amount will be reduced by the amount, if any, of any award to the Debtors by the liquidation of the Debtors' claims against Cenex, CHS or Fin-Ag for damages proximately caused as a result of actions of or inactions by Cenex, including, but not limited to, negligent chemical application, Consumer Protection Act violations, and breach of warranty; and -- the balance, if any, of the allowed claims will be paid by Riley and Lora Cissne as shareholders and as proposed disbursing agents upon confirmation of the Debtors' Plan. The Class 8 Claims of Jeffers, Danielson, et. al. will be paid in full, pursuant to an order approving employment of attorneys on a contingency fee basis entered by Court on Sept. 11, 2005. The Order approved the fee agreement between the Debtors and holders of Class 7 claims dated Feb. 3, 2005, authorizing and employing Class 8 Claim holders to represent the Debtors and others in pursuing the Debtors' claim against Cenex, CHS or Fin-Ag. To the extent the Class 8 Claim is not paid in full from liquidating the claims against Fin-Ag, Cenex or CHS, the balance due Class 11 claims will be paid in full as an allowed administrative claim. Holders of Class 10 Unsecured Claims will receive payment in full plus interest at 6% per annum. Holders of equity interests in the Debtors will receive nothing under the Amended Plan other than approved salaries or wages, until all allowed claims are paid in full. A full-text copy of the Debtors' third amended disclosure statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060809224426 Headquartered in Warden, Washington, Tater Time Potato Company, LLC, packs and ships potatoes. The Company and its debtor- affiliates filed for chapter 11 protection on January 24, 2005 (Bankr. E.D. Wash. Case No. 05-00509). Dan O'Rourke, Esq., at Southwell & O'Rourke, P.S., represents the Debtors in their restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in this case. When the Debtors filed for protection from their creditors, it reported total assets of $11,312,000 and total debts of $7,639,184. TENFOLD CORP: Posts $1.6 Million Net Loss in Second Quarter ----------------------------------------------------------- TenFold Corporation filed its financial results for the second quarter ended June 30, 2006, with the Securities and Exchange Commission on Aug. 1, 2006. For the three months ended June 30, 2006, the Company incurred a $1.6 million net loss on $710,000 of net revenues, compared with a $1.3 million net loss on $1.7 million of net revenues in 2005. As of June 30, 2006, the Company's principal source of liquidity was its cash and cash equivalents of $3.2 million. On March 30, 2006, the Company completed a capital raising transaction for gross proceeds of approximately $6.3 million (before expenses and repayment of $1.1 million of interim financing obligations). The Company believed that with the proceeds of this capital transaction, and new sales that we believe that we can close during 2006, the company will have sufficient liquidity for its operations during 2006. However, significant challenges and risks remain: -- the Company has not been able to generate positive cash flow from operations for the three years ended Dec. 31, 2005, or the six months ended June 30, 2006. The Company's net cash used in operating activities was $4.5 million for the year ended Dec. 31, 2005, and $3.5 million for the six months ended June 30, 2006. -- for the last several years, the Company has derived a significant portion of our cash inflows from time-and- materials consulting services performed for a limited number of large customers for whom we were completing enterprise applications development projects. As these customers completed their initial projects and became self-sufficient, they reduced their purchases of time-and-materials consulting services (although some purchase support from us and other services from time to time). The Company has not replaced these projects with similar sized projects with other customers. These reductions have materially reduced our cash inflows. -- the Company has experienced difficulty closing substantial new sales, and it is unclear when or if the Company can expect to predictably close significant sales to new or existing customers, and to achieve and sustain positive cash flow from operations. Under the leadership of the Company's new Chief Executive Officer, Robert W. Felton, the Company has recently changed our business model to focus on selling larger consulting projects, instead of the smaller prototype application projects that the Company primarily sold in 2005. Although the Company expects to be more successful with this new model, the Company has limited experience with the new model as it has introduced it only recently. And although the Company has closed some new sales under this model, the amount of that sales is not sufficient to generate positive cash flow from operations. If the Company does not close significant sales in 2006, the funds from its recent capital raising alone will not be sufficient to fund its operations through all of 2006. A full-text copy of the Company's Quarterly Report is available for free at http://researcharchives.com/t/s?f22 Going Concern Doubt Tanner LC expressed substantial doubt about TenFold Corporation's ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2005. The auditing firm points to the Company's reliance on significant balances of its cash for its operating activities and the likelihood that the Company will not have sufficient resources to meet operating needs based on its present levels of cash consumption. TenFold Corporation (OTCBB: TENF) -- http://www.tenfold.com/-- licenses its patented technology for applications development, EnterpriseTenFold(TM), to organizations that face the daunting task of replacing obsolete applications or building complex applications systems. Unlike traditional approaches, where business and technology requirements create difficult IT bottlenecks, EnterpriseTenFold technology lets a small, team of business people and IT professionals design, build, deploy, maintain, and upgrade new or replacement applications with extraordinary speed, superior applications quality and power features. TOWER AUTOMOTIVE: Wants Exclusive Period Extended to October 25 --------------------------------------------------------------- Tower Automotive, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to further extend, without prejudice, their exclusive periods to: (a) file a plan of reorganization to Oct. 25, 2006; and (b) solicit acceptances of that plan to Dec. 26, 2006. Anup Sathy, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, tells Judge Gropper that the Debtors have spent a significant amount of time taking actions to obtain and implement settlements with their union and retiree constituents. On July 17, 2006, the Debtors reached an agreement in principle with their active unions, which settlement is subject to important conditions, including ratification by the affected unions. "The Debtors will be informed of the final voting results of the ratification process," Mr. Sathy tells Judge Gropper. In addition, Mr. Sathy says, the Debtors have spent the last several weeks responding to requests filed by the Official Committee of Unsecured Creditors -- before the Bankruptcy Court and the U.S. District Court for the Southern District of New York -- for a stay pending the resolution of the Creditors Committee's appeal of the Bankruptcy Court's ruling approving key settlement agreements between the Debtors and the Milwaukee Unions and the Official Committee of Retired Employees. The Debtors have also been, and remain, committed to working with the Creditors Committee to develop a consensual plan of reorganization, Mr. Sathy relates. Negotiations regarding an intercreditor settlement, which will be a significant component of the plan, are ongoing, but not complete, he adds. Mr. Sathy reasons that it would only invite more costly litigation if the Debtors file a plan while the discussions for an intercreditor agreement are still ongoing. To ensure that a plan may be filed on the earliest possible date, the Debtors have begun drafting a plan of reorganization and accompanying disclosure statement, Mr. Sathy assures Judge Gropper. The Debtors have likewise: a. negotiated several claim settlements and set-off stipulations with their vendors and customers, as well as obtained valuable trade term concessions and agreements on both the customer and vendor level. As a result, the Debtors have secured their customer's support for their restructuring efforts and have successfully secured or reconfirmed numerous awards for new business awarded since the Petition Date and are in the process of launching a substantial amount of previously-awaited business; b. identified contracts and leases which are beneficial in their estates, and have filed seven different motions requesting authority to assume key contracts, all of which the Court has granted. The Debtors have also rejected over 25 unfavorable leases; c. conducted a preliminary ongoing analysis as to the validity of the claims in connection with the Debtors' preparation and filing of their omnibus claims objections. As of August 4, 2006, the Debtors have filed 22 omnibus claims objections, which are integral to the plan development process; and d. evaluation of their entire business model to rationalize, evaluate and enhance the efficiencies of the businesses. The Debtors have substantially completed the business plan that they expect will serve as the foundation for their Chapter 11 plan. In light of this progress, the Debtors believe that they deserve the opportunity to continue to pursue their restructuring objectives without the distraction of allowing third parties the opportunity to file and solicit acceptances of a competing plan of reorganization. About Tower Automotive Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000). UNITY VIRGINIA: Wants to Hire Mullins Harris as Special Counsel --------------------------------------------------------------- Unity Virginia Holdings LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Texas for permission to employ Mullins, Harris & Jessee, P.C., as its special counsel. Mullins Harris will: a) represent the Debtors in matters to Virginia state law, including but not limited to representation before the Division of Mined Land Reclamation and the Office of Surface Mining; b) assist the Debtors generally in matters of Virginia state law, which may arise in the course of the administration of the estate; and c) provide any other necessary and proper purposes. Elsey A. Harris, III, Esq., a Mullins Harris shareholder, discloses that the firm's professionals bill: Position Hourly Rate -------- ----------- Shareholders $250 Associates $100 - $125 Paralegals $45 Mr. Harris assures the Court that his firm does not represent any interest adverse to the Debtor, its estate or creditors. Mr. Harris can be reached at: Elsey A. Harris, III, Esq. Mullins, Harris & Jessee, P.C. 30 Seventh Street P.O. Box 1200 Norton, VA 24273-0912 Tel: (276) 679-3110 Fax: (276) 679-3133 Headquartered in Dallas, Texas, Unity Virginia Holdings LLC, operates a coal mining and processing company. The company filed for chapter 11 protection on May 10, 2006 (Bankr. N.D. Tex. Case No. 06-31937). James C. Jarret, Esq., and Arnaldo N. Cavazos, Jr., Esq., at Cavazos, Hendricks & Poirot, P.C., represent the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtors cases. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. Four of the Debtor's affiliates, Glamorgan Coal Resources LLC, Glamorgan Processing LLC, Glamorgan Properties LLC, and Glamorgan Refuse LLC, filed for chapter 11 protection on May 12, 2006 (Bankr. N.D. Tex. Case Nos. 06-31953 through 06-31956). Another affiliate, Glamorgan Operations, LLC, filed for chapter 11 protection on May 17, 2006 (Bankr. N.D. Tex. Case No. 06-31995). VESTA INSURANCE: District Court Appoints Subsidiaries' Liquidator ----------------------------------------------------------------- Vesta Insurance Group, Inc. disclosed that on Aug. 1, 2006, the District Court of Travis County, Texas entered the Order appointing the Texas Commissioner of Insurance as Liquidator of its Texas-domiciled subsidiaries. The Texas-domiciled insurance subsidiaries are: (a) Vesta Fire Insurance Corporation; (b) The Shelby Insurance Company; (c) Shelby Casualty Insurance Corporation; (d) Texas Select Lloyds Insurance Company; and (e) Select Insurance Services, Inc. The Texas Order also continues the rehabilitation of the Company and the Commissioner's appointment as Rehabilitator pursuant to the Agreed Order Appointing Rehabilitator and Permanent Injunction entered on June 28, 2006. Pursuant to the Texas Order, title to the assets of the Texas Subsidiaries is vested in the Rehabilitator or Liquidator, who is authorized to control the Texas Subsidiaries' property, conduct their business, administer their operations and exercise all power and authority under applicable Texas law. The Texas Order further enjoins: (i) the Texas Subsidiaries and their agents from conducting the Texas Subsidiaries' business; (ii) financial institutions or depositories from taking any action in connection with the Texas Subsidiaries' property; and (iii) all claimants or creditors from asserting claims or causes of action against the Texas Subsidiaries. The Texas Order also continues the automatic stay against the subsidiaries or their property, and the 90-day automatic stay from the entry of the Rehabilitation Order relative to actions against persons insured by the subsidiaries. The Company also disclosed that the Texas order may constitute an event of default to the indenture, dated as of July 19, 1995, between the Company and SouthTrust Bank of Alabama, and the supplemental indenture, also dated as of July 19, 1995, governing the Company's 8 3/4% Senior Debentures due 2025 or to the indenture, dated as of Jan. 31, 1997, and under the amended and restated declaration of trust, dated Jan. 31, 1997, among the Company and Wilmington Trust Company, relating to the capital securities issued by Vesta Capital Trust I and the 8.525% junior subordinated deferrable interest debentures issued by the Company. Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc. (Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding company for a group of insurance companies that primarily offer property insurance in targeted states. * * * As reported in the Troubled Company Reporter on July 12, 2006, A.M. Best Co. revised the financial strength rating to E (Under Regulatory Supervision) from C++ (Marginal) and the issuer credit ratings to "d" from "b" for the property/casualty affiliates of Vesta Insurance Group (Vesta). Concurrently, A.M. Best has revised the ICR to "d" from "cc" for Vesta's parent, Vesta Insurance Group, Inc. [Other OTC: VTAI.PK]. Additionally, A.M. Best has revised the senior debt ratings to "d" from "cc" for Vesta's $100 million 8.75% senior unsecured debentures, due 2025 and to "d" from "c" for Vesta Capital Trust I's $100 million 8.525% deferrable capital securities, due 2027. All companies are located in Birmingham, Alabama. The rating revisions pertain to these property/casualty affiliates of the Vesta Insurance Group: Vesta Fire Insurance Corporation; Florida Select Insurance Company; The Hawaiian Insurance & Guaranty Company, Limited; Shelby Casualty Insurance Company; The Shelby Insurance Company; Texas Select Lloyds Insurance Company; and Vesta Insurance Corporation. As reported in the Troubled Company Reporter on July 7, 2006, Moody's Investors Service lowered the senior debt rating of Vesta Insurance Group to C from B3 and the trust preferred rating of Vesta Capital Trust I to C from Caa2. VESTA INSURANCE: Judge Bennett Converts Case to Chapter 11 ---------------------------------------------------------- The Hon. Thomas B. Bennett of the U.S. Bankruptcy Court for the Northern District of Alabama converted Vesta Insurance Group, Inc.'s involuntary chapter 7 case to a voluntary chapter 11 case. As previously reported in the Troubled Company Reporter, the Debtor disclosed in a Securities and Exchange Commission filing that an involuntary Chapter 7 petition was filed against the Company. Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership III, L.P., filed the petition alleging an aggregate of $12.25 million in bondholder indebtedness against Vesta Insurance. The Debtor informs the Court that the parties who filed the involuntary petition don't object to the conversion of the case to a chapter 11 proceeding. About Vesta Insurance Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc. (Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding company for a group of insurance companies that primarily offer property insurance in targeted states. Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership III, L.P., filed an involuntary chapter 7 petition against the Company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517). R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, represents the petitioners. Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor. On Aug. 1, 2006, the District Court of Travis County, Texas entered the Order appointing the Texas Commissioner of Insurance as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries: Vesta Fire Insurance Corporation; The Shelby Insurance Company; Shelby Casualty Insurance Corporation; Texas Select Lloyds Insurance Company; and Select Insurance Services, Inc. At Dec. 31, 2004, Vesta Insurance's balance sheet showed $1,764,247,000 in total assets and $1,810,022,000 in total liabilities resulting in a $45,775,000 stockholders' deficit. W.R. GRACE: Has Until September 11 to File Plan of Reorganization ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extends the period within which only W.R. Grace & Co., and its debtor- affiliates can file a plan of reorganization and solicit acceptances to any plan through the conclusion of the Sept. 11, 2006 hearing. The hearing will be held at 10:00 a.m., in Pittsburgh, Pennsylvania. The Debtors and some parties-in-interest in their chapter 11 cases has been at odds over the extension of the exclusive periods. The Official Committee of Asbestos Personal Injury Claimants, the Official Committee of Asbestos Property Damage Claimants, and David T. Austern, the legal representative for future asbestos claimants in the Debtors' Chapter 11 cases were in the forefront in the objections against the extensions. Tort claimants started to give way to the extension saying that monthly updates on the plan process should be provided. Her Majesty the Queen in Right of Canada wants to pursue negotiation regarding its contribution and indemnification claims against the Debtors arising out of litigation instituted by Canadian claimants. The Debtors pointed out that they have always been prepared to continue with the nearly successful plan discussion months ago, and it is the asbestos claimants who abrogated that position and entered into a side agreement that will undercut negotiation of a fully consensual plan. They contend that the key issue is not bad faith, but the value of the claims against the estate. They want plan-filing delayed until the estimation of their asbestos liabilities wraps up. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- 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: Receives $2.54 Mil. from Mass. under Settlement Pact ---------------------------------------------------------------- W.R. Grace & Co. and its debtor-affiliates informed the U.S. Bankruptcy Court for the District of Delaware that within the first two quarters of 2006, they have settled a claim filed by the state of Massachusetts Revenue Department against W.R. Grace & Co.-Conn., in accordance with an amended order approving an omnibus procedure for settling claims and causes of action brought by or against the Debtors in a judicial, administrative, arbitral or other proceeding. James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., in Wilmington, Delaware, reports that in April 2006, Grace received payments from Massachusetts aggregating $2,543,604 and $22,627 for refunded tax and accrued interest for taxes previously paid for the 1988 and 1990 tax years. Mr. O'Neill advises that the Debtors may have settled certain claims and actions during the period, which inadvertently were not yet included in the report. Those settlements will be disclosed in future reports filed with the Bankruptcy Court. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- 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. WINN-DIXIE: Judge Funk Approves Solicitation Procedures ------------------------------------------------------- The Honorable Jerry A. Funk of the U.S. Bankruptcy Court for the Middle District of Florida approves Winn-Dixie Stores, Inc., and its debtor-affiliates' proposed solicitation procedures, including all the solicitation materials, and authorizes Logan & Company, Inc., to serve as the Debtors' solicitation and noticing agent. The Court sets August 1, 2006, as the record date for determining the holders of claims and interests entitled to receive solicitation or noticing materials. Judge Funk directs all voting parties to submit their ballots to Logan & Co. by September 25, 2006, at 4:00 p.m. (Eastern Time). The Debtors may extend the Voting Deadline, in consultation with the Official Committee of Unsecured Creditors, by filing notice of extensions with the Court and by serving a copy to Logan & Co. Judge Funk notes that only the Debtors' and Creditors Committee's solicitation letters are authorized for inclusion in the solicitation materials. Creditors entitled to vote on the Plan are: -- holders of claims classified within Classes 7 to 17; and -- participants in the Debtors' management security plan, senior corporate officer's management security plan, or supplemental retirement plan who have filed proofs of claim. Holders of Claims in Classes 10 to 17 whose claims are partly contingent, unliquidated, untimely or disputed will not be permitted to cast a provisional vote unless they file a motion under Rule 3018(a) of the Federal Rules of Bankruptcy Procedure. Judge Funk directs holders of Disputed Claims to file their Rule 3018 Motions with the Court and serve upon the Debtors' counsel, Creditors Committee's counsel and Logan & Co. before September 18, 2006, at 4:00 p.m. (Eastern Time). Parties to executory contracts or unexpired leases that have not yet been assumed or rejected, but if rejected would give rise to rejection damage claims, are permitted to cast a contingent vote. The contingent votes will be counted only if a motion to reject the contract or lease is filed before the Confirmation Hearing and if the Parties: (a) deliver to Logan & Co. a written request for a special ballot to vote a contingent rejection damage claim by September 25, 2006; and (b) properly complete and return the special ballot on or before the Voting Deadline. With respect to potential holders of Landlord Claims in Class 12, Vendor/Supplier Claims in Class 14, Retirement Plan Claims in Class 15, and other Unsecured Claims in Class 16, the plan class identified on the ballot or claim reduction form they will receive will be binding unless they file with the Court a motion seeking a determination of the proper Class before September 18, 2006. Judge Funk directs all known record holders of Winn-Dixie debt and securities to provide Logan & Co. with the addresses of the beneficial holders in electronic format no later than August 6, 2006. Logan & Co. will send solicitation packages to Noteholder Claimants in Class 12 and notices of deemed rejecting status to holders of Winn-Dixie common stock interests in Class 21 before August 15, 2006. Judge Funk instructs Logan & Co. to maintain the confidentiality of social security numbers provided on the return ballots by redacting the numbers before making a copy of any ballot available to a third party. The Court waives the requirements of Local Rule 3071-1(b) and agrees that the terms of the Plan and Confirmation Order will govern the establishment of a bar date for filing administrative claims. Judge Funk will convene a hearing on Oct. 13, 2006, at 9:00 a.m. (Eastern Time) to consider confirmation of the Joint Plan of Reorganization. The deadline for filing objections to confirmation of the Plan is Sept. 25, 2006 at 4:00 p.m. (Eastern Time). Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Inks Fifth Revision of DIP Financing Credit Agreement ----------------------------------------------------------------- The fifth revision of the credit agreement between Winn-Dixie Stores, Inc., its debtor-affiliates and certain lenders led by Wachovia Bank, National Association, took effect Aug. 1, 2006, Winn-Dixie Stores, Inc., says in a regulatory filing with the U.S. Securities and Exchange Commission. The parties amended, among others, the definition of "Excess Availability" to include certain cash deposits. The definition of insurance is also modified to coincide with the current policy terms. In addition, Wachovia is allowed an unsecured interest related to the bank's automated clearinghouse transfer exposure as it relates to Winn-Dixie's banking transactions. As of Aug. 2, 2006, no default under the credit agreement exists or has occurred. A full-text copy of the Fifth Amendment to the Wachovia Credit Agreement is available at no charge at: http://ResearchArchives.com/t/s?f26 Other members of the DIP lending syndicate pursuant to the Fifth Amendment to the Credit Agreement are: * General Electric Capital Corporation, as Syndication Agent and Lender; * The CIT Group/Business Credit, Inc., as Syndication Agent and Lender; * Bank of America, NA, as Documentation Agent and Lender; * Merrill Lynch Capital, as Documentation Agent and Lender; * GMAC Commercial Finance LLC, as Documentation Agent and Lender; * Wells Fargo Foothill, LLC, as Documentation Agent and Lender; * LaSalle Retail Finance; * Westernbank Puerto Rico; * National City Business Credit, Inc.; * UBS AG, Stamford Branch; * PNC Bank, National Association; * State of California Public Employees' Retirement System; * AmSouth Bank; * Webster Business Credit Corp.; * Israel Discount Bank of New York; * Marathon Structured Finance Fund, L.P.; * RZB Finance LLC; * Sovereign Bank; * Erste Bank; * Azure Funding; * Senior Debt Portfolio; * Grayson & Co.; and * Eaton Vance Institutional Senior Loan Fund Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000). WORLD HEALTH: Carve-Out Does Not Violate Absolute Priority Rule --------------------------------------------------------------- The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware ruled that the letter agreement among World Health Alternatives, Inc., and its debtor-affiliates, the Official Committee of Unsecured Creditors and CapitalSource Finance LLC does not violate the absolute priority rule, though the settlement would permit distribution to unsecured creditors before priority tax claims had been paid in full. As reported in the Troubled Company Reporter on July 28, 2006, the letter agreement resolves disputes regarding the proceeds of the $43 million sale of substantially all of the Debtors' assets to Jackson Healthcare Staffing, LLC, the validity of CapitalSource lien, and the debtor-in-financing loan provided by CapitalSource. The parties agreed that the cash proceeds from the asset sale, together with all cash that has not been swept into a concentration account, would be paid to CapitalSource in satisfaction of the Debtors' prepetition and postpetition debt up to a maximum amount of $42.5 million. CapitalSource will pay $1.625 million for the benefit of the Debtors' general unsecured creditors from a carve-out from its lien. In exchange for the carve-out, the Committee withdrew its objection to the asset sale and waived its right to commence causes of action against CapitalSource regarding CapitalSource's lien. Absolute Priority Rule Clarified The United States Trustee for Region 3 objected to the agreement saying the Committee is not authorized to compromise estate claims and causes of action at the expense of priority creditors in chapter 11, citing the Third Circuit's ruling in Armstrong World Industries, Inc.'s chapter 11 case. The U.S. Trustee pointed out that the Internal Revenue Service asserts a tax claim in excess of $4 million. Judge Walsh clarified that Section 1129(b)(2)(B) and the absolute priority rule is not implicated in World Health's case because the settlement does not arise in the context of a plan of reorganization. Additionally, the agreement does not involve money belonging to the estate, but to CapitalSource. An ordinary carve-out would not offend the rule. Citing the First Circuit's ruling in SPM Manufacturing Corp.'s case, Judge Walsh says lenders have a substantive right to dispose of their property, including the right to share the proceeds subject to its lien, with other classes. Settlement is Fair The Court further ruled that the settlement is fair, after examination of these factors in deciding whether to exercise its discretion to approve the settlement: (1) probability of success in litigation; (2) likely difficulties in collection; (3) complexity of litigation involved, and expense, inconvenience and delay necessarily attending it; and (4) paramount interest of creditors. The Court found that factor one favors the settlement because there is a low probability of litigation success. As the Committee states, "[o]ne arrow that the Committee did not have in its quiver was a credible threat to challenge the validity, and perfection of CapitalSource's liens, since it could discern no infirmity in those liens." The Court determined that factor two is seemingly not relevant, and no party has addressed this point. Factor three, however, weighs in favor of approving the proposed settlement. The expense, inconvenience, and delay attendant to any litigation with CapitalSource could be great. Finally, factor four favors settlement. The estate is better off because the remaining $1.34 million from the sale proceeds guarantees a substantial fund to pursue appropriate causes of action against others, which may produce recoveries distributable to all creditors. The Court explains that it does not have to be convinced that proposed settlement is best possible compromise in order to approve it; rather, it needs only conclude that settlement is within reasonable range of litigation possibilities. Judge Walsh's Memorandum Opinion is published at 2006 WL 1888558. Rafael X. Zahralddin, Esq., at Morris, James, Hitchens & Williams LLP, in Wilmington, Del.; and Sarah Robinson Borders, Esq., Felton E. Parrish, Esq., and Seema N. Patel, Esq., at King & Spalding LLP, in Atlanta, Ga., represented the Debtors. Joseph J. McMahon, Jr., Trial Attorney in the U.S. Department of Justice, Office of the U.S. Trustee, in Wilmington, Del., represented Kelly Beaudin Stapleton, the U.S. Trustee for Region 3. Pauline K. Morgan, Esq., M. Blake Cleary, Esq., Erin Edwards, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Del., represented the Committee. Kenneth J. Ottaviano, Esq., at Katten Muchin Rosenman LLP, in Chicago, Ill., represented CapitalSource. Spencer Jones, a managing director at Houlihan Lokey Howard & Zukin Capital, Inc., testified for the Debtors. Edwin T. Gavin, CTP, a managing director at NachmanHaysBrownstein, Inc., testified for the Committee. Headquartered in Pittsburgh, Pennsylvania, World Health Alternatives, Inc. -- http://www.whstaff.com/-- is a premier human resource firm offering specialized healthcare personnel for staffing and consulting needs in the healthcare industry. The company and six of its affiliates filed for chapter 11 protection on Feb. 20, 2006 (Bankr. D. Del. Case Nos. 06-10162 to 06-10168). Stephen M. Miller, Esq., at Morris, James, Hitchens & Williams LLP, represents the Debtors in their restructuring efforts. Lawyers at Young, Conaway, Stargatt & Taylor, LLP, represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $50 million and $100 million. XEROX CORP: Earns $260 Million in Second Quarter of 2006 -------------------------------------------------------- Xerox Corporation filed its second quarter financial statements for the three months ended June 30, 2006, with the Securities and Exchange Commission on Aug. 4, 2006. Second quarter 2006 total revenues grew 1% compared to the second quarter 2005. Revenues included: -- Equipment sales were flat compared to second quarter 2005, including a 1-percentage point benefit from currency, and primarily reflected growth from Office multifunction color and Production color products as well as growth in Developing Markets Operations (DMO), which were offset by revenue declines in black and white products and color printers; -- 3% increase in Post sale and other revenue, including a 1-percentage point benefit from currency, reflected growth in color products and DMO which more than offset declines in light lens products; -- 14% growth in color revenue. Color revenue of $1,364 million comprised 34% of total revenue in the second quarter 2006 compared to 31% in the second quarter 2005; and -- 4% decline in Finance income included a 1-percentage point benefit from currency and reflected lower finance receivables. Total revenues for the six months ended June 30, 2006, were flat compared to the prior year period, including a 1-percentage point negative impact from currency. Total revenues included: -- 2% decline in Equipment sales, including a 1-percentage point negative impact from currency, primarily reflecting revenue declines in Office and Production black and white products, which were partially offset by revenue growth from Office multifunction color and Production color products, as well as, growth in DMO; -- 1% increase in Post sale and other revenue, including a 1-percentage point negative impact from currency, primarily reflecting declines in light lens, licensing revenue, and digital black and white Production products which were more than offset by growth in digital color products and growth in DMO; -- 12% growth in color revenue. Color revenue of $2,578 million comprised 34% of total revenue for the six months ended June 30, 2006, compared to 30% the prior year period; and -- 5% decline in Finance income, reflecting lower finance receivables. Second quarter 2006 net income was $260 million, which included: -- $46 million tax benefit resulting from the resolution of certain tax matters associated with foreign tax audits; -- $25 million after-tax ($36 million pre-tax) charges related to restructuring; and -- $9 million after-tax ($13 million pre-tax) charge from the write-off of the remaining unamortized deferred debt issuance costs as a result of the termination of the Company's 2003 Credit Facility. Second quarter 2005 net income was $423 million, which included: -- $343 million after-tax benefit related to finalization of the 1996-1998 IRS audit; and -- $130 million after-tax ($194 million pre-tax) charge related to restructuring. The Company reported $260 million of net income for the second quarter ended June 30, 2006, compared with $423 million of net income for the same period in 2005. Net income for the six months ended June 30, 2006, was $460 million, which included: -- $46 million tax benefit resulting from the resolution of certain tax matters associated with foreign tax audits; -- $25 million after-tax ($36 million pre-tax) charge related to restructuring; -- $24 million after-tax benefit from the resolution of certain tax matters associated with an ongoing 1999-2003 Internal Revenue Service audit; and -- $9 million after-tax ($13 million pre-tax) charge from the write-off of the remaining unamortized deferred debt issuance costs as a result of the termination of the Company's 2003 Credit Facility. Net income for the six months ended June 30, 2005, was $633 million, which included: -- $343 million after-tax benefit related to the finalization of the 1996-1998 IRS audit; -- $58 million after-tax ($93 million pre-tax) gain from the sale of its equity interest in Integic Corporation; and -- $185 million after-tax ($279 million pre-tax) charge related to restructuring. For the three and six months ended June 30, 2006, the Company recorded restructuring charges of $36 million, respectively, primarily related to headcount reductions of approximately 500 employees primarily in the North American service organizations. The remaining restructuring reserve balance as of June 30, 2006, for all programs was $135 million, of which approximately $42 million is expected to be spent over the remainder of 2006. Worldwide employment of 55,100 at June 30, 2006, declined by approximately 100 from year-end 2005 primarily reflecting reductions from the Company's restructuring initiatives and other attrition partially offset by hiring in certain strategic business areas. At June 30, 2006, Xerox Corp.'s balance sheet showed $21.881 billion in total assets, $14.330 billion in total liabilities, and $7.551 in stockholders' equity. Subsequent Events On Aug. 1, 2006, the Company received notice that the U.S. Joint Committee on Taxation had completed its review of its 1999 - 2003 Internal Revenue Service audit, and as a result of that review, the Company's audit for those years is now finalized. The Company is still evaluating the impact of finalizing this audit. However, at this time the Company expects to record a third quarter 2006 net income benefit in the estimated range of $400 million to $450 million associated with the favorable resolution of certain tax matters from this audit. The recorded benefit will not result in a significant cash refund, but the Company expects it to increase tax credit carryforwards and reduce taxes otherwise potentially due. The Company expects that the net income benefit to the third quarter and full year 2006 will be partially offset by after-tax restructuring charges. While these charges are expected to be in the range of $125 million to $175 million after-tax, because of the preliminary nature of the plans, the timing in 2006 of such charges has not yet been determined. The charges are expected to be associated with new restructuring actions and other cost savings initiatives that the Company is considering in the third and fourth quarters of 2006, which it anticipates will be consistent with prior restructuring and cost savings actions. The actions and initiatives the Company is currently considering are primarily related to headcount reductions across all geographies and segments. However, the Company has not yet finalized or committed to any actions or initiatives. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?f2f About Xerox Headquartered in Stamford, Connecticut, Xerox Corporation (NYSE: XRX) -- http://www.xerox.com/-- develops, manufactures, markets, services, and finances document equipment, software, solutions, and services worldwide. It offers digital monochrome and color systems for customers in the graphic communications industry and enterprises, as well as various prepress and post- press options. Xerox Corporation markets its products through direct sales force, as well as through a network of independent agents, dealers, value-added resellers, and systems integrators. * * * As reported in the Troubled Company Reporter on April 17, 2006, Dominion Bond Rating Service changed the trend on the Issuer Rating of Xerox Corporation and Xerox Canada Inc., to Positive from Stable. The trend change recognizes the progress the Company has made in strengthening its financial profile. Trend Actions: * Xerox Canada Inc. -- Issuer Rating BB (high) Trend Changed to Positive * Xerox Corporation -- Issuer Rating BB (high) Trend Changed to Positive As reported in the Troubled Company Reporter on March 3, 2006, Standard & Poor's Ratings Services raised its corporate credit rating on Stamford, Connecticut-based Xerox Corp. and related entities to 'BB+' from 'BB-', and removed it from CreditWatch, where it was placed with positive implications on Jan. 26, 2006. The upgrade reflected substantial recent debt reductions, good cash flow and growth in equipment sales. The outlook is stable. As reported in the Troubled Company Reporter on Sept. 21, 2005, Moody's Investors Service revised the rating outlook of Xerox Corporation and supported subsidiaries to positive from stable. Moody's previously raised the senior implied rating of Xerox and its financially supported subsidiaries to Ba1 from Ba3. The action was prompted by Xerox's significant debt and leverage reduction over the last year, stable operating profit and free cash flow generation, and the prospects for further strengthening of its credit metrics and overall financial flexibility. XEROX CORP: Fitch Raises Trust Preferred Securities' Rating to BB ----------------------------------------------------------------- Fitch upgraded Xerox Corp.'s and its subsidiaries' debt: -- Issuer Default Rating to 'BBB-' from 'BB+' -- Senior unsecured debt to 'BBB-' from 'BB+' -- Trust preferred securities to 'BB' from 'BB-' In addition, Fitch affirmed the senior unsecured bank credit facility at 'BBB-' and withdrawn the secured term loan rating of 'BBB-' since the secured term loan was repaid and the secured bank facility terminated concurrently with the effectiveness of the new unsecured credit facility. Approximately $6.4 billion of securities, including the $1.25 billion credit facility, are affected by Fitch's action. The Rating Outlook is Stable. Fitch's rating upgrades reflect Xerox's: -- solid balance sheet as a result of significant reductions in core (non-financing) and secured debt; -- strengthening credit metrics, especially core statistics; -- ample liquidity; -- improving post-sale revenue trends; and -- consistent financial performance of the core business measured by funds from operations (FFO; measured by cash flow from operations prior to changes in working capital), excluding cash flows associated with the financing portfolio. Fitch's rating concerns center on: -- consistent equipment pricing pressure, particularly in the office segment; -- risk of more aggressive, and potentially debt-financed, shareholder-friendly initiatives and acquisitions; -- significant annual research and development expenditures; and -- potentially limited FFO growth near-term as the company utilizes its financial flexibility to continue increasing the percentage of internally funded financing assets. Fitch believes the financial performance of Xerox's core business has been relatively consistent despite volatility in free cash flow caused by changes in the company's financing asset portfolio and moderating annual improvement in the cash conversion cycle since 2001. FFO, excluding changes in Xerox's financing asset portfolio, increased approximately 22% annually for 2004 and 2005, reaching approximately $1.4 billion in 2005, and increased 2% year-over-year to $1.3 billion in the LTM ended June 30, 2006. Fitch expects continued improvement in higher-margin post-sale revenue due to solid equipment install growth rates and the increasing number of pages printed in color, which is considerably more profitable than monochrome. Fitch estimates year-over-year color post-sale and financing revenue grew 15% in 2005 to nearly $3.1 billion and 14% in the first half of 2006 to $1.7 billion. Color accounted for 31% of total post-sale and financing revenue in the quarter ended June 30, 2006. Total post-sale revenue, excluding financing, rose 2.5% in the second quarter, the highest year-over-year growth in over three years. In addition, the light-lens business has steadily declined as expected and Fitch believes it will have negligible impact on post-sale growth by 2007. Xerox's credit protection measures for the LTM ended June 30, 2006, continue to improve, especially Xerox's core debt metrics, as Fitch estimates 93% of the company's total debt is attributable to the financing business. Xerox's leverage, measured by total debt to total operating EBITDA, declined to approximately 3.8x compared with 4.4x and 5.1x for the LTM ended June 30, 2005, and 2004, respectively. Similarly, Fitch estimates Xerox's core leverage (defined as non- financing debt divided by non-financing operating EBITDA) at June 30, 2006, declined to approximately 0.4x compared with 1.3x and 2.4x for the LTM ended June 30, 2005, and 2004, respectively. In addition, the company's overall interest coverage (including the financing segment) was 3.8x, while Fitch estimates core interest coverage (defined as core operating EBITDA divided by core interest expense) was approximately 6.7x for the LTM ended June 30, 2006, compared with 4.8x and 3.8x for the LTM ended June 30, 2005, and 2004, respectively. The company's liquidity at June 30, 2006, consisted of approximately $1.2 billion of cash and short-term investments and a mostly undrawn $1.25 billion unsecured bank facility revolver expiring April 7, 2011, which replaced a $1 billion secured credit facility. The bank facility is available, without sublimit, to certain qualifying subsidiaries of Xerox. The facility allows the company to increase from time to time, with willing lenders, the overall size of the credit facility to an aggregate amount not to exceed $2 billion. Fitch believes Xerox could draw on this facility to support ongoing increases of internally funded financing assets. Fitch believes Xerox has more than sufficient liquidity and financial flexibility to meet upcoming debt maturities and absorb a reasonable adverse monetary outcome from any currently outstanding litigation. To support business growth, Xerox also has access to a secured eight-year $5 billion U.S. credit facility provided by General Electric Vendor Financial Services expiring in December 2010. This facility is used for secured loans backed by U.S. finance receivables arising from the sale of Xerox's products. At June 30, 2006, nearly $3.8 billion was available under this facility. In June 2004, Xerox arranged a three-year $400 million revolving credit facility secured by U.S. trade receivables with General Electric Capital Corporation; as of June 30, 2006, this facility was undrawn. Additionally, Xerox has various multi-year committed secured funding facilities totaling approximately $2 billion of which approximately $0.9 billion was available at June 30, 2006. Fitch expects Xerox's usage of the aforementioned financing facilities will continue to decline as the company reduces its reliance on secured financing programs by maintaining a leverage ratio (debt- to-equity) of 7:1 against finance assets by utilizing unsecured capital market facilities and debt. As of June 30, 2006, total debt with equity credit was $7.7 billion. Total debt with equity credit consists of $4.5 billion of senior unsecured debt, $604 million of liabilities to subsidiary trusts issuing preferred securities (mandatorily redeemable in 2027) and approximately $2.6 billion of secured debt, consisting primarily of $2.5 billion secured by financing receivables. Debt secured by finance receivables accounted for approximately 33% of total debt with equity credit as of June 30, 2006, down from 47% as of June 30, 2005. Xerox's net finance receivables and equipment on operating leases totaled $8.2 billion at June 30, 2006. Debt maturities for the second half of 2006 are estimated to be $647 million of which only $169 million is unsecured debt and the remaining amount is debt secured by finance receivables and other assets. For 2007, $1.5 billion of debt matures, of which $269 million is unsecured debt. The conversion of $889 million of mandatorily convertible preferred stock into common equity on July 3, 2006, will not affect Xerox's outstanding debt figure or credit metrics since Fitch previously awarded 100% equity credit to this issue. In addition to Xerox Corp., the ratings affected are: Xerox Credit Corp. and Xerox Capital (Europe) plc's rated senior debt. YUKOS OIL: Russian Prosecutors Begin Bankruptcy Fraud Probe ----------------------------------------------------------- The Russian Prosecutor General's Office is investigating a possible fraud stemming from the bankruptcy proceedings of OAO Yukos Oil Co., the Itar-Tass news agency says. The Moscow Arbitration Court declared what was once Russia's largest oil producer bankrupt on Aug. 1, upholding creditors' vote to liquidate the company. According to the Jurist, Russian prosecutors have accused former Yukos officials of embezzling money by securing a $4.5 billion loan from Yukos Capital SARL, a Luxembourg-based unit and major creditor for Yukos, through legal entities affiliated with the company. Investigators alleged that the ex-Yukos officials masterminded a plan to sell crude oil through trading companies Fargoil and Ratibor under their control, acting both as fictitious owners and buyers, RIA Novosti relates. Prosecutors told the Russian news agency that "proceeds yielded from the scheme through affiliated entities were then offered as loans to Yukos and its subsidiaries." Authorities are now seizing related documents from the offices of Yukos, Yuganskneftegaz, Samarneftegaz, Tomskneft, Yukos Vostok Trade, and Energotrade, MosNews.com reveals. About Yukos Headquartered in Moscow, Yukos Oil -- http://yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for Chapter 11 protection Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742), but the case was dismissed on Feb. 24, 2005, by the Hon. Letitia Z. Clark. A few days later, the Government sold its main production unit Yugansk, to a little-known firm Baikalfinansgroup for $9.35 billion, as payment for $27.5 billion in tax arrears for 2000- 2003. Yugansk eventually was bought by state-owned Rosneft, which is now claiming more than $12 billion from Yukos. On March 10, a 14-bank consortium led by Societe Generale filed a bankruptcy suit in the Moscow Arbitration Court in an attempt to recover the remainder of a $1 billion debt under outstanding loan agreements. The banks, however, sold the claim to Rosneft, prompting the Court to replace them with the state-owned oil company as plaintiff. On April 13, court-appointed external manager Eduard Rebgun filed a chapter 15 petition in the U.S. Bankruptcy Court for the Southern District of New York (Bankr. S.D.N.Y. Case No. 06- 0775), in an attempt to halt the sale of Yukos' 53.7% ownership interest in Lithuanian AB Mazeikiu Nafta. On May 26, Yukos signed a $1.49 billion Share Sale and Purchase Agreement with PKN Orlen S.A., Poland's largest oil refiner, for its Mazeikiu ownership stake. The move was made a day after the Manhattan Court lifted an order barring Yukos from selling its controlling stake in the Lithuanian oil refinery. * Christopher Fagan Joins Seneca Financial as Financial Analyst --------------------------------------------------------------- Seneca Financial Group, Inc. reported the addition of a new financial analyst, Christopher Fagan, who will be responsible for company financial analysis, comparable company analysis, company valuation analysis, industry research, and merger/divestiture modeling. "Christopher is a valuable new addition to our team," said James Harris, president and founder of Seneca Financial Group. "We are confident that he will play a vital role in our firm's continued growth and success." Mr. Fagan joins Seneca after earning a Bachelors of Science in Commerce with concentrations in Accounting and Finance from the McIntire School of Commerce at the University of Virginia. Mr. Fagan grew up in Vernon, Connecticut, and currently resides in New York City. Mr. Fagan previously worked as an intern in the Financial Management Leadership Development Program at St. Paul Travelers in Harford, Connecticut. At the University of Virginia, he was an active participant in philanthropic efforts, volunteering extensively on behalf of the American Cancer Society. Over the last year, Seneca Financial Group has played an instrumental role in a number of high-profile restructuring assignments, including Evergreen International Airlines, Inc., Nellson Pharmaceutical, Con Edison, Metabolife International, A&H Wayside, and J.B. Holding. Seneca Financial Group -- http://www.senecafinancial.com/-- is a specialized investment banking firm focused on private and public corporate restructurings. Seneca is based in Greenwich, Connecticut. * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ------------------------------------------------------------- Recent chapter 11 cases filed with assets and liabilities below $1,000,000: In re Classic Yacht Charters, LLC Bankr. S.D. Calif. Case No. 06-02082 Chapter 11 Petition filed August 1, 2006 See http://bankrupt.com/misc/casb06-02082.pdf In re John William Arndt Bankr. S.D. Tex. Case No. 06-50167 Chapter 11 Petition filed August 1, 2006 See http://bankrupt.com/misc/txsb06-50167.pdf In re Pentecostal Cogic, Inc. Bankr. W.D. Tex. Case No. 06-60593 Chapter 11 Petition filed August 1, 2006 See http://bankrupt.com/misc/txwb06-60593.pdf In re LWTI, Inc. Bankr. W.D. Va. Case No. 06-70854 Chapter 11 Petition filed August 2, 2006 See http://bankrupt.com/misc/vawb06-70854.pdf In re Colonial Rug Company, Inc. Bankr. E.D. Mo. Case No. 06-43429 Chapter 11 Petition filed August 3, 2006 See http://bankrupt.com/misc/moeb06-43429.pdf In re James Darrell Shelton Bankr. M.D. Tenn. Case No. 06-04098 Chapter 11 Petition filed August 3, 2006 See http://bankrupt.com/misc/tnmb06-04098.pdf In re Omega Medical Office Services, Inc. Bankr. D. Ariz. Case No. 06-02389 Chapter 11 Petition filed August 3, 2006 See http://bankrupt.com/misc/azb06-02389.pdf In re Platinum Fitness, Inc. Bankr. N.D. Ga. Case No. 06-21132 Chapter 11 Petition filed August 3, 2006 See http://bankrupt.com/misc/ganb06-21132.pdf In re RPT PRN LLC Bankr. C.D. Calif. Case No. 06-11288 Chapter 11 Petition filed August 3, 2006 See http://bankrupt.com/misc/cacb06-11288.pdf In re The Wellness Connection - A Home Healthcare Agency, Inc. Bankr. S.D. Ohio Case No. 06-54061 Chapter 11 Petition filed August 3, 2006 See http://bankrupt.com/misc/ohsb06-54061.pdf In re Janie P. Etheridge Bankr. S.D. Ala. Case No. 06-11322 Chapter 11 Petition filed August 4, 2006 See http://bankrupt.com/misc/alsb06-11322.pdf In re Piedmont Clothing, Inc. Bankr. N.D. Ala. Case No. 06-81501 Chapter 11 Petition filed August 4, 2006 See http://bankrupt.com/misc/alnb06-81501.pdf In re Chameleon Enterprises, LLC Bankr. N.D. Fla. Case No. 06-40321 Chapter 11 Petition filed August 5, 2006 See http://bankrupt.com/misc/flnb06-40321.pdf In re Athena Acquisitions, LLC Bankr. D. Ariz. Case No. 06-00899 Chapter 11 Petition filed August 8, 2006 See http://bankrupt.com/misc/azb06-00899.pdf ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. The Company's 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. The TCR subscription rate is $725 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***