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/raid1/www/Hosts/bankrupt/TCR_Public/060816.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, August 16, 2006, Vol. 10, No. 194 Headlines ADVANSTAR COMMS: Posts $16.8 Million Net Loss in Second Quarter ALLIANCE LAUNDRY: Posts $800,000 Net Loss for Qtr. Ended June 30 ARMSTRONG WORLD: District Court Confirms Plan of Reorganization ASARCO LLC: Ct. OKs Pact Widening Bar Date for Intercompany Claims ASARCO LLC: Court OKs Pact Allowing Retirement Plan Cure Payments ATLANTIC GULF: Real Property Sale Hearing Set for August 23 AVIALL INC: Launches Offering for $200 Mil. of 7-5/8% Senior Notes BALLY TECHNOLOGIES: S&P Holds B Corp. Credit Rating on Neg. Watch BRICOLAGE CAPITAL: Court OKs Duane Morris to Substitute Arent Fox CALGON CARBON: Prices $65 Mil. Convertible Senior Notes Offering CALPINE CORP: Wants to Employ Lenczner Slaght as Canadian Counsel CALPINE CORP: Court OKs Sale of Fox Energy Plant for $16.2 Mil. CATHOLIC CHURCH: Tort Claimants May File Suit vs. Spokane Parishes CENTRAL VERMONT: Earns $995,000 for 2006 Second Quarter CHEMED CORP: Board Approves $50 Million Stock Repurchase Plan CHENIERE ENERGY: Posts $3.619 Million Net Loss in Second Quarter CIENA CORPORATION: Settles Two Patent Suits with Nortel CITIZENS COMMUNICATIONS: Earns $101.7 Mil. in 2006 Second Quarter COEUR D'ALENE: Earns $32.6 Million in 2006 Second Quarter COLLINS & AIKMAN: Inks Settlement Pact with Valiant and MOBIS COLLINS & AIKMAN: Sets Up Protocol for Rejecting Leases CONGOLEUM CORPORATION: Files Ninth Modified Reorganization Plan CONSUMERS ENERGY: Earns $21 Million in 2006 Second Quarter COPELANDS' ENTERPRISES: Files for Chapter 11 Protection in Del. COPELANDS' ENT: Case Summary & 25 Largest Unsecured Creditors DANA CORP: Can Assume Supply Pacts with Haas, Houghton & Moore's DANA CORP: Court Approves $8.3 Mil. Payment to Pension Fund DANA CORPORATION: Court Allows Travelers to Assert Counterclaims DAVE & BUSTERS: Wants to Amend $160 Million JP Morgan Credit Pact DELPHI CORPORATION: Opposes Panel's Plea to Prosecute GM Claims DELPHI CORP: Equity Committee Asserts Need for Financial Advisor DS WATERS: $68 Mil. Debt Repayment Cues S&P to Raise Rating to B- DUN & BRADSTREET: June 30 Balance Sheet Upside-Down By $134.4 Mil. DURA AUTOMOTIVE: Incurs $131.3 Million Net Loss in Second Quarter ELCOM INTERNATIONAL: Incurs $1.167 Mil. Net Loss in Second Quarter ELWOOD ENERGY: Credit Quality Prompts Moody's to Upgrade Rating ENCORE ACQUISITION: Has $28.4MM Working Capital Deficit at June 30 ENRON CORP: Objects to Citrus Trading's $152-Million Claim ENRON CORP: Judge Harmon Clears Barclays in Newby Litigation ENTERCOM COMMS: 2006 2nd Quarter Net Income Down to $17.1 Million ENTERGY NEW: BNY & FGIC Wants Adequate Protection on Secured Bonds ENTERGY NEW ORLEANS: Wants to Assume Power Purchase Agreements FALCONBRIDGE LMITED: Sells 67.8% Common Stock to Xstrata plc GRANITE BROADCASTING: Posts $31.3 Mil. Second Quarter Net Loss GTSI CORP: Lease Deals Prompt Financial Restatements HERBALIFE LTD: Second Quarter Net Income Increases to $36.3 Mil. INCYTE CORP: June 30 Balance Sheet Upside-Down by $54.7 Million INTEGRATED DISABILITY: Can Continue Case Under Chapter 11 INTERPUBLIC GROUP: Earns $68.9 Million in 2006 Second Quarter JO-ANN STORES: Promotes James Kerr to Chief Financial Officer KAISER ALUMINUM: Posts $2.5 Mil. Net Loss in Qtr. Ended June 30 KING PHARMACEUTICALS: Earns $111 Million in Second Quarter KOEN BOOK: Court Confirms Joint Liquidating Plan KULLMAN INDUSTRIES: Sees $14 to $17 Mil. of Allowed Unsec. Claims LEE'S TRUCKING: Judge Mixon Approves Disclosure Statement LENOX GROUP: Posts $41 Mil. Net Loss in 2nd Quarter Ended July 1 LIBERTY MEDIA: Discloses Second Quarter Financial Results LIGAND PHARMA: June 30 Balance Sheet Upside-Down by $238.5 Million LINN ENERGY: Closes $125 Mil. Acquisition Deal of Kaiser-Francis LOUDEYE CORP: Earns $5.3 Million in Second Quarter of 2006 LOVESAC CORP: Emerges from Chapter 11 Protection in Delaware MARSH SUPERMARKETS: Board Supports MSH Supermarkets Transaction MAXXAM INC: June 30 Balance Sheet Upside-Down by $704 Million MERITAGE HOMES: Board Authorize $100 Million Stock Repurchase METALDYNE CORP: Moody's Junks $400 Million Senior Notes' Rating MILLS CORP: To Sell Stake in Mills to Ivanhoe Cambridge for $981MM MIRANT CORP: Drops Plan to Close Two Calif. Power Generation Units MIRANT CORP: Bids for Phil. Facilities Must be in by Month-End MIRANT CORP: Court Approves $520-Million Settlement with PEPCO NBTY INC: To Acquire Zila Nutraceuticals for $40 Million in Cash NEOMEDIA TECHNOLOGIES: Earns $4.9 Mil. in Second Quarter of 2006 OWENS CORNING: Bondholders Agrees to Toll Action Against Banks OWENS CORNING: Objects to Roger Bell's Infringement Claim PARMALAT USA: Court Denies Reinstatement of Minguito's Claim PARMALAT USA: Carmen Green Wants Stay Lifted to Pursue Lawsuit PENN NATIONAL: Earns $42.7 Million in Second Quarter Ended June 30 PENN OCTANE: Amends and Restates Lease Agreement with Seadrift PLIANT CORP: Enters into Registration Rights Agreement PLIANT CORP: Inks Indenture Supplement to Up Interest on Sr. Notes POPE & TALBOT: Incurs $14.508 Million Net Loss in Second Quarter PORTLAND GENERAL: Earns $27 Million in Second Quarter of 2006 PRIMUS TELECOMMS: Posts $219.9 Million Net Loss in Second Quarter QWEST COMMS: Equity Deficit Narrows to $2.82 Billion at June 30 REFCO INC: Chapter 7 Trustee Can Assume CBOT Lease REGENCY GAS: Moody's Rates New $250 Million Revolving Loan at B1 RESOURCE AMERICA: June 30 Working Capital Deficit is $112.8 Mil. R.H. DONNELLEY: Posts $79.8 Million 2006 Second Quarter Net Loss SAINT VINCENTS: GAIC Has Until August 31 to Examine SVMC Personnel SANMINA-SCI: Form 10-Q Filing Delay Prompts S&P's Negative Watch SANMINA SCI: Moody's Reviews Low-B Ratings and May Downgrade SILICON GRAPHICS: Wants KPMG LLP to Provide Audit Services SILICON GRAPHICS: Wants to Hire Deloitte Financial as Accountants SOLUTIA INC: Ex-Employee Dickerson Appeals Dismissal of Lawsuit SOLUTIA INC: Court Approves Pharmacia and Sauget Settlement Pact SOMERSET EDUCATION: Default Cues S&P's D Rating on $2.9 Mil. Debt SONIC CORP: S&P Assigns BB- Rating to Proposed $775 Million Debts SONIC CORP: Moody's Rates Proposed $775 Million Sr. Loan at Ba3 SOS REALTY: Judge Feeney Denies Foreclosure of Primary Asset SOVRAN SELF: Earns $8.8 Million in Second Quarter of 2006 SPECIALTYCHEM PRODUCTS: Panel Wants Mesirow as Financial Advisor SPECIALTYCHEM PRODUCTS: Brennan Steil Okayed as Panel's Counsel STANDARD PARKING: Has $10.18MM Working Capital Deficit at June 30 SUB SURFACE: Posts $423,361 Net Loss in Third Fiscal Quarter TITAN GLOBAL: Inks $15 Million Revolving Loan With Capital Source TRIPATH TECH: June 30 Balance Sheet Upside-Down by $4.8 Million TRUST ADVISORS: Court Confirms First Amended Reorganization Plan USEC INC: Earns $21.6 Million in Second Quarter of 2006 VERIFONE HOLDING: To Acquire Trintech's Payment Systems Business VTEX ENERGY: Completes Acquisition of U.K. Energy Assets WERNER LADDER: U.S. Trustee Objects to Financial Advisor's Fees WERNER LADDER: Wants to Employ PwC as Tax Advisor and Auditor WORLDGATE COMMS: Completes $11 Mil. Funding With Cornell Capital XERIUM TECHNOLOGIES: Earns $11.1 Million for 2006 Second Quarter * Proskauer Rose Hires Veteran Securities Litigator Thomas Sjoblom * Upcoming Meetings, Conferences and Seminars ********* ADVANSTAR COMMS: Posts $16.8 Million Net Loss in Second Quarter --------------------------------------------------------------- Advanstar Communications Inc. reported operating results for the second quarter ended June 30, 2006. Advanstar's results for the second quarter and first half of 2006 reflect the positive impact of the strategies, operating structure, and growth initiatives we implemented in the last year. "We are continuing to build on our outstanding start to 2006 and have maintained our positive momentum through the second quarter," Joe Loggia, president and chief executive officer of Advanstar, said. "Launching new products and enhancing the customer experience, combined with continuous improvement in our operating efficiencies, drove our 13% revenue growth and 28% EBITDA increase for the first half of the year." Second Quarter Results Revenue increased 6% to $59.2 million from $56.0 million for the same quarter last year. The increase is due to 9% growth in the Fashion & Licensing segment, 24% growth in the Powersports segment and 3% growth in the Life Sciences segment. There were no material event timing differences in the quarter. Operating loss from continuing operations improved to $800,000 from $3.3 million in the second quarter of 2005. Contribution margin grew 17% in the Fashion & Licensing segment and 8% in the Life Sciences segment, while losses were reduced in the Company's Powersports segment. The 2005 results include a restructuring charge of $2.0 million related to a workforce and leased office space reduction. EBITDA in the second quarter grew 47% to $9.2 million from $6.2 million in the same quarter of 2005. EBITDA in the second quarter of 2005 includes the aforementioned restructuring charge of $2.0 million. The balance of the improvement is driven by both solid revenue growth and generally improved operating performance. Cash provided by operations was $2.4 million compared to cash used by operations of $17.7 million in the second quarter last year. Operating cash flow in 2006 benefited from strong operating performance, tradeshow booth deposits from the Project tradeshow business, which was acquired in August 2005 and a reduction in cash interest expense as a portion of long-term debt was repaid in June of 2005. Net loss was $16.8 million, compared with net income of $15.5 million in the second quarter of 2005. The reduction is primarily due to non-recurring items in the second quarter of 2005. Net income in the second quarter of 2005 included the results of assets sold to Questex, which are reported separately as discontinued operations, and included a $53.0 million gain on the sale of these assets. These gains were partially offset by costs of $12.6 million incurred in relation to the extinguishment of a portion of the Company's debt. At June 30, 2006, the Company's balance sheet showed $760.730 million in total assets, $602.495 million in total liabilities, and $157.875 million in total stockholders' equity. The Company's June 30 balance sheet showed strained liquidity with $86.678 million in total current assets available to pay $92.294 million in total current liabilities coming due within the next 12 months. Fashion & Licensing Revenue from Fashion & Licensing for the second quarter of 2006 increased 9% to $11.0 million from $10.1 million in the same quarter of 2005. Revenue from the Licensing International show grew 6%, or $500,000, reflecting a 5% increase in square feet, which increased the size of the event to more than 200,000 square feet. License! magazine revenue grew 18%, or $300,000, due largely to a 15% increase in advertising pages. Contribution margin from Fashion & Licensing increased 17% to $5.0 million in the second quarter of 2006 from $4.3 million in the second quarter of 2005 due to the successful Licensing International event and revenue growth in License! magazine. Life Sciences Revenue from Life Sciences increased 3% to $40.0 million in the second quarter of 2006 from $39.0 million in the same quarter of 2005. The increase in revenue was due to strong performances of several publications, including DVM Newsmagazine, Dental Lab Products, Formulary, and Contemporary Pediatrics, as well as the launches of new conferences and publications. These revenue gains were partially offset by a decline in revenue from our IVT pharmaceutical conferences. Contribution margin from Life Sciences increased 8% in the second quarter of 2006 to $13.4 million from $12.5 million in the second quarter of 2005, due primarily to increased revenue and improved operating efficiencies from the management restructuring undertaken in the second quarter of 2005. Powersports Revenue from Powersports in the second quarter of 2006 increased 24% to $5.5 million from $4.4 million reported in the same quarter of 2005 driven primarily by strong growth in our off-road sector, including the launch of Off-Road Expo in Salt Lake City. Contribution margin from Powersports improved in the second quarter of 2006 to a loss of $100,000 from a loss of $1.0 million in the second quarter of 2005 due primarily to the performance of the off-road properties launched in 2004 and 2005. General and Administrative General and administrative costs increased 8% to $9.4 million from $8.7 million in the second quarter of 2005 primarily due to increases in legal costs related to outstanding legal claims. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?fab About Advanstar Headquartered in New York, Advanstar Communications Inc. -- http://www.advanstar.com/-- is a worldwide media company providing integrated marketing solutions for the Fashion, Life Sciences and Powersports industries. Advanstar serves business professionals and consumers in these industries with its portfolio of 87 events, 58 publications and directories, 125 electronic publications and Web sites, as well as educational and direct marketing products and services. Market leading brands and a commitment to delivering innovative, quality products and services enables Advanstar to "Connect Our Customers With Theirs." Advanstar has roughly 1,000 employees and currently operates from multiple offices in North America and Europe. * * * Standard & Poor's Ratings Services assigned a bank loan rating of 'B+' to Advanstar's $75 million revolving credit facility due 2009. ALLIANCE LAUNDRY: Posts $800,000 Net Loss for Qtr. Ended June 30 ---------------------------------------------------------------- Alliance Laundry Holdings's net loss for the quarter ended June 30, 2006 was $800,000 as compared to a net loss of $2.7 million for the quarter ended June 30, 2005. The Company reported that its net revenues increased $1.2 million, or 1.5%, for the quarter ended June 30, 2006, to $86.9 million from $85.7 million for the quarter ended June 30, 2005. The Company disclosed that, its net loss for the quarter ended June 30, 2006 included $1.1 million of costs related to the transfer of production lines from its Marianna, Florida plant to its Ripon, Wisconsin plant and another $2.1 million of costs related to the closure of its Marianna plant. Net revenues for the six months ended June 30, 2006 increased $2.8 million, or 1.8%, to $158.4 million from $155.6 million for the six months ended June 30, 2005. The Company's net loss for the six months ended June 30, 2006 was $2.3 million as compared to a net loss of $34.1 million for the six months ended June 30, 2005. Thomas F. L'Esperance, chief executive officer and president, said, "We are pleased to report yet another solid quarter, and believe our operating performance reflects our efforts to continue manufacturing consolidations and match commodity cost increases with price increases. The physical move of the Marianna operations to our Ripon facilities was substantially completed by the end of July. We expect to begin seeing efficiencies from the consolidation during the fourth quarter of 2006." Alliance Laundry Systems LLC -- http://www.comlaundry.com/-- is a North American manufacturer of commercial laundry products and provider of services for laundromats, multi-housing laundries and on-premise laundries. Alliance offers a full line of washers and dryers for light commercial and consumer use as well as large frontloading washers, heavy-duty tumble dryers, and finishing equipment for heavy commercial use. The Company's products are sold under the brand names Speed Queen(R), UniMac(R), and Huebsch(R). * * * As reported in the Troubled Company Reporter on June 22, 2006 Standard & Poor's Ratings Services affirmed its 'B' rating and its recovery rating of '3' Alliance Laundry Systems LLC's senior secured credit facilities following its proposed $65 million add- on credit facilities. The 'B' bank loan rating remains at the same level as the corporate credit rating. ARMSTRONG WORLD: District Court Confirms Plan of Reorganization --------------------------------------------------------------- The U.S. District Court Judge Eduardo Robreno issued a decision confirming Armstrong World Industries, Inc.'s Fourth Amended Plan of Reorganization, as Modified, dated Feb. 21, 2006. The Company expects that a formal confirmation order will be entered by the District Court shortly. AWI currently expects to emerge from Chapter 11 in the fourth quarter of 2006. "I am grateful for the support of our employees, customers, suppliers and other business partners during the reorganization process," said Michael D. Lockhart, AWI's Chairman and Chief Executive Officer. "Consistent with our purpose in seeking relief under Chapter 11, the Plan provides the Company with a binding resolution of its asbestos liability." Plan Funding Pursuant to the Plan, AWI will establish a trust in accordance with the provisions of section 524(g) of the U.S. Bankruptcy Code to satisfy all current and future asbestos personal injury claimants. AWI will fund the Trust by making a one-time contribution of a combination of cash, notes and common stock of the reorganized AWI. Based on the Plan's estimated value of the stock of reorganized AWI, the contribution to the Trust will have a value of approximately $1.8 billion. Those assets will be administered by the Trust's trustees and used to pay asbestos claims in accordance with the provisions of the Plan. Reorganized AWI will have no role or responsibility in the administration of the Trust. Pursuant to the Plan, all present and future asbestos personal injury claims must be asserted against the Trust, and all asbestos claimants will be permanently enjoined from pursuing their claims against reorganized AWI. Treatment of Claims The Plan provides for unsecured creditors to receive pro rata distributions on account of their allowed claims through a combination of cash, notes and common stock of the reorganized AWI. Based on the Plan's estimated value of the stock of reorganized AWI, unsecured creditors are expected to receive distributions equal to approximately 59.5% of their allowed claims. Current shareholders of AWI's parent company, Armstrong Holdings, Inc., do not receive any distributions under the Plan. Following AWI's emergence, AHI is expected to dissolve. A full-text copy of the Fourth Amended Plan of Reorganization is available for free at http://ResearchArchives.com/t/s?fb4 About Armstrong World Based in Lancaster, Pennsylvania, Armstrong World Industries, Inc. (OTC Bulletin Board: ACKHQ) -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. The Debtors tapped the Feinberg Group for analysis, evaluation, and treatment of personal injury asbestos claims. Mark Felger, Esq. and David Carickhoff, Esq., at Cozen and O'Connor, and Robert Drain, Esq., Andrew Rosenberg, Esq., and Alexander Rohan, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Houlihan Lokey for financial and investment advice. The Official Committee of Asbestos Personal Injury Claimant hired Ashby & Geddes as counsel. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. ASARCO LLC: Ct. OKs Pact Widening Bar Date for Intercompany Claims ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Texas has established August 1, 2006, as the deadline for certain parties to file proofs of claims against the ASARCO LLC and its debtor- affiliates. Each of the Debtors may have claims against one or more of the other Debtors. The Debtors and their professionals are in the process of reviewing and identifying all Intercompany Claims. Each of the Debtors needs additional time to identify and accurately report the Intercompany Claims. The Official Committee of Unsecured Creditors for ASARCO LLC and the Debtors agree that extending the Bar Date solely with respect to the Intercompany Claims is in the best interests of the Debtors' respective estates. Thus, in a Court-approved stipulation, ASARCO LLC, Encycle, Inc., ASARCO Consulting, Inc., Bridgeview Management Company, Inc., Asarco Oil And Gas Company, Inc., Government Gluch Mining Company Limited, ALC, Inc., American Smelting and Refining Company, AR Mexican Explorations Inc., AR Sacaton, LLC, Salero Ranch, Unit III, Community Association, Inc., Covington Land Company, and Asarco Master, Inc., agree that: (a) the Bar Date Order is extended solely with respect to Intercompany Claims; (b) the Stipulation does not modify or affect the Bar Date as it applies to claims asserted by or against the Asbestos Debtors, or as it applies to claims asserted by any party other than one of the Debtors; and (c) upon completion of the investigation of the Intercompany Claims, the Debtors and the Committees may file a supplemental bar date notice with the Court establishing a new bar date with respect to the Intercompany Claims, provided that the notice must be filed at least 30 days before the Intercompany Claims Bar Date. 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, http://bankrupt.com/newsstand/). ASARCO LLC: Court OKs Pact Allowing Retirement Plan Cure Payments ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi approved the stipulation between ASARCO LLC and the Official Committee of Unsecured Creditors. ASARCO LLC has been identifying and resolving certain problems in the administration of its employee benefit plans. ASARCO has discovered that it has compliance issues relating to its workers' 401(k) plans and certain benefit plans. The Department of Labor Employee Benefit Security Administration administers a Voluntary Fiduciary Correction Program where a sponsor of an employee benefit plan can report its own compliance issues. If those issues are corrected to the satisfaction of the Internal Revenue Service or the DOL, the government will not pursue penalties. The Internal Revenue Services also has a voluntary compliance program, the Employee Plans Compliance Resolution System. If ASARCO does not participate in the Correction Program and the EPCRS, the IRS can impose an excise tax equal to 15% of the foregone interest for each year that the late payment has not been corrected. If not corrected after notice from the IRS, a 100% excise tax penalty will be imposed. Participation in the Correction Program and the EPCRS will substantially reduce ASARCO's exposure to additional taxes and penalties. The funds required to cure the deficiencies would be paid by the funds, and not out of ASARCO's estates. To participate in the EPCRS, ASARCO need to file a Voluntary Correction with Service Approval form and the pay $58,000 as filing fee. The parties stipulate that ASARCO will: (a) participate in DOL's Correction Program and pay $50,000 to cure the deficiencies in the benefit plans; and (b) participate in the IRS' EPCRS and pay $58,000. 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, http://bankrupt.com/newsstand/). ATLANTIC GULF: Real Property Sale Hearing Set for August 23 ----------------------------------------------------------- A hearing on the proposed sale of certain real property owned by Atlantic Gulf Communities Corporation and its debtor-affiliates is scheduled at 2:00 p.m., on Aug. 23, 2006, at the US Bankruptcy Court, 824 Market St., 5th Floor in Wilmington, Delaware. Michael B. Joseph, the Chapter 7 Trustee appointed in the Debtors' case, is seeking to sell three lots, comprising approximately 9.3 acres, at the Cumberland Lakes planned community located in the Cumberland Plateau region of Tennessee. The three lots were inadvertently excluded from the previously approved sale of 185 Cumberland lots to David Fetzner and Aldo DiSorbo. Warren P. Schreier has offered to purchase the lots for a contract price of $35,000. The lots at Cumberland Lakes originally sold at prices between $3,010 and $60,000. The Trustee is disposing the assets pursuant to the request of the Debtors' Secured Term Loan Lenders. The lenders hold liens and security interests on substantially all of the Debtor's assets. As consideration for the Trustee's administration of their assets, the lenders have agreed to make available from their collateral certain funds for distribution to other creditors and the payment of chapter 7 administrative expenses. Headquartered in Fort Lauderdale, Florida, Atlantic Gulf Communities Corporation was a developer and operator of luxury residential real estate communities. The Company and its affiliates filed for chapter 11 protection on May 1, 2001 (Bankr. D. Del. Case Nos. 01-01594 through 01-01597). Michael R. Lastowski, Esq., at Duane Morris LLP represents the Debtor. The Bankruptcy Court converted the Debtors' chapter 11 cases to a chapter 7 liquidation proceeding on June 18, 2002. Michael B. Joseph is the chapter 7 Trustee for the Debtors' estates. John D. McLaughlin, Jr., Esq., at Young Conaway Stargatt & Taylor, LLP represents the chapter 11 Trustee. When the Debtors filed for chapter 11 protection, they listed $148,546,000 in assets and $170,251,000 in liabilities. AVIALL INC: Launches Offering for $200 Mil. of 7-5/8% Senior Notes ------------------------------------------------------------------ Aviall, Inc., commenced a cash tender offer for any and all of its outstanding 7-5/8% Senior Notes due 2011 (CUSIP No. 05366BAB8). There are $200 million in original aggregate principal amount of Notes outstanding. In conjunction with the tender offer, the Company is soliciting the consent of holders of at least a majority in aggregate outstanding principal amount of the Notes to amendments to the indenture under which the Notes were issued. If adopted, the amendments would eliminate substantially all of the restrictive covenants and certain events of default contained in the indenture. The terms and conditions of the tender offer are set forth in an Offer to Purchase and Consent Solicitation Statement dated Aug. 14, 2006. The tender offer will expire at 5:00 p.m., New York City time, on Sept. 12, 2006, unless extended or earlier terminated. Holders of the Notes cannot tender their Notes without delivering their consents to the amendments and cannot deliver consents without tendering their Notes. The Total Consideration for each $1,000 principal amount of Notes validly tendered and purchased in the Offer will be a price determined by reference to the bid-side yield to maturity of the 3.625% U.S. Treasury Note due June 30, 2007 as of 10:00 a.m., New York City time, on Aug. 25, 2006, unless extended, plus 50 basis points. The Total Consideration includes a consent payment of $30 per $1,000 principal amount of Notes that will be payable to holders who validly tender their Notes and deliver consents on or prior to 5:00 p.m., New York City time, on Aug. 25, 2006, unless extended and their Notes are accepted for purchase. Holders who validly tender Notes after the Consent Payment Deadline but on or prior to the Expiration Time will be entitled to receive the Tender Offer Consideration, which is equal to the Total Consideration less the consent payment. In either case, tendering holders will receive accrued and unpaid interest from the most recent payment of semi-annual interest preceding the Payment Date up to, but not including, the Payment Date. The tender offer is subject to the satisfaction of certain conditions, including: (i) the consummation of the acquisition of the Company by The Boeing Company, as announced on May 1, 2006; (ii) the receipt of the requisite consents from the holders of at least a majority in aggregate principal amount of Notes and the execution of a supplemental indenture giving effect to the proposed amendments to the indenture for the Notes; and (iii) certain other customary conditions. Wachovia Securities and UBS Securities LLC are the Dealer Managers and Solicitation Agents for the tender offer and consent solicitation. Questions regarding the terms of the tender offer or consent solicitation should be directed to: Wachovia Securities Telephone (704) 715-8341 Toll-free (866) 309-6316 UBS Investment Bank Telephone (203) 719-4210 Toll-free (888) 722-9555, ext. 4210 The Depositary is The Bank of New York Trust Company, N.A., and the 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 at (212) 269-5550 or toll-free at (888) 644-6071. About Aviall Headquartered in dallas, Texas, Aviall, Inc. (NYSE:AVL) -- http://www.aviall.com/-- provides aftermarket supply-chain management services for the aviation and defense industries. Aviall is comprised of two operating units: Aviall Services, Inc. and Inventory Locator Service. * * * As reported on Troubled Company Reporter on May 3, 2006, Standard & Poor's Ratings Services placed its ratings on Aviall Inc., including the 'BB' corporate credit rating, on CreditWatch with positive implications. BALLY TECHNOLOGIES: S&P Holds B Corp. Credit Rating on Neg. Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services held its ratings on Bally Technologies Inc., including the 'B' corporate credit rating, on CreditWatch with negative implications. Ratings were initially placed on CreditWatch Sept. 9, 2005, following the company's announcement that it had not completed its accounting and financial reporting process for the fiscal year ended June 30, 2005, due to several transactions that came under review from a revenue recognition perspective. The company's 10-K was subsequently filed on Dec. 31, 2005. The company announced that it has completed its review of certain transactions that affect the timing of revenue recognition during 2003 to 2005 and has concluded that these years should be restated. As a result, Bally expects to file the restated financial statements for fiscal years 2003, 2004, and 2005 with the SEC during September 2006. The company expects to file its 10-Qs for the periods ended Sept. 30, 2005, Dec. 31, 2005, and March 31, 2006, approximately 30 to 60 days after the fiscal year restated financials are filed. Bally does not expect to file its 10-K by the Sept. 13, 2006, deadline and now targets filing in November 2006. Management stated that it met its 2006 revenue-growth target, but did not achieve its profitability objectives due to lower gross margins on game sales related to introductory pricing and manufacturing costs, as well as high legal and accounting costs. "In resolving the CreditWatch listing, we will continue to evaluate the accounting and financial reporting issues and their potential impact on Bally's financial position," said Standard & Poor's credit analyst Peggy Hwan Hebard. "Thus far, we have lowered the corporate credit rating by two notches since the initial CreditWatch placement." Rating implications continue to vary considerably depending on the outcome of Standard & Poor's review, with possibilities from an affirmation to a multiple-notch downgrade. BRICOLAGE CAPITAL: Court OKs Duane Morris to Substitute Arent Fox ----------------------------------------------------------------- The Honorable James M. Peck of the U.S. Bankruptcy Court for the Southern District of New York in Manhattan gave Bricolage Capital, LLC, permission to employ Duane Morris LLP as its bankruptcy counsel, nunc pro tunc to July 1, 2006. The Court had approved on Nov. 30, 2005, the Debtor's application to employ Arent Fox PLLC as its bankruptcy counsel, nunc pro tunc to Oct. 14, 2005. Robert E. Grossman, Esq., has primary responsibilities for devising and implementing the Debtor's strategies on behalf of the Debtor. Mr. Grossman resigned his partnership at Arent Fox on June 30, 2006, and effective as of July 1, 2006, he became a partner of Duane Morris LLP. Duane Morris will: (a) take all necessary action to protect and preserve the estate of the Debtor, including the prosecution of actions on the Debtor's behalf, the defense of any actions commenced against the Debtor, the negotiation of disputes in which the Debtor is involved, and the preparation of objections to claims filed against the Debtor's estates; (b) prepare on behalf of the Debtor, as debtor-in-possession, all necessary motions, applications, answers, orders, reports, and other papers in connection with the administration of the Debtor's estate; (c) negotiate and prepare on behalf of the Debtor all plans of reorganization and documents related thereto and assist in obtaining acceptances and confirmation of such plan or plans; (d) perform all other necessary legal services in connection with the prosecution of these chapter 11 cases; and (e) advise the Debtor's board of directors with respect to fiduciary duties. Mr. Grossman disclosed the current hourly rates of Duane Morris: Designation Hourly Rate ----------- ----------- Partners and Counsel $175 - $705 Associates $155 - $425 Paraprofessionals & Staff $60 - $250 The Debtor has previously paid a $350,000 retainer to Arent Fox, the balance of which will be transferred to Duane Morris as an advance payment or security retainer for services to be rendered and expenses to be incurred in connection with the Debtor's chapter 11 case. Mr. Grossman assured the Court that Duane Morris has no interest adverse to the Debtor, its creditors, or any party-in-interest, and is disinterested as that term is defined in Section 101(14) as modified by Section 1107(b) of the Bankrutpcy Code. Headquartered in New York, New York, Bricolage Capital, LLC, filed for chapter 11 protection on Oct. 14, 2005 (Bankr. S.D.N.Y. Case No. 05-46914). Robert E. Grossman, Esq., Lawrence J. Kotler, Esq., and Matthew E. Hoffman, Esq., at Duane Morris LLP represent the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors' has been appointed to date in Bricolage's chapter 11 case. When the Debtor filed for protection from its creditors, it estimated assets of $1 million to $10 million and debts of $10 million to $50 million. CALGON CARBON: Prices $65 Mil. Convertible Senior Notes Offering ---------------------------------------------------------------- Calgon Carbon Corporation priced a private offering of $65 million in aggregate principal amount of its 5% Convertible Senior Notes due 2036 ($75 million in aggregate principal amount if the initial purchaser exercises its option in full). The sale of the Convertible Notes is expected to close on Aug. 18, 2006, subject to customary closing conditions. The Company has also arranged a new $50 million secured revolving credit facility which is also expected to close on Aug. 18, 2006, subject to customary closing conditions. Proceeds from the sale of the Convertible Notes, together with borrowings under the revolving credit facility, will be used to repay in full the outstanding indebtedness under the Company's existing revolving credit facility. The Convertible Notes will be senior unsecured obligations of the Company. The Convertible Notes will be guaranteed on a senior unsecured basis by certain of the Company's domestic subsidiaries. The Convertible Notes will pay interest semiannually in arrears at an annual rate of 5%. The Convertible Notes will be convertible prior to June 15, 2011, upon specified events, and thereafter, at any time, into shares of the Company's common stock at a conversion rate of 196.0784 shares per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $5.10 per share), subject to adjustment in certain circumstances. The initial conversion price represents an approximately 20% premium to the $4.25 per share closing price of the Company's common stock on the New York Stock Exchange on Aug. 14, 2006. Upon conversion, the Company will pay cash and deliver shares of the Company's common stock, if applicable. The Convertible Notes will be redeemable at the Company's option on or after Aug. 20, 2011 at a redemption price equal to 100% of the principal amount of the Convertible Notes being redeemed plus accrued and unpaid interest. The Convertible Notes will be subject to repurchase at the option of holders on Aug. 15, 2011, Aug. 15, 2016, and Aug. 15, 2026, and upon the occurrence of certain fundamental changes at a repurchase price equal to 100% of the principal amount of the Convertible Notes being repurchased plus accrued and unpaid interest. About Calgon Carbon Based in Pittsburgh, Pennsylvania, Calgon Carbon Corporation (NYSE: CCC) -- http://wwwcalgoncarbon.com/-- provides services and solutions for making air and water cleaner and safer. Credit Facility Default As of June 30, 2006, the Company remained in default of its U.S. credit facility. It continues to classify the borrowings outstanding on that facility as short-term debt. The Company is evaluating several options to restructure its credit facility. Calgon Carbon's board of directors did not declare a quarterly dividend. CALPINE CORP: Wants to Employ Lenczner Slaght as Canadian Counsel ----------------------------------------------------------------- Calpine Corp. and its debtor-affiliates ask authority from the U.S. Bankruptcy Court for the Southern District of New York to employ Lenczner Slaght Royce Smith Griffin, LLP, as their Canadian counsel, nunc pro tunc to June 7, 2006. On Dec. 20, 2005, Madam Justice B.E.C. Romaine of the Court of Queen's Bench of Alberta declared that the Companies' Creditors Arrangement Act applied to each of Calpine Canada Energy Limited, Calpine Canada Power Ltd., Calpine Canada Energy Finance ULC, Calpine Energy Services Canada Ltd., Calpine Canada Resources Company, Calpine Canada Power Services Ltd., Calpine Canda Energy Finance II ULC, Calpine Natural Gas Services Limited, and 3094479 Nova Scotia Company. Lenczner Slaght will: (a) advise the Debtors and assist the U.S. Debtors' bankruptcy and reorganization counsel in connection with issues of Canadian bankruptcy law; (b) represent the Debtors in the Canadian Proceedings; and (c) represent the Debtors in the litigation pending in Canada. The Debtors will pay Lenczner Slaght according to the firm's customary hourly rates: Professional Hourly Rate ------------ ----------- Partners CN$475 to CN$750 Associates CN$300 to CN$500 Paraprofessionals CN$125 to CN$225 These professionals will have primary responsibility in providing services to the Debtors: Professional Hourly Rate ------------ ----------- Peter Griffin, Esq. CN$700 Peter Osborn, Esq. CN$625 Monique Jilesen, Esq. CN$475 Pinta Maguire, Esq. CN$300 The Debtors will also reimburse all necessary out-of-pocket expenses Lenczner Slaght will incur. Peter Griffin, Esq., a senior partner at Lenczner Slaght Royce Smith Griffin, LLP, in Toronto, Ontario, assures the Court that his firm does not represent any interest adverse to the Debtors and their estates, and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Calpine Corp. Headquartered in San Jose, California, Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The Company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. (Calpine Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) CALPINE CORP: Court OKs Sale of Fox Energy Plant for $16.2 Mil. --------------------------------------------------------------- Calpine Corp. and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to take all actions necessary to effectuate the sale of the Fox power plant for $16.25 million. As reported in the Troubled Company Reporter on July 7, 2006, Fox Energy Company LLC and Fox Energy OP, LP, leased, on Nov. 19, 2004, Fox Energy Center, a 490-megawatt, natural gas-fired power plant in Kaukauna, Outgamie County, Wisconsin to Calpine Fox LLC. Fox Energy Company and Fox Energy OP are affiliates of GE Energy Financial Services. GE Energy is the existing equity-owner of the Fox power plant. CPN Fox is a non-debtor, indirect wholly owned subsidiary of Calpine Corporation. The Debtors have determined that CPN Fox is not eligible to receive proceeds from their DIP facility and other funding because the Fox power plant cannot maximize nor sustain its overall enterprise value. Bennett L. Spiegel, Esq., at Kirkland & Ellis LLP, in New York, notes that CPN Fox defaulted in its March 2006 rent payment for the Fox power plant. CPN Fox anticipates that it also cannot pay its June 2006 rent. Thus, CPN Fox and the Debtors negotiated for the sale of CPN Fox's leasehold interest in the Fox power plant back to Fox Energy Company and Fox Energy OP. On May 24, 2006, the Debtors, CPN Fox, Fox Energy Company and Fox Energy OP entered into a Letter of Intent, which provides that: 1. CPN Fox will sell the Fox Assets to Fox Energy Company and Fox Energy OP for $16.25 million, subject to post-closing adjustments: * $13.5 million will be paid on closing date, * $1 million will be paid 82 days after the closing date, * $500,000 will be paid 120 days after closing date, and * $1.25 million will be paid after occurrence of certain conditions delineated in the LOI; 2. CPN Fox will surrender the Fox Plant to Fox Energy; 3. Fox Energy's assignment to CPN Fox of certain interests will be terminated and those interests will revert automatically to Fox Energy; 4. CPN Fox and Debtors Calpine Operating Services Company, Inc., and Calpine Construction Management Company, Inc., will terminate certain contracts and assume and assign certain sub-contracts relating to the Fox plant. Among the contracts that will be terminated are: * the Lease, * the Memorandum of Lease, * the Site Lease, * the Memorandum of Site Lease, * the Assignment and Assumption Agreement, * the Project Management Agreement, * the Security Agreement, * the Pledge Agreement, * the Participation Agreement, * the Tax Indemnity Agreement, * the Calpine TIA Guaranty, * the Depositary Agreement, * the Tolling Guaranty and Reimbursement Agreement, * the Guaranty Note, * the Precautionary Pledge Agreement, and * the OP Guaranty; 5. CPN Fox and the Debtors will mutually release all liabilities arising under the terminated agreements; 6. CPN Fox and the Purchasers will execute a transition services agreement; and 7. All parties and their affiliates will mutually release all claims and liabilities related to Fox. A full-text copy of the Letter of Intent is available for free at http://ResearchArchives.com/t/s?d31 Mr. Bennett asserts that the sale proceeds is enough to fully satisfy CPN Fox's liabilities. The remainder of the proceeds can be applied to the Debtors' DIP Facility. To preserve the value of the Fox Assets, Mr. Bennett argues that it is critical that the Debtors close the sale as soon as possible. About Calpine Corp. Headquartered in San Jose, California, Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The Company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. (Calpine Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) CATHOLIC CHURCH: Tort Claimants May File Suit vs. Spokane Parishes ------------------------------------------------------------------ Individuals alleging clergy abuse in Eastern Washington may commence lawsuit against parishes in the Diocese of Spokane and even explore legal liability of individual churchgoers, according to SpokesmanReview.com. John Stucke, staff writer at SpokesmanReview, reports that tort claimants criticized, in radio talk shows, meetings, and statements to the press, Spokane bishop William Skylstad for: (1) reneging on their settlement agreement; and (2) allowing parishes to assert financial independence -- that the claimants said "was never the case before the diocese filed for bankruptcy." The U.S. Bankruptcy Court for the Eastern District of Washington previously threw out in May 2006 a settlement agreement that required the Diocese to pay $45,750,000 to 75 sexual abuse claimants. Judge Williams, instead, directed parties-in-interest to the Diocese's bankruptcy case to consider mediation to resolve issues including the property of the estate dispute and how much money is to be paid to tort claimants. On July 7, 2006, several parties gathered before retired Bankruptcy Court Judge Zive in Reno, Nevada, for mediation. In addition, the full week of August 21 has been set aside for mediation with Judge Zive in Spokane. Participants in the mediation process were: (1) the Tort Litigants Committee, representing the 75 settling claimants; (2) the Tort Claimants Committee, representing 60 or 70 individuals; (3) the Future Claims' Representative; (4) the Association of Parishes; and (5) the Spokane Diocese. Bishop Skylstad disclosed in July that the Diocese has pooled almost $20,000,000 from its liability insurers to be used to indemnify the tort claimants. The amount does not include $8,000,000 in diocesan assets, and an expected funding from Catholic organizations totaling $7,000,000. The Association of Parishes represents the individual parishes located in the Diocese. The parishes are unincorporated associations under applicable Washington law and are capable of bringing suit or being sued. If sued, the parishes will look into Spokane's insurance policies for coverage, said Ford Elsaesser, Esq., at Elsaesser Jarzabek Anderson Marks Elliott & McHugh, the Association's counsel, in papers filed with the Bankruptcy Court. Mr. Elsaesser pointed out that funds to pay the premiums for the policies originated or came from the 82 parishes in the Diocese. Mr. Stucke notes that Shaun M. Cross, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, in Spokane, Washington, the Diocese's counsel, confirmed that Spokane has been advised that the tort claimants may sue the parishes. Mr. Cross said those lawsuits would hinder the final resolution of Spokane's case. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) CENTRAL VERMONT: Earns $995,000 for 2006 Second Quarter ------------------------------------------------------- Central Vermont Public Service's consolidated second quarter earnings were $995,000, compared to second quarter 2005 earnings of $2.1 million. The Company reported consolidated earnings of $5.1 million, for the first half of 2006, versus a consolidated loss of $2.5 million, for the first half of 2005. The 2005 results included a $21.8 million pre-tax charge to earnings, due to the Vermont Public Service Board's Order issued on March 29, 2005. Bob Young, president, said, "Our primary focus continues to be on restoring the company's financial health to enable a return to an investment grade credit rating. In May we filed with the PSB for a 6.15% retail rate increase. We expect a decision on the case in late January 2007," "Financial discipline and strategic growth opportunities, such as the planned purchase of Rochester Electric Light and Power and the southern Vermont territory of Vermont Electric Cooperative, are keys to our success. These purchases will provide important customer growth while allowing the company to spread fixed costs over a larger customer base," Mr. Young said. The Company also disclosed that, it invested $8.9 million into Vermont Transco LLC, a Vermont limited liability company formed by Vermont Electric Power Company, Inc. and its owners. The Company expects to invest another $14.4 million in Transco in the third quarter of 2006. Founded in 1929, Central Vermont Public Service (NYSE: CV) is Vermont's largest electric utility. Central Vermont's non- regulated subsidiary, Eversant Corporation, sells and rents electric water heaters through a subsidiary, SmartEnergy Water Heating Services. * * * As reported in the Troubled Company reporter on Aug. 4, 2006, Standard & Poor's Ratings Services affirmed its 'BB+' corporate credit rating and 'BBB' senior secured bond rating on electric utility Central Vermont Public Service Corp. At the same time, the preferred stock rating was lowered to 'B+' from 'BB-'. The outlook is stable. CHEMED CORP: Board Approves $50 Million Stock Repurchase Plan ------------------------------------------------------------- The Board of Directors of Chemed Corporation has formally authorized the establishment of a $50 million ongoing share repurchase program. In addition, the Company intends to fully utilize the remaining $8 million from its February 2000 share repurchase program. These share repurchases will be funded through a combination of cash generated from operations as well as utilization of its revolving credit facility. The timing and the amount of any repurchase of shares will be determined by Company management based on its evaluation of market conditions and other factors. Headquartered in Cincinnati, Ohio, Chemed Corporation (NYSE:CHE) -- http://www.chemed.com/-- operates VITAS Healthcare Corporation, the nation's largest provider of end-of-life care, and Roto-Rooter, the nation's largest commercial and residential plumbing and drain cleaning services provider. * * * As reported in the Troubled Company Reporter on June 27, 2006, Moody's Investors Service affirmed ratings of Chemed Corp.'s $175 million senior secured revolving credit facility due 2010 at Ba2; $150 million 8.75% guaranteed senior notes due 2011 at Ba3; Corporate family rating at Ba2; and Speculative grade liquidity rating at SGL-1. Moody's said the outlook is stable. CHENIERE ENERGY: Posts $3.619 Million Net Loss in Second Quarter ---------------------------------------------------------------- Cheniere Energy, Inc., incurred a $3.619 million net loss on $413,000 of revenues in the second quarter ending June 30, 2006, the Company disclosed in a Form 10-Q filing delivered to the Securities and Exchange Commission on Aug. 4, 2006. As of June 30, 2006, the Company's balance sheet showed $1.449 billion in assets and $285.547 million in equity. Liquidity and Capital Resources The Company is primarily engaged in Liquefied Natural Gas-related business activities. Craig K. Townsend, the Company's Vice President and Chief Accounting Officer, said the Company's three LNG receiving terminal projects, as well as its related proposed natural gas pipelines, will require significant amounts of capital and are subject to risks and delays in completion. In addition, its marketing business will need a substantial amount of capital for hiring employees, satisfying creditworthiness requirements of contracts and developing the systems necessary to implement our business strategy. Even if successfully completed and implemented, its LNG-related business activities are not expected to begin to operate and generate significant cash flows before 2008. As a result, the Company's business success will depend to a significant extent upon its ability to obtain the funding necessary to construct its three LNG receiving terminals and related pipelines, to bring them into operation on a commercially viable basis and to finance the costs of staffing, operating and expanding our company during that process. The Company's management currently estimates that the cost of completing its three LNG receiving terminals will be approximately $3 billion, before financing costs. In addition, the Company's management expects that capital expenditures of approximately $800 million to $1 billion will be required to construct the Company's three related natural gas pipelines. As of June 30, 2006, the Company had working capital of $756.1 million. While the Company believes that it has adequate financial resources available through 2006, Mr. Townsend asserts that the Company must augment its existing sources of cash with significant additional funds in order to carry out its long-term business plan. The Company currently expects that its capital requirements will be financed in part through cash on hand, issuances of project-level debt, equity or a combination of the two and in part with net proceeds of debt or equity securities issued by Cheniere or other Cheniere borrowings. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?f76 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. CIENA CORPORATION: Settles Two Patent Suits with Nortel ------------------------------------------------------- Ciena(R) Corporation and Nortel have reached an agreement to settle two patent lawsuits between the companies that have been pending in the U.S. District Court for the Eastern District of Texas. The Company disclosed that, pursuant to the settlement, the parties entered into a long-term patent cross-license agreement. Both the original lawsuit brought by Ciena against Nortel in January 2005 and a second patent infringement case filed by Nortel against Ciena in April 2006 are to be dismissed. About Nortel Nortel (NYSE/TSX:NT) -- http://www.nortel.com-- delivers communications capabilities that enhance the human experience and power global commerce, and secure and protect critical information. It simplifies networks and connects people with information. Nortel does business in more than 150 countries. About Ciena Ciena, a supplier of optical telecommunications systems and related products, had $684 million in debt and capitalized operating leases outstanding as of Jan. 31, 2006. * * * As reported in the Troubled Company Reporter on April 6, 2006, Standard & Poor's Ratings Services affirmed its B/Stable/-- ratings on Linthicum, Maryland-based Ciena Corp. "At the same time, we assigned our 'B' rating to the company's proposed issue of $250 million in convertible senior notes due 2013," said Standard & Poor's credit analyst Bruce Hyman. CITIZENS COMMUNICATIONS: Earns $101.7 Mil. in 2006 Second Quarter ----------------------------------------------------------------- Citizens Communications Company reported second quarter 2006 revenues of $506.9 million, operating income of $169.5 million, and net income of $101.7 million. During the quarter, the Company received approximately $65 million in cash upon the liquidation of the Rural Telephone Bank. Excluding the effects of the Rural Telephone Bank liquidation, net income would have been $63.0 million. Second quarter 2006 revenue increased 2.2% compared to the second quarter of 2005. The increase is due primarily to growth in data and internet services revenue and to a lesser extent higher access services revenues and higher enhanced services/features revenues. Data and internet services revenue increased 28.5% compared with the second quarter of 2005. Other operating expense decreased by approximately $6.8 million or 3.7% primarily driven by reductions in salaries and benefits as the company has 340 fewer employees and improved expense control in benefit costs. Depreciation expense for the second quarter of 2006 decreased $12.9 million as compared to the second quarter of 2005. The decrease is due to a declining asset base and changes in the projected useful lives of certain assets as determined by an independent study prepared last year. Depreciation expense is expected to decline in 2006 to approximately $350.0 million or by 11% compared with 2005. At June 30, 2006, the Company's balance sheet showed $6.145 billion in total assets, $3.951 billion in total liabilities, and $924 million in total stockholders' equity. The company added 19,600 high-speed internet customers during the quarter and had over 350,000 high-speed data subscribers at June 30, 2006. The number of the company's high-speed internet subscribers has increased by more than 83,000 or 31.1% since June 30, 2005. Operating income for the second quarter of 2006 was $169.5 million and operating income margin was 33.4%, compared with $142.3 million and 28.7% in the second quarter of 2005. Capital expenditures were $54.5 million for the second quarter of 2006 and $98.3 million for the first six months of 2006. Free cash flow for the second quarter increased 17% to $155.8 million compared with the second quarter of 2005. The company's dividend represents a payout of 51.6% of free cash flow for the first six months of 2006. During the second quarter, the company repurchased $97.3 million of stock at an average price of $13.16. In addition, during the second quarter, the company retired at par $175 million of debentures due on June 1, 2006, and repurchased $22.7 million of its notes due Aug. 17, 2006. The sale of Electric Lightwave, LLC for $247 million (including $243 million in cash) closed on July 31, 2006. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?f35 Based in Stamford, Conn., Citizens Communications Corporation Company (NYSE: CZN) -- http://www.czn.net/-- provides communications services to rural areas and small and medium-sized towns and cities as an incumbent local exchange carrier, or ILEC. The Company offers its ILEC services under the "Frontier" name. * * * As reported in the Troubled Company Reporter on May 30, 2006, Moody's Investors Service placed the debt ratings of Citizens Communications on review for possible upgrade. Affected ratings include the Ba3 ratings of the Company's Corporate family rating, Senior unsecured revolving credit facility, and Senior unsecured notes, debentures, bonds. COEUR D'ALENE: Earns $32.6 Million in 2006 Second Quarter --------------------------------------------------------- Coeur d'Alene Mines Corp. reported all-time record quarterly net income of $32.6 million for the second quarter of 2006, compared to a net loss of $1.7 million for the year-ago period. Cash provided by operations was an all-time quarterly record of $32.0 million, compared to $9.1 million of cash used by operations in the year-ago quarter. Results for the second quarter of 2006 include the favorable impact of the company's strategic sale of 100% of the shares of Coeur Silver Valley, specifically a one-time pre-tax gain of $11.2 million. The quarter also includes pre-tax income of $1.4 million from CSV operations at the Galena mine. Excluding the one-time gain and the income from Galena, the company's net income in the second quarter of 2006 was still a record $20.1 million. For the first six months of 2006, the company reported record net income of $47.0 million compared to a net loss of $2.8 million for the same period of 2005. Excluding the one-time gain mentioned above and US$2.0 million of pretax income from discontinued operations, the company's net income for the first six months of 2006 was still a record $33.9 million. Metal sales from continuing operations in the second quarter of 2006 increased 61 percent to $54.0 million from $33.5 million in the year-ago quarter. Metal sales from continuing operations for the first six months of 2006 increased 50 percent to $98.9 million from $65.7 million in the year-ago period. In commenting on the company's performance relative to the year- ago quarter, Dennis E. Wheeler, Chairman, President and Chief Executive Officer, said, "The company's operating performance improved sharply due to improvement in nearly all of our key business indicators. Specifically, the company reported higher silver production, lower per-ounce cash production costs for silver, and sharply higher realized prices for silver and gold." Mr. Wheeler added, "During the quarter, we completed the profitable sale of our interest in Coeur Silver Valley as part of our strategy to focus our growth on lower cost, longer-life mines. That transaction generated US$15 million in cash for the company. At the same time, by eliminating the highest-cost mine in our system, where silver cash production costs were recently running above $10 per ounce, the transaction contributed to a significant reduction in the company's overall per-ounce silver cash production cost. We are pleased that we not only met our strategic objective with this sale but that we also reported an increase in silver production from continuing operations due largely to strong performance at Cerro Bayo combined with the ounces generated by our Australian interests." Mr. Wheeler said, "Gold and silver prices have remained at the kind of robust levels that enable the company to generate healthy income and cash flow. Our bullish view of the precious metals markets remains unchanged. Growth in silver demand appears to be particularly robust in the industrial sector, and we expect healthy price levels to continue. At the same time, we are counting on strong operating performance by our mines in the second half of the year and expect to see silver production at noticeably higher levels than in the first half, with the Cerro Bayo and Rochester mines, in particular, setting the pace." Highlights by Individual Property Rochester (Nevada) Silver cash cost per ounce declined by 66 percent, relative to the year-ago quarter, due to a 27 percent increase in gold production. Silver production was down modestly due to the short-term impact of heavy rains that affected silver in the solution flow. Cerro Bayo (Chile) Silver production was 53% above the level of the first quarter of 2006 as grades returned to more typical levels as planned. At US$1.82, silver cash cost per ounce in the second quarter of 2006 was the lowest in the Coeur system and was significantly below that reported for the first quarter of 2006 due largely to higher silver production. Silver production was 14 percent above that of a year ago due to an increase in tons milled. Gold production declined relative to the year-ago period due to lower grades. Lower gold production resulted in a reduced by- product credit, which caused silver cash cost per ounce to increase relative to the year-ago quarter. Martha (Argentina) Silver and gold production were above the levels of the year-ago quarter -- and sharply above the levels of the first quarter of 2006 -- primarily because the operation encountered grades for both metals that were much higher than forecast in the mine plan. Silver cash cost per ounce increased relative to the year-ago period due to higher royalties resulting from higher market prices. Endeavor (Australia) Silver production was above the level of the second quarter of 2005 because year-ago results reflected only one month of production data following Coeur's acquisition of this interest in June of 2005. Production rates at Endeavor have not yet returned to expected quarterly levels as the mine continues to recover from a rock fall that occurred in October 2005. Coeur currently expects production levels to return to normal levels during the fourth quarter of 2006. Cash production cost in the second quarter of 2006 was above the level of a year ago due to higher smelting and refining charges associated with the increased market value of silver deductions charged pursuant to the smelting and refining contracts. Broken Hill (Australia) Silver production was 528,041 ounces, with a cash cost per ounce of US$3.27. Cash production cost per ounce was above the level of the preceding quarter due to higher refining and smelting charges associated with the increased market value of silver deductions charged pursuant to the smelting and refining contracts. (Year-ago comparisons for Broken Hill are not meaningful because the mineral interest was acquired in the third quarter of 2005.) In addition, at Broken Hill, proven and probable silver mineral reserve ounces increased 20 percent to 18.0 million contained ounces as of June 2006 from 15.0 million contained ounces at year-end 2005. Balance Sheet and Capital Investment Highlights The company had US$393.3 million in cash and short-term investments as of June 30, 2006. Capital investment during the second quarter of 2006 totaled US$25.7 million, most of which was spent on the Kensington (Alaska) gold project. -- At Kensington, capital investment totaled US$20.9 million during the quarter as the company continued with an aggressive construction schedule. The company is aiming to complete the project and start producing gold near the end of 2007. Recent activity has focused on construction of the mill building and completion of major earthworks. Kensington is expected to produce 100,000 ounces of gold annually. -- At San Bartolome, capital investment totaled US$1.5 million during the quarter. The company is aiming to complete construction activities near the end of 2007. During the second quarter, the construction activities continued to focus on rough-cut grading of the plant site and construction of roads. Coeur has been pleased by the recent cooperative and productive actions of the Government of Bolivia. In particular, the company recently completed renegotiation of a contract with the Bolivian State Mining Company Comibol concerning timing of lease payments; entered into an agreement with Comibol that calls for joint exploration of certain Comibol silver properties in Potosi; and received a letter of assurance from the Minister of Mines regarding the government's support for the San Bartolome project. Based on such developments, Coeur is proceeding with engineering and procurement activities. San Bartolome is expected to produce 8 million ounces of silver annually. Exploration During the second quarter, the company acquired two new exploration properties in the Santa Cruz province near the company's Martha mine via option-to-purchase agreements with private Argentinean interests. The largest is the Costa property, at 98,500 acres, which lies about 90 miles north- northwest of Martha. The second property, called El Aguila, is located in the eastern part of the province approximately 90 miles north of the town of San Julian. The company has commenced exploration activities at both properties. In the second quarter, the exploration program focused primarily on existing properties, with an emphasis on reserve development/delineation drilling and discovery of new mineralization at Cerro Bayo, Martha, and Kensington. Approximate drilling totals were 62,000 feet at Cerro Bayo, 17,000 feet at Martha, and 23,000 feet at Kensington. A full-text copy of the Quarterly Report in Form 10-Q filed with the Securities and Exchange Commission is available for free at http://ResearchArchives.com/t/s?f72 Coeur d'Alene Mines Corp. -- http://www.coeur.com/-- is the world's largest primary silver producer, as well as a significant, low-cost producer of gold. The Company has mining interests in Nevada, Idaho, Alaska, Argentina, Chile, Bolivia and Australia. * * * Coeur d'Alene Mines Corp.'s $180 Million notes due Jan. 15, 2024, carry Standard & Poors' B- rating. COLLINS & AIKMAN: Inks Settlement Pact with Valiant and MOBIS ------------------------------------------------------------- Collins & Aikman Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan to approve a stipulation resolving disputes over a claim asserted by Valiant Tool & Mold, Inc. Before the Debtors' bankruptcy filing, MOBIS Alabama, LLC, ordered various tooling, molds and other personal property from the Debtors pursuant to certain purchase orders. The Debtors out- sourced the manufacture of the Mold to Valiant Tool & Mold, Inc., and Valiant manufactured and delivered the Mold to the Debtors prepetition. Valiant says that $64,780 remains due and owing from the Debtors for the Mold. Valiant also says that it holds valid and perfected liens in the Mold pursuant to the Michigan Mold Lien Act (MCL Section 445.611 et seq.). Valiant had notified the Debtors that it was prepared to exercise its state law remedies under the Michigan Mold Lien Act. The Debtors also possess certain other Tooling that is separate and distinct from the Mold. The Debtors believe that $2,318,843 remains due and owing from MOBIS for receivables related to the Tooling. Marc J. Carmel, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, relates that MOBIS wants to assume ownership of the Tooling and related data, drawings, specifications and other information. MOBIS also wants the right to demand and take possession of the Tooling and copies of the Debtors' maintenance, repair and engineering change records. Moreover, General Electric Capital Corporation asserts that it has a perfected first priority lien in all of the Debtors' prepetition receivables until it is paid for all amounts outstanding under an Amended and Restated Receivables Purchase Agreement dated as of December 20, 2001. After conducting extensive arm's-length negotiations aimed at resolving all of the financial obligations and liens among the Parties, the Parties have agreed to enter a Stipulation, which provides that: (a) In full satisfaction of Valiant's $64,780 claim for the Mold, MOBIS will pay to Valiant, on the Debtors' behalf, $57,280 and Valiant will repay to the Debtors all amounts that they have already paid; (b) In satisfaction of GECC's receivable from the Debtors under the Receivables Purchase Agreement, MOBIS will pay, on the Debtors' behalf, $2,261,563 to GECC; (c) The Mold Payment and the Receivable Payment are in full, final and complete satisfaction of the Debtors' claim that $2,318,843 remains due and owing from MOBIS to the Debtors for the Receivable; (d) The Debtors will waive their right to (i) commence avoidance actions against Valiant solely on account of the alleged Valiant Liens in the Mold or the Mold Payment and (ii) challenge the perfection of the Valiant Liens; and (e) MOBIS will take title to the Tooling and related data, drawings, specifications and other information, free and clear of all liens, claims, encumbrances and other interests. Mr. Carmel asserts that through the Stipulation, the Debtors will: -- avoid the cost and uncertainty of litigating the validity of the Valiant Liens and Valiant's claim to state law remedies; -- avoid the cost and uncertainty of litigating the amount due and owing under the Receivable; and -- reduce the Debtors' balance due and owing to GECC under the Receivables Facility. Moreover, the Debtors will preserve their established relationships with each of MOBIS, Valiant and GECC, Mr. Carmel says. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) COLLINS & AIKMAN: Sets Up Protocol for Rejecting Leases ------------------------------------------------------- Collins & Aikman Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan to approve expedited procedures for the rejection of unnecessary and burdensome executory contracts and unexpired leases. Marc J. Carmel, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, relates that the Debtors have entered a phase of their reorganization wherein they are focused on shedding unnecessary contracts and leases to minimize costs and administrative burden on their estates as well as minimize the Court's administrative burden in overseeing the rejection process. Salient terms of the Debtor's proposed rejection procedures include: (a) The Debtors will file a notice to reject a Contract, setting forth: (i) the Contracts to be rejected; (ii) the name and address of the counterparties to the Contracts; (iii) the effective date of the rejection for the Contracts; and (iv) the deadlines and procedures for filing objections to the Rejection Notice. (b) The Debtors will serve the Rejection Notice by an overnight delivery service on: (i) the Contract counterparties affected by the Rejection Notice; (ii) counsel to the Committee; (iii) counsel to the agent for the prepetition secured lenders; (iv) counsel to the agent for the postpetition secured lenders; and (v) the Office of the United States Trustee. (c) Parties objecting to the rejection must file and serve a written objection with the Court no later than 10 days after the date the Debtors serve the relevant Rejection Notice. (d) If an objection is not timely filed, the Debtors will file a certificate of no objection with a proposed order rejecting the Contracts. (e) If an objection is timely filed and not withdrawn or resolved, the Debtors will file a notice for a hearing to consider the objection for the Contracts to which the objection relates. If an objection is overruled or withdrawn, the Contracts will be rejected. Establishing the Rejection Procedures will minimize the Debtors' postpetition obligations and help them increase the efficiency and overall cost-effectiveness of the reorganization, Mr. Carmel says. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) CONGOLEUM CORPORATION: Files Ninth Modified Reorganization Plan --------------------------------------------------------------- Congoleum Corporation filed a modified plan and disclosure statement with the Bankruptcy Court following court ordered global mediation negotiations. "The plan we have just filed reflects the considerable progress we believe was made with the parties during the last two months," Roger S. Marcus, Chairman of the Board, commented. "This plan has the affirmative support of all asbestos creditor classes and we believe it resolves issues that impeded previous plans. I am pleased we have accomplished this and optimistic that the plan will receive the votes required. A hearing on the disclosure statement for this plan is scheduled for Sept. 21, 2006, which we hope will lead to a confirmation hearing in early 2007 and our emergence soon thereafter." A full-text copy of the Proposed Disclosure Statement is available for free at http://ResearchArchives.com/t/s?fb2 A full-text copy of the Ninth Modified Plan of Reorganization is available for free at http://ResearchArchives.com/t/s?fb1 About Congoleum Corporation Based in Mercerville, New Jersey, Congoleum Corporation (AMEX:CGM) -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The Company filed for chapter 11 protection on Dec. 31, 2003 (Bankr. N.J. Case No. 03-51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A. Brennanat, Esq., at Pillsbury Winthrop Shaw Pittman LLP represent the Debtors in their restructuring efforts. Elihu Insulbuch, Esq., at Caplin & Drysdale, Chartered, represents the Asbestos Claimants' Committee. R. Scott Williams serves as the Futures Representative, and is represented by lawyers at Orrick, Herrington & Sutcliffe LLP, and Ravin Greenberg PC. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Bondholders. When Congoleum filed for protection from its creditors, it listed $187,126,000 in total assets and $205,940,000 in total debts. At March 31, 2006. Congoleum Corporation's balance sheet showed a $44,694,000 stockholders' deficit compared to a $44,960,000 deficit at Dec. 31, 2005. Congoleum is a 55% owned subsidiary of American Biltrite Inc. (AMEX: ABL). CONSUMERS ENERGY: Earns $21 Million in 2006 Second Quarter ---------------------------------------------------------- Consumers Energy Company reported $21 million of net income on $1.396 billion of operating revenue in the second quarter ending June 30, 2006, the Company disclosed on a Form 10-Q filing delivered to the Securities and Exchange Commission on Aug. 4, 2006. As of June 30, 2006, the Company's balance showed assets amounting to $15.666 billion in assets and $3.593 billion in debts. Thomas J. Webb, the Company's Executive Vice President and Chief Financial Officer, said that the Company's operating, investing, and financing activities meet its consolidated cash needs. At June 30, 2006, $918 million consolidated cash was on hand, which includes $67 million of restricted cash and $273 million from entities consolidated pursuant to FASB Interpretation No. 46(R). Liquidity and Capital Resources The Company's primary ongoing source of cash is dividends and other distributions from its subsidiaries. For the six months ended June 30, 2006, Consumers paid $40 million in common stock dividends to CMS Energy Corp. The Company's current financial plan includes controlling operating expenses and capital expenditures and evaluating market conditions for financing opportunities. Due to the adverse impact of the MCV Partnership asset impairment charge recorded in 2005 and the MCV Partnership fuel cost mark-to-market charges during 2006, Consumers' ability to issue FMB as primary obligations or as collateral for financing is expected to be limited to $298 million through December 31, 2006. MCV Partnership is a Midland Cogeneration Venture Limited Partnership in which the Company has a 49% interest through CMS Midland. After December 31, 2006, Consumers' ability to issue FMB in excess of $298 million is based on achieving a two-time FMB interest coverage ratio. The Company's management believes these items will be sufficient to meet the Company's liquidity needs: -- the Company's current level of cash and revolving credit facilities; -- the Company's ability to access junior secured and unsecured borrowing capacity in the capital markets; and -- the Company's anticipated cash flows from operating and investing activities. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?fa4 About Consumers Energy Company Headquartered in Jackson, Michigan, Consumers Energy Company -- http://www.consumersenergy.com/-- a wholly owned subsidiary of CMS Energy Corporation, is a combination of electric and natural gas utility that serves more than 3.3 million customers in Michigan's Lower Peninsula. * * * As reported in the Troubled Company Reporter on April 4, 2006, Fitch assigned a rating of 'BB+' to Consumers Energy Company's $300 million 364-day revolving credit facility. Fitch said the rating outlook is stable. COPELANDS' ENTERPRISES: Files for Chapter 11 Protection in Del. --------------------------------------------------------------- Copelands' Enterprises, Inc. filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware on August 14, 2006. The Debtor relates that it filed for bankruptcy in the hope of achieving a restructuring through a recapitalization under a Chapter 11 Plan. The Debtor tells the Court that its liquidity has been constrained due to a downturn in sales performance and margins as compared to prior years. As a result, it only had approximately $950,000 cash on hand as of Aug. 9, 2006. The Debtor says that it is also in default of its Loan Agreement with Wells Fargo Retail Finance, LLC. The Debtor further relates that a significant portion of its trade payables are overdue and most of its key vendors have either stopped shipping new inventory or threatened to do so. The Debtor discloses that it has received less than $300,000 per week in new inventory. This has resulted to the Debtor not being able to stock its stores with additional new inventory it normal requires for back-to-school and holiday seasons. Wells Fargo Loan The Debtor is a borrower under a Loan and Security Agreement, dated as of Dec. 31, 2002, which was amended and restated as of July 22, 2005, with Wells Fargo. The loan is secured by liens against substantially all of the Debtor's tangible and intangible assets. The Loan Agreement provides for a $40 million revolving line of credit available through Dec. 30, 2009, less the amount of any letters of credit outstanding and subject to borrowing bas limitation based on eligible receivable and inventory. The agreement also provides for term loans up to $6 million that can be drawn in increments of $1 million for the first three years of the agreement and matures on Dec. 30, 2009. The Debtor says that as of its bankruptcy filing, it owes Wells Fargo $14.3 million. Senior Notes The Debtor tells the Court that it also issued 12% Senior Subordinated Notes Dues Dec. 31, 2009, in the aggregate initial principal amount of $10 million. The Notes are secured by a lien on the assets of the Debtor junior to the liens securing its obligation under the Wells Fargo Agreement. The Debtor discloses that prior to filing for bankruptcy, Bruckman, Rosser, Sherrill and Co. II, L.P., an interest holder, held $5 million in principal amount of the Notes while Tom and Jim Copeland, the Debtor's founder and owner, held the other $5 million. The Debtor currently owes approximately $13.8 million to holders of the Notes. Accounts Payable The Debtor says that as of Aug. 14, 2006, it owes approximately $23 million in accounts payable to its vendors. 17 of these vendors, with claims aggregating approximately $9 million, formed an ad hoc committee and engaged in a series of negotiations and discussions with Wells Fargo and the Debtor. Reacquiring Interest The Debtor relates that on December 2002, Bruckman Rosser purchased a majority interest in the Debtor. The Copelands continued as Directors and retained investment in the Debtor. The Debtor says that prior to its filing for bankruptcy, the Copelands reached an agreement with Bruckman Rosser to repurchase Bruckman Rosser's stake in the company. The Copelands, using their own funds, agreed to purchase all of Bruckman Rosser's equity interests in the Debtor and the $5 million in principal amount of the Notes held by Bruckman Rosser. The Copelands further agreed to: a. resume management control of the Debtor; b. advance $5 million to the Debtor to reduce the debt held by Wells Fargo, facilitate the DIP financing by Wells Fargo, and increase availability under the DIP credit line; and c. subordinate their rights as holders of the $13 million in obligations under the Notes to the claims of trade creditors who continue to supply inventory to the Debtor. About Copelands' Enterprises Headquartered in San Luis Obispo, Calif., Copelands' Enterprises, Inc., dba Copelands' Sports -- http://www.copelandsports.com/-- operates specialty sporting goods stores. COPELANDS' ENT: Case Summary & 25 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Copelands' Enterprises, Inc. dba Copelands' Sports dba Shopsports.com 775 Fiero Lane, Suite 200 San Luis Obispo, California 93401 Bankruptcy Case No.: 06-10853 Type of Business: The Debtor operates specialty sporting goods stores. See http://www.copelandsports.com/ Chapter 11 Petition Date: August 14, 2006 Court: District of Delaware (Delaware) Debtor's Counsel: Laura Davis Jones, Esq. Pachulski Stang Ziehl Young Jones & Weintraub LLP 919 North Market Street, 17th Floor P.O. Box 8705 Wilmington, Delaware 19899-8705 Tel: (302) 652-4100 Fax: (302) 652-4400 -- and -- Marc A. Berlinson, Esq. Ira D. Kharasch, Esq. Pachulski Stang Ziehl Young Jones & Weintraub LLP 10100 Santa Monica Boulevard, 11th Floor Los Angeles, California 90067 Tel: (310) 277-6910 Fax: (310) 201-0760 Estimated Assets: $50 Million to $100 Million Estimated Debts: $50 Million to $100 Million Debtor's 25 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Nike USA, Inc. Trade debt $1,685,181 Customer Financial Services P.O. Box 4875 Beaverton, OR 9076-4875 Callaway Golf Trade debt $983,091 2180 Rutherford Road Carlsbad, CA 92008-7328 Sole Technology Inc. Trade debt $825,950 20161 Window Drive Lake Forest, CA 92630 New Balance Shoes Trade debt $806,729 38-42 Everett Boston, MA 02134 Taylor Made Trade debt $663,935 5545 Fermi Court Carlsbad, CA 92008 Titleist Golf Trade debt $542,794 P.O. Box 965 Faurgaven, MA 02719-0965 Adidas America Trade debt $542,794 5675 North Blackstock Road Spartanburg, SC 29303 DC Shoes Trade debt $466,262 1333 Keystone Way, Unit A Vista, CA 92083 Quiksilver Trade debt $418,733 5600 Argosy Circle #300 Huntington Beach, CA 92649 Puma Trade debt $326,819 147 Centre Street Brockton, MA 02402 Pacific Cycle Trade debt $319,708 4730 East Radio Tower Lane Olney, IL 62450 Reebok International Ltd. Trade debt $279,734 1895 J.W. Foster Boulevard Canton, MA 02021 Earth Products Trade debt $275,770 5830 El Camino Real Carlsbad, CA 92008 Asics Tiger Corp. Trade debt $265,529 16275 Laguna Canyon Road Irvine, CA 92618-3603 Nautilus Trade debt $254,539 16400 SC Nautilus Drive Vancouver, WA 98683 Columbia Sportswear Trade debt $253,264 P.O. Box 83239 Portland, OR 97283-0239 DVS Shoes Co., Inc. Trade debt $236,678 955 Francisco Street Torrance, CA 90502 VOLCOM, Inc. Trade debt $235,817 1740 Monrovia Avenue Costa Mesa, CA 92627 PG & E Trade debt $211,538 Box 997300 Sacramento, CA 95899-7300 Under Armour Trade debt $194,830 1020 Hull Street, Suite 300 Baltimore, MD 21230 Jansport Trade debt $194,169 P.O. Box 3600 Appleton, WI 54913-3600 Speedo Authentic Fitness Trade debt $192,658 7911 Haskell Avenue Van Nuys, CA 91410 Converse Trade debt $188,770 One High Street #14 North Andover, MA 01845-2601 Lakai Limited Trade debt $187,432 955 Francisco Street Torrance, CA 90502 Ho Sports/Hyperlite Trade debt $185,916 P.O. Box 94643 Seattle, WA 98124-6943 DANA CORP: Can Assume Supply Pacts with Haas, Houghton & Moore's ---------------------------------------------------------------- The Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York authorized Dana Corporation and its debtor-affiliates to assume their executory contracts with: 1. Haas TCM, Inc., 2. Houghton Fluidcare, Inc., and 3. Moore's Machine Company of Chatham County. The Court adjourned the hearing to consider the Debtors' contracts with U.S. Manufacturing Corporation and Nationwide Precision Products Corporation to a later date. As reported in the Troubled Company Reporter on June 13, 2006, the Debtors are parties to these executory contracts: (A) USM Agreement The Debtors are party to a supply agreement with U.S. Manufacturing Corporation dated September 5, 2002, whereby U.S. Manufacturing supplies parts to the Debtors for specified prices. The USM Agreement has a 10-year term and will expire in September 2012. The annual amount of purchases made by the Debtors under the USM Agreement total approximately $100,000,000. The Debtors want to assume the USM Agreement and pay a $3,994,195 cure amount, which is subject to reconciliation, resulting in the full payment of all prepetition amounts owed to U.S. Manufacturing. In exchange, the Debtors will receive a reduction in the prices paid under the USM Agreement of around 2.3%, with the potential for an additional price reduction if certain modifications to the manufacturing process utilized by U.S. Manufacturing, described as the variable wall tubing alternative, is implemented. (B) The Nationwide Agreement The Debtors are party to a supply agreement with Nationwide Precision Products Corporation dated February 7, 2000, pursuant to which, Nationwide purchases components to be integrated into axle parts manufactured by the Debtors. Nationwide performs machining services on those components prior to selling them to the Debtors. The Nationwide Agreement is scheduled to expire on December 31, 2006. The annual dollar amount of purchases made by the Debtors under the Nationwide Agreement is around $25,000,000. The Debtors want to assume the Nationwide Agreement and pay a $1,005,440 cure amount, which subject to reconciliation, resulting in the payment to Nationwide of 40% of the prepetition claims not entitled to priority under Section 503(b)(9) of the Bankruptcy Code. Nationwide reserves its rights to assert the remaining 60% as general unsecured claims or as reclamation claims. In exchange, Nationwide has agreed to enter into a supply agreement with the Debtors for year 2007. (C) The Haas Agreement The Debtors are party to a Corporate Account Agreement for Chemical Management Services with Haas TCM, Inc., dated August 1, 2004. Under the Haas Agreement, Haas is responsible for procuring, delivering, managing and disposing of various chemicals to the Debtors' facilities. The Haas Agreement is scheduled to expire on July 31, 2006, and, by its terms, is terminable by Haas upon 90 days' notice to the Debtors. The annual dollar amount paid to Haas under the Haas Agreement exceeds $15,000,000. The Debtors want to assume the Haas Agreement and pay a $631,609 cure amount, of which $464,733 is to be paid on assumption and $166,875 is to be paid prior to the effective date of the Debtors' reorganization plan. In exchange, Haas has agreed to, among other things: * refrain from exercising any termination rights it has under the Haas Agreement through August 1, 2007; * convert a 5% cost savings goals for the contract year August 1, 2006, through July 31, 2007, into a cost savings guarantee; * provide the Debtors with a one-year option to extend the term of the agreement and related statements of work through July 31, 2008, with an additional 5% guaranteed minimum savings for that contract year; and * provide other contract modifications that likely will result in cost savings for the Debtors. (D) The Houghton Agreement The Debtors are also party to a Corporate Account Agreement with Houghton Fluidcare, Inc., dated July 15, 2004, under which Houghton provides chemical management services to 18 of the Debtors' facilities. The Houghton Agreement is scheduled to expire on July 14, 2006 and, by its terms, is terminable by Houghton upon 90 days' notice to the Debtors. The annual dollar amount paid to Houghton under the Houghton Agreement exceeds $10,000,000. The Debtors want to assume the Houghton Agreement and pay a Proposed Cure Amount in two portions: (i) an estimated cure payment of $1,100,000; and (ii) the payment of an additional amount of around $375,000 contingent upon Houghton providing certain cost savings under the Houghton Agreement. In exchange, Houghton has agreed to, among other things: * refrain from exercising any termination rights it has under the Houghton Agreement through July 15, 2007; * convert a 5% cost savings goals for the contract year July 15, 2006, through July 14, 2007 into a cost savings guarantee; and * provide the Debtors with a current extension of the Agreement and related statements of work through July 14, 2008, and with a further one-year option to extend the term of the agreement through July 14, 2009, with an additional 5% guaranteed minimum year-over-year cost savings for each those contract years. (E) The Moore's Machine Agreement The Debtors are party to a supply agreement with Moore's Machine Company of Chatham County, Inc., dated February 9, 2004, pursuant to which Moore's Machine manufactures more than 100 part numbers utilized by the Debtors in their manufacturing operations. The Moore's Machine Agreement is scheduled to expire on January 31, 2007, with the Debtors possessing two one-year options to extend the term of the agreement through January of 2008 or 2009. The Debtors want to assume the Moore's Machine Agreement and pay a $590,000 cure amount, subject to reconciliation, resulting in the payment to Moore's Machine of 55% of the prepetition claims not entitled to priority under Section 503(b)(9) of the Bankruptcy Code, with the remainder to be asserted only as general unsecured claims in the Debtors' bankruptcy cases. In addition, the Debtors have agreed to purchase a portion of the raw material inventory of Moore's Machine in certain circumstances. In exchange, Moore's Machine has agreed to permit the Debtors to re-source certain parts presently supplied by Moore's Machine in the event that Moore's Machine is no longer competitive with respect to those parts. With respect to the Contracts to be assumed, the Debtors have assessed the relevant markets and their business operations and have made a preliminary determination that they would be unable to find a replacement supplier on terms as favorable as those in the Contracts, as modified. The Debtors believe that most of the Contracts will be of long term benefit to their operations and restructuring efforts and therefore likely would be assumed later in the Chapter 11 process even if the concessions created by the proposed modifications had not been obtained. Headquartered in Toledo, Ohio, Dana Corporation -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/). DANA CORP: Court Approves $8.3 Mil. Payment to Pension Fund ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved the stipulation between Dana Corporation and its debtor- affiliates and the Official Committee of Unsecured Creditors allowing the payment of $8.363 million to their employees' pension plans. In connection with their collective bargaining agreements and as part of their benefit programs for certain non-union employees, the Debtors maintain defined benefit pension plans and periodically make contributions to those Pension Plans. The next contribution required by the Internal Revenue Code and the Employee Retirement Income Security Act to certain of the Pension Plans, amounting to $8,363,000, is on July 15, 2006. Headquartered in Toledo, Ohio, Dana Corporation -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/). DANA CORPORATION: Court Allows Travelers to Assert Counterclaims ---------------------------------------------------------------- Before their bankruptcy filing, Dana Corporation and certain of its debtor and non-debtor affiliates initiated a state court action seeking, inter alia, a declaration of coverage under several insurance policies issued by Aetna Casualty and Surety Company, now known as Travelers Casualty and Surety Company. Contesting the coverage claims, Travelers filed a counterclaim seeking a declaratory judgment establishing that it has no legal or equitable obligation to pay any amount in connection with the underlying claims and to determine the parties' respective rights and obligations to the extent any liability is found against Travelers, including the parties' respective rights and obligations related to retrospective premiums owed under the Policies. Travelers has also asserted an affirmative defense based upon the retrospective premiums. Travelers asked the U.S. Bankruptcy Court for the Southern District of New York to lift the automatic stay to fully adjudicate the rights and obligations of the parties under the Policies, including any retrospective premiums owed, and to exercise its set-off or recoupment rights against any amounts owed to the Plaintiffs. The Court modified the automatic stay solely to permit Travelers to: -- assert, prosecute, litigate and liquidate in the State Action the Counterclaims; and -- join any additional debtors that are necessary parties to the State Action, as determined by the Court of Common Pleas of Lucas County, Ohio, and bring third-party claims in the State Action. The Court did not permit Travelers to collect any amounts from Dana Corporation and its debtor-affiliates' estates as a result of a determination made in the State Action. The Court denied Traveler's request for relief from stay to exercise its set-off or recoupment rights against any amounts owed, without prejudice to Travelers' right to renew that request for relief after the claims and obligations have been established in the State Action. Headquartered in Toledo, Ohio, Dana Corporation -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue Nos. 8 and 12; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/). DAVE & BUSTERS: Wants to Amend $160 Million JP Morgan Credit Pact ----------------------------------------------------------------- Dave & Buster's Inc. has requested a change to the Company's covenants under its $160 million Credit Agreement with a group of lenders led by JP Morgan Chase Bank, N.A. as administrative agent. The main provisions of the request are: 1) Consent to enter into a sale-leaseback transaction on three fee owned properties, the proceeds of which would be used to pay down the outstanding balance of the term loan portion of the Credit Agreement with up to $5 million being available for reinvestment. Net proceeds are estimated to be approximately $20 million, with an estimated closing date in October or November of 2006. 2) For the purposes of satisfying negative covenants under the Credit Agreement: (a) the amount of start-up costs to be added back to the Company's net income would be increased from $5 million to $7.5 million for the year 2006, and (b) the amount of payments to employees under change in control contracts to be added back to the Company's net income would be set at $10 million through the Company's 2007 fiscal year. 3) The ability to utilize purchasing cards, and treat up to $5 million of such purchasing card obligations as pari passu secured obligations. Dave & Buster's, Inc., headquartered in Dallas, Texas, is a leading operator of large format specialty restaurant and entertainment complexes with 46 locations across the United States. * * * As reported in the Troubled Company Reporter on Feb. 17, 2006, Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to theme restaurant operator Dave & Buster's Inc. At the same time, Standard & Poor's assigned its 'B-' rating to the company's planned $160 million bank loan, along with a recovery rating of '3', indicating the expectation of meaningful (50%-80%) recovery of principal in the event of a payment default. Standard & Poor's also assigned its 'CCC+' rating to the company's planned $175 million senior unsecured notes. The outlook is negative. DELPHI CORPORATION: Opposes Panel's Plea to Prosecute GM Claims --------------------------------------------------------------- Delphi Corporation and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of New York to deny the request of the Official Committee of Unsecured Creditors of Delphi to prosecute, on behalf of the Debtors' estates, the Claims and Defenses raised in a complaint against General Motors Corporation. The Committee had asserted that the Claims and Defenses may support the recapture of billions of dollars in payments and avoidance of obligations that the Debtors were forced to undertake for GM's benefit. The Claims and Defenses may also reduce or eliminate the Defendants' claims against the Debtors. According to the Committee, successful prosecution of the Claims and Defenses will increase dramatically the payout to unsecured creditors. John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, points out that the Official Committee of Unsecured Creditors seeks to wrest from the Debtors' control all of the estates' potential causes of action against General Motors Corporation, whether known or unknown, and all of the defenses to possible claims against the estates by GM, also whether known or unknown. Mr. Butler relates that Delphi Corp.'s Board of Directors had determined that bringing the GM Claims now would prejudice their transformation plan and be harmful to the reorganization. The Board reserved the right to assert some or all of the GM Claims and Defenses in the future prior to the expiration of the statutory tolling period in October 2007. The Committee clarified in its request that its purpose is not to pursue litigation but to ensure a seat in the negotiations. However, Mr. Butler notes, the Committee has not come forward with any case in which a court has granted a statutory committee, over the objection of a Chapter 11 debtor-in-possession, roving authority to usurp from the debtor causes of action that the Committee does not even have any present intention to pursue. To do so would be wholly inconsistent with the Bankruptcy Code, Mr. Butler says. According to Mr. Butler, the Committee does not contend that the Debtors are denying it information. Indeed, the Committee concedes that most of the allegations in the Complaint came from information the Debtors provided to the Committee. Mr. Butler adds that the Committee does not even imply that the Debtors have unjustifiably refused to pursue causes of action against GM. The Committee actually admits that it would be harmful to the estates to bring these causes of action at this time, notes Mr. Butler. Even if the Court were to overlook the fact that the Committee itself does not wish to assert claims against GM at this time, the Committee relies on an overly simplistic analysis to support its extraordinary request, Mr. Butler argues. "[T]he Debtors' objection is not the ratio of litigation expenses to expected recovery, but rather the Debtors' conclusion that litigating these claims against GM at the present time is not the best strategy for maximizing the value of the estates," Mr. Butler says. Based in Troy, Mich., Delphi Corporation -- http://www.delphi.com/ -- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) DELPHI CORP: Equity Committee Asserts Need for Financial Advisor ---------------------------------------------------------------- The Official Committee of Equity Security Holders appointed in Delphi Corporation and its debtor-affiliates' Chapter 11 cases seeks permission from the U.S. Bankruptcy Court for the Southern District of New York to retain a financial advisor. The Equity Committee believes that the services and expertise of a financial advisor are necessary so the Committee can effectively fulfill its fiduciary duties as the representative of equity security holders' interests. Bonnie Steingart, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP, in New York, tells Judge Drain that a financial advisor will assist the Equity Committee in evaluating the complex financial and organizational transformational issues inherent in the Debtors' reorganization. In addition, because of the various information sharing protocols in effect and the designation of a significant number of documents as for "Professionals' Eyes Only", the Equity Committee believes that having a financial advisor will make information sharing more manageable for all parties. The Equity Committee discussed its potential retention of a financial advisor with the Debtors, the United States Trustee and the Official Committee of Unsecured Creditors. These discussions led to lengthy negotiations that resulted in a term sheet setting forth a proposed payment structure and scope of services for a financial advisor that has been agreed to by the Debtors and the Equity Committee. Consistent with those discussions, the Debtors have stated that they have no objection to the Equity Committee's retention of a financial advisor on terms consistent with the Term Sheet. Likewise, the Equity Committee believes that the U.S. Trustee does not object to its efforts to retain a financial advisor. The compensation structure for the financial advisor to the Equity Committee will be $175,000 per month with no success fee. This is consistent with those that the Debtors are currently paying to Lazard Freres, on behalf of the United Auto Workers union, and Chanin Capital, on behalf of the IUE-CWA, for roles which are not as limited as those of the Equity Committee's advisors. Pursuant to the Term Sheet, the Equity Committee's financial advisor will not: 1) determine or evaluate the Debtors' enterprise value, on a consolidated and division basis; 2) monitor or review the business, management, operations, properties, financial condition and prospects of the Debtors; 3) analyze or review the Debtors' claims process, including plan classification modeling, negotiation, and claim estimation -- except for claims of General Motors and the unions arising out of Delphi's transformation or those arising out of divestitures and closings; and 4) participate in negotiations on the Equity Committee's behalf other than with the Debtors. To streamline the process, the Equity Committee interviewed a number of financial advisory firms and has reviewed with those potential advisors the proposed payment structure and scope of services. If the Court approves the request, the Equity Committee will promptly file an application by notice of presentment providing parties with 10 days' negative notice. Based in Troy, Mich., Delphi Corporation -- http://www.delphi.com/ -- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) DS WATERS: $68 Mil. Debt Repayment Cues S&P to Raise Rating to B- ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Atlanta, Georgia-based DS Waters Enterprises LP, including its corporate credit rating, to 'B-' from 'CCC+'. The recovery rating on the amended senior secured bank loan was revised to '2' from '3', which indicates an expected substantial recovery of principal (80% to 100%) in the event of a payment default. The outlook is revised to stable from positive. Standard & Poor's estimates that DS Waters had about $225.6 million of total debt outstanding at June 30, 2006. "The upgrade reflects approximately $68 million of debt repayment in fiscal 2006 and reduced amortization requirements; in addition, the company has begun to improve operating performance, although we note full turnaround of the business is not expected for another year," said Standard & Poor's credit analyst Alison Sullivan. The ratings on DS Waters reflect: * its leveraged financial profile; * narrow business focus; and * participation in the relatively mature home office delivery segment of the U.S. bottled water industry. DS Waters participates in the U.S. HOD water market, ranking first or second in 22 of the top 25 major cities in the U.S. The company was created in 2003 by joining two other bottled water concerns owned by Groupe Danone and Suntory Limited. Operating performance was significantly weaker than expectations for the subsequent two years following the creation of the company. Performance had declined as a result of: * increased competition from retail outlets selling water coolers; * growing consumer preference for single-serve bottled water; * high levels of customer attrition; and * higher-than-expected costs related to the integration of the company's bottled water businesses. Cooler rentals, which represent a substantial portion of the company's cash flow, have continued to decline and to date, DS Waters has not been able to replace this revenue stream with more profitable business; however, management has initiated steps to reduce costs and stabilize its customer base, and the company's operating performance has improved. EBITDA grew over 20% in the first half of 2006 compared to the same period in 2005. While Standard & Poor's remains concerned about industry conditions, it expects further improvements in performance as a result of these cost cutting efforts. DUN & BRADSTREET: June 30 Balance Sheet Upside-Down By $134.4 Mil. ------------------------------------------------------------------ The Dun & Bradstreet Corporation reported its results for the second quarter ended June 30, 2006. "We are pleased with our results in the second quarter, which represents another in a string of quarters in which we've consistently delivered strong performance," Steve Alesio, chairman and chief executive officer of D&B, said. "Looking ahead, we believe that our unique competitive advantages and ongoing investments in the business will allow us to continue to drive profitable revenue growth and deliver increased value to our shareholders." Second Quarter 2006 Results Core and total revenue for the quarter was $367.4 million, up 5% before the effect of foreign exchange (up 4% after the effect of foreign exchange) from the prior year quarter. Core and total revenue results for the second quarter of 2006 reflect: -- Risk Management Solutions revenue of $248.9 million, up 2% before the effect of foreign exchange (up less than 1% after the effect of foreign exchange); -- Sales & Marketing Solutions revenue of $88.2 million, up 10% (both before and after the effect of foreign exchange); -- E-Business Solutions revenue of $21.5 million, up 29% (both before and after the effect of foreign exchange); and -- Supply Management Solutions revenue of $8.8 million, up 33% before the effect of foreign exchange (up 32% after the effect of foreign exchange). Operating income before non-core gains and charges was $89.2 million, up 7% from the prior year quarter. On a GAAP basis, operating income was $85.6 million, up 12% from the prior year quarter. During the quarter, the Company also incurred transition costs of $4.8 million compared with $8.1 million in the prior year quarter. Net income before non-core gains and charges was $55.2 million for the quarter, up 8% from $51.4 million in the prior year quarter. On a GAAP basis, net income was $52.2 million, up 11% from $47.1 million in the prior year quarter. At June 30, 2006, the Company's balance sheet showed $1.449 billion in total assets and $1.584 billion in total liabilities, resulting in a $134.4 million stockholders' deficit. The Company's June 30 balance sheet also showed strained liquidity with $534.4 million in total current assets available to pay $720.6 million in total current liabilities coming due within the next 12 months. Free cash flow for the first six months of 2006, excluding the impact of legacy tax matters, was $162.5 million, up 27% from the first six months of 2005. Free cash flow now includes the effect of its adoption of expensing stock options pursuant to SFAS No. 123R, which resulted in a reclassification of $25.1 million from Cash Flow from Operating Activities to Cash Flow from Financing Activities in the first six months of 2006. On a GAAP basis, net cash provided by operating activities for the first six months of 2006 was $137.9 million, up 14% from the prior year period. Net cash provided by operating activities for the first six months of 2006, excluding $45.6 million of legacy tax matters was $183.5 million, up 34% from the first six months of 2005, which excluded $15.8 million of legacy tax matters. Share repurchases during the quarter, under the Company's current two-year program commenced in the first quarter of 2005 totaled $119.3 million, with $411.2 million repurchased since inception of this two-year $500 million program. This amount is in addition to the Company's existing repurchase program to offset the dilutive effect of shares issued under employee benefit plans, which totaled $154.8 million in the second quarter of 2006. The Company ended the quarter with $117.1 million of cash. Second Quarter 2006 Segment Results United States Core and total revenue for the quarter was $271.2 million, up 7% from $253.7 million in the prior year quarter. U.S. core and total revenue results for the second quarter of 2006 reflect: -- Risk Management Solutions revenue of $169.7 million, up 3%; -- Sales & Marketing Solutions revenue of $73.7 million, up 10%; -- E-Business Solutions revenue of $20.2 million, up 25%; and -- Supply Management Solutions revenue of $7.6 million, up 38%. Operating income for the quarter was $87.8 million, up 7% from the prior year quarter. This increase was primarily due to improved revenue in the U.S. segment and benefits from the Company's Financial Flexibility program, partially offset by higher benefit costs and costs associated with the Company's revenue generating investments. International Core and total revenue for the quarter was $96.2 million, up 1% before the effect of foreign exchange (down 2% after the effect of foreign exchange from $98.0 million in the prior year quarter). During the second quarter, the Italian real estate data business had a negative five point impact primarily due to retroactive price increases in the second quarter of 2005 and continuing legislative changes. All of this impact is reflected in the Risk Management Solutions results. International core and total revenue results for the second quarter of 2006 reflect: -- Risk Management Solutions revenue of $79.2 million, down 1% before the effect of foreign exchange (down 4% after the effect of foreign exchange); -- Sales & Marketing Solutions revenue of $14.5 million, up 9% before the effect of foreign exchange (up 6% after the effect of foreign exchange); -- E-Business Solutions revenue of $1.3 million; and -- Supply Management Solutions revenue of $1.2 million, up 6% before the effect of foreign exchange (up 1% after the effect of foreign exchange). Operating income for the quarter was $23.7 million, up $2.4 million from $21.3 million in the prior year quarter. This increase was primarily due to improved revenue in the International segment and benefits from the Company's Financial Flexibility program, partially offset by investments in the Company's DUNSRight(TM) quality process. On a GAAP basis, operating income was $23.7 million, up $3.2 million from $20.5 million in the prior year quarter. Share Repurchase Programs The Company disclosed that its Board of Directors has authorized a new $200 million one-year share repurchase program. The new $200 million program is in addition to the Company's existing two-year $500 million program commenced in the first quarter of 2005. The new program will commence upon completion of the current $500 million program, which has $88.8 million remaining. The Company anticipates that the new $200 million program will be completed within twelve months after its initiation. The Company also disclosed that its Board of Directors has authorized a new four-year five million share repurchase program to offset dilution. The three-year six million share repurchase program it currently has in place to offset dilution is set to expire in September 2006. Non-Core Gains and Charges During the second quarter of 2006, the Company recorded a net pre-tax, non-core charge of $3.6 million related to its Financial Flexibility initiatives and a tax charge of $800,000 related to the legacy tax item referred to as "Royalty Expense Deductions 1993-1997" in the company's SEC filings. During the second quarter of 2005, the Company recorded pre-tax, non-core charges of $6.5 million related to its Financial Flexibility initiatives and charges totaling $1.9 million related to a dispute on the sale of the Company's French business. These charges were partially offset by pre-tax, non-core gains of $3.5 million related to the sale of a 5% investment in a South African company and $800,000 related to lower than expected costs related to the sale of the Company's Iberian business. D&B's restructuring charges may be viewed as recurring as they are part of its Financial Flexibility initiatives. In addition to reporting GAAP results, the Company reports results before restructuring charges and other non-core gains and charges because they are not a component of its ongoing income or expenses and may have a disproportionate positive or negative impact on the results of its ongoing underlying business operations. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?f90 About D&B The Dun & Bradstreet Corporation (NYSE:DNB) -- http://www.dnb.com/ -- provides business information and insight, enabling companies to Decide with Confidence(R) for 165 years. D&B's global commercial database contains more than 100 million business records. The database is enhanced by D&B's proprietary DUNSRight(R) Quality Process, which transforms the enormous amount of data D&B collects daily into decision-ready insight. Through the D&B Worldwide Network - an unrivaled alliance of D&B and leading business information providers around the world - customers gain access to the world's largest and highest quality global commercial business information database. D&B partners with many of the world's largest and most successful enterprises as well as mid-size companies and entrepreneurial start-ups. Customers use D&B Risk Management Solutions(TM) to mitigate credit risk, increase cash flow and drive increased profitability; D&B Sales & Marketing Solutions(TM) to increase revenue from new and existing customers; D&B E-Business Solutions(TM) to convert prospects into clients faster by enabling business professionals to research companies, executives and industries; and D&B Supply Management Solutions(TM) to generate ongoing savings through supplier consolidation, and to protect their businesses from supply chain disruption and serious financial, operational and regulatory risk. DURA AUTOMOTIVE: Incurs $131.3 Million Net Loss in Second Quarter ----------------------------------------------------------------- DURA Automotive Systems, Inc., filed its financial results for the second quarter ended July 2, 2006, with the Securities and Exchange Commission on Aug. 4, 2006. For the three months ended July 2, 2006, the Company incurred a $131.3 million net loss on $573.3 million of net revenues, compared to $2.9 million of net income on $623.8 million of net revenues in 2005. "While we haven't begun to experience material financial improvements to date, our operational restructuring plan is off to an excellent start," said Larry Denton, Chairman and Chief Executive Officer of DURA Automotive. "Our management team is committed to meeting our restructuring goals and our entire organization is aligned to deliver this program." The decrease in second quarter revenue from the prior year was driven primarily by lower North American and European automotive production, unfavorable vehicle platform mix and the loss of the GMT 800 seat adjuster business. Partially offsetting these decreases was the benefit received from foreign currency exchange. The decrease in second quarter income from continuing operations from the prior year reflects the impact of lower automotive production, the loss of the GMT 800 seat adjuster business and higher raw material prices. Mr. Denton continued, "We need to match our overhead structure to the market share of our major customers. While our 50 cubed restructuring plan is focused on structuring our operations for the future, we must take action immediately to address the current industry conditions. To support this effort, we will reduce our labor force by 510 employees by year end." The $2.9 million facility consolidation charge for the quarter relates primarily to actions associated with the previously announced 50-cubed operational restructuring plan. Approximately $2.3 million of the charge relates to employee severance costs and $600,000 was for facility closure and asset impairment charges. In accordance with Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes", DURA's second quarter 2006 provision for income taxes includes the recording of a $90.8 million valuation allowance for U.S. deferred tax assets recorded as of Dec. 31, 2005. DURA determined the need for a valuation allowance based upon its updated quarterly analysis of its U.S. operations taxable income together with the extended impact of elevated raw material prices on the automotive and recreation vehicle industries. A copy of the Company's Quarterly Report is available for free at http://researcharchives.com/t/s?fa1 Headquarted in Rochester Hills, Michigan, DURA Automotive Systems, Inc. -- http://www.duraauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive and recreation & specialty vehicle industries. DURA, which operates in 63 locations, sells its products to every major North American, Asian and European automotive original equipment manufacturer and many leading Tier 1 automotive suppliers. It currently operates in 63 locations including joint venture companies and customer service centers in 14 countries. * * * As reported in the Troubled Company Reporter on Aug. 1, 2006, Standard & Poor's Ratings Services lowered its corporate credit rating on Dura Automotive Systems Inc. to 'CCC' from 'B-'. The rating outlook is negative. ELCOM INTERNATIONAL: Incurs $1.167 Mil. Net Loss in Second Quarter ------------------------------------------------------------------ Elcom International, Inc., incurred a $1.167 million net loss on $881,000 of net revenues for the second quarter ending June 30, 2006, the Company disclosed in a Form 10-QSB filing delivered to the Securities and Exchange Commission on Aug. 2, 2006. As of June 30, 2006, the Company's balance sheet showed $4.276 million in assets and $4.726 million in liabilities. As of June 30, 2006, the Company posted a $450,000 equity deficit compared to the $1.225 million equity at Dec. 31, 2005. Going Concern Doubt Vitale, Caturano & Company, Ltd., expressed substantial doubt about the Company's ability to continue as a going concern after auditing the Company's financial statements for the year ending Dec.31, 2006. The auditor pointed to the Company's significant operating losses. The Company has incurred net losses every year since 1998, has an accumulated deficit of $124,729,000 as of June 30, 2006, and expects to incur a loss in fiscal year 2006. As of June 30, 2006, the Company had $2.6 million of cash and cash equivalents and current assets of approximately $3.2 million and had current liabilities of approximately $4.2 million. According to John E. Halnen, the Company's President, Chief Executive Officer and Principal Financial and Accounting Officer, the ultimate success of the Company is dependent upon achieving additional revenues by marketing its ePurchasing software solutions, typically through channel partners, until the Company is operating profitably. The Company has incurred significant operating losses and has used cash in operating activities in each of the last several years, including $2.9 million of cash used in operating activities in fiscal 2005, and $2.3 million of cash used in operating activities in the first six months of fiscal 2006. According to the Company's management, the Company's ability to continue as a going concern is primarily dependent upon its ability to grow revenue and attain further operating efficiencies and, if necessary, to also attract additional capital. The Company believes that as a result of its 2005 issuances of common stock, including common stock listed on the AIM market of the London Stock Exchange, that it has the funds required to perform under its contracts in the current year, however it expects to incur a net loss in fiscal 2006. In order to achieve profitable operations Elcom is dependent upon generating significant new revenues from existing and future contracts. There can be no assurance that such incremental, ongoing operating revenues can be realized by the Company, the Company's management clarifies. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?f7f Elcom International, Inc. (OTC Bulletin Board: ELCO and AIM: ELC and ELCS) -- http://www.elcominternational.com/-- operates elcom, inc, an international B2B Commerce Service Provider offering affordable solutions for buyers, sellers and commerce communities to automate many or all of their purchasing processes and conduct business online. PECOS, Elcom's remotely-hosted flagship solution, enables enterprises of all sizes to achieve the many benefits of B2B eCommerce without the burden of infrastructure investment and ongoing content and system management. ELWOOD ENERGY: Credit Quality Prompts Moody's to Upgrade Rating --------------------------------------------------------------- Moody's Investors Service upgraded to Ba1 from Ba2 the rating of Elwood Energy, LLC's 8.159% senior secured notes due 2026. The action concludes the review for possible upgrade that was initiated on June 19, 2006. The rating outlook is stable. The upgrade reflects substantial improvement in counterparty credit quality following Aquila, Inc.'s assignment of its power sales agreements with Elwood to Constellation Energy Commodities Group, Inc., which is a subsidiary of Constellation Energy Group. Constellation's obligation to make payments to Elwood under the PSAs is unconditionally guaranteed by CEG. The Ba1 rating is also supported by Elwood's stable financial performance during its contracted period, resulting in average debt service coverage ratios of around 1.5x, which is likely to continue through 2012. While these financial metrics would be supportive of a low investment grade rating for a fully contracted power project, the rating factors in Elwood's sizeable exposure to non-contracted merchant markets beginning in 2017. Certain structural enhancements have been incorporated into the financing documents to address this risk, including a one-year debt service reserve and the establishment of a reserve account funded from excess cash flow beginning in 2013. However, Moody's believes the structural enhancements may not be sufficient to fully mitigate the project's future exposure to merchant risk after expiration of the PSAs with Exelon Generation and Constellation, barring a sustained improvement in the merchant market for gas-fired peaking generation. Based on our analysis, Moody's believes that Elwood may need to earn an equivalent of $26 per kw-year from its merchant capacity starting in 2013 to fully fund the reserve account by 2017, which is substantially higher than the current market and higher than our current expectations for the capacity market for natural gas- fired peaking generation. The upgrade further considers the announced intention by Peoples Energy Corporation to sell its 50% interest in Elwood by year-end 2006, which could result in the weakening of various guarantees and liquidity support provided to Elwood by its owners. The stable outlook reflects an expectation of predictable cash flows for the intermediate term from investment grade counterparties, resulting in debt service coverage of 1.5x through 2012. Upgrades: Issuer: Elwood Energy LLC * Senior Secured Regular Bond/Debenture, Upgraded to Ba1 from Ba2 Outlook Actions: Issuer: Elwood Energy LLC * Outlook, Changed To Stable From Rating Under Review Elwood Energy, LLC owns a 1,409 mw peaking facility that consists of nine natural gas-fired, simple cycle units of approximately 156.5 Mega Watt, located in Elwood, Illinois, about 50 miles southwest of Chicago. Elwood is jointly owned by subsidiaries of PEC and Dominion Resources, Inc. ENCORE ACQUISITION: Has $28.4MM Working Capital Deficit at June 30 ------------------------------------------------------------------ Encore Acquisition Company reported unaudited second quarter 2006 results. Encore reported net income of $22.2 million in the second quarter of 2006 compared with $23.7 million in the same period a year ago. Net income in the second quarter of 2006 rose 24% versus $17.9 million in the first quarter of 2006. The large expense increase in the second quarter of 2006 was mostly a reflection of a loss in hedge accounting on certain oil derivative contracts due to the widening of the oil differential in the Cedar Creek Anticline (CCA) over the past six months. Encore's cash flow from operations increased 23% in the second quarter of 2006 versus the same period in 2005. Record oil revenues of $94.1 million were recorded in the second quarter of 2006 with a 7% rise in production and higher oil prices versus the second quarter of 2005. "Increased production over the second quarter of 2005 and leverage to oil prices drove significant increases in cash flow from operations and record oil revenues in the second quarter of 2006," Jonny Brumley, president and chief executive officer, stated. "Looking forward, differentials in the CCA are continuing to tighten, and the average wellhead oil differential in the third quarter of 2006 is expected to range between $9 and $11 in the CCA and between $8 and $10 for the total Company." The oil price on the New York Mercantile Exchange (NYMEX) averaged $70.70 per barrel for the second quarter of 2006 versus $53.17 per barrel for the second quarter 2005. The wellhead oil differential in the CCA was $13.97 per barrel under NYMEX in the second quarter 2006 compared with $6.24 per barrel under NYMEX in the second quarter of 2005. Although the differential in the second quarter of 2006 was wider than the long-term historical average, it has tightened considerably from the $19.46 per barrel under NYMEX the Company experienced in the CCA during the first quarter of 2006. Viewed on a monthly basis, the oil differential under NYMEX in the CCA has narrowed from the widest value in March 2006 of $27.32 per barrel to $12.27 per barrel in June 2006. While producer competition and pipeline constraints still exist, the absence of any significant refinery maintenance and strong demand growth have considerably improved oil pricing in the Rockies. Encore's realized commodity prices, including the effects of hedging, averaged $51.93 per barrel and $6.58 per Mcf during the second quarter of 2006, resulting in increases of 27% and 8%, respectively, over the second quarter of 2005. On a combined basis, including the effects of hedging, prices increased during the second quarter of 2006 to $47.52 per BOE from $39.56 per BOE in the second quarter of 2005. Hedging expense reduced realized oil prices by $7.35 per barrel and realized natural gas prices by $0.24 per Mcf during the second quarter of 2006. Second quarter 2006 production volumes increased by 11% to 30,867 BOE per day (2.8 MMBOE), compared with second quarter 2005 production of 27,697 BOE per day (2.5 MMBOE). Production would have been 400 BOE per day higher in the second quarter of 2006, but completion delays in the Barnett Shale deferred production until the third quarter of 2006. The net profits interests in the CCA reduced reported production by approximately 1,562 BOE per day in the second quarter of 2006 versus 859 BOE per day in the second quarter of 2005. Oil represented 65% and 67% of the Company's total production volumes in the second quarter of 2006 and 2005, respectively. This 11% increase in production was attained despite a spring storm that caused a loss of power at the CCA, resulting in a shutdown of all CCA fields for four days. During the second quarter of 2006, lease operations expense increased to $23.1 million ($8.23 per BOE) from $16.1 million ($6.38 per BOE) in the second quarter of 2005. On a per-unit basis, lease operations expense increased due to higher electricity costs, greater field activity, and rising service costs in general. Depletion, depreciation, and amortization expense rose to $28.0 million ($9.96 per BOE) in the second quarter of 2006 versus $19.0 million ($7.55 per BOE) in the second quarter of 2005. Higher per-unit depletion, depreciation, and amortization costs were primarily attributable to higher commodity prices along with increased rig rates and oilfield services costs, which have elevated finding, development, and acquisition costs. Exploration expense was $4.0 million ($1.43 per BOE) in the second quarter of 2006 as compared to $3.8 million ($1.50 per BOE) in the second quarter of 2005. Operations Update In the second quarter of 2006 Encore drilled 63 gross (24.5 net) wells, investing $87.8 million in development capital (excluding development-related asset retirement obligations). The Company also invested $8.2 million in property acquisitions and undeveloped leases. Encore operated between eight and ten rigs during the second quarter of 2006. In the Little Beaver area of the CCA, Encore's high-pressure air injection (HPAI) project continues to keep production stable without drilling additional wells. Implementation of HPAI in Little Beaver Phases I and II was completed in the fourth quarter of 2004. In the Pennel and Coral Creek area of the CCA, Encore completed Phases I and II of the HPAI project in the fourth quarter of 2005, and the Company is seeing initial indications of response and expects to see more meaningful response toward the end of 2006. Implementation of Phase III at Pennel is currently underway. Progress on Encore's joint venture in West Texas is proceeding very well, with three rigs currently operating in the region. Two rigs are drilling in the Brown Bassett Field in Val Verde Basin. The shallow rig is currently on its fourth location drilling to the Wolfcamp formation, while the deep rig is targeting its first Ellenberger well. A third rig has reached total depth at its first location in the Wilshire Field in Midland Basin, a dual lateral in the Devonian formation. Wells that have reached total depth were waiting on completion operations or gathering line construction at the end of the second quarter, and Encore anticipates production from each formation in the third quarter of 2006. A fourth rig dedicated to the joint venture is expected to arrive early in the third quarter of 2006. In addition to the West Texas joint venture, the Company has negotiated to farm-in the Wolfcamp formation at the Brown Bassett Field from another major oil company, bringing the Company's working interest on an estimated 75 Wolfcamp locations from 15% to 65%. These wells are expected to have gross reserves of approximately 50 Bcf and generate a rate of return of about 20%. In the Mid-Continent, an active region for Encore encompassing Oklahoma and East Texas, the Company is currently bringing on a sour gas producer from the Oil Creek zone that may initially yield up to 4.0 MMcfe per day gross (1.0 MMcfe per day net) once treating facilities are in place. In the third quarter of 2005, Encore brought on a Travis Peak well with initial production of 1.9 MMcfe per day gross (1.4 MMcfe per day net). Following the success of the first Travis Peak well, Encore drilled an offset in the second quarter of 2006, which is expected to show about 1.4 MMcfe per day gross (1.0 MMcfe per day net) at first production. Encore expects to drill three additional wells within this initially successful program in the fourth quarter of 2006. Encore has formed a team to develop a drilling program targeting reserves in the prolific Morrow and Atoka formations in Southeast New Mexico. Encore has already developed eight drilling locations and acquired a total of approximately 2,700 gross acres. The team expects to spud its first well in August 2006 and anticipates selling gas in the fourth quarter of 2006. "The wheels are turning fast," remarked Jonny Brumley. "We are seeing success in all of our regions at Encore. It's exciting to see big wells in Oklahoma, and we are expecting great things from the West Texas joint venture and the Company's newly formed New Mexico team." Liquidity Update At June 30, 2006, long-term debt, net of discount, was $593.4 million, including $150 million of 6.25% Senior Subordinated Notes due April 15, 2014, $300 million of 6.0% Senior Subordinated Notes due July 15, 2015, and $150 million of 7.25% Senior Subordinated Notes due 2017. At that date, the Company's existing credit facility was undrawn. At June 30, 2006, the Company's balance sheet showed $1.804 billion in total assets, $1.063 billion in total liabilities, and $741.489 million in total stockholders' equity. The Company's June 30 balance sheet showed strained liquidity with $133.634 million in total current assets available to pay $162.053 million in total current liabilities coming due within the next 12 months. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?faa Headquartered in Fort Worth, Texas, Encore Acquisition Company (NYSE: EAC) -- http://www.encoreacq.com/-- is an independent energy company engaged in the acquisition, development and exploitation of North American oil and natural gas reserves. Organized in 1998, Encore's oil and natural gas reserves are in four core areas: the Cedar Creek Anticline of Montana and North Dakota; the Permian Basin of West Texas and Southeastern New Mexico; the Mid Continent area, which includes the Arkoma and Anadarko Basins of Oklahoma, the North Louisiana Salt Basin, the East Texas Basin and the Barnett Shale; and the Rocky Mountains. * * * Encore Acquisition's $300-million senior subordinate notes due July 15, 2015, carry Moody's Investors Service's B2 rating and Standard & Poor's B rating. ENRON CORP: Objects to Citrus Trading's $152-Million Claim ---------------------------------------------------------- Enron Corp. and its debtor-affiliates object to Citrus Trading Corp.'s $152 million claim. On November 1, 1988, Citrus Trading agreed to buy gas from Pan National Gas Sales, Inc., at the residual fuel oil formula price. On November 1, 1993, Citrus entered into a master agreement to purchase gas from Enron Gas Marketing, Inc. On January 8, 1994, Citrus entered into a gas sales agreement with Auburndale Power Partners, L.P. On April 1, 1994, Citrus agreed to sell gas at the commodity natural gas price, also known as the FGT Index Price, to Florida Power & Light. On October 3, 1994, EGM agreed to replace Citrus as buyer in the Pan National Contract under a Letter Agreement 1. Enron North America Corp. later succeeded to EGM's obligations to purchase gas from Citrus under Letter Agreement 1. On the same day, EGM agreed to sell back to Citrus at the FGT Index Price the same volume of gas EGM had purchased from Citrus under Letter Agreement 1, under a new contract known as Letter Agreement 2. ENA credited Citrus, through a monthly credit to its purchase from ENA under Letter Agreement 2, with profits ENA made as a result of the price arbitrage ENA captured between Letter Agreements 1 and 2. On November 1, 1997, termination agreements among Citrus Corp., Citrus Trading Corp., Sonat Marketing Company L.P., and Enron Capital and Trade Resources Corp. took effect. As a result, ENA became the natural gas supplier on behalf of Citrus for a number of natural gas sales contracts previously supplied and managed by Citrus. According to the termination agreements, ENA became the supplier of the Natural Gas Services Agreement with Florida Power Corp., entered into on July 22, 1996. ENA claims the FPC Contract is in-the-money to ENA, valued at $1,039,900. On August 25, 1999, ECT and FPL entered into an Assignment of Natural Gas Purchase Agreement, which resulted in ENA, as successor-in-interest to ECT, being assigned all of FPL's rights under the now terminated FPL Contract. On May 2, 2002, Citrus and ENA entered into a stipulation wherein among other things, ENA agreed to reject the FPL Contract and Letter Agreements 1 and 2. The Court subsequently approved the stipulation. On July 10, 2003, Citrus filed Claim No. 23159 against ENA for $152,000,000. ENA Objects to Claim On March 11, 2005, ENA objected to Citrus' Claim, asserting that Citrus fails to take into account set-off amounts owed by Citrus to ENA under Letter Agreement 1. ENA also argues that Citrus fails to calculate the value of the credit it claims to be owed under Letter Agreement 2 as of the Petition Date. Moreover, ENA reproaches Citrus with overstating rejection damages due to Citrus under the Auburndale Contract because Citrus does not calculate its damages based on the natural gas price prevailing on the Petition Date, as required by Section 365(g) of the Bankruptcy Code, and because Citrus does not include accounts receivable due to ENA. Citrus Maintains No Set-Off Should Occur Citrus opposes ENA's objection and asserts that no set-off should occur because the agreements were separate and governed by different master agreements. Citrus agrees that its damage claims regarding Letter Agreement 2, the FPL Contract and the Auburndale Contract should be discounted to present value as of the Petition Date. Citrus, however, argues that it does not use the same discount rate as ENA, and contends that ENA used the London Interbank Offered Rate or LIBOR for its discount rate, which is composed of two parts, an underlying Treasury rate, representing the risk- free time value of money, and a risk premium associated with 'AA' rated financial firms. Since performance risk is no longer at issue because Letter Agreement 2 has terminated due to ENA's rejection, only the first component should be used in determining the time value of future performance obligations. Court's Opinion The Court notes that the central issue in the case is whether ENA's in-the-money position under Letter Agreement 1 and Citrus's in-the-money positions under Letter Agreement 2 and the Assignment Contract should be netted to determine the amount of Citrus's claim. The Court holds that the in-the-money positions should be netted because both Letter Agreements and the Assignment Contract must be considered as one single contract. Moreover, according to Judge Gonzalez, the Letter Agreements and Assignment Contract and the nature of the transaction they embody, which is a swap agreement, mandate netting as well. The Letter Agreements and the Assignment Contract constitute one single swap agreement and that the rejection of the swap agreement results in netting of the parties' positions, the judge states. In its January 15, 2002 request to compel the assumption or rejection of executory contracts between the Debtors and the Citrus Companies, Citrus Trading admitted that the Letter Agreements and the Assignment Contract were three interrelated executory contracts and acknowledged that the Letter Agreements were entered into each in contemplation and reliance on the other, Judge Gonzalez points out. Judge Gonzalez notes that pursuant to the May 2, 2002 stipulation between Citrus and ENA, which resolved the Motion to Compel, Citrus is prevented from arguing against netting of the positions under the FPL Contract and the Letter Agreements. The Stipulation, according to Judge Gonzalez, stated that for purposes of calculating Citrus' rejection damage claims under Sections 365 and 502(g), the Contracts will be viewed as a single contract and Citrus will be entitled to a single rejection damage claim. The Contracts referred to are the FPL Contract and Letter Agreements 1 and 2, which clearly showed the parties intended the three agreements to constitute one single contract. The Court finds that based on the Stipulation, Citrus is prohibited from requesting an award of damages on the basis of Letter Agreement 2 and the Assignment Contract while it ignored ENA's in-the-money position under Letter Agreement 1. The Court concludes that that ENA's in-the-money position under Letter Agreement 1 and Citrus's in-the-money positions under Letter Agreement 2 and the Assignment Contract should be netted to determine the amount of Citrus's claim. Accordingly, the Court grants ENA's objection regarding the issue of netting. The Court rules, however, that it cannot decide yet which other amounts due under the Auburndale Contract and the FPC Contract should be taken into consideration to adjudicate the amount of Citrus's claim. Nor does the Court set a discount rate to reach proper valuation of Citrus's claim yet. The Court will convene a hearing to determine the amount of Citrus' Claim No. 23159. Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, represent the Official Committee of Unsecured Creditors. (Enron Bankruptcy News, Issue No. 177; Bankruptcy Creditors' Service, Inc., 15/945-7000, http://bankrupt.com/newsstand/) ENRON CORP: Judge Harmon Clears Barclays in Newby Litigation ------------------------------------------------------------ The Honorable Melinda Harmon of the U.S. District Court for the Southern District of Texas acquitted Barclays PLC, Barclays Bank PLC, and Barclays Capital, Inc., in a class-action lawsuit over its role in Enron Corp.'s bankruptcy. Enron's investors, with the University of California as lead plaintiff, filed the class action suit, known as the Newby litigation, against Enron's former lenders for allegedly aiding Enron in concealing its financial misdeeds that led to the company's collapse and bankruptcy filing in 2001. Judge Harmon ruled that the claims against Barclays amount to aiding and abetting and do not constitute primary violations of Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) of the Federal Rule of Civil Procedure. Because the Section 10(b) and derivative Section 20(a) claims are the only ones asserted against Barclays, the District Court dismisses Barclays from the Newby litigation. The Plaintiffs alleged that Barclays had an extensive and close relationship with Enron, provided commercial banking and investment banking services to Enron, interacted constantly with Enron's top executives regarding Enron's business during the Class Period, and participated in the fraudulent scheme and furthered Enron's fraudulent course of conduct and business by participating in over $3,000,000,000 of loans during the Class Period and helping Enron to raise almost $2,000,000,000 from investors in the sale of new securities. The Plaintiffs claimed that, in return for enormous profits, including interest fees, syndication fees, and investment banking fees, Barclays helped Enron to structure and finance certain illicit special purpose entities (SPEs) and partnerships and to participate in illicit transactions that allowed Enron to falsify its reported financial results. Judge Harmon notes that the only one alleged in detail involving Barclays in the Plaintiffs' suit is Chewco Investments. Barclays sought partial summary judgment against the Plaintiffs' complaint, asking the District Court to dismiss with prejudice the Plaintiffs' first claims for relief against Barclays for violation of Sections 10(b) and 20(a) and Rule 10b-5. Judge Harmon's Opinion and Conclusion When the previous 3% independent equity owner withdrew from Chewco, according to the complaint, Barclays provided $240,000,000 in financing for the SPE at Enron's request, with a secret guarantee of repayment by Enron. Barclays also knowingly provided $11,400,000 to two straw parties without credit standing and controlled by Enron, to set them up to be sham 3% equity investors, but protecting itself by requiring the cash accounts. The fraud occurred not in funding an entity that did not qualify as an SPE for non-consolidation on Enron's balance sheet, it occurred in the improper accounting by Enron and others that did not consolidate, Judge Harmon says. The Plaintiffs alleged that Barclays understood that Enron would use Chewco to circumvent the legal requirements under Generally Accepted Accounting Principles and Statement of Financial Accounting Standards to qualify as an independent equity investor and improperly avoid consolidation of the SPE into Enron's own financial statements, with a purpose of concealing debt and preventing an unwinding of profits previously reported by Enron, as well as for future improper transactions and thereby mislead investors in Enron securities. However, Judge Harmon notes that it was Enron, its accountants and its other officers, not Barclays, which purportedly used or employed the deceptive accounting practices and created the false appearance of a financially strong Enron, while concealing the risks that it would be unable to service its debt and consequently suffer financial collapse. Regarding the issue of loss causation in scheme liability, Judge Harmon agrees that the Plaintiffs must allege the elements of a primary violation by each defendant that is allegedly part of the fraudulent scheme at Enron. Judge Harmon notes that a disclosure of the wrongful conducts in an alleged securities fraud scheme with the same purpose, which is overstating revenue and concealing debt, committed by some defendants in the alleged securities fraud scheme that is a substantial cause of plaintiffs' loss is sufficient to plead loss causation. But the identity of a particular participant or defendant's primary need does not have to be revealed if the same type of primary violations by other defendants with the same purpose, which is creating a picture of financial success when the reality was the opposite to defraud investors, is leaked or disclosed to the market and causes a steep decline in the price of Enron's stock and injuring plaintiff investors, Judge Harmon states. Judge Harmon holds that disclosure of the roles of some primary violators in a multi-defendant scheme to defraud investors by creating the appearance of assets or revenue that did not exist and concealing debt and increasing risks of financial collapse, reflected in "cooking the books," should be viewed as sufficient to show loss causation for later-disclosed actions constituting primary violations of Section 10(b) of other defendants substantially contributing to that fabrication of Enron assets and that hiding of debt in the same scheme. Even if the complaint had stated a primary violation of Section 10(b) against Barclays based on its role in Chewco, the Court agrees with Barclays that the claim would be time-barred. Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, represent the Official Committee of Unsecured Creditors. (Enron Bankruptcy News, Issue No. 177; Bankruptcy Creditors' Service, Inc., 15/945-7000, http://bankrupt.com/newsstand/) ENTERCOM COMMS: 2006 2nd Quarter Net Income Down to $17.1 Million ----------------------------------------------------------------- Entercom Communications Corp. reported financial results for the quarter ended June 30, 2006. Second Quarter Highlights -- Net revenues decreased 3% to $116.5 million and station operating expenses increased 1% to $66.0 million. -- Same station net revenues decreased 4% and same station operating expenses decreased 1%. -- Same station operating income decreased 8% to $50.4 million. "The second quarter was a challenging quarter as business conditions remained sluggish for traditional media," David J. Field, president and chief executive officer stated. "Looking forward, we are encouraged by our outstanding Spring ratings results, improving business conditions in Boston and New Orleans, and the substantial growth potential of our expanding business development and internet initiatives. Our significant recent investments in new brands and content have enhanced our competitive position in several markets and enhanced our revenue and cash flow potential." For the second quarter ended June 30, 2006, the Company reported net income of $17.131 million compared with $24.275 million for the same period in 2005. At June 30, 2006, the Company's balance sheet showed $1.704 billion in total assets, $919.397 million in total liabilities, and $785.166 million in total stockholders' equity. Additional Second Quarter Information On May 7, 2006, the Company renewed its rights agreement with the Boston Red Sox Baseball Club by entering into a multi-year agreement, effective with the start of the 2007 season, to continue to broadcast and produce games, including related programming and promotional events, and to continue to sell advertising time. During the second quarter of 2006, the Company repurchased 700,000 shares of common stock for $18.3 million. On June 29, 2006, Entercom paid its shareholders its second quarterly cash dividend of $0.38 per share, which represents a current annual yield in excess of 6%. Interest expense, which increased 50% over the same period versus the prior year, was higher primarily due to higher interest rates and higher average outstanding debt under our senior credit agreement used to finance the: -- repurchase of its stock; -- payment of dividends; and -- acquisition (net of a disposition) of radio stations in the amount of $38 million in Greenville, South Carolina, during the fourth quarter of 2005. During the second quarter, the Company's corporate general and administrative expenses were negatively impacted primarily by an increase in non-cash compensation expense of $1.1 million. During the second quarter, the Company granted non-cash compensation awards that contributed significantly to an increase in non-cash compensation expense in the quarter as compared to the first quarter of 2006 and prior year periods. The number of shares outstanding as of June 30, 2006, was 39.5 million, while the weighted average diluted shares outstanding for the quarter was 39.8 million. As of June 30, 2006, the Company had $15.3 million in cash and cash equivalents. The Company had outstanding $519.2 million of Senior Debt and $150.0 million of Senior Subordinated Notes due in 2014. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?f95 Entercom Communications Corp. (NYSE:ETM) -- http://www.entercom.com/-- is one of the nation's largest radio broadcasters, with operations in Boston, Seattle, Denver, Sacramento, Portland, Kansas City, Indianapolis, Milwaukee, Norfolk, Buffalo, New Orleans, Providence, Memphis, Greensboro, Rochester, Greenville/Spartanburg, Madison, Wichita, Wilkes- Barre/Scranton, and Gainesville/Ocala. * * * As reported in the Troubled Company Reporter on June 6, 2006, Standard & Poor's Ratings Services placed its ratings on Entercom Communications Corp., including the 'BB' corporate credit rating, on CreditWatch with negative implications. ENTERGY NEW: BNY & FGIC Wants Adequate Protection on Secured Bonds ------------------------------------------------------------------ Pursuant to Sections 361 and 363(e) of the Bankruptcy Code, The Bank of New York, as indenture trustee, and Financial Guaranty Insurance Company jointly ask the U.S. Bankruptcy Court for the Eastern District of Louisiana to grant them and the holders of secured bonds issued by Entergy New Orleans, Inc., adequate protection in the form of periodic payments in an amount equal to the interest on the Secured Bonds. Douglas S. Draper, Esq., at Heller, Draper, Hayden, Patrick and Horn, L.L.C., in New Orleans, Louisiana, says that pursuant to a Court-approved settlement agreement between ENOI, BNY and FGIC, the holders of bonds allowed a priming lien to be granted to ENOI's parent company, Entergy Corporation. The Bondholders have a security interest in all of ENOI's prepetition and postpetition assets as a result of the settlement. The one-year moratorium on postpetition interest on the bonds that comprised a part of the settlement will soon end but ENOI's Chapter 11 case has still not been resolved, Mr. Draper relates. Because of ENOI's continued use of the Bondholders' collateral and the potential diminution in the value of the collateral, the Bondholders should be provided with periodic payments in an amount equal to the interest on the bonds beginning Sept. 23, 2006, as a form of adequate protection, he asserts. The principal amount outstanding under the bonds is $230,000,000. If ENOI does not make the requested periodic payments, interest on the unpaid amounts will also accrue interest, further increasing the estate's costs and depleting its assets, and potentially reducing distributions to unsecured creditors, Mr. Draper avers. Moreover, the payment of postpetition interest on the bonds would maintain the status quo of the bond debt and would decrease the amount of cash that would likely be needed to be paid to the Bondholders on the effective date of any plan of reorganization that is confirmed in ENOI's bankruptcy case, Mr. Draper says. According to Mr. Draper, the Official Committee of Unsecured Creditors has advised FGIC and BNY that it supports their request. About Entergy New Orleans Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. Carey L. Menasco, Esq., Philip Kirkpatrick Jones, Jr., Esq., and Joseph P. Hebert, Esq., at Liskow & Lewis, APLC, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) ENTERGY NEW ORLEANS: Wants to Assume Power Purchase Agreements -------------------------------------------------------------- Entergy New Orleans, Inc., seeks the U.S. Bankruptcy Court for the Eastern District of Louisiana's consent to assume the Power Purchase Agreements, pursuant to Section 365(a) of the Bankruptcy Code. ENOI continues to believe that the PPAs are "forward contracts" within the meaning of Section 556 of the Bankruptcy Code, and that the payments it made were necessary to preserve the PPAs. However, according to R. Patrick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP, in New Orleans, Louisiana, since ENOI has decided to assume the PPAs, it is unnecessary for the Court to determine whether the PPAs are forward contracts because assumption requires the cure of defaults under Section 365(b). Mr. Vance relates that the PPAs are valuable assets of the Debtor's estate. The PPAs provide extremely low cost electricity and, in fact, are the lowest cost resources available to ENOI. The PPAs are: (a) ENOI's life-of-unit purchase of 51 MW from the interest of Entergy Power, Inc., in Unit 2 of the Independence Steam Electric Station, a coal-fired electric generating station located near Newark, Arkansas; (b) ENOI's life-of-unit purchase of one-third of the output of the unregulated 30% interest owned by Entergy Gulf States in the River Bend Nuclear Station located near St. Francisville, Louisiana, which 30% interest formerly was owned by Cajun Electric Power Cooperative, Inc.; and (c) ENOI's life-of-unit purchase from Entergy Arkansas of 110 MW of base load capacity and associated energy out of Entergy Arkansas' six solid fuel units, which whole base load previously had been devoted by Entergy Arkansas to the wholesale market. Mr. Vance asserts that cause exists for ENOI to assume the PPAs. Through the PPAs, ENOI is able to help meet its needs for generating capacity and energy at costs that are much lower that what ENOI would have paid had it obtained the capacity and energy through the wholesale market or through operation of service schedules, which govern the exchange of energy between or among the public utility operating companies of Entergy Corporation. The PPAs also offer advantages in terms of fuel diversity, security and stability, Mr. Vance says. The PPAs rely on coal or nuclear fuel, which have lower energy costs compared to natural gas. ENOI's regulator, the Council for the City of New Orleans, has approved the PPAs, which said that the solid fuel resources made available under the PPAs would produce real savings to ratepayers. Moreover, there is no other practical or legal alternative to maintain the value of the PPA resources for ENOI and its customers other than payment of the prepetition amounts due under the PPAs, Mr. Vance contends. ENOI has paid the amounts due for purchases on the PPAs made before the Petition Date. Accordingly, assumption of the PPAs will not require the payment of any "cure" amount under Section 365(b). About Entergy New Orleans Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. Carey L. Menasco, Esq., Philip Kirkpatrick Jones, Jr., Esq., and Joseph P. Hebert, Esq., at Liskow & Lewis, APLC, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) FALCONBRIDGE LMITED: Sells 67.8% Common Stock to Xstrata plc ------------------------------------------------------------ Approximately 257,700,100 common shares of Falconbridge Limited have been validly deposited to Xstrata plc's offer to acquire all Falconbridge common shares not already owned by Xstrata. Xstrata has taken up and accepted for payment all shares tendered, which represent approximately 67.8% of the issued and outstanding Common Shares on a fully diluted basis. Xstrata now beneficially owns 349,922,526 Common Shares or approximately 92.1% of the issued and outstanding Common Shares on a fully diluted basis. Payment will be made to shareholders who have tendered their shares on or before Aug. 17, 2006. In line with Xstrata's intention to acquire 100% of Falconbridge as soon as possible, Xstrata has also extended the expiry date of its all-cash offer to enable the remaining Falconbridge shareholders to receive prompt payment of the same CDN$62.50 per share consideration under the offer. The offer will now expire at midnight (Vancouver time) on Aug. 25, 2006. All other terms and conditions of Xstrata's offer described in its offer and offering circular dated May 18, 2006, as varied, amended, and supplemented by the notice of extension dated 7 July 2006, the notice of variation dated July 11, 2006, and the notice of variation dated July 21, 2006, remain unchanged. Xstrata intends to acquire all Common Shares not tendered to the offer following the expiry of the offer pursuant to a compulsory acquisition or subsequent acquisition transaction. Xstrata has now taken effective control of Falconbridge and both management teams are working closely together to facilitate a smooth and swift integration of the two businesses. Falconbridge shareholders with questions or requests for copies of the documents, please call Kingsdale Shareholder Services Inc. at 1-866-639-7993. Banks and brokers should call at (416) 867-2272. 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. GRANITE BROADCASTING: Posts $31.3 Mil. Second Quarter Net Loss -------------------------------------------------------------- Granite Broadcasting Corporation reported a net loss of $31.3 million for three months ended June 30, 2006, compared to a net loss of $16.2 million for the same period in 2005. The Company's net revenues for the three months ended June 30, 2006, increased to $26.9 million from $26.7 million for the same period a year ago. The Company also reported a net loss of $46.97 million from net revenue $51.68 million for six months ended June 30, 2006, compared to a net loss of $35.7 million from net revenue $48.28 million in the year ago period. John Deushane, Chief Operating Officer, said, "Our new local direct business initiatives continued to deliver returns, generating over $1.4 million of revenue during the quarter across several categories. We recorded healthy non-political local revenue growth in many of our markets, with stations in Detroit and Fresno contributing particularly healthy increases and outperforming their respective markets. In addition to these gains in local revenue, we are tracking toward $1 million in annualized Internet-related revenue as a result of several initiatives implemented during the first half of the year." Mr. Deushane continued, "We continue to maximize the value of our local brands by leveraging our content and operating infrastructure to expand our distribution outlets and reach. We have entered strategic partnerships with the local UPN affiliates in Fresno and Peoria to broadcast locally produced newscasts during additional time periods, significantly expanding the exposure of our valuable news content. At our Detroit station, where we already have a relationship with the Detroit Pistons, we recently partnered with the Detroit Tigers to further strengthen the station's strong sports programming and local presence in the market. In addition, our recent acquisition of WBNG, the dominant CBS affiliate in Binghamton/Elmira, New York, increases our footprint in upstate New York to almost 60 percent of viewers in the region." Termination of Sales Agreements The Company disclosed that, on July 18, 2006, it exercised its rights to terminate the agreements to sell television stations KBWB, Channel 20 in San Francisco, California and WMYD, Channel 20 in Detroit, Michigan to affiliates of DS Audible, LLC, as the sales did not close on June 30, 2006. The Company also disclosed it would continue marketing KBWB to interested parties, but would retain WMYD, which will become an affiliate of My Network TV in September 2006. Granite Broadcasting Corporation (OTC Bulletin Board: GBTVK) owns and operates, or provides programming, sales and other services to 23 channels in the following 11 markets: San Francisco, California; Detroit, Michigan; Buffalo, New York; Fresno, California; Syracuse, New York; Fort Wayne, Indiana; Peoria, Illinois; Duluth, Minnesota-Superior, Wisconsin; Binghamton, New York; Utica, New York and Elmira, New York. The Company's channel group includes affiliates of NBC, CBS, ABC, CW and My Network TV, and reaches approximately 6% of all U.S. television households. * * * As reported in the Troubled Company Reporter on June 8, 2006, Moody's Investors Service downgraded Granite Broadcasting Corporation's $400 million of 9.75% senior secured notes due 2010 to Caa1 from B3. Additionally, Moody's affirmed the Company's existing ratings, including its Caa2 corporate family rating. The outlook remains negative. GTSI CORP: Lease Deals Prompt Financial Restatements ---------------------------------------------------- GTSI(R) Corp. provided an update on positive financial and business trends for the second quarter of 2006 as well as an announcement that it expects to restate its financial statements included in its Forms 10-K for 2004 and 2005 due to a change in accounting for various lease sales agreements governed by Statement of Financial Accounting Standards 140. The Company often leases IT solutions to government customers, and subsequently sells the leases to third parties under agreements that allow the Company to repurchase the leases under certain circumstances. Additional analysis of these agreements has resulted in a conclusion that a restatement is necessary. The Company will also restate its Form 10-Q for the quarter ended March 31, 2006 for the overstatement of accounts payable due to an overstatement of cost of goods sold. As a result of these accounting errors, the Company's consolidated financial statements included in its Forms 10-K for 2004 and 2005, and the associated auditors reports on file with the Securities and Exchange Commission, and Form 10-Q for the first quarter of 2006 should no longer be relied upon. "While today I cannot provide specific numbers for the second quarter, I am pleased with the positive momentum in virtually all parts of our business, and I want to assure you that GTSI produced a solid second quarter," said Jim Leto, GTSI's President and Chief Executive Officer. "Our focus is to provide our customers with outstanding technology solutions as well as grow our margins and profitability. During the second quarter we delivered several high-end solutions and increased both our margin dollars and margin as a percent of revenue over the same period last year. While, as expected, we will not show a profit for the second quarter, our earnings have improved considerably from the second quarter of 2005 and from the first quarter of this year. Excluding any restatement impacts, the unaudited second quarter pre-tax loss was approximately $3 million, a significant improvement from the $12 million pre-tax loss in the second quarter of 2005. Additionally, the correction of the cost of goods sold will increase margins as well as cumulative income by an estimated range of $3 to $4 million. These adjustments will have no impact on sales or cash flow." "The facts are clear; GTSI is stronger than it was a year ago. We continue to gain new contracting opportunities and our customers are renewing contracts on a regular basis," added Leto. "We have top-notch employees, our systems are stable and working, we have bolstered our financial reporting capabilities, and most importantly we are continuing to see large transactions drive our business. We have a syndicated $135 million credit facility, which is expected to provide adequate funding for years to come." Second Quarter 2006 Update While the Company has not fully completed its second quarter closing process, the Company believes its financial results: -- The pre-tax loss for period is expected to be approximately $3 million, compared to a pre-tax loss of $12 million in the quarter ended June 30, 2005 -- Gross margin has improved quarter over quarter and year over year -- Gross margin as a percent of revenue continues to increase -- SG&A have decreased quarter over quarter Restatement The 2004 and 2005 consolidated financial statements are expected to be restated to revise the accounting for the transfer of certain lease receivables. Such transfers were previously reported as sales and gains were recorded at the time of the transfer. Total gains recorded related to these transactions amounted to $0.5 million in 2003, $3.7 million in 2004 and $5.9 million in 2005. In the restated financial statements, gains on a certain portion of these transfers will be recognized over the life of the leases rather than at the time of transfer, and the transferred lease receivables, together with related liabilities, will be reported in the Company's balance sheets. The Company also plans to amend its first quarter 2006 Form 10-Q as a result of the overstatement of certain accrued liabilities and costs of goods sold, resulting in an overstatement of losses. In several instances, costs of goods sold were double-counted due to certain systems and process-related errors. The impact of this restatement will be to increase gross margin as well as reduce the reported losses by an estimated range of $3 to $4 million. "I am encouraged that my team has been able to dive deep into the financials and begin the process of getting these matters resolved as well as continuing to remediate our various material weaknesses in internal controls," continued Leto. "Our finance team will be working diligently to properly and promptly prepare the required amended SEC reports." As a result of the ongoing activity related to these restatements, GTSI will not be able to file its Form 10-Q for the quarter ended June 30, 2006 by the required date of August 9, 2006. Upon completion of the restated financial statements, which is expected to occur in September 2006, the Company will file its amended Form 10-K/A for 2005 which will include restated 2004 and 2005 financial statements and its amended Form 10-Q/A for the quarter ended March 31, 2006 and Form 10-Q for June 30, 2006. The restatement of prior years and quarter results have been discussed with the Audit Committee of the Company's Board of Directors as well as GTSI's independent registered public accounting firm, Ernst & Young LLP. Ernst & Young has not yet audited these restatement adjustments. The Company will suspend the reporting of monthly results for sales, backlog and bookings until the restatements are completed. In addition, GTSI anticipates not meeting the Nasdaq listing requirements for timely filing and anticipates receiving a Nasdaq staff determination notice letter outlining the process for delisting and appealing the staff determination by requesting an oral hearing. Headquartered in Northern Virginia, GTSI Corp. (NASDAQ:GTSI) -- http://www.GTSI.com/-- is an information technology product and solutions provider, combining products and services to produce solutions that meet government's evolving needs. For more than two decades, GTSI has focused exclusively on Federal, State, and Local government customers worldwide, offering a broad range of products and services, an extensive contract portfolio, flexible financing options, global integration and worldwide distribution. GTSI's Lines of Business incorporate certified experts and deliver exceptional solutions to support government's critical transformation efforts. Additionally, GTSI focuses on systems integrators on behalf of government programs. Going Concern Doubt Ernst & Young LLP expressed substantial doubt about GTSI Corp.'s ability to continue as a going concern after auditing the company's 2004 and 2005 financials. The auditors pointed to the company's net losses and covenant defaults as of Jan. 31, 2006. HERBALIFE LTD: Second Quarter Net Income Increases to $36.3 Mil. ---------------------------------------------------------------- Herbalife Ltd. reported record second-quarter net sales of $466 million, an increase of 21.1% compared with the same period of 2005. The growth was attributable to increases in the company's three largest regions, the Americas, Asia Pacific, and Europe, which achieved net sales growth of 39.2%, 24.7%, and 2.4%, respectively, versus the second quarter of 2005. Partially offsetting the growth in these regions was a 6.3% decline in Japan. "We are pleased to report that the second quarter marked our 10th consecutive quarter of year-over-year double-digit sales growth," The Company's chief executive officer, Michael O. Johnson, said. "Our commitment to supporting the recruiting, retailing and retention efforts of our distributors has served as a key catalyst in accelerating our top line growth." During the second quarter of 2006, new distributor supervisors increased 41.7% versus the second quarter of 2005. The company's high-level Presidents Team increased 15.9% to 924 members during the quarter, compared to 2005, and one new distributorship attained the prestigious level of Chairman's Club, bringing the total to 29 members. Financial Performance For the quarter ended June 30, 2006, the company reported net income of $36.3 million compared with $22.8 million in the second quarter of 2005. This increase was primarily attributable to double-digit net sales growth and lower interest expense, offset by moderate increases in selling, general and administrative expenses. Excluding the impact of a $5.5 million non-cash tax charge associated with restructuring the ownership of the company's China subsidiary in the second quarter of 2005, second quarter 2006 net income increased 28.6% compared with the same period in 2005. At June 30, 2006, the Company's balance sheet showed $837.801 million in total assets, $668.913 million in total liabilities, and $168.888 million in total stockholders' equity. For the six months ended June 30, 2006, the company reported net income of $75.0 million compared with $36.1 million in same period last year. The company invested $13.4 million in capital expenditures during the second quarter, primarily related to management information systems, the development of the company's direct-to-consumer platform, additional infrastructure investments in China and the relocation of the company's Americas region headquarters. Second Quarter 2006 Business Highlights During the quarter, the company hosted a record number of distributors at a variety of regional and local events. One of the major highlights was the Asia Pacific Extravaganza hosted in Bangkok, Thailand, which attracted over 15,000 distributors from 13 countries, including over 2,500 combined from Japan and China. The three-day event included training sessions on business building techniques and new product introductions, as well as recognition of achievements over the past year. In Europe, over 16,000 distributors attended 18 mini-Extravaganzas hosted in 17 countries. Furthermore, the company attracted over 4,500 distributors to its World Team School event in Brazil and almost 5,000 attended a variety of leadership training sessions across South America. "By providing our distributors with events focused on training, motivation and the sharing of best practices, we reinforce our commitment to continuous investment in initiatives that will help our distributors grow their businesses," Mr. Johnson said. Global expansion of the company's distributor business methods continued to gain traction during the quarter. Over 16,000 distributors were trained on the Nutrition Club party-planning concept, which was introduced into six new markets during the quarter, and the Personal Wellness Evaluation method expanded into several new markets. "We are extremely pleased with the global acceptance of our Nutrition Club method and continue to support our distributors in acculturating the concept in markets beyond Mexico," Greg Probert, the company's president and chief operating officer, said. "Additionally, we are equally excited that new business building techniques are being formulated and the unification within our distributor organization is accelerating the expansion of these best practices worldwide," Mr. Probert continued. The company also remained focused on the globalization of its core products during the quarter. LiftOff(TM) expanded into eight European markets and Japan. NouriFusion was also introduced to 14 new markets, including Brazil, Turkey and Russia. Furthermore, reinforcing its commitment to distributor support and training, the company named the 11th member to its Medical Advisory Board, U.K. sports medicine specialist Ralph Rogers M.D. Global branding continues to be a key component in supporting the recruiting and retailing efforts of the company's distributors. Sponsorships during the quarter included the Florence Fitness Festival, the ITU Madrid Triathlon World Cup, the Hong Kong Annual Dragon Boat Championships and the 1st KBS SKY Marathon in Korea. "Our distributors are excited about these branding initiatives, and we will continue to invest strategically in grassroots events to accelerate distributor activation, associate Herbalife with healthy, active lifestyles and increase consumer awareness of the Herbalife brand," Mr. Johnson said. During the quarter, the company also supported the opening of three new Casa Herbalife programs in Mexico, Argentina, and Thailand. "Through the Casa Herbalife program, we are able to build upon the dream of Mark Hughes, our founder, of providing healthy meals to underprivileged children around the world," Mr. Johnson said. Furthermore, the company continued the execution of its China strategy by opening nine new stores in eight key provinces, bringing the total to 28 stores in 17 provinces as of June 30, 2006. "I am pleased with the progress we have made in China and we remain encouraged about our long-term prospects in this important market," Mr. Probert said. "We have expanded our retail presence in key provinces throughout the mainland and remain well positioned to execute our broader strategy once the licensing process is complete," he continued. Regional Performance The Americas, which comprised 49.8% of worldwide sales, reported net sales of $232.3 million in the second quarter, up 39.2% versus the same period of 2005. Excluding currency fluctuations, net sales increased 37.4%. This increase was largely attributable to continued sales growth in the company's largest market, Mexico, which reported an 86.0% increase during the quarter versus 2005. The strong regional performance was also driven by growth in Brazil, up 27.1%, and the U.S., up 5.7%, in each case versus the second quarter 2005. Total supervisors in the region, as of June 30, 2006, increased 41.0% versus 2005. For the six months ended June 30, 2006, net sales in the Americas increased 48.5% to $456.3 million, as compared to the same period in 2005. Excluding currency fluctuations, year-to-date net sales in the region increased 44.0%. Europe, which comprised 31.2% of worldwide sales, reported net sales of $145.2 million in the second quarter, up 2.4% versus the same period of 2005. Excluding currency fluctuations, net sales increased 2.7%. The performance was primarily attributable to growth in several of the region's top markets, including Portugal, up 50.5%, France, up 34.9%, Italy, up 17.7%, and Spain, up 12.9%, in each case compared to the second quarter of 2005. However, these increases were partially offset by declines in Germany and the Netherlands, which were down 14.9% and 21.2%, respectively, versus 2005. Total supervisors in the region, as of June 30, 2006, increased 0.8% versus 2005. For the six months ended June 30, 2006, net sales in Europe increased slightly to $286.7 million, compared with the same period in 2005. Excluding currency fluctuations, year-to-date net sales in the region increased 4.1%. Asia Pacific, which comprised 14.9% of worldwide sales, reported net sales of $69.6 million in the second quarter, up 24.7% versus the same period of 2005. Excluding currency fluctuations, net sales increased 22.9%. The increase was primarily attributable to incremental sales from Malaysia and China, and growth in several other markets such as Thailand, up 39.4%, and South Korea, up 18.9%. These gains were partially offset by declines in other markets such as Taiwan, which decreased 4.6%, resulting from additional distributor focus on new market opportunities in Malaysia and China. Total supervisors in the region, as of June 30, 2006, increased 20.8% versus 2005. For the six months ended June 30, 2006, net sales in Asia Pacific increased 18.8% to $137.6 million, compared with the same period in 2005. Excluding currency fluctuations, year-to-date net sales in the region increased 18.1%. Japan, which comprised 4.1% of worldwide sales, reported net sales of $18.9 million in the second quarter, down 6.3% versus the same period of 2005. Excluding currency fluctuations, net sales decreased 0.4%. Total supervisors in the region, as of June 30, 2006, declined 0.9% versus 2005. For the six months ended June 30, 2006, net sales in Japan declined 12.6% to $41.2 million, compared with the same period in 2005. However, excluding currency fluctuations, year-to-date net sales in the region decreased 4.4%. Recent Developments On July 21, 2006, the company completed refinancing of its existing $225.0 million senior secured credit facility. The new $300.0 million senior secured credit facility consists of a $200.0 million, seven-year term loan and a $100.0 million, six-year revolving credit facility. At closing, the company used approximately $65.0 million of available cash and borrowed $15.0 million under the new revolver to repay the outstanding borrowings under its existing senior credit facility and fund closing costs. The company also announced that it advised the Trustee of its 9-1/2% Notes due 2011, of the company's election to redeem the outstanding $165.0 million aggregate principal amount of Notes at the mandatory redemption price of approximately $109.80 per $100.00 aggregate principal amount of Notes. The company intends to use the proceeds from the new $200.0 million term loan to fund the redemption and pay accrued interest. The anticipated redemption date is Aug. 23, 2006. In conjunction with the Refinancing, the company expects to incur an after-tax one-time charge of approximately $14.0 million, representing the call premium on the Notes and the write-off of unamortized deferred financing costs. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?f97 About Herbalife Ltd. Herbalife Ltd. (NYSE: HLF) -- http://www.herbalife.com/-- is a global network marketing company that sells weight-management, nutritional supplements and personal care products intended to support a healthy lifestyle. Herbalife products are sold in 62 countries through a network of more than one million independent distributors. The company supports the Herbalife Family Foundation -- http://www.herbalifefamily.org/-- and its Casa Herbalife program to bring good nutrition to children. * * * Standard & Poor's Ratings Services rated Herbalife Ltd.'s long- term foreign and local issuer credit ratings at BB+. INCYTE CORP: June 30 Balance Sheet Upside-Down by $54.7 Million --------------------------------------------------------------- Incyte Corporation disclosed its financial results for the second quarter 2006 and reported on the Company's most advanced drug discovery and development programs. For the three months ended June 30, 2006, the Company incurred a $20.5 million net loss on $6.8 million of net revenues, compared to a $25.1 million net loss on $2.7 million of net revenues in 2005. Recent developments include: -- Initiation of Phase I testing in healthy volunteers of an internally developed oral CCR5 antagonist, INCB9471, for treatment of HIV. -- Initiation of Phase I testing in healthy volunteers of an internally developed oral inhibitor of 11-beta hydroxysteroid dehydrogenase type 1, INCB13739, a potential new medicine for Type 2 diabetes. -- Continued progress with several internally developed compounds that are expected to advance into clinical development including INCB8696, an oral CCR2 antagonist for multiple sclerosis, and two additional compounds, one in inflammation and a second in oncology. -- Election of two new members to Incyte's Board of Directors: John Niblack, Ph.D., former Pfizer Inc Vice Chairman and President of Global Research and Development, and Matthew Emmens, Chief Executive Officer of Shire plc, a global specialty pharmaceuticals company. Paul Friedman, MD, Incyte's President and Chief Executive Officer stated, "If our programs progress as we expect they will over the next twelve months, Incyte could have up to six compounds in Phase II clinical development and multiple opportunities to demonstrate the potential value of our drug discovery and development efforts." At June 30, 2006, the Company's balance sheet showed $375.1 million in total assets and $429.8 million in total liabilities, resulting in a $54.7 million stockholders' deficit. A full-text copy of the Company's Quarterly Report is available for free at http://researcharchives.com/t/s?fa2 Based in Wilmington, Delaware, Incyte Corporation (Nasdaq: INCY) -- http://www.incyte.com/-- is a drug discovery and development company with a growing pipeline of oral compounds to treat HIV, inflammation, cancer and diabetes. The company's most advanced product candidate, dexelvucitabine, DFC (formerly Reverset) is an oral, once-a-day therapy in Phase IIb clinical development to treat patients with HIV infections. The company has a broad CCR2 antagonist program that is the subject of a global collaborative research and license agreement with Pfizer. Pfizer's rights extend to the full scope of potential indications, with the exception of multiple sclerosis and one other undisclosed indication, where Incyte retains exclusive worldwide rights, along with certain compounds. The company has a proprietary oral sheddase inhibitor that is in Phase I/II development as a potential treatment for cancer. Incyte has several other early drug discovery programs underway in the areas of HIV, inflammation, cancer and diabetes. INTEGRATED DISABILITY: Can Continue Case Under Chapter 11 --------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas denied the request of Mary Frances Durham, the U.S. Trustee for Region Six, to dismiss Integrated DisAbility Resources, Inc.'s chapter 11 case or convert it to a chapter 7 liquidation proceeding. The Court's ruling follows a settlement agreement entered into by the U.S. Trustee and the Debtor resolving the request. The Debtor is expected to have a confirmed reorganization plan by Aug. 31, 2006. The Troubled Company Reporter on July 3, 2006 noted that the U.S. Trustee sought the dismissal or conversion of the Debtor's case on the ground that the Debtor failed to file an operating report for March 2006 and was unable to pay the U.S. Trustee quarterly fees due on April 30, 2006, amounting to $3,750. According to the U.S. Trustee, the Debtor has no prospect of reorganization. Each month, the U.S. Trustee said, the Debtor continues to incur administrative expenses without proceeding toward a plan, which further diminishes the estate. The U.S. Trustee contended that there is an absence of a reasonable likelihood of rehabilitation, and little chance of confirming a plan without operating reports. Headquartered in Irving, Texas, Integrated DisAbility Resources, Inc. -- http://www.myidr.com/-- provides disability plans and ongoing health and productivity services to claimants and employees. The Debtor filed for chapter 11 protection on Feb. 10, 2006 (Bankr. N.D. Tex. Case No. 06-30575). Cynthia Williams Cole, Esq., and Vincent P. Slusher, Esq., at Godwin Pappas Langley Ronquillo LLP, represent the Debtor in its restructuring efforts. The United States Trustee for Region 6 was not able to form an Official Committee of Unsecured Creditors due to lack of interest and lack of attendance during the creditors' meeting on March 21, 2006. When the Debtor filed for protection from its creditors, it estimated $1 million to $10 million in assets and $10 million to $50 million in debts. INTERPUBLIC GROUP: Earns $68.9 Million in 2006 Second Quarter ------------------------------------------------------------- Interpublic Group of Companies Inc. reported second quarter 2006 revenue of $1.53 billion, compared to $1.61 billion the same period a year ago. The Company had first half 2006 revenue of $2.86 billion, compared to $2.94 billion during the first six months of 2005. Organic revenue decreased by 3.1% compared to the second quarter of 2005, with approximately 2.7% of the decrease due to the timing of revenue recognition (primarily higher revenue deferrals from first to second quarter of 2005 than in 2006). Spending by existing clients increased and new client wins this year offset prior year client losses, such that, for the first half of 2006, organic revenue increase was 0.5% relative to 2005. During the second quarter, operating expenses decreased to $1.46 billion in 2006 from $1.50 billion last year. For the first half, operating expenses declined to $2.94 billion this year from $2.99 billion in 2005. In both cases, lower expenses reflect previously disclosed business dispositions, while in the second quarter an additional driver was lower professional fees. Operating income in the second quarter of 2006 was $76.9 million, compared to $115.5 million in 2005. For the first half of 2006, operating loss was $82.9 million, compared to an operating loss of $53.6 million in 2005. Second quarter net income was $68.9 million and net income applicable to common shareholders was $46.9 million compared to $3.5 million. Year-to-date, net loss applicable to common shareholders was $125.1 million, lower than the net loss of $147.2 million. "We've been clear that the bar on organic revenue would be high due to last year's client losses. Organic performance for the first half demonstrates that we've been successful in replacing these lost revenues through six months, which is a significant accomplishment that positions us well going forward. During the second quarter, we also saw the first indications of stepped-down professional fees, in line with our previous disclosure. A major focus for the balance of this year will be on managing costs and delivering margin improvement," said Michael I. Roth, Chairman and CEO of Interpublic. "Our CMG and McCann units are performing well and we are confident that the new directions we are taking with Draft FCB Group and Lowe will yield positive results. We believe that we remain on track to meet the 2008 turnaround goals outlined at Investor Day." Second Quarter 2006 Operating Results Revenue Reported revenue of $1.53 billion in the second quarter of 2006 was down 4.8% compared with the year-ago period. During the quarter, the effect of foreign currency translation was positive 1.0%, the impact of net divestitures was negative 2.8% and the resulting organic decline in revenue was 3.1%. Of this organic decrease, approximately 2.7% was due to the timing of revenue recognition, more specifically higher revenue deferrals from first to second quarter of 2005, which did not occur to the same extent in 2006. For the first six months of 2006, reported revenue was $2.86 billion, down 2.7% compared to the first half of last year. The effect of foreign currency translation in the second quarter was negative 0.3%, the impact of net divestitures was negative 2.8% and the resulting organic revenue increase was 0.5%. For both the second quarter and first half of 2006, organic revenue growth was solid in the Asia Pacific and Latin American regions, and down moderately in continental Europe and the United Kingdom. In the United States, organic revenue was down in the quarter primarily affected by timing of revenue recognition and was essentially flat year-to-date, primarily reflecting increased spending from existing clients. Operating Expenses During the second quarter, salary and related expenses was $951.4 million, approximately flat compared to the same period in 2005. Adjusted for currency and the net effect of acquisitions/divestitures, salary and related expenses increased 0.9%. For the six months of 2006, salary and related expenses was $1.9 billion, a decrease of 1.4% compared to the same period in 2005. Adjusted for currency and the net effect of acquisitions/divestitures, salary and related expenses in the first half of 2006 increased 1.3%. Compared to the same period in 2005, second quarter 2006 office and general expenses decreased 7.1% to $504.6 million. Adjusted for currency and the net effect of acquisitions/divestitures, office and general expenses decreased 3.6%, primarily reflecting lower professional fees, which declined from $67.9 million in the 2005 period to $48.6 million in the current quarter. For the first half of 2006, office and general expenses decreased 3.0% to $1.04 billion. Adjusted for currency and the net effect of acquisitions/divestitures, office and general expenses increased 1.7%, primarily reflecting higher occupancy expenses, in addition to software-related costs associated with upgrading financial systems and further developing shared services. Non-Operating and Tax Net interest expense in the second quarter of 2006 was flat compared to the same period in 2005. Other income in the quarter increased from $4.3 million in 2005 to $24.6 million in 2006, reflecting the gain on the sale of a non-strategic investment in Asia Pacific during the second quarter. The provision for income tax in the second quarter of 2006 was $1.8 million, compared to $79.9 million in the same period of 2005, due to the release of a valuation allowance related primarily to a net operating loss carry-forward in a foreign jurisdiction and the release of tax reserves triggered by the resolution of prior period tax audit activities during the second quarter. Balance Sheet At June 30, 2006, cash, cash equivalents and marketable securities totaled $1.58 billion, compared to $1.59 billion at June 30, 2005, and $1.63 billion at the end of the first quarter of this year. Total debt was $2.2 billion, as of both June 30 and March 31, 2006. A full-text copy of the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission is available for free at http://ResearchArchives.com/t/s?fa6 About Interpublic Interpublic Group of Companies Inc. (NYSE:IPG) -- http://www.interpublic.com/-- is one of the world's leading organizations of advertising agencies and marketing services companies. Major global brands include Draft FCB Group, FutureBrand, GolinHarris International, Initiative, Jack Morton Worldwide, Lowe Worldwide, MAGNA Global, McCann Erickson, Momentum, MRM, Octagon, Universal McCann and Weber Shandwick. Leading domestic brands include Campbell-Ewald, Carmichael Lynch, Deutsch, Hill Holliday, Mullen, The Martin Agency and R/GA. * * * As reported in the Troubled Company Reporter on June 15, 2006, Fitch assigned a rating of 'B/RR4' to Interpublic Group's $750 million three-year Enhanced Liquidity Facility notes due June 15, 2009. The Rating Outlook is Negative. Fitch also affirmed the Company's Issuer default rating at 'B' and Senior unsecured notes' rating at 'B/RR4'. Fitch also affirmed its 'CCC/RR6' rating on Interpublic's Cumulative convertible perpetual preferred stock and Mandatory convertible preferred stock. JO-ANN STORES: Promotes James Kerr to Chief Financial Officer ------------------------------------------------------------- Jo-Ann Stores, Inc., promoted James Kerr, to Executive Vice President, Chief Financial Officer. "The promotion of Jim to chief financial officer further fortifies our executive management team," Darrell Webb, chairman, president and chief executive officer, said. "Along with an intimate knowledge of the Company, Jim brings a diverse and strong retail background. His strategic and financial knowledge will be an invaluable asset to Jo-Ann Stores as we focus on strengthening the brand and our financial position. I am confident that Jim is well-prepared for this position; he is well-regarded by our management team and Board of Directors, and has provided valuable oversight of the finance team in the past. I am excited to have Jim join our executive leadership team." Mr. Kerr, for the last eight years, was vice president, controller, and recently the chief accounting officer, managing a financial organization that encompasses accounting, financial and merchandise planning. Prior to joining the Company in 1998, Mr. Kerr held various accounting, budgeting and planning positions at The Limited, Inc., a publicly traded women's apparel specialty retailer, and at Revco D.S., Inc., a drugstore retailer. He began his career at Arthur Anderson & Co. progressing to audit manager. He holds a bachelor's degree in accounting from Baldwin-Wallace College and is a certified public accountant. Based in Hudson, Ohio, Jo-Ann Stores, Inc., (NYSE: JAS) -- http://www.joann.com/-- is the leading U.S. fabric and craft retailer with locations in 47 states, operates 688 Jo-Ann Fabrics and Crafts traditional stores and 154 Jo-Ann superstores. * * * As reported in the Troubled Company Reporter on April 11, 2006, Standard & Poor's Ratings Services lowered its corporate credit rating on Jo-Ann Stores to 'B-' from 'B+'. The subordinated debt rating was lowered to 'CCC' from 'B-'. The outlook is negative. All ratings were removed from CreditWatch, where they were placed with negative implications on Oct. 6, 2005. As reported in the Troubled Company Reporter on Feb. 17, 2006, Moody's Investors Service lowered all ratings of Jo-Ann Stores, Inc., including the rating on a $100 million issue of 7.5% senior subordinated notes due 2012 to B3 from B2. The rating downgrade was prompted by the adverse impact that weak merchandising programs and a slowdown in several categories have had on sales, cash flow, and working capital. KAISER ALUMINUM: Posts $2.5 Mil. Net Loss in Qtr. Ended June 30 --------------------------------------------------------------- Kaiser Aluminum reported a net loss of $2.5 million for the quarter ended June 30, 2006 due primarily to a $25 million net adverse impact from non-run-rate and reorganization items. These results compare to net income of $365.8 million for the same period in 2005. The second quarter 2005 income was primarily a result of income from discontinued operations. As reported, the company emerged from bankruptcy on July 6, 2006, and the second quarter 2006 net loss equates to a $0.03 loss per pre-emergence share compared with $4.59 of income per pre-emergence share for the year-earlier period. For the six months ended June 30, 2006, the company reported net income of $35.9 million, compared with net income of $374.1 million for the same period in 2005. Both periods were affected by the second quarter items discussed above. Net sales for the second quarter of 2006 totaled $353.5 million compared to $262.9 million for the second quarter of 2005, reflecting a 15 percent increase in shipments of fabricated products and significant increases in metal prices. Net sales for the first six months of 2006 totaled $689.8 million compared to $544.3 for the same period the previous year, reflecting a 12 percent increase in shipments of fabricated products and significant increases in metal prices. The increase in fabricated products shipments during the quarter and six month periods over the comparable periods in 2005 was broadly based across the markets served by the company but was led by continuing strength in demand for aerospace and high strength products. "The non-run-rate and reorganization items mask very positive performance in the second quarter," said Jack A. Hockema, chairman, president and CEO of Kaiser Aluminum. "Results for the first half were excellent, driven by the core fabricated products business which delivered a 50 percent increase in operating income. Income from continuing operations was $31.6 million despite $15.0 million of reorganization expense." Fabricated Products -- Operating income in the fabricated products division was $16.2 million for the second quarter of 2006 compared with $15.2 million for the same period in 2005. Both periods included significant non-run-rate items: (a) Non-cash LIFO charge of $22 million in 2006 (b) Non-run-rate metal profits of $7 million in 2006 and losses of $4 million in 2005 Operating income in the fabricated products division was $61.2 million for the first six months of 2006 compared to $40.6 million for the same period in 2005. Both periods included significant non-run-rate items: (a) Non-cash LIFO charge of $22 million in 2006 (b) Non-run-rate metal profits of $17 million in 2006 and losses of $3 million in 2005 The significant improvement in operating results for the six month period reflects higher shipments, stronger conversion prices and favorable scrap raw material costs. Improved cost performance more than offset higher natural gas prices for both the quarter and 2006 year-to-date periods. "We are experiencing broad based demand for our core fabricated products led by aerospace and high strength products," added Hockema. "Although we may experience some seasonal softness in the second half of 2006, overall it appears that the current level of demand is sustainable in the near term. Primary Products -- Operating income in the primary products segment totaled $3.7 million for the second quarter, approximately $2 million below the second quarter 2005. Operating income in the primary products segment totaled 12.4 million for the six months, approximately $4 million increase over the same period 2005. These included these non-run-rate items: (a) Mark-to-market gains on hedging-related derivative transactions for the second quarter of $2 million compared with a loss of $2 million for the prior period (b) Mark-to-market gains on hedging-related derivative transactions for the six months of $7 million compared with a loss of $3 million for the prior period The benefit of higher primary aluminum prices and settlements and gains on external hedging-related derivative activities was largely offset by internal hedging of the metal purchase requirements of the fabricated products division. Second quarter and year-to-date 2006 results were adversely affected by a 15 percent increase in power costs. Second quarter 2006 results were also adversely affected by an increase in alumina costs. "This is an exciting time for Kaiser Aluminum. We completed our reorganization on July 6, 2006 with a clean balance sheet and approximately $200 million of liquidity. This positions us to remain strong throughout the business cycle and fuel our growth initiatives, such as our $105 million Trentwood expansion. In addition, our lean initiatives drive improvements in both customer satisfaction and cost performance," concluded Hockema. 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, http://bankrupt.com/newsstand/) KING PHARMACEUTICALS: Earns $111 Million in Second Quarter ---------------------------------------------------------- King Pharmaceuticals, Inc.'s total revenues increased 8% to $500 million during the second quarter ended June 30, 2006, compared to $463 million in the second quarter of 2005. Including special items, net earnings increased to $111 million during the second quarter ended June 30, 2006, compared to net income of $20 million in the same period of the prior year. Excluding special items, net earnings increased to $112 million increased during the second quarter ended June 30, 2006, compared to net earnings of $107 million in the second quarter of 2005. Brian A. Markison, President and Chief Executive Officer of King, stated, "We are very pleased with the success of our activities during the second quarter of 2006 which enabled us to deliver positive financial results while investing incrementally in Research and Development and Commercial Operations." Mr. Markison added, "For the remainder of 2006, we will continue to focus on maximizing the value of our currently marketed branded pharmaceutical products and further advancing the development of new products in our pipeline. Additionally, we plan to continue our aggressive business development initiatives which are designed to further expand our pipeline and better ensure long-term growth." Steve Andrzejewski, Chief Commercial Officer of King, noted, "Our activities during the second quarter of 2006 included the successful restructuring of our Co-promotion Agreement covering our leading branded ACE inhibitor, Altace(R)(ramipril). The restructuring of this agreement is yet another example of King effectively managing the life-cycle of its branded products." Mr. Andrzejewski continued, "With the restructuring of the Altace(R) agreement, our experienced commercial operations group has the opportunity to manage and implement a marketing strategy designed to reinvigorate demand for Altace(R). Additionally, this opportunity, coupled with the recent addition of Glumetza(TM) (metformin hydrochloride extended-release tablets), enables us to continue strengthening our presence in the cardiovascular/metabolics therapeutic area and advances our vision to be a recognized leader and partner of choice in bringing innovative, clinically-differentiated therapies and technologies to market in our key therapeutic areas. As previously announced, we are expanding our existing commercial capability with the addition of a cardiovascular/metabolics specialty sales force, providing even greater strength to our promotion of Altace(R) and Glumetza(TM)." Net revenue from branded pharmaceuticals totaled $419 million for the second quarter of 2006, a 5% increase from $400 million during the second quarter of 2005. This increase was primarily due to price increases taken in the second half of 2005. Altace(R) net sales totaled $154 million during the second quarter of 2006, an increase of 7% from $144 million during the second quarter of 2005. Net sales of Skelaxin(R) (metaxalone) totaled $97 million during the second quarter of 2006, an increase of 12% compared to $87 million during the same period of the prior year. Thrombin-JMI(R) (thrombin, topical, bovine, USP) net sales totaled $62 million during the second quarter of 2006, a 17% increase from $53 million during the second quarter of 2005. Net sales of Sonata(R) (zaleplon) totaled $24 million during the second quarter of 2006, an increase of 24% compared to $19 million during the second quarter of the prior year. Levoxyl(R) (levothyroxine sodium tablets, USP) net sales totaled $29 million during the second quarter ended June 30, 2006, a decrease of 30% from $41 million during the second quarter of 2005. King's Meridian Medical Technologies business contributed revenue totaling $54 million during the second quarter of 2006, an increase of 52% from $35 million during the same period of the prior year. As the Company has previously disclosed, revenue from Meridian may fluctuate significantly from quarter-to-quarter as buying patterns of government and commercial customers vary. Accordingly, the Company expects Meridian revenue to be significantly lower in second half of 2006 compared to the first half of 2006. Royalty revenues, derived primarily from Adenoscan(R) (adenosine), totaled $21 million during the second quarter ended June 30, 2006, compared to $20 million during the second quarter of 2005. During the second quarter ended June 30, 2006, net revenue from contract manufacturing equaled $6 million. As of June 30, 2006, the Company's cash and cash equivalents and investments in debt securities totaled approximately $803 million. Joseph Squicciarino, King's Chief Financial Officer, commented, "King generated strong cash flow from operations of $176 million during the second quarter of 2006. We plan to utilize our cash position to fuel our business development initiatives and aggressively invest in the further development of products in our pipeline. Accordingly, we expect to continue increasing our R&D investment in each of the remaining quarters of this year, as our total investment for the full year of 2006 could exceed $150 million." A full-text copy of the Quarterly Report in Form 10-Q filed with the Securities and Exchange Commission is available for free at http://ResearchArchives.com/t/s?fa7 About King Pharmaceuticals Headquartered in Bristol, Tennessee, King Pharmaceuticals, Inc., (NYSE:KG) -- http://www.kingpharm.com/-- is a vertically integrated branded pharmaceutical company. King, an S&P 500 Index company, seeks to capitalize on opportunities in the pharmaceutical industry through the development, including through in-licensing arrangements and acquisitions, of novel branded prescription pharmaceutical products in attractive markets and the strategic acquisition of branded products that can benefit from focused promotion and marketing and product life-cycle management. * * * As reported in the Troubled Company Reporter on Mar. 27, 2006, Moody's Investors Service affirmed the ratings of King Pharmaceuticals, Inc., including the Ba3 Corporate Family Rating, Ba2 senior secured revolver due 2007, and Ba3 senior unsecured guaranteed convertible debentures due 2021. Following the rating action, the rating outlook remains negative. KOEN BOOK: Court Confirms Joint Liquidating Plan ------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware confirmed the Joint Plan of Liquidation of Koen Book Distributors, Inc., nka Book Distributors, Inc., and its Official Committee of Unsecured Creditors. The Court determined that the Plan satisfies the 13 requirements imposed by Section 1129(a) of the Bankruptcy Code. As reported in the Troubled Company Reporter on May 25, 2006, the Debtor's plan will be funded using any cash remaining and proceeds of the liquidation of the assets and causes of action of the Debtor's estate. On Sept. 22, 2005, the Debtor entered into an Inventory Purchase Agreement with Baker & Taylor for the purchase and sale of the Debtor's book inventory for $4.5 million. The Court approved that agreement on Oct. 7, 2005. On Oct. 3, 2005, the Debtor entered into an Asset Purchase Agreement with Levy Home Entertainment pursuant to which Levy will purchase the Debtor's assets, the name "Koen Book Distributors" and certain unexpired executory contracts for $300,000. The Court approved the Debtor's agreement with Levy on Oct. 17, 2005. Treatment of Claims Under the plan, Administrative Claims, Priority Tax Claims and Priority Claims will be paid in full. Holders of general unsecured claims will receive their pro rata share of the cash remaining after payment of all other claims, exclusive of any reserves established by the Koen Trustee for Disputed Claims. Unsecured claim holders will also receive their pro rata share of the beneficial interests in the Koen Trust. The Debtor tells the Court that if there are sufficient funds to pay unsecured claims in full, then holders of unsecured claims will also receive 3.52% interest. Holders of interests in the Debtor will receive no distribution and those interests will be cancelled. A copy of the Debtor and Committee's disclosure statement explaining their Joint Plan of Liquidation is available for a fee at: http://www.researcharchives.com/bin/download?id=060404023256 About Koen Book Headquartered in Moorestown, New Jersey, Koen Book Distributors, Inc., nka Book Distributors, Inc. -- http://www.koen.com/-- is a book wholesaler specializing in bestsellers and independent press titles. The company filed for chapter 11 protection on July 11, 2005 (Bankr. D. N.J. Case No. 05-32376). Aris J. Karalis, Esq., at Ciardi, Maschmeyer & Karalis, P.C., represents the Debtor. Bruce D. Buechler, Esq., and Bruce S. Nathan, Esq., at Lowenstein Sandler, PC, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. KULLMAN INDUSTRIES: Sees $14 to $17 Mil. of Allowed Unsec. Claims ---------------------------------------------------------------- Under Kullman Industries, Inc.'s First Amended Disclosure Statement explaining its First Amended Liquidating Plan of Reorganization, the Debtor proposes to pay unsecured claims their pro rata share of the total allowed unsecured claims. Unsecured proofs if claims in excess of $34.29 million have been filed in the Debtor's case. The Debtor estimates that after consideration of all appropriate claims objection , allowed general unsecured claims will amount to approximately $14 to $17 million. As reported in the Troubled Company Reporter on August 15, there are three other classified claims and interest pursuant to the Plan apart from general unsecured claims: Classes of priority unsecured claims will receive cash on the effective date equal to the allowed amount of their claim. The Debtor estimates priority unsecured claims at zero. Holders of Allowed Secured Claims will, at the option of the Debtor, either receive title to the property securing the claims or will be paid in full on the effective date. The Debtor believes that the only potential holder of the claim is Bank of New York, as Indenture Trustee, which presently holds a junior, subordinated claim. Robert Kullman, who owns all of the Debtor's common stock, will receive no distribution on account of his equity interests. The Debtor seeks to accomplish payments under the Plan by depositing all its remaining assets in a liquidating trust and making distributions from liquidation proceeds in accordance with the terms of the Plan. The Committee will designate a Plan Trustee on the effective date of the Plan. Payments under the Plan will be funded from: a) cash on the effective date; b) funds available after the effective from, among other things, any payments received by the Trust from: * the liquidation of the Debtor's remaining assets, * the prosecution and enforcement of the pending litigation and potential avoidance actions, and c) any release of funds from the Disputed Claims Reserve. A hearing to consider the adequacy of the Debtor's Disclosure Statement is set at 11:00 a.m., on Aug. 24, 2006, at Courtroom 2 in 402 East State Street, Trenton, New Jersey. A copy of the Debtor's amended Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060815233430 About Kullman Industries Headquartered in Lebanon, New Jersey, Kullman Industries, Inc. -- http://www.kullman.com/-- is a modular construction builder. The company filed for chapter 11 protection on Oct. 17, 2005 (Bankr. D. N.J. Case No. 05-60002). James N. Lawlor, Esq., at Wollmuth, Maher & Duetsch, LLP represents the Debtor in its restructuring efforts. Bruce D. Buechler, Esq., Peter J. D'Auria, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets between $1 million and $10 million and debts between $10 million to $50 million. LEE'S TRUCKING: Judge Mixon Approves Disclosure Statement --------------------------------------------------------- The Honorable James M. Mixon of the U. S. Bankruptcy for the Western District of Arkansas, El Dorado Division, approved on Aug. 2, 2006, the Disclosure Statement explaining Lee's Trucking, Inc.'s Plan of Reorganization. The Court determined that the Disclosure Statement contained adequate information -- the right amount of the right kind -- required under Section 1125 of the Bankruptcy Code. With a Court- approved Disclosure Statement in hand, the Debtor can now ask its creditors to vote to accept the Plan. In summary, the Debtor's plan proposes to pay 100% of the money owed to creditors. However, the Plan contains a provision that allows for a moratorium on payments of no more than two months in the event of a natural disaster or an economic crisis occurring in the U.S. that would increase fuel prices by 20% or reduce the Debtor's customer base by 5%. To obtain funds necessary to make the payments under its plan, the Debtor will continue to engage in its business of transporting goods and continue to utilize the services of First Capital Corporation. First Capital advances monies for the Debtor's receivables. Upon confirmation of the Plan, Jimmy D. Lee will remain as president of the Reorganized Debtor and sole owner of its stock. Mr. Lee's current salary will continue. He is entitled to a yearly increase equal to 5% above the annual inflation rate. Treatment of Claims Under the Plan, the claims of the U. S. Trustee, administrative expenses, the claims of First Capital Corporation, and claims of the equity security holders of the Debtor, are unimpaired. First National Bank of Crossett in Crossett, which holds a security interest on three Peterbilt Trucks and two Ford Trucks as collateral for the Debtor's $141,584 debt, will be paid in monthly installments of $2,726.76 per month. BancorpSouth holds a mortgage for certain property located at 2054 Southfield Road in El Dorado, Arkansas, as collateral for its $479,000 claim. The Debtor proposes to pay BancorpSouth in monthly installments of $9,225.05. The Bank of the West's $28,000 claim will be in monthly installments of $535.25. As collateral for this debt, the Bank of the West holds a security interest in two Polar Trailers. The Debtor owes Center Capital approximately $158,442. Five Peterbilt Trucks secure repayment of this debt. Center Capital's claim will be paid in monthly installments of $3,051.43. CitiCapital Corporation's $86,174.50 claim will be paid in monthly installments of $1,659.63. This debt is secured by five Polar trucks. Financial Federal, owed $1,091,769 by the Debtor, will be paid in monthly installments of $21,026.36. The creditor currently holds liens against 48 pieces of collateral including trucks and trailers. Debts totaling $69,853.34, owed to Pacaar in Dallas, Texas, will be paid in monthly installments of $1,345.30. The Pacaar holds a security interest in a Peterbilt truck as collateral. Wells Fargo, which holds a security interest on three Polar trucks on account of a $47,751.48 claim, will be paid in installments of $919.64 per month. All secured debts will bear an annual interest rate of 6% simple. In addition, the secured creditors liens on their collateral will continue in full force and effect until they are paid in full. Unsecured priority claims will be paid in full, in monthly installments, over a five-year period. Unsecured priority claims will bear interest at 6% per annum. General Unsecured Claims will be paid in full, in monthly installments, over a five-year period. Unsecured debt will not bear any interest. Headquartered in El Dorado, Arkansas, Lee's Trucking -- http://www.leestrucking.com/-- transports bulk chemicals, non- hazardous materials, hazardous materials, and hazardous waste. The Company filed for chapter 11 protection on May 13, 2005 (Bankr. W.D. Ark. Case No. 05-73565). Robert L. Depper, Jr., Esq., at Depper Law Firm represents the Debtor on its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. LENOX GROUP: Posts $41 Mil. Net Loss in 2nd Quarter Ended July 1 ---------------------------------------------------------------- Lenox Group Inc. reported its financial results for second quarter ending July 1, 2006. Summary of Results From Continuing Operations Revenues for the second quarter were $97.8 million compared with $36.4 million in the second quarter of 2005. Revenues for the first six months were $188.2 million compared with $56.0 million in the prior year. The increase in revenue for the second quarter and first six months reflects the impact of the acquisition of Lenox, Inc., in September 2005. During the second quarter, the Company recorded a $35.7 million impairment charge, net of tax, to write-down the goodwill related to the Department 56 wholesale reporting unit. Loss from continuing operations for the second quarter was $5.5 million compared with income of $4.5 million in the second quarter of 2005. Loss from continuing operations for the first six months was $12.6 million compared with income of $2.3 million in the prior year. The loss from continuing operations in the second quarter and the first six months of 2006 is principally due to the Acquisition as the Lenox business has historically operated at a loss during the first six months of the fiscal year. For the second quarter ended July 1, 2006, the Company reported a net loss of $41.182 million compared with net income of $4.120 million for the second quarter ended July 2, 2005. At July 1, 2006, the Company's balance sheet showed $458.995 million in total assets, $344.324 million in total liabilities, and $114.671 million in stockholders' equity. Commenting on the Acquisition, Susan Engel, Chairwoman and Chief Executive Officer, said, "We purchased the Lenox business to diversify our product offerings and channels of distribution which provides our Company with more opportunities beyond Department 56's core business. Today we are even more committed to growing the business and leveraging the opportunities made available through the Lenox acquisition. At the same time, we continue to work at reducing costs to maintain the leanness historically displayed by Department 56." Business Improvements and Initiatives The Company consolidated its Consumer Direct and Lenox/Gorham/Dansk Wholesale business units into a newly renovated office facility in Bristol, Pennsylvania. Susan Engel noted, "This move is an important step toward achieving our goal of integrating our businesses into a 'One Company' structure. The Bristol facility will house, under one roof, most of the Company's direct and retail business and a significant part of the Company's wholesale business. Having all of these businesses in a single location will provide an excellent environment for the design, product development, marketing and support teams to exchange ideas, plans and strategies, as well as share resources, in an effort to maximize the sales and profit potential of our Company brands." As a result of this move to Bristol, the Company sold its Langhorne, Pennsylvania facility, which generated a net cash flow of approximately $9.9 million. The proceeds from this transaction were applied to pay down the Company's term loan. Wholesale The Company completed the integration of its wholesale sales force during the second quarter and participated in its first gift shows with each sales person selling all of the Company's brands to their customers. Susan Engel commented, "We are pleased with the increasing comfort of the sales force with all the new product lines they can now offer. We expect our sales force to increase their knowledge and expertise of our diverse product lines and brands throughout the year and be operating at an optimal level by the January trade shows." Also during the second quarter, the Company completed its integration of the Willitts brands, which include Thomas Blackshear's Ebony Visions, consisting of Afro-Nouveau styled sculptures that celebrate the pride of heritage and beauty of African Americans, and Possible Dreams, a line of Clothtique figurines, which utilize a stiffened cloth technique to create fine sculptural detailing. The Willitts brands are being displayed in the Company's showrooms, sold by the Company's sales force, and shipped from the Company's distribution center. In addition, the Company initiated its effort to consolidate its two wholesale order management systems. This project, likely to be completed mid-2007, will increase the efficiency of the Company's entire wholesale operation. Consumer Direct The Company has signed four leases at mall locations in connection with its launch of four new concept stores called All The Hoopla. Three of the stores are planned to open this year with the fourth opening in 2007. These stores will market and sell all Company brands (Department 56, Lenox, Gorham and Dansk) in a single store format. Joel Anderson, President of Consumer Direct, stated, "We are excited to test a new store format that will merchandise significant product assortments from all four Company brands and provide the platform to communicate our brand messages directly to end consumers. These stores will be a new source of top-line growth. At the same time, they will be a vehicle for building brand equity and acquiring new customers for re-marketing opportunities." Corporate Governance The Company added two new directors to its Board during the second quarter. Dolores A. Kunda is President and Chief Executive Officer of Lapiz Integrated Hispanic Marketing. Dr. Glenda B. Glover is Dean of the College of Business of Jackson State University and has extensive expertise in the area of corporate governance. Ms. Engel stated, "We are very pleased that we were able to attract these two highly qualified individuals to join the Board. Ms. Kunda has specialized marketing expertise to help the Company expand its customer base. Dr. Glover will provide input to support our financial controls and processes and our governance compliance programs, which are important focuses of the Company." Second Quarter Performance from Continuing Operations Wholesale Segment Revenues were up 103% to $70.7 million from $34.8 million in 2005. The increase in revenue was principally due to the Acquisition offset by a decrease in Department 56 branded sales of $9.0 million, or 26%. The decrease in Department 56 branded sales was principally due to the timing of receipt of product from manufacturers overseas as well as the continued softness experienced in the Gift and Specialty channel. The gross profit percentage was 41% compared to 47% in the prior year. The decrease in gross profit percentage was principally due to the Acquisition as the Lenox wholesale business typically generates lower gross margin percentages because it primarily sells to national customers. Retail Segment Revenues increased to $10.5 million from $1.6 million in the prior year principally due to the Acquisition. Same-store sales (including stores added as a result of the Acquisition which are compared against pre-acquisition results) increased by 0.5%. The gross profit percentage was 62% compared with 67% in the prior year reflecting the impact of the Acquisition as the Lenox stores typically carry lower gross profit percentages because they are principally outlet stores. Direct Segment Revenues from the direct business, which was acquired as part of the Acquisition, were $16.7 million. The gross profit percentage was 67%. Year-To-Date Performance from Continuing Operations Wholesale Segment Revenues were up 131% to $122.5 million from $53.1 million in 2005. The increase in revenue was principally due to the Acquisition offset by a decrease in Department 56 branded sales of $14.0 million, or 26%. The decrease in Department 56 branded sales was principally due to the timing of receipt of product from manufacturers overseas as well as the continued softness experienced in the Gift and Specialty channel. The gross profit percentage was 42% compared to 46% in the prior year. The decrease in gross profit percentage was principally due to the Acquisition as the wholesale business typically generates lower gross margin percentages because it primarily sells to national customers. Retail Segment Revenues increased to $26.7 million from $2.9 million in the prior year principally due to the Acquisition. Same-store sales (including stores added as a result of the Acquisition which are compared against pre-acquisition results) increased by 0.4%. Direct Segment Revenues from the direct business, which was acquired as part of the Acquisition, were $39.0 million. The gross profit percentage was 66%. Goodwill Impairment During the second quarter, the Company re-forecasts its 2006 Gift and Specialty channel sales within the Department 56 wholesale reporting unit. The Company also experienced a decline in the quoted market price of its stock in the second quarter. Given these events, the Company determined it was more likely than not a reduction of the fair value of the Department 56 wholesale reporting unit may have occurred. As a result, the Company completed a review of the Department 56 wholesale reporting unit goodwill in accordance with Statement of Financial Accounting Standards No.142. Based on the results of this analysis, the Company recorded an impairment charge of $35.7 million, net of tax, to write-down the goodwill related to the Department 56 wholesale reporting unit. This goodwill impairment charge principally relates to goodwill originally recorded in 1992 as a result of the acquisition of Department 56 by Forstmann Little & Co. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?f9f About Lenox Group Inc. Based in Eden Prarie, Minnesota, Lenox Group Inc (NYSE: LNX) was formed on Sept. 1, 2005, when Department 56, Inc., a designer, wholesaler and retailer of collectibles and giftware products purchased Lenox, Inc., a designer, manufacturer and marketer of fine china, dinnerware, silverware, crystal and giftware products. The Company sells its products through wholesale customers who operate gift, specialty and department store locations in the United States and Canada, Company-operated retail stores, and direct-to-the-consumer through catalogs, direct mail, and the Internet. * * * As reported in the Troubled Company Reporter on May 18, 2006, Moody's Investors Service affirmed Lenox Group, Inc.'s Corporate Family Rating at B1. LIBERTY MEDIA: Discloses Second Quarter Financial Results --------------------------------------------------------- Liberty Media Corporation reported results at both its Liberty Interactive Group and Liberty Capital Group for the second quarter ending June 30, 2006. Liberty Interactive Group Liberty Interactive Group's revenue increased 16% and operating cash flow increased 19% due to the strong operating results at QVC and the addition of Provide Commerce, which was acquired on February 9, 2006. "We are pleased with the strong operating performance at Liberty Interactive, which was fueled by the continued excellent results at QVC," said Liberty Chairman John C. Malone. "We demonstrated our pleasure by repurchasing more than 19 million shares of stock in the quarter." QVC QVC's total revenue increased 10% to $1,630 million and operating cash flow increased 17% to $378 million. QVC's domestic revenue and operating cash flow increased 10% and 14%. The domestic revenue growth was attributed to increased sales to existing subscribers primarily in the areas of accessories and jewelry as the total number of units shipped during the quarter increased 8% and the average selling price increased 3%. QVC.com sales as a percentage of domestic sales grew from 18% in the second quarter of 2005 to 20% in 2006. The domestic operating cash flow margin primarily increased due to higher credit card income associated with the company's private label credit card and operating leverage. QVC's international revenue increased 10% to $490 million for the quarter due to greater sales to existing subscribers in Germany and Japan and new subscriber growth in each of our international markets partially offset by unfavorable foreign currency exchange rates. Excluding the effect of exchange rates, international revenue increased 13%. The operating cash flow of the international operations increased from $76 million to $95 million, or 25%, due to the increased revenue, improved gross margins and operating leverage. International margins increased 2% to 39% due to a lower inventory obsolescence provision and a higher initial gross mark-on. Excluding the effect of exchange rates, QVC's international operating cash flow increased 27%. On July 26, 2006, Liberty announced that it has entered into an agreement to acquire 100% of BUYSEASONS, Inc., the operator of online costume retailer BuyCostumes.com. BuyCostumes.com will be attributed to Liberty Interactive and will enhance Liberty's web-based retailing strategy. During the second quarter, Liberty repurchased approximately 19.3 million shares of Liberty Interactive Series A common stock at an average cost per share of $17.66 for aggregate cash consideration of $341 million. At June 30, 2006, there were approximately 683.7 million outstanding shares of LINTA and LINTB and 19.6 million shares of LINTA and LINTB reserved for issuance pursuant to warrants and employee stock options. At June 30, 2006, there were 1.6 million options that had a strike price that was lower than the closing stock price. Exercise of these options would result in aggregate proceeds of approximately $23 million. QVC's outstanding bank debt was $1.2 billion at June 30, 2006; the increase of $400 million during the quarter was primarily due to funding repurchases of Liberty Interactive Series A common stock. Outlook Liberty expects the operations attributed to the Liberty Interactive Group, which includes QVC for all of 2006 and Provide Commerce from the date of its acquisition on February 9, 2006, to increase over the attributed 2005 operating results, which included only QVC's operations: * revenue growth in the low double digits %; * operating cash flow growth in low double digits %; and * operating income growth in low double digits %. These estimates assume with respect to QVC, among other factors, that its product mix and foreign currency exchange rates affecting its international businesses will be consistent as compared to 2005, while revenue growth rates will experience a slight slowing due to difficult comparisons to the favorable results achieved in 2005. These estimated growth rates are not expected to be achieved ratably on a quarterly basis as the Liberty Interactive Group's attributed businesses will likely experience different quarter over quarter growth rates for each calendar quarter of 2006. The businesses and assets attributed to Liberty Interactive Group are engaged in, or are ownership interests in companies that are engaged in, sales of goods and services primarily through television programming and the Internet, and currently include its subsidiaries QVC and Provide Commerce and its approximate 20% interests in IAC/InterActiveCorp, Expedia and GSI Commerce. Liberty identified QVC, Inc., a consolidated, 98.9% owned subsidiary, as the principal operating segment of Liberty Interactive Group. Liberty Capital Group During the quarter, Liberty sold its 50% interest in Court TV for $735 million in cash and recorded a gain of $303 million. Also during the quarter, Liberty announced the acquisition of IDT Entertainment from IDT Corporation for all of Liberty's interests in IDT, $186 million in cash and the assumption of existing indebtedness. With this acquisition, Starz Entertainment will have the capability to create a wide array of CG animated and live action programming for domestic and international distribution in all major channels, including broadcast syndication, premium television, theatrical, and home video/DVD. "We continue to make progress on divesting non-core assets and reinvesting in our strategic businesses," said Liberty President and CEO Gregory B. Maffei. "We were also pleased with the operating and investment performance of News Corporation, our largest asset in Liberty Capital, during the quarter." Starz Entertainment Group Starz Entertainment Group revenue increased 2% to $264 million and operating cash flow increased 6% to $50 million. The growth in revenue was primarily due to a $14 million increase resulting from an increase in the average number of subscription units for Starz Entertainment's services. Starz average subscription units increased 6% and Encore average subscription units increased 8%. The effect on revenue of these increases in subscription units was partially offset by an $8 million decrease due to a decrease in the effective rate charged for such services due to the fixed-rate affiliation agreements that Starz Entertainment has entered into in recent years. Starz Entertainment's operating expenses increased 1% for the quarter. The increase was due to higher programming costs, which increased 8% from $167 million to $180 million, partially offset by a decrease in SG&A expenses. The programming increases were primarily due to $16 million of additional amortization of deposits previously made under certain of Starz Entertainment's output arrangements. The decrease in SG&A expenses was due to a $10 million decrease in sales and marketing due to the elimination of certain marketing support commitments under the new affiliation agreement with Comcast partially offset by marketing expenses related to the commercial launch of Vongo. Starz Entertainment expects that over the course of 2006, additional marketing expenses for Vongo and its traditional services will exceed the benefits derived from lower marketing support requirements for Comcast, and that its full-year 2006 sales and marketing expenses may exceed those of 2005. Operating cash flow increased due to increased revenue combined with a smaller increase in operating expenses. At June 30, 2006, there were approximately 140.5 million outstanding shares of LCAPA and LCAPB and 3.9 million shares of LCAPA and LCAPB reserved for issuance pursuant to warrants and employee stock options. At June 30, 2006, there were 1.2 million options that had a strike price that was lower than the closing stock price. Exercise of these options would result in aggregate proceeds of approximately $90 million. A full-text copy of the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission is available for free at http://ResearchArchives.com/t/s?fa8 About Liberty Media Based in Englewood, Colorado, Liberty Media Corporation (NASDAQ: LINTA, LCAPA) -- http://www.libertymedia.com/-- owns a broad range of electronic retailing, media, communications and entertainment businesses and investments. Its businesses include some of the world's most recognized and respected brands and companies, including QVC, Encore, Starz, IAC/InterActiveCorp, Expedia and News Corporation. The company was a subsidiary of AT&T, which had acquired former parent Tele-Communications, Inc., in 1999. In 2001 AT&T spun off Liberty Media as part of the phone giant's plan to split its empire into several companies. Liberty Media completed a spin off of its own in 2004 by separating its international assets into a new company. The firm is chaired by former TCI head John Malone. * * * As reported in the Troubled Company Reporter on May 23, 2006, Moody's Investors Service downgraded Liberty Media Corporation's corporate family and senior unsecured long term debt ratings to Ba2 from Ba1 concluding the review for downgrade initiated on March 31, 2006. The outlook is stable. As reported in the Troubled Company Reporter on May 22, 2006, Standard & Poor's Ratings Services held its ratings, including the 'BB+' corporate credit rating, on Englewood, Colorado-based Liberty Media Corp. on CreditWatch, where they were placed with negative implications on Nov. 10, 2005. LIGAND PHARMA: June 30 Balance Sheet Upside-Down by $238.5 Million ------------------------------------------------------------------ Ligand Pharmaceuticals Incorporated's balance sheet at June 30, 2006 showed total assets of $285.9 million and total liabilities of $524.4 million resulting in a stockholders' deficit of $238.5 million. This compares to a stockholders' deficit of $110.4 million at Dec. 31, 2005. The Company's total revenues for the three months ended June 30, 2006, increased 6%, to $48.4 million compared to $45.8 million for the same 2005 period. Loss from operations was $11 million for the three months ended June 30, 2006 compared to $6.5 million for the same 2005 period. Net loss for the quarter ended June 30, 2006 was $16 million compared to $8.9 million for the same 2005 period. Net loss included the accretion and reduction in net present value of the co-promote termination liability to fair value as of June 30, 2006 of $3.1 million, relating to the termination of the Organon co-promotion agreement. Total revenues for the six months ended June 30, 2006, the Company reported, increased 20% to $99.4 million compared to $82.8 million for the same 2005 period. Loss from operations was $148.1 million for the six months ended June 30, 2006, compared to $22.3 million for the same 2005 period. Net loss for the six months ended June 30, 2006 was $158.2 million, compared to $27.4 million for the same 2005 period. Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) -- http://www.ligand.com/-- discovers, develops and markets new drugs that address critical unmet medical needs of patients in the areas of cancer, pain, skin diseases, men's and women's hormone- related diseases, osteoporosis, metabolic disorders, and cardiovascular and inflammatory diseases. Ligand's proprietary drug discovery and development programs are based on gene transcription technology, primarily related to intracellular receptors. LINN ENERGY: Closes $125 Mil. Acquisition Deal of Kaiser-Francis ---------------------------------------------------------------- Linn Energy, LLC closed its acquisition of certain Mid-Continent assets of Kaiser-Francis Oil Company, located in Oklahoma, for a contract purchase price of $125 million, subject to customary closing adjustments. As reported in the Troubled Company Reporter on Aug. 1, 2006, the Company used its new secured revolving credit facility and bridge facility to finance the acquisition. About Linn Energy Headquartered in Pittsburgh, Pennsylvania, Linn Energy LLC (Nasdaq: LINE) -- http://www.linnenergy.com/-- is an independent natural gas company focused on the development and acquisition of natural gas properties in the Appalachian Basin, primarily in West Virginia, Pennsylvania, New York and Virginia. At March 31, 2006, the Company's balance sheet showed $105,187,000 in unitholders' capital compared to a $46,831,000 unitholders' deficit at March 31, 2005. LOUDEYE CORP: Earns $5.3 Million in Second Quarter of 2006 ---------------------------------------------------------- Loudeye Corp. filed its second quarter financial statements for the three months ended June 30, 2006, with the Securities and Exchange Commission on Aug. 30, 2006. The Company reported net income of $5.355 million on $5.382 million of revenues for the second quarter ended June 30, 2006, compared with a $6.930 million net loss on $4.892 million of revenues for the same period in 2005. At June 30, 2006, the Company's balance sheet showed $78.955 million in total assets, $17.816 million in total liabilities, and $61.139 million in total stockholders' equity. Full-text copies of the Company's second quarter financial are available for free at http://ResearchArchives.com/t/s?f80 Going Concern Doubt Moss Adams LLP in Seattle, Wash., raised substantial doubt about Loudeye 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, negative cash flows from operations, accumulated deficit, and negative working capital. Loudeye Corp. (Nasdaq: LOUD) -- http://www.loudeye.com/-- is a worldwide leader in business-to-business digital media solutions and the outsourcing provider of choice for companies looking to maximize the return on their digital media investment. Loudeye combines innovative products and services with the world's largest music archive, a broad catalog of licensed digital music and the industry's leading digital media infrastructure, enabling partners to rapidly and cost effectively launch complete, customized digital media stores and services. LOVESAC CORP: Emerges from Chapter 11 Protection in Delaware ------------------------------------------------------------ LoveSac Corporation and its debtor-affiliates emerged from bankruptcy protection as their Joint Plan of Liquidation is declared effective. The Honorable Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware confirmed the Plan on July 27, 2006 As reported in the Troubled Company Reporter on Aug. 4, 2006,pursuant to the Plan of Liquidation approved the settlement agreement between the Debtors and: * Walnut Investment Partners, LP; * Walnut Private Equity Fund, LP; * Brand Equity Ventures, II, LP; * Barfair Ltd., L.P.; * Millivere Holdings, Ltd.; and * Hauser 41, LLC. These Series A Investors hold certain equity interest in LoveSac. They have also engaged in lending transactions with the Debtors. Some of the Series A Investors have designated members that have served or currently serve on the board of directors of LoveSac. The Court also approved the sale of substantially all of the Debtors' assets to Sac Acquisition LLC, an affiliate of the Series A Investors for at least $750,000. The final purchase amount will be determined by the gross receipts of the business. The settlement agreement and the asset sale are cornerstones of the Plan. Settlement Agreement Under the Settlement Agreement, each of the Series A Investors will pay their ratable share of $75,000 to the liquidating trust to be established under the Plan upon the closing of the Asset Sale, with the condition that either the Plan must be confirmed, or the order approving the Settlement Agreement has become final and non-appealable prior to that payment. Additionally, each of the Series A Investors will pay their ratable share of a second $75,000 to the liquidating trust established under the Plan on or before January 15, 2007. In addition to the payment of these funds, each of the Series A Investors will assign to the liquidating trust established under the Plan, all distributions to which the Series A Investors are or may become entitled to under the Plan, pursuant to their claims. In the event that the liquidating trust under the Plan is not yet established when either the cash payments or the assignment of claims are called for under the Settlement Agreement, the cash payments or the assignment will all be made to the Debtors for the benefit of the liquidating trust. In exchange for the consideration to be paid to the liquidating trust, and the assignment of the Series A Investors' claims against the estate to the other creditors, the Debtors will provide a comprehensive general release of all claims that the Debtors may have against any of the Series A Investors or their affiliates and representatives. A full-text copy of the Asset Purchase Agreement is available for a fee at: http://www.researcharchives.com/bin/download?id=060802213205 A full-text copy of the Settlement Agreement is available for a fee at: http://www.researcharchives.com/bin/download?id=060802213404 Treatment of Claims As reported in the Troubled Company Reporter on June 19, 2006, under the Plan, these claims are entitled to full recovery: 1. Class 1 Other Priority Claims; 2. Class 2 Secured Tax Claims; 3. Class 4-C Secured Claims of Celtic Bank Corp.; 4. Class 4-F Secured Claims of G&G LLC; 5. Class 4-G Secured Claims of REM LLC; 6. Class 4-H Secured Claims of Triple Net Investments; and 7. Class 4-K Miscellaneous Secured Claims. Pursuant to an asset purchase agreement, five creditors agreed to assign any distribution received on their claims to the liquidating trust for the sole benefit of the Class 5A through 5E Unsecured Creditors. These creditors will not receive any distribution on account of their claims: 1. Class 4-A Secured Claims of Barfair, Ltd.; 2. Class 4-B Secured Claims of Brand Equity Ventures II, LP; 3. Class 4-D Secured Claims of Dinesh Patel; 4. Class 4-J Secured Claims of Walnut Investment Partners, LP; and 5. Class 4-J Secured Claims of Walnut Private Equity Fund, LP. The Debtors will surrender a 2003 Ford Econoline Van to Ford Credit in full satisfaction of Ford Credit's secured claim. Class 3 DIP Financing Claims will be assumed by the purchaser, without recourse to the Debtors or the Liquidating Trust. The Debtors' estates will have no further liability for the claims upon assumption. Holders of these claims will receive a pro rata share of their claims from 0% to 50%: 1. Class 5-A General Unsecured Claims; 2. Class 5-B Deficiency Claim of G&G; 3. Class 5-C Triple Net Investments Deficiency Claim; 4. Class 5-D Celtic Bank Deficiency Claims; and 5. Class 5-E REM Deficiency Claim. Class 5-F Series A Deficiency Claims and Class 6 Interest Claims will receive nothing under the Plan. A full-text copy of LoveSac Corp.'s Chapter 11 Liquidation Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=060616052444 A Disclosure Statement explaining that Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=060616052013 Headquartered in Salt Lake City, Utah, The LoveSac Corporation -- http://www.lovesac.com/-- operates and franchises retail stores selling beanbags furniture. The LoveSac Corp. and three affiliates filed for chapter 11 protection on Jan. 30, 2006 (Bankr. D. Del. Case No. 06-10080). Anthony M. Saccullo, Esq., and Charlene D. Davis, Esq., at The Bayard Firm and P. Casey Coston, Esq., at Squire, Sanders & Dempsey LLP represent the Debtors in their restructuring efforts. Michael W. Yurkewicz, Esq., at Klehr Harrison Harvey Branzburg & Ellers represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. MARSH SUPERMARKETS: Board Supports MSH Supermarkets Transaction --------------------------------------------------------------- The Board of Directors of Marsh Supermarkets, Inc. reaffirmed its support for the acquisition of Marsh by MSH Supermarkets Holding Corp., an affiliate of Sun Capital Partners, Inc. As reported in the Troubled Company Reporter on May 5, 2006, Marsh's Board of Directors unanimously approved a definitive merger agreement with MSH Supermarkets, under which MSH Supermarkets will acquire all of the outstanding shares of both classes of common stock of Marsh for $11.125 per share in cash without any financing condition. Letter of Intent Separately, the Company had been advised by MSH Supermarkets and Cardinal Paragon, Inc. and Drawbridge Special Opportunities Advisors LLC, "Cardinal/Drawbridge," that those parties signed a letter of intent to enter into a sale/leaseback agreement under which Cardinal/Drawbridge would have the opportunity for a period of 45 days to provide MSH Supermarkets with sale/leaseback financing. The sale/leaseback is subject to completion of due diligence by Cardinal/Drawbridge and negotiation and finalization of definitive documentation and the arrangement of financing. Cardinal/Drawbridge has withdrawn its indication of interest to acquire Marsh. The letter of intent also prohibits Cardinal/Drawbridge from pursuing any acquisition of Marsh without the consent of MSH Supermarkets. In addition, all claims asserted in the declaratory judgment action filed by Marsh in June will be dismissed. "I am pleased that we are moving forward with the MSH Supermarkets transaction," Don E. Marsh, Chairman of the Board and Chief Executive Officer of Marsh Supermarkets, Inc., said. "We continue to believe that our proposed sale to MSH Supermarkets is in the best interests of Marsh and all of our shareholders. We have called a special meeting of Marsh shareholders to be held on Sept. 22, 2006. Our Board recommends that all Marsh shareholders support this compelling offer." "Our all-cash offer provides Marsh shareholders with significant value for their investment and has the support of Marsh's Board of Directors," Gary Talarico, Managing Director of Sun Capital Partners and Vice President of MSH Supermarkets, said. "We are also pleased to have concluded the letter of intent with Cardinal/Drawbridge regarding a potential financing. Sun Capital's commitment to acquire the Company offers certainty to Marsh shareholders and is not contingent on any external financing. We look forward to owning and operating Marsh's supermarkets, Village Pantry convenience stores, and other businesses and to the smooth and rapid completion of this transaction." The MSH Supermarket acquisition has no financing contingency, and is subject to customary closing conditions, including the approval of Marsh shareholders. The transaction is expected to be completed by the end of September 2006. Headquartered in Indianapolis, Indiana, Marsh Supermarkets, Inc. (Nasdaq: MARSA & MARSB) -- http://www.marsh.net/-- is a regional supermarket chain with stores primarily in Indiana and western Ohio, operating 69 Marsh(R) supermarkets, 38 LoBill(R) Food stores, eight O'Malias(R) Food Markets, 154 Village Pantry(R) convenience stores, and two Arthur's Fresh Market(R) stores. The Company also operates Crystal Food Services(SM) which provides upscale catering, cafeteria management, office coffee, coffee roasting, vending and concessions, and Primo Banquet Catering and Conference Centers; Floral Fashions(R), McNamara(R) Florist and Enflora(R) -- Flowers for Business. * * * As reported in the Troubled Company Reporter on May 8, 2006, Moody's Investors Service placed the ratings of Marsh Supermarkets, Inc., including the B3 Corporate Family Rating and Caa2 rating of 8.875% Senior Subordinated Notes due 2007 on review-direction uncertain. As reported in the Troubled Company Reporter on April 25, 2006, Standard & Poor's Ratings Services held its 'B-' corporate credit and 'CCC' subordinated debt ratings on Marsh Supermarkets Inc. on CreditWatch with developing implications. MAXXAM INC: June 30 Balance Sheet Upside-Down by $704 Million ------------------------------------------------------------- MAXXAM Inc.'s balance sheet at June 30, 2006, showed $975.2 million in total assets and $1.68 billion in total liabilities, resulting in a $704.9 million stockholders' deficit. The Company had reported a $671.3 million stockholders' deficit at March 31, 2006. For the second quarter of 2006, the Company reported a net loss of $11.2 million, compared to a net loss of $9.6 million for the same period a year ago. Net sales for the second quarter of 2006 totaled $63.5 million, compared to $87.2 million in the second quarter of 2005. For the first six months of 2006, MAXXAM reported a net loss of $21.4 million, compared to a net loss of $23.8 million for the same period of 2005. Net sales for the first six months of 2006 were $143.7 million, compared to $170.2 million for the first six months of 2005. MAXXAM reported operating income of $2 million for the second quarter of 2006 and $8.3 million for the first six months of 2006, compared to operating income of $6.5 million and $9.3 million for the comparable periods in 2005. Forest Products Operations Net sales for the Company's forest products operations decreased to $33.8 million for the second quarter of 2006, as compared to $46.9 million for the second quarter of 2005. The $13.1 million decrease in net sales was due to a decline in lumber shipments as a result of a lower log supply from Scotia Pacific Company LLC (ScoPac) and an increase in the volume of lumber placed into the Pacific Lumber Company's (Palco) redwood lumber drying program during the second quarter of 2006, as compared to the same period in 2005. The lower log supply from ScoPac was due to adverse weather conditions in early 2006 and harvest restrictions. The forest products segment generated operating income of $0.1 million for the second quarter of 2006 and an operating loss of $5.4 million for the six months ended June 30, 2006. Real Estate Operations Net sales and operating income for the Company's real estate operations for the second quarter of 2006 decreased by $10.9 million and $7.5 million, respectively, as compared to the same period in 2005, primarily due to a substantial reduction in the number of lots sold at the Company's Fountain Hills development, partially offset by increased lot sales at the Company's Mirada development. Racing Operations Net sales for the Company's racing operations improved $300,000 for the second quarter of 2006, as compared to the same period in 2005, due primarily to higher simulcast wagering levels. Racing operations' operating losses increased $700,000 for the second quarter of 2006, as compared to the same period in 2005, principally due to expenditures related to the Company's efforts to obtain an additional racing license in Laredo, Texas. Corporate The Corporate segment's operating losses represent general and administrative expenses that are not specifically attributable to the Company's operating segments, including stock-based compensation expense. The Corporate segment's operating losses improved $500,000 for the second quarter of 2006 as compared to the same period in 2005, primarily due to cost cutting initiatives. Consolidated investment, interest and other income decreased to $2.3 million for the second quarter of 2006, as compared to $4.3 million for the second quarter of 2005, due to lower levels of investments and a decrease in income from equity method investments. During the second quarter of 2006, the Company purchased 707,285 shares of its Common Stock for an aggregate cost of $22.4 million. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?fa3 Palco - Scopac Liquidity Update The Company reported in its quarterly report on Form 10-Q filed with the Securities and Exchange Commission that the cash flows of Palco and ScoPac, indirect subsidiaries of the Company, have been materially adversely affected by the ongoing regulatory, environmental and litigation matters faced by Palco and ScoPac, and as a consequence, additional liquidity was required at both Palco and ScoPac to fund expected liquidity shortfalls. On July 18, 2006, Palco and Britt Lumber Co., Inc., as borrowers, closed on a new five-year $85 million secured term loan and a new five-year $60 million secured asset-based revolving credit facility. The Term Loan was fully funded at closing. The borrowers used approximately $34 million of the Term Loan funds to pay off the borrowers' existing term loan and $22.5 million of the Term Loan funds to pay off the borrowers' existing revolving credit facility and cash collateralize existing letters of credit. The borrowers have not made any borrowings under the Revolving Credit Facility to date, although they currently have availability in excess of $20 million. On the Timber Notes payment date of July 20, 2006, ScoPac used its existing cash resources, all of the remaining funds available under its line of credit, the additional funds made available from proceeds from land sales of $10.2 million, a $3.7 million timber/log purchase by MGI and a $2.1 million early log payment by Palco, to pay all of the $27.1 million of interest due ($25.4 million net of interest due in respect of Timber Notes held in the SAR Account). ScoPac also repaid $10 million of principal on the Timber Notes ($6.2 million net of principal in respect of Timber Notes held in the SAR Account) using funds held in the SAR Account. As previously announced, ScoPac expects to incur substantial interest shortfalls over at least the next several years. Kaiser Emergence On July 6, 2006, Kaiser Aluminum Corporation emerged from Chapter 11 bankruptcy and the Company's Kaiser common shares were cancelled without consideration or obligation. The Company expects to reverse the $516.2 million of losses in excess of its investment in Kaiser, net of accumulated other comprehensive losses of $85.3 million related to Kaiser, and expects to recognize the net amount, including the related tax effects in the consolidated financial statements in the third quarter of 2006. Headquartered in Houston, Texas, MAXXAM Inc. (AMEX: MXM) operates businesses ranging from aluminum and timber products to real estate and horse racing. MAXXAM's top revenue source is Kaiser Aluminum, which has been in Chapter 11 bankruptcy since 2002. MAXXAM's timber subsidiary, Pacific Lumber, owns about 205,000 acres of old-growth redwood and Douglas fir timberlands in Humboldt County, California. MAXXAM's real estate interests include commercial and residential properties in Arizona, California, Texas, and Puerto Rico. The Company also owns the Sam Houston Race Park, a horseracing track near Houston. Its Chairman and CEO, Charles Hurwitz, controls 77% of MAXXAM. MERITAGE HOMES: Board Authorize $100 Million Stock Repurchase ------------------------------------------------------------- The board of directors of Meritage Homes Corporation authorized the Company to repurchase an additional $100 million of Meritage Homes common stock. The Company had $34 million remaining under its existing $100 million repurchase authorization, originally reported on Feb. 21, 2006. As increased, the total authorized for repurchase of Meritage stock was approximately $134 million as of Aug. 9, 2006. "We have actively repurchased our stock over the last twelve months, reducing our outstanding shares by about 7% while simultaneously improving our net-debt-to-capital ratio to a moderate 42%," said Steven J. Hilton, Meritage chairman and chief executive officer. "This authorization gives us additional flexibility to repurchase stock at attractive levels, which can benefit our stockholders by reducing the base on which earnings and book value per share are calculated. We believe share repurchases can be a prudent use of capital in the current environment." The new authorization allows Meritage to purchase its common shares subject to applicable securities laws, in open market or privately negotiated transactions, based on market conditions and other factors. Shares repurchased are held as treasury shares and may be used in connection with stock option or other incentive plans, or in future financings. Meritage had approximately 26.1 million shares of common stock issued and outstanding as of Aug. 3, 2006. About Meritage Homes Corp. Headquartered in Scottsdale, Arizona, Meritage Homes Corporation (NYSE: MTH) -- http://www.meritagehomes.com/-- is a leader in the consolidating homebuilding industry. Meritage operates in fast- growing states of the southern and western United States, including six of the top 10 single-family housing markets in the country, and has reported 18 consecutive years of record revenue and net earnings. * * * Meritage Homes Corp.'s 7% Senior Notes due 2014 carry Moody's Investors Service's Ba2 rating, Fitch Ratings' BB rating and Standard & Poors' BB- rating. METALDYNE CORP: Moody's Junks $400 Million Senior Notes' Rating --------------------------------------------------------------- Moody's Investors Service lowered the ratings for Metaldyne Corporation -- Corporate Family, to Caa1 from B3; guaranteed senior unsecured notes, to Caa2 from Caa1; guaranteed senior subordinated notes, to Caa3 from Caa2. At the same time Moody affirmed the B3 ratings of the guaranteed senior secured credit facility and assigned B3 ratings to the company's extended senior secured revolving credit facility and new synthetic letter of credit facility. The lowered ratings reflect the challenging industry conditions of rising commodity prices, and declining OEM production levels, which have resulted in Metaldyne's weak credit metrics. For the last twelve months ending July 2, 2006, Debt was 7.2x and EBIT interest was 0.6x. The automotive supplier industry is expected to continue to experience pressures from announced production volume decreases from US OEMs for the second half of 2006, limiting the prospects for any meaningful near term improvement in financial metrics. Despite these challenging conditions, the outlook is stable for the Caa1 rating. The company maintains adequate liquidity of approximately $126 million under its revolving credit and securitization facilities which provides a degree of financial flexibility until operating performance improves. The notching of the senior secured credit facilities favorably reflects the relative strength of the collateral coverage for the committed amount of the facilities. While the senior secured facilities exhibit some coverage deficiency under the domestic assets, conservative enterprise values for the consolidated company support full coverage of the senior secured credit facilities. The company continues make progress in addressing deficiencies in internal controls that were identified through independent investigation by the company's auditors. It is the company's goal to satisfy Section 404 requirements of the Sarbanes-Oxley Act for its fiscal year ending December 30, 2007. These ratings were lowered: Metaldyne Corporation: * Corporate Family Rating to Caa1 from B3; * $150 million of 10% guaranteed senior unsecured notes due November 2013, to Caa2 from Caa1 * $250 million of 11% guaranteed senior subordinated notes due June 2012, to Caa3 from Caa2; These ratings were affirmed: * B3 rating for Metaldyne LLC's guaranteed senior secured credit facilities, consisting of: * $400 million guaranteed senior secured tranche D term loans due December 2009; These ratings were assigned: * B3 rating for the extended $200 million guaranteed senior secured revolving credit facility due August 2011, * B3 rating for the new $100 million Synthetic L/C Facility due August 2011. These rating will be withdrawn upon its refinancing: * B3 rating for the $200 million guaranteed senior secured revolving credit facility due May 2007; The last rating action was on May 18, 2005 when the ratings were lowered. Metaldyne Corporation, headquartered in Plymouth, Michigan, is a manufacturer of highly engineered products for the global light vehicle market. Metaldyne designs, engineers and assembles metal- formed and engineered products used in transmissions, engines and chassis of vehicles. The company's annual revenues currently approximate $1.9 billion. Ownership of Metaldyne is controlled by private equity sponsor Heartland Industrial Partners LP. MILLS CORP: To Sell Stake in Mills to Ivanhoe Cambridge for $981MM ------------------------------------------------------------------ The Mills Corporation signed a binding letter of intent to sell its interest in Vaughan Mills in Ontario, Canada, St. Enoch Centre in Glasgow, Scotland and Madrid Xanadu in Madrid, Spain to Ivanhoe Cambridge, Inc. for $981 million, before transaction costs. The agreement, which is subject to final approval of both firms' boards of directors and other conditions, could close as soon as Aug. 31, 2006 for St. Enoch Centre and Vaughan Mills, and as soon as Sept. 30, 2006 for Madrid Xanadu. The Mills and Ivanhoe each currently own 50% of Vaughan Mills and St. Enoch Centre. Madrid Xanadu is wholly owned by The Mills. Madrid Xanadu opened in May 2003, Vaughan Mills opened in November 2004, and St. Enoch Centre was jointly acquired by The Mills and Ivanhoe Cambridge in February 2005. The Company expects to realize net proceeds of approximately $500 million after paying its proportionate share of costs associated with the projects and the transfer of assets, including amounts to complete ongoing work at Vaughan Mills and Madrid Xanadu, and less assumed debt. The transaction values the three centers at $1.5 billion. The Mills plans to apply proceeds from the sale to pay down a portion of its Senior Term Loan with Goldman Sachs Mortgage Company as Administrative Agent. The consent of lenders under the Senior Term Loan is required to close the sale and The Mills is in the process of seeking the consent. Ivanhoe Cambridge Headquartered in Montreal, Quebec, Canada, Ivanhoe Cambridge, Inc. -- http://www.ivanhoecambridge.com/-- owns, manages, develops and invests Canadian real estate properties. The Company focuses on high-quality shopping centres located in urban areas. Beyond its strong Canada-wide presence, the Company is also active in the United States, Asia and Europe -- where it partners with real estate entities. Its real estate portfolio consists of more than 43.2 million square feet of retail space and includes over 65 regional and super-regional shopping centres. About The Mills Corporation Headquartered in Chevy Chase, Maryland, The Mills Corporation (NYSE:MLS) -- http://www.themills.com/-- develops, owns, manages retail destinations including regional shopping malls, market dominant retail and entertainment centers, and international retail and leisure destinations. The Company owns 42 properties in the U.S., Canada and Europe, totaling 51 million square feet. In addition, The Mills has various projects in development, redevelopment or under construction around the world. * * * As reported in the Troubled Company Reporter on March 24, 2006, The Mills Corporation disclosed that the Securities and Exchange Commission has commenced a formal investigation. The SEC initiated an informal inquiry in January after the Company reported the restatement of its prior period financials. Mills is restating its financial results from 2000 through 2004 and its unaudited quarterly results for 2005 to correct accounting errors related primarily to certain investments by a wholly-owned taxable REIT subsidiary, Mills Enterprises, Inc., and changes in the accrual of the compensation expense related to its Long-Term Incentive Plan. MIRANT CORP: Drops Plan to Close Two Calif. Power Generation Units ------------------------------------------------------------------ Mirant Corporation will continue the operation of its two power generation plants in San Francisco, California, after Pacific Gas & Electric Company agreed to buy electricity produced by Mirant's natural gas-fired Pittsburg and Contra Costa power plants, according to Bloomberg News. Early in May this year, Mirant notified the California Public Utilities Commission and the California Independent System Operator of its intention to cease operation of its Pittsburg 7 and Contra Costa 6 units because it was not able to secure reliability compensation for the plants. The contracts, Bloomberg says, will help PG&E meet the demand of power supply due to the heat storm that struck California. Headquartered in Atlanta, Georgia, Mirant Corporation (NYSE: MIR) -- http://www.mirant.com/-- is an energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03- 46590), and emerged under the terms of a confirmed Second Amended Plan on Jan. 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtors in their successful restructuring. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. The Debtors emerged from bankruptcy on Jan. 3, 2006. (Mirant Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) * * * As reported in the Troubled Company Reporter on July 17, 2006, Moody's Investors Service downgraded the ratings of Mirant Corporation and its subsidiaries Mirant North America, LLC and Mirant Americas Generation, LLC. The Ba2 rating for Mirant Mid- Atlantic, LLC's secured pass through trust certificates was affirmed. Additionally, Mirant's Speculative Grade Liquidity rating was revised to SGL-2 from SGL-1. The rating outlook is stable for Mirant, MNA, MAG, and MIRMA. Moody's downgraded Mirant Americas Generation, LLC's Senior Unsecured Regular Bond/Debenture, to B3 from B2. Moody's also downgraded Mirant Corporation's Corporate Family Rating, to B2 from B1, and Speculative Grade Liquidity Rating, to SGL-2 from SGL-1. Mirant North America, LLC's Senior Secured Bank Credit Facility, was also downgraded to B1 from Ba3 and its Senior Unsecured Regular Bond/Debenture, to B2 from B1. As reported in the Troubled Company Reporter on July 13, 2006, Fitch Ratings placed the ratings of Mirant Corp., including the Issuer Default Rating of 'B+', and its subsidiaries on Rating Watch Negative following its announced plans to buy back stock and sell its Philippine and Caribbean assets. Ratings affected are Mirant Corp.'s 'B+' Issuer Default Rating and Mirant Mid-Atlantic LLC's 'B+' Issuer Default Rating and the Pass- through certificates' 'BB+/Recovery Rating RR1'. Fitch also placed Mirant North America, Inc.'s Issuer Default Rating of 'B+', Senior secured bank debt's 'BB/RR1' rating, Senior secured term loan's 'BB/RR1' rating, and Senior unsecured notes' 'BB-/RR1' rating on Rating Watch Negative. Mirant Americas Generation, LLC's Issuer Default Rating of 'B+' and Senior unsecured notes' 'B/RR5' rating was included as well. Standard & Poor's Ratings Services also placed the 'B+' corporate credit ratings on Mirant Corp. and its subsidiaries, Mirant North American LLC, Mirant Americas Generating LLC, and Mirant Mid- Atlantic LLC, on CreditWatch with negative implications. MIRANT CORP: Bids for Phil. Facilities Must be in by Month-End -------------------------------------------------------------- Interested buyers of Mirant Corporation's generation facilities located in the Philippines have until the end of August to submit indicative bids, with binding bids due by the end of the year, Reuters reports. Potential bidders have received a short sale document of the asset released by the Company, Charlie Zhu of Reuters says. Japanese conglomerate Marubeni Corp. has confirmed that it is bidding for the Philippine assets, according to Bloomberg News. As previously reported, several parties have expressed their interests to purchase the Philippine units, including The AIG Group, Mitsubishi Corp., China Light and Power, Korea Electric Power, Tokyo Electric, Kyushu Electric, and One Energy. Headquartered in Atlanta, Georgia, Mirant Corporation (NYSE: MIR) -- http://www.mirant.com/-- is an energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03- 46590), and emerged under the terms of a confirmed Second Amended Plan on Jan. 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtors in their successful restructuring. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. The Debtors emerged from bankruptcy on Jan. 3, 2006. (Mirant Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) * * * As reported in the Troubled Company Reporter on July 17, 2006, Moody's Investors Service downgraded the ratings of Mirant Corporation and its subsidiaries Mirant North America, LLC and Mirant Americas Generation, LLC. The Ba2 rating for Mirant Mid- Atlantic, LLC's secured pass through trust certificates was affirmed. Additionally, Mirant's Speculative Grade Liquidity rating was revised to SGL-2 from SGL-1. The rating outlook is stable for Mirant, MNA, MAG, and MIRMA. Moody's downgraded Mirant Americas Generation, LLC's Senior Unsecured Regular Bond/Debenture, to B3 from B2. Moody's also downgraded Mirant Corporation's Corporate Family Rating, to B2 from B1, and Speculative Grade Liquidity Rating, to SGL-2 from SGL-1. Mirant North America, LLC's Senior Secured Bank Credit Facility, was also downgraded to B1 from Ba3 and its Senior Unsecured Regular Bond/Debenture, to B2 from B1. As reported in the Troubled Company Reporter on July 13, 2006, Fitch Ratings placed the ratings of Mirant Corp., including the Issuer Default Rating of 'B+', and its subsidiaries on Rating Watch Negative following its announced plans to buy back stock and sell its Philippine and Caribbean assets. Ratings affected are Mirant Corp.'s 'B+' Issuer Default Rating and Mirant Mid-Atlantic LLC's 'B+' Issuer Default Rating and the Pass- through certificates' 'BB+/Recovery Rating RR1'. Fitch also placed Mirant North America, Inc.'s Issuer Default Rating of 'B+', Senior secured bank debt's 'BB/RR1' rating, Senior secured term loan's 'BB/RR1' rating, and Senior unsecured notes' 'BB-/RR1' rating on Rating Watch Negative. Mirant Americas Generation, LLC's Issuer Default Rating of 'B+' and Senior unsecured notes' 'B/RR5' rating was included as well. Standard & Poor's Ratings Services also placed the 'B+' corporate credit ratings on Mirant Corp. and its subsidiaries, Mirant North American LLC, Mirant Americas Generating LLC, and Mirant Mid- Atlantic LLC, on CreditWatch with negative implications. MIRANT CORP: Court Approves $520-Million Settlement with PEPCO -------------------------------------------------------------- The Honorable Michael D. Lynn of the U.S. Bankruptcy Court for the Northern District of Texas approves the settlement agreements among Reorganized Mirant Corp. and its debtor-affiliates, Potomac Electric Power Company and Southern Maryland Electric Cooperative, Inc., and overrules the objection filed by certain Class 3 Claim Holders. In a 30-page Memorandum Opinion, Judge Lynn says he finds the $520,000,000 settlement amount to be reasonable given: * the potential magnitude of claim underlying the Back-to-Back Agreement; * the uncertainties that could arise from further litigation over rejection of the BTB or the Asset Purchase and Sale Agreement; and * the facial appeal of the additional claims asserted by PEPCO. At the July 5, 2006, hearing, the Court, with the assistance of Peter Schaulb, a manager at PEPCO, calculated that the claim to which PEPCO would be entitled by reason of rejection of the Back- to-Back would approximately total $450,000,000, considering the interest from commencement of the case up to May 31, 2006, the date of rejection. Quantification of the BTB claim is based on discounting projected losses over the remaining life of the BTB to present value at a rate of approximately 8%. The Court notes that PEPCO asserts additional claims for more than $70,000,000. Judge Lynn says PEPCO may be entitled to professional fees for which it has made no claim. In addition, contrary to the Claim Holders' assertion, rejection of the BTB and satisfaction of PEPCO's Claim pursuant to the Settlement provides for tax benefits to Mirant, Judge Lynn points out. It is not true that PEPCO's treatment is better, the Court adds. If PEPCO were to receive treatment as provided in the Plan, Mirant would: -- have distributed to it 22,297,600 of common shares; and -- be entitled to a share in litigation proceeds pursuant to Plan. Under the Settlement, however, PEPCO will receive no distributions pursuant to Plan, the Court notes. As of July 19, 2006, Mirant's stock is trading at $26.64 per share. Hence, Judge Lynn says, far fewer shares, less than 20,000,000, are necessary to satisfy PEPCO's $450,000,000 claim under the Settlement. "[I]t is clearly reasonable that management, as part of the Debtors' reorganization, should want to convert the substantial, uncertain future liabilities associated with the [Back-to-Back Agreement] into a claim satisfied largely through the issuance of Mirant's stock," Judge Lynn notes. Judge Lynn finds that the Settlement is a product of arm's-length bargaining, and Mirant's decision to negotiate and enter into the Settlement clearly was not taken lightly. The Court also finds that the assumption of the Facility and Capacity Credit Agreement is appropriate. The assumption of the FCC is an integral part of the Settlement. If the FCC is not assumed, the Settlement cannot go forward, Judge Lynn says. The Court further points out that the Settlement is "unfortunately structured so that it may unduly encourage the Claim Holders to appeal the decision." Since the Settlement requires that the order approving it be final prior to its implementation, Judge Lynn authorizes the parties to waive, at will and in their sole discretion, "the necessity to implementation of a final order approving the Settlement [sic]." A full-text copy of Judge Lynn's Memorandum Opinion is available for free at http://ResearchArchives.com/t/s?fb5 Headquartered in Atlanta, Georgia, Mirant Corporation (NYSE: MIR) -- http://www.mirant.com/-- is an energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03- 46590), and emerged under the terms of a confirmed Second Amended Plan on Jan. 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtors in their successful restructuring. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. The Debtors emerged from bankruptcy on Jan. 3, 2006. (Mirant Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service -- http://bankrupt.com/newsstand/-- Inc., 215/945-7000, http://bankrupt.com/newsstand/)) * * * As reported in the Troubled Company Reporter on July 17, 2006, Moody's Investors Service downgraded the ratings of Mirant Corporation and its subsidiaries Mirant North America, LLC and Mirant Americas Generation, LLC. The Ba2 rating for Mirant Mid- Atlantic, LLC's secured pass through trust certificates was affirmed. Additionally, Mirant's Speculative Grade Liquidity rating was revised to SGL-2 from SGL-1. The rating outlook is stable for Mirant, MNA, MAG, and MIRMA. Moody's downgraded Mirant Americas Generation, LLC's Senior Unsecured Regular Bond/Debenture, to B3 from B2. Moody's also downgraded Mirant Corporation's Corporate Family Rating, to B2 from B1, and Speculative Grade Liquidity Rating, to SGL-2 from SGL-1. Mirant North America, LLC's Senior Secured Bank Credit Facility, was also downgraded to B1 from Ba3 and its Senior Unsecured Regular Bond/Debenture, to B2 from B1. As reported in the Troubled Company Reporter on July 13, 2006, Fitch Ratings placed the ratings of Mirant Corp., including the Issuer Default Rating of 'B+', and its subsidiaries on Rating Watch Negative following its announced plans to buy back stock and sell its Philippine and Caribbean assets. Ratings affected are Mirant Corp.'s 'B+' Issuer Default Rating and Mirant Mid-Atlantic LLC's 'B+' Issuer Default Rating and the Pass- through certificates' 'BB+/Recovery Rating RR1'. Fitch also placed Mirant North America, Inc.'s Issuer Default Rating of 'B+', Senior secured bank debt's 'BB/RR1' rating, Senior secured term loan's 'BB/RR1' rating, and Senior unsecured notes' 'BB-/RR1' rating on Rating Watch Negative. Mirant Americas Generation, LLC's Issuer Default Rating of 'B+' and Senior unsecured notes' 'B/RR5' rating was included as well. Standard & Poor's Ratings Services also placed the 'B+' corporate credit ratings on Mirant Corp. and its subsidiaries, Mirant North American LLC, Mirant Americas Generating LLC, and Mirant Mid- Atlantic LLC, on CreditWatch with negative implications. NBTY INC: To Acquire Zila Nutraceuticals for $40 Million in Cash ---------------------------------------------------------------- NBTY, Inc. entered into a contract to acquire Zila Nutraceuticals, Inc., manufacturer and marketer of the Ester-C(R) nutritional supplement brand. Zila Nutraceuticals is a business unit of Zila, Inc. NBTY will purchase the stock of Zila Nutraceuticals Inc. for approximately $40 million in cash, including up to a $3 million contingent payment which is based upon EBITDA performance. The transaction, which is subject to the approval of Zila, Inc. shareholders, is expected to close by October 2006. Zila Nutraceuticals had $18 million in net revenue for the nine months ended April 30, 2006. "The acquisition of Ester-C(R) expands our broad array of superior quality products with a well-recognized brand having strong consumer appeal," NBTY Chairman and CEO, Scott Rudolph, said. "Ester-C(R) is known throughout multiple markets including health food stores and mass market retailers and its acquisition represents an opportunity for NBTY to enhance its presence in key markets." About Zila Inc. Headquartered in Phoenix, Arizona, Zila, Inc. (Nasdaq: ZILA) -- http://www.zila.com/-- provides quality healthcare products worldwide. About NBTY Headquartered in Bohemia, New York, NBTY, Inc. (NYSE: NTY) -- http://www.NBTY.com/-- manufactures, markets and distributes nutritional supplements in the United States and throughout the world. * * * As reported in the Troubled Company Reporter on Aug. 14, 2006, Standard & Poor's Ratings Services raised its bank loan rating for NBTY Inc., to 'BB+' from 'BB', and raised the recovery rating to '1' from '2'. At the same time, Standard & Poor's revised its outlook to stable from negative and affirmed the 'BB' corporate credit rating and all other ratings on NBTY. The '1' recovery rating indicates the expectation of a full recovery of principal in the event of a default. Approximately $227.4 million of total debt was outstanding at June 30, 2006. NEOMEDIA TECHNOLOGIES: Earns $4.9 Mil. in Second Quarter of 2006 ---------------------------------------------------------------- NeoMedia Technologies, Inc., filed its second quarter financial statements for the three months ended June 30, 2006, with the Securities and Exchange Commission on Aug. 9, 2006. The Company reported net income of $4.927 million on $6.606 million of total net sales for the second quarter ended June 30, 2006, compared with a $2.389 million net loss on $538,000 of total net sales for the same period in 2005. At June 30, 2006, the Company's balance sheet showed $89.091 million in total assets, $30.291 million in total current liabilities, $2.327 million in preferred stock, and $56.473 million in total stockholders' equity. Mobot Acquisition On Feb. 9, 2006, NeoMedia and Mobot -- http://www.mobot.com/-- signed a definitive merger agreement, under which NeoMedia acquired all of the outstanding shares of Mobot in exchange for $3,500,000 cash and 16,931,493 shares of NeoMedia common stock (2,604,845 of which are being held in escrow for a period of one year from the closing date for the purpose of securing the indemnification obligations outlined in the purchase agreement). On Feb. 17, 2006, NeoMedia and Mobot completed the closing requirements and the acquisition became effective. Pursuant to the terms of the merger agreement, the number of shares of NeoMedia common stock to be issued as stock consideration was calculated using a share price of $0.3839, which was the volume- weighted average closing price of NeoMedia common stock for the 10 days up to and including Feb. 8, 2006. In the event that NeoMedia's stock price (at the time the consideration shares are saleable) is less than $0.3839, NeoMedia is obligated to compensate Mobot shareholders in cash for the difference between the price at the time the shares become saleable and $0.3839. Assuming a stock price at the time the shares become saleable of $0.165, which was the last sale price on July 21, 2006, NeoMedia would have a cash liability of $3.7 million resulting from this clause. In addition to cash and stock, at closing NeoMedia forgave notes payable totaling $1,500,000 due from Mobot. Going Concern Doubt Stonefield Josephson, Inc., in Irvine, Calif., raised substantial doubt about NeoMedia Technologies, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's significant operating losses, negative cash flows from operations, and working capital deficit. About NeoMedia Technologies Based in Fort Myers, Fla., NeoMedia Technologies, Inc., develops proprietary technologies that link physical information and objects to the Internet marketed under the PaperClick(R) brand name. NeoMedia has also developed an extensive patent portfolio covering convergence of the physical world and the Internet. OWENS CORNING: Bondholders Agrees to Toll Action Against Banks -------------------------------------------------------------- As previously reported, representatives of all major constituencies in the chapter 11 cases of Owens Corning and its debtor-affiliates, including the Debtors, the Steering Committee of Bank Holders, members of the Official Committee of Unsecured Creditors who represent bondholder and trade creditor constituencies, the Asbestos Claimants' Committee, the Future Claimants' Representative, the Ad Hoc Equity Holders' Committee, and the Ad Hoc Bondholders' Committee, executed a Settlement Term Sheet outlining the agreed upon terms of a revised plan of reorganization, including the summary of treatment to be provided to the various classes of creditors. The major parties-in- interest, except the Steering Committee, entered into a related Plan Support Agreement and Equity Commitment Agreement. The Term Sheet provisions were incorporated in the Sixth Amended Joint Plan of Reorganization and accompanying Disclosure Statement filed with the Court in June 2006. At the Court's direction, and in light of the parties' agreement on the terms of a consensual plan, the Official Bondholder/Trade Creditor Representatives stipulate with: (1) IPM, Inc., Vytec Corporation and Owens-Corning Fiberglass Sweden, Inc.; and (2) Credit Suisse, Cayman Islands Branch, individually and in its capacity as agent for the Debtors' bank lenders, and several other banks, to toll and stay certain adversary proceedings, including all currently pending motions and matters. The Official Representatives are engaged in various activities relating to two pending adversary proceedings: 1. Adversary Proceeding No. 02-05829 commenced by the Debtors and certain of its non-debtor affiliates on October 3, 2002, seeking to avoid as fraudulent conveyances their obligations as subsidiary guarantors under a credit agreement with the Banks; and 2. Adversary Proceeding No. 02-05829 commenced by the Official Representatives on January 6, 2006, seeking to equitably subordinate the Banks' claims and to pierce the corporate veil of certain of Owens Corning's non-debtor subsidiaries. The Banks have (i) sought dismissal of the equitable subordination actions and (ii) objected to the Bondholders' request for standing to pursue the fraudulent conveyance claims. The Banks noted that the actions go to the heart of their recovery on their claims against the Debtors. The parties agree to toll and stay the actions so long as confirmation proceedings related to the Sixth Amended Plan remain pending. If the Plan becomes effective, the actions and related matters will be dismissed, with prejudice. Any statutes of limitations applicable to any additional claims or causes of action between the parties are tolled through the stay period. The Stipulation does not reinstate any claim or cause of action that has been barred for any reason on or before May 10, 2006. All plaintiffs and defendants who have entered an appearance in the Litigation, except Dexia Bank, consent to the Stipulation. Due to logistical problems contacting persons at Dexia Bank responsible for consenting to the Stipulation, Dexia Bank has not yet indicated whether it consents. Neither Dexia Bank nor those Defendants that have not entered their appearances in the Litigation will be prejudiced by the Stipulation. A list of the Settling Defendants is available at no charge at http://ResearchArchives.com/t/s?f99 Defendants that have not entered their appearances are: * Bankers Trust Company n/k/a Deutsche Bank Trust Company Americas; * CIC-Union Europeenne; * Mainstay Funds; * Oaktree Capital Management LLC; and * STB Delaware Funding Trust I 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, http://bankrupt.com/newsstand/) OWENS CORNING: Objects to Roger Bell's Infringement Claim --------------------------------------------------------- Roger D. Bell worked as a technical writer and as marketing communications supervisor/manager for Owens Corning from February 1972 through October 1986. After 1986, Owens Corning periodically engaged Mr. Bell through his consulting firm, Bell & Associates, to assist in developing and revising works pertaining to certain Owens Corning's marketing materials. Mr. Bell alleges that between November 1998 and June 2000, he registered or applied to register copyrights in 17 of the brochures, technical pieces, illustrations and photography he did for Owens Corning with the U.S. Copyright Office. He claims to be the sole proprietor of all right, title and interest in and to the Copyrights. In August 2000, Mr. Bell filed a complaint in the U.S. District Court for the Northern District of Ohio, alleging that Owens Corning and other parties infringed on his Copyrights. The action has been stayed. Mr. Bell also filed a claim in February 2002, asserting a contingent, unliquidated claim for "not less than $800,000." The Debtors deny any liability to Mr. Bell under the Copyright Act or any applicable law. Accordingly, the Debtors ask Judge Fitzgerald to disallow and expunge the claim. The Debtors contend that Mr. Bell cannot prove ownership of valid copyright in his works. Mr. Bell's works were created while he was an Owens Corning employee, hence, those works are deemed "works made for hire" and copyright vests with Owens Corning. Moreover, the Debtors assert that they have a valid license to exploit Mr. Bell's Works. The Works are "derivative works" of prior copyrighted works validly owned by the Debtors, and Mr. Bell's registration of the Works is procedurally defective. Mr. Bell was also a paid consultant. Therefore, Owens Corning has a paid-up license to exploit his works in a manner consistent with the company's prior use of similar works. 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, http://bankrupt.com/newsstand/) PARMALAT USA: Court Denies Reinstatement of Minguito's Claim ------------------------------------------------------------ The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York denied the request of the decedent's estate of Benjamin Minguito to reconsider and vacate the order expunging its Claim No. 614 as against Farmland Dairies, LLC. The Court declared that Claim No. 614 may be asserted to enable the Minguito Estate to recover any available insurance proceeds from insurance policies maintained by the Debtors at the time of the accident. Except for the right to seek and recover the insurance proceeds, as may be available, Claim No. 614 is and remains disallowed and expunged, and the Minguito Estate is not permitted to assert any other recovery pursuant to the Claim. The Minguito Estate's Claim No. 614 asserted unliquidated amount for personal injury or wrongful death, contending that under Section 502(a) of the Bankruptcy Code, the claim is presumed allowable. The Debtors objected to the claim arguing that the Farmland Trust had been operating for many months on the belief that the ongoing personal injury or wrongful death proceedings in the state court are fundamentally irrelevant. In addition, the Debtors argued that granting the request would also encourage holders of disallowed claims to flood the Court with similar motions. About Parmalat Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. (Parmalat Bankruptcy News, Issue No. 75; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) PARMALAT USA: Carmen Green Wants Stay Lifted to Pursue Lawsuit -------------------------------------------------------------- Carmen Green asks the U.S. Bankruptcy Court for the Southern District of New York to vacate the automatic stay so she may pursue a lawsuit in the New Jersey Superior Court. Ms. Green sued, among others, Sunnydale Farms, a business unit of Farmland Dairies, LLC, for damages as a result of personal injuries she sustained from a 2002 accident involving a vehicle owned by Sunnydale. According to Frank A. Tobias, Esq., at Tobias & Kaplan, in Perth Amboy, New Jersey, Sunnydale was insured through a Lubermen's Mutual Casualty Company policy, which was in effect and provided coverage for the loss at the time of the accident. Ms. Green believes that the automobile liability insurance coverage for the claim is sufficient to cover the damages for her sustained injury. Thus, Ms. Green will not seek collection of amounts in excess of that provided by the insurance policy. Ms. Green also assures the Debtors that she will not pursue their estate for additional compensation. Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. (Parmalat Bankruptcy News, Issue No. 75; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) PENN NATIONAL: Earns $42.7 Million in Second Quarter Ended June 30 ------------------------------------------------------------------ Penn National Gaming, Inc., earned $42.7 million of net income on $537.8 million of net revenues for the three months ended June 30, 2006, compared to $12.1 million of net income on $296.2 million of net revenues in 2005, the Company disclosed in a Form 10-Q filing delivered to the Securities and Exchange Commission on Aug. 9, 2006. Commenting on the financial results, Peter M. Carlino, Chairman and Chief Executive Officer of Penn National said, "Penn National's record 2006 second quarter operating results exceeded the Company's financial guidance for the period as we benefited from the successful integration of the five Argosy Gaming properties -- including year-over-year EBITDA improvements at the four largest acquired properties -- and 'same property' EBITDA gains at five of the six other Penn National casinos. In addition, Hollywood Slots at Bangor's EBITDA contribution improved 27% over the first quarter of 2006." "Following last year's hurricane damage, Penn National's Boomtown Biloxi facility re-opened late in the second quarter with a re- modeled interior, approximately 1,100 new slots, 22 table games and a 350-seat buffet. We are delighted that, through the efforts of our redevelopment teams, the property re-opened ahead of schedule and to a strong response from local patrons. In early September, Boomtown will open its pier-based expansion with 400 additional slot machines and a full service restaurant. We are now focused on finishing renovations at our Bay St. Louis, Mississippi casino, which will be re-named Hollywood Casino Bay St. Louis upon re-opening in the fall. We'll initially re-launch this property as a 30,000 square foot temporary casino in the property's former hotel lobby, which we plan to replace with a permanent land-based casino. In addition, the damaged areas of the existing 290-room hotel tower are being completely refurbished. Upon opening, Hollywood Casino Bay St. Louis will initially feature approximately 20 table games and approximately 850 slot machines, with room to expand to 1,270 slots." "In addition to near-term growth to be realized from the re- openings, there have been several recent developments related to our pipeline of expansion and development opportunities, including Argosy Casino Lawrenceburg's casino and parking project; the Hollywood Casino at Penn National; the temporary and permanent facilities at Hollywood Slots at Bangor; Charles Town's casino, parking and food and beverage expansions; and, the hotel at Argosy Casino Riverside." "While Argosy Casino Lawrenceburg recorded a year-over-year EBITDA gain, the property remains capacity constrained and is adversely impacted by its current three-tier layout. We have increased the budget for the new two-level Lawrenceburg barge by approximately 17% to $310 million, which reflects the current environment for construction and materials costs and enables us to add 400 additional gaming positions, including a 30-table poker room, which were not contemplated in the original budget." "Late in the second quarter, the Pennsylvania Gaming Control Board licensed 12 slot distributors in the state, and the Chairman of the PGCB has indicated that conditional Category 1 licenses should be issued by the end of September. We will begin construction on the integrated racing and slots facility at Penn National Race Course this August. Given that nearly two years have elapsed since the facility's initial plans were conceived, the construction budget has been increased by 18% to $310 million. The increased budget reflects a rise in construction and materials costs during this time and a refinement of our development plans. We remain highly confident that Hollywood Casino at Penn National will prove to be an exciting entertainment destination for patrons, while delivering excellent returns for our shareholders." "With growing patronage and play, the Hollywood Slots at Bangor temporary facility is generating strong annualized EBITDA returns and we continue to advance plans to build a permanent facility in the market. During the second quarter, the Bangor City Council approved a series of agreements that pave the way for the development of a permanent Bangor slot site including a parking garage, restaurants and retail space. Construction on the facility, which will open with 1,000 slots and have capacity for 1,500 gaming machines, is planned to commence in early 2007, subject to securing one remaining leaseholder agreement. The construction budget has been increased by $19 million to $90 million, which reflects increased construction costs and a refinement of our development plans." "On the legislative front the state of Illinois passed House Bill 1918 effective May 26 which singled out four casinos for a 3% tax surcharge to subsidize local horse racing interests. As such, second quarter 2006 results were impacted by this higher gaming tax, which amounted to $1.5 million during the period, and we will continue to pay this tax in upcoming periods. Prior to the passage of this law, questions were raised regarding its constitutionality. After it was enacted, Empress Casino Hotel and Hollywood Casino Aurora joined with the two other riverboats affected by the law (Harrah's Joliet and the Grand Victoria Casino in Elgin) and filed suit asking the Court to declare the law unconstitutional. The State agreed to the entry of an order that establishes a protest fund for all of the surcharge payments and enjoins the Treasurer from making any payments out of that fund pending the final outcome of the litigation. Should the casinos prevail with their challenge, the incremental taxes paid under protest would be refunded. We anticipate a long process before a resolution to this matter can be reached." "In Ohio, as the owner of Raceway Park in Toledo, Penn National Gaming continues to provide support for a proposed constitutional amendment that would establish a tuition grant program for Ohio students to attend public or private colleges in the state. This program would generate nearly $1 billion per year in college scholarships while an additional $200 million per year would be earmarked to local governments for attracting new business and jobs, by allowing slot machines at the state's seven racetracks and two locations in downtown Cleveland. The state's three major horsemen's groups including the Ohio Harness Horsemen's Association, the Ohio Horsemen's Benevolent and Protective Association, and the Ohio Thoroughbred Breeders and Owners have all voted to support the amendment. The Learn and Earn Committee has now collected over 600,000 signatures ahead of the Aug. 9, 2006 deadline to qualify the initiative for the ballot in November." "With the benefit of acquisition integration and synergies, organic growth and the resumption of operations at our Gulf Coast properties, Penn National will continue to deliver outstanding financial growth in 2006 and beyond. It should be noted that the earnings growth anticipated in the third quarter and revised full year guidance is inclusive of the Illinois tax increase, which alone amounts to approximately $8 million in the second half of 2006, as well as increased insurance costs related to windstorm and flood coverage. In addition, with a strong base of existing operations, a diversified, staggered development pipeline with an emphasis on strong returns on invested capital, we have a visible growth trajectory for several years. Finally, we continue to regularly evaluate acquisition opportunities in the gaming industry, including destination markets, where we can expand our operating base while generating attractive returns that will bring value to our shareholders." A full-text copy of the Company's Quarterly Report is available for free at http://researcharchives.com/t/s?fa9 Penn National Gaming, Inc. -- http://www.pngaming.com/-- owns and operates casino and horse racing facilities with a focus on slot machine entertainment. The Company presently operates fifteen facilities in thirteen jurisdictions including Colorado, Illinois, Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, New Jersey, Ohio, Pennsylvania, West Virginia, and Ontario. In aggregate, Penn National's facilities feature over 17,500 slot machines, over 400 table games, over 2,000 hotel rooms and approximately 575,000 square feet of gaming floor space. The property statistics in this paragraph exclude two Argosy properties which the company anticipates divesting, but are inclusive of the Company's Casino Magic - Bay St. Louis, in Bay St. Louis, Mississippi and the Boomtown Biloxi casino in Biloxi, Mississippi, which remain closed following extensive damage incurred as a result of Hurricane Katrina. * * * As reported in the Troubled Company Reporter on Feb. 2, 2006, Moody's Investors Service raised the ratings of Penn National Gaming, Inc., and assigned a stable ratings outlook, including its Corporate family rating, to Ba2 from Ba3; $750 million revolver due 2010, to Ba2 from Ba3; $325 million term loan due 2011, to Ba2 from Ba3; $1,650 million term loan B due 2012, to Ba2 from Ba3; $175 million 8.875% guaranteed senior subordinated notes due 2010, to Ba3 from B2; $200 million 6.875% guaranteed senior subordinated notes due 2011, to Ba3 from B2; and $250 million 6.750% not guaranteed senior subordinated notes due 2015, to B1 from B3. As reported in the Troubled Company Reporter on Jan. 16, 2006, Standard & Poor's Ratings Services raised its ratings on casino owner and operator Penn National Gaming Inc., including its issuer credit rating to 'BB' from 'BB-'. PENN OCTANE: Amends and Restates Lease Agreement with Seadrift -------------------------------------------------------------- Penn Octane Corporation and Seadrift Pipeline Corporation, a subsidiary of The Dow Chemical Company, entered into an amended and restated lease agreement for the Ella-Brownsville pipeline. The pipeline runs approximately 132 miles from Exxon Mobil Corporation's King Ranch Gas Plant to the Company's Brownsville terminal facility. The Amended Lease will expire on December 31, 2013. The Amended Lease provides that, the Company will have the exclusive right to transport materials through the Ella- Brownsville pipeline, and Seadrift will no longer have certain rights to utilize the pipeline for its own purposes. In addition, the Company will no longer be required to make minimum payments for propane storage in Markham, Texas and will no longer have access to the storage. The Company will also no longer have access to the Ella-Seadrift pipeline. The Company disclosed that it has agreed to indemnify Seadrift for environmental liabilities, including claims relating to the condition of the leased property and any environmental remediation costs, arising after September 1, 1993. Seadrift has agreed to indemnify the Company for similar environmental liabilities arising before September 1, 1993. The Company's lease payments will now be a fixed annual amount of $1.6 million. Headquartered in Palm Desert, California, Penn Octane Corporation (NASDAQ:POCC) -- http://www.pennoctane.com/-- formerly known as International Energy Development Corporation buys, transports and sells liquefied petroleum gas for distribution in northeast Mexico, and resells gasoline and diesel fuel. The Company has a long-term lease agreement for approximately 132 miles of pipeline, which connects ExxonMobil Corporation's King Ranch Gas Plant in Kleberg County, Texas and Duke Energy's La Gloria Gas Plant in Jim Wells County, Texas, to the Company's Brownsville Terminal Facility. Going Concern Doubt As reported in the Troubled Company Reporter on May 4, 2006, Burton McCumber & Cortez, L.L.P., Brownsville, Texas, raised substantial doubt about the ability of Penn Octane Corporation to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2005. Burton McCumber pointed to the Company's insufficient cash flow to pay its obligations when due, inability to obtain additional financing because substantially all of the Company's assets are pledged or committed to be pledged as collateral on existing debt, existing credit facility may be insufficient to finance its liquefied petroleum gas and Fuel Sales Business, and working capital deficiency. PLIANT CORP: Enters into Registration Rights Agreement ------------------------------------------------------ As contemplated in its Plan or Reorganization, on July 18, 2006, Pliant Corporation entered into a Registration Rights Agreement that is binding on all parties receiving shares of the company's Series AA Redeemable Preferred Stock, $0.01 par value per share. Joseph Kwederis, senior vice president and chief financial officer of Pliant Corp., relates that the Registration Rights Agreement requires the company to take all actions reasonably required to permit the Series AA Preferred Stock to be quoted on the NASDAQ OTC Bulletin Board as soon as practicable after the Plan's Effective Date. The Registration Rights Agreement provides that at any time after nine months and prior to the second anniversary of the Plan's Effective Date, certain holders of the Series AA Preferred Stock can require New Pliant to register an underwritten public offering of the Series AA Preferred Stock. A full-text copy of the Registration Rights Agreement is available for free at http://ResearchArchives.com/t/s?f9c 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, http://bankrupt.com/newsstand/) PLIANT CORP: Inks Indenture Supplement to Up Interest on Sr. Notes ------------------------------------------------------------------ On July 18, 2006, Pliant Corporation entered into a First Supplemental Indenture with respect to the Amended and Restated Indenture dated as of May 6, 2005, among itself, certain of its subsidiaries and Wilmington Trust Company, as trustee, with respect to the company's 11-5/8% Senior Secured Notes due 2009 and 11-1/8% Senior Secured Discount Notes due 2009. Joseph Kwederis, senior vice president and chief financial officer of Pliant, discloses that the Amended and Restated Indenture was amended to increase the interest rate by 0.225% with respect to the Senior Secured Notes, which additional interest will accrue as payment-in-kind interest. As a result, effective July 18, 2006, the interest rates on the 11-5/8% Senior Secured Notes was increased to 11.85% per annum and the interest rate on the 11-1/8% Senior Secured Discount Notes was increased to 11.35% per annum, Mr. Kwederis relates Pursuant to the Amended and Restated Indenture, the consent of the holders of the Senior Secured Notes was not required in connection with the execution of the First Supplemental Indenture, Mr. Kwederis clarifies. A full-text copy of the First Supplemental Indenture on the Secured Notes due 2009 is available for free http://ResearchArchives.com/t/s?f9b 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, http://bankrupt.com/newsstand/) POPE & TALBOT: Incurs $14.508 Million Net Loss in Second Quarter ---------------------------------------------------------------- Pope & Talbot, Inc., incurred a $14.508 million net loss on $213.561 million of net revenues during the second quarter ending June 30, 2006, the Company disclosed in a Form 10-Q filing delivered to the Securities and Exchange Commission on Aug. 3, 2006. As of June 30, 2006, the Company's balance sheet showed assets amounting to $675.773 million and liabilities totaling $581.444 million. As of June 30, 2006, the Company's equity narrowed to $94.329 million from $112.032 million equity at Dec. 31, 2005. Liquidity and Capital Resources On June 28, 2006, the Company entered into a new $325 million credit agreement and borrowed $250 million under the new facilities to terminate and repay all outstanding borrowings under its prior Canadian and U.S. revolving credit facilities, its Halsey pulp mill lease financings, and its receivable sales arrangement. The Company recorded a $4.9 million loss on extinguishment of debt as a result of this transaction. The total debt to total capitalization ratio was 80% at June 30, 2006, compared with 75 percent at December 31, 2005. Total debt increased from $332.0 million at December 31, 2005, to $384.0 million at June 30, 2006. The increase in the debt ratio was due to a $17.7 million reduction in total stockholders' equity resulting primarily from the net loss in the first six months of 2006, and an increase in borrowing under the new credit facilities. Cash requirements in the first six months of 2006 included $15.0 million for capital expenditures, $23.9 million to repurchase accounts sold under the receivables purchase agreement, $18.4 million in fees associated with the new senior secured credit facilities and $3.6 million for debt extinguishment costs associated with repayment of the Halsey pulp mill lease financings. Going Concern Doubt As reported in the Troubled Company Reporter on May 8, 2006, KPMG LLP in Portland, Oregon, raised substantial doubt about Pope & Talbot, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the years ended Dec. 31, 2004, and 2005. The auditor pointed to the Company's recurring losses; inability to comply with financial covenants; inability to refinance or renew maturing debt and comply with financial covenants in future periods. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?f74 Based in Portland, Oregon, Pope & Talbot, Inc. (NYSE: POP) -- http://www.poptal.com/-- is a North American forest products company. Pope & Talbot was founded in 1849 and produces pulp and softwood lumber in the U.S. and Canada. Markets for the Company's products include: the U.S.; Europe; Canada; South America; Japan; and other Pacific Rim countries. * * * As reported in the Troubled Company Reporter on June 22, 2006, Moody's Investors Service downgraded Pope & Talbot Inc.'s senior unsecured debt rating to Caa2 from Caa1. The rating action was prompted by news that the company plans to refinance certain indebtedness. PORTLAND GENERAL: Earns $27 Million in Second Quarter of 2006 ------------------------------------------------------------- Portland General Electric Company reported net income of $27 million for the second quarter ending June 30, 2006, compared with net income of $16 million for the second quarter 2005. Customer growth and increased energy use across all major customer classes as well as improved margins on energy sales, driven by favorable hydro conditions, contributed to the earnings increase. The Company also had reduced maintenance expenses at thermal generating plants and a reduction in administrative and other expenses. However, the Company took a $9 million reserve ($5 million after-tax) related to Senate Bill 408 (SB 408), a new Oregon law related to the rate treatment of income taxes. Operating revenues of $351 million for the second quarter 2006 reflect a 5.4% increase compared with the prior year's second quarter revenues of $333 million. The revenue increase was driven by an increase in the average number of customers served and warmer weather as compared to the second quarter of 2005. A Jan. 1, 2006, rate increase related to higher power costs also contributed to the increase. Increased revenues were partially offset by the reserve taken related to PGE's current assessment of the Oregon Public Utility Commission's interim order on SB 408. "Ongoing growth in our service territory and good hydro conditions drove strong financial results for the second quarter," Peggy Fowler, chief executive officer and president of Portland General Electric Company, said. "The dedication of PGE employees and ongoing investment in our infrastructure enables us to continue to provide safe, reliable energy to our growing customer base." As of June 30, 2006, PGE served approximately 791,000 customers as compared to approximately 777,000 on June 30, 2005, a 1.8% increase. For the second quarter ended June 30, 2006, the Company reported net income of $27 million compared with $16 million of net income for the same period in 2005. At June 30, 2006, the Company's balance sheet showed $3.556 billion in total assets, $2.354 billion in total liabilities, and $1.202 billion in total stockholders' equity. Second Quarter 2006 Summary -- Total retail energy deliveries for the period increased 5.3% (3.1% weather adjusted) to 4,575,000 MWhs in 2006 from 4,346,000 MWhs in 2005. -- On June 26, 2006, the Company broke its previous all-time high net system load summer peak of 3,586 MWs as temperatures exceeded 100 F. -- Total operating revenues increased by 5.4% to $351 million in 2006 from $333 million in 2005. This was primarily the result of a 3.7% rate increase effective Jan. 1, 2006, and energy usage increases of 2.0%, 5.2%, and 19.7% for residential, commercial and industrial customer classes, respectively. The industrial increase was due primarily to two large customers who returned to PGE energy service. In addition, operating revenues were reduced by $9 million due to the reserve taken related to SB 408. -- Purchased power and fuel increased by $12 million primarily due to increased loads and approximately $8 million of incremental power costs that were incurred during the second quarter of 2006 to replace the output of the Boardman Power Plant, which returned to full operation on July 1, 2006. These increases were partially offset by favorable regional hydro conditions. -- Production, distribution, administrative and other expenses decreased by $3 million compared to last year's second quarter. Year-to-Date 2006 For the six months ending June 30, 2006, net income was $21 million compared with $54 million for the same period in 2005. The principle drivers for the decrease were replacement power costs related to the unplanned outages at the Company's Boardman Power Plant, unrealized mark-to-market losses on power and natural gas contracts and a reserve related to SB 408. These factors were partially offset by good regional hydro conditions and increased energy sales. Operating revenues were $732 million compared with $704 million for the same period in 2005. The 4.0% increase was driven by an increase in customers served; colder weather in the first quarter and warmer weather in the second quarter as compared to the respective quarters in 2005; and a Jan. 1, 2006, rate increase related to higher power costs. PGE ceased to be a subsidiary of Enron Corp. on April 3, 2006, with the issuance of 62.5 million shares of new common stock, of which approximately 35 million shares were issued to a Disputed Claims Reserve for future distribution to Enron creditors with allowed and settled claims. The stock, listed on the New York Stock Exchange, began regular way trading on April 10, 2006. Approximately 815,000 shares were distributed from the Disputed Claims Reserve on June 1, 2006, reducing the number of shares held in the Reserve to approximately 55% of total shares outstanding. Year-to-Date 2006 Summary -- Total retail energy deliveries increased 4.8% (2.1% weather adjusted) to 9,595,000 MWhs in 2006 from 9,152,000 MWhs in 2005. -- Total operating revenues increased by 4.0%, to $732 million in 2006 from $704 million in 2005. This was primarily the result of a 3.7% rate increase effective Jan. 1, 2006, and energy usage increases of 5.3%, 4.0%, and 12.7% for residential, commercial and industrial customer classes, respectively. In addition, operating revenues were reduced by $9 million due to the reserve related to SB 408. -- Purchased power and fuel increased by $102 million primarily due to increased loads, unrealized mark-to-market losses and approximately $52 million of incremental power costs incurred during the first half of 2006 to replace the output of the Boardman Power Plant. These increases were partially offset by favorable regional hydro conditions. The mark-to-market impact included $25 million of unrealized net losses on derivative activities in the first half of 2006 compared to $12 million of unrealized net gains in the first half of 2005. It is expected that the 2006 unrealized mark-to-market losses will reverse during the remainder of the year upon settlement of the related contracts. -- Increased stream flows in both the Clackamas and Deschutes river systems, where PGE generating facilities are located, resulted in a 44% increase in Company-owned hydro generation compared to the first half of 2005. In addition, improved regional hydro conditions resulted in a 22% increase in output received from mid-Columbia River hydro projects with which PGE has long-term power purchase contracts. -- Production, distribution, administrative and other expenses increased by $1 million compared to last year's first half. Capital Expenditures PGE's capital expenditures for 2006 are expected to be approximately $358 million compared to actual 2005 expenditures of $255 million. Capital expenditures for 2006 consist of $189 million for ongoing production, transmission and distribution facilities and $159 million for Port Westward, the Company's new natural gas-fired plant, currently under construction in Clatskanie, Ore., and expected to come online in the first quarter of 2007. The 2006 estimate also includes $10 million for the Biglow Canyon wind farm and advanced metering infrastructure. Dividend On Aug. 1, 2006, the PGE board of directors approved a quarterly common stock dividend of 22.5 cents per share. The dividend is payable on Oct. 16, 2006, to shareholders of record at the close of business on Sept. 25, 2006. Senate Bill 408 On July 14, 2006, the OPUC issued an interim order that sets forth preliminary decisions regarding the implementation of SB 408. The intent of SB 408 is to ensure that the amount collected from customers for income taxes matches the amount paid to governmental entities by investor-owned utilities. The OPUC's preliminary decision calls for the use of fixed reference points for margins and effective tax rates from a ratemaking proceeding. The Commission also proposed a method to apportion a consolidated group's income for tax liability. Based on PGE's assessment of the OPUC interim order, the Company has estimated the range of potential refunds to customers of $18 million to $66 million for 2006. Based on the low end of the range, the Company recorded a $9 million reserve for the first half of 2006 for a potential refund obligation to customers using a percentage of estimated annual revenues collected through this period. The OPUC will accept public comments on its interim order through mid-August 2006 and is expected to adopt permanent rules in September 2006 or later. PGE will continue to evaluate the OPUC's proposals and participate in the rulemaking proceedings to help assure that interests of the Company's shareholders and customers are addressed. General Rate Case PGE filed a general rate case in March 2006 for consideration by the OPUC. Based on a 2007 test year, the general rate case proposes a retail rate increase of $143 million (8.9%) across all customer classes and a return on equity of 10.75% to become effective early in 2007. The initial proposal by the OPUC staff, issued in early July 2006, proposed a $30 million (1.9%) increase in PGE's rates and an allowed return on equity of 9.8%. The OPUC staff's initial proposal marks an early stage in the ratemaking process. The Company is reviewing the staff proposal and is in settlement discussions with all participants. The OPUC is expected to issue its final order in mid-January 2007 following settlement conferences, additional testimony and potential public hearings. PGE's last general rate case was based on a 2002 test year, with authorized price changes effective Oct. 1, 2001. Pursuant to a tariff adopted in the 2001 case, PGE has annually updated its forecast of net variable power costs, with changes in the Company's retail prices authorized by the OPUC effective Jan. 1 for each of the years 2003 through 2006. Boardman Power Plant Outage The Boardman Power Plant was taken out of service in late October 2005 for repairs to the plant's turbine rotor and remained out of service during the first four-and-a-half months of 2006 for repairs to both the turbine and generator rotors. Although Boardman was operational by late May 2006, it was again taken offline in early June for repairs to the low-pressure turbine unit. The plant was returned to full operation on July 1, 2006, following completion of repairs. Total incremental power costs to replace the output of Boardman were approximately $92 million, including $52 million in the first half of 2006. PGE filed an accounting application with the OPUC for deferral of replacement power costs for the turbine rotor- forced outage, estimated at $46 million, for the period Nov. 18, 2005, through Feb. 5, 2006, for later ratemaking treatment. OPUC staff's initial response would provide for recovery of approximately $450,000 of such costs. The OPUC's decision is expected in the fourth quarter of 2006. To the extent the Company is not allowed to recover replacement power costs for Boardman under the deferred accounting application, impacts of the turbine rotor-forced outage may be included in the four-year rolling average component of rates requested under the annual update of net variable power costs beginning in 2007. PGE did not file an application to defer incremental power costs related to the generator rotor outage, which began Feb. 6, 2006, and will not propose the inclusion of this outage in the four-year rolling average of forced outages in its annual power cost update filings starting in 2008. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?f94 About Portland General Electric Headquartered in Portland, Ore., Portland General Electric Company (NYSE: POR) -- http://www.PortlandGeneral.com/-- is a fully integrated electric utility that serves 791,000 residential, commercial and industrial customers in Oregon. * * * Portland General Electric Company's preferred stock carries Moody's Investors Service's Ba1 rating. PRIMUS TELECOMMS: Posts $219.9 Million Net Loss in Second Quarter ----------------------------------------------------------------- PRIMUS Telecommunications Group, Incorporated, filed its second quarter financial statements for the three months ended June 30, 2006, with the Securities and Exchange Commission on Aug. 9, 2006. The Company reported a $219.954 million net loss on $252.323 million of net revenues for the second quarter ended June 30, 2006, compared with $44.189 million net loss on $290.638 million of net revenues for the same period in 2005. United States and Other United States and Other net revenue decreased $4.3 million or 8.3% to $47.3 million for the three months ended June 30, 2006, from $51.6 million for the three months ended June 30, 2005. The decrease is primarily attributed to a decrease of $7.7 million in retail voice services (including declines in residential and small business voice services, prepaid services, and wireless), and an $800,000 decrease in Internet services. These decreases were partially offset by an increase of $2.0 million in carrier services, and an increase of $2.0 million in retail VOIP services. Canada Canada net revenue increased $7.2 million or 11.6% to $70.1 million for the three months ended June 30, 2006, from $62.9 million for the three months ended June 30, 2005. The increase is primarily attributed to an increase of $6.0 million in VOIP and wireless services, a $1.4 million increase in prepaid services, and a $1.0 million increase in Internet services. These increases were partially offset by a decrease of $1.1 million in retail voice services. The strengthening of the Canadian dollars against the U.S. dollars accounted for a $6.7 million increase to revenue, and which reflects changes in the exchange rates for the three months ended June 30, 2006, to the three months ended June 30, 2005. Europe European net revenue decreased $31.2 million or 36.0% to $55.3 million for the three months ended June 30, 2006, from $86.5 million for the three months ended June 30, 2005. The decrease is primarily attributable to a decrease of $15.7 million in prepaid services (including decreases of $13.9 million in the Netherlands and $1.9 million in Sweden), a $14.2 million decrease in carrier services due to reductions in lower margin sales, and a decrease of $1.1 million for retail voice services. During the second quarter 2006, the Company restructured the majority of its retail prepaid services business into a wholesale business. The weakening of the European currencies against the U.S. dollar accounted for an $800,000 decrease to revenue, when comparing the exchange rates for the three months ended June 30, 2006, to the three months ended June 30, 2005. Asia-Pacific Asia-Pacific net revenue decreased $10.2 million or 11.3% to $79.5 million for the three months ended June 30, 2006, from $89.7 million for the three months ended June 30, 2005. The decrease is primarily attributable to a $6.8 million decrease in residential voice services, a $6.0 million decrease in dial-up Internet services, a $1.5 million decrease in other retail services (including declines in wireless and other services). These decreases were partially offset by a $3.4 million increase in Australia DSL services, and an increase of $600,000 in business services. The weakening of the Australian dollars against the U.S. dollars accounted for a $2.6 million decrease to revenue, which reflects changes in the exchange rates for the three months ended June 30, 2006, to the three months ended June 30, 2005. At June 30, 2006, the Company's balance sheet showed $414.262 million in total assets and $878.377 million in total liabilities, resulting in a $464.115 million stockholders' deficit, as compared with $236.334 million deficit at Dec. 31, 2005. The Company's June 30 balance sheet also showed strained liquidity with $232.205 million in total current assets available to pay $266.680 million in total current liabilities coming due within the next 12 months. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?f73 Going Concern Doubt As reported in the Troubled Company Reporter on June 19, 2006, Deloitte & Touche LLP expressed substantial doubt about PRIMUS Telecommunications Group, Incorporated's ability to continue as a going concern after auditing the Company's financial statements for the fiscal year ended Dec. 31, 2005. The auditing firm pointed to the Company's recurring losses from operations, the maturity of $23.6 million of the 5-3/4% convertible subordinated debentures due February 2007, negative working capital, and stockholders' deficit. About PRIMUS Based in McLean, Virginia, PRIMUS Telecommunications Group, Incorporated (NASDAQ: PRTL) -- http://www.primustel.com/-- is an integrated communications services provider offering international and domestic voice, voice-over-Internet protocol, Internet, wireless, data and hosting services to business and residential retail customers and other carriers located primarily in the United States, Canada, Australia, the United Kingdom and western Europe. PRIMUS provides services over its global network of owned and leased transmission facilities, including approximately 350 points-of-presence throughout the world, ownership interests in undersea fiber optic cable systems, 16 carrier-grade international gateway and domestic switches, and a variety of operating relationships that allow it to deliver traffic worldwide. * * * As reported in the Troubled Company Reporter on April 7, 2006, Standard & Poor's Ratings Services lowered its ratings on PRIMUS Telecommunications Group Inc., including the corporate credit rating, which was downgraded to 'CCC' from 'CCC+'. The outlook is negative. QWEST COMMS: Equity Deficit Narrows to $2.82 Billion at June 30 --------------------------------------------------------------- Qwest Communications International Inc. posted a $117 million net income on $3.472 billion of revenues on the second quarter ending June 30, 2006, the Company informed the Securities and Exchange Commission in a Form 10-Q filing. As of June 30, 2006, the Company's balance sheet showed assets totaling $21.292 billion and liabilities amounting to $24.118 billion. As of June 30, 2006, the Company's equity deficit narrowed to $2.826 billion from a $3.217 billion deficit at Dec. 31, 2005. The Company is also experiencing strained liquidity with $3.553 billion in current assets available to pay for $6.095 billion in current debts expected to be due in the next 12 months. Liquidity and Capital Resources Near-Term View The Company's working capital deficit increased primarily due to the reclassification of $903 million of debt obligations maturing in the next twelve months, the reclassification of its $1.265 billion 3.50% convertible senior notes to current and its capital expenditures of $832 million. The impact of these items was partially offset by cash generated by operating activities. Long-Term View The Company has historically operated with a working capital deficit as a result of its highly leveraged position, and it is likely that its will operate with a working capital deficit in the future. The Company's management believes that cash provided by operations and the currently undrawn Credit Facility, combined with our current cash position and continued access to capital markets to refinance the Company's current portion of debt, should allow it to meet its cash requirements for the foreseeable future. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?f70 Qwest Communications International Inc. -- http://www.qwest.com/ -- is a leading provider of high-speed Internet, data, video and voice services. With approximately 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. * * * As reported on the Troubled Company Reporter on Aug. 3, 2006, Qwest Communications International Inc.'s $1,265 million 3.5% convertible senior notes due 2025 carry Moody's Investors Service B3 Rating. REFCO INC: Chapter 7 Trustee Can Assume CBOT Lease -------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave Albert Togut, the Chapter 7 trustee for the estate of Refco, LLC, authority to assume a lease for eight offices with the Board of Trade of the City of Chicago, Inc., and C-B-T Corporation. The offices comprise 48,300 square feet and are located at 141 West Jackson Blvd., in Chicago, Illinois. The lease runs from June 1, 2003 through November 30, 2006, at $108,000 per month. The Chapter 7 Trustee says he does not currently utilize the Premises in connection with the winding up of Refco LLC's affairs. Prior to Refco LLC filing for chapter 7 liquidation, the Premises were used in connection with Refco LLC's regulated commodities trading business, which was sold to Man Financial, Inc., and certain other operations. Man continues to utilize a significant portion of the Premises in connection with its business. Man reimburses Refco's estate for that use pursuant to a Transition Services Agreement executed in connection with the sale. Man has indicated that it intends to continue to use a significant portion of the Premises through the conclusion of the transition services period. It also plans to sublease that portion through the conclusion of the term of the CBOT Lease. Scott E. Ratner, Esq., at Togut, Segal & Segal LLP in New York, explains that by assuming the CBOT Lease, the Chapter 7 Trustee avoids costs associated with potential litigation with Man over whether the Transition Services Agreement between Man and the Trustee requires the Trustee to provide Man with access to the Premises beyond the June 23, 2006 for assuming or rejecting any Refco LLC Lease. Mr. Ratner says the Trustee expects the costs of assuming the Lease will be less than the costs of rejecting it. The Trustee also expects to mitigate a substantial portion of the assumption costs by subleasing portions of the Premises to Man and to other short-term tenants. By continuing to sublease a portion of the Premises, the Trustee estimates that the ultimate net cost of assuming the Lease and holding it until the November 30, 2006 expiration will range between $200,000 and $300,000. If the Trustee rejected the CBOT Lease, the Lessor likely would assert a rejection damage claim of approximately $550,000. Due to the relatively short time remaining under the CBOT Lease, coupled with the specialized nature of the use of the Premises, the Trustee also concluded that assumption and assignment of the CBOT Lease to a third party is not a viable option. The Trustee considered "selling" the CBOT Lease back to the Lessor at a discount. However, according to Mr. Ratner, the Lessor, realizing that its claim against the Chapter 7 Debtor may be satisfied in full, was not interested in purchasing the CBOT Lease. Additional vacant space is available in the same building, and therefore, the Lessor has little incentive in accepting a discount on the rental payments due under the CBOT Lease. 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, http://bankrupt.com/newsstand/). REGENCY GAS: Moody's Rates New $250 Million Revolving Loan at B1 ---------------------------------------------------------------- Moody's Investors Service assigned B1 senior secured ratings to Regency Gas Services LP's new $250 million revolving credit facility and $600 million term loan and withdrew the B1 senior secured ratings on $470 million of bank loans that they replaced. The new credit facilities refinance Regency's existing loans and finance its $350 million TexStar acquisition. The ratings are unchanged, since the new facilities' terms and conditions are substantially the same as those in the prior facilities. Borrowings are secured by all of Regency's assets and equity in its subsidiaries and are jointly and severally guaranteed by its parent and subsidiaries. The most obvious changes are the new facilities' larger size and extended maturities: the revolver to 2011 and the term facility to 2013. The facilities limit Regency's consolidated total leverage ratio to no higher than 5.25x, but they are relaxed to 5.75x for two quarters following a material acquisition. Regency is also required to maintain an interest coverage ratio of at least 2.75x. Please refer to Moody's press release of July 13, 2006 and Speculative Grade Liquidity Assessment of July 14, 2006 for further commentary. Assignments: Issuer: Regency Gas Services LP * Senior Secured Bank Credit Facility, Assigned B1 Withdrawals: Issuer: Regency Gas Services LP * Senior Secured Bank Credit Facility, Withdrawn, previously rated B1 Regency Gas Services LP is the chief operating subsidiary of Regency Energy Partners LP, a publicly traded master limited partnership engaged in natural gas gathering, processing, and transportation. The companies are based in Dallas, Texas. RESOURCE AMERICA: June 30 Working Capital Deficit is $112.8 Mil. ---------------------------------------------------------------- Resource America, Inc., reported income from continuing operations of $3.1 million and $13.4 million for the third fiscal quarter and nine months ended June 30, 2006, compared with $3.5 million and $4.6 million for the third fiscal quarter and nine months ended June 30, 2005, a decrease of $398,000 and an increase of $8.8 million, respectively. In the third fiscal quarter ended June 30, 2005, the Company recorded one time gains of $5.2 million related to the refinancing and foreclosure of two of its legacy real estate assets. Without these two items, income from continuing operations would have been $494,000 for the third fiscal quarter ended June 30, 2005. Assets under management increased to $10.5 billion at June 30, 2006, from $5.7 billion at June 30, 2005, an increase of $4.7 billion (82%) Operating income as adjusted, before depreciation and amortization, was $5.7 million and $21.5 million for the third fiscal quarter and nine months ended June 30, 2006, compared with $7.5 million and $8.1 million for the third fiscal quarter and nine months ended June 30, 2005, respectively, a decrease of $1.8 million and an increase $13.4 million, respectively. Operating income as adjusted and reflecting the one time gains would have been $2.3 million for the third fiscal quarter ended June 30, 2005. Net income was $3.0 million and $15.8 million for the third fiscal quarter and nine months ended June 30, 2006, respectively, as compared to net income of $1.6 million and $17.6 million for the third fiscal quarter and nine months ended June 30, 2005, respectively. Net income for the third fiscal quarter and nine months ended June 30, 2005, includes $2.9 million and $16.6 million, respectively, of income from discontinued operations, net of tax from Atlas America, Inc., the Company's former 80% owned subsidiary that was spun-off at June 30, 2005. At June 30, 2006, the Company's balance sheet showed $497.931 million in total assets, $299.959 million in total liabilities, $10.168 million in minority interests, and $187.804 million in total stockholders' equity. The Company's June 30 balance sheet showed strained liquidity with $158.781 million in total current assets available to pay $271.629 million in total current liabilities coming due within the next 12 months. Full-text copies of the Company's third quarter financials are available for free at http://ResearchArchives.com/t/s?fa0 Resource America, Inc. (Nasdaq: REXI) -- http://www.resourceamerica.com/-- is a specialized asset management company that uses industry specific expertise to generate and administer investment opportunities for its own account and for outside investors in the financial fund management, real estate and equipment finance sectors. * * * Moody's Investors Service rated Resource America, Inc.'s senior unsecured rating at Caa1. R.H. DONNELLEY: Posts $79.8 Million 2006 Second Quarter Net Loss ---------------------------------------------------------------- R.H. Donnelley Corporation reported a net loss of $79.8 million for three months ended June 30, 2006, compared to a net income of $20 million for the same period a year ago. Net revenue for the three months ended June 30, 2006 was $432.3 million, versus $233 million for the same period in 2005. The Company also reported a net loss of $151.5 million from a net revenue of $752.8 million for the six months ended June 30, 2006, compared to a net income of $27.7 million from a net revenue of $440.3 million for the same six months period in 2005. The Company further reported, second quarter free cash flow of $194.3 million based on cash flow from operations of $208.5 million and $14.2 million of capital expenditures in the period. Advertising sales during the second quarter were $724.7 million, down 3.5% from the prior year. The Company's GAAP net debt, as of June 30, 2006, was $10.5 billion. Headquartered in Cary, North Carolina, R.H. Donnelley (NYSE: RHD) -- http://www.rhd.com/-- is a Yellow Pages and online local commercial search company. The Company has more than 625 directories, online city guides, and search websites with a circulation of approximately 80 million. The Company's directories are marketed under three brands: AT&T Yellow Pages fka SBC Yellow Pages in Illinois and Northwest Indiana; Dex(R) Yellow Pages and EMBARQ Yellow Pages(TM) directories fka Sprint Yellow Pages(R). R.H. Donnelley's business now includes the Best Red Yellow Pages(R) brand at bestredyp.com(R), in AT&T Yellow Pages markets at CHICAGOLANDYP.com and local search services through DexOnline(R) at DexOnline.com(R). * * * R.H. Donnelley Corp.'s senior unsecured debt carries Moody's and Fitch's junk ratings. Moody's also placed the Company's long-term corporate family rating at B1. Standard & Poor's assigned the Company's long-term local and foreign issuer credit ratings at BB-. The ratings were placed on Jan. 31, 2006 with a stable outlook. SAINT VINCENTS: GAIC Has Until August 31 to Examine SVMC Personnel ------------------------------------------------------------------ In a stipulation approved by the U.S. Bankruptcy Court for the Southern District of New York, Saint Vincents Catholic Medical Centers of New York, its debtor-affiliates and Great American Insurance Company agreed to extend up to and including Aug. 31, 2006, the time for GAIC to: -- examine under oath persons under the direction and control of Saint Vincent's Catholic Medical Centers; and -- issue one or more subpoenas compelling the examination under oath of persons no longer under the direction and control of the SVCMC Debtors. As reported in the Troubled Company Reporter on March 29, 2006, GAIC wants to secure documents from the Debtors related to: (a) restricted use accounts or other set asides or accounts purportedly created by the Debtors relevant to two judgments in favor of: * Patsy Merola, in the action entitled Patsy Merola, as Administrator of the Estate of Wanda Merola v. Catholic Medical Center of Brooklyn & Queens, Inc., doing business as St. John's Hospital, et al., commenced in the Supreme Court of the State of New York, Queens County; and * Sondra Lowery, in the action entitled Sondra Lowery v. Henry Lamaute, M.D., et al., commenced in the Supreme Court of the State of New York, Queens County; and (b) the insurance and self-insurance programs implemented by the Debtors with respect to their medical malpractice liabilities. 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, http://bankrupt.com/newsstand/) SANMINA-SCI: Form 10-Q Filing Delay Prompts S&P's Negative Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB-' corporate credit and other ratings on San Jose, California-based Sanmina-SCI Corp. on CreditWatch with negative implications following the company's announcement that it will delay filing its June 2006 10- Q financial statements until an internal review of stock option practices is complete. While it is too early to assess the outcome of the investigations, Sanmina's liquidity (cash balances totaled $625 million at April 1, 2006) should cushion the downside risk to the rating. "The CreditWatch listing reflects uncertainties regarding the outcome of the stock option review; we will monitor the review to assess whether any potential material restatements, further investigation, or additional involvement of the SEC or other judicial authorities has an impact on the rating," said Standard & Poor's credit analyst Lucy Patricola. SANMINA SCI: Moody's Reviews Low-B Ratings and May Downgrade ------------------------------------------------------------ Moody's Investors Service placed the ratings of Sanmina-SCI Corporation on review for possible downgrade following the announcement by the Company updating the status of the on-going investigation into its stock option administration practices and confirming that Sanmina will not be able to file with the Securities and Exchange Commission its 10-Q for the quarter ended July 1, 2006 by the required deadline as result of the investigation. The investigations are on-going and inconclusive and the Company cannot quantify their potential impact on its financial statements at this time. However, Moody's notes that Sanmina will most likely breach a financial covenant in its bond indenture requiring it to file financial statements in a timely manner. The current delay could place Sanmina in a technical default with its creditors. The review for possible downgrade reflects Moody's concerns over potential liquidity uncertainty presented by Sanmina's potential covenant breach. Sanmina currently has about $563 million in cash and equivalents as of June 30, 2006 and it also has full access to a revolving credit facility of $500 million. The total amount of debt for Sanmina is about $1.5 billion with the next immediate maturity in March 2007 in the amount of $525 million. Moody's will be monitoring closely Sanmina's progress in its stock options investigations, potential liquidity issues, if any, and the possible longer term impact. Ratings under review for downgrade include: * Ba2 Corporate Family rating (negative outlook); * B1 rating on Sanmina's $400 million senior subordinated notes due 2013; * B1 rating on SCI Systems Inc.'s $525 million 3% convertible subordinated notes due 2007; * B1 rating on $600 million senior subordinated notes due 2016 * SGL-1 speculative grade liquidity rating. Headquartered in San Jose, California, Sanmina-SCI Corporation is one of the largest electronics contract manufacturing services companies providing a full spectrum of integrated, value added solutions. SILICON GRAPHICS: Wants KPMG LLP to Provide Audit Services ---------------------------------------------------------- Pursuant to Sections 327(a) and 328(a) of the Bankruptcy Code, Silicon Graphics, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York's authority to employ KPMG LLP as their accountants and auditors, nunc pro tunc to June 19, 2006. The Debtors relate that when they filed for bankruptcy, they ceased employing Ernst & Young LLP as their primary auditors and engaged KPMG because of KPMG's expertise in the field and because the Debtors were able to negotiate a 15% discount on KPMG's rates. KPMG commenced work on June 19, 2006. Barry Weinert, Esq., vice president and general counsel of Silicon Graphics, Inc., relates that the Debtors need to retain certified public accountants who will audit their financial statements and issue an opinion related to the audit. The services are essential to the Debtors' continued operations and plans of emerging from Chapter 11 as a public company. Retaining KPMG is the most cost-effective manner of procuring the required services, Mr. Weinert explains. KPMG's services include: * auditing the Debtors' consolidated financial statements and control over financial reporting; * issuing an annual report; * reviewing quarterly financial statements required to be filed with the Securities and Exchange Commission; * analyzing accounting issues and advising the Debtors regarding the proper accounting treatment of events; * issuing a comfort letter in connection to filing under the Securities Act of 1933, at the Debtors' request; and * performing other accounting and auditing services for the Debtors as may be necessary or desirable, to the extent permitted under professional standards and as agreed to between the Debtors and KPMG. The Debtors will pay KPMG according to the firm's customary hourly rates, applying a 15% discount, in effect on the date the services are rendered: Partners $660 to $770 Directors/Senior Managers/Managers $495 to $575 Senior/Staff Accountants $250 to $360 Paraprofessionals $120 to $195 The Debtors will also reimburse KPMG for expenses incurred. David A. Kane, a partner of KPMG, assures the Court that his firm has no connection with, and holds no interest adverse to, the Debtors, their creditors, or any other party-in-interest. KPMG is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code, Mr. Kane says. 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. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) SILICON GRAPHICS: Wants to Hire Deloitte Financial as Accountants ----------------------------------------------------------------- Silicon Graphics, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York's authority to employ Deloitte Financial Advisory Services LLP to provide accounting services -- specifically fresh-start accounting -- relating to the Debtors' emergence from Chapter 11, nunc pro tunc to June 29, 2006. Deloitte Consulting LLP, an affiliate of Deloitte FAS, will act as Deloitte FAS' subcontractor to assist in the systems implementation of the fresh-start accounting analysis. Deloitte FAS' services will include: (a) assistance with Disclosure Statement and Financial Projections; (b) preparation and substantiation of fresh-start balance sheet under Statement of Position 90-7; (c) posting of fresh-start entries back to Books of Entry; (d) application support; (e) assistance and valuation work per fresh-start under SOP 90-7; and (f) assistance with accounting and financial reporting. The Debtors will pay Deloitte FAS for its services in accordance with negotiated hourly rates: Partner, Principal, or Director $600 to $750 Senior Manager $475 to $580 Manager $400 to $500 Senior Staff $275 to $375 Staff $225 The Debtors will indemnify and hold harmless Deloitte FAS from all claims, liabilities, and expenses relating to the firm's engagement, except to the extent judicially determined to have resulted from the firm's recklessness, bad faith or intentional misconduct. Deloitte FAS also agree to defend, indemnify, and hold the Debtors harmless from and against any loss, damages, or other liabilities solely to the extent directly caused by any negligent acts or omissions or willful misconduct of the firm during the performance of its services. Kirk Blair, a partner of Deloitte FAS, assures the Court that his firm is a "disinterested person," as defined in Section 101(14) of the Bankruptcy Code. Deloitte FAS has no connection with, and holds no interest adverse to, the Debtors, their creditors, or any other party-in-interest, Mr. Blair says. 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. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) SOLUTIA INC: Ex-Employee Dickerson Appeals Dismissal of Lawsuit --------------------------------------------------------------- Jeremy Dickerson, a former Solutia Inc. employee, asks the U.S. Bankruptcy Court for the Southern District of New York to: (a) overrule the Debtors' objection without prejudice to an appeal being refiled after the Second Circuit rules; or (b) disallow his claim without prejudice, and provide for its automatic reinstatement should his appeal be successful. Ronen Sarraf, Esq., at Sarraf Gentile LLP, in New York, relates that the U.S. Secretary of Labor has recently opined that the U.S. District Court for the Southern District of New York's opinion dismissing Jeremy Dickerson's suit against Solutia Inc. and its debtor-affiliates was wrongly decided. Solutia is seeking the disallowance of Claim No. 14735 based on the preclusive effect of the District Court's dismissal of Mr. Dickerson's class action and the doctrine of collateral estoppel. Mr. Dickerson, on behalf of the Solutia Inc. Savings and Investment Plan, its participants and beneficiaries, filed Claim No. 14735 for $290,845,666, as amended, in connection with his allegations in the civil suit. As the entity primarily responsible for enforcement and administration of the fiduciary standards of the Employee Retirement Income Security Act of 1974, the Secretary of Labor's views in interpreting ERISA, including those expressed in amicus curiae briefs, are entitled to considerable deference, Mr. Sarraf asserts. Accordingly, there is substantial likelihood that Mr. Dickerson's appeal before the U.S. Court of Appeals for the Second Circuit will succeed, Mr. Sarraf says. If Mr. Dickerson's appeal is successful, but the Debtors' relief is granted, the patently unjust result would be that the claim would have been disallowed and expunged with prejudice based entirely on an erroneous judgment that was subsequently reversed, Mr. Sarraf points out. In addition, Mr. Sarraf argues, the principles of res judicata and collateral estoppel do not apply to Mr. Dickerson's claim, contrary to Solutia's contention. The doctrine requires that parties in the two cases be the same, or be in privity with the same parties, Mr. Sarraf asserts, citing Perpetual Securities Inc. v. Tang, 290 F.3d 132,139 (2d Cir. 2002). Mr. Sarraf adds that courts have frequently stayed application of the preclusive effects of res judicata and collateral estoppel pending resolution of an appeal of the first case. Mr. Dickerson, thus, asks Judge Beatty to stay consideration of Solutia's objection, as well as his request for class certification, pending resolution of the Second Circuit Appeal. In either case, Mr. Dickerson requests that the Bankruptcy Court make express provisions for his continued participation in the Debtors' bankruptcy process to protect his interests. Case Background As reported in the Troubled Company Reporter on Oct. 19, 2005, Jeremy Dickerson is a Texas resident and was a chemical operator for Solutia, Inc., from July 1998 through October 2003. Mr. Dickerson is a participant in the Solutia Savings and Investment Plan, which was created on Sept. 1, 1997, as a 401(k) plan. The Investment Plan's purpose is to allow participants to save money for retirement. Shares of Solutia common stock were purchased and held in the Investment Plan for Mr. Dickerson's benefit from 1998 to 2003. Mr. Dickerson, on behalf of the Investment Plan and its participants and beneficiaries, had asked the Court to certify his Amended Proof of Claim for a class defined as all Plan participants for whose benefit the Plan held Solutia Stock between Sept. 1, 1997, until Dec. 15, 2003. Mr. Sarraf reported then that Mr. Dickerson brings his claim not as an individual, but, as authorized by the Employee Retirement Income Security Act of 1974, in a representative capacity on behalf of the Plan and its participants, seeking recovery of losses to the Plan as a whole. Mr. Sarraf explains that Mr. Dickerson's claim is for losses to the Plan and participants resulting from Solutia's fiduciary breaches relating to the imprudent investment of Plan assets in Solutia common stock. According to Mr. Sarraf, Solutia failed: -- to take appropriate steps to restrict or liquidate investments in Solutia Stock; -- to provide participants with complete and accurate information regarding the risks of investment in Solutia Stock; and -- to appoint an independent fiduciary to make decisions regarding the Plan's investments in Solutia Stock. Since the Plan held investments in Solutia Stock for the benefit of each participant during the Class Period, and all participants are members of the proposed class, these failures to act affected all members of the proposed class. Moreover, these breaches all pertain to Solutia's uniform conduct with respect to the Plan and its administration, Mr. Sarraf said. About Solutia Inc. Based in St. Louis, Mo., Solutia, Inc. -- http://www.solutia.com/ -- with its subsidiaries, make and sell a variety of high- performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) SOLUTIA INC: Court Approves Pharmacia and Sauget Settlement Pact ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved the Settlement Agreement among Solutia Inc., and its debtor-affiliates, Pharmacia Corporation, and the Paul Sauget Estate, settling all of the claims and disputes relating to the Sauget Area 2 Sites. Before the Petition Date, the U.S. Environmental Protection Agency named Solutia, and Pharmacia, among potentially responsible parties for a collection of alleged waste disposal locations in or around the villages of Sauget and Cahokia, Illinois, known as the Sauget Area 2 Sites. Section 9601 of the Comprehensive Environmental Response, Compensation and Liability Act empowers the EPA to identify and prioritize sites for cleanup, and to order or carry out environmental remediation. On Jan. 23, 2000, the EPA requested Solutia, Pharmacia and other PRPs to perform a remedial investigation and feasibility study of the Sauget Area 2 Sites. Certain PRPs formed the "SA2 Group" and required the members to attempt to settle disputes on the costs incurred at the SA2 Sites. The SA2 Group hired an independent allocator and entered into an Allocation Procedure Agreement to address allocation of the costs. In May 2002, Pharmacia and Solutia filed a complaint before the Federal District Court for the Southern District of Illinois (Pharmacia v. Clayton Chemical, et al., 02-428-MJR) against various PRPs that were not members of the SA2 Group, to seek recovery of the costs relating to the SA2 Sites, and indemnity under certain contracts. Paul Sauget was among the Clayton defendants. He died in 2004. In September 2002, the EPA ordered the PRPs to implement an interim groundwater remedy in the SA2 Sites with an estimated cost of $26 million. Pharmacia and Solutia have undertaken the design and construction of, and continue to implement, the interim groundwater remedy. In August 2004, the Paul Sauget Estate joined the SA2 Group to have their claims to the Allocation Process in an attempt to reach a settlement without litigation. No agreement was reached at that time to have Pharmacia's and Solutia's claims related to the interim groundwater remedy submitted to the Allocation Process. In February 2005, Pharmacia and Solutia filed claims in the probate action for the Estate pending in the Circuit Court of St. Clair County, Illinois, seeking contribution damages and other recovery from the Paul Sauget Estate for past and future costs related to the SA1 and SA2 Sites. In March 2005, the State of Illinois filed a lawsuit regarding cleanup and other costs allegedly incurred by Illinois at the SA1 and SA2 Sites against various defendants including the Estate, Solutia and Pharmacia. Solutia and Pharmacia initially asserted a claim related to the SA2 Sites for $11,250,000 against the Estate. To settle all of the claims and disputes relating to the SA2 Sites, Solutia, Pharmacia and the Paul Sauget Estate entered into an interim partial settlement agreement on Dec. 21, 2005. The Settlement Agreement provides that: (a) the parties will continue settlement negotiations by submitting all claims among the parties relating to SA2 Sites for resolution under the Allocation Process, along with Pharmacia's and Solutia's claims regarding recovery of costs for the interim groundwater remedy; (b) the parties will file a stipulation seeking the dismissal of the claims without prejudice asserted against the Estate in the Clayton Lawsuit; (c) Solutia and Pharmacia will file a stipulation seeking dismissal without prejudice of their claims asserted against the Estate in the Probate Proceeding; (d) if the parties cannot agree on an allocation of the SA2 costs within three months after a recommendation is issued as required by the Allocation Process, or if the Estate withdraws from the Allocation Process, Pharmacia and Solutia are free to file with the District Court all claims they may have related to SA2 against the Estate within 90-days of the withdrawal, or the three-month period after issuance of the allocation recommendation; (d) the Estate will not to object any future lawsuit Solutia and Pharmacia might file against it for claims related to the SA2 Sites on the basis of Pharmacia's and Solutia's voluntary dismissal of their claims in the Probate Proceeding, that the action is out of time because the probate estate has been closed or because Mr. Sauget has been deceased since 2004; and (e) the parties agree to toll relevant statutes of limitation until Dec. 31, 2010. Any claims asserting waiver based on the expiration of any time period will not include, in whole or in part, the tolling period. About Solutia Inc. Based in St. Louis, Mo., Solutia, Inc. -- http://www.solutia.com/ -- with its subsidiaries, make and sell a variety of high- performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) SOMERSET EDUCATION: Default Cues S&P's D Rating on $2.9 Mil. Debt ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Somerset Education Foundation, Va.'s series 2002 leasehold revenue bonds to 'D' from 'AAA' as a result of a July 1 debt service payment not being made. Required actions under the bond documents did not occur as scheduled, causing the default. The prior rating had been based on an executed loan note guarantee issued by the United States, acting through the Department of Agriculture's Rural Housing Service. The default affects $2.9 million of debt. SONIC CORP: S&P Assigns BB- Rating to Proposed $775 Million Debts ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Oklahoma City, Oklahoma-based quick-service restaurant operator Sonic Corp. The outlook is stable. The rating agency also assigned a 'BB-' rating to the company's proposed $100 million secured revolving credit facility maturing in 2011 and to its $675 million secured term loan B maturing in 2013. A recovery rating of '2' was assigned to the credit facilities, indicating the expectation for substantial (80%-100%) recovery of principal in the event of a payment default. The ratings are based on preliminary terms and are subject to change after review of final documents. Sonic is recapitalizing and will use proceeds from the bank facilities to repurchase $560 million of common stock and to refinance existing debt. "Ratings reflect Sonic's weak cash flow protection measures, lack of geographic diversity, risk of business disruptions due to its plans to expand nationally, and relatively small market share in the intensely competitive quick-service restaurant sector," said Standard & Poor's credit analyst Diane Shand. These risks are partly offset by its good brand name and generally good operating performance. Sonic will be highly leveraged after the transaction. Standard & Poor's estimates that pro forma total debt to EBITDA will be 4.3x in 2006, up from 1.1x in 2005. Cash flow protection measures also deteriorate. EBITDA coverage of interest falls to about 3x in 2006, from 13x in 2005, and funds from operations to total debt declines to 9.2% from 68.3%. Because the amortization schedule is minimal, leverage is expected to decline only modestly over the next few years. Sonic is a distant fourth player in the $56 billion hamburger market of the U.S. restaurant industry. With a 5.5% share, the company competes against more formidable players such as McDonald's, which has a 45% share; Burger King, with 13.9%; and Wendy's, with 13.6%. Sonic differentiates itself from other quick-service restaurant operators with its retro drive-in style and service to the car. SONIC CORP: Moody's Rates Proposed $775 Million Sr. Loan at Ba3 --------------------------------------------------------------- Moody's Investors Service assigned a Ba3 corporate family rating to Sonic Corp., in addition to assigning a Ba3 rating to the company's proposed $775 million senior secured credit facility consisting of a $100 million revolver and a $675 million term loan B. These are first-time ratings for Sonic following the company's announcement to finance a Dutch auction tender for approximately $560 million in share repurchases and to refinance existing debt. At the same time, a SGL-2 Speculative Grade Liquidity rating was also assigned. The rating outlook is stable. Moody's noted that the rating assignments are subject to a review of the final documentation. The ratings reflect Sonic's long track record for same store sales, profitability and unit growth, industry leading EBITDA margins, niche operating format and extensive menu within the quick service restaurant segment and well-balanced day-part mix relative to competitors. Factors that constrict the ratings include materially weaker credit metrics driven by this transaction and operating within the highly competitive QSR segment of the restaurant industry. Moody's noted that Sonic does not have a history of operating under the proposed, significantly more levered capital structure. As a result, the rating agency expects no incremental debt to be incurred through the intermediate term. A dditionally, growth in EBITDA and free cash flow is expected to be sufficient to de-lever the company at a reasonable pace over the next few years. First-time ratings assigned with a stable outlook: * Ba3 for the corporate family rating * Ba3 for the $675 million proposed senior secured term loan maturing in 2013 * Ba3 for the $100 million proposed senior secured revolver maturing in 2011 * SGL-2 Speculative Grade Liquidity rating Sonic Corp., headquartered in Oklahoma City, Oklahoma, operates and franchises the largest chain of drive-in restaurants in the United States. As of May 31, 2006, the company owned and operated 604 restaurants and franchised 2,525 restaurants in 33 states and Mexico with significant presence in the Southern and Midwestern United States. Revenues for fiscal 2005 totaled approximately $623 million. SOS REALTY: Judge Feeney Denies Foreclosure of Primary Asset ------------------------------------------------------------ The Honorable Joan N. Feeney of the U.S. Bankruptcy Court for the District of Massachusetts in Boston denied the foreclosure of SOS Realty LLC's primary asset. Framingham Co-operative Bank asked Judge Feeney to foreclose its interest in the mortgage of Washington Grove Condominium owned by SOS Realty or, in the alternative, for adequate protection. The Condominium consisted of two buildings. The first building is located at 5168-5174 Washington Street in West Roxbury, Massachusetts and the second building is located at 11 Cheriton Road in West Roxbury, Massachusetts. The Debtor made a promissory note to FCB for $6,752,000. Under the Note: (a) the interest rate was the Wall Street Journal prime rate plus 425 Basis Points (4.25%) per annum on a daily floating basis; (b) the Debtor was to make monthly payments in the amount of accrued interest on the 24th of each month until Nov. 24, 2006, at which time the principal and interest called for under the Note was fully due and payable; (c) the Debtor was required to pay FCB a late charge of 10% of any monthly installment not received by FCB within five days that the installment was due; and (d) the Debtor agreed to "pay all costs and expenses, including but not limited to all attorneys' fees paid or incurred by FCB in enforcing this Note and collecting the amounts due, whether or not suit is instituted and whether or not foreclosure under this Mortgage and Security Agreement securing the Note is instituted. The Debtor, Bernard J. Laverty, and Barry L. Queen executed a commitment letter. The Commitment Letter contained various terms and obligations, including an obligation for FCB to provide partial releases at the rate of $233,333.00 per unit. The Debtor also provided FCB with a Conditional Assignment of Leases and Rents, and assigned to FCB all of its right, title, and interest to all licenses, permits, and government approvals related to the Premises. Bernard J. Laverty, Jr., and Mr. Queen guaranteed the obligation to FCB. The collateral for the obligation is the land in Massachusetts. The Debtor has stated in its Schedule D that the market value of the collateral when it filed for bankruptcy is $12,000,000. FCB has requested that Thomas J. Mulhern and Associates perform an appraisal of the property. Mulhern has determined the market value of the property is $5,720,000. As of March 14, 2006, the outstanding balance of the Note, exclusive of accrued interest, fees, and attorney's fees, was $5,430,236.43. FCB holds priority interest on the property. The encumbrances junior to FCB are: a. Multiple mortgages to LBM Financial, LLC, which mortgages total $2,179,447.02; b. Chestnut Hill Mortgage and Realty, LLC, in the amount of $700,000; c. Lien of Tully Roofing in the amount of $60,000.00; d. Pad Framers attachment in the amount of $18,000.00; and e. Stock Building Supply lien in the amount of $425,000. Debtor's Objection The Debtor objected to FCB's motion to foreclose its property. The Debtor admitted that this case is a single asset real estate case and that the property likely has a present, market value of approximately $7,600,000. The Debtor said the FCB is oversecured. FCB alleged that its position is eroding because the Debtor has "made no payments to any taxing authority on the property." The Debtor said the property at issue is essential to its effective reorganization. The Debtor's primary asset is the property. Without it, and the ability to generate monies from the property upon completion of the remaining, unsold units, the Debtor will be unable to reorganize. The Debtor said that if the motion is granted, there will likely be no possibility whatsoever of any distribution to unsecured creditors. Chestnut Hill Objection Chestnut Hill Mortgage & Realty, Inc., also objected to FCB's motion to foreclose the property. The Debtor is in the process of providing a detailed and improved construction budget to bring the Project to completion. Since this is a single asset case, the Debtor will likely file a plan of reorganization soon. Chestnut Hill said that even if there were no equity cushion, accrual of real estate taxes would not erode FCB's interest, because the Debtor is proposing to spend significantly more money on improvements to the property than the accrual of any senior real estate tax liens. Peter L. Zimmerman, Esq., and Richard L. Blumenthal, Esq., at Silverman & Kudisch, P.C., represented Framingham Co-operative Bank. Based in West Roxbury, Massachusetts, SOS Realty LLC, owns a condominium development known as the "Washington Grove Condominiums." The company filed for chapter 11 protection on May 11, 2006 (Bankr. D. Mass. Case No. 06-11381). Jennifer L. Hertz, Esq., at Duane Morris LLP, represents the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been filed in the Debtor's case. In its schedules of assets and liabilities, it listed $12,009,000 in total assets and $6,734,279 in total liabilities. SOVRAN SELF: Earns $8.8 Million in Second Quarter of 2006 --------------------------------------------------------- Sovran Self Storage, Inc., reported operating results for the quarter ended June 30, 2006. Net income available to common shareholders for the second quarter of 2006 was $8.8 million. Net income available to common shareholders for the same period in 2005 was $7.6 million. Funds from operations for the quarter increased 16.7% to $14.7 million compared to $12.6 million for the quarter ended June 30, 2005. Strong revenue and operating income growth contributed to the Company's performance this quarter. At June 30, 2006, the Company's balance sheet showed $963.398 million in total assets, $537.014 million in total liabilities, $25.144 million in total minority interests, and $401.240 million in total shareholders' equity. During the quarter, the Company acquired 26 self-storage facilities for a total cost of $105 million. The Company also made further investments in Locke Sovran I, LLC, and Locke Sovran II, LLC, increasing its ownership to over 70% in each joint venture. David Rogers, the Company's chief financial officer, said, "We had a busy quarter. We've strengthened our balance sheet, acquired some great stores and grew occupancies and rents across the board." Operations Total Company net operating income for the second quarter grew 18.7% compared with the same quarter in 2005 to $26.4 million. This growth was the result of improved operating performance and the income generated by 43 stores acquired since April 2005. Overall average occupancy for the quarter was 86.6% and average rent per square foot for the portfolio was $9.90. Revenues at the 269 stores owned and managed for the entire quarter in both years increased 5.8% over the second quarter of 2005, the result of a 3% increase in rental rates, a 160 basis point increase in average occupancy and a $165,000 increase in truck rental revenues and other income. Same store operating expenses rose 3.8% primarily as a result of increased maintenance costs and property taxes. As a result, same store net operating income improved by 6.9% over the second quarter of 2005. General and administrative costs increased this quarter by $707,000, primarily as a result of increased due diligence costs and the expense of additional personnel hired to administer the 14 facilities acquired in 2005 and the 32 purchased thus far this year. Continued strong performance was shown at the Company's Louisiana and Florida stores, and the Atlanta and Houston markets have shown marked improvement. Stores in Ohio, Pennsylvania, and South Carolina experienced slower than expected growth during the quarter. Acquisitions During the quarter, the Company acquired 26 stores totaling 1.6 million sq. ft. at a total cost of $105 million. Nineteen of the stores are located in markets where the Company already has an operating presence - Dallas (6), San Antonio (3), Tampa (3), Southeastern LA (5) and Manchester, NH (2). The Company also acquired seven stores in and near St. Louis, Missouri. Effective April 1, 2006, the Company made additional investments of $8,475,000 in Locke Sovran I, LLC, and Locke Sovran II, LLC, that increased the Company's ownership to over 70% in each of these joint ventures. As a result of this transaction, starting with the second quarter of 2006, the Company has consolidated the accounts of Locke Sovran I, LLC, in its financial statements. The accounts of Locke Sovran II, LLC, had already been included in the Company's financial statements as it is a majority controlled joint venture. Capital Transactions In April, the Company issued $150 million of 10-year unsecured term notes via a private placement arranged by M & T Bank's Debt Capital Markets Group. Interest is payable semi-annually on the notes at a fixed rate of 6.38%. The proceeds were used to repay the Company's outstanding line of credit and other short term obligations and to fund second quarter acquisitions. During the quarter, the Company issued 123,000 shares through its Dividend Reinvestment Program, Direct Stock Purchase Plan and Employee Option Plan. A total of $5.8 million was received, and was used to fund part of those acquisitions. The Company's Board of Directors authorized the repurchase of up to two million shares of the Company's common stock. To date, the Company has acquired approximately 1.2 million shares pursuant to the program. The Company expects such repurchases to be effected from time to time, in the open markets or in private transactions. The amount and timing of shares to be purchased will be subject to market conditions and will be based on several factors, including compliance with lender covenants and the price of the Company's stock. No assurance can be given as to the specific timing or amount of the share repurchases or as to whether and to what extent the share repurchase will be consummated. The Company did not acquire any shares in the quarter ended June 30, 2006. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?f96 Sovran Self Storage, Inc. (NYSE: SSS) http://www.sovranss.com/-- is a self-administered and self-managed equity REIT whose business is acquiring, developing and managing self-storage facilities. The Company owns and/or operates 317 stores under the "Uncle Bob's Self Storage"(R) trade name in 22 states. * * * Sovran Self Storage, Inc.'s preferred stock carries Moody's Investors Service's Ba1 rating. SPECIALTYCHEM PRODUCTS: Panel Wants Mesirow as Financial Advisor ---------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in SpecialtyChem Products, Corp.'s bankruptcy case asks the Honorable Pamela Pepper of the U.S. Bankruptcy Court for the Eastern District of Wisconsin in Milwaukee for authority to employ Mesirow Financial Consulting, LLC, as its financial advisor, nunc pro tunc to July 5, 2006. Mesirow Financial will: (a) assist in the review of reports or filings as required by the Bankruptcy Court or the Office of the United States Trustee, including but not limited to, schedules of assets and liabilities, statements of financial affairs, and monthly operating reports; (b) review of the Debtor's financial information, including but not limited to, analyses of cash receipts and disbursements, financial statement items, and proposed transactions for which Bankruptcy Court approval is sought; (c) review and analysis of reports regarding cash collateral and any debtor-in-possession financing arrangements and budgets; (d) evaluate potential employee retention and severance plans; (e) assist with identifying and implementing potential cost containment opportunities; (f) assist with identifying and implementing asset redeployment opportunities; (g) analyze assumption and rejection issues regarding executory contracts and leases; (h) review and analyze the Debtor's proposed business plans, and the business and financial condition of the Debtor generally; (i) assist in evaluating reorganization strategy and alternatives available to the creditors; (j) review the Debtor's financial projections and assumptions; (k) prepare and analyze enterprise, asset, and liquidation valuations; (l) assist in preparing documents necessary for confirmation; (m) advise and assist the Committee in negotiations and meetings with the Debtor and the bank lenders; (n) advise and assist on the tax consequences of proposed plans of reorganization; (o) assist with the claims resolution procedures, including but not limited to, analyses of creditors' claims by type and entity; (p) give litigation consulting services and expert witness testimony regarding confirmation issues, avoidance actions, or other matters; and (q) give other services as requested by the Committee or its counsel to assist the panel in the Debtor's bankruptcy case. James E. Nugent, a managing director at Mesirow Financial Consulting, disclosed that the Firm's professionals bill: Designations Hourly Rate ------------ ----------- Senior Managing Directors/Managing Directors $620 - $690 Senior Vice Presidents $530 - $590 Vice Presidents $430 - $490 Senior Associates $330 - $390 Associates $190 - $290 Paraprofessionals $150 Mesirow has agreed to give a 25% discount to its fees, and requests a $50,000 retainer. Mr. Nugent assures the Court that the Firm does not hold nor represent an interest adverse to the estate, and is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Marinette, Wisconsin, SpecialtyChem Products, Corp., manufactures various organic chemicals for paper products, electronics, agricultural products and other materials. The company filed for chapter 11 protection on June 12, 2006 (Bankr. E.D. Wis. Case No. 06-23131). Christopher J. Stroebel, Esq., Timothy F. Nixon and Marie L. Nienhuis, Esq., at Godfrey & Kahn, S.C., represent the Debtor in its restructuring efforts. Fort Dearborn Partners, Inc., is the Debtor's turnaround consultant, and gives financial advice to the Debtor. Matthew M. Beier, Esq., and Eliza M. Reyes, Esq., at Brennan, Steil and Basting, S.C., and Matthew T. Gensburg, Esq., and Nancy A. Peterman, Esq., at Greenberg Traurig, L.L.P., represent the Official Committee of Unsecured Creditors of the Debtor. In its schedule of assets and liabilities, the Debtor disclosed $11,394,224 in total assets and $12,323,425 in total debts. SPECIALTYCHEM PRODUCTS: Brennan Steil Okayed as Panel's Counsel --------------------------------------------------------------- The Honorable Pamela Pepper of the U.S. Bankruptcy Court for the Eastern District of Wisconsin in Milwaukee authorized the Official Committee of Unsecured Creditors of SpecialtyChem Products, Corp., to employ Brennan, Steil and Basting, S.C., as its bankruptcy counsel, nunc pro tunc to June 12, 2006. As reported in the Troubled Company Reporter on July 21, 2006, Brennan Steil will: a) consult with the Debtor's professionals concerning the administration of this Case; b) prepare and review pleadings, motions and correspondence; c) appear and involve in proceedings before the Court; d) provide legal counsel to the Committed in its investigation of the acts, conduct, assets, liabilities, and financial condition of the Debtor, the operation of the Debtor's business, and any other matters relevant to this Case; e) analyze the Debtor's proposed use of cash collateral and debtor-in-possession financing; f) advise the Committee with respect to its rights, duties and powers in this Case; g) assist the Committee in analyzing the claims of the Debtor's creditors and in negotiating with creditors; h) assist with the Committee's investigation of the acts, conduct assets, liabilities and financial condition of the Debtor and of the operation of the Debtor's business and any other matters relevant to this Case; i) assist and advise the Committee in its analysis of and negotiations with the Debtor or any third party concerning matters related to, among other things, the terms of a sale, plan of reorganization of other conclusion of this Case; j) assist and advise the Committee as to its communications to the general creditor body regarding significant matters in this Case; k) assist the Committee in determining a course of action that best serves the interest of the unsecured creditors; and l) perform other legal services as may be required under the circumstances of this Case and are deemed to be in the interests of the Committee in accordance with the Committee's powers and duties as set forth in the Bankruptcy Code. Claire Ann Resop, Esq., a shareholder at Brennan Steil, told the Court that she bills $250 per hour for this engagement. Ms. Resop disclosed that the other professionals who render services bill: Professional Hourly Rate ------------- ----------- Matthew M. Beier, Esq. $230 Eliza M. Reyes, Esq. $200 Jean M. Steele $110 Ms. Besop assured the Court that the Firm does not hold any interest adverse to the Debtor, its creditors or estate and is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Marinette, Wisconsin, SpecialtyChem Products, Corp., manufactures various organic chemicals for paper products, electronics, agricultural products and other materials. The company filed for chapter 11 protection on June 12, 2006 (Bankr. E.D. Wis. Case No. 06-23131). Christopher J. Stroebel, Esq., Timothy F. Nixon and Marie L. Nienhuis, Esq., at Godfrey & Kahn, S.C., represent the Debtor in its restructuring efforts. Fort Dearborn Partners, Inc., is the Debtor's turnaround consultant, and gives financial advice to the Debtor. Matthew M. Beier, Esq., and Eliza M. Reyes, Esq., at Brennan, Steil and Basting, S.C., and Matthew T. Gensburg, Esq., and Nancy A. Peterman, Esq., at Greenberg Traurig, L.L.P., represent the Official Committee of Unsecured Creditors of the Debtor. In its schedule of assets and liabilities, the Debtor disclosed $11,394,224 in total assets and $12,323,425 in total debts. STANDARD PARKING: Has $10.18MM Working Capital Deficit at June 30 ----------------------------------------------------------------- Standard Parking Corporation disclosed that its second quarter 2006 revenue (excluding reimbursed management contract expense) grew 4% while gross profit 7%, respectively. Pre-tax income increased by 15%. "We are obviously pleased to deliver yet another quarter of solid operating results," James A. Wilhelm, president and chief executive officer, said. "Strong 15% growth in pre-tax income reflects the Company's ongoing ability to provide consistent, predictable financial results despite the continuing impact of Hurricane Katrina. "We added 18 net new locations during the second quarter of 2006, and our retention rate for existing business improved to 92% for the twelve months ended June 30, 2006. Our improving retention rate speaks to our product and our ability to deliver it, whether through stringent internal auditing of our revenue controls, our parker-oriented amenity programs or our technological solutions for clients. The fact that we are winning more than we are losing provides further evidence that our product is being well received in the market." Second Quarter Operating Results Revenue for the second quarter of 2006, excluding reimbursed management contract expense, increased by approximately 4% to $64.9 million from $62.5 million in the year ago period. Excluding New Orleans, revenue from same locations (locations open more than one year) increased by 6% as compared to the second quarter of 2005. Gross profit in the quarter increased by more than 7% to $18.8 million from $17.5 million a year ago, despite the fact that gross profit from the Company's New Orleans operations was $500,000 less than the year ago period due to Hurricane Katrina. While the recovery in New Orleans continues, progress is slow and not all of the City's operations are back to pre-Hurricane levels. During the second quarter, however, the Company did resume collections from the City's on-street meters, and now is collecting revenues from 3,800 parking spaces. An insurance claim for the Company's Hurricane-related losses has been filed, although no final determination is expected before the end of 2006. Second quarter 2006 gross profit included $200,000 realized from the Sound Parking portfolio, which was partially offset by a $100,000 charge related to an operation in Minnesota. The contract for the Minnesota location was terminated as of the end of May 2006, and the Company does not expect any further financial obligations related to that contract. Same location gross profit increased by 6% during the second quarter, and would have been 8% excluding New Orleans. General and administrative expenses increased by approximately 9% to $10.1 million from $9.2 million a year ago. The increase was due partially to the January acquisition of the Sound Parking operations of $100,000 and stock compensation expense of $200,000 resulting from the adoption of FAS 123R. Also, audit and Sarbanes-Oxley costs were incurred earlier in the year this year as compared to last year contributing to $200,000 of the increase in G&A. The remainder of the increase was due to resource investments in new initiatives that began in the latter part of 2005. Second quarter 2006 general and administrative expenses were down $600,000, or almost 6% as compared to the 2006 first quarter, and the Company expects that its underlying G&A run rate for the remainder of 2006 will be consistent with second quarter levels. Second quarter 2006 operating income increased by almost 6% to $7.2 million versus $6.8 million in the year ago quarter. Free cash flow was used to reduce borrowings, resulting in reduced leverage and borrowing rates. Therefore, despite a higher interest rate environment, interest expense for the second quarter of 2006 decreased by almost 11% to $2.2 million from $2.5 million a year ago. Pre-tax income for the second quarter increased by more than 15% to $5.0 million from $4.4 million in the second quarter of 2005. The Company expects its 2006 book tax provision to be approximately 15% in the absence of any changes to the valuation allowance for its deferred tax assets. Given the potential for significant fluctuation in GAAP tax expense, the Company considers year-over-year growth in pre-tax income to be the most meaningful measure of its overall earnings performance. The Company continues to expect its cash tax expense to be under 5% for 2006. Net income for the 2006 second quarter was $4.4 million versus $4.3 million a year ago. At June 30, 2006, the Company's balance sheet showed $194.149 million in total assets, $167.102 million in total liabilities, and $27.046 million in total stockholders' equity. The Company's June 30 balance sheet showed strained liquidity with $48.404 million in total current assets available to pay $58.584 million in total current liabilities coming due within the next 12 months. Free cash flow for the second quarter was $13.6 million as compared with $2.8 million a year ago. There was a permanent shift in the timing of approximately $3.0 million in payments under the Company's performance-based compensation program, from the 2005 second quarter to the first quarter of 2006 (and subsequent years). Normal fluctuations in the timing of payments, collections and certain accruals can impact free cash flow significantly. In the first quarter of 2006, such fluctuations resulted in negative cash flow. As expected, many of these items reversed in the second quarter, resulting in the higher free cash flow. Free cash flow was used to repay debt and repurchase shares of the Company's stock in open market transactions totaling $3.0 million. The Company repurchased approximately 105,000 shares at an average price of $28.50. Through June 2006, the Company has repurchased stock at a cost totaling $6.0 million of the $7.5 million authorized by the Board. Debt Refinancing The Company has entered into an amended and restated senior credit agreement. The $135 million revolving facility, which matures in June 2011, represents a commitment increase of $45 million. Key changes to the credit agreement consist of a reduction in the pricing of the LIBOR Margin, Base Rate Margin and the Letter of Credit Fee Rate of up to 50 basis points. On July 31, the Company repaid the remaining principal balance of $48.9 million, along with accrued interest, on all of its remaining 9.25% Notes with lower cost borrowings under its senior credit agreement. As a measure of protection against rising interest rates, on Aug. 1, 2006, the Company purchased a three-year interest rate cap on $50 million of revolving borrowings, which will cap LIBOR at 5.75%. Mr. Wilhelm commented, "Our debt refinancing represents the latest step in our ongoing efforts to lower the cost of our debt financing and overall cost of capital while maintaining a high degree of financial flexibility. Our consistent performance from both an earnings and cash flow perspective has enabled us to refinance our debt and achieve an expected cost savings of $0.04 per share for the remainder of 2006." Recent Developments -- A multi-year contract to manage over 15,000 parking spaces at the Portland International Airport in Portland, Oregon. Four other parking operators, including the incumbent, had competed for this contract. -- Expansion of the Company's contract with the Cincinnati Airport to include shuttle bus services to transport employees and customers from the terminals to remote parking lots. -- A contract to manage 6,000 parking spaces serving the newly constructed Toyota Park in Chicago, permanent home to Major League Soccer's Chicago Fire. The 28,000-seat stadium will also host concerts and other special events throughout the year. With the award of this new contract, Standard Parking now manages every major sports stadium parking facility in the Chicago area. -- A multi-year contract to manage parking at the Gateway East and Gateway North garages in Cleveland, Ohio. The parking garages serve the downtown Cleveland market as well as Jacobs Field, home of Major League Baseball's Cleveland Indians, as well as Quicken Loans Arena, home to the National Basketball Association's Cleveland Cavaliers. -- A contract to manage the parking serving the Pearl Harbor Visitors Center in Honolulu. The parking lot provides visitor parking for the Battleship USS Missouri Memorial and the USS Bowfin Submarine Museum, as well as overflow parking for the USS Arizona Memorial. -- A contract awarded by the New York City Economic Development Corporation to manage two parking facilities containing 850 parking spaces and shuttle busses that serve the Staten Island Ferry. -- A multi-year contract awarded to operate Market Place I & II in Seattle, Washington. The award enhances the relationship between Standard Parking and Tishman Speyer, one of the world's leading owners, developers and operators of first-class real estate. -- Expansion of the Company's contract with New York Hospital Queens to include a shuttle operation that transports employees, physicians and visitors to and from area parking facilities to the Medical Center. Year-to-Date Results Revenue for the first half of 2006, excluding reimbursed management contract expense, increased by over 4% to $128.5 million from $123.0 million in the first half of 2005. Gross profit for the first half of 2006 increased over 12% to $37.6 million from $33.5 million in the year ago period. The Sound Parking portfolio in Seattle that the Company acquired in January 2006 generated $400,000 of gross profit in 2006. Gross profit for 2006 was negatively affected, however, by $800,000 due to the continuing impact of Hurricane Katrina and by a $200,000 charge related to the terminated Minnesota operation. General and administrative expenses for the first six months of 2006 increased 13% to $20.7 million from $18.3 million for the first six months of 2005. Aside from the ongoing costs related to permanent resource investment in growth initiatives, other contributing factors include expenses associated with the acquired Sound Parking operations of $300,000, stock compensation expense of $300,000, and additional audit and Sarbanes-Oxley expenses of $200,000. Operating income for the first half of 2006 increased almost 22% to $13.9 million from $11.4 million in the first half of 2005. Excluding the $900,000 valuation allowance taken in the first quarter of 2005, first half 2006 operating income would have increased 13% over first half 2005 results. Interest expense decreased by $500,000 to $4.4 million for the first six months of 2006, due to a reduction in outstanding borrowings and applicable rates. Pre-tax income was $9.4 million, an increase of almost 46% over the same period last year. After adjusting for last year's valuation allowance, pre-tax income for the first six months of 2006 increased 28% as compared with the same period of 2005. Income tax expense was $1.3 million for the first six months of 2006 as compared with $100,000 for the six months of 2005 due to the recording of $500,000 of quarterly deferred tax expense. Net income for the first half of 2006 was $8.2 million as compared with $6.4 million in the same period of 2005, an increase of 29%. The Company generated $10.8 million of free cash flow during the first half of 2006 as compared with $8.7 million during the first half of 2005. With the elimination of semi-annual interest payments that will result from the Company's July 2006 redemption of all of its outstanding 9.25% Notes, the timing of free cash flow will change from its historical patterns, even without the normal fluctuations in working capital. The Company nevertheless continues to expect to generate at least $20 million in 2006 free cash flow. Mr. Wilhelm concluded, "Our pipeline for new business remains strong, especially in our airport and hospital and university businesses. In the Airport Division, we retained every contract that was up for bid during the first two quarters and added some new inventory. We are on track with what we have forecasted in terms of deals for the third and fourth quarters. "As expected, our recent acquisition of the Sound Parking portfolio is providing benefits through its integration into our operations in the Pacific Northwest. We are successfully leveraging its relationships with our size to participate in major transactions in that marketplace that neither Company would have been able to accomplish on its own. "Finally, due to our stock's performance and the resulting increase in our market capitalization, Standard Parking recently was added to the Russell 2000 Index. We look forward to the increased visibility that this recognition will bring." Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?fac Standard Parking Corporation (NASDAQ: STAN) -- http://www.standardparking.com/-- provides parking facility management services. The Company provides on-site management services at multi-level and surface parking facilities for all major markets of the parking industry. The Company manages over 1,900 parking facilities, containing over one million parking spaces in more than 300 cities across the United States and Canada, including parking-related and shuttle bus operations serving more than 60 airports. * * * Standard & Poor's Ratings Services raised Standard Parking Corp.'s corporate credit and senior secured debt ratings to 'B+' from 'B', and raised the senior subordinated debt rating to 'B-' from 'CCC+'. SUB SURFACE: Posts $423,361 Net Loss in Third Fiscal Quarter ------------------------------------------------------------ Sub Surface Waste Management of Delaware, Inc., posted a $423,361 net loss on $76,662 of net revenues in the third fiscal quarter ending June 30, 2006, the Company disclosed in a Form 10-QSB filing delivered to the Securities and Exchange Commission on Aug. 4, 2006 As of June 30, 2006, the Company's balance sheet showed assets totaling $1,214,490 and $547,282 stockholders equity. Liquidity and Capital Resources Cash totaled $139,286 as of June 30, 2006. During the nine months ended June 30, 2006, the Company raised $157,000 net of $5,000 placement fees from issuance of 4,350,000 shares of restricted and unrestricted common stock, including the sale of 150,000 shares of unrestricted common stock to Fusion Capital Fund II, LLC. As of June 30, 2006 the Company had working capital of $383,100, compared to a negative working capital of $14,111 as of June 30, 2005. Current assets as of June 30, 2006 of $1,050,308 include $465,696 due from affiliates compared to current assets of $1,008,590 included $771,829 due from affiliates for the period ended June 30, 2005. To date, the Company has financed its operations principally through private placements of equity securities and debt. The Company believes that it will raise sufficient cash to continue its operations through September 30, 2006, and anticipates that cash generated from anticipated private placements and projected revenues during the next quarter of fiscal 2006 will enable it to fulfill cash needs for 2006 operations. The Company has approximately $5,885,000 remaining to be used on its equity financing agreement with Fusion Capital. However, in order to use this financing, the stock price must be $0.10 or better for a specified period of time. According to Conrad Nagel, the Company's Chief Financial Officer, there can be no assurance that additional private or public financing, including debt or equity financing, will be available as needed, or, if available, on terms favorable to the Company. Any additional equity financing may be dilutive to shareholders and such additional equity securities may have rights, preferences or privileges that are senior to those of the Company's existing common or preferred stock. Furthermore, debt financing, if available, will require payment of interest and may involve restrictive covenants that could impose limitations on the operating flexibility of the Company. The failure of the Company to successfully obtain additional future funding may jeopardize the Company's ability to continue its business and operations. Going Concern Doubt Russell Bedford Stefanou Mirchandani LLP, the Company's auditor, expressed substantial doubt about the Company's ability to continue as a going concern after auditing the Company's financial statements for the year ending Sept. 30, 2005. The auditor points to the Company's recurring losses from operations and difficulty in generating sufficient cash flow to meet it obligations and sustain its operations. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?f7a Sub Surface Waste Management of Delaware, Inc., was formed under the laws of the State of Utah in January, 1986 and re-domiciled to the state of Delaware in February, 2001. The Company designs, installs and operates proprietary soil and groundwater remediation systems. TITAN GLOBAL: Inks $15 Million Revolving Loan With Capital Source ----------------------------------------------------------------- Titan Global Holdings, Inc. amended its existing financing facilities and reached an agreement in principal with Capital Source Finance, LLC to establish a new $15,000,000 revolving credit facility and $4,974,000 senior term loan. The new financings will be used to repay the existing credit facility of Oblio Telecom Inc. with Capital Source, to finance a portion of a recapitalization, and to provide for future working capital requirements. "In our current fiscal year we paid approximately $7.5 million to our senior lenders in interest, fees, and principal," said David Marks, Chairman of Titan. "Given these contractual obligations, Titan wasn't able to invest in significant organic growth. As we look towards our next fiscal year, Titan's management is very focused on de-leveraging its balance sheet. Upon completion of these new financings, Titan will have more flexibility to use its substantial free cash flow for use to exploit Titan's organic and strategic opportunities." The new financings will also be used, in part, to repay senior convertible loans due to Laurus Master Fund, Ltd. The Revolving Credit Facility would have a term of three years and an interest rate of the Prime Rate of Citibank, N.A. plus 1.50%, and the Senior Term Loan would have a term of three years and would be amortized over four years on a straight line basis with an interest rate of the Prime Rate of Citibank, N.A., plus 4.00%. Titan and Capital Source expect to close the transaction by September 30, 2006. These new financing arrangements will include the issuance of Common Stock and dilution to current shareholders. There can be no assurance that such new financing arrangements will be finalized in a timely fashion or on terms acceptable to Titan. If the parties are unable to agree on final terms, the contemplated financings will not be completed. "In our fiscal year which ends August 31, 2006 Titan made great fundamental progress in dramatically growing its revenue and EBITDA," said Bryan Chance, CFO of Titan Global Holdings. "The completion of these financings will give our subsidiaries the working capital to exploit organic and strategic opportunities that deliver a high return on invested cash flow." EBIDTA is defined as earnings before interest, taxes, depreciation and amortization. The agreement in principal is subject to Capital Source's ongoing due diligence and audits, Titan's execution and delivery to Capital Source of loan and security agreements, notes, and assurances as are reasonable and customary for similar loans, and as Capital Source may reasonably require in connection with the Closing. Further, the agreement in principal requires Titan to issue Capital Source 175,000 shares of its common stock and to raise additional equity or convertible debt of at least $5.5 million. Titan has filed an 8-K with the Securities and Exchange Commission relating to its financing with Capital Source. Headquartered in Salt Lake City, Utah, Titan Global Holdings, Inc. (OTCBB: TTGL) -- http://www.titanglobalholdings.com/-- operates through three divisions: Oblio Telecom, Inc., Titan PCB East, Inc. and Titan PCB West, Inc. Oblio is engaged in the creation, marketing, and distribution of prepaid telephone products for the wire line and wireless markets and other related activities. Titan PCB is a printed circuit board manufacturer providing competitively priced time-sensitive, quality products to the commercial and military electronics markets. Titan PCB offers high layer count, fine line production of rigid, rigid-flex and flex PCBs. Going Concern Doubt As reported in the Troubled Company Reporter on Jan. 5, 2006, Wolf & Company, P.C., in Boston, Massachusetts, raised substantial doubt about Titan Global Holdings, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the fiscal year ended Aug. 31, 2005. The auditor pointed to the Company's significant operating losses, high debt levels, defaults on debt covenants, and negative working capital. At May 31, 2006, the Company's balance sheet showed total assets of $46,945,000 and total liabilities of $54,586,000, resulting in a stockholders' deficit of $7,641,000. TRIPATH TECH: June 30 Balance Sheet Upside-Down by $4.8 Million --------------------------------------------------------------- Tripath Technology Inc. filed its third fiscal quarter financial statements for the three months ended June 30, 2006, with the Securities and Exchange Commission on Aug. 9, 2006, The Company reported a $1.297 million net loss on $2.382 million of revenues for the third quarter ended June 30, 2006, compared with a $600,000 net loss on $2.886 million revenues for the same period in 2005. At June 30, 2006, the Company's balance sheet showed $7.824 million in total assets and $12.661 million in total liabilities, resulting in a $4.837 million stockholders' deficit. The Company's June 30 balance sheet showed strained liquidity with $6.991 million in total current assets available to pay $12.243 million in total current liabilities coming due within the next 12 months. Full-text copies of the Company's third quarter financials are available for free at http://ResearchArchives.com/t/s?f77 Going Concern Doubt As reported in the Troubled Company Reporter on Dec. 15, 2005, Stonefield Josephson, Inc., expressed substantial doubt about Tripath Technology Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended Sept. 30, 2005 and 2004. The auditing firm pointed to the Company's recurring operating losses and accumulated deficit. About Tripath Headquartered in San Jose, California, Tripath Technology Inc. -- http://www.tripath.com/-- is a fabless semiconductor company which provides power amplification to the Flat Panel Television, Home Theater, Automotive Audio and Consumer and PC Convergence markets. Tripath owns the patented technology called Digital Power Processing. Tripath markets audio amplifiers with DPP(R) under the brand name Class-T(R). Tripath's current customers include Alcatel, Alpine, Hitachi, JVC, Samsung, Sanyo, Sharp, Sony and Toshiba. TRUST ADVISORS: Court Confirms First Amended Reorganization Plan ---------------------------------------------------------------- The Honorable Alan H. W. Shiff of the U.S. Bankruptcy Court for the District of Connecticut in Bridgeport confirmed Trust Advisors Stable Value Plus Fund's First Amended Plan of Reorganization on July 28, 2006. The Court determined that the Plan satisfies the 13 requirements imposed by Section 1129(a) of the Bankruptcy Code. The Plan contemplates the orderly liquidation and distribution of the Debtors' assets. No classes of creditors are impaired under the Plan while two classes of interest holders are impaired. On the effective date, the Declaration of Trust of Circle Trust Company Trust Advisors Employee Benefit Investment Funds will be amended to incorporate the provisions of the Plan. The fund will exist solely for the purposes of: -- making the distributions provided for in the Plan; and -- funding and prosecuting litigation as provided for in the Plan. Circle Trust will remain as Fund Trustee but fiduciary duties will be exercised by Fiduciary Counselors, Inc., as liquidating fiduciary. Reliance Trust Company will continue to provide custodial services with respect to the Fund. Treatment of Claims Allowed Unsecured Claims, estimated at $500,000, will be paid in full with interest on the effective date of the Plan. Hong Kong and Shanghai Banking Corporation will retain its rights under the HSBC Amended Liquidating Account Agreement. HSBC will not be entitled to any cure amount as a result of the assumption of the agreement. Under the Plan, the Liquidating Fiduciary has the option to pay in full the holders of Class 3 Allowed Investor Interests with a March 31, 2006 SEI Assets Interest of $3,000 or less, it the Department of Labor litigations is resolved as anticipated. The SEI Stable Asset Fund is a collective investment fund with respect to which the SEI Trust Company serves as Trustee. Allowed Investor Interests with a March 31, 2006, SEI Asset Interest of $70,000 or less under Class 3 will remain a participant in the Fund and will have a proportionate interest in each of the assets of the Fund. This class will receive an initial cash distribution on the effective date with respect to all assets of the fund other than the SEI assets. Periodic distributions from the fund will subsequently be made equal to the additional aggregate amounts that have been liquidated. With respect to the SEI assets, each holder will receive, on the effective date, a cash distribution equal to the holders' effective date SEI asset interest. Allowed Investor Interests with a March 31, 2006, SEI Asset Interest of more than $70,000, will receive similar treatment as those under Class 3 with respect to all assets of the fund other than the SEI assets. This class' SEI assets will have a special treatment under the Plan. A full-text copy of the Debtor's First Amended Plan of Reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=060815232923 Headquartered in Darien, Connecticut, Trust Advisors Stable Value Plus Fund is a collective trust for employee benefit plan investors and was created to serve as an investment vehicle for various types of pension plans qualified under Section 401(a) of the Internal Revenue Code, which plans are also governed by the Employee Retirement Income Security Act of 1974. The Company filed for chapter 11 protection on Sept. 30, 2005, (Bankr. D. Conn. Case No. 05-51353). Scott D. Rosen, Esq., at Cohn Birnbaum & Shea P.C. represents the Debtor in its restructuring efforts. Robert A. White, Esq., Robert E. Kaelin, Esq., and Lissa J. Paris, Esq., at Murtha Cullina LLP, represent the Official Committee of Unsecured Investor Creditors. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $100 million. USEC INC: Earns $21.6 Million in Second Quarter of 2006 ------------------------------------------------------- USEC Inc. reported net income of $21.6 million in the quarter ended June 30, 2006, compared with a loss of $3.0 million in the same quarter of 2005. Pro forma net income before American Centrifuge expenses was $38.4 million in the second quarter of 2006, compared with $11.6 million in the same period of 2005. For the first six months of 2006, net income was $56.2 million compared with a loss of $2.1 million in the same period of 2005. Pro forma net income before American Centrifuge expenses was $85.3 million in 2006 compared with $26.2 million in the same period last year. The improved second quarter results were a result of 89% higher revenue than the year earlier due to higher SWU volume and higher average prices billed to customers, increased sales of higher margin uranium, and lower interest expense following the repayment of bonds maturing in January 2006. Expenses related to the American Centrifuge were $3.2 million higher than in the second quarter of 2005. "Our financial results demonstrate that the steps taken in recent years to lower costs and improve the gross margin for our products are producing strong results," John K. Welch, USEC president and chief executive officer, said. "Nonetheless, we are very mindful that higher power costs will have a detrimental effect on earnings going forward, and we are focused on developing mitigating actions. "We also continue to evaluate the best path for demonstrating and deploying the American Centrifuge technology, which we expect to be an industry leading uranium enrichment process," Mr. Welch said. "As we continue with our demonstration activities to finalize the machine design, the data we have gathered thus far gives us a high degree of confidence that the centrifuges we plan to deploy commercially will operate as well, or possibly better, than we had initially targeted. "We anticipated installing the first cascade of machines in the demonstration facility late this summer and to begin operating the cascade thereafter. While we expect to be operating a small number of machines by late summer, we have adjusted our plans to have a full Lead Cascade of machines installed and operating by mid-2007. "In April, we tested a centrifuge machine that achieved performance essentially at our target level under sub-optimal operating conditions. We believe that taking some additional time now to optimize the performance and reliability of individual machines is the prudent course of action to ensure we are maximizing shareholder value," Mr. Welch said. USEC is currently expensing most of its spending related to the American Centrifuge, directly reducing net income. To help investors evaluate the impact of these adjustments to current business results, USEC is reporting a non-GAAP financial measure - pro forma net income before American Centrifuge expenses. Revenue Revenue for the second quarter was $525.3 million, compared with $277.4 million in the same period a year earlier. Revenue from sales of Separative Work Units was $404.3 million, which was $211 million or 109% higher than the second quarter of 2005. The increase was due to 5% higher average prices billed to customers and volume that nearly doubled quarter over quarter. Uranium revenue was $71 million, $37.3 million higher than a year earlier, reflecting substantially higher volume and relatively flat average prices billed to customers. Revenue from U.S. government contracts and other was virtually unchanged year over year for both the quarter and six-month periods. For the six-month period, revenue was $886.6 million, or $298 million more than the same period of 2005. Revenue from SWU sales was $638.3 million, a 57% improvement over last year on a 7% increase in prices billed to customers and a 47% increase in volume. Uranium revenue for the first half of 2006 was $146.8 million compared with $79.5 million in the same period last year, an 85% increase that reflects a 33% increase in the average price billed to customers. At June 30, deferred revenue amounted to $108.3 million, with a deferred gross profit of $40.7 million. In a number of sales transactions, USEC transfers title and collects cash from customers but does not recognize the revenue until low enriched uranium is physically delivered. Cash flow At June 30, 2006, USEC had a cash balance of $21.6 million. Short-term debt under the bank credit facility was $26.0 million. Cash flow from operations during the six-month period was $39.7 million compared with $38.2 million in the same period a year earlier. Operations generated more cash year over year on higher customer collections but this was offset by additional payments to Russia due to timing of deliveries to USEC, higher payments for power due to prepayments to TVA under the new power contract, and higher tax payments. The largest use of cash during the first half of 2006 was the repayment of principal at maturity of the remaining $288.8 million of bonds due in January 2006. The Company also had $16.1 million in capital expenditures, including capitalized costs for the American Centrifuge Plant, compared with $11.8 million in capital expenditures in the same period last year. USEC entered into a five-year, syndicated bank credit facility in August 2005 that provides up to $400 million in revolving credit commitments secured by assets of the Company and its subsidiaries. As agreed, the facility's availability was reduced by $150 million on July 20 until USEC issues additional debt or equity. Proceeds from any future debt or equity offerings would reduce the amount of this $150 million reserve on a dollar-for-dollar basis. The Company expects that its cash, internally generated funds from operations and available financing under the credit facility will be sufficient over the next 12 months to meet its cash needs. American Centrifuge Update The Company continues its substantial efforts at developing and deploying the American Centrifuge technology as a replacement for the gaseous diffusion technology used at its Paducah plant. Since early 2005, it has been manufacturing and testing prototype parts, components, subassemblies and full centrifuges in order to finalize the design and gather reliability data for the machines that it anticipates will be operated in the Lead Cascade. As part of this process, individual parts, subassemblies and individual machines are put through a series of mechanical tests to determine operating parameters and performance capability. These initial tests are run with the centrifuges empty; subsequently under plant-like conditions, machines are tested with uranium hexafluoride (UF6) to measure separation performance. This testing takes place at our leased facilities at Oak Ridge, Tennessee. Once optimized performance of the Company's prototype machines is achieved, it plans to assemble these machines into a group it calls a Lead Cascade, that is, the first cascade in its demonstration facility in Piketon, Ohio. The Company has a license to operate this Lead Cascade on UF6 gas in order to measure operational aspects of the cascade of machines operating as a grouped unit. This configuration provides data that helps to predict the way they will operate in a full scale commercial plant. Operating the Lead Cascade will give the Company the performance and reliability data it needs to help confirm the economics of the American Centrifuge program. The Company has been strongly encouraged by the performance of its prototype machines in testing at its facilities in Oak Ridge. For example, the Company has achieved performance essentially at its target level of about 320 SWUs per machine per year under sub- optimal operating conditions. As with any large scale development-to-commercialization project, it has experienced various challenges in manufacturing and testing that have caused delays and over the course of the project it is likely to encounter additional challenges. The Company continues to have every confidence in the technology and its well-qualified program team. The Company had targeted to install the first cascade of centrifuges in Piketon late this summer and begin operating the machines shortly thereafter. While it expects to be operating a small number of machines at the demonstration facility by late summer, the Company has adjusted its plans to have a full Lead Cascade of machines installed and operating by mid-2007. The Company has the capability to build and install a Lead Cascade of machines that can perform at less than its target level. The Company believes that taking some additional time now to optimize the performance and reliability of individual machines could result in its deploying centrifuges with higher performance. The process of obtaining an operating license from the U.S. Nuclear Regulatory Commission for the American Centrifuge plant continues to move forward, with the license still expected to be issued by early 2007. USEC also continues to evaluate its options for financing the American Centrifuge plant. It plans to finance the project through a combination of internally generated cash as well as the proceeds from debt and equity securities offerings. Its ability to secure financing will depend upon project economics, risk profile, and projected revenues and earnings, taking into account overall cost estimates, timing and market assumptions, including SWU prices and continued restrictions on Russian low-enriched uranium imports under the Russian Suspension Agreement. Other Business Matters -- The International Trade Commission voted on July 18 to maintain the antidumping suspension agreement that limits imports of Russian uranium products. By a 4 to 1 vote, the ITC found that lifting the 1992 Russian suspension agreement would likely cause material injury to domestic producers, including USEC. The ITC ruling was part of a "sunset review" of the Russian suspension agreement and was parallel with a May 31 finding by the U.S. Department of Commerce that terminating the agreement would likely lead to a resumption of dumping of Russian uranium products. Under the Russian suspension agreement, Russia is only allowed to sell enriched uranium in the United States through USEC as part of the Megatons to Megawatts nonproliferation program that has eliminated material equivalent to more than 11,000 nuclear warheads. -- The Paducah plant uses Freon as a primary process coolant. Production of Freon ended a decade ago in the United States and is no longer commercially available. The Company has exhausted its inventory of Freon at Paducah and it plans to use a portion of the 4 million pounds of Freon stored at the Piketon plant. The total amount would provide approximately 10 years of Freon supply for its Paducah operations. Approximately 400,000 pounds of this Freon has been moved to the Paducah plant and the Company anticipates loading this coolant into the plant in August. The Company is in discussions with DOE regarding our use of this Freon. It expects the 400,000 pounds to be sufficient for operations through late 2007. -- In July 2006, USEC, the Department of Energy's National Nuclear Security Administration and BWX Technologies completed a multi-year project of converting U.S. highly enriched uranium into nuclear fuel for commercial power plants. Approximately 50 metric tons of weapons-grade HEU equivalent to about 800 nuclear warheads was converted into nearly 660 metric tons of low-enriched fuel. DOE transferred the HEU to USEC as part of the privatization of the Company in 1998. USEC contracted with BWXT to downblend the surplus HEU with natural uranium, and USEC sold the resulting commercial-grade fuel to its utility customers. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?f98 Bethesda, Maryland-based USEC Inc. (NYSE:USU) is a global energy company that supplies enriched uranium fuel for commercial nuclear power plants. * * * As reported in the Troubled Company Reporter on June 30, 2006, Standard & Poor's Ratings Services lowered its corporate credit rating on USEC Inc. to 'B-' from 'B+'. At the same time, S&P lowered its senior unsecured rating on USEC's 6.75% senior notes due 2009 to 'CCC' from 'B-'. S&P said the outlook is negative. Moody's Investors Service downgraded the senior unsecured debt rating of USEC Inc. to B2 from Ba3. Moody's also downgraded the Corporate Family Rating to B1 from Ba2. VERIFONE HOLDING: To Acquire Trintech's Payment Systems Business ---------------------------------------------------------------- VeriFone Holdings, Inc. agreed to acquire the payment systems business of Trintech Group PLC in an all-cash transaction. Trintech's unattended and outdoor payment systems will enhance VeriFone's solutions in the growing markets for self-service payment, vending, and pay-at-the-pump applications. "The acquisition continues VeriFone's expansion into new growth markets," said VeriFone Chairman and CEO, Douglas G. Bergeron. "Trintech built a track record of innovation and leadership in unattended payment systems and EFT software. The acquisition of Trintech's payment business and its strong customer relationships will further enhance VeriFone's leadership in the growing and ever changing electronic payments business." The acquisition includes a range of payment systems that will support and extend VeriFone's existing offerings for merchants and financial institutions. VeriFone will take over distribution of those products and will provide existing customers with service and support. "We are confident that the acquisition of our payment systems business by VeriFone is a strong fit with VeriFone's global position in the secure electronic payment technologies marketplace," said Trintech Chairman and Chief Executive Officer, Cyril McGuire. "Trintech is reinforcing its strategic focus on its core competence in the Funds Management business. This strategic sale is designed to allow Trintech to aggressively expand its transaction reconciliation software business globally servicing customers in the commercial, financial and healthcare markets." Trintech is divesting its payment systems business to concentrate on its transaction reconciliation software products and services, which allow customers to optimize enterprise funds management performance, including transaction verification, account reconciliation, process management and compliance. Under the terms of the Agreement, VeriFone will pay Trintech $12.1 million cash for all of the outstanding shares of a newly-formed subsidiary which, prior to closing, will hold substantially all of the assets and liabilities of the payment systems business of Trintech. The purchase price is subject to adjustment based on the working capital of the business and other accruals at the closing date. Trintech's board of directors has approved the sale, which is subject to customary closing conditions and is expected to close by the end of August, 2006. Trintech will provide further information on this transaction on its next quarterly earnings call scheduled for Wednesday 23rd August, 2006. William Blair & Company, LLC and Ion Equity acted as financial advisors to Trintech Group PLC. Financial Technology Partners LP and FTP Securities LLC acted as financial advisor to VeriFone. Verifone Holdings, Inc. (NYSE:PAY) is headquartered in Santa Clara, California, and is a global market leader in the development and sale of point-of-sale electronic payment systems. * * * Verifone Holdings' Corporate Family and Bank Loan Debt's Rating carry Moody's Investors Service B1 rating. VTEX ENERGY: Completes Acquisition of U.K. Energy Assets -------------------------------------------------------- VTEX Energy, Inc., and its wholly-owned subsidiary, Viking International Petroleum, PLC, completed the acquisition and the related financing of certain energy assets in the United Kingdom. The acquisition and financing was related to an agreement entered into on October 7, 2005, by the Company and its subsidiary, with Marathon Capital, LLC and U.S. Energy Systems, Inc. regarding the joint acquisition of certain energy assets in the U.K. The assets acquired include: (a) gas licenses for approximately 100,000 acres of onshore natural gas properties and mineral rights in North Yorkshire, England, containing approximately 62.4 bcf of proved and probable reserves; (b) the Knapton Generating Station, a 42 MW gas-fired power plant associated with and located in the vicinity of the natural gas reserves in North Yorkshire, England; and (c) certain related gas gathering and processing assets. The Company disclosed that, as part of the U.K. transaction, it entered into a power purchase agreement and a gas sales agreement with Scottish Power Energy Management, under which Scottish Power is required to take all of the electricity generated by the Knapton Generating Station and all of the natural gas produced from the associated reserves up to 100 bcf for a term of up to 12 years. The financing of the U.K. transaction provided approximately $167 million for the acquisition of the U.K. Assets, for certain reserves required by the terms of the financing and for working capital to be used by for the operation and upgrading of the U.K. assets and the increased production of natural gas from the reserves covered by the gas licenses. VTEX Energy, Inc., explores for and produces oil and gas primarily in Louisiana and Texas. The company focuses on low-risk drilling developments, recompletions, and workovers, and has estimated proved preserves of 103,000 barrels of crude oil and 9.4 billion cu. ft. of natural gas. Going Concern Doubt Pannell Kerr Forster of Texas, P.C., in Houston, Texas, raised substantial doubt about VTEX Energy, Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended April 30, 2005. The auditor pointed to the company's significant losses from operations, working capital deficiency, and additional funding requirement. WERNER LADDER: U.S. Trustee Objects to Financial Advisor's Fees --------------------------------------------------------------- Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, objects to the motion of Werner Holding Co. (DE), Inc., aka Werner Ladder Company, and its debtor-affiliates, to hire Rothschild, Inc., as financial advisors modified to permit review of the reasonableness of the compensation terms and the amounts to be awarded upon submission of the firm's final fee application. U.S. Trustee Objects The U.S. Trustee tells the Court that the Debtors seek to pay Rothschild, Inc., various "contingent" fees without regard to the Rothschild's actual involvement in the events giving rise to those contingent fees and whether the estate receives a benefit from those events net of the contingent fees payable to the firm. It also appears that Rothschild would be entitled to collect the contingent fees even if the payment of those fees would result in net distributions to creditors of less than the amounts that would be distributed in an immediate Chapter 7 liquidation. No contingent fees of any kind should be payable to Rothschild except upon demonstration of value added for the benefit of unsecured creditors, and those fees should not exceed the demonstrable added value; the estates should be enhanced, not diminished, by the engagement of Rothschild, Ms. Stapleton contends. The U.S. Trustee also objects to the pre-approval of Rothschild's fee arrangement. The U.S. Trustee argues that the review, consideration and approval of Rothschild's fees should be deferred until the conclusion of the Debtors' case, when the efficacy of Rothschild's services can be evaluated. Rothschild should be required to satisfy its burden of proof under Section 330 of the Bankruptcy Code when it applies for compensation, and should not be granted the benefit of "protection" under 11 U.S.C. Section 328(a) to circumvent that burden, Ms. Stapleton asserts. The U.S. Trustee also notes that the Rothschild engagement letter provide that if indemnity is not available for any reason, Rothschild's aggregate contribution liability will be limited to the compensation paid to Rothschild in connection with the engagement unless the limitation is prohibited by applicable law; in that case, relative fault may also be considered in determining Rothschild's contribution liability. According to Ms. Stapleton, the Court should determine now, at the commencement of the engagement, that limitation of Rothschild's contribution liability to compensation received is not a reasonable term of employment and is prohibited. That limitation would otherwise hold Rothschild to an unconscionably low standard of performance, essentially waiving in advance claims for future acts and omissions. That limitation is not appropriate for a professional person employed to assist a debtor in performing its statutory duties. About Werner Ladder Headquartered in Greenville, Pennsylvania, Werner Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). The firm of Willkie Farr & Gallagher LLP serves as the Debtors' counsel. Kara Hammond Coyle, Esq., Matthew Barry Lunn, Esq., and Robert S. Brady, Esq., Young, Conaway, Stargatt & Taylor, LLP, represents the Debtors as its co-counsel. The Debtors have retained Rothschild Inc. as their financial advisor. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. (Werner Ladder Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) WERNER LADDER: Wants to Employ PwC as Tax Advisor and Auditor ------------------------------------------------------------- Werner Holding Co. (DE), Inc., aka Werner Ladder Company, and its debtor-affiliates ask permission from the U.S. Bankruptcy Court for the District of Delaware to employ PricewaterhouseCoopers LLP as their tax advisors and auditors, effective as of the Petition Date. PwC is a multi-national accounting firm that provides auditing, accounting advice, tax compliance and consulting, financial consulting and advisory services and has extensive experience in providing services for corporate restructurings in large and complex Chapter 11 cases. PwC has also served as the Debtors' tax advisors and auditors since August 1999 and has become well acquainted with their businesses, finances, operations, systems and capital resources, relates Larry V. Friend, vice-president, chief financial officer and treasurer of Werner Holding Co., Inc. Pursuant to an engagement letter dated Feb. 15, 2006, PwC agrees to: (1) review and sign the required state corporate income tax returns for the Debtors for the tax year beginning Jan. 1, 2005, through Dec. 31, 2005; (2) advise and assist the Debtors regarding tax planning issues, including calculating net operating loss carry forwards and the tax consequences of any proposed plan of reorganization; (3) assist in preparing any Internal Revenue Service ruling requests regarding the future tax consequences of alternative reorganization structures; and (4) perform all other tax, auditing and consulting services to the Debtors that are necessary in their bankruptcy proceedings. According to Mr. McCutcheon, PwC received a $29,500 fixed fee for its preparation and review of the Debtors' tax returns for 2005. The Debtors have paid $14,750 of the fixed fee. The Debtors will pay PwC for all other tax consulting, auditing, and related advisory support services on an hourly basis: Designation Hourly Rate ----------- ----------- Partner $445 - $605 Managing Director $430 - $525 Director and Senior Manager $315 - $450 Manager $295 - $420 Senior Associate $170 - $255 Associate $130 - $180 Intern $100 - $125 Administrative Staff $75 - $85 The Debtors will also reimburse PwC for its reasonable expenses incurred in connection with the provision of the additional services. The Debtors agree to indemnify and hold harmless PwC and its personnel from and against any and all third-party claims, suits and actions, and all associated damages, settlements, losses, liabilities, costs and expenses arising from or relating to the services provided, except to extent finally determined to have resulted from the gross negligence or other intentional misconduct of PwC. Robert W. McCutcheon, a partner at PwC, assures the Court that PwC is a disinterested person as the term is defined Sections 101(14) and 1107(b) of the Bankruptcy Code, and that the firm represents no interest adverse to the Debtors and their estates. PricewaterhouseCoopers LLP 300 Madison Avenue 24th Floor New York, New York 10017 Telephone: (646) 471 4000 U.S. Trustee Objects Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, disputes the limited liability provisions in PwC's engagement. "Stripped to its essence, this provision holds PwC to an unconscionably low standard of performance," Ms. Stapleton says. The U.S. Trustee explains that the low performance standards, which explicitly waive in advance claims for future acts and omissions that are anything short of gross negligence or intentional misconduct, are not appropriate for a professional person employed to assist a debtor in performing its statutory duties. The effect of that provision is to dramatically curtail the circumstances under which PwC may be held liable for more than the amount of its fees and then, no matter how egregious PwC's conduct, to limit the types of damages for which PwC may be held liable. The PwC engagement letter limits the firm's liability to pay damages for any losses incurred by client as a result of breach of contract, negligence or other tort committed by PwC, regardless of the theory of liability asserted, to no more than the total amount of fees paid to PwC for the particular service provided under the agreement to which the claim relates. In addition, PwC will not be liable in any event for lost profits or any consequential, indirect punitive, exemplary or special damages. Ms. Stapleton suggests that PwC provide proof that the limitation of liability provisions its seeks are common in the marketplace for tax services, and are reasonable. Otherwise, those provisions should be stricken. About Werner Ladder Headquartered in Greenville, Pennsylvania, Werner Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). The firm of Willkie Farr & Gallagher LLP serves as the Debtors' counsel. Kara Hammond Coyle, Esq., Matthew Barry Lunn, Esq., and Robert S. Brady, Esq., Young, Conaway, Stargatt & Taylor, LLP, represents the Debtors as its co-counsel. The Debtors have retained Rothschild Inc. as their financial advisor. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. (Werner Ladder Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) WORLDGATE COMMS: Completes $11 Mil. Funding With Cornell Capital ---------------------------------------------------------------- WorldGate Communications Inc., completed a transaction for up to $11 million of convertible debenture financing with Cornell Capital Partners, an investment fund which provides innovative financing solutions to growing companies in the small-cap sector worldwide. "We believe that this transaction significantly strengthens WorldGate's financial position and allows us to continue to invest in our Ojo video phone" said Hal Krisbergh, Chairman and CEO at WorldGate. "Cornell's investment, which is the largest investment by a single investor in the Company's history, will increase our ability to continue our technological leadership in video telephony and continue to market Ojo to customers around the world. Our recent successes in several key parts of the world will be enhanced by the support this investment will provide." The debenture has a maturity of three years, an interest rate of six percent per annum, and is convertible into WorldGate's common stock at a conversion price of the lesser of $1.75 per share or the 90% of a calculation based on the volume weighted average closing price. WorldGate received $6 million at the closing of the transaction. An additional $3 million will be funded upon shareholder approval of the transaction and $2 million will be funded upon an effective registration of the shares. As part of this private placement WorldGate will also issue five- year warrants to purchase up to a total of 2,595,000 shares of WorldGate common stock, with 1,145,000 of the shares having an exercise price of $1.85 per share, 1,100,000 of the shares having an exercise price of $2.35 per share, and 350,000 having an exercise price of $2.60 per share. "We are excited for this opportunity to work with the management of WorldGate and their Ojo Personal video phone" Michael D'Ecclesiis of Cornell Capital stated. "We look forward to a longstanding relationship with the company." Headquartered in Trevose, Pennsylvania, WorldGate Communications, Inc. -- http://www.wgate.com/-- designs, manufactures, and distributes personal video phones. WorldGate's products is marketed to consumers through cable, DSL, VoIP and satellite service providers as well as through retail stores worldwide under the Ojo brand name. WorldGate is traded on NASDAQ under the symbol WGAT. Going Concern Doubt As reported in the Troubled Company Reporter on May 16, 2006, Marcum & Kliegman LLP expressed substantial doubt about WorldGate Communications, Inc.'s ability to continue as a going concern. The accounting firm pointed to the Company's recurring losses from operations and accumulated deficit of $229 million after auditing its financial statements for the year ended Dec. 31, 2005. Worldgate's balance sheet at Dec. 31, 2005 showed $21,229,000 in total assets and $26,801,000 in total liabilities resulting to a total stockholders' deficit of $5,572,000. The Company's balance sheet also showed strained liquidity with $19,523,000 in total current assets and $7,133,000 in total current liabilities. For the 12 months ended Dec. 31, 2005, the Company incurred a $6,851,000 net loss out of $1,558,000 in net revenues. XERIUM TECHNOLOGIES: Earns $11.1 Million for 2006 Second Quarter ---------------------------------------------------------------- Xerium Technologies, Inc.'s net income was $11.1 million for the second quarter of 2006 compared to a net loss of $12.3 million for the second quarter of 2005. The Company's net sales for the second quarter of 2006 were $154.6 million, a 6% increase from $145.9 million for the second quarter of 2005. The Company disclosed net cash generated by operating activities was $18.3 million for the second quarter of 2006, compared to a negative $11.1 million in the same quarter last year. The Company also disclosed capital expenditures for the second quarter of 2006 were $9.5 million, compared to $8.7 million for the second quarter of 2005. Approximately $6.2 million of capital expenditures in this year's second quarter were directed toward projects designed to support the Company's growth objectives, with the remaining $3.3 million used to sustain the Company's existing operations and facilities. Net income of the Company was $20.7 million, for the first six months of 2006, compared to a net loss of $4.1 million, for the same period of 2005. The Company's net sales for the first half of 2006 were $301.3 million, a 1.2% increase from $297.8 million for the first six months of 2005. The total impact of currency fluctuations on net sales for the first six months of 2006, as compared to the first half of 2005, was a decrease of $5 million, including $1.6 million from currency translation and $3.4 million from the effect of currency on pricing. Net cash generated by operating activities was $22 million for the first six months of 2006, compared to $6.6 million in the same period last year. Declaration of Cash Dividend The Company also disclosed that its Board of Directors has declared a cash dividend of $0.225 per share of common stock payable on September 15, 2006. Headquartered in Wesborough, Massachusetts, Xerium Technologies, Inc. (NYSE: XRM) -- http://xerium.com/-- is a leading global manufacturer and supplier of two types of products used primarily in the production of paper: clothing and roll covers. The company, which operates around the world under a variety of brand names, owns a broad portfolio of patented and proprietary technologies to provide customers with tailored solutions and products integral to production, all designed to optimize performance and reduce operational costs. With 36 manufacturing facilities in 15 countries around the world, Xerium Technologies has approximately 3,900 employees. * * * As reported in the Troubled Company Reporter on Jan. 24, 2006, Moody's Investors Service changed the outlook on Xerium Technologies, Inc.'s ratings to negative from stable, and affirmed the company's corporate family rating at B1. The change in outlook to negative reflects Xerium's weaker than expected operating performance primarily due to production inefficiencies in North America and delays in achieving benefits from cost reduction initiatives. Moody's believes the impact of these issues, coupled with a difficult pricing environment for roll covers and to a lesser extent clothing products, will continue to negatively affect operating performance over the intermediate term. Affirmed ratings are: * Corporate family rating; B1 * Guaranteed senior secured term loan B; B1 * Guaranteed senior secured revolving credit facility; B1 * Proskauer Rose Hires Veteran Securities Litigator Thomas Sjoblom ------------------------------------------------------------------ Veteran securities litigator and regulatory attorney Thomas Sjoblom has joined Proskauer Rose LLP as a partner. He will be resident in Proskauer's Washington, D.C. office in addition to spending significant time in the firm's New York office. He will be joined by three associates, who, together with Mr. Sjoblom, constitute a significant expansion of the firm's regulatory and securities practices. Mr. Sjoblom specializes in working with financial institutions and with officers, directors and professionals at public companies through all stages of criminal investigations by the Securities and Exchange Commission, Department of Justice, state regulatory agencies and self-regulatory organizations such as the New York Stock Exchange and the National Associations of Securities Dealers. Before entering private practice, Mr. Sjoblom spent nearly 20 years at the SEC, where he prosecuted numerous white- collar proceedings of all types. "Tom's experience working in private practice and as a government prosecutor both representing and investigating companies in a wide range of important industries and sectors will prove invaluable as we continue to grow our securities, broker-dealer litigation and regulatory practices across the entire firm," said Bruce E. Fader, co-Chair of Proskauer's Litigation and Dispute Resolution Department. Mr. Sjoblom and the three associates -- Ben Ogletree, Jonathan Hanks and Jackie Perrell - join Proskauer from Chadbourne & Parke, where Mr. Sjoblom was a partner. While at the SEC, Mr. Sjoblom worked with the Department of Justice as a Special Assistant U.S. Attorney in addition to being called upon by several European and Asian governments and securities exchanges to advise them on investigations and prosecutions. "The addition of Tom further enhances our presence in the D.C. legal community and is a significant part of our continued expansion," said Mark Biros, head of Proskauer's Washington, D.C. office. The new group continues the growth of Proskauer's D.C. office, which now has nearly 50 attorneys. In March, Colin Sandercock, the former co-chair of Heller Ehrman's Patents & Trademark Practice Group, joined the office as a partner, as did fellow practice group members John Isacson, Dr. Paul Booth, and David Laub. Also joining the office recently were two other attorneys with significant regulatory backgrounds: Rhett Krulla, a former senior trial attorney at the Federal Trade Commission; and Robyn Manos, a former special counsel at the Securities and Exchange Commission. Mr. Sjoblom received his B.A. from the University of Minnesota, his J.D. from William Mitchell College of Law, and his LL.M. in Securities Regulation from Georgetown University Law Center. Proskauer's Broker-Dealer and Investment Management Group represents a broad spectrum of financial institutions, including full service and boutique brokerage firms, domestic and foreign investment banks, investment advisers, investment companies, business development companies, hedge funds, private investment funds and banks. The firm provides counsel on securities regulatory matters, corporate and investment company governance, capital markets transactions, internal investigations, regulatory investigations, civil enforcement proceedings, criminal prosecutions, arbitrations and complex litigations. The Criminal Defense and Corporate Investigations Practice Group at Proskauer Rose represents individuals and corporate clients in internal organizational investigations and criminal proceedings. With significant experience as former prosecutors and defense lawyers, Proskauer's attorneys have used their legal acumen and professional experiences in representing clients in enforcement agency investigations, when conducting internal organizational investigations in response to allegations of corporate and organizational impropriety, and during federal and state criminal proceedings. The attorneys in Proskauer's D.C. office practice in diverse areas of the law including: health care; commercial litigation and arbitration; Internet, patent, copyright, computer and intellectual property law; internal corporate investigations and white-collar crime; labor and employment; securities regulation and enforcement; corporate ethics and governance; and antitrust. About Proskauer Rose Proskauer Rosen LLP -- http://www.proskauer.com/-- founded in 1875, provides legal services to clients throughout the United States and around the world from offices in New York, Los Angeles, Washington, D.C., Boston, Boca Raton, Newark, New Orleans and Paris. The firm has wide experience in all areas of practice important to businesses and individuals, including corporate finance, mergers and acquisitions, general commercial litigation, private equity and fund formation, patent and intellectual property litigation and prosecution, labor and employment law, real estate transactions, internal corporate investigations, white collar criminal defense, bankruptcy and reorganizations, trusts and estates, and taxation. Its clients span industries including chemicals, entertainment, financial services, health care, hospitality, information technology, insurance, Internet, manufacturing, media and communications, pharmaceuticals, real estate investment, sports, and transportation. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- August 25, 2006 TURNAROUND MANAGEMENT ASSOCIATION Annual Fishing Trip Point Pleasant, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ August 29, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Citrus Club, Orlando, Florida Contact: 561-882-1331 or http://www.turnaround.org/ September 6, 2006 TURNAROUND MANAGEMENT ASSOCIATION 4th Annual Alberta Golf Tournament Kananaskis Country Golf Course, Kananaskis, Alberta Contact: 403-294-4954 or http://www.turnaround.org/ September 7, 2006 TURNAROUND MANAGEMENT ASSOCIATION Business Mixer TBA, Seattle, Washington Contact: 503-223-6222 or http://www.turnaround.org/ September 7-8, 2006 EUROMONEY Leveraged Finance Hotel Rey Juan Carlos I, Barcelona, Spain Contact: http://www.euromoneyplc.com/ September 7-8, 2006 TURNAROUND MANAGEMENT ASSOCIATION Saratoga Regional Conference Gideon Putnam Hotel, Saratoga Springs, New York Contact: http://www.turnaround.org/ September 7-9, 2006 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference Wynn Las Vegas, Las Vegas, Nevada Contact: 1-703-739-0800; http://www.abiworld.org/ September 8-9, 2006 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium London, England Contact: http://www.turnaround.org/ September 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Tyson's Corner, Vienna, Virginia Contact: 703-912-3309 or http://www.turnaround.org/ September 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION Networking Breakfast TBA, Secaucus, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ September 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION LI Turnaround Formal Event Long Island, New York Contact: http://www.turnaround.org/ September 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION Networking Function Sydney, Australia Contact: 0438 653 179 or http://www.turnaround.org/ September 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION Formal Event - Major Speaker to be Announced Long Island, New York Contact: 631-251-6296 or http://www.turnaround.org/ September 13-15, 2006 TURNAROUND MANAGEMENT ASSOCIATION Texas Regional Conference Hyatt Regency Resort & Spa Lost Pines, TX Contact: 870-760-7116 or http://www.turnaround.org/ September 14, 2006 TURNAROUND MANAGEMENT ASSOCIATION Kick-Off Reception Westin Buckhead, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ September 15, 2006 TURNAROUND MANAGEMENT ASSOCIATION BOK Review - Management Gardner Carton & Douglas, Chicago, IL Contact: 815-469-2935 or http://www.turnaround.org/ September 17-24, 2006 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES Optional Alaska Cruise Seattle, Washington Contact: 800-929-3598 or http://www.nabt.com/ September 19-20, 2006 STRATEGIC RESEARCH INSTITUTE 2nd Annual Euro Distressed Debt Summit Le Meridien Parkhotel, Frankfurt, Germany Contact: http://www.srinstitute.com/ September 20, 2006 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner Bankers Club, Miami, Florida Contact: 561-882-1331 or http://www.turnaround.org/ September 21, 2006 TURNAROUND MANAGEMENT ASSOCIATION Restructuring Workshop With US Bankruptcy Judges Hale, Nelms and Lynn Belo Mansion - The Pavilion, Dallas, TX Contact: http://www.turnaround.org/ September 24, 2006 TURNAROUND MANAGEMENT ASSOCIATION Restructuring the Troubled High Tech Company Arizona Contact: http://www.turnaround.org/ September 26, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Centre Club, Tampa, Florida Contact: 561-882-1331 or http://www.turnaround.org/ September 27, 2006 TURNAROUND MANAGEMENT ASSOCIATION Joint Education Program with NYIC Joint Reception CFA/RMA/IWIRC Woodbridge Hilton, Iselin, NJ Contact: http://www.turnaround.org/ September 27, 2006 TURNAROUND MANAGEMENT ASSOCIATION 7th Annual Cross Border Business Restructuring and Turnaround Conference Banff, Alberta Contact: http://www.turnaround.org/ October 5, 2006 TURNAROUND MANAGEMENT ASSOCIATION Commercial Lenders Breakfast Sydney, Australia Contact: 0438 653 179 or http://www.turnaround.org/ October 10, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Center Club, Baltimore, Maryland Contact: 703-912-3309 or http://www.turnaround.org/ October 11, 2006 TURNAROUND MANAGEMENT ASSOCIATION Professional Development Meeting Sydney, Australia Contact: 0438 653 179 or http://www.turnaround.org/ October 11-14, 2006 TURNAROUND MANAGEMENT ASSOCIATION 2006 Annual Conference Milleridge Cottage, Long Island, New York Contact: 312-578-6900; http://www.turnaround.org/ October 12, 2006 TURNAROUND MANAGEMENT ASSOCIATION UTS Fundamentals of Turnaround Management Mecure Hotel - Haymarket, Sydney, Australia Contact: http://www.turnaround.org/ October 17, 2006 TURNAROUND MANAGEMENT ASSOCIATION Updates on the New Bankruptcy Law Kansas City, Missouri Contact: http://www.turnaround.org/ October 19, 2006 TURNAROUND MANAGEMENT ASSOCIATION Billards Networking Night - Young Professionals TBA, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ October 26, 2006 TURNAROUND MANAGEMENT ASSOCIATION Hedge Funds - Expanded Financing Opportunities in Business Turnarounds Arizona Contact: http://www.turnaround.org/ October 26, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Speaker Series #3 TBA, Calgary, Alberta Contact: 403-294-4954 or http://www.turnaround.org/ October 26, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Speaker Series #3 TBA, Calgary, Alberta Contact: 403-294-4954 or http://www.turnaround.org/ October 27, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast with Coach Dan Reeves Westin Buckhead, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ October 28, 2006 TURNAROUND MANAGEMENT ASSOCIATION BK/TMA Golf Tournament Orange Tree Golf Resort, AZ Contact: 623-581-3597 or http://www.turnaround.org/ October 30-31, 2006 Distressed Debt Summit: Preparing for the Next Default Cycle Financial Research Associates LLC Helmsley Hotel, New York, NY Contact: http://www.frallc.com/ October 31, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Citrus Club, Orlando, Florida Contact: 561-882-1331 or http://www.turnaround.org/ October 31 - November 1, 2006 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC Annual Conference San Francisco, California Contact: http://www.iwirc.com/ November 1, 2006 TURNAROUND MANAGEMENT ASSOCIATION Halloween Isn't Over! - Ghosts of turnarounds past who remind you about what you should have done differently Portland, Oregon Contact: http://www.turnaround.org/ November 1-4, 2006 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges San Francisco, California Contact: http://www.ncbj.org/ November 2-3, 2006 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES Third Annual Conference on Physician Agreements & Ventures Successful Strategies for Medical Transactions and Investments The Millennium Knickerbocker Hotel - Chicago Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ November 7, 2006 TURNAROUND MANAGEMENT ASSOCIATION Networking Breakfast Marriott, Bridgewater, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ November 8, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Tyson's Corner, Vienna, Virginia Contact: 703-912-3309 or http://www.turnaround.org/ November 8, 2006 TURNAROUND MANAGEMENT ASSOCIATION TMA Australia National Conference Sydney, Australia Contact: http://www.turnaround.org/ November 14, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Program St. Louis, Missouri Contact: 815-469-2935 or http://www.turnaround.org/ November 15, 2006 TURNAROUND MANAGEMENT ASSOCIATION Joint Reception with NYIC/NYTMA TBA, New York Contact: 908-575-7333 or http://www.turnaround.org/ November 15, 2006 LI TMA Formal Event TMA Australia National Conference Long Island, New York Contact: http://www.turnaround.org/ November 15, 2006 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner Citrus Club, Orlando, Florida Contact: 561-882-1331 or http://www.turnaround.org/ November 16, 2006 TURNAROUND MANAGEMENT ASSOCIATION Bankruptcy Judges Panel Duquesne Club, Pittsburgh, Pennsylvania Contact: http://www.turnaround.org/ November 16, 2006 TURNAROUND MANAGEMENT ASSOCIATION Dinner Program TBA, Seattle, Washington Contact: 503-223-6222 or http://www.turnaround.org/ November 23, 2006 TURNAROUND MANAGEMENT ASSOCIATION Martini Party Vancouver, British Columbia Contact: 403-294-4954 or http://www.turnaround.org/ November 27-28, 2006 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES Thirteenth Annual Conference on Distressed Investing Maximizing Profits in the Distressed Debt Market The Essex House Hotel - New York Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ November 28, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Centre Club, Tampa, FL Contact: 561-882-1331 or http://www.turnaround.org/ November 29, 2006 TURNAROUND MANAGEMENT ASSOCIATION Special Program TBA, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ November 29, 2006 TURNAROUND MANAGEMENT ASSOCIATION Turnaround Industry Trends Jasna Polana, Princeton, NJ Contact: http://www.turnaround.org/ November 30-December 2, 2006 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Regency at Gainey Ranch, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ December 6, 2006 TURNAROUND MANAGEMENT ASSOCIATION Holiday Dinner Portland, Oregon Contact: 503-223-6222 or http://www.turnaround.org/ December 7, 2006 TURNAROUND MANAGEMENT ASSOCIATION Networking Breakfast The Newark Club, Newark, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ December 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION LI TMA Holiday Party TBA, Long Island, New York Contact: 631-251-6296 or http://www.turnaround.org/ December 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION Christmas Function GE Commercial Finance, Sydney, Australia Contact: 0438 653 179 or http://www.turnaround.org/ December 20, 2006 TURNAROUND MANAGEMENT ASSOCIATION Holiday Extravaganza - TMA, AVF & CFA Georgia Aquarium, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ January 12, 2007 TURNAROUND MANAGEMENT ASSOCIATION Annual Lender's Panel Breakfast Westin Buckhead, Atlanta, GA Contact: http://www.turnaround.org/ February 8-11, 2007 TURNAROUND MANAGEMENT ASSOCIATION Certified Turnaround Professional (CTP) Training NY/NJ Contact: http://www.turnaround.org/ February 2007 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium San Juan, Puerto Rico Contact: 1-703-739-0800; http://www.abiworld.org/ March 15, 2007 TURNAROUND MANAGEMENT ASSOCIATION Martini Madness Cocktail Reception with Geraldine Ferraro Westin Buckhead, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ March 15-18, 2007 NATIONAL ASSOCIATION OF BANKRUTPCY TRUSTEES NABT Spring Seminar Ritz-Carlton Buckhead, Atlanta, GA Contact: http://www.NABT.com/ March 27-31, 2007 TURNAROUND MANAGEMENT ASSOCIATION Spring Conference Four Seasons Las Colinas, Dallas, Texas Contact: http://www.turnaround.org/ March 29-31, 2007 ALI-ABA Chapter 11 Business Reorganizations Scottsdale, Arizona Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ April 11-15, 2007 AMERICAN BANKRUPTCY INSTITUTE ABI Annual Spring Meeting J.W. Marriott, Washington, DC Contact: 1-703-739-0800; http://www.abiworld.org/ April 20, 2007 TURNAROUND MANAGEMENT ASSOCIATION Breakfast meeting with Chapter President, Bruce Sim Westin Buckhead, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ June 6-9, 2007 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 23rd Annual Bankruptcy & Restructuring Conference Westin River North, Chicago, Illinois Contact: http://www.airacira.org/ June 14-17, 2007 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ July 12-15, 2007 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Marriott, Newport, RI Contact: 1-703-739-0800; http://www.abiworld.org/ October 10-13, 2007 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Orlando, Florida Contact: http://www.ncbj.org/ October 16-19, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Copley Place, Boston, Massachusetts Contact: 312-578-6900; http://www.turnaround.org/ December 6-8, 2007 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Westin Mission Hills Resort, Rancho Mirage, California Contact: 1-703-739-0800; http://www.abiworld.org/ March 25-29, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference Ritz Carlton Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ September 24-27, 2008 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Scottsdale, Arizona Contact: http://www.ncbj.org/ October 28-31, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Copley Place, Boston, Massachusetts Contact: 312-578-6900; http://www.turnaround.org/ October 5-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org/ 2009 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Las Vegas, Nevada Contact: http://www.ncbj.org/ October 4-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ 2010 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, Louisiana Contact: http://www.ncbj.org/ BEARD AUDIO CONFERENCES Coming Changes in Small Business Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Real Estate under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES High-Yield Opportunities in Distressed Investing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Fundamentals of Corporate Bankruptcy and Restructuring Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Reverse Mergers - the New IPO? Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Dana's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Employee Benefits and Executive Compensation under the New Code Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Validating Distressed Security Portfolios: Year-End Price Validation and Risk Assessment Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changing Roles & Responsibilities of Creditors' Committees Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Calpine's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Healthcare Bankruptcy Reforms Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changes to Cross-Border Insolvencies Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES The Emerging Role of Corporate Compliance Panels Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Privacy Rights, Protections & Pitfalls in Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES High-Yield Opportunities in Distressed Investing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Robert Max Victor M. Quiblat II, Shimero R. Jainga, Joel Anthony G. Lopez, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Christian Q. Salta, Jason A. Nieva, Lucilo M. Pinili, Jr., Tara Marie A. Martin and Peter A. Chapman, Editors. Copyright 2006. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. 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 ***