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/raid1/www/Hosts/bankrupt/TCR_Public/061006.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, October 6, 2006, Vol. 10, No. 238 Headlines A4S SECURITY: Completes $5.2 Mil. Private Placement of Securities ACE AVIATION: Shareholders Approve Plan of Arrangement ACTIVANT SYSTEMS: Moody's Assigns Loss-Given-Default Ratings ADVANCED MICRO: Moody's Rates $2.5 Billion Term Loan at Ba3 ADVANCED MICRO: S&P Rates Proposed $2.5 Billion Sr. Loan at BB- AIRNET COMMS: Court Confirms Modified Amended Chapter 11 Plan ALLIED HOLDINGS: Lease Decision Period Stretched to December 23 ALLIED HOLDINGS: Seeks March 16 Removal Period Extension ALLIED HOLDINGS: Stephen Newlin Wants to Collect from Insurers AMERICAN GENERAL: Moody's Lifts Rating on $9MM Class C Notes to B1 AMERICAN NATURAL: Defaults on Interest Payment for 8% Debentures APPLETON PAPERS: Appoints Thomas Ferree as VP of Finance and CFO ASARCO LLC: Has Until January 5 to File Reorganization Plan ASARCO LLC: Has Until January 5 to Remove Civil Actions ASARCO LLC: Asbestos Panel & FCR Want Jury Trial to Estimate Claim ATHENA CDO: Moody's Eyes Upgrade for B1 Rated $53MM Senior Notes ATTACHMATE CORP: Moody's Assigns Loss-Given-Default Ratings CA INC: Moody's Assigns Loss-Given-Default Ratings BODIES IN MOTION: Hires FocalPoint as Financial Advisor BREUNERS HOME: Court Okays McGrane Greenfield as Local Counsel CALPINE CORP: Hilco to Auction Eight Generators on November 16 CHARMING CASTLE: Case Summary & 19 Largest Unsecured Creditors COI MIDWEST: Wants Plan Filing Period Extended to March 29 COI MIDWEST: Taps Property Condition as Property Assessor COMMODORE APPLIED: June 30 Stockholders' Deficit Tops $10 Million COMPLETE PRODUCTION: S&P Upgrades Corporate Credit Rating to B+ COMPLETE RETREATS: Taps XCMS as Agent Under U.S. Bankr. Sec. 363 COMPLETE RETREATS: Private Files Complaint Against Gram, et. al. COMPLETE RETREATS: Court Approves Proposed Interim Fee Procedures COPELANDS' ENTERPRISES: Panel Hires Landis Rath as Bankr. Counsel COPELANDS' ENTERPRISES: Hires Keen Realty as Real Estate Advisor COPELANDS' ENTERPRISES: Selling Nine Leases on November 14 DANA CORP: Equity Committee Taps Jefferies as Financial Advisors DANA CORP: Can Assume 36 Real Property Leases on Amended Schedule DANA CORP: Wants to Walk Away from Nine Contracts and Leases DC PROPERTIES: U.S. Trustee Wants Case Converted to Chapter 7 DELPHI CORP: Considering Warren, Ohio, Plant Closure DELPHI CORP: Appaloosa Seeks to Increase Equity Stake to 33% DELPHI CORP: Inks Outsourcing Deals with EDS and Hewlett Packard DELTA AIR: Comair Labor Groups Says New Agreements Must Be Fair DEVELOPMENT FINANCE: Fitch Holds Issuer Default Rating at BB DOLLAR FINANCIAL: New $75MM Debt Facility Gets Moody's B3 Rating DORAL FIN'L: Completes Restructuring Loan Pact with R-G Premier DYNAMIC LEISURE: Files Amended FY 2005 & First Quarter Financials ENTERGY NEW: Entergy Services to Refund Franchise Fee Payment ENTERGY NEW ORLEANS: Panel Wants FTI's Retention Terms Modified FASHION HOUSE: June 30 Balance Sheet Upside-Down by $2.5 Million FINOVA GROUP: To Partially Prepay 7.5% Senior Secured Notes FIRST BANCORP: Remains Listed in the NYSE Through April 3, 2007 FORD MOTOR: Reports 5% Rise in Vehicle Sales in September FOREST CITY: Offering $250 Million Equity-Linked Senior Notes FOREST CITY: S&P Affirms BB+ Rating & Maintains Stable Outlook FTI CONSULTING: Closes Offer to Buy FD International for $260 Mil. GALVEX HOLDINGS: Galvex Capital Wants Ch. 11 Case Dismissed GENERAL MOTORS: Ends Alliance Talks with Nissan and Renault GLOBAL EMPLOYMENT: Buys Back $5.7 Mil. of Convertible Secured Debt GLOBAL POWER: Wants Court Approval on White & Case as Counsel GLOBAL POWER: Taps Bayard Firm as Bankruptcy Co-Counsel GOODYEAR TIRE: United Steelworkers Union Begins Strike GREAT CHINA: Restates Fiscal-Year 2005 Financial Statements HEALTHWAYS INC: Aborted Merger Prompts S&P's Rating Withdrawal i2 TELECOM: June 30 Stockholders' Deficit Widens to $2,498,648 INTEGRATED HEALTH: Paying $3,453 in Legal Fees to Stevens & Lee INTERTAPE POLYMER: S&P Puts B+ Corp. Credit Rating on Neg. Watch IRIDIUM LLC: Creditors' Suit Vs. Motorola Begins on October 23 ISLE OF CAPRI: S&P Puts BB- Corp. Credit Rating on Negative Watch ISTAR FIN'L: Secures Consents to Amend 2008 Notes Indenture KARA HOMES: Case Summary & 20 Largest Unsecured Creditors LITTLE TRAVERSE: Moody's Assigns LGD4 Rating to 10.25% Sr. Notes LUMENIS LTD: Inks Pact With LM & Ofer to Buy 75% Equity for $120MM LUMINENT MORTGAGE: Moody's Puts Ba1 Rating to Class B-8 Notes MANARIS CORP: PricewaterhouseCoopers Raises Going Concern Doubt MASSEY ENERGY: S&P Revises Outlook to Developing from Stable MCDERMOTT INT'L: Moody's Assigns Loss-Given-Default Ratings MCLEODUSA INC: Completes $120 Million Senior Sec. Loan Offering MESABA AVIATION: Has Access to Marathon's $24 Mil. DIP Facility MESABA AVIATION: Four Creditors Object to $24MM DIP Financing METAMORPHIX INC: Deloitte & Touche Raises Going Concern Doubt NASH FINCH: Moody's Holds B1 Rating on $125MM Sr. Debt Facility NORTEL NETWORKS: Gets $23.6 Mil. U.S. Navy Litigation Support Pact NORTHWEST AIRLINES: Buying 72 Aircrafts to Meet Market Demands NORTHWEST AIRLINES: Inks Distribution Pact With Priceline.com PERFORMANCE TRANSPORTATION: Turns to Tectura for Support Services PERFORMANCE TRANSPORTATION: Finis Hodge Wins Lift-Stay Plea PERFORMANCE TRANSPORTATION: BMC Records 981 Proofs of Claim Filed PHI INC: Moody's Assigns LGD4 Rating to 7.125% Sr. Global Notes PIER 1: Board Discontinues $0.10 Per Share Quarterly Dividends REFCO INC: Chapter 7 Trustee Reaches Settlement with Rogers Funds RENT-A-CENTER: Increased Risk Cues Moody's to Downgrade Ratings ROTEC INDUSTRIES: Court Moves Plan Filing Deadline to November 30 ROTEC INDUSTRIES: Court OKs Pact Securing CIT Collateral Interest ROWE COMPANIES: Storehouse to Hold Bankruptcy Liquidation Sale RURALMETRO CORP: Appoints Kristine Beian Ponczak as CFO SATELITES MEXICANOS: Can Continue Existing Insurance Programs SATELITES MEXICANOS: Milbank Tweed Holds $580,932 Retainer SATELITES MEXICANOS: Taps Togut Segal as Conflicts Counsel SEACOR HOLDINGS: Moody's Assigns Loss-Given-Default Ratings SECUNDA INT'L: Extends $125 Million Tender Offer Until Oct. 12 SECUNDA INT'L: Moody's Assigns Loss-Given-Default Rating SEITEL INC: Moody's Assigns Loss-Given-Default Rating SERACARE LIFE: Equity Panel Fails to Delay Financing Hearing SESI LLC: Moody's Assigns Loss-Given-Default Rating SHAW GROUP: Westinghouse Acquisition Cues S&P's Negative Watch SILICON GRAPHICS: Wants LG Electronics' Claim Estimated at $0 SILICON GRAPHICS: Wants to Assume Solectron Contract SPEAKING ROSES: June 30 Stockholders' Deficit Widens to $3.8 Mil. SPECIALTYCHEM PRODUCTS: Wants to Assume & Assign Lease Agreements STEWART & STEVENSON: Moody's Assigns Loss-Given-Default Rating SURETY CAPITAL: Posts $167,000 Net Loss in Second Quarter of 2006 TENET HEALTHCARE: S&P Rates $800 Million Credit Facility at BB- TESORO CORPORATION: Moody's Assigns Loss-Given-Default Ratings THOMPSON & WALTERS: Voluntary Chapter 11 Case Summary TITAN FINANCIAL: U.S. Trustee Adds Two Creditors to Official Panel TITAN FINANCIAL: Committee Hires Kilpatrick Stockton as Counsel TROPICAL SPORTSWEAR: Liquidating Trustee Issues Final Distribution UNITED REFINING: Moody's Assigns Loss-Given-Default Rating UNIVERSAL COMPRESSION: Moody's Assigns Loss-Given-Default Ratings VALCOM INC: Posts $1.3 Mil. Net Loss in Third Qtr. Ended June 30 VERITAS DGC: Moody's Assigns Loss-Given-Default Rating VISTEON CAPITAL: Production Cuts Prompt Moody's Rating Review WAMU MORTGAGE: Moody's Rates Class L-B-12 Certificates at Ba2 WASHINGTON MUTUAL: Moody's Assigns B2 Rating to Cl. B-2 Notes WINN-DIXIE: Discloses Members of New Board of Directors WINN-DIXIE: Wants to Disallow & Reduce Claims for Voting Purposes WINN-DIXIE: Several Parties Object to Plan Confirmation WORLD GAMING: Directors Say Technical Default Possible * Chef Solutions Sells Pennant Foods Unit to Fresh Start Bakeries * Jennifer Handz Joins Chadbourne & Parke's London Office * BOOK REVIEW: The Failure of The Franklin National Bank: Challenge to the International Banking System ********* A4S SECURITY: Completes $5.2 Mil. Private Placement of Securities ----------------------------------------------------------------- A4S Security, Inc., has completed a private placement of unregistered securities totaling $5,223,750. The Company disclosed that a total of $2,772,000 was closed consisting of 792,000 common share units at $3.50 per unit with each Common Share Unit including one share of the Company's common stock and three warrants to acquire Common Stock. Additionally a total of $2,451,750 was closed consisting of 700,500 convertible promissory note units at $3.50 per unit with each Note Unit consisting of a 5.13% per annum Convertible Promissory Note due Jan. 31, 2007, and three Investor Warrants. Each $3.50 of principal, plus interest, due under the Notes will automatically be converted into one share of the Company's Series A Convertible Preferred Stock upon shareholder approval of the conversion. The Company plans to seek approval for the conversion right at a special meeting of the Company's shareholders scheduled for the fourth quarter of 2006. The Series A Preferred Stock is non- voting, pays no dividends, contains no liquidation preference and is convertible into one share of Common Stock for each share of Series A Preferred Stock owned. Investor Warrants consist of three separate warrants with these terms: * Warrant "A" is exercisable at $4.75 per share and expires four years from closing; * Warrant "B" is exercisable at $4.75 per share and expires 18 months from closing; and * Warrant "SWATW"'s terms mirror exactly the current publicly-traded warrants of the Company, trading under the symbol: SWATW. Generally, the SWATW Warrants are exercisable at $9 per share, expires in July 2010 and are redeemable by the Company beginning on July 18, 2008 for $0.10 each, under defined conditions, including a minimum trading price of the Common Stock of $13.50 per share. The Company also disclosed that it will try to obtain the same CUSIP number for the "SWATW" Warrants issued in the private placement as is assigned to its current publicly-traded "SWATW" Warrants so that following registration of the new SWATW Warrants they will trade with the existing SWATW Warrants. If it is unable to do so prior to the six month anniversary of the closing, the new SWATW Warrants shall thereupon be exchanged for a warrant, identical in form to Warrant "A" and Warrant "B" issued at the closing, except that the exercise price shall be $8 per share and the expiration date shall be July 18, 2010. All warrants shall be exercisable in cash, commencing six months after the closing and contain anti-dilution rights for stock splits and stock dividends. Greg Pusey, chairman stated: "This important financing results in a strong cash position for A4S, exceeding $5 million, and allows us to further advance the pending Vizer / Avurt acquisitions and accelerate our combined sales, marketing and development efforts. We are also very pleased that two well respected investment funds, including Vision Opportunity Master Fund, Ltd., have made sizable investments in our company. Based on discussions with our new institutional investors we are optimistic that additional funds could potentially be available to us through the subsequent exercise of the short term warrants which could help finance future growth." Mr. Pusey went on to state "The closing of this offering combined with a successful subsequent shareholder vote would allow finalization of the pending Vizer / Avurt merger and the conversion of the notes issued in this offering to equity, well positioning us to advance our goals" The Company has agreed to file a registration statement with the Securities and Exchange Commission for the shares of Common Stock underlying the Common Share Units and the Note Units within 90 days of the closing. The registration statement will also register the new SWATW Warrants. Failure to file the registration statement within 90 days of the closing or failure to get the registration statement effective 180 days from the closing would require the Company to pay each investor a penalty fee in cash equal to 2% per month up to a maximum of 10% of their investment. The Company further disclosed that the offering was made to accredited investors, including $3,010,000 purchased by the lead investor, Vision Opportunity Master Fund, Ltd. An additional investment totaling approximately $135,000 was also made by the Company's Chairman and his family members subject to shareholder approval. The purpose of the private placement was to raise funds to support the acquisitions of Vizer Group, Inc., and Avurt International, Inc., and for ongoing product development and for working capital and general corporate purposes. None of the Common Stock Units, the Note Units, the shares of Common Stock or Series A Preferred Stock underlying such Units or the warrants included in the Units are registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. About A4S Security, Inc. Based in Loveland, Colo., A4S Security, Inc., (Nasdaq: SWAT, SWATW; NYSE Arca) -- http://www.shiftwatch.com/-- develops and markets the ShiftWatch(R) product line of mobile digital video surveillance solutions for public transportation, law enforcement and general security applications. Going Concern Doubt GHP Horwath, P.C., expressed substantial doubt aboutA4S Security, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the Company's history of net operating losses and an accumulated deficit in excess of $8 million. ACE AVIATION: Shareholders Approve Plan of Arrangement ------------------------------------------------------ ACE Aviation Holdings Inc. reported that its shareholders have approved a proposed statutory arrangement under the Canada Business Corporations Act. The arrangement would grant authority to the board of directors of ACE to make, from time to time, one or more special distributions to shareholders in an aggregate amount of up to $2 billion by way of reduction of the stated capital of the Class A variable voting shares, Class B voting shares and the preferred shares of ACE. 95.5% of the shareholder votes were cast in favor of the arrangement. The implementation of the plan of arrangement is subject to issuance by the Quebec Superior Court of a final order approving the plan of arrangement. ACE previously announced on Aug. 31, 2006 its intention to proceed with an initial distribution of units of Aeroplan Income Fund under the plan of arrangement representing a portion of its interest in Aeroplan. The initial distribution is subject to the prior receipt of an advance income tax ruling or opinion from the Canada Revenue Agency confirming that the distribution will be treated as a return of capital. It is anticipated that the initial distribution will be completed by the end of 2006. The remaining terms of the initial distribution, including the number of Aeroplan units to be distributed, the record date to determine the ACE shareholders eligible to participate in such distribution and the anticipated payment date will be announced by subsequent news release after receipt of the tax ruling or opinion. Air Canada's Pilots Association has filed a claim in the Ontario Superior Court of Justice seeking to prevent the proposed special distributions under the plan of arrangement. ACE says this claim is without merit. ACE Aviation Holdings Inc. -- http://www.aceaviation.com/-- is the parent holding company of Air Canada, Aeroplan, Jazz, Air Canada Technical Services, Air Canada Vacations, Air Canada Cargo, and Air Canada Ground Handling Services. * * * As reported in the Troubled Company Reporter on April 24, 2006, Standard & Poor's Ratings Services raised the long-term corporate credit rating on ACE Aviation Holdings Inc. to 'B+' from 'B', while affirming the 'B' long-term corporate credit rating on its wholly owned subsidiary, Air Canada. The outlook on both entities remains stable. ACTIVANT SYSTEMS: Moody's Assigns Loss-Given-Default Ratings ------------------------------------------------------------ In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. Technology Software sectors this week, the rating agency confirmed its B2 Corporate Family Rating for Activant Solutions Inc. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $40 Million Senior Secured Revolving Credit Facility due 2011 B2 B1 LGD3 33% $390 Million Senior Secured First Lien due 2013 B2 B1 LGD3 33% $175 Million Senior Subordinated Notes due 2014 Caa1 Caa1 LGD5 87% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- umeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Activant Solutions Inc. provides enterprise software and systems to small to medium sized retail and wholesale businesses in the automotive parts, hardlines and lumber, and wholesale and distribution business industries in the United States and Canada. ADVANCED MICRO: Moody's Rates $2.5 Billion Term Loan at Ba3 ----------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Advanced Micro Device's $2.5 billion senior secured bank facility while confirming the Ba3 corporate family rating and Ba3 rating on the company's $390 million senior notes due 2012. The ratings reflect both the overall probability of default of the company, to which Moody's assigns a PDR of Ba3, and a loss given default of LGD3 for both the new bank facility and the $390 million senior notes both of which will share the same collateral and security package. The rating outlook is stable. This rating action concludes Moody's review that was triggered by AMD's announcement of its $6 billion acquisition of ATI Technologies on July 24, 2006. The transaction will be financed with the newly rated bank facility in addition to $1.7 billion of common stock and $1.8 billion of cash balances. The acquisition still remains subject to the approval of ATI shareholders and other customary approvals and consents but is expected to be completed prior to the end of October 2006. AMD's Ba3 corporate family rating reflects -- the continued strength of AMD's product portfolio and roadmap, which has resulted in profitable market share gains and an expansion of its customer base that now includes all major personal computer manufacturers; -- its improved financial flexibility as a result of its strong operational performance and previous balance sheet strengthening actions; -- the strategic benefits that the acquisition should have on AMD's microprocessor technology roadmap, as well as the expanded revenue opportunities and diversification that ATI's complementary product set and consumer end-market is likely to provide; and, -- AMD's ability to reduce acquisition debt over the intermediate term through a combination of non core asset sale proceeds as well as free cash flow. The rating also considers the notable business risks in the capital intensive and highly competitive microprocessor segment, including -- the significant product and price competition from a much larger competitor, Intel Corporation, which could periodically pressure profitability and cash flow; -- the large capital expenditure requirements and execution risk to meet capacity needs of a growing customer base and to consistently transition to new technology nodes and manufacturing capabilities for microprocessors; and, -- the higher debt levels pro forma the ATI acquisition, which could limit AMD's flexibility in dealing with unexpected shocks to its business. The Ba3 rating of the $2.5 billion senior secured credit facility reflects an LGD3 loss given default assessment as this facility is secured by -- a perfected security interest in accounts receivable of AMD and its US based sales subsidiary, -- a stock pledge of restricted domestic subsidiaries and 66% of foreign subsidiaries but excluding AMD's Fab 36 in Germany, as well as, -- any proceeds from the sale of AMD's equity interests in its recently spun off flash memory business, Spansion. The Ba3 rating of the $390 million previously unsecured notes also reflects an LGD 3 loss given default as the notes will become secured and share in the same collateral package as the term loan. However, it is important to note that were total secured debt to decline to below $2.5 billion, the new security package benefiting the $390 million senior note holders may be released. Absent any other change, this would cause the ratings on these notes to decline by up to two notches, reflecting its then junior position in AMD's capital structure. These are Moody's rating actions: * $2.5 billion senior secured term loan due 2013 at Ba3 (LGD 3, 47%) * Corporate family rating Ba3; * Probability-of-default rating Ba3; * $390 million secured notes due August 2012 at Ba3 (LGD 3, 47%) Advanced Micro Devices, Inc., headquartered in Sunnyvale, California, designs and manufactures microprocessors and other semiconductor products. ADVANCED MICRO: S&P Rates Proposed $2.5 Billion Sr. Loan at BB- --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Sunnyvale, California-based Advanced Micro Devices Inc. Standard & Poor's removed the rating from CreditWatch negative where it had been placed on July 24, 2006, following the announced acquisition of unrated ATI Technologies Inc. The ratings outlook is negative. At the same time, the rating agency assigned its 'BB-' bank loan rating, one notch above the corporate credit rating, and a '1' recovery rating to the company's proposed $2.5 billion senior secured term loan, to be used as partial funding of the acquisition. Standard & Poor's also raised its rating on the company's $600 million ($390 million outstanding) senior notes to 'B+' from 'B', because the company plans to withdraw its shelf registration which structurally subordinated the notes. Concurrent with the closing of the new bank loan and pursuant to a debt incurrence test in the indenture for the notes, the notes will become pari passu to the bank loan and the note rating will become 'BB-' with a '1' recovery rating. Ratings on the company's $1.1 billion shelf registration were withdrawn, following the company's plan to cancel the shelf. "The ratings on AMD reflect its improving business and financial profile, notwithstanding aggressive competition from dominant supplier Intel Corp," said Standard & Poor's credit analyst Bruce Hyman. AMD has bolstered its operating profitability through an enriched product line and improved manufacturing performance, and has reduced its exposure to the commodity memory industry through the late-2005 IPO of its Spansion Inc. subsidiary. The acquisition of Markham, Ontario-based ATI brings its strengths in graphics processors and chipsets, which are expected to enhance the combined company's position in the commercial and mobile computing segments and in the rapidly-growing consumer electronics market. The negative outlook reflects the possibility that the company's microprocessor market share gains over the past year could be stressed by Intel Corp.'s recently refreshed product line, as well as the possibility that competitive responses to the acquisition of ATI could be disruptive to AMD's planned integration strategies of the two businesses. To the extent that AMD successfully addresses these factors, the outlook would likely be revised to stable in the next few quarters. AIRNET COMMS: Court Confirms Modified Amended Chapter 11 Plan ------------------------------------------------------------- The Hon. Arthur B. Briskman of the U.S. Bankruptcy Court for the Middle District of Florida confirmed AirNet Communications Corporation's Modified Amended Chapter 11 Plan of Reorganization on Oct. 2, 2006. Judge Briskman determined that the Plan satisfies the 13 requirements for confirmation stated in Section 1129(a) of the Bankruptcy Code. Classification and Treatment of Claims Under the Plan, Priority wage, vacation, and benefit claims will be paid in full over 12 months without interest. Allowed priority tax claims will be paid quarterly over a period of five years, with a 6% per annum interest. Tecore's $2 million claim will be paid quarterly over ten years with a 7% per annum interest. Tecore's $5,448,190 remaining claim will be waived in exchange for 100% of the new equity interests in Reorganized AirNet. Laurus Master Fund, Ltd.'s $4,249,000 claim will be reduced to $3,300,000 and divided into two tranches. Tranche A will be in the amount of $800,000 and will accrue interest at 3%. Tranche B, amounting to $2,500,000, won't accrue interest. Reorganized AirNet will repay Tranche A through 16 quarterly payments of $50,000 each, plus interest. Tranche B will be repaid upon each sale of any item of inventory, which existed as of the Debtor's bankruptcy filing. The amount due upon each sale of Petition Date Inventory will be 25% of that inventory's book value. If sale of Petition Date Inventory does not produce at least $1,700,000 in payments to Laurus four years from the Effective Date, Reorganized AirNet will pay Laurus an amount equal to the difference between $1,700,000 and the amount previously paid under Tranche B. Secured creditor SCP Private Equity Partners II will retain its lien against all of the Debtor's intellectual property with the same extent, validity and priority as its prepetition lien. Treatment of SCP's claim will also be subject to a term sheet. A full-text copy of the Term Sheet is available for free at: http://ResearchArchives.com/t/s?104d SCP's deficiency claim, amounting to $2.1 million, will be paid over 40 quarters following the effective date and will accrue interest at 7% per annum. Sacco and Associates, which asserts a retaining lien on certain legal files, will be allowed to retain those files as the indubitable equivalent of its claim. Holders of general unsecured claims will receive an initial cash payment on the effective date of the Plan and deferred payments over a three-year period after the effective date with 10% annual interest. Holders of equity interest will get nothing. A full-text copy of the Debtor's Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=060823061028 Headquartered in Melbourne, Florida, AirNet Communications Corporation -- http://www.aircom.com/-- designs, manufactures, and markets wireless infrastructure products and offers infrastructure solutions for commercial GSM customers, and government, defense, homeland security based agencies. The Debtor filed for chapter 11 protection on May 22, 2006 (Bankr. M.D. Fla. Case No. 06-01171). R. Scott Shuker, Esq., at Gronek & Latham, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $15,701,881 and total debts of $21,615,346. ALLIED HOLDINGS: Lease Decision Period Stretched to December 23 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia extended, until Dec. 23, 2006, Allied Holdings, Inc., and its debtor-affiliates' deadline to assume, assume and assign or reject their non-residential real property leases. Thomas R. Walker, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, related that the Debtors continue to be lessees to 51 non-residential real property leases. A list of the 51 Leases is available for free at http://researcharchives.com/t/s?1105 Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/ or 215/945-7000) ALLIED HOLDINGS: Seeks March 16 Removal Period Extension -------------------------------------------------------- Allied Holdings, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Georgia to further extend their period to remove civil actions through and including March 16, 2007, effective as of Sept. 29, 2006. Vivieon E. Kelley, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, relates that since the outset of their Chapter 11 cases, the Debtors have expended energy rejecting burdensome leases and executory contracts, and addressing matters concerning organized labor. The Debtors are also in the process of formulating a program to deal with the large volume of prepetition civil litigation in which they are involved. On Sept. 25, 2006, the Court authorized the Debtors to settle prepetition automobile claims in their sole discretion. Ms. Kelley notes that the most prudent and efficient course of action for the Debtors to take is to request a further extension of the removal period deadline. Ms. Kelley explains that enlarging the Removal Period will: -- provide the Debtors an opportunity to make informed decisions concerning the removal of causes of action; -- assure that the Debtors do not forfeit any of their rights under Section 1452 of the Judiciary Code; and -- permit the Debtors to continue focusing their time and energy on reorganizing. Furthermore, Ms. Kelley says, the rights of other parties to the Causes of Action will not be prejudiced by the extension because in the event of removal, any party to a removed action may seek to have the action remanded pursuant to Section 1452(b). Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/ or 215/945-7000) ALLIED HOLDINGS: Stephen Newlin Wants to Collect from Insurers -------------------------------------------------------------- Stephen G. Newlin asks the U.S. Bankruptcy Court for the Northern District of Georgia to lift the automatic stay, to allow him to enforce a judgment against Allied Holdings, Inc., and its debtor- affiliates' third party insurance carriers or other non-debtor third parties. Mr. Newlin had previously sought and obtained a default judgment against Allied Automotive Group, Inc., for $1,575,000 on June 21, 2006. Before the debtor filed for bankruptcy, USI of Georgia, Inc., coordinated the Debtors' U.S. Insurance Programs with the Debtors' various insurance carriers. The Debtors paid USI approximately $100,000 each month to administer certain U.S. insurance policies, Leon S. Jones, Esq., in Atlanta, Georgia, relates. The ACE Group of Companies also provided automobile liability coverage for the Debtors in the United States from March 1, 2003, through December 31, 2005, pursuant to certain policies and related agreements, Mr. Jones adds. USI is the broker for ACE American Insurance Company. AAG is a named insured of ACE American. Mr. Jones tells the Court that Mr. Newlin's attorney -- Steven J. Jackson, Esq. -- notified USI of Mr. Newlin's claim for personal injuries against AAG and requested for a certificate of coverage under Georgia State law. However, USI did nothing. Mr. Jones notes that ACE American's policy provides that: * the bankruptcy or insolvency of the insured or the insured's estate will not relieve them of their obligation under their policy; and * no person or organization has a right under their policy to join them as a party or otherwise bring suit against them asking for damages from an insured or to sue them or an insured under their policy unless all of the terms of the policy have been complied with. Mr. Newlin did not receive notice of the bankruptcy case at the time his state court litigation was commenced and default judgment was entered, according to Mr. Jones. Accordingly, the Debtors, ACE, and USI should not be rewarded for not complying with their duties under state law to list Mr. Newlin as a creditor and to file a notice of stay in the State Court Lawsuit, Mr. Jones asserts. The actions Mr. Newlin undertook are not intentional or willful acts in violation of the stay, Mr. Jones continues. Allowing Mr. Newlin to proceed against the Debtors' insurers will not prejudice the Debtors' ability to reorganize in anyway because Mr. Newlin's claim is covered under a policy issued by ACE American. Mr. Newlin also never took any adverse action against the Debtors to collect on his Judgment, other than ask the Debtors to tell him who their insurers were. Mr. Jones reminds the Court that Mr. Newlin has: * two torn rotator cuffs and a herniated cervical disk; * had surgery on one shoulder and needs two more surgeries; * lost his ability to support himself and is homeless; and * been reduced to begging for food. A relief from the stay should be granted to allow Mr. Newlin to collect Judgment against ACE, so he can pay for food, shelter, and his surgeries, Mr. Jones stresses. Debtors Talk Back The Debtors ask the Court to deny Mr. Newlin's request and compel him to: (i) immediately vacate the state court default judgment; and (ii) reimburse the Debtors for all of their attorneys' fees and costs in responding to his Request. Harris B. Winsberg, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, asserts that the Debtors had no basis to schedule Mr. Newlin as a claimant and provide him with actual notice of the pending bankruptcy cases because he failed to notify the Debtors of his alleged claim prepetition. Mr. Winsberg argues that Mr. Newlin's stated reasons are insufficient to obtain the relief requested because Mr. Newlin: (1) does not and cannot allege that the Debtors' cases were filed in bad faith; (2) cannot point to any unconscionable conduct by the Debtors that would warrant the grant of extraordinary relief; and (3) cannot establish that the requested relief and underlying cause of action will have no impact on the bankruptcy estates. Furthermore, equity does not support the granting of relief to Mr. Newlin because every action he took in pursuit of the Debtors was taken postpetition in violation of the Bankruptcy Code, Mr. Winsberg explains. Mr. Newlin's continued efforts to attempt to collect on a void default judgment are sufficient to warrant a determination that all equitable considerations weigh in favor of the Debtors, Mr. Winsberg tells Judge Mullins. Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/ or 215/945-7000) AMERICAN GENERAL: Moody's Lifts Rating on $9MM Class C Notes to B1 ------------------------------------------------------------------ Moody's Investors Service upgraded these classes of notes issued by American General CBO 2000-1: * The $251,400,000 million Senior Secured Class A Floating Rate Notes Due 2012 -- Prior Rating: Aa2 (on watch for possible upgrade) -- Current Rating: Aaa * The $20,000,000 million Senior Secured Class B-1 Floating Rate Notes Due 2012 -- Prior Rating: Ba1 (on watch for possible upgrade) -- Current Rating: Baa1 * The $21,000,000 million Senior Secured Class B-2 Fixed Rate Notes Due 2012 -- Prior Rating: Ba1 (on watch for possible upgrade) -- Current Rating: Baa1 * The $9,000,000 million Senior Secured Class C Fixed Rate Notes Due 2012 -- Prior Rating: Caa1 (on watch for possible upgrade) -- Current Rating: B1 According to Moody's, the rating action was the result of the amortization of the Senior Secured Class A Floating Rate Notes, improvement in the credit quality of the deal's portfolio and increased coverage for the notes mentioned above. AMERICAN NATURAL: Defaults on Interest Payment for 8% Debentures ---------------------------------------------------------------- American Natural Energy Corporation has failed to meet the interest payment due on Sept. 30, 2006 on its 8% Convertible Secured Debentures, the outstanding principal of which was also due on Sept. 30, 2006. As reported in the Troubled Company Reporter on July 10, 2006, the Company previously failed to meet the interest payment due on June 30, 2006, on these debentures. Computershare Trust Company of Canada, the Trustee under the Indenture governing the Debentures, has the right to enforce its rights on behalf of the Debenture holders against the collateral for the Debentures. The Debentures are collateralized by substantially all of ANEC's assets. At Sept. 30, 2006, the Debentures are outstanding in the principal amount of $10,825,000 and accrued and unpaid interest at that date amounts to $437,000. ANEC is continuing its efforts to raise additional equity to pay the current interest obligation, fund its Louisiana drilling operation and re-finance other outstanding obligations or to seek to enter into another transaction in order to seek to maximize shareholder value. Based in Tulsa, Oklahoma, American Natural Energy Corporation (TSX Venture: ANR.U) is an independent exploration and production company with operations in St. Charles Parish, Louisiana. APPLETON PAPERS: Appoints Thomas Ferree as VP of Finance and CFO ---------------------------------------------------------------- Appleton Papers, Inc., disclosed that Thomas J. Ferree has been appointed vice president of finance and chief financial officer. Mr. Ferree will be responsible for developing and implementing financial strategies and managing the financial analysis and reporting processes of the Company. He will join the Company on Oct. 9 and report to Mark Richards, chief executive officer. Mr. Ferree comes from Wells' Dairy, Inc., where he served as senior vice president of finance and chief financial officer for the past three years. Wells' Dairy, based in Le Mars, Iowa, is the nation's largest family-owned dairy processor and produces the Blue Bunny(R) brand of dairy products. Mr. Ferree was responsible for the corporation's accounting, finance, legal, risk management and information services activities. His accomplishments while at Wells' included refinancing the company's short and long-term debt, establishing a strategic planning process, and negotiating a product licensing agreement that should deliver over $150 million in annual sales to the company. From 1999 to 2003, Mr. Ferree worked as corporate controller for Meredith Corporation, in Des Moines, Iowa, a publicly-held media and marketing company with businesses centering on magazine and book publishing, television broadcasting, integrated marketing and interactive media. His job responsibilities included strategic planning and budgeting, SEC and external financial reporting, treasury and banking activities, risk management, financial analysis and accounting shared services. He was also accountable for investor relations and acquisition and divestiture analysis and negotiations. Prior to joining Meredith Corporation, Mr. Ferree spent eight years with Banc One Corporation. He served in executive management positions in marketing and finance and had job responsibilities that included new account and distribution channel development, financial reporting and budgeting, accounting operations and controls, strategic planning, and acquisition and joint venture negotiations. From 1981 to 1990 Mr. Ferree held financial management positions with Baxter Healthcare Corporation based in Northbrook, Ill. He served as group plant controller for 11 manufacturing facilities in the U.S., Puerto Rico and Mexico. He began his career with Baxter Healthcare in inventory and cost accounting management positions at the company's Texas, California and Illinois operations. Mr. Ferree earned a master's degree in finance and a bachelor's degree in business administration, accounting from the University of Iowa. Headquartered in the Appleton, Wisconsin, Appleton Papers Inc. -- http://www.appletonideas.com/-- uses ideas that make a difference to create product solutions through its development and use of coating formulations and applications as well as encapsulation, security, printing and packaging technologies. The Company produces carbonless, thermal, security, and performance packaging products and provides secure and specialized print services. Appleton has manufacturing operations in Wisconsin, Ohio, Pennsylvania, Massachusetts and the United Kingdom, employs approximately 3,300 people, and is 100% employee-owned. * * * As reported in the Troubled Company Reporter on April 3, 2006, Standard & Poor's Ratings Services lowered its corporate credit rating on Appleton Papers Inc., to 'BB-' from 'BB'. The outlook is stable. At the same time, Standard & Poor's raised its recovery rating on the carbonless and specialty paper producer's secured bank facility to '2' from '3', indicating expectations of substantial recovery of principal in the event of a payment default. ASARCO LLC: Has Until January 5 to File Reorganization Plan ----------------------------------------------------------- The Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi gave ASARCO LLC and its debtor-affiliates until Jan. 5, 2007, to file a plan of reorganization. Judge Schmidt also gave the Debtors until March 9, 2007, to solicit acceptances of that plan. U.S. Government's View The U.S. government, on behalf of the Environment & Natural Resources Division, informed the Court that it does not oppose the three months' extension of the Debtors' exclusive periods. David L. Dain, Esq., in Washington, D.C., noted that as indicated by the numerous proofs of claim filed in the Debtors' Chapter 11 cases by numerous states and other parties, the Debtors' mining and operational activities have resulted in their extensive liabilities. The liabilities included a wide variety of actions related to the protection of public health and safety and of the environment and natural resources. The Government, however, wanted to emphasize the importance of using that period to make significant progress in trying to reach consensual resolution of the complex environmental and other issues in the Debtors' Chapter 11 cases, Mr. Dain told the Court. The Debtors have appropriately begun the process of meeting with the Government and several States to exchange information about environmental issues. The Government hopes that the parties are able to build off of those initial meetings so that a plan of reorganization resolving most environmental issues emerges by January 2007, Mr. Dain related. "Bankruptcy in complex cases like [that of the Debtors'] works best as a consensual process whereby the various stakeholders are able to reach an agreed on path for moving forward," Mr. Dain said. In the absence of a consensual approach, the Government predicted that extensive estimation hearings and other litigation and appeals on environmental issues are likely to consume an enormous amount of time and resources of the Debtors, other parties-in- interest and the Court. It is therefore critical that the Debtors make demonstrable progress during the extended Exclusive Period, both in formulating an overall plan approach as well as in reaching agreement on a blueprint for resolving in a consensual manner most environmental issues for purposes of confirmation of a plan, Mr. Dain emphasizes. The Government urged the Debtors to pursue the dialog that has commenced, and make tangible progress with the other parties-in-interest. The Government hoped that the Debtors will also talk in a timely manner with third parties that might have an interest in funding a plan. The state of Arizona, the Department of Environmental Quality, the California Department of Toxic Substances Control, the Kansas Department of Health and Environment, the Missouri Department of Natural Resources and the state of Montana join in the Government's response. About ASARCO LLC 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. 30; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). ASARCO LLC: Has Until January 5 to Remove Civil Actions ------------------------------------------------------- The Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi gave ASARCO LLC and its debtor-affiliates until Jan. 5, 2007, to remove civil actions. As reported in the Troubled Company Reporter on Sept. 4, 2006, the Debtors are parties in numerous lawsuits in various state and federal courts. Nathaniel Peter Holzer, Esq., at Jordan, Hyden, Womble, Culbreth & Holzer, P.C., in Corpus Christi, Texas, contended that the issues involved in many of those lawsuits are complex and many require individual analysis of each case. The Debtors believed they needed more time to review the Lawsuits to determine whether removal of the various cases is in the best interest of their bankruptcy estates. Mr. Holzer asserted that the Debtors' need for additional time is sufficient cause to extend the action removal deadline. An extension of the deadline would aid the efficient and economical administration of the Debtors' estates, Mr. Holzer added. About ASARCO LLC 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. 30; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). ASARCO LLC: Asbestos Panel & FCR Want Jury Trial to Estimate Claim ------------------------------------------------------------------ The Official Committee of Unsecured Creditors for the Asbestos Subsidiary Debtors and Robert C. Pate, as future claims representative, ask the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to find that the Asbestos Debtors are entitled to a jury trial on ASARCO LLC's liability for the Derivative Asbestos Claims. The Asbestos Debtors are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. ASARCO LLC and its Official Committee of Unsecured Creditors tilt arguments that the Official Committee of Unsecured Creditors for the Asbestos Subsidiary Debtors and Robert C. Pate, as future claims representative, never made, Jacob L. Newton, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, tells Judge Schmidt. The Asbestos Committee and the FCR assert that they have not implied that ASARCO and its Creditors Committee have consented to the Court conducting a jury trial. Mr. Newton contends that the Asbestos Committee and the FCR prefer that a jury trial be conducted by the Court with the required express consent of all parties concerned. The Asbestos Committee and the FCR believe that the Court could conduct a jury trial without the delay and attendant increased costs to the Debtors' estates that withdrawal of the reference to the district court likely would entail. The Asbestos Committee and the FCR remain committed to the schedule agreed upon for the contested matter, according to Mr. Newton. Any delay resulting from a jury trial will be caused by ASARCO and the Committee's refusal to consent to a jury trial before the Court, Mr. Newton avers. Furthermore, the Asbestos Committee and the FCR assert that: 1. They have timely filed demands for a jury trail. Thus, the ASARCO Committee's argument that the Asbestos Committee and the FCR waived their right to a jury trial by failing to make a jury demand is without merit; 2. ASARCO and its Creditors Committee ignore the authority that the right to a jury trial in federal court is a matter of federal law; 3. The Fifth Circuit has held that a party is entitled to a jury trial on claims to pierce the corporate veil. ASARCO tries to avoid the Fifth Circuit's binding precedent by giving a strained interpretation to the plain language of the Court and concluding that the Fifth Circuit's holding does not "provide any guidance." 4. While state law determines the elements of the Asbestos Debtors' substantive claims to pierce the corporate veil, the Court has not determined what state's substantive law will apply. ASARCO has assumed that the substantive law of either Alabama or Delaware will apply to the Derivative Asbestos Claims. However, the Asbestos Committee and the FCR believe that Texas law may apply as the Asbestos Debtors' principal place of business and principal assets warranted their filing their Chapter 11 cases in the Texas Bankruptcy Court; 5. ASARCO and its Creditors Committee's arguments ignore the fact that the cases are jointly administered but have not been substantively consolidated; and 6. The classification of the Derivative Asbestos Claims as core or non-core has no bearing on the Court's analysis and on a Seventh Amendment determination. Even if the Court determines that the Derivative Asbestos Claims constitute a core proceeding, the Asbestos Debtors will not have lost their right to a trial by jury on their legal claims. About ASARCO LLC 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. 30; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). ATHENA CDO: Moody's Eyes Upgrade for B1 Rated $53MM Senior Notes ---------------------------------------------------------------- Moody's Investors Service placed these notes issued by Athena CDO, Limited on watch for possible upgrade: * The U.S.$53,000,000 Second Priority Senior Secured Notes Due 2010 -- Prior Rating: B1 -- Current Rating: B1 (on watch for possible upgrade) According to Moody's, the rating action is the result of improvement in par coverage of the notes. ATTACHMATE CORP: Moody's Assigns Loss-Given-Default Ratings ----------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. Technology Software sectors this week, the rating agency confirmed its B3 Corporate Family Rating for Attachmate Corporation. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $20 Million Senior Secured Revolving Credit Facility B2 B1 LGD2 28% $300 Million Senior Secured First Lien B2 B1 LGD2 28% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- umeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in Seattle, Washington, Attachmate Corporation is a software services provider specializing in host access and integration solutions. CA INC: Moody's Assigns Loss-Given-Default Ratings -------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. Technology Software sectors this week, the rating agency confirmed its Ba1 Corporate Family Rating for CA, Inc. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $350 Million 6.5% Senior Unsecured Notes due 2008 Ba1 Ba1 LGD4 54% $1 Billion Senior Global Notes due 2011 Ba1 Ba1 LGD4 54% $460 Million Convertible Senior Unsecured Notes due 2009 Ba1 Ba1 LGD4 54% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- umeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in Islandia, New York, CA, Inc. -- http://www.ca.com/-- engages in the development, delivery, and licensing of information technology management software products and services. BODIES IN MOTION: Hires FocalPoint as Financial Advisor ------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California allowed Bodies in Motion, Inc., to employ FocalPoint Securities LLC, as its financial advisor. The firm is expected to: a) design and implement processes to effect a transaction; b) prepare offering memorandum and financial model to be provided to prospective sources; c) coordinate contact with sources; d) analyze financial models, as necessary; e) evaluate and compare proposals to provide capital to the Debtor; f) negotiate terms of a transaction; and g) review legal documents. The Debtor disclosed that it has paid the firm $15,000 as prepetition retainer. FocalPoint Securities will be paid $10,000 per month for its services. Duane K. Stullich, a managing director at FocalPoint Securities, assured the Court that his firm does not hold any interest adverse to the Debtor's estates. Mr. Stullich can be reached at: Duane K. Stullich FocalPoint Securities LLC 15303 Ventura Boulevard, Suite 1510 Los Angeles, California 91403 Tel: (818) 728-6040 Fax: (818) 728-6044 http://www.focalpointllc.com/ Headquartered in North Hills, California, Bodies in Motion Inc. -- http://www.bodiesinmotion.com/-- operates a chain of private fitness facilities offering boxing, yoga, personal training, and other physical fitness programs. The Company filed for chapter 11 protection on June 20, 2006 (Bankr. C.D. Calif. Case No. 06- 10931). Ron Bender, Esq., at Levene, Neale, Bender, Rankin & Brill, LLP, represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. BREUNERS HOME: Court Okays McGrane Greenfield as Local Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Montague S. Claybrook, the Chapter 7 Trustee overseeing the liquidation of Breuners Home Furnishings Corp. and its debtor-affiliates, authority to employ McGrane Greenfield, L.L.P., as his local counsel. The Trustee says that Isabel Donovan, the Debtor's former employee, commenced an action before the Labor Commissioner in San Jose, California, seeking damages in excess of $25,000 in connection with a postpetition wage claim. Mr. Claybrook wants Mcgrane Greenfield to assist him with respect to the Donovan Labor Action. The Trustee discloses that it wants to retain Mcgrane Greenfield because of the firm's familiarity with actions before the Labor Commissioner and extensive experience in the field of bankruptcy law. Bernard S. Greenfield, Esq., a partner at Mcgrane Greenfield, told the Court that he will bill at $450 per hour for this engagement. Mr. Greenfield disclosed that Marcia E. Gerston, Esq., will also be rendering services and will charge $350 per hour. Mr. Greenfield assured the Court that his firm does not hold any interest adverse to the Debtors' estates. Mr. Greenfield can be reached at: Bernard S. Greenfield, Esq. Mcgrane Greenfield, L.L.P. 40 South Market Street, 2nd Floor San Jose, CA 95113 Tel: (408) 995-5600 Fax: (408) 995-0308 http://www.mghh.com/ Headquartered in Lancaster, Pennsylvania, Breuners Home Furnishings Corp. -- http://www.bhfc.com/-- was one of the largest national furniture retailers focused on the middle the upper-end segment of the market. The Company and its debtor- affiliates, filed for chapter 11 protection on July 14, 2004 (Bankr. Del. Case No. 04-12030). Bruce Grohsgal, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors. Great American Group, Gordon Brothers, Hilco Merchant Resources, and Zimmer-Hester were brought on board within the first 30 days of the bankruptcy filing to conduct Going-Out-of-Business sales at the furniture retailer's 47 stores. The Bankruptcy Court converted the case to a Chapter 7 liquidation on Feb. 8, 2005. Montague S. Claybrook serves as the Chapter 7 Trustee. Mr. Claybrook is represented by Michael G. Menkowitz, Esq., at Fox Rothschild LLP. When the Debtors filed for chapter 11 protection, they reported more than $100 million in estimated assets and debts. CALPINE CORP: Hilco to Auction Eight Generators on November 16 -------------------------------------------------------------- Hilco Industrial, LLC, has scheduled a November 16th, 2006 date for the simultaneous on-site and Global WebCast auction of Eight unused Gas and Steam Turbine Generators and miscellaneous plant equipment, for Calpine Corporation in Las Vegas, Nevada at 10 am Pacific Time. Calpine Corporation is a major North American power company, delivering electricity to 20 U.S. States and three Canadian provinces. This auction is being conducted by order of the U.S. Bankruptcy Court for the Southern District of New York. The auction will feature four Siemens 501FD-2 Gas Turbine and Generators, Three GE LM6000 Gas Turbine and Generator sets and One Fuji 140 MW Steam Turbine and Generator set. The auction will also feature balance of plant equipment including valves, a turbine inlet chiller package, a unit auxiliary transformer, and residual GE7FA engine equipment. A preview of these assets will take place by appointment only. To set up a preview appointment, contact Hilco Industrial at (248) 254-9999. The Auction will be conducted on Thursday, November 16th, 2006, beginning at 10 a.m. (Pacific Time). Prospective buyers may bid online at http://www.hilcoind.com/ or attend in-person. Preview information, equipment site, asset catalog, terms and conditions and online bidding procedures are available at http://www.hilcoind.com/ About Hilco Industrial Hilco Industrial, LLC -- http://www.hilcoind.com/-- helps manufacturers, wholesalers, distributors, and the financial institutions that serve them, to maximize the value of surplus and under-utilized industrial machinery, equipment and inventory. A global leader in industrial asset monetization, Farmington Hills, Michigan-based Hilco Industrial has substantial capital resources available to acquire assets and subsequently sell them at on-site and/or webcast auctions, or through negotiated sales. Hilco Industrial, LLC is a member of The Hilco Organization -- http://www.hilcotrading.com/-- an internationally-known and respected provider of asset valuations, asset acquisition and disposition services, and specialized debt and equity capital. About Calpine Headquartered in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- 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. CHARMING CASTLE: Case Summary & 19 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Charming Castle LLC dba Indies House P.O. Box 190 Hackleburg, AL 35564 Tel: (205) 935-3117 Fax: (205) 935-8387 Bankruptcy Case No.: 06-71420 Type of Business: The Debtor manufactures mobile homes. See http://www.indieshouse.net/ Chapter 11 Petition Date: October 5, 2006 Court: Northern District of Alabama (Tuscaloosa) Debtor's Counsel: Robert L. Shields, III, Esq. The Shields Law Firm 2025 Third Avenue North, Suite 301 Birmingham, AL 35203 Tel: (205) 323-0010 Fax: (205) 322-8385 Estimated Assets: Less than $50,000 Estimated Debts: $10 Million to $50 Million Debtor's 19 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Hugh Weeks $6,273,201 2221 Brookshire Place Birmingham, AL 35223 Consolidated Forest Products $347,247 155 County highway 62 Bear Creek, AL 35543 Universal Forest Products $268,086 P.O. Box 530155 Atlanta, GA 30353-0155 General Electric Appliances $240,179 P.O. Box 281865 Atlanta, GA 30384-1865 Adorn $235,432 2421 South Nappanee Street, Suite B Elkhart, IN 46517 Chaparral Steel $232,547 Patrick Industries Inc. $228,577 Shaw Industries Inc. $204,225 Door Components $180,510 Elixer Industries $166,805 Posey Supply Co., Inc. $163,944 Continental Axel $163,600 Crane Plastics Siding, LLC $162,308 Tarkett USA, Inc. $129,017 Kinro, Inc. $117,510 Dave Carter & Associates $116,718 Fastening Solutions $75,614 Service Supply Distributions $74,982 Wesco $69,015 COI MIDWEST: Wants Plan Filing Period Extended to March 29 ---------------------------------------------------------- COI Midwest Investment LLC asks the U.S. Bankruptcy Court for the Central District of California to extend, until March 29, 2007, the period within which it has the exclusive right to file a plan of reorganization. The Debtor also wants its time to solicit acceptances of that plan extended to May 28, 2007. The Debtor explains that during the first two to three months of its chapter 11 case, it devoted substantial time to negotiate a sale agreement with Prime Measurement Products, Inc. In addition, the Debtor says it has been working diligently to hire the necessary professionals in order to prepare the property for sale. The Debtor says that the property will be ready for marketing in the first quarter of 2007. The Debtor believes that the extension will give it more time to prepare a successful disclosure statement and provide a meaningful distribution to creditors and equity holders as a result of the property sale. Headquartered in the City of Industry, California, COI Midwest Investments LLC leases its real property in Canyon Road. The Company filed for bankruptcy protection on June 1, 2006 (Bankr. C.D. Calif. Case No. 06-12329). Ron Bender, Esq., and David B. Golubchik, Esq., at Levene, Neale, Bender, Rankin & Brill, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it reported assets amounting between $10 million and $50 million and debts aggregating between $1 million and $10 million. COI MIDWEST: Taps Property Condition as Property Assessor --------------------------------------------------------- COI Midwest Investment LLC asks the U.S. Bankruptcy Court for the Central District of California for permission to employ Property Condition Assessments, LLC, as its property assessor. Property Condition will prepare a property assessment report regarding the Debtor's real property located at 900 South Turnbull Canyon Road, in the City of Industry, California. In addition, the firm will evaluate the general condition of the base building shell as well as mechanical, electrical, plumbing, fire and life safety systems. The Debtor believes that the value of the property is largely in excess of the secured and unsecured debt asserted against its estate. As a result, the Debtor says all allowed claims would be paid in full from the proceeds of the sale of the property. Property Condition will receive an $8,200 flat fee for its services. John I. Luna, a managing member at Property Condition, assures the Court that his firm does not hold any interest adverse to the Debtor's estate. Mr. Luna can be reached at: Property Condition Assessments, LLC 16 N. Marengo Ave., Suite 510 Pasadena, CA 91101 Tel: (626) 685-9560 Fax: (626) 685-9570 Headquartered in the City of Industry, California, COI Midwest Investments LLC leases its real property in Canyon Road. The Company filed for bankruptcy protection on June 1, 2006 (Bankr. C.D. Calif. Case No. 06-12329). Ron Bender, Esq., and David B. Golubchik, Esq., at Levene, Neale, Bender, Rankin & Brill, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it reported assets amounting between $10 million and $50 million and debts aggregating between $1 million and $10 million. COMMODORE APPLIED: June 30 Stockholders' Deficit Tops $10 Million ----------------------------------------------------------------- Commodore Applied Technologies, Inc., has filed its financial statements for the second quarter ended June 30, 2006, with the Securities and Exchange Commission. For the three months ended June 30, 2006, the Company reported a $597,000 net loss on $1,826,000 of contract revenues, compared with a $5,095,000 net loss on $2,733,000 of contract revenues for the same period in 2005. The Company's balance sheet at June 30, 2006, showed $1,791,000 in total assets and $12,491,000 in total liabilities, resulting in a $10,700,000 stockholders' deficit. The Company had a $9,864,000 deficit at Dec. 31, 2005. The Company's June 30 balance sheet also showed strained liquidity with $1,651,000 in total current assets available to pay $6,565,000 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?1301 Going Concern Doubt As reported in the Troubled Company Reporter on May 12, 2006, Tanner LC in Salt Lake City, Utah, raised substantial doubt about Commodore Applied Technologies, Inc.'s ability to continue as a going concern after auditing the consolidated financial statements for the years ended Dec. 31, 2005, and 2004. The auditor pointed to the Company's recurring losses and working capital deficiency. About Commodore Applied Commodore Applied Technologies, Inc. -- http://www.commodore.com/ -- is a diverse technical solutions company focused on high-end environmental markets. The Commodore family of companies includes subsidiaries Commodore Solution Technologies and Commodore Advanced Sciences. The Commodore companies provide technical engineering services and patented remediation technologies designed to treat hazardous waste from nuclear and chemical sources. COMPLETE PRODUCTION: S&P Upgrades Corporate Credit Rating to B+ --------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on oilfield service provider Complete Production Services to 'B+' from 'B'. The outlook is stable. In addition, Standard & Poor's also raised the ratings on the revolving credit facility and term loan to 'B+' from 'B'. As of June 30, 2006, the Houston, Texas-based company had $441 million of debt. "The rating action incorporates the company's improved business profile due to its greater diversification of oil and gas services, capital expenditures to expand its operations, and good operating performance due to favorable market fundamentals," said Standard & Poor's credit analyst Aniki Saha-Yannopoulos. "The financial profile has improved with the recent IPO, where the company raised about $300 million of primary proceeds in equity," she continued. The ratings reflect the company's weak business position as an oilfield services provider, with an aggressive growth strategy in the cyclical, capital-intensive, and highly competitive oilfield services industry. Slightly mitigating these weaknesses are the company's adequate, near-term liquidity for meeting capital spending and diversified product lines in the currently favorable well-servicing environment. The stable outlook reflects the expectation that the company will continue to benefit from favorable, near-term market conditions strengthening through early 2007, continue its acquisitive growth strategy, and maintain adequate liquidity. A cyclical downturn and/or an aggressive debt-financed acquisition resulting in the deterioration of the company's financial profile and liquidity could warrant lower ratings. On the other hand, a meaningful sustained improvement in credit metrics could lead to a rating upgrade or positive outlook over the intermediate term. COMPLETE RETREATS: Taps XCMS as Agent Under U.S. Bankr. Sec. 363 ---------------------------------------------------------------- Pursuant to Section 363 of the Bankruptcy Code, Complete Retreats LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Connecticut for authority to employ XRoads Claims Management Services, LLC, as their claims and noticing agent until Sept. 30, 2006. In August 2006, the Debtors filed an application pursuant to Section 156(c) of the Judiciary and Judicial Procedure Code to employ XCM as their claims and noticing agent. The United States Trustee objected to the XCM Retention Application and pointed out that the Debtors: -- do not seek to employ XCM pursuant to Section 327 of the Bankruptcy Code but the proposed services of XCM are those generally performed by a professional employed pursuant to Section 327; -- do not propose to subject XCM's fees and expenses to Court oversight and review in accordance with Section 330 of the Bankruptcy Code; and -- have not provided information to show that the fees charged by XCM are commercially reasonable and standard when compared to those of other parties offering the same or similar services. In addition, the U.S. Trustee asserted that to the extent Holly Felder Etlin, the Debtors' chief restructuring officer, has the right to contract for XCM, insider and other issues will arise that would prohibit XCM's employment by the Debtors. Subsequently, the Debtors voluntarily withdrew the XCM Retention Application after discussions with their counsel and the U.S. Trustee. Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor- affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Connecticut, serves as counsel to the Official Committee of Unsecured Creditors. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. (Complete Retreats Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). COMPLETE RETREATS: Private Files Complaint Against Gram, et. al. ---------------------------------------------------------------- Debtor Private Retreats Belize, LLC, seeks to avoid and recover prepetition transfers made to: -- Jeffrey Gram, -- Casa Olita Ltd., -- Private Island Management Group, -- Espanto Island Resort, Ltd., -- Espanto Partners, Ltd., -- Bluewater Holding, Ltd., -- Island Seekers, Ltd., and -- John Does 1-25. Casa Olita, Private Island Management, Espanto Island Resort, Espanto Partners, and Bluewater Holding are believed to be alter egos of Mr. Gram. Jeffrey K. Daman, Esq., at Dechert LLP, in Hartford, Connecticut, relates that the Debtor's complaint arises from a December 2003 transaction, wherein Private Retreats Belize bought an island and resort properties off the coast of Belize -- Cayo Espanto -- from Mr. Gram for approximately $2,900,000, with additional substantial incentives. The purchase price consisted of $850,000 cash and a $2,050,000 promissory note. The Promissory Note obligated Private Retreats Belize to make two consecutive payments of $300,000 each. Commencing on February 12, 2004, the Debtor was required to pay Mr. Gram 39 consecutive level monthly installments of $42,700, which included interest at an annual rate of 7.5%. The Promissory Note was to be paid off in full by April 12, 2007. As part of the transaction, Private Retreats Belize also entered into a management agreement with Private Island Management, whereby Mr. Gram, through his company Private Island Management, would be the manager of Cayo Espanto in return for 80% of its net profits. The Management Agreement provides that Private Retreats Belize was to be responsible for 86% of the expenses associated with running the resort operations on Cayo Espanto, with Mr. Gram, through his company Casa Olita, responsible for the remaining 14% of Resort Fees. Also, if Private Island Management was terminated as a manager, even for cause, it was entitled to a $1,000,000 termination fee. Private Retreats Belize also entered into a lease on Dec. 8, 2003, where it leased one of the houses on Cayo Espanto, worth approximately $1,000,000, to Casa Olita in exchange for a one- time $99 payment and $1 a year for 99 years. Mr. Daman relates that on June 16, 2006, Mr. Gram informed Private Retreats Belize that due to certain "defaults, and in particular the payment defaults" under the Management Agreement, he purported to have terminated the Management Agreement. In a separate letter, Mr. Gram stated that he "exercised the power of sale [of Cayo Espanto] conferred by the mortgage debentures . . . effective on June 5, 2006." Mr. Gram transferred Private Retreats Belize's interests in Cayo Espanto to Espanto Partners, and purports to now operate the property through Espanto Island Resorts. Moreover, Mr. Daman continues, as a result of Mr. Gram's purported termination of the Management Agreement, he also illegally terminated the Lease Agreement, and seized ownership of and sold the house the Debtor owned and rented to Mr. Gram to Espanto Partners. Mr. Daman argues that Private Retreats Belize received no value for its interest in Cayo Espanto and was insolvent at the time the transfer took place. "The transfer of Cayo Espanto to alter egos of [Mr.] Gram was well below its market value." On March 7, 2006, H.G. Christie, Ltd., a Caribbean real estate broker, appraised Cayo Espanto for $6,800,000. Mr. Daman points out that Mr. Gram has failed and refused to either (1) undo the Fraudulent Transfer of Cayo Espanto to his alter ego, Espanto Partners, or (2) pay the Debtor the reasonable commercial value of its interest in Cayo Espanto. The Debtor asks the U.S. Bankruptcy Court for the District of Connecticut for a judgment in its favor and against Mr. Gram, et al., in an amount sufficient to fairly compensate it for the value of its interest in Cayo Espanto. Private Retreats Belize made payments to Private Island Management from February 28, 2004, until June 23, 2006, totaling $2,239,330 in cash advances for expenses and fees associated with operating the resort on Cayo Espanto. Mr. Daman asserts that Mr. Gram misappropriated expenses and management fees, and used them for his personal interests and other business interests not related to Cayo Espanto. Thus, the Debtor asks the Court to require Mr. Gram and Private Island Management to provide a monthly accounting of the expenses and fees from Dec. 8, 2003, through June 23, 2006. The Debtor adds that: -- Mr. Gram and Casa Olita should be made to remit $1,000,000 plus prejudgment interest for their breach of the Lease Agreement; and -- Mr. Gram and Private Island Management should be made to remit $6,800,000 plus prejudgment interest and punitive damages for their breach of the Management Agreement and wrongful and unlawful conversion. Private Retreats Belize also asks the Court to find that Espanto Partners, Bluewater Holding, and Island Seekers are subject to jurisdiction of the Bankruptcy Court by reason of Mr. Gram's contacts with the United States and be held liable for Mr. Gram's wrongful conduct. Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor- affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Connecticut, serves as counsel to the Official Committee of Unsecured Creditors. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. (Complete Retreats Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). COMPLETE RETREATS: Court Approves Proposed Interim Fee Procedures ----------------------------------------------------------------- At Complete Retreats LLC and its debtor-affiliates' behest, the U.S. Bankruptcy Court for the District of Connecticut established uniform procedures for compensating and reimbursing Court-approved professionals on an interim basis similar to those established in other large Chapter 11 cases, subject to certain modifications. The Honorable Alan H.W. Shiff ordered that these documents be filed with the Court and served on the Notice Parties: (a) each Professional's Monthly Statement, (b) Objections to the Monthly Statements, and (c) Certificates of No Objection to the Monthly Statements. Judge Shiff noted that a professional will not be entitled to receive monthly compensation until it properly files an interim fee application. The Court permited counsel for any official committee appointed in the Debtors' Chapter 11 cases to, in accordance with the Compensation Procedures, collect and submit statements of expenses allowed under Section 503(b)(3)(F) of the Bankruptcy Code, along with supporting vouchers, from members of the committees for reimbursement. However, counsel to the committees will ensure that the reimbursement requests comply with any guidelines promulgated by the Office of the United States Trustee. The Debtors' proposed interim fee procedures, published in the Troubled Company Reporter on Aug. 17, 2006, states that: (a) By the 20th day of each month, after the month for which compensation is sought, each Professional will serve a monthly statement to: * the Debtors, * the counsel for the Debtors, * the counsel for the Debtors' postpetition DIP lenders, * the counsel for the Creditors Committee; and * the Office of the United States Trustee. The first Monthly Statement will be due on Sept. 20, 2006, for the period covering the Debtors' bankruptcy filing through and including Aug. 31, 2006; (b) Any party that objects to a Monthly Statement is required to serve on the Affected Professional and the Notice Parties, within 20 days after the service of the Monthly Statement, a written statement that: -- describes the precise nature and basis of the Objection; and -- specifies the amount of objectionable fees or expenses at issue; (c) If an Objection is served, the Objecting Party and the Affected Professional are required to make a good-faith attempt to resolve the Objection on a consensual basis. All Objections that are not resolved by the parties will be preserved and presented to the Court at the next interim or final fee application hearing; (d) If no Objection to a Monthly Statement has been served prior to the relevant Objection Deadline, the Affected Professional will serve on the Debtors and their counsel a certification that there has been no Objection to its Monthly Statement, and the Debtors are authorized to pay 80% of the sought fees and 100% of the sought expenses. If an Objection is timely served, the Affected Professional will serve on the Debtors and their counsel a certification indicating that there has been an Objection and stating the total fees and expenses in the Monthly Statement not subject to the Objection. The Debtors are then authorized to pay the Affected Professional an amount equal to 80% of the fees and 100% of the expenses not subject to the Objection; (e) From Jul. 23, 2006 through Oct. 31, 2006, and at four- month intervals afterwards, each Professional will file with the Court, within 30 days of the end of the Interim Fee Period, an interim fee application for interim Court approval and allowance of 100% of the compensation and expense reimbursement sought in the Monthly Statements served during the Interim Fee Period; (f) If an Objection to all or part of the Interim Fee Application is timely and properly filed within 30 days from the filing of the Interim Fee Application, the Objection will be considered at the Interim Fee Hearing; (g) If no Objection to the Interim Fee Application is timely and properly filed by the applicable Fee Objection Deadline, the Professional will file with the Court and serve on the Debtors and their counsel a certification that there have been no Objections to its Interim Fee Application; (h) The Court will convene an Interim Fee Hearing on pending Interim Fee Applications, once every four months. The Debtors will provide notice of all Interim Fee Hearings to the Notice Parties; and (i) A pending objection to a Monthly Statement or an Interim Fee Application will not disqualify a Professional from the future payment of compensation or reimbursement of expenses that are requested in accordance with the Compensation Procedures. Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor- affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Connecticut, serves as counsel to the Official Committee of Unsecured Creditors. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. (Complete Retreats Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). COPELANDS' ENTERPRISES: Panel Hires Landis Rath as Bankr. Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave the Official Committee of Unsecured Creditors in Copelands' Enterprises, Inc.'s chapter 11 case, permission to employ Landis Rath & Cobb, LLP, as its bankruptcy counsel, nunc pro tunc to Aug. 14, 2006. Landis Rath will: a) render legal advice with respect to the powers and duties of the Committee and the other participants in the Debtor's case; b) assist the Committee 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 matter relevant to the bankruptcy case, as and to the extent such matters may affect the Debtor's creditors; c) prepare all necessary applications, motions, answers, orders, reports and papers on behalf of the Committee, and appear on behalf of the Committee at Court hearings as necessary and appropriate in connection with the bankruptcy case; d) render legal advice and perform legal services in connection with the foregoing; and e) perform all other necessary legal services in connection with the bankruptcy case, as may be requested by the Committee. Adam G. Landis, Esq., a partner of the firm, will charge the Debtor $480 per hour for this engagement. He also disclosed the firm's other professionals billing rate: Professionals Designation Hourly Rate ------------- ----------- ----------- Kerri K. Mumford, Esq. associate $250 John H. Strock, Esq. associate $195 Mr. Landis assured the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Landis can be reached at: Adam G. Landis, Esq. Landis Rath & Cobb LLP 919 Market Street, Suite 600 P.O. Box 2087 Wilmington, DE 19899 Tel: (302) 467-4400 Fax: (302) 467-4450 Based in San Luis Obispo, California, Copelands' Enterprises, Inc., dba Copelands' Sports -- http://www.copelandsports.com/-- operates specialty sporting goods stores. The Company filed for chapter 11 protection on Aug. 14, 2006 (Bankr. D. Del. Case No. 06-10853). Laura Davis Jones, Esq., Marc A. Berlinson, Esq., and Ira A. Kharasch, Esq., at Pachulski, Stang, Ziehl, Young, Jones, & Weintraub LLP, in Los Angeles, California, represent the Debtor. Clear Thinking Group serves as the Debtor's financial advisor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $50 million and $100 million. COPELANDS' ENTERPRISES: Hires Keen Realty as Real Estate Advisor ---------------------------------------------------------------- The Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware authorized Copelands' Enterprises, Inc., to employ Keen Realty, LLC, as its special real estate consultant. Keen Realty is expected to: a) review all pertinent documents and consult with the Debtor's counsel, as appropriate; b) develop and implement a marketing program which may include, as appropriate, newspaper, magazine or journal advertising, letter or flyer solicitation, placement of signs, direct telemarketing, and other marketing methods as may be necessary; c) communicate with potential replacement tenants, brokers, investors, landlords, etc. and endeavor to locate additional parties who may have an interest in the purchase of a property; d) respond and provide information to, negotiate with, and solicit offers from prospective purchasers and settlements from landlords and make recommendations to the Debtor as to the advisability of accepting particular offers and settlements; e) meet periodically with the Debtor, its accountants and attorneys, in connection with the status of its efforts; f) work with attorneys responsible for the implementation of the proposed transactions, reviewing documents, negotiating and assisting in resolving problems which may arise; and g) appear in Court during the term of this retention, testify or consult with the Debtor in connection with the marketing or disposition of a property. Keen Realty will be paid: a) an initial payment of $400 per renegotiation property for the review of documents, analysis of the leases, and development and implementation of a renegotiation strategy; b) $1,500 or 4% of gross proceeds from the transaction; c) a minimum transaction fee or 4% of gross proceeds from the transaction with respect to the waiver, release or negation of a landlord's rejection claim; d) a $400 minimum fee per property if a leasehold property is rejected or otherwise withdrawn from the scope of the agreement and the consultant has not earned a fee; Harold Bordwin, a Keen Realty member, assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Based in San Luis Obispo, California, Copelands' Enterprises, Inc., dba Copelands' Sports -- http://www.copelandsports.com/-- operates specialty sporting goods stores. The Company filed for chapter 11 protection on Aug. 14, 2006 (Bankr. D. Del. Case No. 06-10853). Laura Davis Jones, Esq., Marc A. Berlinson, Esq., and Ira A. Kharasch, Esq., at Pachulski, Stang, Ziehl, Young, Jones, & Weintraub LLP, in Los Angeles, California, represent the Debtor. Adam G. Landis, Esq., at Landis Rath & Cobb LLP represents the Official Committee of Unsecured Creditors. Clear Thinking Group serves as the Debtor's financial advisor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $50 million and $100 million. COPELANDS' ENTERPRISES: Selling Nine Leases on November 14 ---------------------------------------------------------- Copelands' Enterprises, Inc., is auctioning off leases of Copeland stores in four states, including Oregon, The Portland Business Journal reports. Keen Realty LLC will market and dispose of the Company's 11 leased stores in Oregon, California, Nevada and Utah. According to the Journal, two of the Debtor's six stores in Oregon will be sold. One store is located at 12200 S.E. 82nd Ave. in Clackamas and the other is located at 11959 S.W. Canyon Road in Beaverton. As reported in the Troubled Company Reporter on Sept 1, 2006, the Debtor sought the U.S. Bankruptcy Court for the District of Delaware's authority to: -- to close 11 of their retail store locations; and -- to conduct going-out-of-business sales free and clear of liens pursuant to Sections 363(b) and (f) of the U.S. Bankruptcy Code. The remaining GOB 9 stores are located in: a. Store # 2 Santa Barbara # 2 1137 State Street Santa Barbara, CA 93102 b. Store # 4 Santa Barbara # 4 1230 State Street Santa Barbara, CA 93102 c. Store # 13 Carmichael 6404 Fair Oaks Boulevard Carmichael, CA 95608 d. Store # 23 Sacramento 643 Downtown Plaza, #1-C-100 Sacramento, CA 95814 e. Store # 58 Las Vegas (BOB 3860 S Maryland Parkway Las Vegas, NV 89119 f. Store # 60 Henderson 579 N Stephanie Street Henderson, NV 89014 g. Store # 61 Provo 4801 N University, Suite 210 Provo, UT 84604 h. Store # 65 El Cerrito 300 El Cerrito Plaza El Cerrito, CA 94530 i. Store # 67 Walnut Creek 1330 S California Boulevard Walnut Creek, CA 94596 The leases will be auctioned on Nov. 14, 2006. The deadline for submitting bids is Nov. 9, 2006. Based in San Luis Obispo, California, Copelands' Enterprises, Inc., dba Copelands' Sports -- http://www.copelandsports.com/-- operates specialty sporting goods stores. The Company filed for chapter 11 protection on Aug. 14, 2006 (Bankr. D. Del. Case No. 06-10853). Laura Davis Jones, Esq., Marc A. Berlinson, Esq., and Ira A. Kharasch, Esq., at Pachulski, Stang, Ziehl, Young, Jones, & Weintraub LLP, in Los Angeles, California, represent the Debtor. Adam G. Landis, Esq., at Landis Rath & Cobb LLP represents the Official Committee of Unsecured Creditors. Clear Thinking Group serves as the Debtor's financial advisor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $50 million and $100 million. DANA CORP: Equity Committee Taps Jefferies as Financial Advisors ---------------------------------------------------------------- The Official Committee of Equity Security Holders in Dana 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 Jefferies & Company, Inc., as its financial advisors, nunc pro tunc to July 11, 2006. The Debtors' Chapter 11 Cases are very large and complex and the restructuring of their businesses will require an analysis of a substantial number of difficult issues that will have significant immediate and long term consequences, Gary Kaplan, Esq., at Fried, Frank, Harris, Shriver & Jacobson, LLP, in New York, relates. These issues include, among other things: (a) how to deal with the Debtors' collective bargaining agreements and pension and other post-employment benefits obligations, including whether to seek relief under Sections 1113 and 1114 of the Bankruptcy Code; (b) which business divisions should be retained and which assets should be sold; (c) whether to renegotiate key customer contracts; (d) whether the Debtors' asbestos liabilities should "pass through" unimpaired, or whether alternative treatment should be established; and (e) whether the Debtors' plants should be relocated to other less costly locations. On top of these issues, several other issues that frequently arise in ordinary large Chapter 11 cases also must be addressed, like employment compensation matters, and contract and lease assumptions and rejections, Mr. Kaplan adds. To address each of those issues, the Official Committee of Equity Security Holders requires a sophisticated financial advisor to perform analysis and for the Equity Committee to act accordingly, Mr. Kaplan asserts. Moreover, the Debtors are in the process of formulating their business plan. It is imperative that the Equity Committee be represented by financial advisors that can assist it in understanding the assumptions that underlie the business plan and in reviewing the many business decisions necessary that will determine the future direction of the Debtors' business, Mr. Kaplan contends. Without a dedicated financial advisor, Mr. Kaplan says the Equity Committee is without adequate means to review the business plan or the many decisions that will be implemented in order to lay the groundwork for achieving the business plan. As financial advisors, Jefferies will: (1) familiarize and analyze the Debtors' business, operations, assets, financial condition and prospects, including, without limitation, providing valuation analysis and related litigation support; (2) assist and advise the Equity Committee in examining and analyzing any potential or proposed strategy for restructuring or adjusting the Debtors' outstanding indebtedness or overall capital structure, whether pursuant to a plan of reorganization, a sale of assets or equity under Section 363 of the Bankruptcy Code, an infusion of financing or capital, a liquidation, or otherwise, including, where appropriate, assisting the Equity Committee in developing its own strategy for accomplishing a restructuring; (3) assist and advise the Equity Committee in evaluating and analyzing the proposed implementation of any restructuring, including the value of the securities, if any, that may be issued under any plan; (4) advise the Equity Committee on the current state of the "restructuring market" and in particular, the capital markets, including access to the capital markets in conjunction with the restructuring; and (5) render other financial advisory services as may from time to time be agreed on by the Equity Committee and Jefferies, including, but not limited to, providing expert testimony, and other expert and financial advisory support related to any threatened, expected, or initiated litigation. Jefferies will be paid: (a) $500,000 in cash as initial financial advisory fee, payable upon the Court's approval of its retention; (b) $150,000 monthly fee commencing on the earlier of: (i) the release of the Debtors' business plan, or (ii) February 1, 2007, until the termination of the Engagement Letter; and (c) a transaction fee in an amount equal to either: (i) $5,250,000, if holders of the Debtors' existing equity securities retain or receive more than 50% of the equity of the reorganized Debtors, including, without limitation, any options, warrants, or securities convertible into equity, or the right to participate in a rights offering (x) at the value of the equity as of the effective date of a plan as determined by the Court or (y) that is actually subscribed by holders of Equity to achieve more than 50% ownership; or (ii) $2,500,000, if holders of the Debtors' existing equity securities retain less than 50% of the equity in the reorganized Debtors upon consummation of a plan confirmed by the Court consensually with the Equity Committee. Steven R. Strom, managing director of Jefferies & Company, Inc., assures the Court that his firm does not represent any other entity having an adverse interest in connection with the Debtors' Chapter 11 Cases, and is a "disinterested person" as defined under Section 101(14) of the Bankruptcy Code. Mr. Strom adds that Jefferies has no connection with the Official Committee of Unsecured Creditors, the Debtors, their creditors and other parties-in-interest in these Chapter 11 Cases. Toledo, OH-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. 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. 22; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DANA CORP: Can Assume 36 Real Property Leases on Amended Schedule ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave Dana Corporation and its debtor-affiliates authority to assume 36 unexpired non-residential real property leases based on the Debtors' amended assumed lease schedule, and deemed all objections to the lease assumption resolved. An amended seven-page list of the Assumed Leases is available for free at http://researcharchives.com/t/s?12db The Debtors revised the assumed lease schedule following objections from lessors Lexington Corporate Properties Trust and CRP Holdings B, L.P. Lexington sought to have the Debtors' ninth lease added in the schedules, while CRP Holdings asserted that the Debtors' "monthly obligation" under its leases with CRP totals $19,567, not $15,750. The Amended Assumed Leases Schedule reflects: (1) The unexpired lease between the Debtors and Bristol Industrial I, LLC, for a property located at 5540-48 Bandini Boulevard, in Bell, California, has been removed from the Schedule because Bristol has agreed to extend the time for the Debtors to decide whether to assume or reject the Lease until December 31, 2006, pursuant to a Court approved stipulation. (2) The Debtors added the unexpired lease with LXP for the property at 730 N. Black Branch Road, in Elizabethtown, Kentucky. The Debtors will pay $2,886 in connection with the assumption of the Lease. (3) The Debtors updated or corrected certain of the lessors' names and addresses. (4) The Debtors have reconciled certain cure amounts in response to additional information provided by certain lessors. Toledo, OH-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. 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. 22; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DANA CORP: Wants to Walk Away from Nine Contracts and Leases ------------------------------------------------------------ Dana Corporation and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to reject nine executory contracts and unexpired leases effective as of Sept. 30, 2006: Contracting Party Description ----------------- ----------- CCA Financial, LLC Equipment Lease CCA Financial, LLC Equipment Lease CCA Financial, LLC Equipment Lease Great America Leasing Corporation Equipment Lease Citicorp Vendor Finance, Inc. Equipment Lease Citicorp Vendor Finance, Inc. Equipment Lease Perry Corporation Maintenance Agreement Perry Corporation Equipment Lease Electrolux Consumer Outdoor Supply Agreement According to the Debtors, the nine contracts and leases are not necessary to their ongoing business operations or restructuring efforts or are no longer profitable. Thus, the Debtors' ongoing obligations under the Leases and Contracts, aggregating approximately $9,500 per month, impose an undue burden on the Debtors' estates. Corinne Ball, Esq., at Jones Day, in New York, asserts that maintaining the Leases and Contracts under these circumstances would unnecessarily deplete the assets of the Debtors' estates to the direct detriment of their creditors. Moreover, the Debtors have determined that the Agreements do not have any realizable value in the marketplace. Ms. Ball assures the Court that the Debtors have surrendered, or will surrender by the applicable rejection effective date, possession of any property leased under the Leases and Contracts to the Contracting Party concerned. Toledo, OH-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. 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. 22; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DC PROPERTIES: U.S. Trustee Wants Case Converted to Chapter 7 ------------------------------------------------------------- The U.S. Trustee for Region 4 asks the U.S. Bankruptcy Court for the Southern District of West Virginia to convert the chapter 11 case of DC Properties, LLC, to chapter 7 liquidation proceedings. The Trustee says that the case, filed on Dec. 20, 2005, remains open without any reorganization plan having been confirmed. The Trustee reminds the Court that the Debtor filed its January to March 2006 monthly operating reports only after the Court issued an order compelling the filing and directing the Debtor to file all subsequent reports at the times required by law. The Trustee discloses that that the Debtor has also failed to file operating reports for the months of June, July and August 2006. According to the Trustee, monthly operating reports are required to be filed in order for the Court, U.S. Trustee, and parties-in- interest to evaluate the progress of the case. The Trustee contends that the Debtor's failure to file monthly operating reports is cause to convert its case to a chapter 7 liquidation proceeding. Headquartered in Huntington, West Virginia, DC Properties, LLC filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D. W.Va. Case No. 05-26014). Joseph W. Caldwell, Esq., at Caldwell & Riffee, and Marshall C. Spradling, Esq., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets between $1 million and $10 million and estimated debts between $10 million and $50 million. DELPHI CORP: Considering Warren, Ohio, Plant Closure ---------------------------------------------------- Delphi Corp. may close its plant in Warren, Ohio, Bloomberg News reports, citing Tom Kennedy, a lawyer representing the Communication Workers of America. The Warren Plant has about 3,800 workers, most of whom have opted for the buyouts, Bloomberg News relates. According to Bloomberg News' Tom Becker, workers in the Warren Plant are represented by the International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers- Communications Workers of America. "We continue to have constructive dialogue with all of our U.S. unions, including the IUE-CWA," Delphi spokesman Lindsey Williams said, according to Bloomberg News. "However, there are challenges that must be addressed with the IUE-CWA leadership at the Warren site if the operation is to remain viable." 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. 43; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Appaloosa Seeks to Increase Equity Stake to 33% ------------------------------------------------------------ Appaloosa Management LP is currently negotiating with Delphi senior management and General Motors Corp. chief financial officer Frederick A. Henderson about investing billions of dollars in Delphi in exchange for up to a one-third equity stake in Delphi, The Wall Street Journal reports. Harbinger Capital Partners, UBS AG and Merrill Lynch & Co. also plan to invest in Delphi, the Journal says. People involved in the negotiations expect a deal hammered out by early October, the Journal's Ianthe Jeanne Dugan adds. Appaloosa currently holds 52,000,000 shares of Delphi common stock representing a 9.3% equity stake. In August, Delphi agreed to furnish Appaloosa and Harbinger with non-public, confidential or proprietary information necessary for them to evaluate a possible business arrangement involving Delphi. Appaloosa has engaged UBS Securities LLC as its lead financial advisor and lead capital markets advisor, and Merrill Lynch & Co. as additional financial advisor, in connection with any potential restructuring, acquisition or other transaction. The financial advisors were given an opportunity to participate in any debt or equity financing transactions involving Delphi. 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. 43; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Inks Outsourcing Deals with EDS and Hewlett Packard ---------------------------------------------------------------- Delphi Corporation and its debtor-affiliates ask the U.S Bankruptcy Court for the Southern District of New York for authority to enter into and perform under: (a) an agreement with Electronic Data Systems Corporation and EDS Information Services, LLC, which provides for the outsourcing of global desktops, service desk, and mainframe systems hosting; and (b) an agreement with Hewlett Packard Company, which provides for the outsourcing of server systems hosting. John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, tells Judge Drain that the Debtors' decision to enter into the IT Infrastructure Outsourcing Agreements is one step in the implementation of their transformation plan. The Debtors intend to transform their salaried workforce to ensure a competitive structure aligned with their product portfolio and manufacturing footprint, which would in turn, lower the Debtors' selling, general, and administrative expenses. To achieve this goal, the Debtors are designing and implementing a shared service delivery model that will contribute to the reduction of their global SG&A expense by $450 million annually. One aspect of this effort is Delphi's accelerated consolidation and outsourcing of IT functions and the transition to common processes and systems. Benchmarking analysis conducted with independent consultants concluded that Delphi's 2005 IT operating budget of $588 million could be reduced by $256 million through three transformation actions: (1) outsourcing IT services; (2) reducing the number and type of unique, non-common systems, moving to common operating platforms; and (3) running a streamlined IT shared service organization. The Debtors' shared service model calls for the outsourcing of these IT services: (a) global infrastructure services, including desktops, service desk, and mainframe and server systems hosting; (b) system development, maintenance, and support; and (c) network services such as data networks and voice services. Currently, the Debtors purchase IT services from more than 100 regional-based suppliers. According to Mr. Butler, completion of all three outsourcing phases would enable rationalization of the supplier-provider base to fewer than 10 direct suppliers, which will enable the Debtors to significantly reduce the number of internal employees providing those services. After one-time transition costs of $80 million, net operating savings of $155 million are expected over the seven-year term of the IT Infrastructure Outsourcing Agreements. Based on arm's-length negotiations, the Debtors have recommended to Delphi's Board of Directors to award aspects of the project to each of EDS and HP. Splitting the scope of the project between EDS and HP allowed the Debtors to select the most competitive terms offered by each of EDS and HP. The Debtors sought and obtained the Court's permission to file their agreements with EDS and HP under seal because they contain competitively sensitive business information that, if publicly disclosed, could detrimentally affect the Debtors' ability to negotiate the terms of future agreements with other parties. By moving to a model that provides for the outsourcing of IT infrastructure services to two vendors, the Debtors believe that they will: (a) achieve and sustain a competitive environment in which their service providers will provide service at competitive prices throughout the term of the agreement; (b) be able to develop stronger relationships with their fewer service providers; (c) reduce their costs through common process, common systems, and economies of scale; and (d) find providers with innovation and progressive technology. Delphi will contract for global infrastructure services for a seven-year term, with costs between $700 million and $800 million. Monthly operating expenses and one-time transition costs will be charged directly or allocated to the Delphi affiliates which use the services, with 35% of operating and transition costs being borne by the Debtors and the remaining costs by non-Debtor affiliates. The scope of services to be provided under the IT Infrastructure Outsourcing Agreements includes transition services both at inception and at termination to ensure a smooth transition from existing service providers to EDS and HP and also to ensure that there is no disruption to Delphi's business at the end of the term. Each service provider would be required to submit a detailed transformation plan which identifies principal changes in technology and deliverables to allow Delphi to work toward implementing common systems and a more efficient IT services delivery model and achieve year-over-year price reductions over the life of the contracts. 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. 43; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELTA AIR: Comair Labor Groups Says New Agreements Must Be Fair --------------------------------------------------------------- The union leadership of the 1,600 Comair pilots, as represented by the Air Line Pilots Association, International, and the 1,000 Comair flight attendants, as represented by Local 513 of the International Brotherhood of Teamsters, have formally announced that if the two parties are to provide contract relief to help their carrier emerge from Chapter 11 bankruptcy, their two agreements must be fair and consensual. Following continued efforts to reach agreements, representatives from both the pilot and flight attendant unions recently met at the Comair ALPA offices in Erlanger, Kentucky, to discuss their circumstances and develop a joint position. Delta Air Lines, Inc., Comair's parent company, had given Comair until Oct. 2, 2006, to reach new agreements with its unions. This date was also the deadline Delta had advertised for its request for proposals, which solicited bids from regional carriers for service Comair currently operates. "The pilots and flight attendants will not have contract terms imposed upon them, regardless of some artificial deadline," said Capt. J.C. Lawson, chairman of the Comair ALPA unit. "To date, Comair management has not significantly budged from its initial demand of $17.3 million in annual pilot concessions and offers nothing in return if we grant them. Our pilots are willing to provide contract relief, but we expect a commitment from the company, in the form of job security, for our efforts." Connie Slayback, president of the Comair flight attendant Teamsters' unit, noted, "We all want to help our airline emerge from bankruptcy and return to profitability, but we have to be able to reach a deal that both the flight attendants and management can agree to." Ms. Slayback added, "J.C. and I also take the position that any agreement a Comair union negotiates will be contingent upon other Comair labor groups reaching similar agreements. None of us will go this alone." Capt. Lawson stated, "The pilots stand behind this statement. We support our flight attendants and expect Comair management to negotiate in good faith with them." About ALPA Founded in 1931, ALPA -- http://www.alpa.org/-- is the world's largest pilot union representing more than 61,000 cockpit crewmembers at 40 airlines in the U.S. and Canada. About IBT Founded in 1903, the IBT -- http://www.teamster.org/-- represents more than 1.4 million hardworking men and women throughout the United States and Canada. About Delta Air Atlanta, GA-based Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. DEVELOPMENT FINANCE: Fitch Holds Issuer Default Rating at BB ------------------------------------------------------------ Fitch affirmed the ratings of Development Finance Limited: -- Long-Term Issuer Default Rating at 'BB' -- Short-Term Issuer Rating at 'B' -- Individual Rating at 'D' -- Support Rating at '3' The Rating Outlook is Stable. Ratings of DFL reflect its ownership, efficient operating structure, and sizable portion of stable long-term funding. Offsetting factors include the company's concentration of exposure, high though improving level of impaired loans, small size and limited market position. In 2005, net income continued to trend higher with an improving ROA. Earnings benefited from sharply lower provisions for loan losses combined with solid growth in net interest income, DFL's primary revenue source. In 1H06, earnings remained steady with a favorable outlook for the rest of 2006. DFL is a specialized lender and investment bank, providing corporate finance, risk capital, microfinance loans and strategic management advisory services to private enterprises in T&T, as well as in other Caribbean countries. The largest shareholders are RBTT Financial Holdings with a 31% stake, the Government of Trinidad and Tobago with 28%, the European Investment Bank with 8.5%, and the Inter-American Investment Corporation with 8.5%. Fitch believes there is a moderate probability of support from DFL's institutional owners in the event of serious financial difficulties. Despite its small systemic and market position, DFL's focus on the private sector is consistent with the strategic goals of its main shareholders. DOLLAR FINANCIAL: New $75MM Debt Facility Gets Moody's B3 Rating ---------------------------------------------------------------- Moody's Investors Service affirms Dollar Financial Group, Inc.'s B3 Corporate Family Rating, and assigned a B3 senior secured rating to its new $75 million U.S revolving credit facility. Moody's also assigned a first time rating of B3 to the $295 million term loan and $25 million revolving credit facilities of National Money Mart Co., Dollar's Canadian subsidiary. Finally, Moody's assigned a first time rating of B3 to the $80 million senior secured term loan facility of Dollar Financial U.K. Limited, Dollar's U.K. subsidiary. The rating outlook remains positive. The ratings relate to Dollar's plan to refinance its existing senior unsecured notes and revolving credit facility and concurrently acquire 82 of its Canadian franchise stores. The new credit facilities will fund the refinancing and acquisition. Dollar's acquisition of the Canadian franchise stores will be immediately accretive to earnings and contribute approximately $45 million to revenues and approximately $19 million to EBITDA. Dollar also realizes several other benefits from this transaction, such as lowering its consolidated tax burden, reducing its cost of debt via the lower interest rate on the new credit facilities, and freeing up territory in Canada for future growth initiatives. Dollar's tax burden will be reduced as a result of: 1) interest expense at the foreign subsidiaries will rise, thus reducing their taxable income, and 2) interest expense at the U.S. entity will decline and it will thereby become profitable, allowing it to begin utilizing its approximately $100 million in net operating loss carryforwards. As a result of the increased debt load from the refinancing and acquisition, Dollar's leverage, as measured by adjusted debt to EBITDAR (total debt plus capitalized operating lease rentals divided by EBITDA plus lease rental expense), will worsen relative to the recent improvement that had resulted from the company's common equity issue and debt paydown. Adjusted EBIT to interest expense (EBIT plus 1/3 of rental expense divided by interest expense plus 1/3 of rental expense) will also deteriorate modestly. Somewhat mitigating these developments will be higher consolidated EBITDAR margins resulting from the higher margin Canadian stores and anticipated improvement in free cash flow to adjusted debt. The credit facilities at Dollar, NMM, and DFUL are secured on the assets of the respective entity. The facilities at NMM and DFUL are guaranteed by Dollar, and are also cross-guaranteed, but for tax reasons Dollar's revolver has no upstream guarantees from the foreign subsidiaries (Dollar's facility does have a pledge of the stock of the foreign subsidiaries, however). In this respect, Moody's considered the structural inferiority of the Dollar credit facility to the facilities at the foreign subsidiary level. However, Moody's concluded that this factor did not warrant a notching differential between the Dollar credit facility and the facilities at the foreign subsidiary level. The maintenance of the positive ratings outlook reflects Dollar's strong competitive position within the industry, which Moody's believes is enhanced by the Canadian acquisition, as well as the strong cash flow generating capability of the firm. What Could Change The Rating -- Up: The main source of upward pressure on the rating would be improvement in the company's leverage profile and free cash flow, and demonstration that improved levels are sustainable. What Could Change The Rating -- Down: Increased leverage, material weakening in cash flows, and adverse developments in the political/regulatory framework that affect Dollar's business. These are Moody's rating actions: * Dollar Financial Group, Inc. -- Corporate Family Rating B3 -- Senior Secured Rating B3 * National Money Mart Co. -- Senior Secured Rating B3 * Dollar Financial U.K. Limited -- Senior Secured Rating B3 Moody's most recent rating action for Dollar occurred on July 20, 2006, when Moody's affirmed Dollar's Corporate Family Rating and senior unsecured rating of B3 and changed the outlook to positive from stable. Dollar Financial Group is a wholly-owned subsidiary of Dollar Financial Corp., an international financial services company serving under-banked consumers. Dollar, based in Berwyn, Pa., reported total assets of $551 million at fiscal year end June 30, 2006. DORAL FIN'L: Completes Restructuring Loan Pact with R-G Premier --------------------------------------------------------------- Doral Financial Corporation completed the restructuring of the terms of certain prior mortgage loan transfers between the Company and R-G Premier Bank of Puerto Rico, a wholly owned subsidiary of R&G Financial Corporation, that the Company had recharacterized as secured borrowings as part of the restatement process. "With this transaction, the Company has successfully completed the restructuring of substantially all of the prior mortgage loan transfers that were recharacterized as secured borrowings as part of the restatement," Glen Wakeman, Chief Executive Officer, said. This transaction also resolves Doral Bank's loan-to-one-borrower issues that had resulted from the recharacterization. As previously discussed in connection with the Company's restatement, the Company had decided to reverse the mortgage loan transfers that involved the generally contemporaneous purchase and sale of mortgage loans from and to other local financial institutions, where the amounts purchased and sold, and other terms of the transactions, were similar. In the case of the transactions with R-G Premier, the Company reversed the gains previously recognized with respect to certain transfers made to R- G Premier and recorded the transactions as loans payable secured by mortgage loans. Also, certain mortgage loans purchased by Doral Bank, the Company's principal banking subsidiary, from R-G Premier that had initially been reported as purchases of residential mortgage loans were recharacterized as commercial loans secured by mortgages. Under the agreements with R-G Premier, the Company transferred title to R-G Premier to the mortgage loans underlying the recharacterized borrowing as payment in full of such borrowing and entered into a servicing agreement pursuant to which the Company will continue servicing the mortgage loans in exchange for an annual servicing fee of 25 basis points of the unpaid principal balance of the mortgage loans. The outstanding principal balance of the mortgage loans transferred by the Company to R-G Premier as of Aug. 31, 2006, was approximately $411.2 million. Similarly, R-G Premier transferred title to Doral Bank to the mortgage loans underlying the commercial loan recognized by Doral Bank as payment in full of the loan and Doral Bank entered into a servicing agreement with R&G Mortgage Corporation pursuant to which R&G Mortgage will continue servicing the mortgage loans in exchange for an annual servicing fee of 25 basis points of the unpaid principal balance of the mortgage loans. The outstanding principal balance of the mortgage loans transferred by R-G Premier to Doral Bank as of August 31, 2006 was approximately $398.7 million. In connection with the restructuring, the parties agreed to terminate in full any outstanding recourse obligations. Doral Financial Corporation (NYSE: DRL) -- http://www.doralfinancial.com/-- a financial holding company, is the largest residential mortgage lender in Puerto Rico, and the parent company of Doral Bank, a Puerto Rico based commercial bank, Doral Securities, a Puerto Rico based investment banking and institutional brokerage firm, Doral Insurance Agency, Inc. and Doral Bank FSB, a federal savings bank based in New York City. * * * As reported in the Troubled Company Reporter on June 13, 2006, Standard & Poor's Ratings Services lowered its long-term ratings on Doral Financial Corp., including the company's long-term counterparty rating, to 'B+' from 'BB-'. At the same time, Doral's outlook remains on CreditWatch with negative implications. DYNAMIC LEISURE: Files Amended FY 2005 & First Quarter Financials ----------------------------------------------------------------- Dynamic Leisure Corporation, fka DynEco Corporation, delivered its amended financial statements on Form 10-KSB/A for the fiscal year ended Dec. 31, 2005, and Form 10-QSB/A for the first quarter ended March 31, 2006, to the Securities and Exchange Commission. The amended annual report and quarterly report restate the Company's financial statements. The management became aware that a default premium paid in 2006 in connection with the Modification and Waiver agreement should have been accrued by DynEco Corp. at Dec. 31, 2005. The company believes that the consolidated financials statements must be adjusted to accrue the $77,578 default premium. The net loss was increased from $526,195 to $603,773. Restated Annual Financials For the full year ended Dec. 31, 2005, the Company incurred a $603,773 net loss on zero revenues, compared to a $434,523 net loss on $286,900 of net revenues in 2005. At Dec. 31, 2005, the Company's balance sheet showed $62,373 in total assets and $1.2 million in total liabilities resulting in a $1.1 million stockholders' deficit. The Company's December 31 balance sheet also showed strained liquidity with $32 million in total current assets available to pay $76.7 million in total current liabilities coming due within the next 12 months. Restated Quarterly Financials For the three months ended March 31, 2006, the Company incurred a $4.1 million net loss on $1 million of net revenues. At March 31, 2006, the Company's balance sheet showed $10.2 million in total assets and $10.3 million in total liabilities resulting in a $133,436 stockholders' deficit. The Company's March 31 balance sheet also showed strained liquidity with $1.8 million in total current assets available to pay $10.2 million in total current liabilities coming due within the next 12 months. A full-text copy of the Company's restated annual report for the period ended Dec. 31, 2005, is available for free at http://researcharchives.com/t/s?12f7 A full-text copy of the Company's restated quarterly report for the period ended March 31, 2006, is available for free at: http://researcharchives.com/t/s?12f8 Company Name Changed On Feb. 28, 2006, DynEco filed Articles of Correction with the Secretary of State of Minnesota, to change DynEco's name to Dynamic Leisure Corporation. These Articles were effective in the State of Minnesota at the close of business on March 3, 2006. Going Concern Doubt Salberg & Company, P.A., expressed substantial doubt about Dynamic Leisure's ability to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the company's losses, working capital deficit, accumulated deficit, stockholders' deficit and loan defaults. About Dynamic Leisure Headquartered in Tampa, Florida, Dynamic Leisure Corporation -- http://www.dylicorp.com/-- operates as an international online travel package technology company. It provides packaged domestic and international vacations to travel agencies and other travel resellers using proprietary packaging computer software and broadband communication technology. Its featured destinations include the Caribbean, Mexico, and Europe, as well as leisure U.S. destinations, such as Florida, California, and Las Vegas. ENTERGY NEW: Entergy Services to Refund Franchise Fee Payment ------------------------------------------------------------- Pursuant to a Court-approved stipulation, Entergy New Orleans, Inc., and Entergy Services, Inc., agreed that: (1) ENOI will withdraw the portion of the Motion relating to the August Franchise Fee payment; (2) ESI will agree to the entry of a judgment refunding ENOI for the amount of the $3,491,974 Franchise Fee, plus interest accruing from October 5, 2005, through the date of payment calculated at the rate charged under the DIP Credit Agreement; (3) ENOI will reserve all of its rights, claims and causes of action, which it may have as a result of the refund of the August Franchise Fee to ENOI; and (4) ESI will have until October 26, 2006, to file a proof of claim for the amount of the August Franchise Fee reserving to ENOI and any party-in-interest all rights to object to the claim except as to the timeliness of the filing. ESI to Refund Franchise Fee Payment As reported in the Troubled Company Reporter on Feb. 2, 2006, ENOI sought the U.S. Bankruptcy Court for the Eastern District of Louisiana's permission to pay amounts owed to the City of New Orleans, Louisiana, as of the Petition Date: (i) $1,096,711 attributable to consumer taxes that the Debtor collected for and in behalf of the City of New Orleans from utility payments by its customers; and (ii) $3,491,974 for the franchise fee pursuant to Section 3-123 et seq. of the Home Rule of the City of New Orleans for the period of August 2005. On Sept. 15, 2005, ESI issued a check to the City of New Orleans on behalf of ENOI in payment for the $3,491,974 August Franchise Fee. The check was delivered on behalf of ENOI to the City on September 19, 2005, but the City did not cash the check until after the Petition Date. ENOI subsequently reimbursed ESI for the August Franchise Fee on October 5, 2005. The reimbursement occurred during the confusion and emergency events surrounding Hurricane Katrina, the displacement of Entergy personnel from their offices, and the difficulties of accessing bank and accounting records. Notwithstanding that the Motion is seeking approval of ENOI's payment of the August Franchise Fee, ENOI has made a demand on ESI to refund the October 5 payment. 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. 24; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ENTERGY NEW ORLEANS: Panel Wants FTI's Retention Terms Modified --------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Entergy New Orleans Inc.'s chapter 11 case, asks the U.S. Bankruptcy Court for the Eastern District of Louisiana to further modify the terms of FTI Consulting, Inc.'s retention to remove or increase the caps on FTI's compensation for July 2006 and all subsequent months. Philip K. Jones, Jr., Esq., at Liskow & Lewis, APLC, in New Orleans, Louisiana, says that contrary to original projections of ENOI, the Committee, and FTI, the amount of work required of FTI has not been consistent from month to month. He cites the monthly fees incurred by FTI for 2006: Month Fees ----- ---- January $15,050 February 50,923 March 83,734 April 126,487 May 143,193 June 167,639 July 58,589 Mr. Jones notes that as a result of the caps imposed by the Court's modifying order dated July 7, 2006, payment to FTI would be limited to $550,000, while the total fees are $645,615. Hence, FTI would be required to write off $95,615 of its fees that exceeded the cumulative caps for January to July 2006. Mr. Jones tells the Court that certain issues that have arisen in ENOI's Chapter 11 case that have taken more of FTI's time and effort that were originally expected. The issues include FTI's work in considering the allocation insurance proceeds, the allocation of tax losses, the payment to shareholders, and analyzing voluminous documentation concerning fuel cost reported by ENOI for the purpose of developing its business plan. Furthermore, Mr. Jones says, the compensation caps do not give FTI any flexibility to address unanticipated issues that may arise in ENOI's bankruptcy case, which include FTI's possible work in looking at ENOI's payments to affiliates, the assumption of power contracts and the issue of adequate protection for the holders of ENOI-issued secured bonds. Mr. Jones asserts that the caps are limiting the Creditors Committee's ability to fully investigate issues presented in ENOI's bankruptcy case, develop a competing reorganization plan, and invest the related testimony to support the termination of ENOI's exclusive period to propose a plan of reorganization. Additionally, the limitations have become an impediment and inhibitions to actions by FTI on behalf of the Committee. 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. 24; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FASHION HOUSE: June 30 Balance Sheet Upside-Down by $2.5 Million ---------------------------------------------------------------- The Fashion House Holdings, Inc.'s balance sheet at June 30, 2006, showed total assets of $2,301,614 and total liabilities of $4,835,333, resulting in a stockholders' deficit of $2,533,719. The company's balance sheet at June 30, 2006, also showed negative working capital with $1,702,220 in total current assets and $2,588,333 total current liabilities. For the three months ended June 30, 2006, the company incurred a $417,789 net loss on $1,682,565 of net sales, compared to a $1,615,779 net loss on $79,253 of net sales for the same period last year. Full-text copies of the company's financial statements for the quarter ended June 30, 2006, are available for free at http://researcharchives.com/t/s?12fb Headquartered in Los Angeles, California, The Fashion House Holdings, Inc. -- http://www.thefashionhouseinc.com/-- engages in the design, manufacture, licensing, and marketing of women's designer footwear. FINOVA GROUP: To Partially Prepay 7.5% Senior Secured Notes ----------------------------------------------------------- The FINOVA Group, Inc., disclosed a partial principal prepayment to be made effective on Nov. 15, 2006, to holders of record as of 5:00 p.m., New York City time, on Nov. 8, 2006, on its 7.5% Senior Secured Notes Due 2009 with Contingent Interest Due 2016. The Company also disclosed that the partial principal prepayment is $29,679,490. The Prepayment Date is also an Interest Payment date for the Notes, so interest is scheduled to be paid on all Notes through the day preceding the Prepayment Date. The Company, on Oct. 2, 2006, advised The Bank of New York, the Trustee of the Notes, that it would make the partial prepayment. Including the November 2006 prepayment, it will have prepaid 50% of the $2,967,949,000 principal amount outstanding as of Dec. 31, 2003. Headquartered in Scottsdale, Arizona, The Finova Group, Inc., provides commercial financing to small and mid-sized businesses; other services include factoring, accounts receivable management, and equipment leasing. The firm has three segments: Commercial Finance, Specialty Finance, and Capital Markets. FINOVA targets such markets as transportation, wholesaling, communication, health care, and manufacturing. Loan write-offs had put the firm on shaky ground. The Company and its debtor-affiliates and subsidiaries filed for Chapter 11 protection on March 7, 2001 (U.S. Bankr. Del. 01-00697). Pachulski, Stang, Ziehl, Young & Jones P.C. and Wachtell, Lipton, Rosen & Katz represent the Official Committee of Unsecured Creditors. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., represents the Debtors. FINOVA has since emerged from Chapter 11 bankruptcy. Financial giants Berkshire Hathaway and Leucadia National Corporation (together doing business as Berkadia) own FINOVA through the almost $6 billion lent to the commercial finance company. Finova is winding up its affairs. Going Concern Doubt As reported in the Troubled Company Reporter on May 16, 2006, Ernst & Young LLP expressed substantial doubt about The Finova Group Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the Company's negative net worth as of Dec. 31, 2005 as well as limited sources of liquidity to satisfy its obligations. FIRST BANCORP: Remains Listed in the NYSE Through April 3, 2007 --------------------------------------------------------------- First BanCorp has received an extension for continued listing and trading on the New York Stock Exchange through April 3, 2007, subject to the NYSE's ongoing monitoring of the Corporation's 2005 10-K filing efforts. The Company disclosed that in the event that it does not complete and file its 2005 Annual Report with the Securities and Exchange Commission by April 3, 2007, the NYSE advised that it will move forward with the initiation of suspension and delisting procedures. The Company expects to file the quarterly reports on Form 10-Q for the interim periods for the year ended Dec. 31, 2005, and the annual report on Form 10-K for the year ended Dec. 31, 2005, during the first quarter of 2007. Thereafter, it expects to file its quarterly reports for the corresponding quarters of 2006. First BanCorp (NYSE: FBP) -- http://www.firstbankpr.com/-- is the parent corporation of FirstBank Puerto Rico, a state chartered commercial bank with operations in Puerto Rico, the Virgin Islands and Florida; of FirstBank Insurance Agency; and of Ponce General Corporation. First BanCorp, FirstBank Puerto Rico and FirstBank Florida, formerly UniBank, the thrift subsidiary of Ponce General, all operate within U.S. banking laws and regulations. * * * As reported in the Troubled Company Reporter on March 22, 2006, Fitch Ratings affirmed the ratings and Outlook for First Bancorp and FirstBank Puerto Rico: long-term Issuer Default Rating 'BB'/short-term 'B'. The Rating Outlook remains Negative. FORD MOTOR: Reports 5% Rise in Vehicle Sales in September --------------------------------------------------------- Ford Motor Company disclosed that its dealers delivered 238,848 vehicles to U.S. customers in September, up 5% compared with a year ago. The Company also disclosed that car sales were up 26% and truck sales were down 5%, but full-size pickup trucks and SUVs showed signs of stabilizing as the Ford F-Series, Explorer, and Expedition all posted higher sales compared with a year ago. "We're pleased by the continued strong demand for our cars and the solid performance posted by the F-Series truck and Explorer and Expedition SUVs," Al Giombetti, president, Ford and Lincoln Mercury sales and marketing, said. "The all-new Expedition and Navigator are on their way to dealers and production of the Ford Edge and Lincoln MKX crossover utilities starts soon." The Company further disclosed that its Fusion, Milan, and MKZ had a strong month in September despite limited availability resulting from the 2007 model changeover and a record sales month in August. Combined sales for the company's new mid-size sedans totaled 16,208 and its full-size trucks and SUVs reversed recent sales trends. Headquartered in Dearborn, Michigan, Ford Motor Company -- http://www.ford.com/-- manufactures and distributes automobiles in 200 markets across six continents. With more than 324,000 employees worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Motor Credit Company and The Hertz Corporation. * * * As reported in the Troubled Company Reporter on Aug. 22, 2006, Dominion Bond Rating Service placed long-term debt rating of Ford Motor Company Under Review with Negative Implications following announcement that Ford will sharply reduce its North American vehicle production in 2006. DBRS lowered on July 21, 2006, Ford Motor Company's long-term debt rating to B from BB, and lowered its short-term debt rating to R-3 middle from R-3 high. DBRS also lowered Ford Motor Credit Company's long-term debt rating to BB(low) from BB, and confirmed Ford Credit's short-term debt rating at R-3(high). Fitch Ratings also downgraded the Issuer Default Rating of Ford Motor Company and Ford Motor Credit Company to 'B' from 'B+'. Fitch also lowered the Ford's senior unsecured rating to 'B+/RR3' from 'BB-/RR3' and Ford Credit's senior unsecured rating to 'BB- /RR2' from 'BB/RR2'. The Rating Outlook remains Negative. Standard & Poor's Ratings Services also placed its 'B+' long-term and 'B-2' short-term ratings on Ford Motor Co., Ford Motor Credit Co., and related entities on CreditWatch with negative implications. As reported in the Troubled Company Reporter on July 24, 2006, Moody's Investors Service lowered the Corporate Family and senior unsecured ratings of Ford Motor Company to B2 from Ba3 and the senior unsecured rating of Ford Motor Credit Company to Ba3 from Ba2. The Speculative Grade Liquidity rating of Ford has been confirmed at SGL-1, indicating very good liquidity over the coming 12-month period. The outlook for the ratings is negative. FOREST CITY: Offering $250 Million Equity-Linked Senior Notes ------------------------------------------------------------- Forest City Enterprises Inc. reported its intention to offer, subject to market and other conditions, $250 million aggregate principal amount of Puttable Equity-Linked Senior Notes due 2011. These notes will be offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The notes are expected to be puttable at the option of the holders prior to maturity under certain circumstances at a put value rate equal to a number of shares of Forest City's Class A common stock. Upon any put of the notes by a holder, Forest City will pay cash based on the put value established during the related observation period. The interest rate, put value rate and other terms of the notes will be determined by negotiations between Forest City and the initial purchasers of the notes. Forest City expects to grant to the initial purchasers an option to purchase up to an additional $37.5 million aggregate principal amount of notes to cover over-allotments. In connection with the offering, Forest City expects to enter into a puttable note hedge transaction and warrant transaction with one or more of the initial purchasers of the notes to increase the effective put exercise price of the notes. These transactions are also intended to reduce the potential dilution upon a future put of the notes. In connection with these transactions, the counterparties have advised Forest City that they expect to enter into various derivative transactions with respect to shares of Forest City Class A common stock at or shortly after the pricing of the notes. Thereafter, the counterparties may enter into or unwind various derivatives and/or continue to purchase or sell shares of Forest City Class A common stock in secondary market transactions. The Company expects to use the net proceeds from the offering to repurchase up to $25 million of its Class A common stock, to pay the net cost of the puttable note hedge transaction and warrant transaction, to repay recourse debt outstanding under the Company's $600 million bank revolving credit facility, and for general corporate purposes. The notes will be sold to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The notes and the shares of Forest City Class A common stock that may be issuable upon a put of the notes have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, and applicable state laws. Headquartered in Cleveland, Ohio, Forest City Enterprises, Inc. (NYSE:FCEA) (NYSE:FCEB) is a $5.9 billion NYSE-listed real estate company. The Company is principally engaged in the ownership, development, acquisition and management of commercial and residential real estate throughout the United States. The Company's portfolio includes interests in retail centers, apartment communities, office buildings and hotels in 20 states and the District of Columbia. FOREST CITY: S&P Affirms BB+ Rating & Maintains Stable Outlook -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' rating on Forest City Enterprises Inc. The rating affirmation affects roughly $550 million in rated senior notes. The outlook remained stable. "The rating on Forest City reflects risks associated with a large and complex development pipeline and a high level of secured debt that structurally subordinates the interests of unsecured creditors," said credit analyst James Fielding. "However, the company's established development track record, deep and well-seasoned management team, and significant preleasing mitigate some of the development risk, while its ability to retain predictable cash flow from a diversified portfolio of attractive and highly occupied commercial real estate properties enhances overall liquidity." The outlook is supported by the improving cash flow from Forest City's core real estate portfolio and by the capacity to finance capital needs over the next two years. At present, minimally acceptable coverage levels preclude ratings improvement. If coverage measures deteriorate, as a consequence of a larger-than-anticipated development pipeline or deteriorating real estate fundamentals, Standard & Poor's would revise the outlook to negative and/or lower the credit rating. FTI CONSULTING: Closes Offer to Buy FD International for $260 Mil. ------------------------------------------------------------------ FTI Consulting, Inc., closed its offer to purchase privately-held Financial Dynamics International (Holdings) Limited for approximately $260 million. The Company expects to complete its acquisition of 100% of FD's share capital by no later than February 2007. The purchase price for the acquisition consists of up to $215 million in cash, $20 million in notes and deferred purchase obligations and $25 million of the Company's restricted stock. It anticipates that the acquisition will be accretive to the Company's 2007 earnings per diluted share. $215 Million Senior Notes The Company also disclosed the closing of its private offering of $215 million of Senior Notes due 2016 at 7.75%, which net proceeds it plans to finance for a portion of the acquisition of FD. The Senior Notes will mature on Oct. 1, 2016, and will rank pari passu in right of payment with all of its existing and future senior indebtedness and senior in right of payment to all of its existing and future subordinated indebtedness. The Company will have the option to redeem all or a portion of the Senior Notes at any time on or after Oct. 1, 2011. At any time prior to Oct. 1, 2011, the Company may also redeem all or a part of the notes at a redemption price equal to 100% of the principal amount of the notes redeemed plus a premium. At any time before Oct. 1, 2009, FTI may also redeem up to 35% of the aggregate principal amount of the Senior Notes at a redemption price of 107.75% of the principal amount, plus accrued and unpaid interest, if any, to the date of redemption, with the proceeds of certain equity offerings. Amended Credit Facility The Company further disclosed that it has amended and restated its revolving credit facility, increasing its bank credit facility to $150 million from $100 million, and improved pricing and reduced commitment fees. In addition, the facility, which became effective on Sept. 29, 2006, has been extended and will now expire on Sept. 30, 2011. Jack Dunn, president and chief executive officer, commented, "We are extremely pleased with the acquisition of FD. As we've discussed previously, we believe the acquisition accelerates our five-year plan, diversifies our consulting capabilities and provides us with a significant presence outside of the United States. The integration is progressing well, and we have already identified a number of opportunities across both client bases. In addition, the increase of our credit facility combined with the closing of the Senior Notes offering significantly improves our financial flexibility, allowing us to continue to build on our long-term strategy." FTI Consulting Inc. (NYSE:FCN) provides problem-solving consulting and technology services to major corporations, financial institutions and law firms when confronting critical issues that shape their future and the future of their clients, such as financial and operational improvement, major litigation, complex investigations, mergers and acquisitions and regulatory issues. FTI has 25 offices in major U.S. cities, and offices in Europe, Asia and Australia. FTI's total workforce of more than 1,400 employees includes numerous PhDs, MBAs, CPAs, CIRAs and CFEs, who are committed to delivering the highest level of service to clients. * * * As reported in the Troubled Company Reporter on Sept. 19, 2006, Standard & Poor's Ratings Services assigned its 'B+' rating to FTI Consulting Inc.'s $215 million senior notes due 2016. At the same time, Standard & Poor's affirmed the corporate credit rating of FTI at 'BB-' and revised the outlook to positive from stable, based on strong earnings performance and talent retention. As reported in the Troubled Company Reporter on Sept. 18, 2006 Moody's Investors Service assigned a Ba2 rating to FTI Consulting, Inc.'s proposed $215 million of senior unsecured notes and lowered the ratings on its $150 million senior subordinated convertible notes to B1 from Ba3. Moody's affirmed the Ba2 corporate family rating and the Ba2 rating on FTI's existing senior unsecured notes. The rating outlook remains stable. GALVEX HOLDINGS: Galvex Capital Wants Ch. 11 Case Dismissed ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York will convene a hearing at 10:00 a.m., on Oct. 24, 2006, to consider Debtor Galvex Capital, LLC's request to dismiss its Chapter 11 case. Galvex Capital tells the Court that dismissal of its case is the only viable option for the estate because it has no other assets expect for claims against Galvex Holdings Limited and its subsidiaries, Galvex Estonia OU, Galvex Intertrade OU and Galvex Trade Limited, collectively know as the Galvex Debtors. Galvex Capital asserts claims against the Galvex Debtors for services it had provided to them under a management agreement. Prior to their bankruptcy filing, Daniel Bain, Galvex Capital's principal, served as chief executive officer of each of the Galvex Debtors. When the Galvex Debtors defaulted on the terms of its loan agreement with SPCP Group, LLC, SPCP exercised its right to appoint members to Galvex's board and forcibly removed Mr. Bain from his post. With new management in place, the Galvex Debtors refused to make any payment to Galvex Capital on account of the managerial services provided prepetition. SPCP subsequently acquired the Galvex Debtors through a credit bid. Gerard DiConza, Esq., at DiConza Law, PC, tells the Court that recovery of Galvex Capital's claim against the Galvex Debtors will require extensive litigation outside the Bankruptcy Court. He adds that a continuation of Galvex Capital's Chapter 11 case may jeopardize its ability to collect on its claims. Mr. DiConza assures the Court Mr. Bain is ready to finance the litigation against the Galvex Subsidiaries and pay Galvex Capital's creditors out of any recoveries from that lawsuit. Headquartered in New York City, New York, Galvex Holdings Limited -- http://www.galvex.com/-- and its affiliates operate the largest independent galvanizing line in Europe. The Debtors have offices in New York, Tallinn, Bermuda, Finland, Ukraine, Germany and the United Kingdom. The company and four of its affiliates filed for chapter 11 protection on Jan. 17, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10082). Galvex Capital, LLC, is represented by David Neier, Esq., at Winston & Strawn LLP, and Gerard DiConza, Esq., at DiConza Law, P.C. Galvex Holdings Ltd. and the other debtor-affiliates are represented by David Neier, Esq., at Winston & Strawn LLP, and Lori R. Fife, Esq., Marcia L. Goldstein, Esq., and Shai Waisman, Esq., at Weil, Gotshal & Manges, LLP. John P. McNicholas, Esq., and Thomas R. Califano, Esq., at DLA Piper Rudnick Gray Cary US LLP, represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. On Aug. 30, 2006, Judge Drain converted the chapter 11 case of Galvex Holdings to a chapter 7 liquidation proceeding. John S. Pereira is the Debtor's Chapter 7 Trustee. GENERAL MOTORS: Ends Alliance Talks with Nissan and Renault ----------------------------------------------------------- General Motors Corporation, Renault, and Nissan have agreed to terminate discussions regarding a proposed alliance between them. The parties mutually recognized that significant aggregate synergies might result from the alliance. However they did not agree on either the total amount of aggregate synergies or the distribution of those benefits. Based on its conclusions, GM had proposed that Renault and Nissan provide compensation as part of a potential alliance and for potentially precluding GM from entering into other alliance opportunities if Renault-Nissan had made a significant investment in GM. Renault and Nissan concluded that the principle of compensation is contrary to the spirit of any successful alliance. The three automakers had agreed to conduct a 90-day study of the benefits of a possible alliance after GM shareholder Kirk Kerkorian, who owns a 9.9% stake in the company, broached the idea early this year. Sarah Karush at the Associated Press reports that Kerkorian's Tracinda Corp. was disappointed over the outcome of the Nissan- Renault negotiations. "We believe that General Motors' participation in a global alliance with Renault and Nissan would have enabled GM to realize substantial synergies and cost savings," AP quotes Tracinda spokeswoman Carrie Bloom. Mr. Kerkorian had tried to convince GM's Board to conduct an independent review of the Nissan-Renault deal days before the alliance negotiations ended. General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- the world's largest automaker, has been the global industry sales leader since 1931. Founded in 1908, GM employs about 317,000 people around the world. It has manufacturing operations in 32 countries and its vehicles are sold in 200 countries. * * * As reported in the Troubled Company Reporter on July 28, 2006, Standard & Poor's Ratings Services held all of its ratings on General Motors Corp. -- including the 'B' corporate credit rating, but excluding the '1' recovery rating -- on CreditWatch with negative implications, where they were placed March 29, 2006. As reported in the Troubled Company Reporter on July 27, 2006, Dominion Bond Rating Service downgraded the long-term debt ratings of General Motors Corporation and General Motors of Canada Limited to B. The commercial paper ratings of both companies are also downgraded to R-3 (low) from R-3. As reported in the Troubled Company Reporter on June 22, 2006, Fitch assigned a rating of 'BB' and a Recovery Rating of 'RR1' to General Motor's new $4.48 billion senior secured bank facility. The 'RR1' is based on the collateral package and other protections that are expected to provide full recovery in the event of a bankruptcy filing. As reported in the Troubled Company Reporter on June 21, 2006, Moody's Investors Service assigned a B2 rating to the secured tranches of the amended and extended secured credit facility of up to $4.5 billion being proposed by General Motors Corporation, affirmed the company's B3 corporate family and SGL-3 speculative grade liquidity ratings, and lowered its senior unsecured rating to Caa1 from B3. The rating outlook is negative. GLOBAL EMPLOYMENT: Buys Back $5.7 Mil. of Convertible Secured Debt ------------------------------------------------------------------ Global Employment Holdings, Inc. has purchased $5,744,000 principal amount of its convertible secured notes, along with warrants to purchase 91,904 shares of Global common stock, from a fund controlled by an institutional investor. "We are pleased to have been able to reduce our overall debt level by almost $750,000 just six months following our recapitalization on March 31," said Howard Brill, Global's chief executive officer. The purchase price was 87% of principal amount. The notes and warrants purchased by Global will be retired. In addition, 13 of Global's directors and officers purchased, at the same price, an additional $2,303,000 principal amount of the notes, together with warrants to purchase 36,848 shares. The same institutional investor sold $10,123,000 principal amount to existing investors in Global's convertible notes at the same purchase price of 87% of principal amount. The convertible notes were issued on March 31, 2006. "We are gratified by the faith so many of our senior managers and directors, as well as our other note holders, showed in Global by purchasing convertible notes" Charles Gwirtsman, Global's board chairman, said. Global financed the purchase with borrowings under its existing credit facility with Wells Fargo Business Credit. Global Employment Holdings Inc., through its operating subsidiary, Global Employment Solutions, provides human capital solutions with offices in cities throughout the United States. Its business is divided into two major segments, staffing services and professional employer organization services. * * * As of July 2, 2006, the Company's balance sheet showed a stockholders' deficit of $22,803,000 compared to a deficit of $24,920,000 at Jan. 1, 2006. GLOBAL POWER: Wants Court Approval on White & Case as Counsel ------------------------------------------------------------- Global Power Equipment Group Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to employ White & Case LLP as their bankruptcy counsel. White & Case will: a. take all necessary actions to protect and preserve the estates of the Debtors, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved, and the preparation of objections to claims filed against the Debtors' estates; b. provide legal advice with respect to the Debtors' powers and duties as debtors and debtors-in-possession in the continued operation of their businesses and the management of their properties; c. prepare on behalf of the Debtors all necessary motions, applications, answers, orders, reports, and papers in connection with the administration and prosecution of the Debtors' chapter 11 cases; d. assist the Debtors in connection with any disposition of the Debtors' assets, by sale or otherwise; e. assist the Debtors in the negotiation, preparation and confirmation of a plan or plans or reorganization and all related transactions; f. appear in Court and protect the interests of the Debtors before the Court; and g. perform all other necessary legal services in connection with the Debtors' chapter 11 cases. Gerard Uzzi, Esq., a partner at White & Case, tells the Court that the firm's hourly rates are: Professional Hourly Rate ------------ ----------- Partners $600 - $950 Counsel $445 - $830 Attorneys $245 -$595 Paraprofessionals $125 - $265 Mr. Uzzi assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Uzzi can be reached at: Gerard Uzzi, Esq. White & Case LLP Wachovia Financial Center 200 South Biscayne Boulevard Suite 4900 Miami, Florida 33131-2352 Tel: (305) 371-2700 Fax: (305) 358-5744/5766 http://www.whitecase.com/ Headquartered in Tulsa, Oklahoma, Global Power Equipment Group Inc., aka GEEG, Inc. -- http://www.globalpower.com/-- provides power generation equipment and maintenance services for its customers in the domestic and international energy, power and infrastructure and service industries. The Company designs, engineers and manufactures a range of heat recovery and auxiliary equipment primarily used to enhance the efficiency and facilitate the operation of gas turbine power plants as well as for other industrial and power-related applications. The Company has facilities in Plymouth, Minnesota; Tulsa, Oklahoma; Auburn, Massachusetts; Atlanta, Georgia; Monterrey, Mexico; Shanghai, China; Nanjing, China; and Heerleen, The Netherlands. The Company and 10 of its affiliates filed for chapter 11 protection on Sept. 28, 2006 (Bankr. D. Del. Case No 06-11045). As of Sept. 30, 2005, the Debtors reported total assets of $381,131,000 and total debts of $123,221,000. The Debtors' exclusive period to filed a chapter 11 plan expires on Jan. 26, 2007. GLOBAL POWER: Taps Bayard Firm as Bankruptcy Co-Counsel ------------------------------------------------------- Global Power Equipment Group Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to employ The Bayard Firm, P.A., as their bankruptcy co-counsel. Bayard will: a. take all necessary actions to protect and preserve the estates of the Debtors, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved, and the preparation of objections to claims filed against the Debtors' estates; b. provide legal advice with respect to the Debtors' powers and duties as debtors and debtors-in-possession in the continued operation of their businesses and the management of their properties; c. negotiate, prepare and pursue confirmation of a plan and approval of a disclosure statement; d. prepare on behalf of the Debtors all necessary motions, applications, answers, orders, reports, and other legal papers in connection with the administration of the Debtors' estates; e. appear in Court and protect the interests of the Debtors before the Court; f. assist with any disposition of the Debtors' assets, by sale or otherwise; and g. perform all other legal services in connection with the Debtors' chapter 11 cases as may reasonably be required. The Debtors disclose that Bayard will work closely with White & Case LLP, to ensure that there is no unnecessary duplication of services performed or charged to the Debtors' estates. Jeffrey M. Schlerf, Esq., a director and shareholder of Bayard, tells the Court that the firm's hourly rate are: Professional Hourly Rate ------------ ----------- Directors $440 - $675 Associates and Counsel $205 - $415 Paralegals and Case $180 - $185 Management Assistants Mr. Schlerf assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Schlerf can be reached at: Jeffrey M. Schlerf, Esq. The Bayard Firm, P.A. 222 Delaware Avenue, Suite 900 P.O. Box 25130 Wilmington, DE 19899 Tel: (302) 655-5000 Fax: (302) 658-6395 http://www.bayardfirm.com/ Headquartered in Tulsa, Oklahoma, Global Power Equipment Group Inc., aka GEEG, Inc. -- http://www.globalpower.com/-- provides power generation equipment and maintenance services for its customers in the domestic and international energy, power and infrastructure and service industries. The Company designs, engineers and manufactures a range of heat recovery and auxiliary equipment primarily used to enhance the efficiency and facilitate the operation of gas turbine power plants as well as for other industrial and power-related applications. The Company has facilities in Plymouth, Minnesota; Tulsa, Oklahoma; Auburn, Massachusetts; Atlanta, Georgia; Monterrey, Mexico; Shanghai, China; Nanjing, China; and Heerleen, The Netherlands. The Company and 10 of its affiliates filed for chapter 11 protection on Sept. 28, 2006 (Bankr. D. Del. Case No 06-11045). As of Sept. 30, 2005, the Debtors reported total assets of $381,131,000 and total debts of $123,221,000. The Debtors' exclusive period to filed a chapter 11 plan expires on Jan. 26, 2007. GOODYEAR TIRE: United Steelworkers Union Begins Strike ------------------------------------------------------ The United Steelworkers reported that it struck Goodyear Tire and Rubber Company beginning at 1:00 p.m. EDT, Oct. 5, 2006. The USW delivered the required 72-hour notice to terminate the contract on Monday. Both sides had been working on a day-to-day extension agreement signed in July that extended a three-year pact. "The company left us with no option," said USW executive vice president Ron Hoover. "We cannot allow additional plant closures after the sacrifices we made three years ago to help this company survive." In the 2003 agreement, the USW agreed to a closure of the Huntsville, Ala. facility as well providing Goodyear with additional financial flexibility by accepting wage, pension and health care cuts. "We worked very hard with the company in 2003 to deal with a difficult situation," said Hoover. "While more work can be done, Goodyear has rebounded and other stakeholders have been rewarded accordingly. Now the Company seems determined to only take more away from our members." The strike will impact 15,000 USW members and operations at 16 plants in the United States and Canada. "Closing more plants would not only cause additional job losses and devastate the communities where the operations would cease, but it would also threaten the long-term viability of Goodyear," said Hoover. "You can't build long-term, viability by continuing to give up market share." About Goodyear Tire Headquartered in Akron, Ohio, The Goodyear Tire & Rubber Company (NYSE: GT) -- http://www.goodyear.com/-- is the world's largest tire company. The company manufactures tires, engineered rubber products and chemicals in more than 90 facilities in 28 countries. It has marketing operations in almost every country around the world. Goodyear employs more than 80,000 people worldwide. * * * As reported in the Troubled Company Reporter on June 8, 2006, Fitch affirmed The Goodyear Tire & Rubber Company's Issuer Default Rating at 'B'; $1.5 billion first lien credit facility at 'BB/RR1'; $1.2 billion second lien term loan at 'BB/RR1'; $300 million third lien term loan at 'B/RR4'; $650 million third lien senior secured notes at 'B/RR4'; and Senior Unsecured Debt at 'CCC+/RR6'. As reported in the Troubled Company Reporter on June 23, 2005, Moody's Investors Service assigned a B3 rating to Goodyear Tire & Rubber Company's $400 million ten-year senior unsecured notes. As reported in the Troubled Company Reporter on June 22, 2005, Standard & Poor's Ratings Services assigned its 'B-' rating to Goodyear Tire & Rubber Co.'s $400 million senior notes due 2015 and affirmed its 'B+' corporate credit rating. GREAT CHINA: Restates Fiscal-Year 2005 Financial Statements ----------------------------------------------------------- Great China International Holdings, Inc., has delivered its amended financial statements on Form 10-KSB/A for the fiscal year ended Dec. 31, 2005, to the Securities and Exchange Commission. The amended annual report restates the Company's financial statements to correct errors related to construction costs and the allocation of common area costs. Restated Financials For the full year ended Dec. 31, 2005, the Company reported $80,394 of net income on $26.5 million of net revenues, compared to a $597,248 net loss on $29.6 million of net revenues in 2005. At Dec. 31, 2005, the Company's balance sheet showed $79.4 million in total assets and $79.9 million in total liabilities resulting in a $559,102 stockholders equity' deficit. The Company's December 31 balance sheet also showed strained liquidity with $32 million in total current assets available to pay $76.7 million in total current liabilities coming due within the next 12 months. A full-text copy of the Company's Amended Annual Report is available for free at http://researcharchives.com/t/s?12f5 Going Concern Doubt Murrell, Hall, McIntosh & Co., PLLP, expressed substantial doubt about Great China International Holdings' ability to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the company's working capital deficit and bank loan defaults. About Great China Founded in 1989, Great China International Holdings' (OTCBB:GCIH) wholly owned subsidiary, Shenyang Maryland International Industry Co., Ltd., is one of the largest non-state-owned real estate developers in Northeast China. The company's core business is premium residential and commercial development and management. It currently owns and manages the President Building, which was completed in April 2002, with 25 tenants comprised of Fortune 500 companies, including General Electric (China) Co., Ltd., Johnson & Johnson, Kodak and Philip Morris. The company's prior developments included the Maryland Building, Roma Resort Garden, Qiyun New Village, Peacock Garden, University Campus of Shenyang Teacher's University, and Chenglong Garden, mostly located in Shenyang. HEALTHWAYS INC: Aborted Merger Prompts S&P's Rating Withdrawal -------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'BB' corporate credit rating and all other ratings on Nashville, Tennessee-based Healthways Inc. "This action follows the announcement that Healthways and LifeMasters have terminated their merger agreement due to a material adverse event that prevented LifeMasters from closing the transaction," said Standard & Poor's credit analyst Rivka Gertzulin. On Aug. 25, 2006, Healthways announced that the merger was delayed due to a third-party reporting error on a LifeMasters contract and, as a result, the previously reported and forecasted revenue of LifeMasters was significantly negatively affected. The companies could not agree on a revised valuation and, on Sept. 30, 2006, they formally terminated the merger agreement. i2 TELECOM: June 30 Stockholders' Deficit Widens to $2,498,648 -------------------------------------------------------------- i2 Telecom International, Inc.'s balance sheet at June 30,2006, showed total assets of $ 5,949,614 and total liabilities of $8,448,262, resulting in a total shareholders' deficit of $2,498,648, a $1,594,765 increase from an equity deficit of $903,883 at Dec. 31, 2005. The company's June 30, 2006 balance sheet also showed stained liquidity with $1,431,304 in total current assets and $6,748,262 in total current liabilities. Revenues decreased from $266,230 for the second quarter of 2005 to $136,975 for the second quarter of 2006, driven by the Company's reorganization focusing from product to service offerings. Net loss for the second quarter of 2006 was $1,527,662 as compared to a net loss for the same period in 2005 of $1,927,861, due to the company's continued reduction in operating costs. Full-text copies of the company's financial statements for the quarter ended June 30, 2006, are available for free at http://researcharchives.com/t/s?1300 Headquartered in Atlanta, Georgia, I2 Telecom International, Inc. -- http://www.i2telecom.com/-- provides telecommunications services employing voice over Internet protocol technology. Its products include VoiceStick that allows the user to make domestic and international long distance calls via the Internet, with the use of an included handset; and InternetTalker integrated access device, which enables the user to make worldwide phone calls over the Internet. The company also offers microgateway adapters, integrated access devices, and VoIP long distance and other communication services to subscribers. INTEGRATED HEALTH: Paying $3,453 in Legal Fees to Stevens & Lee --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware directs IHS Liquidating LLC to promptly remit $3,453, by check or wire transfer payable to Stevens & Lee, P.C., as reimbursement for legal expenses incurred by C. Taylor Pickett and Daniel J. Booth in the IHS Debtors' Chapter 11 cases. As reported in the Troubled Company Reporter on Aug. 24, 2006, the Former Officers sought the Court to compel IHS Liquidating to reimburse them for the fees and expenses incurred in respect of the filing and prosecution of their Motion to Compel. On Feb. 27, 2001, Don G. Angell, among others, commenced a lawsuit against, among others, Messrs. Picket and Booth, before the U.S. District Court for the Middle District of North Carolina. The stay on the Angell Lawsuit has been terminated pursuant to the confirmation of the Debtors' plan of reorganization. In addition, Messrs. Picket and Booth and IHS Liquidating have been litigating several issues in the Chapter 11 cases, which remain subjudice, relating to IHS Liquidating's obligation to indemnify the Former Officers, including their request for the establishment of a reserve for their administrative claims, and the trustee's request for estimation of the claims. In 2001, Messrs. Picket and Booth entered into separate Court- approved employment agreements with IHS. The agreements provide that IHS will indemnify and hold the Former Officers harmless against any judgments, fines, amounts paid in settlement, and reasonable expenses in connection with any claim, action or proceeding as a result of their employment with IHS. Messrs. Picket and Booth complain that IHS Liquidating has not paid their legal fees to their co-counsel, Stevens & Lee, P.C., for work performed from May 2005 through February 2006. The fees relate solely to Stevens & Lee's representation of the Former Officers in the Court as a result of the matters raised by IHS Liquidating. The fees do not relate to work performed in the Angell Lawsuit. IHS Liquidating has refused to pay the fees unless the Former Officers agree to forego reimbursement of any and all other legal bills incurred in the Angell Lawsuit, preservation of their claims against the estate, or otherwise. The Order is without prejudice to the Former Officers' request for indemnification and reimbursement on: -- any and all legal fees and costs incurred, including services performed solely on Mr. Pickett's behalf; -- costs for filing and prosecuting the Motion; and -- other costs incurred later on. The Order will also be without prejudice to IHS Liquidating's right to object to further requests for indemnification and reimbursement by the Former Officers. Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- operated local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company and its 437 debtor-affiliates filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical Corporation and its direct and indirect debtor-subsidiaries broke away from IHS and emerged under their own plan of reorganization on March 26, 2002. Abe Briarwood Corp. bought substantially all of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan on May 12, 2003, and that plan took effect September 9, 2003. Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the IHS Debtors. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 109; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) INTERTAPE POLYMER: S&P Puts B+ Corp. Credit Rating on Neg. Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'B+' corporate credit rating, on Intertape Polymer Group Inc. on CreditWatch with negative implications. The CreditWatch placement follows the company's recent announcement that its Board of Directors will initiate a process to explore various strategic and financial alternatives. The nature of options being explored and the timeline of the exercise have not been announced, but the culmination of such an exercise could result in a change of ownership. Standard & Poor's also notes that the company's operations appear to have weakened somewhat because of softening of demand in the third quarter of 2006, especially related to the North American housing market. As a result, the company anticipates that it may not be in compliance with certain financial covenants under its credit agreement when it reports its third quarter results. At June 30, 2006, total debt (including present value of operating leases) was approximately $360 million. The company has engaged TD Securities Inc. as its financial advisor in the strategic and financial review process. Standard & Poor's will monitor the progress of this review, and the company's attempt to seek any required amendment of covenants under its debt and credit agreements. "We could lower the ratings in the near term if the review process results in outcomes that could lead to increased debt levels, such as the sale of the company to a financial buyer or another highly leveraged company," said Standard & Poor's credit analyst Paul Kurias. "Ratings could also be lowered if appropriate amendments to bank agreements are not put in place, or if operations deteriorate further." With annual sales of more than $800 million, St. Laurent, Quebec- based Intertape is a manufacturer of paper and film pressure- sensitive tapes, polyolefin films, and packaging systems. Carton sealing tape and masking tape generate the majority of Intertape's sales. Most of the company's demand growth relates to industrial activity and GDP growth rates, which also makes demand susceptible to economic cycles. Standard & Poor's will continue to monitor the company's efforts to improve its operating performance and to amend its credit facilities, and will resolve the CreditWatch after evaluating additional information related to the pending strategic review. IRIDIUM LLC: Creditors' Suit Vs. Motorola Begins on October 23 -------------------------------------------------------------- A federal bankruptcy court is set to begin trial on Oct. 23, 2006, to determine what role Motorola Inc. might have played in the collapse of Iridium LLC, Peter Lattman and Sara Silver at The Wall Street Journal reports. According to The Journal, Iridium's creditors want to take back approximately $3.7 billion, plus interest, that they had sunk in the failed satellite-phone company. Iridium developed its phones and complementary satellite network with the aid of Motorola at a cost of $5 billion. The Journal says almost all of this amount was paid to Motorola. The Journal reports that Iridium's creditors accuse Motorola of: -- continuing to receive money from Iridium even when the Company was already insolvent; -- structuring the Iridium deal so that risks were passed on to outsiders; and -- controlling Iridium through, among other things, executive and board appointments as wells as loan guarantees. Weil, Gotshal & Manges represents the creditors in this case while Motorola is represented by Kirkland & Ellis and Wachtell, Lipton, Rosen & Katz. About Iridium LLC Iridium LLC became the world's first global satellite phone and paging company on Nov. 1, 1998. Its network of 66-low earth orbiting satellites, combined with existing terrestrial cellular systems, enabled customers to communicate around the globe. Iridium filed for bankruptcy protection in April 1999. The Company's chapter 11 bankruptcy case was terminated in September of that year. Iridium Satellite LLC acquired Iridium's assets in December 2000 for approximately $25 million. ISLE OF CAPRI: S&P Puts BB- Corp. Credit Rating on Negative Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Isle of Capri Casinos Inc., including its 'BB-' corporate credit rating, on CreditWatch with negative implications. The CreditWatch listing follows the filing of a Schedule 13D by Hayground Cove Asset Management LLC, disclosing its purchase of 5.53% of Isle's common shares outstanding and its view that Isle should pursue equity alternatives to support its future growth. "Given that Hayground now has a meaningful stake in Isle, we believe that management will now be pressured to pursue shareholder-enhancing leveraging transactions," said Standard & Poor's credit analyst Peggy Hebard. While ratings on Isle also consider the performance of Isle of Capri Black Hawk LLC (B+/Stable/--), an unrestricted subsidiary that is 57%-owned by Isle, given its importance to the overall portfolio and the Isle brand, the outlook at this time remains stable. "We may revisit the ratings and/or outlook on Isle of Capri Black Hawk if the credit quality for Isle of Capri weakens as a result of an announced leveraging transaction," Ms. Hebard said. Standard & Poor's will review its ratings on Isle when, and if, a definitive leveraging transaction is announced and the company's operating and financial objectives are evaluated. ISTAR FIN'L: Secures Consents to Amend 2008 Notes Indenture ----------------------------------------------------------- iStar Financial, Inc., received the requisite consents to adopt the proposed amendments to the indenture governing its 2008 Notes. The Company has previously made an exchange offer and consent solicitation for the exchange of its 5.95% Senior Notes due 2013 for its outstanding 8.75% Notes due 2008. The Company disclosed that the adoption of the proposed amendments required the consent of holders of at least a majority of the aggregate principal amount of the outstanding 2008 notes under the indenture. As of 5:00 p.m. on Oct. 2, 2006, $187,299,000 aggregate principal amount of 2008 notes had been tendered. The proposed amendments will amend two of the restrictive covenants in the indenture governing the 2008 notes. The Company and the trustee under the indenture executed the supplemental indenture adopting the proposed amendments on Oct. 2, 2006. The amendments will not become operative until the Company accepts and consummates the exchange of all notes validly tendered. The exchange offer and consent solicitation are scheduled to expire on Oct. 17, 2006. The amendments relative to the 2008 notes will be effective as of Oct. 2, 2006. The Company further disclosed that the exchange offer and consent solicitation is only made, and copies of the offering documents will only be made available to, holders of 2008 notes that have certified certain matters to the Company, including their status as "qualified institutional buyers" within the meaning of Rule 144A, or non-U.S. persons as defined under Regulation S, under the Securities Act of 1933. An offering memorandum will be distributed to Eligible Holders through the information agent, Global Bondholder Services Corporation, at Tel. Nos. 866-387-1500 or 212-430-3774. The 2013 notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and any applicable state securities laws. iStar Financial (NYSE: SFI) -- http://www.istarfinancial.com/-- is a publicly traded finance company focused on the commercial real estate industry. The Company provides custom- tailored financing to high-end private and corporate owners of real estate nationwide, including senior and junior mortgage debt, senior and mezzanine corporate capital, and corporate net lease financing. The Company, which is taxed as a real estate investment trust, seeks to deliver a strong dividend and superior risk-adjusted returns on equity to shareholders by providing the highest quality financing solutions to its customers. * * * Moody's Investors Service upgraded iStar Financial Inc.'s preferred stock rating to Ba1 from Ba2, with a stable outlook. Fitch Ratings also raised the Company's preferred stock rating to 'BB+' from 'BB' in January 2006. Fitch said the Rating Outlook is Stable. KARA HOMES: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Kara Homes, Inc. aka Kara Service Co., LLC aka Kara Homes Development LLC 197 Route 18, Suite 235S East Brunswick, NJ 08816 Bankruptcy Case No.: 06-19626 Type of Business: The Debtor builds single-family homes, condominiums, townhomes, and active-adult communities. Chapter 11 Petition Date: October 5, 2006 Court: District of New Jersey (Trenton) Debtor's Counsel: David L. Bruck, Esq. Greenbaum, Rowe, Smith, et al. P.O. Box 5600 Woodbridge, NJ 07095 Tel: (732) 549-5600 Fax: (732) 549-1881 Total Assets: $350,179,841 Total Debts: $296,840,591 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------- ------------ A-1 Bracket $1,856,462 145 W. Philadelphia Avenue Morrisville, PA 19067 Strober Building Supply, Inc. $1,541,663 81 Kresson Road Haddonfield, NJ 08033 Sunrise Concrete Company, Inc. $1,257,344 P.O. Box 435 Rushland, PA 18956 RWZ Inc. Stairs & Rails $890,655 520 James Street Lakewood, NJ 08701 Benchmark Inc. $876,586 450 Oberlin Avenue South Lakewood, NJ 08701 Michael J. Wright $780,310 Construction Co., Inc. 16 Madison Avenue Toms River, NJ 08753 R&R Construction Co., Inc. $777,950 105-B Parker Road Chester, NJ 07930 Home Remodeling Concepts $703,074 4 Dale Drive Fairfield, NJ 07004 Manzo-Maroba Construction $686,101 Beacon Hill Place Morganville, NJ 07751 Woodhaven Lumber & Millwork $634,569 P.O. Box 870 Lakewood, NJ 08701 SJP Contractors $634,056 7 Industrial Drive Keyport, NJ 07735 C&R Plumbing & Heating $604,342 822 Route 9 Lanoka Harbor, NJ 08734 All County Aluminum Inc. $575,397 560 Cross Street Lakewood, NJ 08701 East Lake Interiors LLC $554,873 215 Edgewood Avenue West Berlin, NJ 08091 Strober Building Supply, Inc. $524,036 81 Kresson Road Haddonfield, NJ 08033 Concrete Systems $519,478 45 Lupine Way Stirling, NJ 07980 Wagner Electric Corp. $501,001 449 Washington Road Sayreville, NJ 08872 Leopard Framing Corp. $499,898 P.O. Box 146 Nutley, NJ 07110 Century Kitchens, Inc. $458,404 Route 309 & RR Crossing Colmar, PA 18915 Shoreline Plumbing & Heating $444,103 447 Stage Road Tuckerton, NJ 08087 LITTLE TRAVERSE: Moody's Assigns LGD4 Rating to 10.25% Sr. Notes ---------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the Gaming, Lodging & Leisure sector, the rating agency revised Little Traverse Bay Bands of Odawa Indians' Corporate Family Rating to B1 from B2. Additionally, Moody's confirmed its B2 probability-of-default rating on the Company's 10.25% Senior Notes due 2014. Moody's also assigned an LGD4 rating to these notes, suggesting noteholders will experience a 66% loss in the event of a default. Moody's current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as its research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% - 9%) to LGD6 (loss anticipated to be 90% - 100%). Headquartered in Petoskey, Mich., The Little Traverse Bay Bands of Odawa Indians -- http://www.ltbbodawa-nsn.gov/-- opened Little Traverse Bay Bands of Odawa Indians Casino on July 16, 1999. The Casino was closed on Aug. 31, 1999, by order of Judge Bell until the casino property was put in trust. Little Traverse Bay Bands Victories Casino reopened for business in December 1999. LUMENIS LTD: Inks Pact With LM & Ofer to Buy 75% Equity for $120MM ------------------------------------------------------------------ Lumenis Ltd., signed a definitive Purchase Agreement with LM Partners L.P. and Ofer Hi-Tech Group for an investment of $120 million in exchange for newly issued common shares. LM Partners L.P. and Ofer Hi-Tech are private equity firms based in Israel with several private equity investments in global companies. The Company disclosed that as a condition to closing of the transactions contemplated by the Purchase Agreement, it has entered into a definitive agreement with Bank Hapoalim B.M. to restructure its estimated $205 million of outstanding debt. Pursuant to the Restructuring Agreement, from the time of closing through the end of 24 months post-closing, the principal amount of the debt net of all post-closing loan repayments of $80 million and write offs of $50 million will be approximately $75 million, based on the current debt level. Upon shareholder approval, the Company also disclosed that Mr. Harel Beit-On will become its chairman of the board of directors. Mr. Beit-On is the former chairman and chief executive officer of Tecnomatix, which was sold in 2005 to UGS for $230 million and the former chairman of ECtel during its recovery process until the beginning of 2006. Yoav Doppelt, Ofer Hi-Tech's chief executive officer, will join the Company's board of directors following shareholder approval. Mr. Doppelt brings with him years of experience in the medical device industry and will be an active director in the Company's affairs. Pursuant to the Purchase Agreement, the LM Partners and Ofer Hi- Tech will purchase from the Company for $120 million ordinary shares at a price per share of $1.0722, representing approximately a 75% interest in the Company following closing. Under the provisions of the Companies Law, the proposed private placement requires approval by its shareholders. The Company intends to solicit shareholder approval at a meeting planned for early November. The closing of the Purchase Agreement is subject to shareholder approval of several items to be submitted in a proxy statement. About LM Partners L.P. LM Partners L.P. is a limited partnership formed in connection with the private placement by the general partner, a newly formed partnership affiliated with a Private Equity Group led by Mr. Aharon Dovrat, his son Shlomo Dovrat, Harel Beit-On and Avi Zeevi Beit-On. The group, formed in 1999, is an exclusive private investment group operating from Israel. The group is focused on the initiation and management of specialized private equity and venture capital funds investing mainly in Israeli or Israeli- related companies. The group currently oversees the management of approximately $900 million in private equity investments. The group's investors include a range of "blue chip" institutional and corporate investors from all over the world. About Ofer Hi-Tech Group The Ofer Hi-Tech group (controlled by Ofer (Ship Holding) Ltd.) was established in 1997 as a subsidiary of the Ofer Brothers Group, one of Israel's leading industrial and commercial conglomerates with a strong international presence, and is beneficially held by Mr. Ehud Angel and Mr. Eyal Ofer. The team was assembled to support private equity investments in the healthcare and information technology industries. Ofer Hi-Tech is managed by Yoav Doppelt. LM Partners and Ofer Hi-Tech groups have joined in transactions in the past, such as the investment in Tecnomatix Technologies Ltd. and the ECI telecom PIPE. About Lumenis Ltd. Headquartered in Yokneam, Israel, Lumenis Ltd. -- http://www.lumenis.com-- is a global developer, manufacturer and seller of laser and light- based devices for medical, aesthetic, ophthalmic, dental and veterinary applications. The Company offers a wide range of products along with extensive product support systems including training, education and service. Lumenis invests heavily in research and development to maintain and enhance its leading industry position. The Company holds numerous patents worldwide on its technologies. * * * As reported in the Troubled Company Reporter on March 1, 2006, As of Dec. 31, 2005, Lumenis' shareholders' equity deficit widened to $40,401,000 from a $27,107,000 deficit at Dec. 31, 2004. LUMINENT MORTGAGE: Moody's Puts Ba1 Rating to Class B-8 Notes ------------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by Luminent Mortgage Trust 2006-6, and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed adjustable-rate negative amortization Alt-A mortgage loans acquired by Maia Mortgage Finance Statutory Trust. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, excess spread, and a cap agreement for the Class A-2A Certificates. Moody's expects collateral losses to range from 0.80% to 1.00%. Wells Fargo Bank, N.A. will act as master servicer. Moody's has assigned Wells Fargo Bank, N.A. its top servicer quality rating of SQ1 as a master servicer. These are Moody's rating actions: * Luminent Mortgage Trust 2006-6 * Mortgage Pass-Through Certificates, Series 2006-6 Cl. A-1, Assigned Aaa Cl. A-2A, Assigned Aaa Cl. A-2B, Assigned Aaa Cl. A-3, Assigned Aaa Cl. B-1, Assigned Aa1 Cl. B-2, Assigned Aa1 Cl. B-3, Assigned Aa2 Cl. B-4, Assigned A1 Cl. B-5, Assigned A2 Cl. B-6, Assigned A3 Cl. B-7, Assigned Baa2 Cl. B-8, Assigned Ba1 MANARIS CORP: PricewaterhouseCoopers Raises Going Concern Doubt --------------------------------------------------------------- PricewaterhouseCoopers LLP expressed substantial doubt about Manaris Corporation's ability to continue as a going concern after auditing the Company's financial statements for the fiscal year ended June 30, 2006. PwC pointed to the Company's recurring losses from operations, reliance on non-operational sources of financing to fund operations, and negative working capital at June 30, 2006. The auditing firm also cited the Company's failure to comply with certain covenants and the fund restrictions imposed by a supplier under a loan arrangement. Manaris incurred an $11.9 million net loss for the year ended June 30, 2006, compared to a $6.2 million net loss a year earlier. The Company attributes the increase in net loss primarily due to the impairment of goodwill, increases in marketing and sales expenses, professional fees related to increased use of accounting, audit and legal services, debenture accretion, interest expenses, and the effect of the reduction in the exercise price of outstanding warrants in July 2005. For the year ended June 30, 2006, the Company generated $10.4 million of revenue, in contrast to $3.5 million in 2005. Sales from the Company's Fiber & Monitoring operating segment, represented by its subsidiary, Avensys Inc.'s products and solutions, account for 97% of net revenues. Sales from the Credit Management operating segment, represented by another subsidiary, C-Chip Technologies (North America) Inc.'s products and solutions, were generated through a network of eight resellers located in North America. At June 30, 2006, the Company's balance sheet showed $17.1 million in total assets, $9.9 million in total liabilities, stockholders' equity of $7.2 million and non-controlling interest of 23,940. A full-text copy of the Company's annual report is available for free at http://researcharchives.com/t/s?12f9 Default In August 2006, Manaris entered into a Note and Warrant Purchase Agreement for the sale by the Company of Series B Subordinated Secured Convertible Notes in an aggregate principal amount of approximately $3.6 million and Original Issue Discount Subordinated Secured Convertible Notes equal to 15% of the aggregate principal amount of Series B Notes to certain institutional and accredited investors. The Company failed to file a registration statement within 45 days from the closing date of the August private placement. As a result, until a registration statement is filed, the investors can demand repayment in an amount equal 110% of the aggregate principal amount of the notes. The Company, however, has not received a notice of default from the investors. The company has also begun to accrue liquidated damages equal to 1.5%, for each calendar month of the initial investment in the notes as a result of its failure to file the registration statement. About Manaris Manaris Corporation -- http://www.manariscorp.com/-- through its two wholly owned subsidiaries, offers risk mitigation solutions. C-Chip Technologies (North America) specializes in the high-tech sector of the security industry, offering technology that allows business users to access, control, manage and monitor remote assets at low cost. Avensys, Inc., enables businesses to monitor different types of environments, including air, soil and water, as well as buildings and materials. Avensys also produces fiber optic components and sensors. MASSEY ENERGY: S&P Revises Outlook to Developing from Stable ------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook to developing from stable on Massey Energy Co., which has a corporate credit rating of 'B+'. A developing outlook means the ratings can be raised, lowered, or affirmed. "The outlook revision follows the company's announcement that it has engaged the services of Goldman, Sachs & Co. to assist in its review of strategic opportunities to maximize shareholder value," said Standard & Poor's credit analyst Dominick D'Ascoli. Massey Energy Co. has limited geographic diversity, exposure to the difficult operating environment of Central Appalachia, high cost position, and aggressive financial leverage. Standard & Poor's continues to believe that Central Appalachian coal will continue to lose market share to the Illinois and Northern Appalachian coal-producing regions over the next several years as coal-burning power plants install emission-control equipment, allowing them to burn high-sulfur coal from these regions. The direction of possible ratings movement will primarily be influenced by the outcome of the company's review of strategic opportunities to enhance shareholder value. Standard & Poor's assumes that all such opportunities are being considered. "We could revise the outlook to positive, raise our ratings, or affirm them if Massey is acquired or mergers with a stronger company or if Massey acquires another company without using significant debt financing," Mr. D'Ascoli said. "We could revise the outlook to negative, or lower our ratings, if Massey retains its aggressive financial leverage and again revises downward its estimate of future production or margins. We could also lower our ratings if the company implements additional shareholder initiatives at a meaningful detriment to the balance sheet. The ratings could be affirmed if we come to expect total debt to EBITDA and funds from operations to total debt to approximate around 4x and 15%, respectively, through an industry cycle." MCDERMOTT INT'L: Moody's Assigns Loss-Given-Default Ratings ----------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the oilfield service and refining and marketing sectors last week, the rating agency confirmed its B1 Corporate Family Rating for McDermott International Inc. Moody's also revised its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Multiple Seniority Shelf (Senior Unsecured) (P)B3 (P)B3 LGD6 97% Multiple Seniority Shelf (Subordinate) (P)Caa2 (P)B3 LGD6 97% Multiple Seniority Shelf (Preferred) (P)Caa3 (P)B3 LGD6 97% In addition, Moody's revised its rating on subsidiary McDermott Inc.'s Pollution Control Revenue Bonds Due 2009 to B3 from B2, and assigned those bond obligations an LGD6 rating suggesting a 94% projected loss-given default. Furthermore, Moody's revised its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations for another McDermott subsidiary, The Babcock & Wilcox Company: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Sr. Sec. Gtd. Revolving Credit Facility Due 2011 B1 Ba2 LGD2 19% Sr. Sec. Gtd. Delayed Draw Term Loan B1 Ba2 LGD2 19% Sr. Sec. Gtd. Letter of Credit Facility B1 Ba2 LGD2 19% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Houston Texas, McDermott International, Inc. -- http://www.mcdermott.com/-- through its subsidiaries, operates as an energy services company worldwide. MCLEODUSA INC: Completes $120 Million Senior Sec. Loan Offering --------------------------------------------------------------- McLeodUSA Incorporated has successfully completed its private offering of Senior Second Secured Notes announced Sept. 13, 2006. The offering was upsized to $120,000,000 from the planned size of $110,000,000, due to strong interest in the marketplace for these securities. "I have raised a lot of capital over the years, doing financial roadshows to tell a company's story and strategy for the future," McLeodUSA Chief Executive Officer Royce Holland stated, "and I can't recall ever ending a roadshow several days early because the offering was oversold. The reception of the financial markets has been gratifying and reassuring. Clearly there is capital available when a company can make a compelling case for future success, based on solid execution. I'm very proud of all that the team at McLeodUSA has achieved in the months since I joined the company in January 2006, and I'm confident the financial markets are encouraged by the sound execution we have demonstrated." McLeodUSA Incorporated used the net proceeds of the offering to repay indebtedness under its previous senior secured credit facility, to cash collateralize certain of its existing letters of credit, and will use the remaining proceeds of approximately $24 million for general corporate purposes. "After completing this financing offering, we have a net debt to EBITDA ratio of 1:1," Mr. Holland continued. "That's certainly one of the strongest ratios in the telecom sector where many of our peers are running more like 4:1 of debt to EBITDA. McLeodUSA continues to have one of the strongest balance sheets in the industry and a strong commitment to taking care of our customers. That's important to us as we execute our strategy, and it's important for the confidence of our customers, who now number more than 250,000 accounts." The Senior Second Secured Notes have a five-year maturity date of October 1, 2011, at a fixed interest rate of 10.5%. "This is a significantly more favorable interest rate than we were carrying on our previous debt," Joe Ceryanec, McLeodUSA chief financial officer, stated. "The fact that the rate is fixed rather than variable, and that the notes carry no maintenance covenants, allows us greater flexibility as we execute our revised business strategy." "In addition to our emphasis on revenue growth," Mr. Ceryanec stated, "we are pleased with our steadily improving gross margins in 2006 and we are cash flow positive after covering capital expenditures and interest payments. Prior to this closing, we had approximately $39 million in cash; after the deal, we now have approximately $63 million in available cash." Headquartered in Cedar Rapids, Iowa, McLeodUSA Incorporated -- http://www.mcleodusa.com/-- provides integrated communications services, including local services in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The Debtor and its affiliates filed for chapter 11 protection on Oct. 28, 2005 (Bankr. N.D. Ill. Case Nos. 05-53229 through 05-63234). Peter Krebs, Esq., and Timothy R. Pohl, Esq., at Skadden, Arps, Slate, Meagher and Flom, represent the Debtors in their restructuring efforts. As of June 30, 2005, McLeodUSA Incorporated reported $674,000,000 in total assets and $1,011,000,000 in total debts. Judge Squires confirmed the Debtors' Joint Prepackaged Plan of Reorganization on Dec. 16, 2005, and that plan took effect on Jan. 6, 2006. McLeodUSA Inc. previously filed for chapter 11 protection on Jan. 30, 2002 (Bankr. D. Del. Case No. 02-10288). The Court confirmed the Debtor's chapter 11 plan on April 5, 2003, and that Plan took effect on April 16, 2002. The Court formally closed that case on May 20, 2005. * * * As reported in the Troubled Company Reporter on Sept. 15, 2006, Standard & Poor's Ratings Services assigned a 'B-' corporate credit rating to Hiawatha, Iowa-based competitive local exchange carrier McLeodUSA Inc. The rating outlook is negative. As reported in the Troubled Company Reporter on Sept. 15, 2006, Moody's Investors Service assigned a B3 corporate family rating to McLeodUSA Incorporated, and a B3 rating for the proposed $110 million second lien note issue. The ratings for the note reflect both the overall probability of default of the company, to which Moody's assigns a PDR of B2, and a loss given default of LGD 4. The outlook is stable. The new financing will be used to refinance existing debt and for general corporate purposes. MESABA AVIATION: Has Access to Marathon's $24 Mil. DIP Facility --------------------------------------------------------------- The Honorable Gregory F. Kishel of the U.S. Bankruptcy Court for the District of Minnesota has issued a final order approving the terms and conditions of the DIP Credit Facility and DIP Loan Documents that will provide Mesaba Aviation, Inc., access to a $24,000,000 loan from Marathon Structured Finance Fund, L.P. Pursuant to the Final DIP Order, the Debtor is obligated to perform its obligations, effective as of September 20, 2006, under the Final Order and these DIP Loan Documents: (a) the DIP Credit Agreement; and (b) all financing statements, notices, schedules, other security agreements -- including the Security and Pledge Agreement, SGR Security Agreement and Spare Parts Mortgage -- blocked account agreements, deeds of trust, mortgages, instruments, guaranties, subordination agreements, acceptance agreements and documents as may be necessary or required from time to time to: -- evidence its obligations to Marathon; -- consummate the terms and provisions of the Debtor's request, the Final Order and the DIP Credit Agreement; and -- evidence perfection of the liens and security interests to be given to Marathon. Judge Kishel authorizes the Debtor to execute and deliver any non-material amendments or modifications to any of the DIP Loan Documents or any waivers as may be agreed upon in writing by the Debtor and Marathon, without the need of further notice, hearing or ruling of the Court. All DIP Credit Documents entered into by the Debtor before September 20, 2006, in accordance with the terms of the Final Order, are approved and ratified in full. All indebtedness, Loans and Obligations incurred on or after the Petition Date by the Debtor to Marathon pursuant to the DIP Loan Documents, whether contingent or otherwise, are referred to as the "DIP Indebtedness." No obligation or liability owed, or payment, transfer or grant of security, to Marathon or any lender under the DIP Loan Documents or the Final Order will be stayed, restrained, voidable, or recoverable under the Bankruptcy Code or under any applicable law, or subject to any defense, reduction, set off, recoupment or counterclaim. Notwithstanding anything in the Final Order to the contrary, the Debtor may only use Cash Collateral in accordance with the terms of the DIP Loan Agreement and only at and during times that the outstanding amount of DIP Indebtedness equals $0. The maximum aggregate outstanding principal amount of the DIP Revolving Loans that the Debtor may borrow from Marathon before the "Termination Date" will not at any time exceed $24,000,000, provided that: (a) if Marathon in its sole discretion advance funds in excess of the limitations or any other limitations or restrictions set forth in the DIP Credit Documents, the advances will constitute part of the DIP Indebtedness and will be entitled to the benefits of the DIP Loan Documents and the Final Order; and (b) Marathon may impose reserves against DIP Financing availability as it deems necessary or appropriate in accordance with the DIP Loan Documents, including a reserve for the Carve-Out. Nothing contained in the Final Order will alter, limit or modify the rights of Wells Fargo Bank, National Association to enforce its rights and remedies pursuant to agreements executed before the Final Order between the Debtor and Wells Fargo. All other objections to the entry of the Final Order have been withdrawn or overruled. A full-text copy of the Final Order and its exhibits, and the DIP Credit Agreement is available for free at http://researcharchives.com/t/s?12fa In the order issued by the Bankruptcy Court on September 22, 2006, vacating its July 14 ruling authorizing the Debtor to reject collective bargaining agreements with unions, Judge Kishel noted that despite the Court's decision authorizing the Debtor to obtain postpetition financing, the representation has been that the lender will not advance until the Debtor has had decisive action on the matter of labor cost reductions. Negotiations with regard labor cost reduction are still ongoing. Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 24 and 25; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) MESABA AVIATION: Four Creditors Object to $24MM DIP Financing ------------------------------------------------------------- Four parties have objected to Mesaba Aviation, Inc.'s request for a DIP Credit Facility and Financing with Marathon Structured Finance Fund, L.P.: (1) Salt Lake County Treasurer; (2) Wells Fargo Bank, National Association; (3) Habbo G. Fokkena, U.S. Trustee for Region 12; and (4) General Electric Company. As reported in the Troubled Company Reporter on Aug. 29, 2006, the Honorable Gregory F. Kishel of the U.S. Bankruptcy Court for the District of Minnesota authorized Mesaba Aviation to promptly pay Marathon Structured: (1) $100,000 as additional deposit; and (2) $120,000 as first installment of the Closing Fee, under the terms of the Commitment Letter. Judge Kishel further approves the provisions on "Indemnity" and "Expenses" under the DIP Facility. The Debtor is authorized and directed to perform as provided in these provisions, whether or not the remaining terms of the proposed transaction are ultimately approved by the Court or consummated by the parties, Judge Kishel says. The Debtor has previously determined that a postpetition credit facility is vital for its successful reorganization and for the continued operation of its business. With the cooperation of a representative of the Official Committee of Unsecured Creditors, the Debtor engaged in good faith, extensive, arm's-length negotiations with several DIP lenders. The negotiations culminated in an agreement with Marathon Structured. Pursuant to a commitment letter between the parties, Marathon Structured agrees to provide a senior secured, revolving, DIP credit facility to the Debtor in the aggregate principal amount not to exceed $24,000,000, all subject to the terms and conditions in the Commitment Letter, a final DIP order and DIP Loan Documents. The Debtor asked the Court for authority to enter a final ruling approving all of the terms and conditions of the DIP Credit Facility and DIP Loan Documents with Marathon Structured. Parties' Objections (1) Salt Lake The Salt Lake County Treasurer asserts an $11,583 prepetition claim for unpaid delinquent 2005 taxes against the Debtor. Salt Lake is also currently in the process of assessing postpetition administrative expense taxes for the 2006 tax year, which is expected to total at least as much as the 2005 taxes. Zachary D. Shaw, Salt Lake's deputy district attorney, relates that the taxes are secured by first priority liens pursuant to Section 59-2-1325 of the Utah Code Ann. If Salt Lake's personal property tax liens have priority over prior contractual interests, they surely have priority over subsequent contractual interests, Mr. Shaw adds. Mr. Shaw asserts that the Debtor's request to enter into a debtor-in-possession credit facility with Marathon Structured Finance Fund, L.P., does not appear to provide adequate protection to Salt Lake's claims, as required by Section 364(d)(1) of the Bankruptcy Code. Specifically, Mr. Shaw says, the Debtor asked the Court: * for permission to obtain secured postpetition financing under terms which appear to prime and subordinate Salt Lake's statutory liens; and * that Marathon Structured receive first priority and perfected security interests and liens on all currently owned property of the Debtor, whether real or personal. Mr. Shaw asserts that while the Debtor's request refers to "Permitted Liens" which will take priority over the DIP financing liens, the Debtor's request is not clear whether Salt Lake's lien is included as a Permitted Lien. Salt Lake does not consent to the imposition of liens, which would prime its pre- or postpetition tax liens. Accordingly, Salt Lake asks the Court to deny the Debtor's request to the extent it seeks to prime or subordinate Salt Lake's liens or claims. (2) Wells Fargo As previously reported, the Court authorized the Debtor to continue using its cash management system, which includes various commercial deposit accounts with Wells Fargo Bank, National Association. William P. Wassweiler, Esq., at Rider Bennett, LLP, in Minneapolis, Minnesota, relates that the maintenance of the Deposit Accounts are governed by the terms of a Commercial Account Agreement, in which the Debtor: * granted Wells Fargo a lien on and security interest in all of the Debtor's accounts with the Bank and its affiliates; and * acknowledged Wells Fargo's right of set-off against any account maintained by the Debtor at the Bank. Subsequently, Wells Fargo issued a corporate credit card and several letters of credit totaling $4,598,000, and $4,715,000 in "Pledged Collateral." On June 28, 2006, the Court approved an increase in credit on L/C No. NZS439600 from $2,500,000 to $3,500,000, subject to and in accordance with the terms of the General Pledge Agreement and Standby Letter of Credit Agreement -- both dated June 27. Mr. Wassweiler notes that the Debtor granted Wells Fargo a security interest in: -- a specific wholesale time deposit account, pursuant to the terms of the General Pledge Agreement; and -- all Pledged Accounts and Deposit Accounts, as security for the Debtor's reimbursement obligations to Wells Fargo under the L/Cs, pursuant to the terms of the Standby Letter of Credit Agreement. Wells Fargo's security interest in the Pledged Accounts and Deposit Accounts is perfected by Wells Fargo's possession and control of those accounts. Against this backdrop, Wells Fargo objects to the Debtor's request because: (i) The DIP Lien impairs Wells Fargo's first priority lien rights and set-off rights in the Deposit Accounts without adequately protecting Wells Fargo's interest in those accounts; (ii) The request requires the Debtor to enter into cash management agreements including blocked account agreements satisfactory to Marathon Structured. Wells Fargo has not reviewed or approved any agreements which may impermissibly impose obligations on Wells Fargo without its consent; (iii) The DIP Lien impairs the cross-collateralized nature of the Pledged Accounts and Deposit Accounts, and Wells Fargo's pre- and postpetition set-off rights in the Pledged Accounts, without adequately protecting Wells Fargo's interest in those accounts; and (iv) The Debtor attempts to cap the "restricted cash" held in the Pledged Accounts to $4,715,000 or some other fixed amount. The General Pledge Agreements clearly secure all funds held in the Pledged Accounts and proceeds, including any dividends or other accretions. Wells Fargo, therefore, asks the Court to deny the Debtor's request. Wells Fargo reserves its right to raise further objections to the Debtor's request after it has the opportunity to review the DIP Credit Documents, Mr. Wassweiler says. (3) U.S. Trustee Habbo G. Fokkena, U.S. Trustee for Region 12, objects to the proposed financing because the loan agreement provides for a grant to the Lender of a lien on all the Debtor's avoidance causes of action. Encumbering avoidance causes of action will thwart a liquidation if the Debtor's reorganization efforts are not successful, Mr. Fokkena explains. More importantly, he continues, the Court should recognize that the avoidance causes of action to be encumbered could have very substantial value if the liens encumber the Debtor's alleged fraudulent conveyance cause of action against MAIR Holdings, which has been purported to have received as much as $120,000,000 before the Petition Date. The U.S. Trustee also objects to the proposed financing because the Debtor improperly characterizes the loan as being under Section 364(c)(1) of the Bankruptcy Code when in fact, if the loan is approved, it will have the effect provided by Section 364(d), Mr. Fokkena says. Section 364(c)(1) provides for a first lien on unencumbered property that is superior to administrative expenses. In a business as complex as the Debtor's, Mr. Fokkena notes, it is likely that other lien creditors exist and the Lender should not be given the benefit of Section 364(d) without the Debtor proving adequate protection for any pre-existing liens. Furthermore, Mr. Fokkena objects to placing the Lender's Commitment Letter under seal because he believes that the Debtor and Lender failed to meet their burden of showing a need for sealing information. The U.S. Trustee submits that if the loan can be renegotiated to resolve his objections, then the loan can be approved. (4) General Electric General Electric Company has asserted lien rights with respect to engines operated by the Debtor and serviced by GE. GE asks the Court that any DIP order recognize GE's liens as "Permitted Liens," as that term is defined by the Debtor, and to authorize further Section 546(b) of the Bankruptcy Code notices by GE to preserve perfection of its liens. Michael J. O'Grady, Esq., at Frost Brown Todd LLC, in Cincinnati, Ohio, recounts that in November 2005, GE requested a relief from stay or for adequate protection of its lien rights. On that same month, the Debtor and GE entered into a standstill stipulation authorizing GE to continue to make lien filings in the state of Kansas with respect to engines serviced by GE pending further ruling by the Court on the stay request. Mr. O'Grady tells Judge Kishel that GE has continued to perform pursuant to its agreement with the Debtor and the standstill stipulation despite the continued lack of adequate protection of GE's lien rights. Without the determination that the GE liens are "Permitted Liens" and the authorization for GE to continue to issue notices pursuant to Section 546(b), the proposed DIP order subjects GE to additional risk for which GE is not adequately protected in violation of Section 364(d)(1)(B), Mr. O'Grady asserts. About Mesaba Aviation Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) METAMORPHIX INC: Deloitte & Touche Raises Going Concern Doubt ------------------------------------------------------------- Deloitte & Touche LLP expressed substantial doubt about MetaMorphix, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the Company's recurring losses and negative cash flows from operations, working capital deficiency and significant accumulated deficit at Dec. 31, 2005. MetaMorphix reported a $23.6 million net loss for the year ended Dec. 31, 2005, a 54.8% decrease compared to a $52.1 million net loss incurred in the prior year. Revenue for the year ended Dec. 31, 2005 was $2.5 million a decrease of $3.1 million or 55.9%, from the $5.7 million generated during the same period of 2004, primarily due to the difference in genomic research project milestone revenue. In 2004, the Company earned $3.1 million in milestone revenue relating to the Cargill collaborative research project. Revenue from the Company's parentage and identification genotyping services increased $364,205, or 19.6%, in 2005 from 2004 due to the increased volume of tests services performed. The Company expects revenue from its livestock genomics business to increase during the next two years as a result of the commercialization of the technologies currently under collaborative research projects. At Dec. 31, 2005, the Company's balance sheet showed $13.1 in total assets and $51.6 million in total liabilities, resulting in a stockholders' deficit of $38,416,350. A full-text copy of the Company's annual report is available for free at http://researcharchives.com/t/s?12f6 Headquartered in Beltsville, Maryland, MetaMorphix, Inc. -- http://www.metamorphixinc.com/-- is developing a pipeline of innovative products addressing all major livestock sectors including cattle, swine, poultry and aquaculture, as well as developing products that enhance the health of companion animals. NASH FINCH: Moody's Holds B1 Rating on $125MM Sr. Debt Facility --------------------------------------------------------------- Moody's Investors Service confirmed all ratings of Nash Finch Company, including the secured bank loan at B1 and the senior subordinated notes at B3, but assigned a negative rating outlook. The ratings reflect both the overall B1 probability of default for the company and a loss given default of LGD 4 for the secured bank loan and LGD 6 for the subordinated notes. The rating confirmation recognizes the company's solid credit metrics and comfortable liquidity position. However, the negative rating outlook is prompted by Moody's concern regarding the effectiveness of current efforts to improve weakening operating performance in the retail and distribution divisions, the uncertainty of long-term strategic direction during the transition in the senior management team, and lingering uncertainty about the potential impact of the unresolved SEC investigation. This concludes the rating review that commenced on March 7, 2006. These ratings are confirmed: * $125 million senior secured revolving credit facility (2009) at B1 (LGD 4, 54% LGD rate); * $175 million senior secured term loan (2010) at B1 (LGD 4, 54% LGD rate); * $322 million (fully accreted value) convertible subordinated notes (2035) at B3 (LGD 6, 91% LGD rate); * Corporate family rating at B1; * Probability of Default rating at B1. The B1 corporate family rating considers Moody's opinion that, in spite of the solidly positioned credit metrics, the competitive challenges facing the company may intensify in coming years, the inherent risks as the new senior management team institutes strategic and organizational changes, and the uncertainty of the ongoing SEC investigation. Important qualitative credit metrics consistent with the assigned rating include the company's aggressive financial policy for dividends and debt financed acquisitions that scores at the B level, the low level of capital investment in comparison with capital investment that has B attributes, and the company's challenged position within the grocery retailing and distribution industry that has Ba and B characteristics. Moody's believes that competitive pressures on the company and its wholesale customers will remain intense as well-regarded competitors like Wal-Mart (senior unsecured rating of Aa2) continue to develop supercenters in Nash Finch's trade areas. Important quantitative credit metrics, such as leverage, interest coverage, free cash flow, and scale, have high non-investment grade attributes. The expectation of improved Board oversight and stability within senior management, as well as resolution of the SEC investigation related to possible insider stock trading by former company officers, are also important rating factors. Ratings could decline over the next 12 to 18 months if operating performance in the wholesale or retail segments continued to weaken, non-traditional grocery retailers won additional market share in the trade areas of the company and its wholesale customers, or the company were materially impacted by the unresolved SEC discussions. Specifically, ratings would decline if debt to EBITDA exceeded 5 times, outflows for cash interest expense, capital expenditures, dividends, and working capital exceeded EBITDA, or EBIT to interest fell below 1.5 times. Given the negative outlook, an upgrade over the medium-term is unlikely. The rating outlook could be revised to stable if the company made progress towards the strategic goals that will be defined by the new Chairman and Chief Executive Officer, if the company and its customers maintained market share without sacrificing profitability, and if debt protection measures did not decline from current levels. Moody's has applied its new Probability-of-Default and Loss-Given- Default rating methodology to Nash Finch. Moody's current long- term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology disaggregates these two key assessments in long-term ratings. The LGD rating methodology also enhances the consistency in Moody's notching practices across industries and improves the transparency and accuracy of our ratings as our research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha-numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% - 9%) to LGD6 (loss anticipated to be 90% - 100%). Nash Finch, headquartered in Edina, Minnesota, is a leading grocery distributor to retailers and military commissaries and operates 69 supermarkets in the upper Midwest and Great Plains regions. Revenue for the 12 months ending June 2006 was $4.7 billion. NORTEL NETWORKS: Gets $23.6 Mil. U.S. Navy Litigation Support Pact ------------------------------------------------------------------ Nortel Networks Corporation's wholly owned U.S. company, Nortel Government Solutions, disclosed that it is providing litigation support services on behalf of the U.S. Navy Office of the General Counsel under a five-year, $23.6 million contract. The services are required by the Navy to assist the U.S. State Department Office of the Legal Advisor in providing the defense before the Iran-United States Claims Tribunal in The Hague against certain claims by Iran arising from sales of military equipment to Iran before the 1979-81 hostage crisis. The Company is providing claims research, analysis of discovery and claims documentation, financial and logistical reconciliation, report preparation and other litigation services in support of U.S. Navy-managed cases and weapons systems related to Iran's claims. "We have a wealth of knowledge and experience with Foreign Military Sales that is instrumental in providing an effective defense in these proceedings," Bob Veschi, president, Defense Sector, said. "This expertise and a solid reputation for excellent service were instrumental in our selection." About Nortel Government Solutions Headquartered in Fairfax, Va., Nortel Government Solutions -- http://www.nortelgov.com/-- is a U.S. company wholly owned by Nortel. It is a network-centric integrator, providing the services expertise, mission-critical systems and secure communications that empower government to ensure the security, livelihood, and well being of its citizens. Nortel Government Solutions offers a one-stop shop for solutions designed to improve workforce productivity, reduce operating costs, and streamline inter-agency communications. About Nortel Networks Corp. Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. * * * As reported in the Troubled Company Reporter on Oct. 5, 2006, Moody's Investors Service upgraded its B3 Corporate Family Rating for Nortel Networks Corp. to B2. As reported in the Troubled Company Reporter on July 10, 2006, Dominion Bond Rating Service confirmed the long-term ratings of Nortel Networks Capital Corporation, Nortel Networks Corporation, and Nortel Networks Limited at B (low) along with the preferred share ratings of Nortel Networks Limited at Pfd-5 (low). All trends are Stable. DBRS confirmed B (low) Stb Senior Unsecured Notes; B (low) Stb Convertible Notes; B (low) Stb Notes & Long-Term Senior Debt; Pfd-5 (low) Stb Class A, Redeemable Preferred Shares; and Pfd-5 (low) Stb Class A, Non-Cumulative Redeemable Preferred Shares. Standard & Poor's also affirmed its 'B-' long-term and 'B-2' short-term corporate credit ratings on the company, and assigned its 'B-' senior unsecured debt rating to the company's proposed $2 billion notes. The outlook is stable. NORTHWEST AIRLINES: Buying 72 Aircrafts to Meet Market Demands -------------------------------------------------------------- Northwest Airlines has ordered from two manufacturers 72 new, two- class aircraft that will each accommodate 76 customers. The airline said it placed firm orders for 36 Bombardier Canadair Regional Jet 900s and 36 Embraer 175s that will equip Northwest with modern aircraft that offer customers a comfortable travel experience, allow the carrier to pursue growth opportunities in important markets, including in the Heartland of the U.S., and provide Northwest with improved aircraft economics. Northwest also received options for additional Bombardier and Embraer 76-seat aircraft. Both aircraft types are powered by General Electric CF34 engines. "[The] orders are examples of the steady progress we are making in our restructuring which is focused on resizing and optimizing the Northwest fleet to better serve customers; realizing competitive labor and non-labor costs; and restructuring and recapitalizing the airline's balance sheet," said Doug Steenland, Northwest president and chief executive. "The aircraft purchases from Bombardier and Embraer allow us to tailor our service to meet market demands while providing customers with a comfortable and efficient flight experience on Northwest. Both new aircraft types will lower Northwest's operating costs over the aircraft they replace such as the Avro Regional Jet 85 through a combination of significantly lower fuel consumption along with inherent maintenance cost advantages," he continued. The values of the orders were not disclosed. Discussing the multiple orders, Neal Cohen, executive vice president and chief financial officer, said, "Our Bombardier purchase builds on a well-established, long-term relationship and the Embraer order introduces another highly respected aircraft product line to Northwest travelers." Northwest's CRJ900 and Embraer 175 aircraft will provide a best- in-class product experience for Northwest Airlink customers. They both will be configured with 12 seats in first class and 64 seats in coach class. The 12 first class seats, arranged in a one seat- aisle-two seats configuration, will have 36 inches of pitch, or space between rows. Coach class, arranged in a two seats-aisle- two seats configuration, will have pitch comparable to other aircraft in the airline's current mainline fleet. The CRJ900 has a range of nearly 1,400 miles (2,253 km) while the Embraer 175 will eventually have a nonstop range of nearly 1,700 miles (2,735 km). Northwest expects to take initial delivery of both aircraft in the second quarter of 2007. Tim Griffin, executive vice president-marketing and distribution, said, "The new aircraft are ideally suited to serve Northwest's Heartland markets by connecting passengers through the airline's Detroit, Minneapolis/St. Paul and Memphis hubs to the carrier's expansive domestic and international route network." "In addition, the introduction of highly-efficient 76-seat aircraft into the fleet will allow Northwest to offer new service and develop markets where demand does not yet support service with a 100-seat DC9-30, but exceeds what could be accommodated with a 50-seat Northwest Airlink CRJ200." Discussing a future replacement for Northwest's DC-9 aircraft, Steenland said, "We are continuing to meet with aircraft manufacturers to review our requirements for a 100-seat aircraft that would replace our DC-9s." Northwest said that its regional subsidiary, Compass Airlines, will operate the 36 Embraer 175s as Northwest Airlink. An Airlink partner, to be determined at a later date, will operate the 36 Bombardier aircraft. In addition, as part of the agreement to order new CRJ900 aircraft, Bombardier, GECAS and Export Development Canada have reached an agreement on restructuring the existing 126 CRJ200 aircraft fleet. The agreement includes the return of 15 previously rejected CRJ200 aircraft back into the Northwest Airlink fleet. This marks the completion of Northwest's CRJ fleet restructuring. As a result, the Airlink fleet will total 141 aircraft. The agreements are subject to the approval of the U.S. Bankruptcy Court for the Southern District of New York. Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. NORTHWEST AIRLINES: Inks Distribution Pact With Priceline.com ------------------------------------------------------------- Northwest Airlines and priceline.com have finalized a distribution agreement covering priceline.com's published-price and opaque airline ticket services. Northwest will resume its participation in priceline.com and lowestfare.com immediately. "We're excited to have Northwest as a priceline.com participant," Mark Koehler, priceline.com's Senior Vice President, Air, said. "We're also very pleased to give our customers access to the broad domestic and international flight options and the excellent in- flight product provided by Northwest." "Priceline.com has developed a supplier-friendly distribution structure and offers marketing opportunities that meet our needs and allows us to broaden the online base of travelers we serve," Al Lenza, Northwest's Vice President, Distribution and E-Commerce, said. "We look forward to resuming our relationship with priceline.com." Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. PERFORMANCE TRANSPORTATION: Turns to Tectura for Support Services ----------------------------------------------------------------- Performance Transportation Services, Inc., and its debtor- affiliates have sought the services of Tectura (USA), Inc., in accordance with the procedures approved by the U.S. Bankruptcy Court for the Western District of New York for hiring Ordinary Course Professionals. Tectura will provide Great Plains support and upgrade services to the Debtors. John Matterson, president of Tectura, informs the Court that the company currently performs services, and may perform services in the future, to parties-in-interest, in matters unrelated to the Debtors' Chapter 11 cases. Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/or 215/945-7000) PERFORMANCE TRANSPORTATION: Finis Hodge Wins Lift-Stay Plea ----------------------------------------------------------- The Honorable Michael J. Kaplan of the U.S. Bankruptcy Court for the Western District of New York lifts the automatic stay in effect in Performance Transportation Services, Inc., and its debtor-affiliates' bankruptcy cases to allow Finis Hodge to continue proceedings in a personal injury action against Debtor Hadley Auto Transport. The action is currently pending before the Third District Court for Salt Lake County, in Utah. Judge Kaplan rules that the running of time for the Debtors to answer the Action is extended up to Nov. 18, 2006, and further proceedings are stayed until Nov. 18, 2006. Judge Kaplan also orders the Debtors to provide information to the Court by Nov. 21, 2006, on what portion of the damages, if any, has been paid out. Mr. Hodge claims he suffered injuries when a semi-truck owned and operated by Hadley collided with the vehicle he was driving. Among other injuries, Mr. Hodge says he suffered serious and permanent injuries to his arm affecting his day-to-day life. Mr. Hodge's counsel had argued that lifting the stay will not prejudice any creditor or party-in-interest due to the liability insurance coverage and self-insurance, which will cover all litigation costs and the Debtor's ultimate liability on any judgment or settlement. Debtors Objection The Debtors had asserted that cause does not exist to lift the automatic stay to allow Mr. Hodge to pursue his personal injury action. Garry M. Graber, Esq., at Hodgson Russ LLP, in Buffalo, New York, noted that Mr. Hodge filed his action on April 7, 2006, more than two months after the Petition Date, which is a clear violation of Section 362 of the Bankruptcy Code. Mr. Graber argued that bankruptcy courts in the Southern District of New York have consistently held that actions commenced after the Petition Date, without court authority, violate Section 362 and are therefore void even if the acting party had no actual notice of the automatic stay. The Debtors also contested Mr. Hodge's allegations that he is entitled to relief from stay because they (i) have obtained insurance from Discovery Property & Casualty Insurance Company and (ii) have complied with the Federal Motor Carrier Safety Act. The Official Committee of Unsecured Creditors supported the Debtors' objection to Mr. Hodge's request. Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/or 215/945-7000) PERFORMANCE TRANSPORTATION: BMC Records 981 Proofs of Claim Filed ----------------------------------------------------------------- As of Sept. 15, 2006, BMC Group, Inc., the official claims and noticing agent, has recorded 981 proofs of claim filed in the Chapter 11 cases of Performance Logistics Group, Inc., and its subsidiaries: Total No. Total Amt. Debtor of Claims Asserted ------ --------- -------- Performance Logistics Group, Inc. 24 $157,449,384 Leaseway Motorcar Transport Company 416 203,297,035 PLG Leasing Corp. 10 153,048,715 E. and L. Transport Company L.L.C 173 155,131,848 Logistics Computer Services, Inc. 18 153,246,900 Transportation Releasing L.L.C. 22 153,464,964 Hadley Auto Transport 177 157,858,845 Performance Transportation Svcs. Inc. 80 165,126,553 Florida Leaseco Company L.L.C. 14 153,587,074 Hadley Computer Services 9 153,048,610 Automotive Logistics Corp. 10 153,063,670 HFS Investments Inc. 9 153,048,610 LAC Holding Corp. 10 153,050,329 Vehicle Logistics Associates, LLC 9 153,048,610 ---- -------------- TOTAL 981 $2,217,471,146 Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/or 215/945-7000) PHI INC: Moody's Assigns LGD4 Rating to 7.125% Sr. Global Notes --------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the oilfield service and refining and marketing sectors last week, the rating agency confirmed its B1 Corporate Family Rating for PHI, Inc. In addition, Moody's revised its rating on the company's 7.125% Senior Unsecured Guaranteed Global Notes Due 2013, to B2 from B1, and assigned those debentures an LGD4 rating suggesting noteholders will experience a 59% loss in the event of default. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Lafayette, Louisiana, PHI, Inc. fka Petroleum Helicopters Inc., supplies air transportation of people and equipment, mainly to oil and gas companies. PIER 1: Board Discontinues $0.10 Per Share Quarterly Dividends -------------------------------------------------------------- Pier 1 Imports, Inc.'s Board of Directors has decided to discontinue the Company's $0.10 per share quarterly dividend. Marvin J. Girouard, chairman and chief executive officer, commented, "We believe that discontinuing the cash dividend will improve the Company's near-term liquidity and is consistent with our efforts to provide financial stability as we execute Pier 1's turnaround strategy. While the discontinuation of the cash dividend was done in an effort to provide additional flexibility, we still believe that the Company's cash on hand, available lines of credit and proceeds from the sale of the credit card business will be sufficient to meet our expected cash requirements over the next fiscal year." Based in Fort Worth, Texas, Pier 1 Imports, Inc. (NYSE:PIR) -- http://www.pier1.com/-- is a specialty retailer of imported decorative home furnishings and gifts with Pier 1 Imports(R) stores in 49 states, Puerto Rico, Canada, and Mexico and Pier 1 kids(R) stores in the United States. * * * As reported in the Troubled Company Reporter on Sept. 26, 2006, Moody's Investors Service downgraded Pier 1's corporate family rating to B3 from B1 following continued degradation in same store sales, which have resulted in modest operating results and negative free cash flow. The rating outlook is stable. REFCO INC: Chapter 7 Trustee Reaches Settlement with Rogers Funds ----------------------------------------------------------------- Albert Togut, chapter 7 trustee for Refco, LLC, reached an agreement, on Oct. 4, 2006, with representatives for Rogers International Raw Materials Fund, L.P. and Rogers Raw Materials Fund, L.P., with respect to the Rogers funds' customer property claims against Refco, LLC. In July, the Rogers funds had reached a settlement with the chapter 11 estate of Refco Capital Markets, Ltd. On the basis of these two settlements, the two Rogers funds may recover between 96% and 100% on their claims against the Refco debtors, depending upon recoveries that may be obtained by the litigation trust that will be established for RCM creditors. The funds' settlement with Refco, LLC resolves numerous claims brought by the Rogers funds as well as claims between Refco, LLC and RCM, and further paves the way for a global settlement among all of the Refco bankruptcy estates. The Refco, LLC settlement remains subject to bankruptcy court approval at a hearing scheduled for October 11, 2006. On October 24, 2005, one week after the Refco chapter 11 filings, the Rogers funds filed a complaint in the bankruptcy court seeking a constructive trust over $364 million in cash and securities that the funds claimed were wrongfully diverted from Refco, LLC, a once active commodity broker registered with the CFTC, to RCM, an unregulated Bermuda unit of Refco, Inc. The Rogers funds also asserted claims against Refco, LLC for the same amount, contending that they were entitled to customer treatment at Refco, LLC. The settlement with RCM, which involves RCM customers who hold securities accounts and foreign-exchange accounts, will provide that the Rogers Funds shall receive the same treatment as the claims of securities customers at RCM. Under the RCM settlement, if the RCM plan of reorganization is confirmed by the end of 2006, securities customers would initially recover 84% of the value of their claims. Future recoveries would depend on Mr. Kirschner's success at pursuing claims third parties who were part of Refco's collapse in October 2005. With the Refco, LLC settlement, the chapter 7 trustee will recognize that the Rogers funds have a $30 million claim against Refco, LLC. "The settlement with Refco, LLC, together with the settlement with RCM, brings an end to protracted litigation in the bankruptcy court, may provide a total recovery to the Rogers funds, and is in the best interests of the Rogers funds and their investors," said Walter T. Price, C.E.O. of Beeland Management Company, L.L.C., the operator of the two funds. 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). The Debtors filed their Chapter 11 Plan and Disclosure Statement on Sept. 14, 2006. RENT-A-CENTER: Increased Risk Cues Moody's to Downgrade Ratings --------------------------------------------------------------- Moody's Investors Service rated the proposed $600 million add-on to the secured term loan B of Rent-A-Center, Inc at Ba2, and downgraded the corporate family to Ba3, the existing bank loan ratings to Ba2, and the senior subordinated notes to B2. The ratings reflects both the overall probability of default of the company of Ba3, and a loss given default of LGD 3 for the secured term loan and LGD 5 for the senior subordinated notes. Proceeds from the new debt will be used to finance the purchase of Rent- Way, Inc. (corporate family rating of B3 under review for upgrade), a smaller operator of rent-to-own stores, including its rated senior subordinated notes. The downgrade of the ratings is prompted by the increase in financial and business risk that will occur as a result of the debt-financed acquisition. The rating outlook is stable. This rating action concludes the review that commenced on August 8, 2006. This rating is assigned: * $600 million proposed incremental secured term loan B at Ba2 (LGD 3, 39% LGD rate). These additional ratings are lowered: * $400 million secured revolving credit facility (LGD 3, 39% LGD rate) to Ba2 from Ba1; * $200 million secured term loan A (LGD 3, 39% LGD rate) to Ba2 from Ba1; * $125 million secured term loan B (LGD 3, 39% LGD rate) to Ba2 from Ba1; * $300 million 7.5% senior subordinated notes (2010) (LGD 5, 88% LGD rate) to B2 from Ba3; * Corporate family rating to Ba3 from Ba2; * Probability of default rating to Ba3 from Ba2. The ratings of Rent-Way, Inc. likely will be withdrawn upon closing of the transaction. Rent-A-Center's corporate family rating of Ba3 reflects the balance of certain key quantitative and qualitative rating drivers. Key credit metrics such as Debt to EBITDA, interest coverage, and free cash flow to debt have Ba or B characteristics, with the exception of retained cash flow to debt that has an investment grade score. Also contributing to the assigned ratings are the unproven success to date of initiatives designed to stimulate average unit volume growth and the challenges in expanding the personal loan business beyond the test stage. However, supporting the company's position are the leading position of Rent-A-Center in the consumer rent-to-own industry in terms of geography, store count, sales, and store count; the lower cyclicality and seasonality of rent-to-own stores compared to many other retailing segments; and the relatively high quality of the store base. Moody's anticipates that a portion of operating cash flow will be used for meaningful debt amortization going forward, in contrast to the company's historic practice of using virtually all operating cash flow for share repurchases, capital investment, and industry consolidation. The stable outlook anticipates that the company will steadily grow comparable store sales and cash flow (in spite of the potentially adverse impact of high motor fuel prices), that the Rent-Way expansion will achieve a portion of the anticipated post-merger operating efficiencies, and that the business line expansion into financial services will prove profitable. The outlook also considers Moody's expectation that discretionary cash flow will be targeted towards debt repayment rather than share repurchases or further acquisitions, as well as the assumption that the company will maintain solid liquidity through moderation of planned growth capital investment if operating results fall below plan. Operating pressures that prevent the company from growing revenue and margin, a financial policy action such as share repurchases, or a permanent decline in revolving credit facility availability could cause the ratings to be lowered. Specifically, ratings would to be lowered if operating performance falters such that debt to EBITDA is above 5 times one year following the transaction, EBIT to interest expense falls below 1.5 times, or free cash flow becomes negative. Ratings could eventually move upward if the company continues the historical pattern of consistent sales growth at new and existing stores; if possible acquisitions and returns to shareholders do not adversely impact credit metrics, and if financial flexibility strengthens such that EBIT coverage of interest expense continues to exceed 2 times, leverage falls toward 4.5 times, and Free Cash to Debt approaches 5% on a sustainable basis. Moody's has applied its new Probability-of-Default and Loss-Given- Default rating methodology to Rent-A-Center. Moody's current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology disaggregates these two key assessments in long-term ratings. The LGD rating methodology also enhances the consistency in Moody's notching practices across industries and improves the transparency and accuracy of our ratings as our research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha-numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% - 9%) to LGD6 (loss anticipated to be 90% - 100%). Rent-A-Center, Inc, with headquarters in Plano, Texas operates the largest chain of consumer rent-to-own stores in the U.S. with 2,749 company operated stores located in the U.S., Canada, and Puerto Rico. Rent-A-Center also franchises 295 rent-to-own stores that operate under the "ColorTyme" and "Rent-A-Center" banners. Revenue for the twelve months ending June 2006 was about $2.3 million. The company will add 784 stores and sales of more than $500 million with the pending Rent-Way acquisition. ROTEC INDUSTRIES: Court Moves Plan Filing Deadline to November 30 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended Rotec Industries Inc.'s exclusive periods to: a) file a chapter 11 plan of reorganization until Nov. 30, 2006; and b) solicit acceptance of that plan until Jan. 31, 2007. The Debtor told the Court that since it filed for bankruptcy, it has continued to manage its business while also attending to the requirements if the bankruptcy process, has responded to creditor issues and has made substantial progress with respect to the resolution of the Three Gorges Project Development Corporation's claim. The Debtor further told the Court that the extension will not prejudice the legitimate interests of any creditor, and will afford the parties the opportunity to achieve a successful confirmation of a plan. Headquartered in Elmhurst, Illinois, Rotec Industries, Inc. -- http://www.rotec-usa.com/-- provides concrete products and concrete placing technology & solutions. The company filed for chapter 11 protection on May 31, 2006 (Bankr. D. Del. Case No. 06- 10542). Edward J. Kosmowski, Esq., at Young, Conaway, Stargatt & Taylor, LLP, represents the Debtor in its restructuring efforts. Adam G. Landis, Esq., and Megan Nancy Harper, Esq., 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. ROTEC INDUSTRIES: Court OKs Pact Securing CIT Collateral Interest ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved the stipulation entered into by Rotec Industries Inc. and CIT Group/Equipment Financing Inc. granting CIT adequate protection with regards to the Debtor's use of the collateral securing repayment of its obligations to CIT. The Debtor and CIT are parties to a master security agreement, dated June 10, 1998, which terms have been ratified by a forbearance agreement dated Dec. 27, 2004. In the Forbearance Agreement, the Debtor reaffirmed the security interest it granted to CIT on Grove Model Year 1998, RT9100 Model Rough Terrain Crane, Serial No. 87494. The parties believe that CIT is entitled to adequate protection of its interests in the Collateral. Accordingly, the parties agree, among others, that: a) for the month of August 2006 and each month thereafter, the Debtor will pay CIT as adequate protection the amount of $7,500 and to keep the insurance in place on the collateral consistent with past practice; and b) in the event CIT does not timely receive an adequate protection payment, CIT will give five days written notice by facsimile of the nonpayment to the Debtor and to its counsels, and if the nonpayment is not timely cured within the five 5-day notice period, the Debtor agrees that CIT may seek expedited relief from the automatic stay on 10 days advance notice. Headquartered in Elmhurst, Illinois, Rotec Industries, Inc. -- http://www.rotec-usa.com/-- provides concrete products and concrete placing technology & solutions. The company filed for chapter 11 protection on May 31, 2006 (Bankr. D. Del. Case No. 06- 10542). Edward J. Kosmowski, Esq., at Young, Conaway, Stargatt & Taylor, LLP, represents the Debtor in its restructuring efforts. Adam G. Landis, Esq., and Megan Nancy Harper, Esq., 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. ROWE COMPANIES: Storehouse to Hold Bankruptcy Liquidation Sale -------------------------------------------------------------- Storehouse Inc., an affiliate of The Rowe Companies, will conduct a court-ordered bankruptcy liquidation sale beginning today, Friday, October 6. The sale was ordered by the U.S. Bankruptcy Court for the Eastern District of Virginia and announced by Hudson Capital Partners, LLC, which is managing the liquidation. Following the liquidation sale, which is expected to take several weeks, all of the Storehouse retail locations will be closed. "The Storehouse liquidation sale was ordered following exhaustive efforts to sell the chain or obtain fresh equity, which proved unsuccessful. The inventory to be liquidated has a value of approximately $60 million," noted Hudson Capital Partners co- founder Jim Schaye. The Storehouse merchandise to be liquidated will include furniture, accessories, wall decor, lighting, rugs and other designer items. The sale will involve all of the nearly 70 Storehouse locations in Alabama, Delaware, Florida, Georgia, Louisiana, Maryland, Michigan, New Jersey, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Washington, D.C. About Hudson Capital Hudson Capital Partners, LLC -- http://www.hudsoncpl.com/-- offers an extensive array of professional solutions to the challenges retailers face, including management of excess, obsolete and discontinued inventory, changing geographic and demographic circumstances, unproductive store sites, and real estate and liquidity issues. The firm's diversified staff is experienced at performing strategic store closings and relocations, fixed asset dispositions, wholesale inventory buyouts and lease mitigations. About Storehouse Inc. Storehouse -- http://www.storehouse.com/-- offers a sophisticated and eclectic blend of unique furnishings that offer all the elements of home decor. The specialty home furnishings retailer is known for its distinctive collection of upholstery, dining, bedroom and home office furniture with style ranging from contemporary to classic. About The Rowe Companies Headquartered in McLean, Virginia, The Rowe Companies -- http://www.therowecompanies.com/-- manufactures upholstered retail home and office furniture, interior decorations, tableware, lighting fixtures, and other interior design accessories. The Company owns 100% of stock of manufacturing and retail subsidiaries, Rowe Furniture -- http://www.rowefurniture.com/-- and Storehouse, Inc. -- http://www.storehousefurniture.com/ The Company and its two of its debtor-affiliates filed for chapter 11 protection on Sept. 18, 2006 (Bank. E.D. Va. Case Nos. 06-11142 to 06-11144). Dylan G. Trache, Esq., H. Jason Gold, Esq., and Valerie P. Morrison, Esq., at Wiley Rein & Fielding LLP, represent the Debtors. When the Debtors filed for protection from their creditors, The Rowe Companies listed total assets of $130,779,655 and total debts of $93,262,974; Rowe Furniture estimated assets between $50 million and $100 million and debts between $10 million and $50 million; and Storehouse, Inc. estimated assets and debts between $10 million and $50 million. The Debtors' exclusive period to file a chapter 11 plan expires on Jan. 16, 2006. RURALMETRO CORP: Appoints Kristine Beian Ponczak as CFO ------------------------------------------------------- Rural/Metro Corporation appointed Kristine Beian Ponczak as senior vice president, chief financial officer and corporate secretary. Mrs. Ponczak brings more than 17 years of experience in all phases of financial management, including treasury, accounting, strategic planning and financial analysis. Prior to her promotion, Mrs. Ponczak, served as vice president and Treasurer of the Company, managing the its working capital strategies, financial planning and budgeting, operational performance measurement, financial risk management, corporate banking, investments, and taxation strategies. In her new role, Mrs.Ponczak's oversight will be expanded to include overall responsibility for driving financial direction, optimizing the organization's capital structure, investor relations, implementation of information technology solutions, and coordination of financial strategies to deliver results. She will report directly to the President and Chief Executive Officer. Mrs. Ponczak succeeds Michael S. Zarriello, who is no longer with the company. Prior to joining the Company in 1998, Mrs. Ponczak served as Corporate Controller for Sun Street Foods from 1995 to 1998 where she was responsible for managing the financial reporting and banking relationships of that privately held company, which represented a management buyout of certain subsidiaries of Main Street & Main Inc. From 1993 to 1995, she worked at Main Street & Main Inc. as Controller over two subsidiaries. Prior to that, Mrs. Ponczak was a member of the managing consulting/business valuation group at the public accounting firm Coopers & Lybrand, where she focused on corporate valuations, litigation support, and acquisition structures. Mrs. Ponczak is a graduate of Arizona State University with a Bachelor of Science degree in accountancy and is a Certified Public Accountant. Headquartered in Scottsdale, Arizona, Rural/Metro Corporation -- http://www.ruralmetro.com/-- provides emergency and non- emergency medical transportation, fire protection, and other safety services in 23 states and approximately 350 communities throughout the United States. * * * Rural/Metro's balance sheet at June 30, 2006 showed total assets of $299 million and total liabilities of $392 million resulting in a total stockholders' deficit of $93 million. SATELITES MEXICANOS: Can Continue Existing Insurance Programs ------------------------------------------------------------- The Honorable Robert D. Drain, U.S. Bankruptcy Judge for the Southern District of New York, granted authority to Satelites Mexicanos, S.A. de C.V., to take steps necessary to maintain and continue its existing insurance programs consistent with practices prior to its filing for chapter 11 protection and in the ordinary course of business. The authority includes paying its obligations prior to its filing for chapter 11 protection, in respect of the Insurance Programs. The Debtor is also authorized to obtain new Insurance Programs as needed in the ordinary course of its business, consistent with practices prior to its filing for chapter 11 protection. Judge Drain clarifies that the Order does not constitute assumption of any executory contract under Section 365 of the Bankruptcy Code. As reported in the Troubled Company Reporter on Aug. 30, 2006 the Debtor sought from the Court authority to: (1) maintain and continue its current Insurance Programs and Insurance Policies on an uninterrupted basis, consistent with prepetition practices; and (2) pay when due and in the ordinary course all premiums, administrative fees and other obligations, including any prepetition obligations. The Debtor maintains various insurance policies and related programs through several third-party carriers. The Insurance Programs include coverage for claims relating to, among other things, in-orbit damage for its satellites, multimedia liability, general liability, directors and officers' liability, automotive liability, legal liability and property. Satelites Mexicanos, S.A. de C.V., provides fixed satellite services in Mexico. Satmex provides transponder capacity via its satellites to customers for distribution of network and cable television programming, direct-to-home television service, on-site transmission of live news reports, sporting events and other video feeds. Satmex also provides satellite transmission capacity to telecommunications service providers for public telephone networks in Mexico and elsewhere and to corporate customers for their private business networks with data, voice and video applications. Satmex also provides the government of the United Mexican States with approximately 7% of its satellite capacity for national security and public purposes without charge, under the terms of the Orbital Concessions. The Debtor filed for chapter 11 petition on August 11, 2006 (Bankr. S.D.N.Y. Case No. 06-11868). Luc A. Despins, Esq., at Milbank, Tweed Hadley & McCloy LLP represents the Debtor in the U.S. Bankruptcy proceedings. Attorneys from Galicia y Robles, S.C., and Quijano Cortina Lopez y de la Torre give legal advice in the Debtor's Mexican Bankrutpcy proceedings. UBS Securities LLC and Valor Consultores, S.A. de C.V., give financial advice to the Debtor. Steven Scheinman, Esq., Michael S. Stamer, Esq., and Shuba Satyaprasad, Esq., at Akin Gump Strauss Hauer & Feld LLP give legal advice to the Ad Hoc Existing Bondholders' Committee. Dennis Jenkins, Esq., and George W. Shuster, Jr., Esq., at Wilmer Cutler Pickering Hale and Dorr LLP give legal advice to Ad Hoc Senior Secured Noteholders' Committee. As of July 24, 2006, the Debtor has $905,953,928 in total assets and $743,473,721 in total liabilities. On May 25, 2005, certain holders of Satmex's Existing Bonds and Senior Secured Notes filed an involuntary chapter 11 petition against the Company (Bankr. S.D.N.Y. Case No. 05-13862). On June 29, 2005, Satmex filed a voluntary petition for a Mexican reorganization, known as a Concurso Mercantil, which was assigned to the Second Federal District Court for Civil Matters for the Federal District in Mexico City. On August 4, 2005, Satmex filed a petition, pursuant to Section 304 of the Bankruptcy Code to commence a case ancillary to the Concurso Proceeding and a motion for injunctive relief seeking, among other things, to enjoin actions against Satmex or its assets (Bankr. S.D.N.Y. Case No. 05-16103). (Satmex Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SATELITES MEXICANOS: Milbank Tweed Holds $580,932 Retainer ---------------------------------------------------------- Matthew S. Barr, Esq., a member of Milbank, Tweed, Hadley & McCloy, LLP, in New York, informed the U.S. Bankruptcy Court for the Southern District of New York that his firm held a $580,932 retainer as of the Debtor's filing for chapter 11 protection and not $454,250 as previously disclosed. Mr. Barr explained that due to an inadvertent miscalculation its prior disclosure was inaccurate. The Retainer remains unapplied, Mr. Barr adds. As reported in the Troubled Company Reporter on Sept. 19, 2006 Mr. Barr tells the Court that on June 26, 2003, the Debtor provided his firm with a $200,000 retainer. Over time, the Debtor provided Milbank with additional payments to increase the Retainer and, as of the Debtor's filing for chapter 11 protection, Milbank held $454,250. Satelites Mexicanos, S.A. de C.V., provides fixed satellite services in Mexico. Satmex provides transponder capacity via its satellites to customers for distribution of network and cable television programming, direct-to-home television service, on-site transmission of live news reports, sporting events and other video feeds. Satmex also provides satellite transmission capacity to telecommunications service providers for public telephone networks in Mexico and elsewhere and to corporate customers for their private business networks with data, voice and video applications. Satmex also provides the government of the United Mexican States with approximately 7% of its satellite capacity for national security and public purposes without charge, under the terms of the Orbital Concessions. The Debtor filed for chapter 11 petition on August 11, 2006 (Bankr. S.D.N.Y. Case No. 06-11868). Luc A. Despins, Esq., at Milbank, Tweed Hadley & McCloy LLP represents the Debtor in the U.S. Bankruptcy proceedings. Attorneys from Galicia y Robles, S.C., and Quijano Cortina Lopez y de la Torre give legal advice in the Debtor's Mexican Bankrutpcy proceedings. UBS Securities LLC and Valor Consultores, S.A. de C.V., give financial advice to the Debtor. Steven Scheinman, Esq., Michael S. Stamer, Esq., and Shuba Satyaprasad, Esq., at Akin Gump Strauss Hauer & Feld LLP give legal advice to the Ad Hoc Existing Bondholders' Committee. Dennis Jenkins, Esq., and George W. Shuster, Jr., Esq., at Wilmer Cutler Pickering Hale and Dorr LLP give legal advice to Ad Hoc Senior Secured Noteholders' Committee. As of July 24, 2006, the Debtor has $905,953,928 in total assets and $743,473,721 in total liabilities. On May 25, 2005, certain holders of Satmex's Existing Bonds and Senior Secured Notes filed an involuntary chapter 11 petition against the Company (Bankr. S.D.N.Y. Case No. 05-13862). On June 29, 2005, Satmex filed a voluntary petition for a Mexican reorganization, known as a Concurso Mercantil, which was assigned to the Second Federal District Court for Civil Matters for the Federal District in Mexico City. On August 4, 2005, Satmex filed a petition, pursuant to Section 304 of the Bankruptcy Code to commence a case ancillary to the Concurso Proceeding and a motion for injunctive relief seeking, among other things, to enjoin actions against Satmex or its assets (Bankr. S.D.N.Y. Case No. 05-16103). (Satmex Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SATELITES MEXICANOS: Taps Togut Segal as Conflicts Counsel ---------------------------------------------------------- Satelites Mexicanos, S.A. de C.V., seeks permission from the U.S. Bankruptcy Court for the Southern District of New York to employ Togut, Segal & Segal LLP as its conflicts counsel, nunc pro tunc to Aug. 28, 2006. The Court previously authorized the retention of Milbank, Tweed, Hadley & McCloy LLP to serve as primary bankruptcy counsel to the Debtor on a final basis. In view of a potential or actual conflict of interest, however, the Debtor seeks to retain Togut Segal to handle discrete matters, which cannot be appropriately handled by Milbank Tweed. The Debtor has selected Togut Segal because of the firm's knowledge in the fields of debtor's protections, creditors' rights, and business reorganizations under the Bankruptcy Code. In addition, Togut Segal possesses extensive expertise, experience and knowledge practicing before the bankruptcy courts. Togut Segal has served as Chapter 11 counsel for Daewoo International (America) Corp., an international trading company and wholly owned subsidiary of Daewoo International Corporation, a Korean conglomerate that underwent what is believed to be one of the largest non-sovereign global debt restructurings in history. Togut Segal also served as Chapter 11 counsel for SK Global America, Inc., the U.S.-based trading arm for the SK Global conglomerate based out of Korea. As with Daewoo America, a Chapter 11 plan was successfully confirmed and consummated in the SK Global America bankruptcy case. Togut Segal also has extensive experience in transnational cases, including: (i) Sammi Atlas, involving restructuring proceedings in Korea for a large Korean steel manufacturer that led to winding-up proceedings in Canada and, ultimately, to a bankruptcy case in the United States where the firm represented the Canadian Foreign Representative in commencing a Chapter 11 case in the Southern District of New York; (ii) the Olympia & York Tower B Company's World Financial Center, which involved the restructuring of more than $1 billion of debt growing out of an international restructuring effort; and (iii) Axona International, where Albert Togut, Esq., a senior member of Togut Segal, was the Trustee. The Debtor believes that Togut Segal's retention will avoid unnecessary litigation and reduce the overall expenses of administering the bankruptcy case. The Debtor understands that the members, counsel and associates of Togut Segal who will be employed in the case are members in good standing of the Bar of the State of New York and the United States District Court for the Southern District of New York. At times when Milbank Tweed cannot represent the Debtors, Togut Segal will: (a) advise the Debtor regarding its powers and duties as debtor-in-possession in the continued management and operation of its businesses and properties; (b) attend meetings and negotiate with representatives of creditors and other parties-in-interest; (c) take all necessary actions to protect and preserve the Debtor's estate, including prosecuting actions on the Debtor's behalf, defending any action commenced against the Debtor, and representing the Debtor's interests in negotiations concerning litigation in which the Debtor is involved, including, but not limited to, objections to claims filed against the estate; (d) prepare on the Debtor's behalf motions, applications, answers, orders, reports, and papers necessary to the administration of the estate; (e) advise the Debtor in connection with any potential sale of assets; (f) appear before the Court and any appellate courts, and protect the interests of the Debtor's estate before these courts; and (g) perform other necessary legal services and provide other necessary legal advice to the Debtor in connection with the case. Togut Segal will be paid its customary hourly rates: Professional Hourly Rates ------------ ------------ Members & Counsels $560 to $795 Associates & Paraprofessionals $115 to $540 The firm will also be reimbursed according to its customary reimbursement policies. Albert Togut, Esq., at Togut, Segal & Segal, LLP, assures the Court that his firm has not represented and will not represent any party other than the Debtor in the case or in connection with any matters that would be adverse to the Debtor's interest. Togut Segal is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code, Mr. Togut asserts. Satelites Mexicanos, S.A. de C.V., provides fixed satellite services in Mexico. Satmex provides transponder capacity via its satellites to customers for distribution of network and cable television programming, direct-to-home television service, on-site transmission of live news reports, sporting events and other video feeds. Satmex also provides satellite transmission capacity to telecommunications service providers for public telephone networks in Mexico and elsewhere and to corporate customers for their private business networks with data, voice and video applications. Satmex also provides the government of the United Mexican States with approximately 7% of its satellite capacity for national security and public purposes without charge, under the terms of the Orbital Concessions. The Debtor filed for chapter 11 petition on August 11, 2006 (Bankr. S.D.N.Y. Case No. 06-11868). Luc A. Despins, Esq., at Milbank, Tweed Hadley & McCloy LLP represents the Debtor in the U.S. Bankruptcy proceedings. Attorneys from Galicia y Robles, S.C., and Quijano Cortina Lopez y de la Torre give legal advice in the Debtor's Mexican Bankrutpcy proceedings. UBS Securities LLC and Valor Consultores, S.A. de C.V., give financial advice to the Debtor. Steven Scheinman, Esq., Michael S. Stamer, Esq., and Shuba Satyaprasad, Esq., at Akin Gump Strauss Hauer & Feld LLP give legal advice to the Ad Hoc Existing Bondholders' Committee. Dennis Jenkins, Esq., and George W. Shuster, Jr., Esq., at Wilmer Cutler Pickering Hale and Dorr LLP give legal advice to Ad Hoc Senior Secured Noteholders' Committee. As of July 24, 2006, the Debtor has $905,953,928 in total assets and $743,473,721 in total liabilities. On May 25, 2005, certain holders of Satmex's Existing Bonds and Senior Secured Notes filed an involuntary chapter 11 petition against the Company (Bankr. S.D.N.Y. Case No. 05-13862). On June 29, 2005, Satmex filed a voluntary petition for a Mexican reorganization, known as a Concurso Mercantil, which was assigned to the Second Federal District Court for Civil Matters for the Federal District in Mexico City. On August 4, 2005, Satmex filed a petition, pursuant to Section 304 of the Bankruptcy Code to commence a case ancillary to the Concurso Proceeding and a motion for injunctive relief seeking, among other things, to enjoin actions against Satmex or its assets (Bankr. S.D.N.Y. Case No. 05-16103). (Satmex Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SEACOR HOLDINGS: Moody's Assigns Loss-Given-Default Ratings ----------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the oilfield service and refining and marketing sectors last week, the rating agency confirmed its Ba1 Corporate Family Rating for SEACOR Holdings Inc. Moody's also revised its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations of SEACOR: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- 7.2% Sr. Unsec. Notes Due 2009 Ba1 Ba1 LGD4 57% 5.875% Sr. Unsec. Notes Due 2012 Ba1 Ba1 LGD4 57% Multiple Seniority Shelf (Senior Unsecured) (P)Ba1 (P)Ba1 LGD4 57% Multiple Seniority Shelf (Subordinate) (P)Ba2 (P)Ba2 LGD6 97% Multiple Seniority Shelf (Preferred) (P)Ba3 (P)Ba2 LGD6 97% In addition, Moody's held its Ba1 rating on Seabulk International Inc.'s 9.5% Senior Unsecured Guaranteed Global Notes Due 2013, and assigned those debentures an LGD4 rating suggesting noteholders will experience a 57% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Fort Lauderdale, Florida, Seacor Holdings Inc. http://www.seacorholdings.com/-- engages in the ownership, operation, investing, marketing, and remarketing of equipment, primarily in the offshore oil and gas, and marine transportation industries worldwide. Based in Fort Lauderdale, Florida, Seabulk International Inc. -- http://www.seabulkinternational.com/-- provides marine support and transportation services, primarily to the energy and chemical industries. In June 2006, Seabulk's and SEACOR's stockholders approved Seabulk's merger deal with a SEACOR subsidiary. SECUNDA INT'L: Extends $125 Million Tender Offer Until Oct. 12 -------------------------------------------------------------- Secunda International Limited disclosed that the expiration time of its tender offer and consent solicitation for any and all of its $125 million Senior Secured Floating Rate Notes due 2012 has been extended to 5:00 p.m., New York City time, on Oct. 12, 2006. The previous expiration time for the Tender Offer was Oct. 3, 2006, at 5:00 p.m., New York City time. The Settlement Date for the Tender Offer is expected to be the business day following the Expiration Time. The Company is extending the Tender Offer to accommodate the schedule for the Company's financing relative to the offer. As reported in the Troubled Company Reporter on Aug. 30, 2006, the Company disclosed tenders and consents had been received, as of Aug. 25, 2006, from holders of $125 million in aggregate principal amount of the Notes, representing 100% of the outstanding Notes. Based in Nova Scotia, Canada, Secunda International Limited -- http://www.secunda.com/-- provides supply and support services to the offshore oil and gas industry internationally. The Company currently owns and operates a fleet of 14 harsh weather, multifunctional marine vessels that provide supply, support and safety services to offshore exploration, development, production and subsea construction projects. The Company primarily serves the North Sea, West Africa and the Gulf of Mexico and have a leading position in the east coast of Canada. SECUNDA INT'L: Moody's Assigns Loss-Given-Default Rating -------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the oilfield service and refining and marketing sectors last week, the rating agency held its B2 Corporate Family Rating for Secunda International Limited, as well as its B2 rating on the company's Senior Secured Guaranteed Floating Rate Global Notes Due 2012. Moody's assigned those debentures an LGD3 rating suggesting noteholders will experience a 48% loss in the event of default. Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Dartmouth, Nova Scotia, Canada, Secunda International Limited provides supplies and services for oil and gas facilities off the east coast of Canada, the north and west coasts of Africa, and in the North Sea and Gulf of Mexico. SEITEL INC: Moody's Assigns Loss-Given-Default Rating ----------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the oilfield service and refining and marketing sectors last week, the rating agency held its B2 Corporate Family Rating for Seitel Inc. as well as its B3 rating on the company's 11.75% Senior Unsecured Guaranteed Global Notes Due 2011. Moody's assigned those debentures an LGD4 rating with a projected loss- given default of 59%. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Houston, Tex.-based Seitel Inc. -- http://www.seitel-inc.com/-- provides seismic data and related geophysical services to the oil and gas industry in North America. Its products and services are used by oil and gas companies to assist in the exploration, development, and management of oil and gas reserves. SERACARE LIFE: Equity Panel Fails to Delay Financing Hearing ------------------------------------------------------------ The Honorable Louise DeCarl Adler of the U.S. Bankruptcy Court for the Southern District of California denied the motion of SeraCare Life Sciences, Inc.'s, ad hoc equity holders panel to delay auctions and hearings under the Debtor's proposed secured exit financing. The equity panel had argued that the Debtor failed to file a final documentation regarding the alleged "stalking horse" bid for the financing. As reported in the Troubled Company Reporter on Aug. 24, 2006, the Debtor entered into a letter of intent and term sheet with a syndicate of investors consisting of funds managed by: * Cohanzick Management, LLC; * Robeco Investment Management; * Fairfield Greenwich Group; * Foxhill Capital Partners LLC; * Gruber & McBain Capital Management; * Seven Bridges Management, L.P.; and * Triage Capital Management LP The LOI contemplates that the Investor Group would fund a secured loan to the Company in the aggregate principal amount of up to $25 million. The LOI also proposes to pay the lenders, collectively known as the Allegiant Investors, a $1.25 million breakup fee payable if Debtor accepts a proposal superior to that contemplated by the LOI. A full-text copy of the Letter of Intent is available for free at http://ResearchArchives.com/t/s?1039 On Sept. 12, 2006, Judge Adler designated the Allegiant Investors as a stalking horse bidder and approved the LOI subject to these modifications: -- the proposed break up fee is withdrawn subject to a reservation of rights; and -- the proposed post petition financing will be on an unsecured basis with administrative priority pursuant to Bankruptcy Code Section 364(b). With Judge Adler's denial of the equity panel's motion, the auction with respect to the qualified bids for the Debtor's exit financing will proceed at 1:00 p.m., on Oct. 16, 2006, at the offices of Winthrop Couchot PC, located at 660 Newport Center Drive, Fourth Floor in Newport Beach, California. Competing bids must be received by Winthrop Couchot by 1:00 p.m., today, Oct. 6, 2006. Based in Oceanside, California, SeraCare Life Sciences, Inc. -- http://www.seracare.com/-- develops and manufactures biological based materials and services for diagnostic tests, commercial bioproduction of therapeutic drugs, and medical research. The Company filed for chapter 11 protection on March 22, 2006 (Bankr. S.D. Calif. Case No. 06-00510). Garrick A. Hollander, Esq., Paul J. Couchot, Esq., and Peter W. Lianides, Esq., represent the Debtor. The Official Committee of Unsecured Creditors selected Henry C. Kevane, Esq., and Maxim B. Litvak, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, as its counsel. When the Debtor filed for protection from its creditors, it listed $119.2 million in assets and $33.5 million in debts. SESI LLC: Moody's Assigns Loss-Given-Default Rating --------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the oilfield service and refining and marketing sectors last week, the rating agency affirmed its Ba3 Corporate Family Rating for SESI, L.L.C., and revised its rating on the company's 6.875% Senior Unsecured Guaranteed Global Notes Due 2014. The debentures were assigned an LGD4 rating suggesting noteholders will experience a 63% loss in the event of default. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). SESI, L.L.C., a wholly owned subsidiary of Superior Energy Services, Inc. -- http://www.superiorenergy.com-- provides oilfield services and equipment focusing on serving the drilling and production-related needs of oil and gas companies primarily in the United States. SHAW GROUP: Westinghouse Acquisition Cues S&P's Negative Watch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB' corporate credit rating and other ratings for The Shaw Group Inc. on CreditWatch with negative implications. "The CreditWatch placement followed followed the company's announced agreement to take a 20% ownership interest in the $5.40 billion acquisition, led by Toshiba Corp. (BBB/Watch Neg/A-2), of Westinghouse Electrical Company Co. from British Nuclear Fuels Ltd.," said Standard & Poor's credit analyst Dan Picciotto. Shaw's $1.08 billion purchase will be funded with proceeds from a limited-recourse yen-denominated bond. As part of the transaction, Shaw will execute an agreement for certain exclusive and other commercial opportunities. Standard & Poor's will meet with Shaw management to discuss the specifics of the acquisition and the company's business and financial strategies. "We could modestly downgrade the company if it appears likely or reasonably possible that Shaw will maintain a sizable equity interest beyond the life of the bonds, at which time the company may be required to refinance or repay the bonds, resulting in a financial profile inconsistent with the current ratings," Mr. Picciotto said. SILICON GRAPHICS: Wants LG Electronics' Claim Estimated at $0 ------------------------------------------------------------- Silicon Graphics, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to estimate the value of Claim No. 623 filed by LG Electronics, Inc., for purposes of allowance and distribution under the Plan of Reorganization at $0 or, in the alternative, cap the LGE Claim at an amount to be determined after hearing. Adam P. Strochak, Esq., at Weil, Gotshal & Manges LLP, in New York, recounts that the Debtors corresponded and met with LGE representatives between 2000 and 2004, during which time LGE provided nonspecific "claim charts." Mr. Strochak notes that although the claim charts purport to explain how the Debtors' products infringe each of the asserted LGE patents, a closer inspection reveals that none of the claim charts are tied to actual, specific components found in the Debtors' products. Rather, they simply restate the claim elements as broad conclusions without any reference to evidentiary support, Mr. Strochak asserts. The Debtors attempted to resolve the dispute by negotiating for the purchase of a license for the LGE patents. However, LGE failed to offer a license on terms acceptable to the Debtors and the negotiations ceased. LGE pursued litigation against other computer manufacturers in a series of lawsuits pending in the United States District Court for the Northern District of California, losing the cases on summary judgment and then appealing to the United States Court of Appeals for the Federal Circuit. The Federal Circuit found triable issues of fact that precluded summary judgment and sent the cases back to the District Court for further proceedings. In August 2006, LGE sought relief from the automatic stay to commence a lawsuit against the Debtors in an unspecified district court. LGE also filed Claim No. 623 against the Debtors asserting an unsecured, non-priority, contingent, and unliquidated claim of at least $75,000,000 alleging infringement of LGE's patents. LGE simultaneously filed identical proofs of claim against each of the Debtors. The Debtors objected to the LGE Claim. By stipulation dated September 8, 2006, LGE withdrew its lift stay request and all of the duplicate proofs of claim. Mr. Strochak points out that adjudication of the LGE Claim to final judgment will require months or even years of litigation and would unduly delay distributions under the Plan. Pursuant to the Plan, each holder of allowed general unsecured claim against Silicon Graphics Class 6 will receive its pro rata share of $9,000,000, with distributions commencing 45 days after service of notice of entry of the order confirming the Plan. According to Mr. Strochak, the LGE Claim should be estimated at $0 because LGE makes no credible factual allegation and provides no supporting detail that any of the Debtors' products infringes on any LGE Patent. It can be presumed that LGE has nothing more to offer than the infringement "analysis" it previously provided the Debtors during licensing negotiations, adds Mr. Strochak. Mr. Strochak further notes that the Debtors will demonstrate at the estimation hearing that an appropriate royalty is one commensurate with the contribution the LGE Patents make to the overall Debtors' product, if any, and that the maximum royalty LGE could ever achieve on the LGE Claim is but a tiny fraction of the more than $75,000,000 claimed. The Official Committee of Unsecured Creditors supports the Debtors' request. 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. Judge Lifland confirms the Debtors' Plan of Reorganization on Sept. 19, 2006. 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. 20; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SILICON GRAPHICS: Wants to Assume Solectron Contract ---------------------------------------------------- Silicon Graphics, Inc., and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's authority to assume a Contract with Solectron Corporation. The Debtors and Solectron are parties to a contract manufacturing long-term business agreement originally dated as of May 2, 1999. Pursuant to the Contract, Solectron provides manufacturing services to the Debtors and the Debtors provide materials to Solectron to be utilized in connection with the manufacturing. A full-text copy of the Assumption Termsheet is available for free at http://researcharchives.com/t/s?12fc According to Gary T. Holtzer, Esq., at Weil, Gotshal, & Manges LLP, in New York, Solectron is currently the Debtors' only supplier of printed circuit board assemblies -- PCBAs -- used in their computer systems. The Debtors purchase around $10,000,000 to $15,000,000 of PCBAs from Solectron every quarter. After the Petition Date, various disputes arose between the parties regarding Solectron's continued performance under the Contract; scope of work contemplated by the Contract; payment terms; and procurement of materials under the Contract. In May 2006, the Debtors sought, among other things, Solectron's continued performance under the Contract. The parties reached an agreement with respect to their performance under the Contract prior to the hearing on the Debtors' request. The parties have, since then, negotiated on several occasions to facilitate a healthier relationship. Hence, after extensive arm's-length negotiations, the Debtors and Solectron entered into the Assumption Termsheet, which among other things: (i) resolves the disputes between them; (ii) provides for Solectron's continued performance under the Contract; (iii) provides for the Contract's modification and assumption pursuant to Section 365 of the Bankruptcy Code; (iv) provides for the cure of defaults under the Contract for $9,260,243 and fixes Solectron's prepetition, general unsecured claims at $3,014,987; and (v) releases all other claims between the parties relating to the Contract through the effective date of the Debtors' Plan of Reorganization. Mr. Holtzer tells the Court that without assurance that Solectron will continue to deliver PCBAs through and after emergence from Chapter 11, the Debtors' timely delivery of finished products to customers and their ability to launch new products -- a key part of the Debtors' reorganization strategy -- could be jeopardized. The payment terms pursuant to the Assumption Termsheet will preserve the Debtors' resources and improve their reorganization prospects, Mr. Holtzer notes. Mr. Holtzer assures the Court that the Debtors have satisfied Section 365 (b) of the Bankruptcy Code as there are no defaults under the Contract that cannot be cured by the payment of cure amounts. In addition, Solectron has agreed that no adequate assurance of future performance is required in connection with the assumption of the Contract. 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. Judge Lifland confirms the Debtors' Plan of Reorganization on Sept. 19, 2006. 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. 20; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SPEAKING ROSES: June 30 Stockholders' Deficit Widens to $3.8 Mil. ----------------------------------------------------------------- At June 30, 2006, Speaking Roses International, Inc.'s balance sheet reported a $3,830,034 total stockholders' deficit resulting from total assets of $1,283,764 and total liabilities of $5,113,798. The company's stockholders' deficit at Dec. 31, 2005 stood at $1,827,980. The company's balance sheet at June 30, 2006, also reported negative working capital with $447,244 in total current assets and $4,610,398 in total current liabilities. For the three months ended June 30, 2006, the company's net loss increased to $2,084,650 from a net loss of $1,384,144 for the three months ended June 30, 2005. Net sales for the current quarter also increased to $407,942 from a $367,791 net sales for the same period last year. Full-text copies of the company's financial statements for the quarter ended June 30, 2006, are available for free at http://researcharchives.com/t/s?12fd Salt Lake City, UT-based Speaking Roses International, Inc. (OTCBB: SRII) -- http://www.speakingroses.com/-- engages in marketing, distribution, retailing, and franchising floral and ancillary products, primarily roses. The company also sells embossed flowers and bouquets through its patented embossing technology. SPECIALTYCHEM PRODUCTS: Wants to Assume & Assign Lease Agreements ----------------------------------------------------------------- SpecialtyChem Products Corporation and ChemDesign Corporation ask the U.S. Bankruptcy Court for the Eastern District of Wisconsin for permission to assume and assign 13 nonresidential lease agreements. Christopher Stroebel, Esq., at Godfrey & Kahn, S.C., tells the Court that the assumption request is made in conjunction with the going-concern sale of the Debtors' operations in Marinette, Wisconsin. Mr. Stroebel relates that in the Debtors' business judgment, the assumption and assignment of the Agreements is in the best interest of their estates and their creditors. The nonresidential real property lease with Ansul, Inc., is essential to the Debtors' value as a going concern. Without its leasehold, the Debtors cannot continue production. The toll manufacturing agreements accounts for a substantial part of the Debtors' business and are critical to the Debtors' business operations. In addition, the toll contracts are with customers and the Debtors therefore has no payment owed to cure. The railcar tanker leases are necessary for the shipment of products and waste; the cost of rejecting these arrangements, in terms of transaction cost of curing the defaults under these contracts. A full-text copy of the Agreements to be Assumed and Assigned is available for free at http://ResearchArchives.com/t/s?12e0 About ChemDesign Corporation Headquartered in Fitchburg, Massachusetts, ChemDesign Corporation -- http://www.chemdesigncorp.com/-- is a custom manufacturer of various fine organic chemicals for paper products, electronics, agricultural products and other materials. The Debtor filed for chapter 11 protection on Aug. 27, 2006 (Bankr. E.D. Wis. Case No. 06-24729. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. About SpecialtyChem Products 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. STEWART & STEVENSON: Moody's Assigns Loss-Given-Default Rating -------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the oilfield service and refining and marketing sectors last week, the rating agency affirmed its B2 Corporate Family Rating for Stewart & Stevenson LLC. Moody's also affirmed its B3 rating on the company's 10% Senior Unsecured Global Notes Due 2014, and assigned those debentures an LGD5 rating suggesting a projected loss-given default of 74%. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Houston, Texas, Stewart & Stevenson LLC -- http://www.ssss.com/-- provides capital and rental equipment and aftermarket parts and services that supports the specific requirements of global clients within the oil and gas industry. SURETY CAPITAL: Posts $167,000 Net Loss in Second Quarter of 2006 ----------------------------------------------------------------- Surety Capital Corp. filed its financial statements for the second quarter ended June 30, 2006, with the Securities and Exchange Commission on Sept. 25, 2006. For the three months ended June 30, 2006, the Company reported a $167,000 net loss compared with a $480,000 net loss for the three months ended June 30, 2005. There was no loan loss provision for the three months ended June 30, 2006, as contrasted with a provision for loan losses of $75,000 for the corresponding period in 2005. The three months ended June 30, 2006, included a gain on the sale of other real estate owned of $17,000 versus a $123,000 gain for the 2005 period. The three months ended June 30, 2006, included a gain of $323,000 from the sale of the Insurance Premium Finance (IPF) division as contrasted with no comparable transactions in 2005. Non-interest expense declined $297,000 from 2005 to 2006 as a result of a $135,000 decrease in salaries and employee benefits, a $64,000 decrease in professional fees, a $31,000 decrease in insurance expense, and a general decrease in other expenses resulting from the sale of the Whitesboro branch and the IPF Division. At June 30, 2006, the Company's balance sheet showed $32,252,000 in total assets, $30,586,000 in total liabilities, and $1,666,000 in total shareholders' equity. Full-text copies of the Company's second quarter financials are available for free at http://ResearchArchives.com/t/s?12ec Going Concern Doubt In the Company's latest Form 10KSB filed with the SEC for the year ended Dec. 31, 2002, Weaver and Tidwell, L.L.P., in Fort Worth, Texas, raised substantial doubt about the Company's ability to continue as a going concern. The auditor cited that the Company is operating under both a Determination Letter with the Texas Department of Banking and a Written Agreement with the Board of Governors of the Federal Reserve Bank of Dallas, and, prior to Sept. 1, 2005, operated under a Consent Order with the Office of the Comptroller of the Currency. The appropriateness of using the going concern basis is dependent upon the Company's ability to improve profitability through increasing marketing efforts, introducing new deposit products, emphasizing loan growth and reducing non-interest expense. In addition, the Company must meet the requirements of the Determination Letter and the Written Agreement. About Surety Capital Corp. Surety Capital Corporation is the holding company of its wholly- owned subsidiary, Surety Bank. The Bank has full service offices in Converse, Fort Worth, New Braunfels, San Antonio, Schertz, Universal City, and Whitesboro, Texas. TENET HEALTHCARE: S&P Rates $800 Million Credit Facility at BB- --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its loan and recovery ratings to Tenet Healthcare Corp.'s $800 million senior secured revolving credit facility due 2011. The revolver is rated 'BB-' (two notches higher than the 'B' corporate credit rating on Tenet) with a recovery rating of '1', indicating the expectation for full recovery of principal in the event of a payment default. The corporate credit rating on Tenet is B/Stable/B-3. The 'B' rating reflects the company's weak operating performance, cash flow, and financial profile over the past several years. These factors override the still reasonably large size and scale of the company's hospital facility base, which is much smaller than it was several years ago due to significant downsizing efforts. Ratings List: Tenet Healthcare Corp.: * Corporate credit rating: B/Stable/B-3 New Ratings: Tenet Healthcare Corp. * $800 mil. secured revolver: BB- (Recovery Rating: 1) TESORO CORPORATION: Moody's Assigns Loss-Given-Default Ratings -------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the oilfield service and refining and marketing sectors last week, the rating agency confirmed its Ba1 Corporate Family Rating for Tesoro Corporation. Moody's also revised or held its probability-of-default ratings and assigned loss-given-default ratings on these debentures: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Sr. Sec. Gtd. Revolving Credit Facility 2008 Baa3 Baa1 LGD2 10% 6.25% Sr. Unsec. Gtd. Global Notes Due 2012 Ba1 Ba1 LGD4 57% 6.625% Sr. Unsec. Gtd. Global Notes Due 2015 Ba1 Ba1 LGD4 57% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in San Antonio, Texas, Tesoro Corporation http://www.tesoropetroleum.com/-- and its subsidiaries engage in refining and marketing petroleum products in the United States. THOMPSON & WALTERS: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Thompson & Walters Nursery LLC 29525 Northwest Chalmers Lane Cornelius, OR 97113 Tel: (503) 357-4666 Bankruptcy Case No.: 06-33096 Type of Business: The Debtor wholesales & retails nursery stock. Chapter 11 Petition Date: October 5, 2006 Court: District of Oregon (Portland) Judge: Elizabeth L. Perris Debtor's Counsel: Jeanette L. Thomas, Esq. Perkins Cole LLP 1120 Northwest Couch Street, 10th Floor Portland, OR 97209-4128 Tel: (503) 727-2000 Fax: (503) 727-2222 Total Assets: $24,538,461 Total Debts: $27,187,244 The Debtor did not file a list of its 20 largest unsecured creditors. TITAN FINANCIAL: U.S. Trustee Adds Two Creditors to Official Panel ------------------------------------------------------------------ The U.S. Trustee for Region 21 added two creditors to the Official Committee of Unsecured Creditors in Titan Financial Group II, LLC, and its debtor-affiliates chapter 11 cases: The Committee is now composed of: 1. Brad Bylenga 9 Longview Terrace Greenville, SC 29605 Tel: (864) 423-0586 Fax: (864) 672-2787 2. Life of the South Corporation 100 West Bay Street Jacksonville, FL 32202 Attn.: W. Dale Bullard, Exec. V. P. Tel: (904) 350-9660 Fax: (904) 354-4525 3. Lyndon Financial Corporation 14755 North Outer Forty Drive, Suite 400 St. Louis, MO 63017 Attn.: Gregg O. Cariolano, CFO Tel: (636) 536-5689 Fax: (636) 536-5605 4. Estate of Roy Merritt, Deceased c/o James E. Friese, Esq. 201 Blakely Street Cuthbert, GA 39840 Tel: (404) 841-0896 Fax: (678) 658-1954 5. Kenneth E. Hoerr 9619 North Route 91 Peoria, IL 61615 Tel: (309) 243-7750 Fax: (309) 243-1978 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtor's expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the chapter 11 cases to a liquidation proceeding. Headquartered in Atlanta, Georgia, Titan Financial Group II, LLC, provides standard installment loans and serves approximately 80,000 customers through its 125 retail branches across Georgia, South Carolina and Texas. The Company and 11 of its affiliates filed for chapter 11 protection on Sept. 3, 2006 (Bankr. N.D. Ga. Case No. 06-70852). Amy Edgy Ferber, Esq., Paul K. Ferdinands, Esq., and Sarah R. Borders, Esq., at King & Spalding, LLP, represent the Debtors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. TITAN FINANCIAL: Committee Hires Kilpatrick Stockton as Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Titan Financial Group II, LLC, and its debtor-affiliates' chapter 11 cases obtained permission from the U.S. Bankruptcy Court for the Northern District of Georgia to retain Kilpatrick Stockton LLP as its bankruptcy counsel. Kilpatrick Stockton is expected to: a. advise the Committee with respect to its organization, duties and powers in the Debtors' chapter 11 cases; b. assist the Committee in its investigation of the acts, conduct, assets, liabilities and financial condition of the Debtors, the operation of the Debtors' business and the desirability of continuing the same, the potential sale of the Debtors' assets, and any other matter relevant to these cases or the formulation and analysis of any plan of reorganization; c. attend meetings of the Committee and meetings with the Debtors, their attorneys and other professionals, as requested; d. represent the Committee in hearings before the Court; e. assist and advise the Committee with respect to its communications with the constituency represented by the Committee; f. review and analyze all motions, applications, proposed orders, statements, reports and schedules filed with the Court and advise the Committee with respect to the same; and g. provide other and further legal assistance as the Committee may deem necessary and as appropriate. Todd C. Meyers, Esq., a partner at Kilpatrick Stockton, tells the Court that the firm's billing rates are: Professional Hourly Rate ------------ ----------- Partners $375 - $595 Counsel $335 - $355 Associates $195 - $295 Paralegals $145 - $190 To the best of the Committee's knowledge, the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Meyers can be reached at: Todd C. Meyers, Esq. Kilpatrick Stockton LLP Suite 2800, 1100 Peachtree Street Atlanta, GA 30309-4530 Tel: (404) 815-6500 Fax: (404) 815-6555 http://www.kilpatrickstockton.com/ Headquartered in Atlanta, Georgia, Titan Financial Group II, LLC, provides standard installment loans and serves approximately 80,000 customers through its 125 retail branches across Georgia, South Carolina and Texas. The Company and 11 of its affiliates filed for chapter 11 protection on Sept. 3, 2006 (Bankr. N.D. Ga. Case No. 06-70852). Amy Edgy Ferber, Esq., Paul K. Ferdinands, Esq., and Sarah R. Borders, Esq., at King & Spalding, LLP, represent the Debtors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. The Debtors' exclusive period to file a chapter 11 plan expires on Jan. 1, 2007. TROPICAL SPORTSWEAR: Liquidating Trustee Issues Final Distribution ------------------------------------------------------------------ The Liquidating Trustee for the TSLC I, Inc. Creditors' Liquidation Trust made a second and final distribution to creditors in the amount of $14,445,765.77 on Sept. 29, 2006. The TSLC I, Inc. Creditors' Liquidation Trust is the liquidating trust created pursuant to the confirmed chapter 11 plan of liquidation of TSLC I, Inc., successor to Tropical Sportswear International, Inc., and its debtor-affiliates, to liquidate the Debtors' remaining assets. Because the Debtors' plan of liquidation has now been substantially consummated, the Liquidating Trustee asks the U.S. Bankruptcy Court for the Middle District of Florida to enter a final decree closing the Debtors' chapter 11 cases. Headquartered in Tampa, Florida, Tropical Sportswear Int'l Corp. -- http://www.savane.com/-- manufactured and marketed casual pants, shorts, denim jeans and shirts for men, women and boys. The Company and its debtor-affiliates filed for chapter 11 protection on Dec. 16, 2004 (Bankr. M.D. Fla. Case No. 04-24134). David E. Bane, Esq., and Denise D. Dell-Powell, Esq., at Akerman Senterfitt, represented the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $247,129,867 and total debts of $142,082,756. On February 26, 2005, the Company sold substantially all of its assets to Perry Ellis International as part of liquidating in the bankruptcy case. The Court confirmed the Debtors' plan on May 24, 2006. UNITED REFINING: Moody's Assigns Loss-Given-Default Rating ---------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the oilfield service and refining and marketing sectors last week, the rating agency held its B3 Corporate Family Rating for United Refining Company, and revised its rating on the company's 10.5% Senior Unsecured Guaranteed Global Notes Due 2012. Moody's assigned the debentures an LGD4 rating suggesting noteholders will experience a 61% loss in the event of default. Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in Warren, Pennsylvania, United Refining Company refines and markets petroleum products in the northeastern United States. UNIVERSAL COMPRESSION: Moody's Assigns Loss-Given-Default Ratings ----------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the oilfield service and refining and marketing sectors last week, the rating agency confirmed its Ba2 Corporate Family Rating for Universal Compression Inc. In addition, Moody's revised its probability-of-default ratings and assigned loss-given-default ratings on these debentures: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Sr. Sec. Gtd. Term Loan Due 2012 Ba2 Ba1 LGD3 36% Sr. Sec. Gtd. Revolving Credit Facility Due 2010 Ba2 Ba1 LGD3 36% 7.25% Sr. Unsec. Global Notes Due 2010 Ba3 B1 LGD5 88% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Houston, Texas, Universal Compression, Inc. -- http://www.universalcompression.com/-- provides natural gas compression equipment and services, primarily to the energy industry in the United States, as well as in Canada, Venezuela, Argentina, Columbia, and Australia. VALCOM INC: Posts $1.3 Mil. Net Loss in Third Qtr. Ended June 30 ---------------------------------------------------------------- ValCom, Inc., has filed financial statements for the third fiscal quarter ended June 30, 2006, with the Securities and Exchange Commission. For the three months ended June 30, 2006, the Company reported a $1,320,972 net loss on $631,999 of total revenues, compared with a $180,322 net loss on $273,705 of total revenues for the same period in 2005. At June 30, 2006, the Company's balance sheet showed $2,139,073 in total assets and $3,200,609 in total current liabilities, resulting in a $1,061,536 stockholders' deficit. Full-text copies of the Company's third fiscal quarter financials are available for free at http://ResearchArchives.com/t/s?12fe Going Concern Doubt As reported in the Troubled Company Reporter on Jan. 25, 2006, Armando C. Ibarra, CPAs, expressed substantial doubt about ValCom, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal years ended Sept. 30, 2005, and 2004. The auditing firm pointed to the Company's recurring losses from operations About ValCom Headquartered in Las Vegas, Nevada, ValCom, Inc. -- http://www.valcom.tv/-- is a diversified and vertically integrated, independent entertainment company. ValCom, Inc., through its operating divisions and subsidiaries creates and operates full service facilities that accommodate film, television, and commercial productions with its five divisions that are comprised of studio, film, television, camera and equipment rentals, and broadcast television. As of Sept. 30, 2005, ValCom had four subsidiaries: Valencia Entertainment International, LLC; Half Day Video, Inc.; ValCom Studios, Inc. and ValCom Broadcasting, LLC. VERITAS DGC: Moody's Assigns Loss-Given-Default Rating ------------------------------------------------------ In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the oilfield service and refining and marketing sectors last week, the rating agency confirmed its Ba3 Corporate Family Rating for Veritas DGC. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Houston, TX-based Veritas DGC Inc. -- http://www.veritasdgc.com/ -- provides geophysical information and services for the national and independent oil and gas companies worldwide. VISTEON CAPITAL: Production Cuts Prompt Moody's Rating Review ------------------------------------------------------------- Moody's Investors Service placed the ratings of Visteon Corporation under review for possible downgrade. The action reflects concern on the extent which lower North American production volumes from Visteon's largest customer, Ford Motor Company, may have on the company's performance and capital requirements in 2007 and afterwards. Moody's also affirmed Visteon's Speculative Grade Liquidity rating at SGL-3, representing adequate liquidity over the coming year. Ratings under review: * Visteon Corporation -- Corporate Family rating, B2 -- Probability of default ratings, B2 -- Senior Secured Bank term loan, Ba2, LGD2, 22% -- Senior Unsecured Notes, Caa1, LGD6, 91% -- Shelf filings for unsecured, subordinated, and preferred; (P)Caa1, LGD6, 91%; (P)Caa1, LGD6, 97%; and (P)Caa1, LGD6, 97% respectively * Visteon Capital -- Trust preferred shelf, (P)Caa1, LGD6, 97% Ratings affirmed: -- Speculative Grade Liquidity, SGL-3 The last rating action was on September 22, 2006 when ratings were revised upon the implementation of Moody's Loss Given Default methodology. Ford's announced production cutbacks in North America for the fourth quarter are approximately 21%. In response, Visteon has taken some initial actions to address those lower volumes and mix changes. In September, Ford announced the broad terms of its accelerated Way Forward program. This will involve many steps; among which will be closure of certain plants to reduce its North American capacity. Moody's concern focuses on what the impact which potentially lower Ford volumes in 2007 and beyond may have on Visteon's financial performance, and any accelerated or additional restructuring, which may be required in response to Ford's September announcements beyond those identified at the time of the 2005 Automotive Component Holdings agreement. While Ford North America is a smaller percentage of Visteon's revenues than prior to the 2005 ACH transaction, and was always planned to become a smaller portion, the slope of that descent may have steepened. Given the level of fixed costs incumbent in the industry and a supplier's sensitivity to changes in through-put, expectations on Visteon's prospective performance and capital requirements need to be reassessed. In affirming the SGL-3 Speculative Grade Liquidity rating, Moody's noted that Visteon retains approximately $836 million of balance sheet cash and $553 million of combined unused availability under its domestic revolving credit facility and European securitization program (pro forma for $97 million of letter of credit issuance and initial borrowings of $25 million under the domestic facility announced in August), which will provide some degree of flexibility over the coming year. Moreover, Visteon has access to a Ford funded escrow account to cover the bulk of restructuring actions flowing from the ACH agreement. In addition, Ford has agreed to share on a 50-50 basis with Visteon the costs of certain restructuring actions. Consequently, the review will analyze the net effect of any Ford volume and mix assumptions and incremental Visteon management plans, if any, to accelerate or supplement the company's existing restructuring plans in response to changes in Ford assumptions. The review will also concentrate on the effect those changes may have on Visteon's earnings, cash flows, related coverage ratios and liquidity profile. Visteon Corporation, headquartered in Van Buren Township, MI, is a global automotive supplier that designs, engineers and manufactures climate control, interior, electronic and lighting products for vehicle manufacturers and provides a range of products and services to aftermarket customers. The company has more than 170 facilities in 24 countries and employs 49,000 people. WAMU MORTGAGE: Moody's Rates Class L-B-12 Certificates at Ba2 ------------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by WaMu Mortgage Pass-Through Certificates Series 2006-AR11 Trust, and ratings ranging from Aa1 to Ba2 to the subordinate certificates in the deal. The securitization is backed by option arm loans originated by Washington Mutual Bank. The ratings are based primarily on the credit quality of the loans and on the protection from subordination. Moody's expects collateral losses to range from 0.70% to 0.80%. Washington Mutual Bank will service the loans, and Washington Mutual Mortgage Securities Corp. will act as master servicer. These are Moody's rating actions: * Issuer: WaMu Mortgage Pass-Through Certificates Series 2006- AR11 Trust * Securities: WaMu Mortgage Pass-Through Certificates, Series 2006-AR11 Cl. 1A, Assigned Aaa Cl. 2A, Assigned Aaa Cl. 2A-1B, Assigned Aaa Cl. 3A-1A, Assigned Aaa Cl. 3A-1B, Assigned Aaa Cl. 3A-1C, Assigned Aaa Cl. CA-1B1, Assigned Aaa Cl. CA-1B2, Assigned Aaa Cl. CA-1B3, Assigned Aaa Cl. CA-1B4, Assigned Aaa Cl. 1X-PPP, Assigned Aaa Cl. 2X-PPP, Assigned Aaa Cl. 3X-PPP, Assigned Aaa Cl. L-B-1, Assigned Aa1 Cl. L-B-2, Assigned Aa1 Cl. L-B-3, Assigned Aa2 Cl. L-B-4, Assigned Aa2 Cl. L-B-5, Assigned Aa3 Cl. L-B-6, Assigned A1 Cl. L-B-7, Assigned A2 Cl. L-B-8, Assigned A3 Cl. L-B-9, Assigned Baa1 Cl. L-B-10, Assigned Baa2 Cl. L-B-11, Assigned Baa3 Cl. L-B-12, Assigned Ba2 Cl. 3-B-1, Assigned Aa1 Cl. 3-B-2, Assigned Aa1 Cl. 3-B-3, Assigned Aa1 Cl. 3-B-4, Assigned Aa2 Cl. 3-B-5, Assigned Aa3 Cl. 3-B-6, Assigned Aa3 Cl. 3-B-7, Assigned A1 Cl. 3-B-8, Assigned A2 Cl. 3-B-9, Assigned A3 Cl. 3-B-10, Assigned Baa1 Cl. 3-B-11, Assigned Baa3 Cl. 3-B-12, Assigned Ba1 Cl. R, Assigned Aaa The Class L-B-12 and Class 3-B-12 certificates were sold in privately negotiated transactions without registration under the Securities Act of 1933under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144A. WASHINGTON MUTUAL: Moody's Assigns B2 Rating to Cl. B-2 Notes ------------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by Washington Mutual Asset-Backed Certificates, WMABS Series 2006-HE3 Trust, and ratings ranging from Aa1 to Ba2 to the subordinate certificates in the deal. The securitization is backed by Encore Credit Corp., Lenders Direct Capital Corporation and other originators' originated adjustable-rate and fixed-rate subprime mortgage loans. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, excess spread and an interest rate swap agreement provided by Wachovia Bank, N.A. Moody's expects collateral losses to range from 5.10% to 5.60%. Washington Mutual Bank will service the loans. Moody's has assigned Washington Mutual Bank its servicer quality rating of SQ2 as a servicer of subprime mortgage loans. These are Moody's complete rating actions: * Washington Mutual Asset-Backed Certificates, WMABS Series 2006-HE3 Trust Cl. I-A, Assigned Aaa Cl. II-A-1, Assigned Aaa Cl. II-A-2, Assigned Aaa Cl. II-A-3, Assigned Aaa Cl. II-A-4, Assigned Aaa Cl. M-1, Assigned Aa1 Cl. M-2, Assigned Aa2 Cl. M-3, Assigned Aa3 Cl. M-4, Assigned A1 Cl. M-5, Assigned A2 Cl. M-6, Assigned A3 Cl. M-7, Assigned Baa1 Cl. M-8, Assigned Baa2 Cl. M-9, Assigned Baa3 Cl. B-1, Assigned Ba1 Cl. B-2, Assigned Ba2 The Class B-1 and B-2 certificates were sold in privately negotiated transactions without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144A. WINN-DIXIE: Discloses Members of New Board of Directors ------------------------------------------------------- Winn-Dixie Stores, Inc., disclosed on Oct. 4, 2006, that nine individuals have been designated to serve on a newly constituted Board of Directors when the company emerges from bankruptcy. These designees include Winn-Dixie President and Chief Executive Officer Peter Lynch, who is expected to serve as chairman of the new Board. Confirmation Hearing The U.S. Bankruptcy Court for the Middle District of Florida scheduled a hearing on Oct. 13, 2006, to consider approval of Winn-Dixie's Plan of Reorganization. If the Plan of Reorganization is confirmed by the Court, Winn- Dixie expects to emerge from Chapter 11 protection later this year with sufficient financing and liquidity to make significant investments in its current store base, to develop new stores, and to take other actions to position the business to compete effectively in its markets over the next several years. The company also expects to emerge with only a minimal amount of long- term debt on its balance sheet. In preparation for the upcoming confirmation hearing before the Honorable Jerry A. Funk, Winn-Dixie filed a number of supplemental documents required by its Plan of Reorganization on Oct. 4, 2006, which includes: * a list of the proposed members of Winn-Dixie's new Board of Directors, * a copy of the final commitment letter for $725 million in exit financing, * proposed draft forms for Winn- Dixie's new charter and bylaws, * a stock registration rights agreement, * a new equity incentive plan to be provided to key associates, and * protocols for the settlement of certain claims. Proposed Board of Directors If the Plan of Reorganization is confirmed by the Court, a new Board of Directors will take office on the effective date of the Plan. The company and the creditors committee have designated these eight people to join Mr. Lynch on the new Board, subject to approval of the Bankruptcy Court: - Ronald E. Elmquist, President and CEO of Qualserve Corporation since 2005 and a director of Radio Shack Corporation. Mr. Elmquist was formerly President and CEO of Submitorder, Inc.; Chairman, President and CEO of Keystone Automotive Operations, Inc.; President of Global Food Services and Corporate Vice President at Campbell Soup Company, Inc.; and Chairman, President and CEO of W.S. Holdings Corporation and White Swan, Inc. He has also held senior positions at Fleming Companies, Inc., PYA Monarch, Inc., and Sysco Corporation. - Evelyn V. Follit, Senior Vice President, Chief Organizational Enabling Services Officer and Chief Information Officer at Radio Shack from 1997 to 2005. Ms. Follit is currently a director at Catalina Marketing Corporation and GetConnected, Inc. She has previously held senior positions at A.C. Nielsen Corporation, D&B Corporation, ITT Industries and IBM Corporation. - Charles P. Garcia, President of the Sterling Hispanic Capital Markets Group at vFinance, Inc. Mr. Garcia was founder, CEO and Chairman of Sterling Financial Investment Group, Inc. A graduate of the U.S. Air Force Academy and former intelligence officer for the U.S. Department of State, he served as a White House Fellow in 1988. Mr. Garcia is a director of several not-for-profit organizations, including the U.S. Air Force Academy, the American Bar Association, and Read On! Foundation. - Jeffrey C. Girard, Vice Chairman, Finance and Administration at ShopKo Stores, Inc. from 2002 to 2004. Earlier in his career he served in senior management roles at Supervalu, Inc., Supermarkets General Corporation, Pathmark Stores, Inc., and Standard Brands, Inc. - Yvonne R. Jackson, Founder and President of BeecherJackson. Ms. Jackson has served as Senior Vice President, Human Resources for Pfizer, Inc., Compaq Computer Corporation, and Burger King Corporation. From 1979 to 1993 she served in a number of human resources positions at Avon Products, Inc., including Vice President, Human Resources for the U.S. division. She began her career as a personnel manager at Sears, Roebuck & Co. - Gregory P. Josefowicz, former Chairman, President and CEO of Borders Group, Inc. and a director of PetSmart, Inc. and Ryerson, Inc. Mr. Josefowicz joined Borders as President and CEO in 1999 after having served as President of the Midwest Region of Albertson's, Inc. He also held several senior positions at Jewel Food Stores and has served as a director of Spartan Stores, Inc. - Terry Peets, senior advisor to J.P. Morgan Partners and a director of Berry Plastics, Inc., Pinnacle Foods Group, Inc., Ruiz Foods, Inc., and WKI Holding Company, Inc. Mr. Peets has served as Chairman of Bruno's Supermarkets, Inc.; President, CEO and a director of Pia Merchandising Company, Inc.; Executive Vice President of Vons Companies, Inc.; and Executive Vice President of Ralph's Grocery Company. - Richard E. Rivera, President and CEO of Rubicon Enterprises, LLC and a director of the National Restaurant Association. Mr. Rivera has served as Vice Chairman, President and Chief Operating Officer at Darden Restaurants, Inc. and as President of Darden's Red Lobster chain. He has also served as President and CEO of Chart House Enterprises, Inc., RARE Hospitality International, Inc., and TGI Friday's, Inc. (a division of Carlson Companies, Inc.). He has also held senior positions at W.R. Grace & Company (President of Del Taco Corporation); Annheuser-Busch Companies, Inc. (President of El Chico Corporation); and Grand Metropolitan plc (Steak & Ale Restaurants of America). Mr. Lynch said, "I believe this will be an outstanding board. The members are a diverse group, with considerable experience and expertise ranging from the food and supermarket industry to human resources to information technology. Their collective knowledge, judgment and support will be a tremendous asset for our management team as we continue to pursue opportunities to strengthen and grow our business." Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates 527 stores in Florida, Alabama, Louisiana, Georgia, and Mississippi. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. The Court approved the Debtors' Disclosure Statement on Aug. 4, 2006. WINN-DIXIE: Wants to Disallow & Reduce Claims for Voting Purposes ----------------------------------------------------------------- Pursuant to Rule 3018 of the Federal Rules of Bankruptcy Procedure, Winn-Dixie Stores, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Middle District of Florida to: -- disallow George C. Walker, Jr.'s Claim No. 454, and WD Rocky Mount Va Partners LLC's Claim No. 8367; -- reduce Fred D. Bentley, Sr.'s Claim No. 12432 to $306,516 and Day Properties LLC's Claim No. 11905 to $216,890; -- temporarily reduce for voting purposes James and Carolyn Sell's Claim No. 12786 to $1,042,851; and -- direct Logan and Company, Inc., voting agent in their Chapter 11 cases, not to count the ballots cast by Mr. Walker or Rocky Mount and to count the ballots case by Mr. and Mrs. Sell, Mr. Bentley, and Day Properties only in the reduced amount. D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, relates that the Walker Claim, asserting $519,219, is for the alleged rejection damages arising under the lease for Store No. 988. The same liability has been asserted by Mr. Walker's mortgage lender on the lease premises, Jefferson Pilot Life Insurance Co., by its Claim No. 8574. The Debtors understand that claim rights are held by Jefferson Pilot, thus they sent the mortgage company a ballot to vote Claim No. 8574 for $382,220. Mr. Baker contends that only one claim should be allowed for Store No. 988 and only one ballot should be counted. The Rocky Mount Claim, asserting $606,626, is for alleged rejection damages arising under the lease for the Debtors' Store No. 983. Merrill Lynch has asserted the same liability in Claim No. 13298 and has received a ballot to vote the claim for $717,829. The Debtors reiterate that only one claim should be allowed for Store No. 983 and only one ballot should be counted. The Bentley and Day Properties Claims are for rejection damages as well, but neither claimant applied the damage cap required by Section 502(b)(6) of the Bankruptcy Code. According to the Debtors, the Bentley Claim asserting $1,591,693 should be reduced to $306,516 while the Day Properties claim asserting $1,028,639 should be reduced to $216,890. By their Sept. 12, 2006, Objection, the Debtors asked the Court to reduce the Sells' claim from $6,480,175 to $1,042,851. Mr. Baker says that the amount in which the Sells should be permitted to vote should be similarly reduced to $1,042,851. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates 527 stores in Florida, Alabama, Louisiana, Georgia, and Mississippi. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). WINN-DIXIE: Several Parties Object to Plan Confirmation ------------------------------------------------------- Several parties-in-interest filed objections to confirmation of Winn-Dixie Stores, Inc., and its debtor-affiliates' Plan of Reorganization with the U.S. Bankruptcy Court for the Middle District of Florida. These parties are: 1. CVS EGL Overseas Marathon FL LLC; 2. Hamilton County, Tennessee; 3. Two Landlords; and 4. Six Stockholders. CVS EGL Overseas Marathon FL LLC CVS EGL Overseas Marathon FL LLC is a tenant of Winn-Dixie Stores, Inc., pursuant to a written lease dated Sept. 25, 1972, for a real property located in Marathon, Florida. As of Sept. 22, 2006, the Debtors have neither assumed nor rejected the CVS Lease. Peter E. Nicandri, Esq., at Milam Howard Nicandri Dees & Gillam P.A., in Jacksonville, Florida, relates that although the Debtors' counsel had informed him that the Debtors would file an appropriate motion to assume the CVS Lease, no motion has been filed as of Sept. 22, 2006. Thus, CVS files a limited protective objection to the confirmation of the Debtors' Joint Plan of Reorganization to the extent that the Plan purports to revest or transfer the Property free and clear of its interest. If the CVS Lease is assumed, then the Property must "revest" subject to the CVS Lease, Mr. Nicandri says. If the CVS Lease were rejected, Mr. Nicandri contends, the Debtors would not be permitted to revest the Property free and clear because the revesting will contravene CVS' rights afforded to it under Section 365(h) of the Bankruptcy Court. Upon the Court's approval of the Debtors' anticipated motion to assume the CVS Lease and confirmation that the Property will revest in the Debtors subject to CVS' interest, the Protective Objection will be resolved, Mr. Nicandri states. To the extent that it may be necessary, CVS asks the Court for adequate protection for its interests pursuant to Section 363(e). Hamilton County, Tennessee The objection of Hamilton County, Tennessee, to the confirmation of the Debtors' Joint Plan of Reorganization is rooted on the proposed treatment of Class 10-Secured Tax Claims under the Plan. The County asserts that the proposed treatment for Class 10 is authorized by the Bankruptcy Code for unsecured priority tax claimants but not for secured tax claimants. Hamilton County filed Claim No. 4206 for $15,431, plus interest, representing the Debtors' ad valorem taxes for 2005, and had a valid first lien on the Debtors' assets at four stores located in the County. Scott N. Brown, Jr., Esq., at Spears, Moore, Rebman & Williams P.C., in Chattanooga, Tennessee, relates that the Debtors sold the assets with Hamilton County's lien attached to the proceeds, which the County believes to have exceeded the amounts owed to it by the Debtors. Mr. Brown contends that Hamilton County is entitled to the immediate payment of its taxes, plus delinquent interest from the presumably segregated sale proceeds. Hamilton County asks the Court to sustain its objection and deny confirmation unless the Plan is amended to provide for full payment of its claim in cash at a fixed date, confirmation or effective date of the Plan. Two Landlords Two landlords object to the confirmation of the Debtors' proposed Joint Plan of Reorganization. A. Terranova Landlords Westfork Tower LLC, Concord-Fund IV Retail LP, TA Cresthaven LLC, Flagler Retail Associates Ltd., Elston/Leetsdale LLC, and their property manager and agent Terranova Corporation specifically object to the provision that states that the Debtors have discretion to reject an unexpired lease that is subject to a pending motion for assumption after confirmation of the Plan. According to Jeffrey R. Dollinger, Esq., at Scruggs & Carmichael PA, in Gainesville, Florida, the provision is inconsistent with: (1) the Debtors' agreement in an August 10, 2006 hearing to limit their ability to reject unexpired leased that are subject to pending motions to assume to the failure of the occurrence of the effective date of the Plan; and (2) the Court's August 18, 2006 Order authorizing the assumption of store leases that includes those of the Terranova Landlords. Thus, the Terranova Landlords ask the Court to sustain their objection to the Debtors' Plan and provide in the Confirmation Order the modification to the Plan with respect to unexpired leases. B. Sarria Entities In a separate filing, Sarria Enterprises, Inc.; Lago Plaza Shopping Center; Interplaza Shopping Center; Twin Oaks Plaza; and Homestead Plaza object to the Plan to the extent that the cure amounts are incorrect. The Sarria Entities assert that the appropriate cure amounts should be: Asserted Cure Amount -------------------- Store No. Debtors Landlords --------- ------- --------- 270 $1,949 $20,055 237 124,036 162,138 330 7,524 7,524 302 0 30,793 Accordingly, the Sarria Entities ask the Court to reject the Plan if it is not modified to correct the cure amounts for the four store leases. Six Stockholders Six stockholders sent letters to the Court requesting not to confirm the Debtors' Joint Plan of Reorganization. * Janet Bourland; * Louise H. Brannon; * Deborah A. Tindel Cheney; * Cesar Garcia; * Barbara L. Hart; and * Jessie and Matthew Williams. The Stockholders feel that they should be compensated. They assert that their stock interests in the company should not be cancelled as proposed by the Debtors in their Plan. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates 527 stores in Florida, Alabama, Louisiana, Georgia, and Mississippi. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). WORLD GAMING: Directors Say Technical Default Possible ------------------------------------------------------ The Board of Directors of World Gaming plc disclosed that having reviewed the Company's debt facilities agreement, the Directors believe it may be in technical default of its loan conditions due to a material adverse change in the circumstances of the business, arising from proposed changes in legislation in the United States. The Company continues to operate at the current time and is in discussion with its lenders. Legislation On Sept. 29 2006, the U.S. Congress passed legislation entitled the Unlawful Internet Enforcement Act of 2006 that seeks to prohibit the processing and acceptance of financial transactions in connection with certain types of Internet gambling. The Legislation remains to be signed by the President of the United States. The Company's Board says it is not aware of the enactment date of the Legislation but once enacted the Legislation may have a material adverse impact respecting ongoing operations. The Group is monitoring the situation closely and is seeking legal advice regarding the impact of the Legislation. In addition, as a result of the passing of the Legislation, the Boards of World Gaming and Sportingbet have discontinued discussions in respect of Sportingbet making an all share offer of certain of its shares for those of World Gaming. World Gaming plc -- http://www.worldgaming.com/-- is a UK based holding company whose subsidiaries participate in Internet gaming software licensing and operations. The World Gaming Group is an international developer, licensor, and provider of online gaming products, including casino, sportsbook, and pari-mutuel betting. World Gaming's Ordinary Shares are traded on the London Stock Exchange, Alternative Investment Market under the symbol WGP and the Over The Counter Bulletin Board market in the U.S. under symbol WGMGY. * Chef Solutions Sells Pennant Foods Unit to Fresh Start Bakeries ----------------------------------------------------------------- Chef Solutions, owned by Questor Partners Fund II, disclosed the sale of the Pennant unit to Fresh Start Bakeries, a portfolio company of the private equity firm Lindsay Goldberg & Bessemer. The terms of the transaction were not disclosed. "Pennant's president, Dan Scales, and his talented management team have put the business on a very strong sales and earnings trajectory since Questor acquired Chef Solutions in 2004," Steve Silk, president and chief executive officer of Chef Solutions, said. "They have successfully leveraged Pennant's strengths in its core product categories to significantly expand its customer base over the past two years, while implementing a number of very successful profit improvement initiatives. Pennant will be a strong addition to Fresh Start's business." Questor acquired Chef Solutions in June 2004 from Lufthansa, the German airline. Questor specializes in purchasing underperforming businesses and non-core operations of large corporations. Chef Solutions had been Lufthansa's non-airline prepared foods business in the United States and Canada, and its performance under Lufthansa had been deteriorating. "After Questor acquired Chef Solutions, we restructured the business along its legacy Pennant, Orval Kent, and I&K Distribution business lines, established a new management team, and successfully implemented a comprehensive performance improvement agenda," Dean Anderson, Questor managing director who led the acquisition of Chef Solutions and the sale of Pennant, said. "Following a period of substantial financial improvement at Chef Solutions under our ownership, the sale of Pennant marks the first stage in the successful realization of Questor's overall Chef Solutions investment", Mr. Anderson added. "Meanwhile, we continue to strengthen the operations of the Orval Kent division. Late last year, we acquired the Fish House Foods specialty salad operation as a key element of our growth strategy for Orval Kent. Management will now focus its energy on accelerating our growth and value creation initiatives at the expanded Orval Kent business." John Janitz, co-managing principal of Questor, said, "The sale of the Pennant division once again demonstrates the power of Questor's turnaround expertise and our ability to create value for our limited partners. We look forward to continued strong growth at Chef Solutions' Orval Kent division." About Chef Solutions Chef Solutions is a provider of refrigerated salads and side dishes through its Orval Kent division, specialty bakery products through its Pennant Foods division, and refrigerated distribution through its I&K division. Pennant Foods, which is based in Northlake, Ill., supplies premium-quality bakery products to restaurant chains, in-store bakeries in supermarkets and other retailers, as well as to foodservice companies. It is an important supplier to Subway, Dunkin' Donuts, Ahold, Kroger, Supervalu, Sysco, Starbucks and others. Fresh Start Bakeries, which is headquartered in Brea, CA, is one of the major suppliers of bakery products to McDonald's restaurants. About Questor Questor Management Company LLC has offices in Southfield, Michigan, Chicago and New York, and manages the Questor Partners Funds, which have more than $1.1 billion of committed equity capital. Questor's objective is to acquire underperforming businesses that are in transition and offer the potential for superior returns with the application of appropriate levels of capital and management expertise. Since it was founded in 1995, the company has successfully completed more than 20 acquisitions worldwide. * Jennifer Handz Joins Chadbourne & Parke's London Office --------------------------------------------------------- The international law firm of Chadbourne & Parke LLP disclosed that Jennifer Handz has joined the Firm's 60-lawyer Russia and CIS Practice Group as a partner in the London office of Chadbourne & Parke, the multinational partnership of Chadbourne & Parke LLP. Ms. Handz, 43, was formerly a senior counsel at the European Bank for Reconstruction and Development. She had been with the EBRD since 1999, working in the Banking Operations Group and the Corporate Recovery Group. Her areas of practice include project finance, debt and equity financing and restructuring focusing on Russia and the CIS, as well as Central and Eastern Europe. Ms. Handz will focus on banking and finance work representing both lenders and borrowers in various financing transactions, providing support to Chadbourne's growing CIS and Central and Eastern Europe Practice. Chadbourne has added two offices in the CIS in the past year -- St. Petersburg and Almaty -- expanding its regional practice to seven offices. "We do not believe in resting on our laurels," said Claude S. Serfilippi, Managing Partner of Chadbourne's London office. "Jennifer's experience as a senior counsel at the EBRD specializing in Russia and Central and Eastern Europe, as well as her significant emerging market experience, will help us serve clients in this growing practice area." Prior to joining the EBRD, Ms. Handz worked in England, Vietnam, Australia and Poland as a banking and finance lawyer. She acted as managing attorney for Freehill, Hollingdale and Page in Hanoi, Vietnam. As an associate for Theodore Goddard in London, she was seconded to the Dewey Ballantine Theodore Goddard (joint venture) office in Warsaw. "Jennifer will be a great addition to our group," said Laura M. Brank, head of Chadbourne's Russia and CIS Practice Group. "She brings a wealth of experience in banking and finance and restructurings, as well as years of practical experience working in developing markets on everything from privatizations to complex financings." Ms. Handz has a Bachelor of Jurisprudence and Bachelor of Laws from the University of Western Australia, Perth and in 1987 was admitted as solicitor and barrister to the Supreme Court of Western Australia. In 1991, she was admitted as solicitor in England and Wales. About Chadbourne & Parke LLP Chadbourne & Parke LLP -- http://www.chadbourne.com/-- an international law firm headquartered in New York City, provides a full range of legal services, including mergers and acquisitions, securities, project finance, corporate finance, energy, telecommunications, commercial and products liability litigation, securities litigation and regulatory enforcement, special investigations and litigation, intellectual property, antitrust, domestic and international tax, insurance and reinsurance, environmental, real estate, bankruptcy and financial restructuring, employment law and ERISA, trusts and estates and government contract matters. The Firm has offices in New York, Washington, D.C., Los Angeles, Houston, Moscow, St. Petersburg, Kyiv, Almaty, Tashkent, Warsaw (through a Polish partnership), Beijing, and a multinational partnership, Chadbourne & Parke, in London. About Chadbourne & Parke, A Multinational Partnership In London, the Firm conducts its practice through Chadbourne & Parke, a multinational partnership employing both English- qualified solicitors and U.S. lawyers who work closely with other Chadbourne offices to provide seamless service to international clients. The London partnership offers a range of legal services under both English and U.S. law and, in particular, focuses on project finance, privatization, energy, capital markets, banking, insurance and reinsurance, securitizations, structured finance, corporate finance, litigation and products liability. * BOOK REVIEW: The Failure of The Franklin National Bank: Challenge to the International Banking System ---------------------------------------------------------------- Author: Joan E. Spero Publisher: Beard Books Paperback: 235 Pages List Price: $34.95 Order your personal copy at http://amazon.com/exec/obidos/ASIN/1893122344/internetbankrupt In 1974 the international financial system faced its most serious crisis since the 1930s. The stresses and shocks of that year, including the failure of the Franklin National Bank, led to a crisis of confidence that brought the International banking system dangerously close to disaster. Franklin's failure forced United States and foreign regulatory authorities to devise new ways to avert an international banking crisis, and served as a catalyst for later efforts to bring international banking under public management. The author's case study, first published in 1979 when events were very fresh, examines the failure of the Franklin -- once the twentieth largest bank in the United States -- within the context of the bank crisis. Franklin's collapse was both cause and effect; changes in banking regulation and practice contributed to the bank's problems, while its collapse forced bank regulators and policymakers to address the new international nature of banking and to cooperate in addressing dramatic changes in international financial markets, and, hopefully, avoiding a repeat of the crisis. The book begins by reviewing the economic and political factors that led to the internalization of American banks, as many banks became multinational corporations. This phenomenon surged during the 1960s and 1970s, carrying the Franklin (which even acquired a foreign owner, Italian financier Michele Sindona) with it. The work then examines the extent to which the Franklin's demise was caused by its international activities and, in turn, the manner in which Franklin's insolvency threatened the international banking system. After analyzing the crisis's antecedents, the book moves to a discussion of United States regulatory responses to control it, and explains how American authorities were forced to take innovative steps to manage the international dimensions of the Franklin crisis. Those steps included a massive Federal Reserve loan and the use of that loan to cover foreign branch outflows, assistance in managing foreign exchange operations and the eventual purchase of Franklin's foreign exchange book, and the FDIC sale. Not even those bold regulatory approaches sufficed to stem the crisis, however, United States regulators were obliged to seek assistance from other nations' financial authorities. The cooperative approach not only prevented the crisis from devolving into a crash, but also laid groundwork for increased cooperation in the future. This achievement, the author concludes, was the lasting (and beneficial) effect of the failure of the Franklin National Bank. The Franklin Episode, thus, revealed both the weaknesses and the strengths of the United States' regulatory system as it applies to international banking. ********* 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, Melvin C. Tabao, 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 ***