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 13, 2006, Vol. 10, No. 244 Headlines ACE AVIATION: Approved Distribution Cues S&P's Negative Outlook ADELPHIA COMMS: Files Revised Disclosure Statement Supplement ADELPHIA COMMS: Judge Gerber OKs Stipulation with Broadcast Music AGY HOLDING: Moody's Rates Proposed $175 Mil. Senior Notes at B2 AGY HOLDING: S&P Rates Planned $175 Mil. Sr. Secured Notes at B- ALERIS INTERNATIONAL: Moody's Assigns Loss-Given-Default Rating ALLEGHENY TECHNOLOGIES: Moody's Assigns Loss-Given-Default Rating AMERICAN WAGERING: 9th Cir. Rules IPO Consultant Not an Investor AMERICANA FOODS: Involuntary Chapter 7 Case Summary AMKOR TECH: Form 10-Q Filing Cues Moody's to Put Positive Outlook ASARCO LLC: Srackangast Approved as Special Environmental Auditor ASARCO LLC: Encycle Trustee Sells Tank to Valley Solvents BERRY PETROLEUM: Moody's Rates $200 Million Senior Notes at B3 CABLEVISION SYSTEM: Dolan Family Offers to Buy All Common Shares CALPINE CORP: Sells Stake in Fox Energy to GE Energy for $16.3MM CALPINE CORP: Sells Thomassen to Ansaldo Energia for $23.5 Million CARMIKE CINEMAS: Moody's Assigns Loss-Given-Default Rating CASABLANCA RESORTS: Moody's Assigns Loss-Given-Default Rating CD 2006-CD3: S&P Places Low-Ratings on Six Certificate Classes CEDAR FAIR: Moody's Assigns Loss-Given-Default Rating CENTURY THEATRES: Moody's Assigns Loss-Given-Default Rating CHATTEM INC: Earns $15.2 Million for Fiscal 2006 Third Quarter CHOCTAW RESORT: Moody's Assigns Loss-Given-Default Rating CINEMARK INC: Moody's Assigns Loss-Given-Default Rating CNET NETWORKS: Names Neil Ashe as New Chief Executive Officer CNET NETWORKS: Discloses Findings of Stock Options Investigation CNET NETWORKS: Extends Consent Solicitation for 0.75% Senior Notes COMPLETE RETREATS: Court OKs Ableco's Financing Commitment Letter COMPLETE RETREATS: Inks $80 Million DIP Financing Pact with Ableco COPA CASINO: Moody's Assigns Loss-Given-Default Rating CREDIT SUISSE: Good Credit Cues S&P to Raise & Affirm Ratings DELTA AIR: Wants Claims Settlement Procedures Established DELTA AIR: Committee Supports Claims Settlement Procedures DIGITAL LIGHTWAVE: Issues $269,931 Promissory Note to Optel DILLARD'S INC: Moody's Assigns Loss-Given-Default Ratings EDDIE BAUER: Moody's Assigns Loss-Given-Default Rating EUGENE CAVALLO: Case Summary & 11 Largest Unsecured Creditors FEDERAL-MOGUL: Retains All UK Administered Companies Under CVAs FERRO CORP: Auditor Expresses Adverse Opinion on Internal Control FESTIVAL FUN: Moody's Assigns Loss-Given-Default Rating FINLAY FINE: Moody's Assigns Loss-Given-Default Rating FIRST FRANKLIN: Low Credit Support Prompts S&P to Lower Ratings FLYI INC: Judge Walrath Supplements Protocol Order FLYI INC: Graham's Want Stay Lifted to Pursue New Jersey Suit FOAMEX INTERNATIONAL: Foamex LP Assumes Amended Shell Contract FOAMEX INTERNATIONAL: Lyondell Chemical Withdraws $14.8 Mil. Claim FOOT LOCKER: Moody's Assigns Loss-Given-Default Rating FORD MOTOR: Mulls Possible Sale of Automobile Protection Unit FRASCELLA ENTERPRISES: Class Action Suit Stays in Bankruptcy Court GAMESTOP CORP: Moody's Assigns Loss-Given-Default Ratings GLOBAL POWER: Can Wind Down Heat Recovery Business Segment GOLD KIST: Board Rejects Pilgrim Pride's Offer as Inadequate GOLF 255: Involuntary Chapter 11 Case Summary GSAMP TRUST: S&P Junks Rating on Class B-1 Certs. & Removes Watch HARTCOURT COMPANIES: Restates 2005 & 2004 Financial Statements HEALTH CARE: $5.3 Billion CNL Buy Cues Moody's to Lower Ratings IAP WORLDWIDE: Weak Credit Metrics Prompt S&P's Negative Outlook INEX PHARMACEUTICALS: Nears Completion of Tekmira Spin-Out INTERSTATE BAKERIES: Can Use Estate Funds to Pay Cushman's Fees INTERSTATE BAKERIES: Court Approves Rejection of 4 Kentucky Leases INVERNESS MEDICAL: Reduced Leverage Cues Moody's to Lift Ratings J. CREW: Moody's Assigns Loss-Given-Default Rating JACUZZI BRANDS: $1.25 Bil. Apollo Merger Cues S&P's Negative Watch JRO INC: Case Summary & 19 Largest Unsecured Creditors KINETIC CONCEPTS: Dennert Ware to Retire as CEO KMART CORP: Court Approves Pact Resolving Spring Park's Claim KMART CORP: Court OKs Pact Resolving Stribling's $2,160,500 Claim LEAP WIRELESS: Cricket Unit to Sell $750 Million Senior Notes LESLIE'S POOLMART: Moody's Assigns Loss-Given-Default Rating LEVITZ HOME: PBGC Takes Over Retirement Plan LINENS 'N THINGS: Moody's Assigns Loss-Given-Default Rating LIVE NATION: Moody's Rates Proposed $200 Million Senior Loan at B1 MAGGY'S INC: Case Summary & Three Largest Unsecured Creditors MERRILL COMMS: S&P Rates Proposed $200 Million Term Loan at B- MESABA AVIATION: District Court Reverses Judge Kishel's Decision MESABA AVIATION: Judge Kishel Vacates Ruling on Union CBAs MGM MIRAGE: Inks Fifth Amended and Restated Loan Pact with Lenders MUSICLAND HOLDING: MacLennan Objects to Disclosure Statement MUSICLAND HOLDING: Tells Court of 10 Rejected Executory Contracts NATIONAL CENTURY: Two Trusts File Post-Confirmation Reports NATIONAL CENTURY: LTC Entities Lawsuit Stayed Until October 23 NATIONAL ENERGY: ET Debtors File Quarterly Report Ending Aug. 31 NATIONAL HEALTH: Moody's Reviews Ba3 Rating and May Downgrade NCO GROUP: Moody's Junks $365 Million Senior Subor. Notes' Rating NCO GROUP: S&P Rates $365 Million Senior Subordinated Notes at B- NEENAH FOUNDERY: Moody' Rates $300 Senior Secured Notes at B2 NEOPLAN USA: Court Fixes October 23 as General Claims Bar Date NEOPLAN USA: Committee Taps Pepper Hamilton as Bankruptcy Counsel NORTHWEST AIRLINES: Wants Stay Enforced Against RI Commission NORTHWEST AIRLINES: Employs 13 Ordinary Course Professionals OWENS CORNING: Fibreboard Wants Continental Settlement Pact Okayed OWENS CORNING: Florida Revenue Dept. Wants $1.3 Mil. Claim Paid PETCO ANIMAL: Raised Term Loan Prompts S&P to Affirm B Rating PHOTOWORKS INC: Sells $3.1 Million of Common Stock and Warrants PILGRIM'S PRIDE: Gold Kist Snubs Purchase Offer PRESIDENT CASINOS: Resolves Competing Ch. 11 Reorganization Plans PROCARE AUTOMOTIVE: Unsecured Creditors to Recover 25% Under Plan REFCO INC: Chapter 7 Trustee Wants Rogers Funds Claims Pact Okayed REFCO INC: Wants Solicitation & Tabulation Procedures Established SAINT VINCENTS: Auctioning Nursing School Assets on November 9 SAINT VINCENTS: Plans Private Sale of Surplus Assets SERACARE LIFE: Wants to Hire Mayer Hoffman as Auditors ST. JOHN KNITS: Moody's Holds $230 Million Loan's Rating at B1 THORNBURG MORTGAGE: Stable Credit Cues S&P to Affirm Ratings TIAA CMBS: Credit Enhancements Cue S&P to Raise & Affirm Ratings TITAN GLOBAL: Closes $1.25 Million Financing for Titan PCB TTM TECHONOLOGIES: Moody's Rates $240 Million Facilities at B1 VISEON INC: Virchow Krause Expresses Going Concern Doubt WELLSFORD REAL: Buys Reis for $34.6 Million Cash WENDY'S INT'L: Says No Violation of Indenture Has Occurred WESTERN MEDICAL: A/R Recovery Hired as Accounts Receivable Agent WINN-DIXIE: Unseals Substantive Consolidation Documents WINN-DIXIE: Wants to Sell Live Oak Outparcel to Ronnie Poole WI-TRON INC: Commences 11,000,000 Million Units Securities Offer WR GRACE: High Court Rejects Plea to Overturn $54.5MM Cleanup Cost WRIGHT & LATO: Case Summary & 20 Largest Unsecured Creditors YAZAKI INT'L: S&P Whips Long-Term Credit Rating to B+ from BBB- ZANETT INC: Inks $10 Million Credit Facility with LaSalle Bank * Michael Lord Joins Alvarez & Marsal's Restructuring Practice * Neil Pigott Joins Brown Rudnick as Partner in London Office * BOOK REVIEW: The Global Bankers ********* ACE AVIATION: Approved Distribution Cues S&P's Negative Outlook --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on ACE Aviation Holdings Inc. to negative from stable on ACE obtaining shareholders' and court approval of a plan to distribute up to CDN$2 billion to shareholders over time. The distribution will be made by way of a capital reduction by ACE and new share issues by Aeroplan, which enjoys a stronger business profile and more stable revenue streams, and possibly by other subsidiaries including Jazz. After the distribution, ACE's shares in these two companies could be diluted although it is expected to remain a significant shareholder. The 'B+' long-term corporate credit rating on ACE has been affirmed. Standard & Poor's has made a one-notch differential between the ratings on ACE and Air Canada in light of the significantly lower debt amount and large cash holdings at the company level, and the modest diversity brought about by the dividend flows from Jazz and Aeroplan. "The negative outlook on ACE reflects our expectation that ACE's business diversity could weaken and that the ratings on ACE and Air Canada could be equalized over time," Standard & Poor's credit analyst Greg Pau said. Upon completion of the distribution plan, ACE's business diversity could be adversely affected because its entitlement to dividend streams from Aeroplan and Jazz could be reduced and its dependence on the operating performance of Air Canada (B/Stable/--) might increase. "To determine the rating on ACE, Standard & Poor's will assess the extent of dilution in ACE's shares in its subsidiaries, particularly in Aeroplan and Jazz, the ongoing liquidity position at the company level, and the operating performance of Air Canada, which remains the dominant revenue generator and the core of ACE's businesses," Mr. Pau added. Indications of any material financial support to be provided by ACE to Air Canada in the form of guarantees or cash downstream could also provide grounds for immediate equalization of the ratings. The outlook on Air Canada remains stable based on some improvement in operating performance in the past 12 months. In view of the volatility of the aviation industry, the rating on Air Canada could only be raised if a more sustained improving trend develops and significant deleveraging through cash injection in Air Canada's upcoming IPO targeted before the end of 2006. Standard & Poor's also has noted the statement of claim filed by Air Canada Pilots Association in the Ontario Supreme Court to thwart the distribution plan. Should there be any material disruption of its operations as a result of a possible escalation of ACPA's action or strike, the ratings on Air Canada, and possibly those on ACE, could be negatively affected. ADELPHIA COMMS: Files Revised Disclosure Statement Supplement ------------------------------------------------------------- Adelphia Communications Corporation filed a revised draft of the Second Disclosure Statement Supplement to its Fourth Amended Disclosure Statement with the United States Bankruptcy Court for the Southern District of New York on Oct. 12, 2006. The revised draft of the Disclosure Statement Supplement relates to the modified draft of Adelphia's Fifth Amended Joint Chapter 11 Plan of Reorganization that was filed with the Bankruptcy Court on Oct. 11, 2006. Adelphia and the Official Committee of Unsecured Creditors are seeking an order of the Bankruptcy Court approving the revised draft of the Disclosure Statement Supplement as containing "adequate information" to enable Adelphia's Chapter 11 bankruptcy creditors and equity holders to make an informed judgment about the modified draft of the Fifth Amended Plan. The Bankruptcy Court commenced the hearing on the Disclosure Statement Supplement on Sept. 12, 2006. The hearing is currently scheduled to continue on today, Oct. 13, 2006. Adelphia and the Official Committee of Unsecured Creditors remain co-proponents of the modified draft of the Fifth Amended Plan. In addition, the two bank administrative agents with which settlements have been reached will continue to be co-proponents of the modified draft of the Fifth Amended Plan with respect to the treatment of bank claims under the credit agreements for which they are agents. Adelphia's proposal and prosecution of confirmation of the modified draft of the Fifth Amended Plan still is subject in all respects to entry of an order approving the Disclosure Statement Supplement, as well as Bankruptcy Court authorization for Adelphia to propose and seek votes in respect of the modified draft of the Fifth Amended Plan. If this order is entered and such authorization is granted, Adelphia, the Official Committee of Unsecured Creditors and the relevant bank administrative agents will begin the process of soliciting creditors and equity holders to vote on the modified draft of the Fifth Amended Plan. A full-text copy of the modified Fifth Amended Reorganization Plan is available for free at http://ResearchArchives.com/t/s?134f A full-text copy of the Disclosure Statement Supplement is available for free at http://ResearchArchives.com/t/s?135d Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. ADELPHIA COMMS: Judge Gerber OKs Stipulation with Broadcast Music ----------------------------------------------------------------- The Honorable Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York, approved the stipulation between Adelphia Communications Corporation and Broadcast Music, Inc. As reported in the Troubled Company Reporter on Sept. 27, 2006 the Company and Broadcast Music, Inc., sought the Court's approval to a stipulation, pursuant to which, among others, BMI withdraws its objection, with prejudice, to the ACOM Debtors' proposed rejection of their Cable Systems Local Origination Music License Agreement. Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue Nos. 149; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AGY HOLDING: Moody's Rates Proposed $175 Mil. Senior Notes at B2 ---------------------------------------------------------------- Moody's Investors Service assigned a B2/LGD4-54% rating to AGY Holding Corp.'s proposed $175 million eight-year 2nd lien senior secured 144A Notes due 2014 and affirmed its B2 corporate family rating. AGY's rating outlook remains stable. These new notes will refinance the debt issued on April 7, 2006, when AGY was acquired by Kohlberg & Co. in a transaction valued at $271 million, excluding fees and expenses. The acquisition was financed with $210 million of Senior Secured Credit Facilities, comprised of a $30 million senior secured revolving credit facility, a $135 million senior secured 1st lien term loan and a $45 million senior secured 2nd lien term loan, as well as cash. Moody's ratings for AGY's existing debt will be withdrawn at the conclusion of this new transaction. The new debt provides additional flexibility by lengthening the maturity schedule with no amortizing debt. As part of this refinancing, AGY also plans to arrange a privately-placed $40 million five-year 1st lien senior secured asset-based revolver that will not be rated. AGY's ratings reflect its substantial leverage resulting from the purchase of virtually all outstanding equity interests by equity sponsor, Kohlberg & Co. The B2 corporate family rating also considers AGY's small size, customer and application concentration, ongoing margin compression from input cost inflation, the speculative grade credit quality of certain of the company's main customers, and exposure to several highly cyclical end-use markets. Moody's assigned a B2 rating, LGD4 Assessment, and a Loss Rate of 54% to the proposed $175 million eight-year 2nd lien senior secured notes. The rating is equal to the corporate family rating level given that the 1st lien debt only accounts for 19% of total debt, even assuming that the secured revolver is fully drawn. All of AGY's senior secured bank debt will be guaranteed by both of AGY's North American subsidiaries, AGY Aiken LLC, and AGY Huntingdon LLC, which own over 99% of the company's total assets. Moody's believes that, with potentially $215 million in senior secured 1st and 2nd lien debt, tangible asset coverage of debt is reasonable, reflected in the pari passu 2nd lien term loan and corporate family ratings. AGY, headquartered in Aiken, South Carolina, is a US producer of glass fiber yarns. Its products are used globally in a variety of industrial, electronic, construction, and specialty applications. The company generated sales of $170.3 million or the LTM ending June 30, 2006. AGY HOLDING: S&P Rates Planned $175 Mil. Sr. Secured Notes at B- ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on AGY Holding Corp. to negative from stable. At the same time, Standard & Poor's affirmed its 'B' corporate credit rating on AGY. In addition, S&P assigned its 'B-' rating and a recovery rating of '3' to the company's proposed $175 million second-lien senior secured notes, indicating that the lenders can expect meaningful recovery (50% to 80%) of principal in the event of a payment default. Proceeds from the proposed senior notes and an unrated $40 million first-lien senior secured revolving credit facility will be used to refinance the company's existing credit facility. The 'B-' rating on the second-lien notes is one notch below the corporate credit rating to reflect the notes' junior claim on collateral, and the presence of higher priority debt in the capital structure. The rating is based on preliminary terms and conditions. The outlook revision reflects S&P's expectation for a decline in revenues and earnings from a key product-application, the up- armoring of the military Humvee vehicle. Demand for AGY's product used in the military Humvee is likely to decline in the near-term following unexpected design changes to the vehicle. The military Humvee application constituted a meaningful portion of AGY's earnings for the first half of 2006. Lower than expected Humvee-related earnings in the future will likely weaken overall operating performance somewhat and result in very little room at the current rating for other possible unexpected negative developments. The company has limited ability in the near-term to entirely offset this loss through increased earnings from existing products or from the launch of new products. Still, S&P expects improved market conditions in some markets such as electronics and AGY's new product pipeline in its niche markets to partly offset the shortfall. The ratings reflect a vulnerable business position in a relatively narrow segment of the glass fiber market, with concentration of revenue and operating profits in a few customers and product- applications, and a highly leveraged financial profile. These risk factors are partly offset by the company's technological capabilities in some specialized product categories, a focus on growing the contribution from value-added products, and good market shares in the business niches in which it competes. Aiken, South Carolina-based AGY and its operating subsidiaries manufacture glass yarns, which range in degree of specialization and technological complexity. The company's products are geared to niche, and sometimes customized, applications in end-markets including aerospace, defense applications, construction, and electronics. ALERIS INTERNATIONAL: 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 North American Metals & Mining sectors, the rating agency confirmed its B1 Corporate Family Rating for Aleris International, Inc., and its Ba3 rating on the company's $400 million issue of senior secured term loan. Moody's also assigned an LGD3 rating to those loans, suggesting noteholders will experience a 32% loss in the event of a default. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on Aleris Deutschland Holding GMBH's loans obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $250 Million Gtd. Senior Secured Term Loan Ba3 Ba3 LGD3 34% 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 Beachwood, Ohio, a suburb of Cleveland, Aleris International, Inc. -- http://www.aleris.com/-- manufactures aluminum rolled products and extrusions, aluminum recycling and specification alloy production. The Company is also a recycler of zinc and a leading U.S. manufacturer of zinc metal and value-added zinc products that include zinc oxide and zinc dust. The Company operates 50 production facilities in North America, Europe, South America and Asia, and employs approximately 8,600 employees. ALLEGHENY TECHNOLOGIES: 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 North American Metals & Mining sectors, the rating agency confirmed its Ba2 Corporate Family Rating for Allegheny Technologies Inc. and its B1 rating on the company's $300 million issue of 8.375% senior unsecured notes due 2011. Moody's also assigned an LGD6 rating to those bonds, suggesting noteholders will experience a 90% loss in the event of a default. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on Allegheny Ludlum Corporation's and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $150 Million Gtd. Debentures due 2025 Ba2 Ba2 LGD4 53% 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 Pittsburgh, Pennsylvania, Allegheny Technologies Inc. is a specialty stainless steel and alloy producer. AMERICAN WAGERING: 9th Cir. Rules IPO Consultant Not an Investor ----------------------------------------------------------------- The United States Court of Appeals for the Ninth Circuit said last week that Michael Racusin's claim against American Wagering, Inc., should not be subordinated and sent the dispute back to the lower courts with instructions to pay Mr. Racusin what he's owed. Mr. Racusin, d/b/a M. Racusin & Company, provided American Wagering with prepetition consulting services. He sued and obtained a money judgment in a prepetition lawsuit he brought against the debtor to recover payment for the services he rendered nine years before the bankruptcy petition in connection with the handling of the debtor's public offering. Although the consultant's contract with the debtor provided that he would be paid for his services, in part, with shares of the debtor's stock, the shares were never tendered to the consultant. The value of the shares was used in the lawsuit to calculate the damages owed to the consultant. The dispute brought to the Ninth Circuit was whether Mr. Racusin was a "creditor," rather than an "investor." The Ninth Circuit held the consultant's claim against the debtor will not be subordinated as arising from the rescission of a purchase or sale of the debtor's stock. The Ninth Circuit's decision is published at 2006 WL 2846373. As reported in the Troubled Company Reporter on April 19, 2005, the Bankruptcy Appellate Panel for the 9th Circuit Court of Appeals ruled in favor American Wagering, Inc. regarding the Racusin subordination matter. On April 14, 2005, the BAP reversed a bankruptcy court order and ruled that the debt owed to Michael Racusin dba M. Racusin & Co. is subordinated pursuant to the provisions of Section 510(b) of the U.S. Bankruptcy Code. As a result, the debt to Racusin will be paid in the form of 250,000 shares of the Company's common stock rather than $2.8 million in cash. Headquartered in Reno, Nevada, American Wagering, Inc. -- http://www.americanwagering.com/-- owns and operates a number of subsidiaries including, but not limited to, (1) Leroy's Horse and Sports Place, which operates 47 race and sports books licensed by the Nevada Gaming Commission, giving it the largest number of books in the state; (2) Computerized Bookmaking Systems, the dominant supplier of computerized sports wagering systems in the state of Nevada; and (3) AWI Manufacturing (formerly AWI Keno) is licensed by the Nevada Gaming Commission as a manufacturer and distributor, and has developed a self-service race and sports wagering kiosk. The Company filed for chapter 11 protection on July 25, 2003 (Bankr. D. Nev. Case No. 03-52529). Thomas H. Fell, Esq., at Gordon & Silver, Ltd., represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed $13,694,623 in total assets and $13,688,935 in total debts. The Company and its wholly owned subsidiary, Leroy's Horse & Sports Place, Inc., consummated the Restated Amended Joint Plan of Reorganization and have formally emerged from Chapter 11 in March 2005. AWI and Leroy's officially concluded the process after completing all required actions and satisfying all remaining conditions of the Plan, which was confirmed by the U.S. Bankruptcy Court for the District of Nevada on Feb. 28, 2005. AMERICANA FOODS: Involuntary Chapter 7 Case Summary --------------------------------------------------- Alleged Debtor: Americana Foods Limited Partnership aka Americana Foods I Limited Partnership 3333 Dan Morton Drive Dallas, TX 75236 Involuntary Petition Date: October 11, 2006 Case Number: 06-34387 Chapter: 7 Court: Northern District of Texas (Dallas) Judge: Harlin DeWayne Hale Petitioners' Counsel: Jason S. Brookner, Esq. Andrews Kurth LLP 1717 Main St., Suite 3700 Dallas, TX 75201 Tel: (214) 659-4457 Fax: (214) 659-4829 Petitioners: CB Americana LLC c/o Integrated Brands Inc. 4175 Veterans Memorial Highway Ronkonkoma, NY 11779 Amount of Claim: Unknown AMKOR TECH: Form 10-Q Filing Cues Moody's to Put Positive Outlook ----------------------------------------------------------------- Moody's Investors Service confirmed the corporate family and long- term debt ratings of Amkor Technology, Inc. and assigned a positive rating outlook. In addition, Moody's upgraded the company's speculative grade liquidity rating to SGL-3, reflecting an improved liquidity situation following the company's avoidance of covenant defaults and consent fees. These actions conclude the ratings review that commenced on August 15, 2006. The ratings confirmation and positive outlook reflect Amkor's filing of its June 2006 10-Q on October 6, 2006, which cured the technical default under its note indentures. In addition, the company concluded its internal investigation involving Amkor's historical stock option practices and restated its financial results for years 2003, 2004, 2005, the first and second quarters of 2005 and first quarter of 2006. These restatements did not impact materially the company's financial position. Although liquidity concerns have diminished, Moody's notes that Amkor's ratings continue to reflect the inadequate oversight, processes and controls related to the granting of past stock options and the resulting impact on the accuracy of the company's financial reporting, which increases accounting risk. While the financial charges are not deemed material, Moody's confidence in the company's financial reporting has weakened. The ratings also reflect Amkor's ongoing efforts to remediate the material weaknesses, which are not yet complete; the impact of higher costs associated with the remediation; additional legal and accounting costs associated with the investigation; and the ongoing SEC investigations. In Moody's view, Amkor's credit fundamentals, absent the accounting and control issues surrounding its historical stock options practices, are more reflective of a B3 credit. The positive outlook reflects Moody's expectations that Amkor will complete successfully its remediation efforts; and that additional costs for remediation and accounting and legal services will be offset by a reduction in operating expenses in other areas or will be absorbed through improving performance. However, Moody's could move the rating outlook back to stable if further concerns regarding weaknesses in internal, disclosure and accounting controls emerged, liquidity issues resurfaced or if Amkor witnessed a sudden slowdown in customer demand. Additionally, given that the investigation found evidence of intentional manipulation of stock option pricing linked to former executives, we note that if the potential for legal risk increases as a result of former management actions or adverse conclusions from the SEC investigations, the ratings could be constrained or possibly downgraded. These ratings were confirmed and loss given default estimates changed: * Corporate Family Rating -- Caa1 * Probability of Default Rating -- Caa1 * $300 million Guaranteed Senior Secured 2nd Lien Term Loan due 2010 - B1 * $1,162 million Senior Unsecured Notes with various maturities -- Caa1 * $22 million 10.5% Senior Subordinated Notes due 2009 -- Caa2 * $190 million 2.5% Convertible Senior Subordinated Notes due 2011 - Caa3 * $142 million 5.0% Convertible Subordinated Notes due 2007 -- Caa3 These ratings were upgraded: * Speculative Grade Liquidity Rating to SGL-3 from SGL-4 Chandler, AZ-based Amkor Technology, Inc. is one of the largest providers of contract semiconductor assembly and test services for integrated semiconductor device manufacturers as well as fabless semiconductor operators. ASARCO LLC: Srackangast Approved as Special Environmental Auditor ----------------------------------------------------------------- The Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi authorized ASARCO LLC to employ Arnold Srackangast as its special purpose environmental professional. Mr. Srackangast will conduct the air quality modeling audit for the El Paso smelter. As reported in the Troubled Company Reporter on Sept. 22, 2006, ASARCO LLC has submitted an application to the Texas Commission on Environmental Quality for renewal of certain air quality permit necessary for the operation of its El Paso smelter. As required by TCEQ, ASARCO submitted an air dispersion modeling protocol to support its permit renewal application. However, the TCEQ has advised ASARCO that it will not consider its review completed until a third-party contractor audits the air modeling results. The TCEQ believes that an independent audit will ensure "a thorough and impartial review of the emissions from and related to the El Paso Plant and their impacts on surrounding areas . . ." Pursuant to an Engagement Letter, Mr. Srackangast will: (a) review ASARCO's air dispersion modeling to determine whether it complies with TCEQ protocols; and (b) prepare for the TCEQ Executive Director a final report, which will be in a form substantially conforming with the TCEQ's standard modeling report and will include the information and conclusions as required by the standard modeling report. ASARCO understands that the TCEQ staff will consider and rely on the final report in preparing its own independent review of the modeling. Thus, the parties have agreed that, in performing the air quality modeling audit, Mr. Srackangast will not act as an advocate for ASARCO, but as an independent third-party consultant paid for by ASARCO. ASARCO will pay not more than $30,000 to Mr. Srackangast on a time and material basis. Mr. Srackangast assured the Court that he does not represent any entity having adverse interest to ASARCO or its estate, and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. 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: Encycle Trustee Sells Tank to Valley Solvents --------------------------------------------------------- The Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi authorized Michael Boudloche, the Chapter 7 Trustee for Encycle/Texas, Inc., to sell a 1,500-gallon stainless steel up right tank with a 30- degree bottom to Valley Solvents & Chemicals. As reported in the Troubled Company Reporter on Sept. 28, 2006, the asset will be for consideration of Valley Solvents' complete pick-up, removal, and disposal off-site of approximately 1,300 gallons of sulfuric acid at Encycle's plant. The sale is free and clear of all liens, claims and interests. 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). BERRY PETROLEUM: Moody's Rates $200 Million Senior Notes at B3 -------------------------------------------------------------- Moody's Investors Service assigned a B3 first time rating to Berry Petroleum Company's $200 million senior subordinated notes offering and a B1 corporate family rating. The ratings for the notes reflect both the overall probability of default of the company, to which Moody's assigns a PDR of B1 and a loss given default of LGD 5. The rating outlook is stable. Proceeds from the new senior subordinated notes will be used to repay borrowings under the $500 million senior unsecured revolving credit facility. Berry's B1 corporate family rating reflects the company's growing scale of its reserves and production. While the company currently compares favorably to some of the higher rated exploration and production companies based on historic measures, the current rating provides the flexibility Moody's believes Berry may need as it embarks on an aggressive drilling program to establish a new core base of natural gas production in the Rocky Mountain region which is in the very early stages. If this transition is successful, it could facilitate Berry's transition from a predominantly crude oil producer to more of a natural gas producer. A higher corporate family rating would indicate that company has already completed this transition and has established a track record of consistent production and reserve growth at competitive costs in its new region. In Moody's view this will be better known over the next year or so. In addition, given the pace and scope of the drilling program combined with the continuation of meaningful equity repurchases and the payment of material common dividends, there is an expectation that the company will likely utilize additional debt over the next 12 to 18 months. This will likely lead to a continued trend of increasing leverage on the proven developed reserves which is currently more than triple the levels of FYE 2005 as the company has completed two large debt funded acquisitions and may look to pursue more opportunities. However, Moody's believes that even if the additional leverage is fairly significant, it can still be accommodated within the B1 rating. The B1 rating also reflects the company's cost structure that while currently within the peer group, it is anticipated to increase as the company drills its natural gas inventory in the Rockies, thus giving some rise to the drillbit finding and development costs which may also put some pressure on the company's leverage full cycle ratio, especially if commodity prices are not supportive. The B3 rating of the senior subordinated notes reflects an LGD 5 loss given default assessment as these notes are contractually subordinated to all of the company's senior creditors which includes the $500 million revolving credit facility that is expected to have material borrowings over the next 12 months. Moody's assigned these ratings to Berry Petroleum Corp. with a stable outlook: * B1 corporate family rating, * B1 probability of default rating, LGD-4 50% loss given default assessment, * B3 for the proposed $200 million senior subordinated notes Berry Petroleum Company, headquartered in Bakersfield, California, is an independent energy company engaged in the exploration, development, production, acquisition, and exploitation of crude oil and natural gas. The company's reserves and production are located in California, the Rocky Mountain, and Mid-Continent regions. CABLEVISION SYSTEM: Dolan Family Offers to Buy All Common Shares ---------------------------------------------------------------- In a letter to the board of directors of Cablevision Systems Corporation, Charles F. Dolan and James L. Dolan said that the Dolan Family Group is offering to acquire, at $27 per share, all outstanding shares of the Company's common stock. Charles and James Dolan said that they believe their offer is fair to and in the best interests of the Company and its public stockholders and that the public stockholders will find their offer attractive because: * The offer price represents a premium of 17% over the average closing price of the Company's Class A common stock for the past ten trading days, which follows substantial price appreciation in recent months. * The offer price represents an 11.3% premium to the 52-week high closing price for the Company's Class A common stock. * The offer price is 14.9% higher than the 2005 proposal, as valued by the Dolan Family Group at the time and when adjusted for the $10 per share special dividend paid in April 2006. * The all cash nature of the consideration provides value certainty. The Dolans also said that their proposal will ensure the Company has the flexibility to meet the challenges of intensifying competition and the risk of new entrants in the years to come and that for the Company to succeed a long-term, entrepreneurial management perspective that is not constrained by the public markets' constant focus on short-term results is required. In addition to the substantial equity investment from the Dolan Family Group, funds would be provided by committed debt financing from Merrill Lynch & Co. and Bear, Stearns & Co. Inc., the Dolans disclosed. The Dolans further said that following the transaction they expect the Company's senior management team would remain in place, with Charles Dolan continuing to serve as chairman and James Dolan continuing to serve as chief executive officer. The family group also clarified that their interest is only in pursuing the proposed transaction and will not sell their stake in the Company. The Dolan family group owns approximately 22.5% of the common stock, representing approximately 74% of the voting power, of Cablevision Systems Corporation. The family group shares would have a value of approximately $1.7 billion, based on the proposed transaction price. Charles Dolan and James Dolan are the Company's chairman and chief executive officer, respectively. Headquartered in Bethpage, New York, Cablevision Systems Corporation, is a domestic cable multiple system operator serving more than 3 million subscribers in and around the metropolitan New York area. Rainbow National Services LLC, headquartered in Jericho, New York, supplies television programming to cable television and direct broadcast service providers throughout the United States. * * * As reported in the Troubled Company Reporter on Oct 11, 2006 Moody's Investors Service placed all ratings for Cablevision Systems Corporation, CSC Holdings, Inc., a wholly owned subsidiary of CVC, and Rainbow National Services LLC on review for downgrade following the Dolan family's announcement of a proposal to acquire Cablevision. The ratings on Cablevision Systems Corporation that are under review are: Corporate Family Rating, Placed on Review for Possible Downgrade, currently B1; Probability of Default Rating, Placed on Review for Possible Downgrade, currently B1; and Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently B3,LGD6, 93%. CALPINE CORP: Sells Stake in Fox Energy to GE Energy for $16.3MM ---------------------------------------------------------------- Calpine Corporation disclosed, on Oct. 12, 2006, that one of its non-debtor subsidiaries has completed the sale of its entire leasehold interest in the 560-megawatt Fox Energy Center, located in Kaukauna, Wisconsin, to affiliates of GE Energy Financial Services, the plant's owner/lessor. With this sale, Calpine continues to advance its Chapter 11 restructuring program to strengthen its business -- financially and operationally -- and to position the company for future growth. The Fox Energy Center is a natural gas-fired, combined-cycle facility that supplies electricity to Wisconsin Public Service Corporation under a ten-year power sales agreement. In consideration of the sale, Calpine receives a cash payment from GE Energy Financial Services of approximately $16.3 million and eliminates approximately $352.3 million of obligations under a non-recourse sale/leaseback transaction. "The sale of the Fox Energy Center will enhance Calpine's liquidity and reduce project debt, allowing Calpine to further focus its resources on our core power and trading operations," Robert P. May, Calpine's Chief Executive Officer, stated. "As part of our restructuring, Calpine continues to evaluate every aspect of our power and contractual portfolio. Our goal is to determine the right asset base and market mix to achieve near-term results while positioning Calpine for long-term growth." Calpine operated, maintained and held a leasehold interest in the facility through its subsidiary, CPN Fox. Another business unit of GE, GE Energy, has hired all of Calpine's former Fox Energy Center personnel to continue to operate and maintain the power plant. The U.S. Bankruptcy Court for the Southern District of New York and the Federal Energy Regulatory Commission have approved the sale. 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. CALPINE CORP: Sells Thomassen to Ansaldo Energia for $23.5 Million ------------------------------------------------------------------ Calpine Corporation has completed the sale of its Netherlands- based gas turbine manufacturing affiliate Thomassen Turbine Systems, B.V. to Ansaldo Energia, S.p.A., for EUR18.5 million, or approximately $23.5 million. Robert P. May, Calpine's Chief Executive Officer, stated, "The sale of TTS further strengthens Calpine's renewed commitment to the North American power business. As we advance our restructuring program, Calpine will continue to pursue opportunities to enhance liquidity and our core power generation and trading business through the sale of non-strategic assets." Calpine continues to maintain and service its gas turbine parts and components through its in-house Turbine Maintenance Group, based in Pasadena, Texas. TMG supports Calpine's Power Operations group by providing technical support and maintenance parts inventory to help engineer high reliability into the company's fleet of natural gas-fired turbines, steam turbines and generators. About Thomassen Turbine Based in Rheden, The Netherlands, Thomassen Turbine Systems, B.V. -- http://www.thomassenturbinesystems.com/-- designs, manufactures and services gas turbine systems and also operates United Arab Emirates, India, and Australia, with field offices in Australia and India. Calpine acquired TTS in 2003. About Ansaldo Energia Based in Genova, Italy, Ansaldo Energia, S.p.A. -- http://www.ansaldoenergia.com/-- is a company in the Finmeccanica group and supplies gas turbines, steam turbines, generators and global services for power generation plants. About Calpine Corp. 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. CARMIKE CINEMAS: 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 gaming, lodging and leisure sectors, the rating agency revised its Corporate Family Rating for Carmike Cinemas Inc. to B3 from B2. Moody's also 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. Rev. Matures May 2010 B2 B1 LGD2 29% Sr. Sec. TL Matures May 2012 B2 B1 LGD2 29% Delayed Draw TL Due May 2012 B2 B1 LGD2 29% 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 Columbus, Georgia, Carmike Cinemas Inc. -- http://www.carmike.com/-- owns, operates, and holds interests in theatres. As of Dec. 31, 2005, it owned 85 theatres, leased 214 theatres, and operated 2 theatres under shared ownership with 2,475 screens located in 37 states. Carmike Cinemas primarily targets small to mid-size nonurban markets. CASABLANCA RESORTS: 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 gaming, lodging and leisure sectors, the rating agency confirmed its B3 Corporate Family Rating for CasaBlanca Resorts. Moody's also 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 ---------- ------- ------- ------ ---------- 9% Senior Secured Notes Due 2009 B3 B2 LGD3 43% 12-3/4% Senior Subordinated Notes Due 2013 Caa3 Caa2 LGD5 89% 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%). CasaBlanca Resorts -- http://www.casablancaresort.com/-- is headquartered in Mesquite, Nevada. CD 2006-CD3: S&P Places Low-Ratings on Six Certificate Classes -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to CD 2006-CD3 Mortgage Trust's $3.58 billion commercial mortgage pass-through certificates series CD 2006-CD3. The preliminary ratings are based on information as of Oct. 11, 2006. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying loans, and the geographic and property type diversity of the loans. Classes A-1, A-2, A-3, A-AB, A-4, A-5, A-1S, AM, AJ, A-1A, XP, B, C, D, E, and F are currently being offered publicly, and the remaining classes will be offered privately. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage of 1.27x, a beginning LTV of 102.8%, and an ending LTV of 94.3%. A copy of Standard & Poor's complete presale report for this transaction can be found on RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at http://www.ratingsdirect.com/ The presale can also be found on Standard & Poor's Web site at http://www.standardandpoors.com/ Select Credit Ratings, and then find the article under Presale Credit Reports. Preliminary Ratings Assigned CD 2006-CD3 Mortgage Trust Preliminary Recommended Class Rating amount credit support ----- ------ ----------- -------------- A-1 AAA $78,000,000 30.000% A-2 AAA $338,700,000 30.000% A-3 AAA $97,400,000 30.000% A-AB AAA $89,230,000 30.000% A-4 AAA $127,000,000 30.000% A-5 AAA $1,410,219,000 30.000% A-1S AAA $204,985,000 30.000% A-M AAA $335,076,000 20.000% A-J AAA $276,438,000 11.750% A-1A AAA $204,985,000 11.750% XP* AAA TBD N/A B AA+ $22,394,000 11.125% C AA $53,746,000 9.625% D AA- $31,351,000 8.750% E A+ $22,394,000 8.125% F A $26,873,000 7.375% X-S* AAA $3,583,040,872 N/A G A- $44,788,000 6.125% H BBB+ $40,309,000 5.000% J BBB $40,310,000 3.875% K BBB- $40,309,000 2.750% L BB+ $13,436,000 2.375% M BB $8,958,000 2.125% N BB- $13,436,000 1.750% O B+ $4,479,000 1.625% P B $13,436,000 1.250% Q B- $4,479,000 1.125% S NR $40,309,872 0.000% *Interest-only class with a notional amount. TBD - To be determined. NR - Not rated. N/A - Not applicable. CEDAR FAIR: 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 gaming, lodging and leisure sectors, the rating agency revised its Corporate Family Rating for Cedar Fair LP to B1 from Ba3. Additionally, Moody's 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. Revolver Matures July 2011 Ba3 Ba3 LGD3 35% Sr. Secured Term Loan Matures July 2012 Ba3 Ba3 LGD3 35% 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%). Sandusky, OH-based Cedar Fair LP -- http://www.cedarfair.com-- and its affiliated companies engage in the ownership and operation of amusement and water parks in the United States. CENTURY THEATRES: 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 gaming, lodging and leisure sectors, the rating agency revised its Corporate Family Rating for Century Theatres Inc. to B1 from Ba3. Moody's also revised its ratings on the company's Senior Secured Revolver Due 2012 and Senior Secured Term Loan Due 2013, from Ba3 to Ba2. Moody's assigned those loan obligations an LGD2 rating suggesting lenders will experience a 29% 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 San Rafael, California, Century Theatres Inc. owns and operates theaters in California, Nevada, Colorado, Iowa, Oregon, Utah, and Washington, as well as in the Chicago and San Francisco Bay Area markets. CHATTEM INC: Earns $15.2 Million for Fiscal 2006 Third Quarter -------------------------------------------------------------- Chattem, Inc., disclosed financial results for the third fiscal quarter and nine months ended August 31, 2006. Third Quarter Financial Results Total revenues for the third quarter of fiscal 2006 increased 6% to $72 million from total revenues of $68.2 million in the prior year quarter. Total revenues increased 9% over the third quarter of fiscal 2005 excluding sales of pHisoderm, which was divested in Nov. 2005. Revenue growth for the quarter was driven by the continued strength of the Gold Bond(R) franchise, up 24%; the Dexatrim(R) franchise, up 42%; the BullFrog(R) franchise, up 9%; along with incremental sales growth from Icy Hot(R) Pro-Therapy(TM) and Selsun(R) Salon(TM). Net income in the third quarter of fiscal 2006 was $15.2 million, compared to $9.4 million in the prior year quarter. Net income in the third quarter of fiscal 2006 included a net recovery related to the Dexatrim litigation settlement and SFAS 123R employee stock option expense. Net income for the third quarter of fiscal 2005 included legal expenses related to the Dexatrim litigation settlement and a severance charge. As adjusted to exclude these items, net income for the third quarter of fiscal 2006 was $8.9 million, compared to $11.3 million in the prior year quarter. Nine-Month Period Financial Results For the first nine months of fiscal 2006, total revenues were $235.4 million, compared to total revenues of $215.4 million in the prior year period, representing a 9% increase. Total revenues increased 13% over the prior year period excluding sales of pHisoderm. Revenue growth for the first nine months of fiscal 2006 was led by the new product launches of Icy Hot Pro-Therapy and Selsun Salon and continued growth of the Gold Bond business. For the first nine months of fiscal 2006, the Selsun franchise increased 11% and the Gold Bond franchise increased 16%, as compared to the prior year period. Net income in the first nine months of fiscal 2006 was $40.2 million, compared to $33.6 million in the prior year period. Net income in the first nine months of fiscal 2006 included a loss on early extinguishment of debt, net recoveries related to the Dexatrim litigation settlement and SFAS 123R employee stock option expense. Net income in the first nine months of fiscal 2005 included a loss on early extinguishment of debt, a net recovery related to the Dexatrim litigation settlement and a severance charge. Excluding these items, net income in the first nine months of fiscal 2006 was $31.6 million, compared to $34 million in the prior year period. Income Statements Highlights Operating Metrics -- Gross margin for the third quarter and first nine months of fiscal 2006 was lower compared to the prior year quarter and nine month period. The decline was largely attributable to the launch of Icy Hot Pro-Therapy, which has lower gross margins than our other products. -- Advertising and promotion expense increased for the third quarter and first nine months of fiscal 2006 compared to the prior year quarter and nine month period, due primarily to increased spending to support the Company's new product introductions. -- Selling, general and administrative expenses decreased for the third quarter and first nine months of fiscal 2006 compared to the prior year quarter and nine month period reflecting lower restricted stock and variable compensation expense, offset by share-based payment expense under SFAS 123R. Interest Expense Interest expense decreased for the third quarter and first nine- month period of fiscal 2006 as compared to the same prior year periods as a result of the Company's retirement of the $75 million Floating Rate Senior Notes in the first quarter of fiscal 2006. Share Repurchase and Capital Resources The Company successfully completed, on July 25, 2006, a consent solicitation from the holders of its $107.5 million 7% Senior Subordinated Notes due 2014 to an amendment to the indenture. Relative to the consent solicitation, the Company's board of directors authorized the repurchase of up to an additional $100 million of its common stock under the terms of the Company's existing stock repurchase program. From June 1, 2006 to Oct. 5, 2006, the Company repurchased 572,863 shares of its common stock at an average cost of $31.42 per share, or $18 million in the aggregate. As of Oct. 5, 2006 a total of $88.1 million remains available under the Company's board authorized stock repurchase program. The Company's total debt less cash as of Aug. 31, 2006 was $134.1 million compared to $139.4 million as of Aug. 31, 2005. Dexatrim Litigation Update The Company has resolved all of the claims submitted in the Dexatrim PPA class action settlement and all claims have been paid by the settlement trust that was funded by its insurance carriers and the manufacturer of Dexatrim products containing PPA. The Court granted, on July 14, 2006, a motion to dissolve the settlement trust and the Company received a payment of $10.7 million from the trust on Aug. 31, 2006. Based in Chattanooga, Tennessee, Chattem Inc. (NASDAQ: CHTT) -- http://www.chattem.com/-- manufactures and markets a variety of branded consumer products, including over-the-counter healthcare products and toiletries and skin care products. The Company's products include Icy Hot(R), Gold Bond(R), Selsun Blue(R), Garlique(R), Pamprin(R) and BullFrog(R). * * * As reported in the Troubled Company Reporter on Oct. 10, 2006 Moody's Investors Service placed Chattem Inc's corporate family rating and senior subordinated ratings of Ba3 and B1, respectively, under review for possible downgrade prompted by the company's announcement today that it had entered into an agreement to acquire the U.S. rights to five leading consumer and over-the- counter brands from Johnson & Johnson and the consumer healthcare business of Pfizer Inc. for $410 million in cash. The review for downgrade reflects the potential for significantly increased leverage and weakened debt protection measures as a result of this likely all-debt financed acquisition. CHOCTAW RESORT: 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 gaming, lodging and leisure sectors, the rating agency confirmed its Ba2 Corporate Family Rating for Choctaw Resort Development Enterprise. 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 ---------- ------- ------- ------ ---------- Term Loan Ba2 Ba2 LGD3 44% 7-1/4% Senior Notes Ba3 Ba2 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%). Choctaw, MS-based Choctaw Resort Development Enterprise operates the Pearl River Resort, which includes two casino hotels, a water park, golf course, and a training program under the Mississippi Band of Choctaw Indians. Both casinos offer a wide assortment of games and slots, including poker and roulette. The resort has partnered with a local community college to offer a two-year degree in hotel and restaurant management. CINEMARK 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 gaming, lodging and leisure sectors, the rating agency confirmed its B1 Corporate Family Rating for Cinemark Inc., and revised its rating on the company's 9- 3/4% Senior Discount Notes Due March 2014 to B3 from Caa1. Moody's assigned the debentures an LGD6 rating with a projected loss-given default of 92%. Additionally, Moody's revised or held these ratings based on Cinemark Inc. subsidiary Cinemark USA, Inc.'s proposed bank financing and acquisition of Century Theatres Inc.: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- 9% Sr. Sub. Notes Due Feb. 2013 B3 B2 LGD5 74% Sr. Secured RC Ba2 Ba2 LGD2 27% Sr. Secured TL Ba2 Ba2 LGD2 27% Further, Moody's revised these ratings for Cinemark USA, Inc., which ratings to be withdrawn following proposed bank financing and acquisition of Century Theatres Inc.: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Sr. Secured RC Due Sept. 2010 Ba3 Ba1 LGD2 11% Sr. Secured TL Due March 2011 Ba3 Ba1 LGD2 11% 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 Plano, Texas, Cinemark Inc. owns nearly 3,400 screens in more than 300 theaters in the US and several other countries, mostly in Latin America. CNET NETWORKS: Names Neil Ashe as New Chief Executive Officer ------------------------------------------------------------- CNET Networks, Inc. disclosed that its Board of Directors has unanimously appointed Neil Ashe as the Company's new chief executive officer and director effective immediately. Co-founder and chief executive officer Shelby Bonnie has resigned as chairman and CEO. The Company also said that Jarl Mohn has been named non-executive chairman of CNET Networks' Board of Directors. Mr. Mohn has extensive experience in the media and technology industries. Mr. Mohn has previously served as president and chief executive officer of Liberty Digital, Inc., founding president and CEO of E! Entertainment Television, and executive vice president and general manager of MTV and VH1. "CNET Networks is known for building world class brands for people and the things they are passionate about. It's been an honor to work with Shelby as we have grown the company from its technology roots and moved into new categories like Entertainment, Food and Parenting," said Neil Ashe. "CNET Networks is a different kind of media company and we are committed to continuing to be pioneers in interactive content. We have been and will be innovators, and together with my colleagues worldwide, I am confident about what we can accomplish. Innovation is part of our DNA and will be fundamental to our success moving forward." Jarl Mohn, the newly appointed chairman of the Board, said, "Neil has been instrumental in CNET Networks' growth and success over the past few years both as head of corporate strategy and development and through the operation of several business units. This announcement marks the successful completion of the Board's succession planning started more than 18 months ago. Neil's broad-based expertise in all facets of the business, together with his outstanding management and leadership skills, are valuable assets that will serve our company well as we continue to expand CNET Networks." "I am confident under Neil's leadership CNET Networks will continue to play an important role in the evolving media landscape" said Shelby Bonnie. "He will build upon the company's legacy and take it to new heights." Since joining CNET Networks in 2002, Mr. Ashe has led the company's content expansion strategy, including numerous acquisitions to develop its existing products and expand into new categories which attract new audience and customer segments. His day-to-day responsibility for the Community and Lifestyle, International, Channel, and Business divisions has resulted in new product development, audience growth and revenue streams for the company. Prior to joining CNET Networks, Mr. Ashe founded and served as chief executive officer of several start-up companies and held senior positions in private equity and investment banking. Mr. Ashe holds an MBA from Harvard Business School and a BS from Georgetown University. About CNET Networks CNET Networks, Inc. (Nasdaq: CNET) -- http://www.cnetnetworks.com/ -- is an interactive media company that builds brands for people and the things they are passionate about, such as gaming, music, entertainment, technology, business, food, and parenting. The Company's leading brands include CNET, GameSpot, TV.com, MP3.com, Webshots, CHOW, ZDNet and TechRepublic. Founded in 1993, CNET Networks has a strong presence in the US, Asia and Europe. * * * As reported in the Troubled Company Reporter on Aug. 22, 2006, CNET Networks received a notice from the trustee under the indenture governing the Company's $125 million aggregate principal amount of 0.75% Convertible Senior Notes due 2024, stating that the company is in default of its covenant to file its Form 10-Q with the trustee within fifteen days after it is required to be filed with the SEC. If the default is not cured within 60 days, the bonds may be accelerated by the holders of 25% outstanding principal amount or the trustee. As of June 30, 2006, the Company had approximately $143.3 million of cash and investments. CNET NETWORKS: Discloses Findings of Stock Options Investigation ---------------------------------------------------------------- CNET Networks, Inc. said that a special committee of its Board of Directors has reported its findings on the Company's options granting practices and procedures to the Board of Directors. As reported in the Troubled Company Reporter on May 24, 2006, the Company's Board of Directors appointed a special committee of independent directors to conduct an internal investigation relating to past option grants, the timing of such grants and related accounting matters. The Special Committee consists of two independent members of CNET Networks' audit committee of the Board of Directors - Peter Currie and Betsey Nelson, chair of the audit committee. The Special Committee was assisted in the investigation by outside legal counsel Davis Polk & Wardwell and accountants from Navigant LLC. The Special Committee reviewed and analyzed more than 700,000 documents and emails, and conducted over thirty interviews of current and former officers, directors, employees and advisors to CNET Networks over the last four months. The Company says that the Special Committee and the Company continue to cooperate with the Securities and Exchange Commission, the NASD and the United States Attorney's Office for the Northern District of California. "The completion of the Special Committee report represents an important step forward for CNET Networks," said Neil Ashe, the Company's newly elected chief executive officer. "We are committed to ensuring that the highest standards of business conduct, financial reporting and internal controls are maintained, and we are focused on quickly implementing the recommendations of the Special Committee. Under the leadership of our CFO, George Mazzotta, we look to complete the restatement of historical financial statements related to past stock option grants as soon as practicable." Key findings of the Special Committee's report include: * There were deficiencies with the process by which options were granted at CNET, including in some instances the backdating of option grants, during the period from the Company's IPO in 1996 through at least 2003. * These deficiencies resulted in accounting errors, which the Company has previously announced will result in a restatement. * A number of executives of the Company, including the former CFO and the recently resigned CEO, General Counsel and SVP of Human Resources, bear varying degrees of responsibility for these deficiencies. * The report does not conclude that any current employees of the Company or any recently resigned employees engaged in intentional wrongdoing. * Since 2003, the Company has taken steps to remedy these deficiencies through personnel changes and improved internal controls. The Special Committee recommended a number of additional remedial measures. * The recently resigned executives and the directors who received improperly priced options have agreed voluntarily to have these options repriced to fair market value on the appropriate measurement date. The Special Committee reported that it believes that the Compensation Committee relied upon management to establish and maintain appropriate procedures with respect to stock option grants. The report stated that it would have been better practice if the Compensation Committee had encouraged management to adopt more rigorous procedures and controls during the 1996-2003 period. The Company's co-founder and the chairman of the board and chief executive officer from 2000 to the present, Shelby Bonnie, has resigned as chairman and CEO but will remain a director. The Company's general counsel and head of Human Resources have also resigned. With regard to Mr. Bonnie, Mr. Jarl Mohn, chairman of the Board of Directors, commented, "We extend our appreciation to Shelby for his founding role and many years of service, and for his willingness to work with the Board and the Company in assisting with this transition. Shelby's lasting legacy will be the innumerable positive actions he undertook to make CNET Networks the successful industry leader it is today." "I apologize for the option-related problems that happened under my leadership," said Shelby Bonnie. "I believe that the company has come a long way since 2003 in addressing these deficiencies, but am deeply disappointed it happened nonetheless." The Company and its independent auditors are reviewing the findings of the Special Committee investigation. Management continues to expect that CNET Networks will need to restate its historical financial statements to record non-cash charges for compensation expense relating to past stock option grants. The Company and its independent auditors are reviewing recent accounting guidance published by the SEC, and have not yet determined the amount of such charges, the resulting tax and accounting impact, or which periods may require restatement. About CNET Networks CNET Networks, Inc. (Nasdaq: CNET) -- http://www.cnetnetworks.com/ -- is an interactive media company that builds brands for people and the things they are passionate about, such as gaming, music, entertainment, technology, business, food, and parenting. The Company's leading brands include CNET, GameSpot, TV.com, MP3.com, Webshots, CHOW, ZDNet and TechRepublic. Founded in 1993, CNET Networks has a strong presence in the US, Asia and Europe. * * * As reported in the Troubled Company Reporter on Aug. 22, 2006, CNET Networks received a notice from the trustee under the indenture governing the Company's $125 million aggregate principal amount of 0.75% Convertible Senior Notes due 2024, stating that the company is in default of its covenant to file its Form 10-Q with the trustee within fifteen days after it is required to be filed with the SEC. If the default is not cured within 60 days, the bonds may be accelerated by the holders of 25% outstanding principal amount or the trustee. As of June 30, 2006, the Company had approximately $143.3 million of cash and investments. CNET NETWORKS: Extends Consent Solicitation for 0.75% Senior Notes ------------------------------------------------------------------ CNET Networks, Inc. modified and extended its solicitation of consents for its outstanding $125.0 million principal amount of 0.75% Senior Convertible Notes due 2024. The Company also updated its outlook for it revenues for the third quarter of 2006 and for the full year. Modified and Extended Consent Offering The consent solicitation has been modified to offer holders a two- year extension of the call protection period so that such period would end on April 20, 2011 rather than April 20, 2009. The offer, which was scheduled to expire midnight, New York City time, on October 11, 2006, will now expire at midnight, New York City time, on Wednesday, October 18, 2006. The solicitation is being made upon the terms, and is subject to the conditions, set forth in the Company's Consent Solicitation Statement, dated September 13, 2006, and in the accompanying form of consent, as amended by the supplement to Consent Solicitation Statement dated October 11, 2006. The proposed amendments and waivers require the consent of holders of 70% of aggregate principal amount of the notes outstanding. Requests for additional copies of the Consent Solicitation Statement, the Letter of Consent or other related documents should be directed to D.F. King & Co., Inc., the information and tabulation agent, at (800) 829-6551 (toll-free) or (212) 269-5550 (collect). Questions regarding the consent solicitation should be directed to the Convertibles Sales Department of Banc of America Securities LLC, the solicitation agent, at 800-654-1666 (toll- free) or 212-583-8206 (collect). Business Outlook In April 2006 the Company revised its outlook noting several industry trends in the technology and video game industries. These factors continue to impact CNET Networks' business, and accordingly, the Company has further revised its outlook. * For the third quarter of 2006, CNET Networks estimates total revenues were approximately $92.8 million. Previously, the Company had expected total revenues of $93 million to $96 million. * For the full-year 2006, CNET Networks expects total revenues of $376 million to $386 million. Previously, the Company had expected full year total revenues of $386 million to $403 million. Form 10-Q Filing Delay The Company will not be in a position to file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 on a timely basis, pending the completion of its financial restatements related to its independent investigation of stock option granting practices and of the requisite audit procedures by the Company's independent registered public accountants. Consequently, CNET Networks is not in a position to provide actual results or guidance regarding operating expense, operating income, net income or earnings per share. About CNET Networks CNET Networks, Inc. (Nasdaq: CNET) -- http://www.cnetnetworks.com/ -- is an interactive media company that builds brands for people and the things they are passionate about, such as gaming, music, entertainment, technology, business, food, and parenting. The Company's leading brands include CNET, GameSpot, TV.com, MP3.com, Webshots, CHOW, ZDNet and TechRepublic. Founded in 1993, CNET Networks has a strong presence in the US, Asia and Europe. * * * As reported in the Troubled Company Reporter on Aug. 22, 2006, CNET Networks received a notice from the trustee under the indenture governing the Company's $125 million aggregate principal amount of 0.75% Convertible Senior Notes due 2024, stating that the company is in default of its covenant to file its Form 10-Q with the trustee within fifteen days after it is required to be filed with the SEC. If the default is not cured within 60 days, the bonds may be accelerated by the holders of 25% outstanding principal amount or the trustee. As of June 30, 2006, the Company had approximately $143.3 million of cash and investments. COMPLETE RETREATS: Court OKs Ableco's Financing Commitment Letter ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Connecticut approved Ableco Finance LLC's commitment letter providing Complete Retreats LLC and its debtor-affiliates a replacement credit facility. Accordingly, the Court authorizes, but does not direct, the Debtors to pay Ableco: (a) an $800,000 commitment fee; and (b) an additional $100,000 deposit to cover Ableco's reasonable fees and expenses, including reasonable attorneys' fees and expenses and due diligence fees and expenses incurred in connection with the negotiation, preparation, execution and delivery of the Commitment Letter, the related term sheet, and any and all definitive documentation. The Court also authorizes the Debtors and Ableco to amend or modify the Commitment Letter without further Court order, provided that any modification is non-material and are not adverse to the Debtors and their estates. As reported in the Troubled Company Reporter on Oct. 10, 2006, the Court's final order on the Debtors' existing DIP Financing Agreement with The Patriot Group, LLC, and LPP Mortgage, Ltd., requires the Debtors to obtain replacement DIP financing sufficient to "take out" Patriot and LPP Mortgage by Oct. 31, 2006. Otherwise, Patriot and LPP Mortgage will be authorized, under certain conditions, to foreclose on the Debtors' assets. The Debtors have solicited interest in providing a replacement credit facility from numerous potential postpetition lenders. The Debtors received draft commitment letters from two potential lenders, one from Ableco Finance LLC. The Debtors believe that the terms of the credit facility proposed by Ableco are more favorable than the proposed credit facility of the other potential lender. Subsequently, the Debtors and Ableco executed a DIP Financing Commitment Letter on Oct. 4, 2006. The Commitment Letter contemplates that the Debtors and Ableco will enter into a credit facility of up to $80,000,000, comprised of a term loan of up to $50,000,000 and a revolver of up to $30,000,000. The Ableco Commitment Letter requires the Debtors to pay an $800,000 non-refundable commitment fee to Ableco. It also requires that the Debtors pay Ableco's reasonable fees and expenses, including its reasonable attorneys' and due diligence fees and expenses incurred in connection with the negotiati