T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, October 31, 2006, Vol. 10, No. 259 Headlines A21 INC: Posts $2.27 Million Net Loss in Second Quarter 2006 ADELPHIA COMMS: Discloses Claims Classification Under Revised Plan ADVANCED MICRO: Moody's Assigns Loss-Given-Default Ratings ADVENTRX PHARMA: Alexander Denner Joins Board of Directors ALLEGHENY ENERGY: Earns $110.2 Million in Third Quarter of 2006 ALLEGHENY ENERGY: Potomac Completes $100 Million Bond Offering ALLIED HOLDINGS: Ad Hoc Equity Panel Renews Call for Appointment ALLIED HOLDINGS: Creditors Committee Wants Lang as Special Counsel AMERICAN ACHIEVEMENT: Moody's Assigns Loss-Given-Default Ratings AMERICAN GREETINGS: Moody's Assigns Loss-Given-Default Ratings AMKOR TECHNOLOGY: Moody's Assigns Loss-Given-Default Ratings ANCHOR GLASS: Has Until December 15 to Object to Claims APRIA HEALTHCARE: Earns $19.3 Million in Quarter Ended Sept. 30 ARDAJI RESTAURANT: Case Summary & 40 Largest Unsecured Creditors ARMSTRONG WORLD: Requests for Payment Deadline Set for November 16 AVAGO TECHNOLOGIES: Moody's Assigns Loss-Given-Default Ratings AVNET INC: Moody's Assigns Loss-Given-Default Ratings BALL CORP: Earns $101.5 Million in the Third Quarter of 2006 BALLY TOTAL: Files Restated Results for 2006 Quarter Ended June 30 BANTA CORP: S&P Rates $515 Mil. Sr. Sec. Credit Facilities at BB BEST MANUFACTURING: Court Approves BDO Seidman as Accountants BLYTH INC: Moody's Assigns Loss-Given-Default Ratings BOMBARDIER INC: S&P Rates EUR1.8 Bil. Senior Unsec. Notes at BB BOMBARDIER INC: Moody's Rates Proposed EUR1.8 Billion Notes at Ba2 BOMBARDIER INC: Fitch Downgrades Issuer Default Rating to BB- BUCKEYE TECHNOLOGIES: Henry Frigon Resigns from the Board BUILDING MATERIALS: Fitch Sees BB+ Rating on $850MM Sr. Sec. Debt CABLEVISION SYSTEM: Grover Brown and Zachary Carter Joins Board CAJUN FUNDING: Moody's Assigns Loss-Given-Default Rating CARIBBEAN RESTAURANTS: Moody's Assigns Loss-Given-Default Rating CARROLS CORPORATION: Moody's Assigns Loss-Given-Default Rating CASABLANCA RESORTS: Moody's Holds Caa2 Rating on Senior Notes CEP HOLDINGS: Taps Glass & Associates as Financial Advisors CHARITABLE LEADERSHIP: Moody's Puts on Watch Ba2 Rated $55MM Bonds CHASE MORTGAGE: Fitch Assigns BB Rating to $1.6MM Private Class CITICORP MORTGAGE: Fitch Puts B Rating to $843,000 Class B Certs. CITIZENS COMMS: Board Declares $0.25 Per Share Quarterly Dividend COLLINS & AIKMAN: Has Until Dec. 27 to File Reorganization Plan COLLINS & AIKMAN: Reviews Bankruptcy Exit Plan COMCAST CORP: Earns $1.2 Billion for the Quarter Ended Sept. 30 COMMSCOPE INC: Reports $43.6 Million Net Income in Third Quarter CONEXANT SYSTEMS: Improved Liquidity Cues S&P to Lift Corp. Rating CONEXANT SYSTEMS: Moody's Junks Corporate Family Rating CONEXANT SYSTEMS: To Offer $250 Mil. Floating Rate Secured Notes CORE GROUP: Debtor's Suit Naming IRS as Defendant Was Deficient CRC HEALTH: S&P Rates Amended $434 Mil. Sr. Sec. Term Loan B at B CRC Health: Moody's Puts Ba3 Rating on Proposed $190 Million Loan CWALT INC: $4.3 Million of Certificates Gets Fitch's Low-B Rating CWALT INC: Fitch's Rating on $3.3MM Class B-4 Certs. Remains at B DANA CORP: Court Permits Debtors and Franklin to Conduct Discovery DANA CORP: Wants Furillo's and Buono's Lift Stay Requests Denied DAVE & BUSTERS: Moody's Assigns Loss-Given-Default Rating DEATH ROW: Court Approves LECG LLC as Accountants Advisors DELPHI CORP: Resolves SEC Fraud Lawsuit DELPHI CORP: Shifts Power Products Trade to Automotive Holdings DELPHI CORP: Panel Balks at Move to Recognize Late-Filed Claims DENNY'S CORP: Earns $25.5 Million for the Quarter ended Sept. 27 DEVELOPERS DIVERSIFIED: Buying Inland Retail for $6.2 Billion DEVELOPERS DIVERSIFIED: Filing Form S-3 for 3.50% Senior Notes DEVELOPERS DIVERSIFIED: Fitch Holds BB+ Preferred Stock Rating DHIMANT PATEL: Case Summary & Five Largest Unsecured Creditors DORAL FINANCIAL: 10-Q Filing Cues S&P to Remove Ratings from Watch DOUGLAS HAN: Case Summary & 20 Largest Unsecured Creditors DOV PHARMACEUTICAL: May File for Bankruptcy to Improve Liquidity DURA AUTOMOTIVE: U.S. and Canadian Operations File for Chapter 11 DURA AUTOMOTIVE: Case Summary & 30 Largest Unsecured Creditors EDUCATE INC: Moody's Places Ba3 Rated $159 Mil. Term Loan on Watch ENTERGY NEW ORLEANS: U.S. Trustee Amends Committee Membership ENTERGY NEW: Court Dismisses Request for August Tax Payment FIRST BANCORP: Fitch Puts Low-B Ratings on Negative Watch FIRST MERCURY: Moody's Withdraws B2 Rating on Sr. Notes Due 2012 FOAMEX INTERNATIONAL: Schulte Roth Represents Ad Hoc Committee FOAMEX INTERNATIONAL: Trade Creditors Sell 39 Claims FOCUS CORP: S&P Rates Proposed CDN$195 Million Secured Debts at B- FORD MOTOR: Closes Production at Atlanta Assembly Plant FORTUNE NATURAL: Judge Brown Nixes 90% of Greenwich's Claim GALLERIA INVESTMENTS: Taps Gleeds USA as Contract Auditor GATEHOUSE MEDIA: S&P Cuts Sr. Sec. Credit Facilities Rating to B+ GATEWAY DISTRIBUTORS: Posts $1.1 Mil. Net Loss in Second Quarter GLOBAL DOCUGRAPHIX: Wants Court Approval on Chapter 7 Conversion GOODYEAR TIRE: Closing Tire Manufacturing Plant in Tyler, Texas GREENS WORLDWIDE: Posts $2.7 Million Net Loss in Second Quarter HERBALIFE LTD: Amends Employment Pact with CEO Richard Goudis HOST HOTELS: S&P Rates Proposed $500 Million Senior Notes at BB IDEAL ELECTRIC: Case Summary & 20 Largest Unsecured Creditors INCO LTD: CVRD Brings In New Board Following Purchase Completion INT'L GALLERIES: Trustee Wants Court Okay to Use Cash Collateral INTERMUNE INC: Paying $36.9 Million Actimmune Drug Suit Settlement INTRAWEST CORP: Fortress Purchase Cues S&P to Withdraw Ratings INTREPID TECHNOLOGY: June 30 Balance Sheet Upside-Down by $2.1MM JP MORGAN: S&P Affirms B- Rating on Class O Certificates KAISER ALUMINUM: Gramercy Alumina Moves for Summary Judgment KAISER ALUMINUM: Trustee Balks at LeBlanc's Admin. Claim Payments KANSAS CITY SOUTHERN: Fitch Ratings Holds B+ IDR Rating KARA HOMES: Wants Until Nov. 15 to File Schedules and Statements LARRY VARNER: Involuntary Chapter 11 Case Summary LAS AMERICAS: Judge Rimel Confirms Chapter 11 Reorganization Plan LEHMAN XS: Moody's Puts B2 Rating on Class A-4 Notes LIFESTREAM TECHNOLOGIES: Exploring Strategic Alternatives MERIDIAN AUTOMOTIVE: Plan-Filing Period Extended Until December 31 MERIDIAN AUTOMOTIVE: Has Until March 1 to Remove Civil Actions MERRILL LYNCH: Moody's Rates $2.2 Mil. Class L Certificates at B3 MICRON TECHNOLOGY: Earns $408 Million in 2006 Fiscal Year MILLS CORP: Could File Delinquent Financial Statements in 4 Weeks MOORE MEDICAL: Case Summary & 20 Largest Unsecured Creditors MORTGAGE ASSET: $1.9 Mil. Class B-4 Certs. Get Fitch's BB Rating NESCO INDUSTRIES: Has $10 Million Stockholders' Deficit at July 31 NISKA GAS: Moody's Assigns Loss-Given-Default Ratings NORAMPAC INC: Earns CDN$24.3 Mil. for Quarter Ended Sept. 30, 2006 OPTIMAL CARE: Case Summary & 20 Largest Unsecured Creditors PERFORMANCE TRANSPORTATION: Inks Services Pact with Qwest Comms PERFORMANCE TRANSPORTATION: Panel Argues Against Compensation Plan PHOTRONICS INC: Moody's Assigns Loss-Given-Default Ratings POP N GO: Posts $4.4 Million Net Loss in Third Fiscal Quarter PRODIGY HEALTH: Moody's Junks Proposed $75MM Sr. Facility Rating R&G FINANCIAL: Fitch Lowers to IDR to BB with Negative Outlook RADIOSHACK CORP: Fitch Holds Issuer Default Rating at BB+ RAFAELLA APPAREL: S&P Raises Corporate Credit Rating to B from B- REGENT BROADCASTING: Moody's Puts B1 Rating on $125 Mil. Term Loan RENO REDEVELOPMENT: S&P Cuts SPUR on Sub. 1998A Bonds to BB+ RESIDENTIAL ACCREDIT: Fitch Holds B Rating on 16 Cert. Classes RIEFLER CONRETE: Gets Initial Okay on Harter Secrest Rentention RIVES CARLBERG: Voluntary Chapter 11 Case Summary ROBERT ZOCCO: Case Summary & Largest Unsecured Creditor ROLE MODELS: Debtor Had No Interest in Fort Ritchie Property ROO GROUP: Posts Net Loss of $3.2 Mil. in Second Quarter ROWECOM INC: Liquidating Trustee Provides Update on Recent Actions SAINT VINCENTS: Court Approves Nursing School Asset Auction SAINT VINCENTS: Judge Hardin Allows Sale of Surplus Assets SEARS ROEBUCK: Moody's Assigns Loss-Given-Default Ratings SEMCAMS HOLDING: Moody's Assigns Loss-Given-Default Ratings SEPRACOR INC: Restates Annual Reports Showing Option Grant Changes SFG LP: Wants to Hire DJM Asset as Real Estate Consultant SMARTIRE SYSTEMS: David Warkentin Gets Promoted to President & CEO SWIFT & COMPANY: Names Raymond Silcock as EVP and CFO SWIFT & COMPANY: First Fiscal Quarter Net Sales Rose to $2.59 Bil. SYNTHRON INC: Case Summary & 20 Largest Unsecured Creditors TAKE-TWO INTERACTIVE: Court Retains "Grand Theft Auto" Suit Claims TOYS 'R' US DELAWARE: Moody's Assigns Loss-Given-Default Ratings TOYS 'R' US: Moody's Assigns Loss-Given-Default Ratings TRANSCO ENERGY: Moody's Assigns Loss-Given-Default Ratings TRUSTREET PROPERTIES: GE Capital Extends $3 Billion Purchase Offer TYRINGHAM HOLDINGS: Gets Final Court OK on DIP Financing with BoA UAP HOLDING: Posts $4.2M Net Loss in 2nd Fiscal Qtr. Ended Aug. 27 USI HOLDINGS: S&P Puts BB- Bank Loan Ratings on Negative Watch VESCOR DEVELOPMENT: Court OKs Lionel Sawyer as Bankruptcy Counsel VISHAY INTERTECHNOLOGY: Moody's Assigns Loss-Given-Default Ratings VISIPHOR CORP: To Consolidate Vancouver and Burnaby Offices WCI COMMUNITIES: Expects to Report Net Income in Third Quarter WELD WHEEL: Creditors Must File Proofs of Claim by December 1 WELD WHEEL: Courts Approves Expansion of BMC Group's Work Scope WELLS FARGO: Fitch Rates $326,000 Class B-5 Certificates at B WESTCHESTER COUNTY: Moody's Holds Ba2 Rating on $107 Mil. Sr. Debt WILLIAMS HOLDINGS: Moody's Assigns Loss-Given-Default Ratings WILLIAMS PRODUCTION: Moody's Assigns Loss-Given-Default Ratings WINN-DIXIE: Court Approves Deutsche Bank Stipulation WINN-DIXIE: Wants to Assume Hobart Corp. Agreement WORLDCOM INC: District Court Holds Bankr. Court's Enjoinment Order WORLDCOM INC: Court Denies Seinfeld's Derivative Claims Action X-RITE INC: Moody's Assigns Loss-Given-Default Ratings YOUNG CHOE: Voluntary Chapter 11 Case Summary * FTI Appoints New Directors to Forensic, Corp Finance Practices * Japonica's Kazarian to Give Keynote at Distressed Investing 2006 * Large Companies with Insolvent Balance Sheets ********* A21 INC: Posts $2.27 Million Net Loss in Second Quarter 2006 ------------------------------------------------------------- A21 Inc. reported a $2,270,000 net loss on $4,511,000 of revenues for the second quarter ended June 30, 2006, compared to a $985,000 net loss on $2,327,000 of revenues for the same period in 2005. At June 30, 2006, the company's balance sheet showed $40,330,000 in total assets, $30,345,000 in total liabilities, Minority Interest of $2,590,000, Convertible Preferred Stock of $4,830,000, and $2,465,000 in stockholders' equity. Accumulated deficit increased to $18,871,000 at June 30, 2006, from $14,185,000 at Dec. 31, 2005. At June 30, 2006, A21, Inc.'s balance sheet showed an improvement in the company's working capital position, with $11,409,000 in current assets available to pay $5,033,000 in current liabilities. This was primarily due to the net proceeds from Convertible Debt Financing offset by the cash used to acquire ArtSelect and cash used in operations. Full-text copies of the company's second quarter financial statements are available for free at: http://researcharchives.com/t/s?142d Going Concern Doubt BDO Seidman LLP, in Charlotte, North Carolina, raised substantial doubt about A21 Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2005. The auditor pointed to the company's working capital deficit and losses from operations. About A21 Inc. Headquartered in Jacksonville, Florida, A21, Inc. -- www.a21group.com/ -- through its subsidiary SuperStock, Inc., aggregates visual content from photographers, photography agencies, archives, libraries, and private collections and licenses the visual content to customers. ADELPHIA COMMS: Discloses Claims Classification Under Revised Plan ------------------------------------------------------------------ The Adelphia Communications Corporation Debtors disclosed the classification of claims under its Revised Fifth Amended Plan of Reorganization. The Revised Draft Fifth Amended Plan contains 11 new types of claims or equity interests: (a) Century Bank Claims Administrative Agent Claims, (b) Century Bank Claims Non-Administrative Agent Claims, (c) Century Syndicate Claims, (d) Century Wachovia Claims, (e) Century BMO Claims, (f) FrontierVision Bank Claims, (g) Olympus Bank Claims Administrative Agent Claims, (h) Olympus Bank Claims Non-Administrative Agent Claims, (i) Olympus Bank Syndicate Claims, (j) Olympus Wachovia Claims, (k) Olympus BOFA Claims, (l) UCA Bank Claims Administrative Agent Claims, (h) UCA Bank Claims Non-Administrative Agent Claims, (i) UCA Bank Syndicate Claims, (j) UCA BMO Claims, and (k) UCA BOFA Claims. The new classes of Bank Claims are revisions to: -- the Century Bank Claims Class, -- the FrontierVision Bank Claims Class, -- the Olympus Bank Claims Class, and -- the UCA Bank Claims Class. The new Bank Classes will receive payment in full in cash, subject to disgorgement and certain other conditions. Each holder of Bank Claims in a class that accepts the Plan will also receive Bank Fee Claims for fees and expenses actually billed and accrued and not pre-billed for future anticipated services. Except for the Bank Syndicate Claims Classes, the estimated total recovery of the Bank Claims is 100%. The Bank Claims Classes are impaired and are entitled to vote. The Plan also reflects revisions to the recoveries and treatment of certain Claim Classes: Type of Claim Treatment ------------- --------- A. GENERAL Administrative Claims Paid in full in cash. Estimated total recovery: 100% Estimated claims: $901,000,000 B. SUSIDIARY DEBTORS Subsidiary Debtor Paid in full in cash, plus Secured Claims accrued postpetition interest from the Petition Date through the Effective Date, at the Applicable Rate. Estimated total recovery: 137% Estimated claims: $57,000,000 Unimpaired; not entitled to vote FPL Notes Payment through distribution of cash and TWC Class A Common Stock equal to payment in full, and of CVV Series FPL Interests. Estimated total recovery: 122% Estimated claims: $127,000,000 Impaired; entitled to vote Olympus Notes Payment through distribution of cash and TWC Common Stock equal to payment in full, and of CVV Series Olympus Interests. Estimated total recovery: 139% Estimated claims: $213,000,000 Impaired; entitled to vote C. ACOM DEBTORS ACOM Debtors Secured Paid in full in cash. Claims Estimated total recovery: 137% Estimated claims: <$1,000,000 Unimpaired; not entitled to vote ACOM Senior Notes Payment through distribution of cash and TWC Common Stock, and of CVV Series ACC-1 Interests. Estimated total recovery: 58% Estimated claims: $5,110,000,000 Impaired; entitled to vote ACOM Trade Claims Payment through distribution of cash and TWC Common Stock, and of CVV Series ACC-2 Interests. Estimated total recovery: 42% - 45% Estimated claims: $293,000,000 Impaired; entitled to vote ACOM Other Unsecured Payment through distribution Claims of cash and TWC Common Stock and of CVV Series ACC-3 Interests. Estimated total recovery: 42% - 45% Estimated claims: $89,000,000 Impaired; entitled to vote 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 No. 150; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ADVANCED MICRO: Moody's Assigns Loss-Given-Default Ratings ---------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. technology semiconductor and distributor sector, the rating agency affirmed its Ba3 corporate family rating on Advanced Micro Devices, Inc. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $600 Mil. senior unsecured notes B1 Ba3 LGD4 59% Shelf - Sr. Unsecured Notes B1 Ba3 LGD4 59% Shelf - Subor. B2 B2 LGD6 97% Shelf - Preferred B3 B2 LGD6 97% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in Sunnyvale, California, Advanced Micro Devices Inc. (NYSE: AMD) -- http://www.amd.com/-- provides microprocessor solutions for computing, communications and consumer electronics markets. ADVENTRX PHARMA: Alexander Denner Joins Board of Directors ---------------------------------------------------------- ADVENTRX Pharmaceuticals Inc. disclosed that Alexander J. Denner, Ph.D., a member of the board of directors of ImClone Systems Incorporated, will join its board of directors. Dr. Denner will replace Keith Meister as the representative of entities affiliated with Carl Icahn and other investors. "Alex's deep understanding of the biotechnology markets will be a tremendous resource to us as we move our product candidates towards commercialization," Evan M. Levine, chief executive officer, said. "We are pleased that top-tier individuals who understand our industry appreciate the value of our pipeline and are excited to participate in and help shape our success." Dr. Denner currently serves as a Managing Director of entities affiliated with Carl Icahn, including Icahn Partners LP and Icahn Partners Master Fund LP., both private investment funds. Previously, Dr. Denner served as a portfolio manager specializing in healthcare investments for Viking Global Investors. Prior to Viking, he served in a variety of roles at Morgan Stanley, beginning in 1996, including as portfolio manager of healthcare and biotechnology mutual funds. Dr. Denner currently serves as a director of ImClone Systems Incorporated and HyperMed, Inc., a privately held company specializing in imaging platforms for medical and surgical applications. Dr. Denner received his B.S. degree from the Massachusetts Institute of Technology and his M.S., M.Phil. and Ph.D. degrees from Yale University. ADVENTRX Pharmaceuticals (Amex: ANX) -- http://www.adventrx.com/ -- is a biopharmaceutical research and development company focused on commercializing low development risk pharmaceuticals for cancer and infectious disease that enhance the efficacy or safety of existing therapies. ADVENTRX Pharmaceuticals' balance sheet at June 30, 2006, showed total assets of $20 million and total liabilities of $31 million, resulting to an $11 million total shareholders' deficiency. ALLEGHENY ENERGY: Earns $110.2 Million in Third Quarter of 2006 --------------------------------------------------------------- Allegheny Energy Inc. reported consolidated net income of $110.2 million from operating revenues of $816 million for the third quarter of 2006, compared to net income of $35.7 million from operating revenues of $845 million for the same period in 2005. Operating income for the three months ended Sept. 30, 2006, was $211 million, versus $171 million for the comparable period in 2005. For the first nine months of 2006, the Company reported consolidated net income of $254.7 million from operating revenues of $2.38 billion, as compared to net income of $59.9 million from operating revenues of $2.31 billion for the first nine months of the prior year. Operating income for the nine-month period ended Sept. 30, 2006, was $574 million, compared to $463 million in the prior year. Adjusted net income from continuing operations was $246.0 million for the first nine months of 2006, compared to $146.1 million for the same period of 2005. Headquartered in Greensburg, Pennsylvania, Allegheny Energy, Inc., (NYSE:AYE) -- http://www.alleghenyenergy.com/-- is an investor- owned utility consisting of two major businesses. Allegheny Energy Supply owns and operates electric generating facilities, and Allegheny Power delivers low-cost, reliable electric service to customers in Pennsylvania, West Virginia, Maryland and Virginia. ALLEGHENY ENERGY: Potomac Completes $100 Million Bond Offering -------------------------------------------------------------- The Potomac Edison Company, a wholly owned subsidiary of Allegheny Energy Inc., completed an offering of $100 million aggregate principal amount of its First Mortgage Bonds, 5.80% Series Due 2016 in accordance with provisions of Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Securities were issued under the Indenture, dated Oct. 1, 1944, and the 107th Supplemental Indenture, dated as of October 23, 2006, between the Company and JPMorgan Chase Bank, N.A. as the Corporate Trustee and Thomas J. Foley, as Individual Trustee. The Securities bear interest at the rate of 5.80% per year and mature on Oct. 15, 2016. Interest is payable semi-annually in arrears on each of April 15 and October 15, commencing on April 15, 2007. The Securities are redeemable at the Company's option at any time at a "make-whole" premium. The Company disclosed that the Securities are secured by a first lien on all of the real estate, transmission and distribution systems and franchises that it now owns or may own in the future. The Securities are the Company's senior secured indebtedness and rank equally in right of payment with its other existing or any future unsubordinated indebtedness. The Indenture permits the Company to "re-open" the offering of Securities without the consent of the holders of the Securities. Accordingly, the principal amount of the Securities may be increased in the future. The Company and its affiliates maintain banking relationships with JPMorgan Chase Bank, N.A. and its affiliates. A full text-copy of the 107th Supplemental Indenture may be viewed at no charge at http://ResearchArchives.com/t/s?1422 Headquartered in Greensburg, Pennsylvania, Allegheny Energy, Inc., (NYSE:AYE) -- http://www.alleghenyenergy.com/-- is an investor- owned utility consisting of two major businesses. Allegheny Energy Supply owns and operates electric generating facilities, and Allegheny Power delivers low-cost, reliable electric service to customers in Pennsylvania, West Virginia, Maryland and Virginia. * * * As reported in the Troubled Company Reporter on Oct. 16, 2006, Moody's Investors Service confirmed its Ba2 Corporate Family and Senior Unsecured Credit Facility ratings for Allegheny Energy, Inc. ALLIED HOLDINGS: Ad Hoc Equity Panel Renews Call for Appointment ---------------------------------------------------------------- The Ad Hoc Committee of Equity Security Holders in Allied Holdings Inc. and its debtor-affiliates' bankruptcy cases renewed its requests for the appointment of an official equity committee. The Hon. W. Homer Drake, Jr., of the U.S. Bankruptcy Court for the Northern District of Georgia, previously denied, without prejudice, a prior request for appointment of an official committee of equity security holders of Allied Holdings Inc., filed by Virtus Capital LP, Hawk Opportunity Fund, L.P., Aspen Advisors, LP, Sopris Capital Advisors, LLC, and Armory Advisors. The Court stated that it would revisit the issue if: (i) additional evidence demonstrated that equity security holders were not being adequately represented in the Chapter 11 cases; (ii) further evidence demonstrated that the Debtors were not "hopelessly insolvent"; and (iii) other factors warranted the appointment. Paul N. Silverstein, Esq., at Andrews Kurth LLP, in New York, relates that in the interim, Virtus, et al., is acting as an ad hoc committee of equity security holders monitoring the Debtors' case. However, because Virtus, et al., is not privy to important information concerning the Debtors' business and Chapter 11 strategies as an official committee would, it cannot properly protect its constituency's interests. Mr. Silverstein tells the Court that certain elements mandate the appointment of an equity committee pursuant to Section 1102(a)(2) of the Bankruptcy Code to protect all stockholders, including: -- the interests of stockholders are not being adequately represented as illustrated by, among others, the Debtors' inaction with respect to their contracts with the International Brotherhood of Teamsters and the continued over-collateralizing of their self-insurance claims; -- the Debtors are not "hopelessly insolvent" as demonstrated by their April 2006 through June 2006 operating reports showing positive net income for the past three months; -- the costs would not outweigh the benefits of an equity committee; and -- American Alliance Fund I, L.P., Yucaipa American Alliance (Parallel) Fund I LP, and certain of their respective affiliates, has emerged as an aggressive and vocal creditor attempting to impose its will and agenda on the Debtors. Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/ or 215/945-7000) ALLIED HOLDINGS: Creditors Committee Wants Lang as Special Counsel ------------------------------------------------------------------ The Official Committee of Unsecured Creditors in Allied Holdings Inc. and its debtor-affiliates' chapter 11 cases seeks authority from the U.S. Bankruptcy Court for the Northern District of Georgia to: (a) retain Lang Michener LLP as its special Canadian counsel, effective as of October 1, 2006, to perform the legal services that will be necessary during the Debtors' Chapter 11 cases in respect of Canadian legal issues and proceedings; and (b) discontinue all obligations of Fasken Martineau DuMoulin LLP to represent the Committee as Canadian counsel effective as of September 30, 2006. The Creditors' Committee previously obtained Court approval to retain Fasken to represent the Committee's interests in all Canadian matters during the pendency of the Debtors' bankruptcy cases. Sheryl E. Seigel, Esq., then head of Fasken's bankruptcy and insolvency practice, was responsible for the Committee's representation. Thomas M. Korsman, vice-president of the Creditors' Committee, informs the Court that Ms. Seigel became a partner and head of Lang Michener's business restructuring and insolvency practice effective as of October 2006. Mr. Korsman says Lang Michener -- a multi-service firm with experienced attorneys practicing in corporate, labor and employment, pension, litigation, and other areas of law -- has experience working on complex domestic and multi-national business reorganizations and restructurings, including cross- border proceedings. Mr. Korsman relates that while the Creditors' Committee is most appreciative of Fasken's role in representing its interests, the Committee believes that its interests, as well as those of the Debtors, their estates and their other stakeholders, will be best served by continuing Ms. Seigel's representation through her new position at Lang Michener. Furthermore, Mr. Korsman discloses that the Creditors' Committee believes that no additional costs will be incurred by the Debtors, their estates or their creditors, and no interest of any party will be diminished or compromised as a result of the transition. As Canadian Counsel, Lang Michener will render bankruptcy, restructuring, and related legal services to the Creditors' Committee in relation to Canadian legal issues and proceedings, as needed throughout the remaining course of the Debtors' bankruptcy cases. This includes: a. representing the Creditors Committee at Canadian hearings and any other related proceedings; b. assisting the Committee and its U.S. professional advisors in analyzing the claims of the Debtors' creditors and, if required, in negotiating with the creditors; c. assisting in the Committee's investigation of the assets, liabilities, and financial condition of the Debtors in Canada and of the operations of the Debtors' Canadian businesses; d. assisting the U.S. Advisors in their analysis of, and negotiations with, the Debtors or any third party concerning matters related to, among other things, formulating the terms of a plan or plans of reorganization for the Debtors; e. assisting and advising the U.S. Advisors with respect to any matters that they may request; f. reviewing and analyzing all pleadings, orders, statements of operations, schedules, and other legal documents in the Canadian proceedings or any other proceedings in Canada relating to the Debtors or their property, assets or businesses; g. preparing, on behalf of the Committee, any pleadings, orders, reports and other legal documents as may be necessary, in furtherance of the Committee's interests and objectives; and h. performing all other legal services as described by the Committee and its U.S. Advisors, which may be necessary and proper for the Committee to discharge its duties in the Chapter 11 proceedings. Lang Michener will be paid on an hourly basis according to its customary hourly rates: Partners C$360 to C$765 Associates C$235 to C$475 Summer/Articling Students C$160 to C$215 Paralegals C$55 to C$245 Mr. Korsman adds that the C$655 hourly rate charged for Ms. Seigel's services while at Fasken will remain unchanged for the balance of the current calendar year after her transition to Lang Michener. The Creditors' Committee will reimburse Lang Michener for actual and necessary expenses. Ms. Siegel assures the Court that Lang Michener is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, and does not hold or represent any interest adverse to the Debtors' estates as required by Section 328(c). Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/ or 215/945-7000) AMERICAN ACHIEVEMENT: Moody's Assigns Loss-Given-Default Ratings ---------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. consumer products sector, the rating agency revised its probability-of-default ratings and assigned loss-given-default ratings on American Achievement Corporation's loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $150M senior sub. notes due 2012 B2 B1 LGD3 41% $107M senior secured term loan due 2011 Ba3 Ba2 LGD1 9% $40M senior secured revolving credit facility due 2010 Ba3 Ba2 LGD1 9% 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%). Austin, Texas-based American Achievement Corporation -- http://www.cbi-rings.com/-- is an indirect wholly owned operating subsidiary of AAC Group Holding Corp. American Achievement provides products associated with graduation and important event commemoration, including class rings, yearbooks, graduation products, achievement publications and affinity jewelry through in-school and retail distribution. AAC's brands include: Balfour and ArtCarved, providers of class rings and graduation products; ECI, publisher of Who's Who Among American High School Students(R); Keepsake Fine Jewelry; and Taylor Publishing, publisher of yearbooks. AAC has over 2,000 employees and is majority-owned by Fenway Partners. AMERICAN GREETINGS: Moody's Assigns Loss-Given-Default Ratings -------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. consumer products sector, the rating agency confirmed its Ba1 Corporate Family Rating for American Greetings Corporation. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $300M sr. sec delay draw term loan due 2013 Ba1 Baa3 LGD2 28% $350M senior secured revolving credit facility due 2011 Ba1 Baa3 LGD2 28% $200M senior unsecured notes due 2016 Ba2 Ba2 LGD5 81% $22.7M senior unsecured notes due 2028 Ba2 Ba2 LGD5 81% 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%). Cleveland, Ohio-based American Greetings Corporation (NYSE: AM) -- http://corporate.americangreetings.com/-- manufactures social expression products. Along with greeting cards, its product lines include gift wrap, party goods, candles, stationery, calendars, educational products, ornaments, and electronic greetings. AMKOR TECHNOLOGY: Moody's Assigns Loss-Given-Default Ratings ------------------------------------------------------------ In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. technology semiconductor and distributor sector, the rating agency affirmed its Caa1 corporate family rating on Amkor Technology, Inc. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $300MM Guaranteed Senior Secured 2nd Lien Term Loan due 2010 B3 B1 LGD1 7% $500MM 9.25% Sr. Unsecured Notes due 2008 Caa3 Caa1 LGD3 44% $400MM 9.25% Sr. Unsecured Notes due 2016 Caa3 Caa1 LGD3 44% $425MM 7.75% Sr. Unsecured Notes due 2013 Caa3 Caa1 LGD3 44% $250MM 7.125% Sr. Unsecured Notes due 2011 Caa3 Caa1 LGD3 44% $200MM 10.50% Sr. Subordinated Notes due 2009 Ca Caa2 LGD5 75% $190MM 2.50% Convertible Sr. Sub Notes due 2011 Ca Caa3 LGD5 84% $258.8MM 5.00% Convertible Subor. Notes 2007 Ca Caa3 LGD6 94% 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%). Chandler, Arizona-based Amkor Technology, Inc. (NASDAQ: AMKR) -- http://www.amkor.com/-- provides advanced semiconductor assembly and test services. The company offers semiconductor companies and electronics original equipment manufacturers a complete set of microelectronic design and manufacturing services. ANCHOR GLASS: Has Until December 15 to Object to Claims ------------------------------------------------------- The U.S. Bankruptcy Court for the Middle district of Florida extended the deadline for Anchor Glass Container Corporation to object to claims until Dec. 15, 2006, without prejudice to its right to seek a further extension. Anchor Glass is continuing to file objections to claims, Robert A. Soriano, Esq., at Shutts & Bowen LLP, in Tampa, Florida, relates. However, after consulting with representatives of the Alpha Resolution Trustee, Anchor Glass has discovered that in certain instances, it is not clear in which Class some filed claims belong. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents Anchor Glass in its restructuring efforts. Edward J. Peterson, III, Esq., at Bracewell & Guiliani, represents the Official Committee of Unsecured Creditors. When Anchor Glass filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. The Court confirmed Anchor Glass' second Amended Plan of Reorganization on April 18, 2006. Anchor Glass emerged from Chapter 11 protection on May 3, 2006. (Anchor Glass Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) APRIA HEALTHCARE: Earns $19.3 Million in Quarter Ended Sept. 30 --------------------------------------------------------------- Apria Healthcare Group Inc. reported revenues of $382.2 million in the third quarter of 2006 compared to $367.6 million in the third quarter of 2005. Net income for the third quarter of 2006 was $19.3 million versus net income for the same period in 2005 of $19.3 million. Net revenue growth for the third quarter of 2006, when compared to the third quarter of 2005, was 4%. Selling, distribution and administrative expenses were 53% of net revenues in the third quarter of 2006 compared to 54.8% of net revenues in the third quarter last year. Earnings before interest, taxes, depreciation and amortization was $72.5 million in the third quarter of 2006, compared to $69 million in the third quarter of 2005 was. Free cash flow was $36.6 million in the third quarter of 2006, up from $1.6 million in the third quarter of 2005, and $99.2 million for the nine months ended Sept. 30, 2006, versus $36.0 million for the comparable period in 2005. The Company has utilized its free cash flow to reduce its revolving credit line balance by $40 million during the third quarter and $95 million year-to-date. The Company also disclosed that annual revenues are estimated at $9.5 million and its management reaffirms previous sales growth estimate of approximately 3% for the year. Headquartered in Lake Forest, California, Apria Healthcare Group Inc. (NYSE:AHG) -- http://www.apria.com/-- provides home respiratory therapy, home infusion therapy and home medical equipment through approximately 500 branches serving patients in all 50 states. * * * As reported in the Troubled Company Reporter on June 5, 2006, Standard & Poor's Ratings Services affirmed its BB+, Stable, rating on Apria Healthcare. ARDAJI RESTAURANT: Case Summary & 40 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Ardaji Restaurant Ventures LLC 151 Greenwich Avenue, Suite 301 Greenwich, CT 06830 Bankruptcy Case No.: 06-50462 Debtor-affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Pauli Moto's of Tysons Corner LLC 06-50463 Paul Ardaji, Sr. 06-50464 Type of Business: The Debtors operate a Japanese-Chinese cuisine restaurant. Chapter 11 Petition Date: October 27, 2006 Court: District of Connecticut (Bridgeport) Judge: Alan H.W. Shiff Debtors' Counsel: Scott D. Rosen, Esq. Cohn Birnbaum & Shea P.C. 100 Pearl Street, 12th Floor Hartford, CT 06103-4500 Tel: (860) 493-2200 Fax: (860) 727-0361 Total Assets Total Debts ------------ ----------- Ardaji Restaurant $3,595,000 $2,289,733 Ventures LLC Pauli Moto's of Tysons $8,295,125 $5,825,439 Corner LLC Paul Ardaji, Sr. $1,191,000 $1,215,083 A. Ardaji Restaurant Ventures LLC's Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Forrester Construction $2,200,000 Company 12231 Parklawn Drive Rockville, MD 20852 Lexus Financial Services 3 month lease $2,100 P.O. Box 17187 payment Baltimore, MD 21297-0511 Kolbrenner & Alexander LLC Accounting $750 15 Valley Drive Services Greenwich, CT 06831 B. Pauli Moto's of Tysons Corner LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Macerich Company Unpaid Rent $524,000 1961 Chain Bridge Road McLean, VA 22102 The Chef's Warehouse $31,178 7477 Candlewood Road Hanover, MD 21076 True World Foods Inc. $31,045 3331 75th Avenue Landover, MD 20785 Donald Chin Supply Co. $30,357 1323 4th Street Northeast Washington, DC 20002 Kolbreener & Alexander LLC Accounting $28,850 15 Valley Drive Services Greenwich, CT 06831 Pro Fish $27,325 L & M Produce Co. $20,613 Sysco $20,389 Linens of the Week $14,373 Nishimoto Trading Co. Ltd. $13,729 International Enviro $10,192 Management Great America Leasing $4,895 Solid Gold Inc. $4,623 Ecolab $4,064 Washington Gas Co. $3,414 Jani King $2,390 Western Pest $2,065 Marlin Leasing Co. $2,062 L & L Bakeries Inc. $2,032 Korin Japanese Trading Co. $1,962 C. Paul Ardaji, Sr.'s 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Forrester Construction Co. $2,200,000 12231 Parklawn Drive Rockville, MD 20852 Washington Mutual Bank 309 Stanwich Road $2,100,000 P.O. Box 100561 Greenwich, CT 06830 Secured: Florence, SC 29501 $1,875,000 Countrywide Home Loans 309 Stanwich Road $1,000,000 103 Atlantic Street Greenwich, CT 06830 Secured: Stamford, CT 06901 $1,875,000 Senior Lien: $2,100,000 Wachovia Bank Prejudgment Remedies $250,000 123 South Broad Street Philadelphia, PA 19109 Judd Brown Designs, Inc. Contract for Design $185,000 700 School Street and Architectural Pawtucket, RI 02860 Services at Paul Moto's of Legacy Place LLC JP Morgan/Chase Bank $45,000 Kolbrenner & Alexander Accounting Services $4,500 Capitol One Visa $3,000 Cablevision $800 Northease Utilities Utilities $535 Downtown at the Gardens Lease Guaranty for Unknown Terra PGA Lease Foxwoods Resorts & Casino Lease Guaranty for Unknown Pauli Moto's at Foxwoods Macerich Company Lease Guaranty for Unknown Pauli Moto's of Tysons Corner LLC Park Place Partners Lease Guaranty for Unknown Pauli Moto's of Leaweed LLC S.R. Weiner & Co. Lease Guaranty for Unknown Terra at Farmington Valley LLC Sembler Family Lease Guaranty at Unknown Partnership #31, Ltd. Legacy Palm Beach Woolbright Development, Inc. Lease Guaranty for Unknown Naples ARMSTRONG WORLD: Requests for Payment Deadline Set for November 16 ------------------------------------------------------------------ Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, reminds the U.S. Bankruptcy Court for the District of Delaware that on Oct. 2, 2006, Armstrong World Industries Inc.'s Fourth Amended Plan of Reorganization became effective. As of the Effective Date, the Plan discharges the Debtor and its estate, assets, properties and interests in property, as provided in Section 1141 of the Bankruptcy Code and the Confirmation Order. The Plan also binds the Debtor and all creditors and parties-in- interest; revests property of the Debtor's estate in Reorganized AWI free and clear of all Claims, Equity Interests, Encumbrances and other interests unless otherwise stated; voids any judgment against the Debtor; and operates as an injunction with respect to any debt discharged. The Asbestos PI Channeling Injunction and the Claims Trading Injunction are in full force and effect, Mr. Madron states. All entities seeking payment for services rendered or reimbursement of expenses incurred through and including the Effective Date under Section 330, or allowance of Administrative Expenses arising under Sections 503(b)(2), 503(b)(3), 503(b)(4), or 503(b)(5) must file a request by Nov. 16, 2006. Any distribution under the Plan that is unclaimed after 180 days following the distribution date will be deemed not to have been made and will be transferred to Reorganized AWI, free and clear of any claims or interests of any entities, including any claims or interests of any governmental unit under escheat principles. Based in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior floor coverings and ceiling systems, around the world. The Company and its affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. The Company and its affiliates tapped the Feinberg Group for analysis, evaluation, and treatment of personal injury asbestos claims. Mark Felger, Esq. and David Carickhoff, Esq., at Cozen and O'Connor, and Robert Drain, Esq., Andrew Rosenberg, Esq., and Alexander Rohan, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Houlihan Lokey for financial and investment advice. The Official Committee of Asbestos Personal Injury Claimant hired Ashby & Geddes as counsel. The Bankruptcy Court confirmed AWI's plan on Nov. 18, 2003. The District Court Judge Robreno confirmed AWI's Modified Plan on Aug. 14, 2006. The Clerk entered the formal written confirmation order on Aug. 18, 2006. The Company's "Fourth Amended Plan of Reorganization, as Modified," has become effective and AWI has emerged from Chapter 11. (Armstrong Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service,Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Oct. 9, 2006 Standard & Poor's Ratings Services raised its corporate credit rating on Armstrong World Industries Inc. to 'BB' from 'D', following the Company's emergence from bankruptcy on Oct. 2, 2006. The outlook is stable. AVAGO TECHNOLOGIES: Moody's Assigns Loss-Given-Default Ratings -------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. technology semiconductor and distributor sector, the rating agency affirmed its B2 corporate family rating on Avago Technologies Finance Pte. Ltd. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $250MM Senior Secured Revolver due 2012 B1 Ba2 LGD1 4% $500MM 10.125% Sr. Unsecured Notes due 2013 B3 B2 LGD3 47% $250MM Floating Rate Sr. Unsecured Notes due 2013 B3 B2 LGD3 47% $250MM 11.875% Sr. Subordinated Notes due 2015 Caa2 Caa1 LGD6 91% 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%). Avago Technologies -- http://www.avagotech.com/-- supplies semiconductor solutions for advanced communications, industrial and commercial applications. With approximately 6,500 employees worldwide, Avago provides a range of analog, mixed-signal and optoelectronic components and subsystems to more than 40,000 customers. The company's products serve four end markets: industrial and automotive, wired infrastructure, wireless communications, and computer peripherals. AVNET INC: Moody's Assigns Loss-Given-Default Ratings ----------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. technology semiconductor and distributor sector, the rating agency affirmed its Ba1 corporate family rating on Avnet, Inc. Additionally, Moody's held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $400MM 8.00% Sr. Unsecured Notes due 2006 Ba1 Ba1 LGD3 49% $250MM 6.00% Sr. Unsecured Notes due 2015 Ba1 Ba1 LGD3 49% $300MM 6.625% Sr. Unsecured Notes due 2016 Ba1 Ba1 LGD3 49% $300MM 2.00% Convertible Sr. Debentures due 2034 Ba1 Ba1 LGD3 49% Shelf - Sr. Unsecured (P)Ba1 (P)Ba1 LGD3 49% Shelf - Subor. (P)Ba2 (P)Ba2 LGD6 97% 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%). Avnet Inc., headquartered in Phoenix, Arizona, distributes electronic components and computer products, primarily for industrial customers. Revenues for the fiscal year ended July 1, 2006 were $14.3 billion. BALL CORP: Earns $101.5 Million in the Third Quarter of 2006 ------------------------------------------------------------ Ball Corporation reported third quarter earnings of $101.5 million on sales of $1.82 billion, compared to $79.3 million on sales of $1.58 billion in the third quarter of 2005. For the first nine months of 2006, the Company's results were earnings of $278.8 million on sales of $5.03 billion, compared to $216.9 million on sales of $4.46 billion in the first three quarters of 2005. The 2006 results include a gain of $2.8 million in the third quarter and $76.9 million in the first nine months for insurance recovery from a fire that occurred April 1 at a beverage can manufacturing plant in Germany. "Overall, we were pleased with our third quarter results, especially considering the increased cost pressures we continue to experience throughout the corporation, R. David Hoover, chairman, president and chief executive officer, said. "We are making progress on profit improvement and pricing initiatives that are essential to our achieving acceptable returns. We also are making good progress on integrating the acquisitions we made earlier this year and on completing important projects to improve operating efficiencies." Outlook Raymond J. Seabrook, executive vice president and chief financial officer, said that he anticipates full-year free cash flow to be in the range of $250 million. Mr. Seabrook said, "The seasonal working capital build we have seen through the first nine months will be largely eliminated in the fourth quarter. We will continue our focus on free cash flow generation in the future as some of the major capital spending projects we have been engaged in wind down and we begin to realize the benefits from them," "At mid-year we said we expected results for the second half of 2006 would be better than those of the first half, excluding property insurance recovery related to the fire in Germany," Mr. Hoover said. "Our solid third quarter results now make us confident of that outcome. Mr. Hoover also said, "The cost recovery initiatives we have and will continue to implement throughout our reporting segments will be critical to sustaining and improving our performance in 2007. Some of those initiatives have been announced and already are being implemented, and others are being discussed and developed with suppliers and customers," Headquartered in Broomfield, Colorado, Ball Corporation (NYSE:BLL) -- http://www.ball.com/-- is a supplier of high-quality metal and plastic packaging products and owns Ball Aerospace & Technologies Corp., which develops sensors, spacecraft, systems and components for government and commercial customers. Ball reported 2005 sales of $5.7 billion and the company employs 13,100 people worldwide. * * * Moody's Investors Service assigned ratings to Ball Corp's $500 million senior secured term loan D, rated Ba1, and $450 million senior unsecured notes due 2016-2018, rated Ba2. It also affirmed existing ratings, which include Ba1 Ratings on $1.475 billion senior secured credit facilities and $550 million senior unsecured notes due Dec. 12, 2012. The ratings outlook is stable. Fitch affirmed Ball Corp.'s 'BB' issuer default rating, 'BB+' senior secured credit facilities, and 'BB' senior unsecured notes. BALLY TOTAL: Files Restated Results for 2006 Quarter Ended June 30 ------------------------------------------------------------------ Bally Total Fitness Holding Corporation filed with the Securities and Exchange Commission an amended financial report on Form 10-Q for the quarter ended June 30, 2006, correcting an error in management's discussion and analysis of financial condition and results of operations regarding membership roll forward statistics for the three and six months period ended June 30, 2006, and the related computation of average number of members during the periods. According to the company, as a result of the change in average number of members for the periods, average monthly membership revenue recognized per member and average monthly cash received per member for the periods have been revised as the amounts are derived using average membership in the denominator of the calculation. Restated 2006 Second Quarter Results Bally Total Fitness Holding Corporation's balance sheet at June 30, 2006, showed total assets of $430,902,000 and total liabilities of $1,841,195,000 resulting in a total stockholders' deficit of $1,410,293,000. The company's total stockholders' deficit at Dec. 31, 2005, stood at $1,463,686,000. The company's June 30 balance sheet also showed strained liquidity with $46,964,000 in total current assets and $611,627,000 in total current liabilities. For the three months ended June 30, 2006, the company reported a $733,000 net loss on $254,631,000 of net revenues, compared with a $1,607,000 net income on $259,617,000 of net revenues for the three months ended June 30, 2005. Full-text copies of the company's financial statements for the three months ended June 30, 2006, are available for free at: http://researcharchives.com/t/s?140c Chicago, Ill.-based Bally Total Fitness Holding Corp. (NYSE: BFT) -- http://www.Ballyfitness.com/-- is a commercial operator of fitness centers, with over 400 facilities located in 29 states, Mexico, Canada, Korea, the Caribbean, and China under the Bally Total Fitness, Bally Sports Clubs, and Sports Clubs of Canada brands. * * * As reported in the Troubled Company Reporter on Oct. 19, 2006, Moody's Investors Service affirmed its junk credit ratings for Bally Total Fitness Holding Corporation, including the company's $235 million 10.5% senior unsecured notes (guaranteed) due 2011 and $300 million 9.875% senior subordinated notes due 2007. The rating outlook remains negative. BANTA CORP: S&P Rates $515 Mil. Sr. Sec. Credit Facilities at BB ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' corporate credit rating to Banta Corp., a Menasha, Wis.-based printing and supply chain management services company. At the same time, Standard & Poor's assigned its 'BB' bank loan rating and '3' recovery rating to the company's $515 million senior secured credit facilities reflecting S&P's expectation for a meaningful (50%-80%) recovery of principal in the event of a payment default. Proceeds from the bank facilities will be primarily used to fund a $16 per share cash dividend (about $388 million), refinance certain existing debt, and for general corporate purposes. In addition, Standard & Poor's placed the ratings on Banta on CreditWatch with negative implications. The CreditWatch placement reflects uncertainties surrounding the offer by Cenveo Corp. to acquire Banta and its related exploration of strategic alternatives to maximize shareholder value, which could extend beyond the special dividend that is being financed with the new bank facilities. The Sept. 14, 2006, announcement by the company that it was paying a special dividend to shareholders followed the receipt of an offer by Cenveo to acquire Banta. Banta's board of directors has turned down both Cenveo's initial offer and revised one, which is set to expire on Oct. 31, 2006. In addition to the special dividend, Banta announced on Oct. 3, 2006, that its board has authorized management, in conjunction with its financial advisor, to explore all potential strategies for further maximizing shareholder value, including, but not limited to, remaining independent, joint ventures, mergers, acquisitions, further return of capital, or the sale of the company. Ratings could be lowered in the event the search for strategic alternatives results in a sizable leveraging transaction. BEST MANUFACTURING: Court Approves BDO Seidman as Accountants ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey gave the Official Committee of the Unsecured Creditors appointed in Best Manufacturing Group LLC and its debtor-affiliates' chapter 11 cases, authority to retain BDO Seidman, LLP, as its accountants and financial advisors. As reported in the Troubled Company Reporter on Sept. 20, 2006, BDO Seidman is expected to: a) analyze the financial operations of the Debtors pre and postpetition, as necessary; b) analyze the Debtors' real property interests, including lease assumptions and rejections; c) perform forensic investigating services, as requested by the Committee and counsel, regarding prepetition activities of the Debtors in order to identify potential causes of action; d) perform claims analysis for the Committee, as necessary including analysis of reclamation claims; e) verify the physical inventory merchandise, supplies, equipment and other material assets and liabilities, as necessary; f) assist the Committee in its review of monthly statements of operations to be submitted by the Debtors; g) analyze the Debtors' business plans, cash flow projections, restructuring programs, selling and general administrative structure and other reports or analyzes prepared by the Debtors or their professionals in order to advise the Committee on viability of the continuing operations and the reasonableness of the projections and underlying assumptions with respect to industry and market conditions; h) scrutinize cash disbursements on an ongoing basis for the period subsequent to the Debtors' bankruptcy filing; i) analyze transactions with insiders, related or affiliated companies; j) prepare and submit reports to the Committee as necessary; k) assist the Committee in its review of the financial aspects of a plan of reorganization to be submitted by the Debtors, or in arriving at a proposed reorganization plan; l) attend meetings of the committee and conference with representatives of the creditor groups and their counsel; m) prepare hypothetical orderly liquidation analysis; n) review the work performed by the Debtors' investment bankers and monitor the sale or liquidation of the Debtors; o) analyze the financial ramifications of any proposed transactions for which the Debtors seek Bankruptcy Court approval including, but not limited to, postpetition financing, sale of all or a portion of the Debtors' assets, management compensation or retention and severance plans; p) render expert testimony on behalf of the Committee; q) provide assistance and analysis in support of potential litigation that may be investigated or prosecuted by the Committee; r) analyze transactions with the Debtors' financing institution; s) assist and advise the Committee and its counsel in the development, evaluation and documentation of any plan(s) of reorganization or strategic transaction(s), including developing, structuring and negotiating the terms and conditions of potential plan(s) or strategic transaction(s) and the value of consideration that is to be provided to unsecured creditors; and t) perform other necessary services as the Committee or counsel to the Committee may request from time to time with respect to the financial, business and economic issues that may arise. William K. Lenhart, a BDO Seidman member, disclosed that the firm's professionals bill: Designation Hourly Rate ----------- ----------- Partners $355 - $700 Senior Managers $230 - $510 Managers $210 - $345 Seniors $150 - $255 Staff $95 - $195 Mr. Lenhart assured the Court that his firm does not hold nor represent any interest adverse to the Debtors' estates and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Jersey City, New Jersey, Best Manufacturing Group LLC -- http://www.bestmfg.com/-- and its subsidiaries manufacture and distribute textiles, career apparel and other products for the hospitality, healthcare and textile rental industries. The Company and four of its subsidiaries filed for chapter 11 protection on Aug. 9, 2006 (Bankr. D. N.J. Case No. 06-17415). Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., represent the Debtors. Scott L. Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, and Brian L. Baker, Esq., and Stephen B. Ravin, Esq., at Ravin Greenberg PC, represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. BLYTH INC: Moody's Assigns Loss-Given-Default Ratings ----------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. consumer products sector, the rating agency confirmed its Ba3 Corporate Family Rating for Blyth, Inc. Additionally, Moody's held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $125M senior unsecured bonds due 2009 Ba3 Ba3 LGD4 55% $100M senior unsecured bonds due 2013 Ba3 Ba3 LGD4 55% 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 Greenwich, Connecticut, Blyth Inc. designs, manufactures and markets a line of candles and home fragrance products, tabletop heating products, candle accessories and home decor and giftware products. BOMBARDIER INC: S&P Rates EUR1.8 Bil. Senior Unsec. Notes at BB --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' long-term corporate credit rating on Montreal, Que.-based Bombardier Inc. At the same time, Standard & Poor's assigned its 'BB' issue rating to Bombardier's proposed issuance of up to EUR1.8 billion seven- to-ten-year multi-tranche senior unsecured notes. The notes are to be used to refinance EUR1.175 billion of debt maturing on or before Feb. 22, 2008. The remainder will form part of the collateral required for a new LOC issuance credit facility to be arranged after the completion of the bond issue. The outlook is negative. "The ratings on Bombardier reflect the competitive and operating challenges it faces in its commercial aircraft business, the company's volatile and somewhat unpredictable operating cash flows, and the low profitability of its transportation division," Standard & Poor's credit analyst Greg Pau said. The ratings are supported by: -- the company's business aircraft segment, -- the slowly improving profitability at its transportation division, -- its relatively low capital expenditure requirements in the next few years, -- and its financial policies, which are focused on restoring balance-sheet stability. "The ratings factor in our expectation that Bombardier will successfully execute the proposed bond issuance. Any material delay or failure to complete the bond issuance could result in a weaker liquidity position and trigger a review of the ratings," Mr. Pau added. Bombardier's regional aircraft division continues to struggle, and Standard & Poor's expects that the company's performance will continue to suffer for the balance of the current year and possibly in subsequent years. The company's net orders and backlog, particularly for regional jets, remain weak. The outlook continues to be uncertain, as the prospects for the U.S. airline industry, Bombardier's principal market for regional jets, remain unsettled and financing for expansion or fleet renewal is still difficult to obtain. The company's turboprop division is providing some offset to this weakness, with a better backlog and less exposure to the U.S. airline industry. Strong business aircraft demand and improved cost efficiency in the transportation segment partly offset the impact of the weak regional aircraft division. The outlook is negative, indicating the slow progress in Bombardier's efforts to consistently generate free cash flow and restore balance-sheet strength. The ratings could be lowered if: -- the company's prospective liquidity position weakened; -- profit margins do not improve, resulting in expectations of weak free cash flow; or -- the company's balance sheet does not stabilize (which could be caused by weak free cash generation, expansion of aircraft program spending, or a widening pension deficit). A near-term return to a stable outlook is considered unlikely and would primarily require an improvement in prospects for the commercial aerospace business while maintaining current performance in the business jet and transportation divisions. Although not currently contemplated by the company, a material change in capital structure toward material reduction in leverage through equity injection could be a positive development that could trigger an outlook revision or an upgrade. BOMBARDIER INC: Moody's Rates Proposed EUR1.8 Billion Notes at Ba2 ------------------------------------------------------------------ Moody's Investors Service assigned its Ba2 rating to Bombardier Incorporated's proposed EUR1.8 billion in new senior unsecured notes and affirms all current ratings. On October 23, 2006, Bombardier opened its offer to tender for cash for approximately EUR1 billion of its debt maturing in 2007 and 2008. The tender offer will be funded with the proceeds of the new debt issuances maturing in 2013 to 2016. Proceeds will also be utilized to support a cash collateral requirement (EUR860 million) associated with its proposed new bank letter of credit facility. The assignment of the Ba2 senior unsecured debt rating considered that the new notes have a similar priority of claim to the notes targeted for tender. The exchange, if completed will extend and smooth the company's debt maturity profile which previously included relatively large maturities in 2007 and 2008. The issuance does not change the LGD assessment of Bombardier's debt, and the new notes will carry the same LGD4, 54% assessment as the company's existing senior unsecured debt. Bombardier's Ba2 debt rating considers its market share and installed base in the business and regional jet aerospace segment and improving results in the transportation sector. The combination of the debt issuance, the tender for the near term maturing debt and completion of the renewal of the company's bank lines of credit will add to the company's high debt levels but will also will stabilize the company's liquidity profile and reduce near term funding uncertainties. On balance, Moody's considers that the completion of these financial actions will be modestly positive for the overall credit profile. Bombardier's outlook remains negative and reflects business uncertainties in the company's aerospace segment. The expectation is for continued weak demand for its regional jet product highlighted by the recently announced reductions in production rates. Weakness in this important but problematic segment is only partially offset by the favorable near term business jet outlook and recent margin improvements in the company's transportation segment. Bombardier Inc., headquartered in Montreal, Quebec, is a diversified company involved primarily in the aerospace, transportation, and financial services markets. BOMBARDIER INC: Fitch Downgrades Issuer Default Rating to BB- ------------------------------------------------------------- Fitch Ratings has downgraded the debt and Issuer Default Ratings for both Bombardier Inc. and Bombardier Capital Inc.: Bombardier Inc. -- IDR to 'BB-' from 'BB'; -- Senior unsecured debt to 'BB-' from 'BB'; -- Credit facilities to 'BB-' from 'BB'; -- Preferred stock to 'B' from 'B+'. Bombardier Capital Inc. -- IDR to 'BB-' from 'BB'; -- Senior unsecured debt to 'BB-' from 'BB'. The ratings are removed from Rating Watch Negative, where they were placed on Oct. 23 over concerns about potential changes in Bombardier's financial strategy. The Rating Outlook is Stable. Fitch also expects to assign a 'BB-' rating to Bombardier's proposed EUR1.8 billion issuance of senior unsecured bonds. The rating actions listed above are based on the expectation that Bombardier will complete the bond issuance, a related tender offer, and the proposed new letter of credit facility as described in materials distributed by the company. These ratings cover outstanding debt and preferred stock totaling approximately $4.2 billion, which could rise to more than $5.0 billion after the pending tender offer and bond issuance are completed. Due to the existence of a support agreement and demonstrated support by the parent, BC's ratings are linked to those of BI. The downgrade is based on what Fitch considers to be a change in Bombardier's financial strategy, which had included plans for significant debt reduction. Fitch's previous ratings had incorporated expectations for debt reduction in fiscal 2007, and possibly in fiscals 2008 and 2009. Bombardier recently announced three financial transactions (EUR1 billion tender for BI and BC debt, EUR1.8 billion bond issuance by BI, and a new LC facility) which will offset most of the approximately $1 billion of debt reduction achieved so far in fiscal 2007 and will likely defer additional debt reduction to beyond fiscal 2009. The transactions extend debt maturities, resolve some possible covenant pressures in fiscal 2008 and lower Bombardier's LC fees. However, Fitch believes that the transactions will result in Bombardier having higher leverage that is in line with the new rating level. Pro forma for the financial transactions, Fitch estimates that fiscal 2007 consolidated gross leverage (gross debt to EBITDA) will be in the 4.6x-4.9x range. Fitch estimates that consolidated net leverage (net debt to EBITDA) will be in the 2.6x-2.9x range, although Fitch estimates that net leverage will be higher for most of fiscal 2008 due to Bombardier's seasonal working capital needs. After the financial transactions, all debt will be located at BI with the exception of BC's GBP300 million issue due in May 2009 and untendered bonds, if any. The net leverage estimates assume $1.8 billion- $2.2 billion of unrestricted cash balances at the end of F2007. Bombardier will also have approximately $1 billion of restricted cash balances related to the new LC facility. These restricted cash balances are not available for liquidity purposes or for the benefit of unsecured bondholders. Bombardier's unrestricted cash balances will be the company's sole source of liquidity because the new LC facility is not available on a revolving credit basis. Factors supporting the ratings and Outlook include the company's diversification, leading market positions, the health of the business jet and turboprop markets, cash balances, revised debt maturity schedule, Bombardier Transportation's successful restructuring, and large backlog at BT. Concerns include the variability of free cash flow due to order flow at BT and Bombardier Aerospace; continued low margins and free cash flow; the levels of consolidated gross debt compared to EBITDA and free cash flow; business jet market cyclicality; the sizable pension plan deficit; the impact of exchange rate volatility on financial results and planning; and various regional jet concerns, including weak orders, uncertainty regarding development of new aircraft models, and contingent obligations related to past aircraft sales. Previously, Fitch calculated BI's credit metrics on a deconsolidated basis accounting for BC as an equity investment. This methodology was used for several reasons: consistency with the way other industrial companies with sizable finance subsidiaries are evaluated in the credit markets; the size of BC's operations and the amount of BC's outstanding debt; the fact that BC's debt was neither an obligation of BI nor guaranteed by BI; and the calculation of BI's covenants, which excluded BC. Going forward Fitch will calculate Bombardier's credit metrics on a consolidated basis, for these reasons. BC's assets and pro forma debt have declined substantially in the past several years. In addition, Bombardier's covenants will be calculated on a consolidated basis for the new LC facility. Finally, Bombardier revised some of its financial reporting earlier this year, and it now reports only consolidated financial results. BUCKEYE TECHNOLOGIES: Henry Frigon Resigns from the Board --------------------------------------------------------- Buckeye Technologies Inc. disclosed that Henry F. Frigon has resigned from its Board of Directors effective Nov. 3, 2006. Mr. Frigon, a private investor, has been a member of the Company's Board of Directors since 1996 and is resigning for personal reasons unrelated to his service at Buckeye. The Company's Board of Directors has named Director Lewis Holland to succeed Mr. Frigon as chair of the Company's Audit Committee effective Nov. 3, 2006. Mr. Holland is president of Henry Turley Company, a real estate company specializing in development of urban communities. Prior to joining Henry Turley Company, Mr. Holland was with National Commerce Bancorporation, prior to its merger with SunTrust. At NCBC he served as vice chairman and chief financial officer and also head of its ancillary businesses including fuel card processing, retirement plan processing, trust and brokerage, until his retirement in 2001. Mr. Holland is a former partner with the accounting firm of Ernst & Young and was in charge of E&Y's Memphis audit staff. Effective with Mr. Frigon's resignation, the Board of Directors has amended the Company's by-laws to reduce the number of directors from ten to nine. Headquartered in Memphis, Tennessee, Buckeye Technologies, Inc. (NYSE:BKI) -- http://www.bkitech.com/-- is a leading manufacturer and marketer of specialty fibers and nonwoven materials. The Company currently operates facilities in the United States, Germany, Canada, and Brazil. Its products are sold worldwide to makers of consumer and industrial goods. * * * As reported in the Troubled Company Reporter on March 9, 2006, Standard & Poor's Ratings Services revised its outlook on Buckeye Technologies Inc. to negative from stable. At the same time, Standard & Poor's affirmed its ratings, including the 'BB-' corporate credit rating, on the Memphis, Tennessee-based specialty pulp producer. Moody's Investors Service, in connection with the implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the North American Forest Products sector, confirmed its B2 Corporate Family Rating for Buckeye Technologies, Inc. BUILDING MATERIALS: Fitch Sees BB+ Rating on $850MM Sr. Sec. Debt ----------------------------------------------------------------- Fitch Ratings expects to assign a 'BB+' rating to Building Materials Holding Corporation's proposed $850 million sr. secured credit facilities. This rating will apply to the proposed $500 million senior secured revolving credit and the $350 million senior secured term loan facilities. Proceeds from the new senior secured term loan facility will be used to repay the company's existing term loan facilities and reduce outstandings under the revolving credit facility. The refinancing of its credit facilities is expected to be completed by mid-November. The company's Issuer Default Rating remains at 'BB' and BMHC's Rating Outlook remains Stable. The rating and Outlook reflect the continued improvement of BMHC's operating performance, its focus on the large production homebuilders, and its diverse range of product and service offerings. Risk factors include the company's exposure to the cyclicality of the homebuilding industry, possible integration/financing issues related to its ongoing acquisition program, and the continued consolidation of BMHC's customer base. The rating and Outlook also incorporate BMHC's growth strategy. Building on key acquisitions over the past five years, the company has increased its revenues from $1.1 billion in 2001 to $2.9 billion in 2005. In 2005, the company acquired seven companies for approximately $203 million. Thus far in 2006, BMHC has acquired seven companies, purchased the remaining 20% interest in a company that was originally acquired in 2003, and has signed a letter of intent to acquire a roofing services company. These acquisitions are consistent with BMHC's strategy - entry into new markets and the addition of new services in its existing markets. Fitch believes that acquisitions will continue to be the primary growth strategy for the company, particularly in the SelectBuild Construction segment, as it expands its range of services to further become an integrated multi-trade residential construction company. However, Fitch expects BMHC to be less acquisitive in the next year as it integrates the operations of the companies it acquired over the last 18 months. The proposed refinancing of its credit facilities should continue to enhance the company's liquidity. As the housing market slows down, most of the large public homebuilders are projecting lower margins resulting from the lack of pricing power as well as increased level of incentives. As a result, the large public homebuilders are going back to their supply chain (i.e. subcontractors and materials suppliers) to seek concessions in order to alleviate some of the margin pressure they are experiencing. During the third quarter ended Sept. 30, 2006, BMHC reported a decline in organic growth for both of its business segments. BMHC's SelectBuild segment reported that sales from comparable operations were down 28%, primarily in its Southwest and Pacific markets. For its BMC West business, sales from comparable operations declined 10% during the quarter. However, it is important to note that BMHC maintained its gross margins during the third quarter despite the current trends in the industry. Nevertheless, Fitch expects pressure on BMHC's margins during at least the short term as homebuilding activity slows down. Fitch projects total housing starts to decline 11.5%-12.5% during 2006. The company conducts business with 17 of the 25 largest production homebuilders in more than half of the top 40 residential markets in the U.S. The large builders are typically significant players in many of the largest, often high-growth metropolitan housing markets. BMHC's focus on the large homebuilders should benefit the company going forward. The large public builders have the opportunity to leverage their scale and capital in the period ahead. These companies (large builders) should be able to continue to gain market penetration and grow their businesses. Fitch believes that the large production builders are better prepared for a housing downturn (relative to their smaller competitors), which should provide some stability for BMHC. A key element of the company's business strategy for the past several years entails shifting its product and service mix from commodity lumber to value-added manufactured building components and construction services. Through acquisitions, the company now delivers a growing range of residential construction services in key growth markets in the U.S. Distribution of commodity products still represents about 30% of revenues as of 2005, but is significantly lower than the 60% contribution from this business during 2000. The focus on construction services as well as value- added manufactured building components somewhat lessens the impact of lumber volatility on the company's margins. The past decade has seen consolidation in the distribution channels of the building products industry. New home sales from the top 10 U.S. homebuilders increased from approximately 10% of industry sales in 1993 to over 20% in 2005. Fitch expects more consolidation in the industry, with the large builders continuing to buy private, midsize companies and taking share from smaller builders. The continued growth of the large homebuilders (and their efforts to look for cost savings) may eventually limit the pricing power of building products and construction services providers like BMHC. However, Fitch believes that the continued consolidation of the homebuilding industry will create a long-term need for broad-based suppliers like BMHC to enable national homebuilders to lower costs (i.e. shorten home construction cycle time) and reduce logistics complexity in their business. Large builders are the ones who will value BMHC's services, allowing them (builders) to focus on what they do best (i.e. land acquisition and entitlement and sales). Founded in 1987, BMHC is a construction services and building materials company, with annual sales of almost $3 billion. BMHC competes in the homebuilding industry through two business segments: BMC West and SelectBuild Construction. With locations in the western and southern U.S., BMC West distributes building products and manufactures building components for professional builders and contractors. SelectBuild Construction provides construction services to high-volume production homebuilders through operations in key growth markets across the U.S. CABLEVISION SYSTEM: Grover Brown and Zachary Carter Joins Board --------------------------------------------------------------- The Board of Directors of Cablevision Systems Corporation appointed Grover C. Brown and Zachary W. Carter as directors of the Company. Messrs. Brown and Carter will serve as directors elected by holders of Class A common stock under the Company's Amended and Restated Certificate of Incorporation. They were also appointed as directors of the Company's subsidiary CSC Holdings, Inc. Messrs. Brown and Carter were also appointed to a newly formed special litigation committee of the Board. The special litigation committee will review and analyze the facts and circumstances of claims raised in certain litigations where the Company is named as a nominal defendant, and which purport to have been brought derivatively on behalf of the Company. The special litigation committee has full and sole authority to consider whether prosecution of the claims will be in the best interests of the Company and its shareholders, and what actions the Company will take on the cases. Mr. Brown is a Special Counsel with the law firm of Gordon, Fournaris & Mammarella, P.A., in Wilmington, Delaware. From 1985 to 2000, Mr. Brown was Partner at the law firm of Morris, James, Hitchens & Williams. Mr. Brown served as Chancellor and Vice Chancellor of the Delaware Court of Chancery from 1973 until 1985 and was a Family Court Judge for the State of Delaware prior to that time. While a member of the Court of Chancery, Mr. Brown sat as a member of the Delaware Supreme Court on more than 100 appeals by special designation of the Chief Justice of the Delaware Supreme Court. Mr. Carter is a partner at the law firm Dorsey & Whitney LLP, in New York, New York. Mr. Carter joined Dorsey & Whitney in 1999 after a career in public service, which included serving as: United States Attorney for the Eastern District of New York from 1993 to 1999; United States Magistrate Judge for the Eastern District of New York from 1991 to 1993; Judge of the Criminal Court of the City of New York from 1987 to 1991; and Executive Assistant District Attorney, Kings County District Attorney's Office, Brooklyn, New York from 1982 to 1987. 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%. CAJUN FUNDING: 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 restaurant sector, the rating agency confirmed its B2 Corporate Family Rating for Cajun Funding Corp. Additionally, Moody's revised its ratings to B2 from B3 on the company's $115.5 million 12.5% Senior Secured 2nd Lien Notes Due 12/2011 and $39.5 million Floating Senior Secured 2nd Lien Notes Due 12/2011. Moody's assigned those debentures an LGD3 rating suggesting noteholders will experience a 46% 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%). Cajun Funding Corp., the special purpose financing entity for Cajun Operating Company, Inc., are both headquartered in Atlanta, Georgia. The operating company develops, operates and franchises quick-service restaurants primarily under the trade name Church's Chicken. CARIBBEAN RESTAURANTS: 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 restaurant sector, the rating agency confirmed its B2 Corporate Family Rating for Caribbean Restaurants LLC. In addition, Moody's revised its rating on the company's $30 million Senior Secured Revolver Due 2009 and $180 million senior Secured Term Loan B Due 2009 to B1 from B2. Moody's assigned those loan facilities an LGD3 rating suggesting lenders will experience a 33% 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%). Caribbean Restaurants LLC is a Puerto Rican fast-food company. CARROLS CORPORATION: 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 restaurant sector, the rating agency confirmed its B2 Corporate Family Rating for Carrol's Corporation. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $50m Senior secured revolver due 2009 B1 Ba3 LGD2 24% $220m Senior secured term loan B due 2010 B1 Ba3 LGD2 24% $180m 9% Senior sub notes due 2013 Caa1 Caa1 LGD5 79% 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%). Carrol's Corporation, with headquarters in Syracuse, New York, operates 336 Burger King quick service hamburger restaurants. Carrol's also operates or franchises 95 Pollo Tropical restaurants and 138 Taco Cabana restaurants. CASABLANCA RESORTS: Moody's Holds Caa2 Rating on Senior Notes ------------------------------------------------------------- Moody's Investors Service upheld CasaBlanca Resorts' B3 corporate family rating, B3 probability of default rating, B2 senior secured note rating (LGD3, 43%), Caa2 senior subordinated note rating (LGD5, 89%), and SGL-3 speculative grade liquidity rating. The ratings outlook remains stable. CasaBlanca's ratings consider its significant leverage and small size, as well as its market which exposes the company to potential competition from new casino facilities in other Nevada areas that could intercept traffic. Positive ratings consideration is given to its market dominance with ownership of three of the four casinos (76% market share) located in Mesquite, Nevada, which is 80 miles north of Las Vegas. The ratings also take into account that the Mesquite market has experienced significant growth over the past few years, with the market reporting a 13.8% growth in year-to-date gaming revenues through August 2006. The stable ratings outlook anticipates continued growth in the Mesquite market and no material new competition in the foreseeable future. The outlook also assumes that CasaBlanca will continue to generate positive free cash flow after cash interest and maintenance capital expenditures over the next 12 months. Ratings could improve if the company continues to report increasing revenues and cash flow and is able and willing to maintain debt to EBITDA below 6x. A significant drop off in revenue and cash flow growth combined with higher capital expenditures could have a negative impact on ratings given if that were to occur, debt to EBITDA, already at the high end of what is typically considered acceptable at the 'B' indicated rating category, would likely increase. The SGL-3 rating recognizes CasaBlanca's adequate liquidity position to fund the cash needs of the business including growth capital expenditures over the next 12 months. The SGL-3 also acknowledges that substantially all of the assets of the borrower and its subsidiaries are pledged as collateral, and as a result, there are limited sources of alternate liquidity from the sale of non-core assets. Moody's most recent action on CasaBlanca occurred on September 28, 2006 when Probability of Default ratings and LGD assessments were assigned to the company as part of the general roll-out of the LGD product. CasaBlanca Resorts owns and operates the CasaBlanca, the Oasis, and the Virgin River casino and hotels in Mesquite, Nevada, which are located approximately 80 miles north of Las Vegas, Nevada. The company also owns the Mesquite Star, a non-operating casino property that is currently being used as a special events center. CEP HOLDINGS: Taps Glass & Associates as Financial Advisors ----------------------------------------------------------- CEP Holdings LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Ohio for permission to employ Glass & Associates, as their financial advisors, nun pro tunc Sept. 20, 2006. The firm will: a) gather and analyze date interview appropriate management and evaluate the Debtors' existing financial plan and budget to determine the extent of the Debtors' financial challenges. b) assist in the development of strategies for improving liquidity, including possible overhead and expense reduction initiatives and cash conservation programs. c) manage or oversee, as the case may be, all aspects of the business and operations of the Debtors in a manner, and to the extent, customary for a financial advisor. d) lead the Debtors in the development of an action plan, which plan would facilitate discussions concerning the ongoing financing of existing operations and strategic alternatives. e) lead negotiations with entities or groups affected by any transactions or strategic alternatives which the Debtors pursue. f) Participate in the Debtors' board meetings as appropriate, and provide periodic status reports and advise with respect to restructuring and sale activities. g) Perform such other services and analyses relating to the restructuring or sale efforts as are or become consistent with the foregoing items, or as the parties hereto mutually agree. The Debtors tell the Court that the firm received a $125,000 retainer for services to be rendered. The firm's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- John DiDonato, Esq Principal in Charge $450 Anthony Bergen, Esq. Senior Consultant $300 James Stephenson, Esq. Senior Consultant $300 Shaun Donnellan, Esq. Quality Principal $450 To the best of the Debtors' knowledge, the firm does not hold any interest adverse to the estate and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The attorneys can be reached at: John DiDonato, Esq. Anthony Bergen, Esq. James Stephenson, Esq. Shaun Donellan, Esq. Glass & Associates Inc. 26677 West Twelve Mile Road Detroit, Michigan 48034 Tel: (248) 358-8358 Fax: (248) 358-8359 http://www.glass-consulting.com/ Based in Akron, Ohio, CEP Holdings, LLC, manufactured hard, molded rubber products and extruded plastic materials for companies in the automotive, construction, and the medical industries. The Company and two of its subsidiaries filed for chapter 11 protection on Sept. 20, 2006 (Bankr. N.D. Ohio Case No. 06-61796). Joseph F. Hutchinson, Jr., Esq., at Baker & Hostetler, LLP, represents the Debtor. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. The Debtors' exclusive period to file a chapter 11 plan expires on Jan. 18, 2007. CHARITABLE LEADERSHIP: Moody's Puts on Watch Ba2 Rated $55MM Bonds ------------------------------------------------------------------ Moody's Investors Service lowered the rating to Ba2 from Baa3 on Charitable Leadership Foundation's $55 million of Series 2002A bonds issued through the City of Albany Industrial Development Agency. The rating remains on watchlist for further downgrade. We expect to conclude our next review of the rating within a 90 day period. The bonds are expected to be repaid from lease payments made by various tenants leasing space in the bond- financed biomedical research facility located in the University Heights district of Albany, with Charitable Leadership Foundation ultimately providing a guaranty of debt service payments. The rating action reflects Moody's concerns about the multi-year decline in the Foundation's liquidity and the resulting deterioration in the strength of the Foundation's guaranty agreement. Legal Security: -- Payments under the Installment Sale Agreement are a general obligation of the Foundation; -- debt service reserve fund; -- mortgage lien on the leasehold interest in facility and a security interest in the equipment; and, -- pledge and assignment to the Trustee all right, title, and interest to all Leases. Although the expectation is that lease payments from building tenants will adequately cover debt service, the Foundation also entered into a Guaranty Agreement with the Trustee. Under this agreement, which is unconditional and remains in effect for the life of the bonds, the Foundation guarantees debt service on the bonds. Debt-Related Derivatives: None. Strengths: -- The research facility is 100% leased and a large portion of the facility is physically occupied. Ordway Research Institute, a not-for-profit research organization created by the Foundation, occupies approximately 43% of the facility's space. Health Research Inc., a not-for-profit corporation, occupies 45% of the space. The Wadsworth Center, a large New York State Department of Health laboratory, occupies the portion leased by HRI. The New York State Department of Health Division of Lab Quality and Control leases the remaining 11% of space. To-date lease payments by tenants have adequately covered annual debt service and the guaranty provided by the Foundation has not been used. -- CLF recently received a large unrestricted trust gift from a member of the Foundation's founding family. Management reports that it intends to maintain these funds in readily- marketable, publicly-traded equity and debt securities. CLF could also realize future income and investment appreciation from its MTAP affiliate, a medical venture entity specializing in pharmaceutical research, as well as other private research investments. -- CLF's management reports that the Foundation has no intention of making any additional guarantees and very limited plans for future loan commitments. Challenges: -- The rating action largely reflects the Foundation's reduced level of liquidity over the past few years as a result of making accelerated advances to Ordway and other loans and private equity-like investments. In the absence of the recent large trust gift, which had been expected for many years, the strength of the CLF guaranty would have been significantly reduced, with the Foundation not meeting one of the guaranty agreement covenants to maintain at least 90% of its investments in liquid assets by Moody's calculation. As of October 2006, the Foundation has approximately $27.5 million of cash, cash equivalents, and publicly traded equities. However, roughly 60% of this investment portfolio is invested in the stock of one company as a result of the recent transfer of the trust gift which has not yet been fully liquidated. Moody's will continue to monitor CLF's portfolio management and future investment diversification. -- CLF made significant upfront investments in Ordway Research Institute during the start-up period. In FY 2004 through FY 2006 (Ordway's fiscal years), CLF provided over $18 million to Ordway. Although CLF's management projects that Ordway will be financially self-sufficient in the next two years with multiple pending grant applications submitted to NIH and other funding sources, Moody's is concerned about Ordway's current level of dependence on grants from CLF and Ordway's future ability to fully cover its share of lease payments absent financial subsidy from CLF. -- The Charitable Leadership Foundation, which was established in 1999, has a relatively short operating history and small management team and is largely governed by a single member of the Foundation's establishing family. Unlike almost all Moody's-rated not-for-profit organizations, the Foundation does not have a self-perpetuating Board of Trustees overseeing the organization's financial operations and preservation of financial resources. Outlook: The rating remains on watchlist for further downgrade and we expect to conclude our review in a 90 day period. Moody's will continue to focus on CLF's levels of liquid assets as well as the diversification of the Foundation's investment portfolio. What could change the rating - up -- Growth of the Foundation's liquid reserves; -- diversification of investments: and, -- lease payments continuing to adequately cover debt service What could change the rating - down -- Additional borrowing; -- further reduction of CLF's amounts of publicly-traded and readily marketable equity and debt securities or lack of investment diversification; and, -- lease payments inadequately covering annual debt service Key Indicators (FY 2005 financial data of Charitable Leadership Foundation): -- Total cash and investments: $11.3 million -- Total debt: $55 million -- Return on financial resources: -21.5% Rated Debt: -- Series 2002A Civic Facility Revenue Bonds: Ba2 CHASE MORTGAGE: Fitch Assigns BB Rating to $1.6MM Private Class --------------------------------------------------------------- Chase Mortgage Finance Trust's $800 million mortgage pass-through certificates, series 2006-S3S, are rated by Fitch: -- Classes 1-A1 through 1A-7, 1-AX, 2-A1 through 2-A3, 2-AX, A-P and A-R (senior certificates) 'AAA'; -- $10 million class A-M 'AA+'; -- $14.4 million class M-1 'AA'; -- $4 million class B-1 'A'; -- $2 million class B-2 'BBB'; -- $1.6 million privately offered class B-3 'BB'; -- $800,000 privately offered class B-4 'B'. The $1.2 million privately offered class B-5 certificates are not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 4.25% subordination provided by the 1.25 % class A-M, 1.80% class M-1, 0.5% class B-1, 0.25% class B-2, 0.20% privately offered class B- 3, 0.10% privately offered class B-4 and 0.15% privately offered class B-5 certificates. Fitch believes the credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures and the primary servicing capabilities of JPMorgan Chase Bank, N.A. (rated 'RPS1' by Fitch). The trust consists of 1,431 first-lien residential mortgage loans with stated maturity of not more than 30 years with an aggregate principal balance of $800,001,980 as of the cut-off date, Oct. 1, 2006. The mortgage pool has a weighted average original loan-to-value ratio of 70.26% with a weighted average mortgage rate of 6.716%. The weighted-average FICO score of the loans is 744. The average loan balance is $2,958,860 and the loans are primarily concentrated in California (27.9%), New York (20.9%) and Florida (14.2%). None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. The Bank of New York Trust Company, N.A. will serve as trustee. Chase Mortgage Finance Corporation, a special purpose corporation, deposited the loans in the trust which issued the certificates. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. CITICORP MORTGAGE: Fitch Puts B Rating to $843,000 Class B Certs. ----------------------------------------------------------------- Fitch rates Citicorp Mortgage Securities, Inc.'s REMIC pass- through certificates, series 2006-5: -- $545,721,778 classes IA-1 through IA-14, IA-IO, IIA-1, IIA-IO, IIIA-1, IIIA-IO, and A-PO certificates (senior certificates) 'AAA'; -- $9,558,000 class B-1 'AA'; -- $2,812,000 class B-2 'A'; -- $1,687,000 class B-3 'BBB'; -- $843,000 class B-4 'BB'; -- $843,000 class B-5 'B'. The $845,143 class B-6 is not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 2.95% subordination provided by the 1.70% class B-1, the 0.50% class B- 2, the 0.30% class B-3, the 0.15% privately offered class B-4, the 0.15% privately offered class B-5, and the 0.15% privately offered class B-6. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and CitiMortgage, Inc.'s servicing capabilities (rated 'RPS1' by Fitch) as primary servicer. As of the cut-off date (Oct. 1, 2006), the mortgage pool consists of 1,010 conventional, fully amortizing, 15-30-year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties with an aggregate principal balance of approximately $562,309,922, located primarily in California (32.04%), New York (16.77%) and Florida (4.06%). The weighted average current loan to value ratio of the mortgage loans is 69%. Approximately 21.86% of the loans were originated under a reduced documentation program. Condo properties account for 5.91% of the total pool. Cash-out refinance loans represent 16.96% of the pool and there are no investor properties. The average balance of the mortgage loans in the pool is approximately $556,743. The weighted average coupon of the loans is 6.588% and the weighted average remaining term is 347 months. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. The mortgage loans were originated or acquired by CMI and in turn sold to CMSI. A special purpose corporation, CMSI, deposited the loans into the trust, which then issued the certificates. U.S. Bank National Association will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. CITIZENS COMMS: Board Declares $0.25 Per Share Quarterly Dividend ----------------------------------------------------------------- Citizens Communications Company's Board of Directors has declared a regular quarterly cash dividend payment of $0.25 per share, payable on Dec. 29, 2006 to holders of record at the close of business on Dec. 9, 2006. Headquartered in Stamford, Connecticut, Citizens Communications fka Citizens Utilities, provides phone, TV, and Internet services to more than two million access lines in parts of 23 states, primarily in rural and suburban markets, where it is the incumbent local-exchange carrier operating under the Frontier brand. * * * As reported in the Troubled Company Reporter on Sept. 20, 2006 Fitch Ratings affirmed Citizens Communications Company's Issuer Default Rating rating at 'BB'. The Rating Outlook is Stable. As reported in the Troubled Company Reporter on Sept. 20, 2006 Moody's Investors Service upgraded the corporate family rating of Citizens Communications to Ba2 from Ba3. Moody's also assigned a Ba2 probability of default rating to the company. The ratings on the senior unsecured revolver and the senior unsecured notes and debentures were also upgraded to Ba2 from Ba3. The instrument ratings reflect both the overall Ba2 probability of default of the company, and a loss given default of LGD 4. The ratings on the preferred EPPICS were upgraded to B1 from B2, and assigned an LGD6 assessment. The outlook is stable. COLLINS & AIKMAN: Has Until Dec. 27 to File Reorganization Plan --------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan extended Collins & Aikman Corporation and its debtor-affiliates' exclusive right to file a plan of reorganization until Dec. 27, 2006, and to solicit acceptances of that Plan until Feb. 26, 2007, without prejudice to their right to seek additional extensions. The Debtors inform the Court that since the latest extension of their exclusive right to file and solicit acceptances of a plan of reorganization, they have been engaged in intense negotiations with their six principal customers regarding the global resolutions necessary for them to emerge from Chapter 11 as a stand-alone enterprise. The Debtors hope to conclude these negotiations shortly. They note that the outcome of those talks will materially affect their reorganization plan. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and US$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COLLINS & AIKMAN: Reviews Bankruptcy Exit Plan ---------------------------------------------- Collins & Aikman Corp. CEO Frank Macher told Bloomberg News in an interview that the Company is reconsidering its strategy to exit bankruptcy after DaimlerChrysler AG announced plans to reduce production at its Chrysler division. Mr. Macher said the Company may split itself into a number of parts, which can be sold off, rather than bundle its units together for sale or reorganize as a standalone company. Bloomberg News reports that some of Collins & Aikman's more potential candidates for a sale include its soft trim business, which makes automotive carpet, and its business plants in Canada and Mexico. Collins & Aikman is contemplating on closing down about 45 North American business plants, Bloomberg says. Mr. Macher explained that the reduction at Chrysler will lower vehicle production by 17% in the second half of 2006, resulting to fewer parts purchases from Collins & Aikman and other suppliers, Bloomberg relates. Aside from DaimlerChrysler, General Motors Corp., and Ford Motor Co. have also unveiled plans to slash production. The Big 3 automakers accounted for approximately 80% of Collins & Aikman's revenues in 2005. "Chrysler came as quite a surprise to us because we had not planned to see such a dramatic reduction in the fourth quarter," Mr. Macher said, according to Bloomberg. "It put a crimp in our plan of reorganization." David Youngman, Collins & Aikman's spokesman, said reorganizing as an independent company is still possible, Bloomberg says. "We are obligated to continue to explore all the options to find the best value for our shareholders," Mr. Youngman told Bloomberg. Mr. Macher said he is trying to accelerate the decision about a new strategy so Collins & Aikman can emerge from Chapter 11 in February 2007 if it remains a standalone company, Bloomberg adds. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and US$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COMCAST CORP: Earns $1.2 Billion for the Quarter Ended Sept. 30 --------------------------------------------------------------- Comcast Corporation reported its consolidated results for the three and nine months ended Sept. 30, 2006, which includes all acquisitions as of the date of their closing. The Company acquired Susquehanna Communications in April 2006 and completed the Adelphia/Time Warner transactions in July 2006. As part of the Adelphia/Time Warner transactions the Company transferred cable systems serving Los Angeles, Dallas and Cleveland to Time Warner, presented as discontinued operations for all periods. Consolidated results, as of Sept. 30, 2006, include the Company's interest in the Texas/Kansas City cable partnership as an equity method investment. The Company disclosed that operating income increased 46% to $1.2 billion in the third quarter of 2006 from $841 million for the same quarter in the prior year. Similarly, consolidated operating income increased 27% to $3.4 billion for the nine months ended Sept. 30, 2006. Net Income increased to $1.2 billion in the third quarter of 2006, compared to net income of $222 million in the third quarter of 2005. The current quarter net income includes an estimated one- time gain, included in investment income, of $694 million related to the Adelphia/Time Warner transactions. Also included in the quarter's results is a one-time gain of $234 million, net of tax, on discontinued operations related to the transfer of cable systems to Time Warner. Net income increased to $2.1 billion in the nine months ended Sept. 30, 2006 compared to net income of $795 million in the prior year. Net Cash from Operating Activities increased to $5.1 billion for the nine months ended Sept. 30, 2006 from $3.9 billion in 2005. Free Cash Flow increased $812 million to $2.2 billion for the nine months ended Sept. 30, 2006 compared to $1.4 billion in 2005. Revenue increased to $6.4 billion in the third quarter of 2006 from $5.2 billion in the prior year third quarter, while operating cash flow increased 16% to $2.6 billion in the quarter. The Company's balance sheet at Sept. 30, 2006 showed total current assets of $5.4 billion and total current liabilities of $6.1 billion. At Dec. 31, 2005 the Company's balance sheet showed total current assets of $2.5 billion and total current liabilities of $6.2 billion. Share Repurchase Program The Company also disclosed that it has repurchased $493 million or 15 million shares of its Class A Special Common Stock during the third quarter of 2006. On a year-to-date basis, the Company repurchased $1.9 billion or 64 million shares, reducing the number of shares outstanding by 3%. Remaining availability under its stock repurchase program is $3.5 billion. 2006 Financial Outlook The Company reaffirms all previously issued guidance for 2006 and updates cable guidance to include the Adelphia/Time Warner transactions and the Houston system, as follows: -- Cable revenue growth of 10% to 11% above 2005 pro forma cable revenue of $23.6 billion, which includes a net $2.4 billion related to acquisitions and dispositions; -- Cable Operating Cash Flow growth of at least 13% above 2005 pro forma cable operating cash flow of $9.1 billion, which includes a net $800 million related to acquisitions and dispositions; -- Cable RGU net additions approximately 60% above 2005 pro forma RGUs of 3 million net additions; -- Cable capital expenditures of approximately $4.5 billion supporting RGU growth in 2006 and including capital expenditures for the Adelphia/Time Warner transactions and the Houston systems of approximately $500 million. Headquartered in Philadelphia, Pennsylvania, Comcast Corporation (Nasdaq: CMCSA, CMCSK) -- http://www.comcast.com/-- provides cable, entertainment and communications products and services. With 21.7 million cable customers, 9.3 million high-speed Internet customers, and 1.7 million voice customers, Comcast is principally involved in the development, management and operation of broadband cable networks and in the delivery of programming content. The Company's content networks and investments include E! Entertainment Television, Style Network, The Golf Channel, OLN, G4, AZN Television, PBS KIDS Sprout, TV One and four regional Comcast SportsNets. The Company also has a majority ownership in Comcast-Spectacor, whose major holdings include the Philadelphia Flyers NHL hockey team, the Philadelphia 76ers NBA basketball team and two large multipurpose arenas in Philadelphia. * * * Comcast Corp.'s preferred stock carry Moody's Investors Service's Ba1 Rating. COMMSCOPE INC: Reports $43.6 Million Net Income in Third Quarter ---------------------------------------------------------------- CommScope Inc. disclosed its third quarter results for the period ended Sept. 30, 2006. The Company reported record third quarter sales of $466.1 million and net income of $43.6 million. The reported net income includes after-tax charges of $1.9 million related to restructuring costs. Excluding this special item, adjusted third quarter earnings were $45.5 million. For the third quarter of 2005, CommScope reported sales of $345.6 million and net income of $11.5 million. The reported net income included total after-tax charges of $11.2 million, primarily for equipment impairment related to global manufacturing initiatives. Excluding these special items, adjusted earnings were $22.7 million. "We delivered record third-quarter results fueled by the expanding global demand for bandwidth," said Frank M. Drendel, CommScope Chairman and Chief Executive Officer. "We believe our performance demonstrates we are executing our strategy well and are strongly positioned for success in 2007." "We posted strong sales growth in all segments," added Mr. Drendel. "Business enterprises are upgrading their Local Area Networks and data centers. Broadband service providers and telecommunication carriers are investing in their infrastructure to provide the 'quadruple play' of video, data, voice and mobility. CommScope's expanding portfolio of infrastructure solutions continues to enable a host of new and exciting communications services." Sales Overview Sales for the third quarter of 2006 increased 34.9% year over year, primarily driven by increased customer demand and price increases in response to higher raw material costs. Enterprise sales rose 41.6% year over year to $237.7 million. Sales rose across essentially all geographic regions with particular strength in the European region. The strong third quarter growth is primarily due to unusually strong orders received during the second quarter and price increases resulting from increased commodity prices. The Enterprise segment continued to experience organic growth as businesses moved toward consolidated data centers and updated their Local Area Networks to support bandwidth intensive applications. Broadband segment sales rose to $143.8 million, up 17.6% year over year, as a result of higher prices for coaxial cable products, increased global sales volumes in all regions and a product line acquisition announced earlier this year. Broadband sales continued to be positively affected by competition between cable television operators and telephone companies. Carrier sales rose 52.9% year over year to $85.0 million due to substantially increased demand for Integrated Cabinet Solutions products. ICS sales increased as domestic telephone companies continued investing in their infrastructure to support video and high-speed data services. Total international sales rose 22.0% year over year to $137.1 million, or approximately 29.4% of total company sales. Overall orders booked in the third quarter of 2006 were $392.6 million, up 6.6% from the year-ago quarter. Global Manufacturing Initiatives CommScope's third quarter 2006 results reflect net pretax restructuring charges of $3.0 million ($1.9 million after tax) primarily for equipment relocation costs associated with the Company's global manufacturing initiatives. The Company has essentially completed the Enterprise portion of these initiatives. The Broadband portion of these initiatives is expected to be completed in the first quarter of 2007. Other Third Quarter 2006 Highlights -- CommScope's SYSTIMAX(R) SolutionsTM joined the Cisco Technology Developer Program as an IP Communications Participant Partner. The Cisco Technology Developer Program sets criteria for interoperability testing by independent third parties and enables leading product and services firms to deploy innovative business solutions. This program provides enterprise or service provider customers with information regarding Cisco Technology Developer Partner products and services that an independent testing facility has tested and found to interoperate with Cisco networking technology. -- Gross margin for the third quarter rose to 30.0%, up more than 250 basis points year over year and up more than 350 basis points sequentially. The gross margin improvements were primarily due to higher sales volume and selling prices, favorable product mix and the positive impact of the Company's global manufacturing initiatives. -- SG&A for the third quarter of 2006 was $62.8 million or 13.5% of sales, compared to $51.3 million or 14.8% of sales in the year-ago quarter. SG&A declined as a percentage of sales primarily due to higher sales levels. -- Third quarter 2006 results include $1.3 million of pretax equity-based compensation expense accounted for in accordance with SFAS No. 123(R). -- Operating income for the third quarter of 2006 was $64.9 million or 13.9% of sales. Excluding restructuring costs, operating income would have been $67.9 million or 14.6% of sales. In the year-ago quarter, operating income was $19.9 million or 5.8% of sales. Excluding special items, operating income would have been $33.9 million or 9.8% of sales for the quarter. -- Total depreciation and amortization expense was $13.4 million for the third quarter, which included $3.2 million of intangibles amortization. -- Net cash provided by operating activities in the third quarter was $34.8 million, up 22% year over year. Capital spending in the quarter was $7.6 million. CommScope also recently reported that its wholly owned subsidiary, Connectivity Solutions Manufacturing Inc. had closed on a previously announced agreement to sell real estate consisting of approximately 70 acres and a 580,000-sq. ft. building at the CSMI manufacturing facility located in Omaha, Nebraska. The sales price for the land and building was approximately $11 million. The sale will be recorded in the fourth quarter of 2006. Fourth Quarter 2006 Guidance * For the fourth quarter of 2006, revenue is expected to be $370-$385 million and operating margin is expected to be 9%-10%, excluding special items; * Effective tax rate of approximately 30%-34%; and * Capital spending of approximately $5-$8 million. Based on the fourth quarter 2006 guidance, sales for calendar year 2006 are expected to be approximately $1.60-$1.62 billion, up 20% year over year. Operating margin for calendar year 2006 is estimated to be around 10.5%, excluding special items. Calendar Year 2007 Guidance * For calendar year 2007, revenue is expected to be in the range of $1.70-$1.75 billion and operating margin is expected to be 11.5% or better, excluding special items. * Effective tax rate of approximately 30%-34%; * Depreciation and amortization expense of approximately $50 million; and * Capital spending of approximately $30-$40 million. "As we move into the seasonally slower fourth quarter, we expect a greater than normal sequential sales decline due primarily to strong shipments in the third quarter," said Executive Vice President and Chief Financial Officer Jearld L. Leonhardt. "Our calendar year 2007 sales guidance is based on our assumption of relatively constant raw material costs, modest volume growth and a stable business environment," noted Leonhardt. "Based upon this revenue outlook, we believe we can deliver another year of good earnings growth." Based in Hickory, North Carolina, CommScope, Inc. (NYSE:CTV) -- http://www.commscope.com/-- designs and manufactures "last mile" cable and connectivity solutions for communication networks. Through its SYSTIMAX(R) Solutions(TM) and Uniprise(R) Solutions brands CommScope is the global leader in structured cabling systems for business enterprise applications. It is also the world's largest manufacturer of coaxial cable for Hybrid Fiber Coaxial applications. Backed by strong research and development, CommScope combines technical expertise and proprietary technology with global manufacturing capability to provide customers with high-performance wired or wireless cabling solutions. * * * As reported in the Troubled Company Reporter on Oct. 5, 2006, Moody's Investors Service confirmed its Ba2 Corporate Family Rating for CommScope Inc. and upgraded its B1 rating on the company's $250 million Senior Subordinated Note due 2024 to Ba3 in connection with Moody's implementation of its new Probability-of- Default and Loss-Given-Default rating methodology. Moody's assigned those debentures an LGD5 rating suggesting noteholders will experience a 73% loss in case of default. CONEXANT SYSTEMS: Improved Liquidity Cues S&P to Lift Corp. Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit and other ratings on Newport Beach, Calif.-based Conexant Systems Inc., reflecting improved liquidity and operating results. The corporate credit rating was raised to 'B' from 'B-'. The outlook was revised to stable from negative. At the same time, S&P assigned its 'B+' senior secured rating and '1' recovery rating to the company's proposed $250 million senior secured floating rate notes due 2010, indicating that investors can expect full recovery of principal in the event of payment default. The rating is based on preliminary offering statements and is subject to review upon final documentation. Proceeds, along with cash on hand, will be used to refinance $457 million of debt maturing in February 2007. "The ratings reflect volatile and competitive industry conditions, the mature nature of its core modem business, and still-high leverage," Standard & Poor's credit analyst Lucy Patricola said. "These factors are offset by good positions in its key markets. Conexant is a supplier of semiconductors used in dial-up modems, set-top boxes, broadband access supporting DSL connectivity, and wireless networking." The outlook is stable. The company's solid market position in the steady dial-up modem business provides ratings support in light of high leverage and modest free cash flow. The outlook could be revised to positive if the company is successful in liquidating noncore assets and reducing debt, while maintaining stable operations. The outlook could be revised to negative if the voice access business matures faster than anticipated, or if the company's technological competitiveness in its remaining core businesses is eroded. CONEXANT SYSTEMS: Moody's Junks Corporate Family Rating ------------------------------------------------------- Moody's Investors Service assigned a B1 rating to the senior secured floating rate notes and a Caa1 rating to the corporate family rating of Conexant Systems Inc., a provider of integrated circuits for the communications and broadband digital home markets. The ratings reflect both the overall probability of default of the company under Moody's LGD framework using a fundamental approach, to which Moody's assigns a PDR of Caa1, and a loss-given-default of LGD-2 for the senior secured notes. Moody's also assigned a SGL-3 speculative grade liquidity rating, reflecting adequate liquidity. Net proceeds from the $250 million note offering together with $217 million of balance sheet cash will be used to retire the outstanding $457 million 4% convertible subordinated notes maturing February 2007. The rating outlook is stable. The Caa1 corporate family rating reflects Conexant's challenges, given the company's high financial leverage and cost structure, to withstand the dramatic swings inherent in the semiconductor industry. Conexant operates in a highly competitive operating environment that is subject to cyclical factors and continuous change. Though limited, the company's financial flexibility will improve following the planned refinancing of its convertible notes maturing February 2007 and expected cash receipts from the pending sale of its equity stake in Jazz Semiconductor. It is Moody's understanding that Conexant intends to use the entire proceeds from the sale to reduce debt shortly after receipt. Nevertheless, Moody's believes Conexant remains challenged to generate sufficient operating cash flow to comfortably service its debt load during cyclical downturns. The recent industry upturn coupled with growing demand for Conexant's universal access, broadband access and broadband media products, has resulted in gross margin expansion and has helped the company to trim operating losses, however free cash flow remains negative. Excluding certain special charges and expenses, Conexant has the propensity to deliver positive operating cash flow. Moody's believes the company's technological and product strength, as well as its Tier 1 customer relationships, will provide a base off of which it should be able to generate higher revenues and profits once the company experiences rising market share growth in its broadband media and wireless LAN segments and after Conexant achieves the expected cost reductions that are part of its most recent restructuring efforts. The stable outlook reflects Moody's expectation that Conexant will continue to demonstrate potential for improved market penetration and favorable product mix driven by its ability to achieve: -- design wins in the embedded wireless networking segment; -- the integration of its DSL and Wi-Fi capabilities into a single chip to capture higher volumes and higher price points; and, -- the roll-out of new products targeting the residential VDSL gateway segment. Coupled with expected cost savings from the recent financial turnaround, this could help to improve Conexant's profit profile. Moody's notes that to the extent debt is not repaid as planned from the Jazz Semi sale proceeds, the rating on the secured notes would likely experience downward pressure. The $250 million senior secured floating rate notes are secured by first priority liens on all of the company's tangible and intangible assets, including: -- equity interests in Jazz Semi and Mindspeed Technologies; -- inter-company loans; -- real estate owned by the company; and, -- intellectual property and contracts. The secured notes also benefit from upstream guarantees from all direct and indirect domestic subsidiaries. Due to the protection provided by the collateral package and the senior position of the secured notes in the company's debt structure, they are rated three notches higher than the CFR at B1 under Moody's LGD framework, which assumes a 44% expected family recovery rate. These ratings were assigned to Conexant: -- Corporate Family Rating at Caa1 -- Probability of Default Rating at Caa1 -- $250 million Senior Secured Floating Rate Notes due 2010 rated B1, LGD-2, 19% -- Speculative Grade Liquidity Rating at SGL-3 Conexant Systems Inc., headquartered in Newport Beach, California, is a provider of integrated circuits for the communications and broadband digital home markets. For the last twelve months ended June 30, 2006, revenues were $940 million. CONEXANT SYSTEMS: To Offer $250 Mil. Floating Rate Secured Notes ---------------------------------------------------------------- Conexant Systems Inc. intends to offer $250 million aggregate principal amount of floating rate senior secured notes due 2010 in a private placement. The Company discloses that the offering will be made to institutional buyers pursuant to Rule 144A, or in offshore transactions pursuant to Regulation S, under the Securities Act of 1933. The net proceeds, together with available cash, cash equivalents and marketable securities on hand, will be used to repay its outstanding 4% convertible subordinated notes due Feb. 1, 2007. The notes are expected to bear interest at a floating rate based on LIBOR, with the rate, reset quarterly. The notes will be guaranteed by certain of its domestic subsidiaries and secured by first-priority liens on substantially all of the assets of the Company and the subsidiary guarantors. The Company further disclosed that the securities to be offered will not be registered under the Securities Act of 1933 or applicable state securities laws, and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws. Headquartered in Newport Beach, California, Conexant Systems, Inc. (NASDAQ: CNXT) -- http://www.conexant.com/-- is a fables semiconductor company. The company has approximately 2,400 employees worldwide. * * * Moody's Investors Service's assigned its Caa1 corporate family rating for Conexant Systems, Inc. The outlook is stable. CORE GROUP: Debtor's Suit Naming IRS as Defendant Was Deficient --------------------------------------------------------------- Core Group Inc., dba the Interactive Core, filed a lawsuit naming the United States Department of Treasury, Internal Revenue Service as the Defendant in an attempt to recover an allegedly $18,549.08 preferential transfer. In an Opinion published at 2006 WL 2660805 and 98 A.F.T.R.2d 2006-6134, the Honorable Mary D. France says the lawsuit was deficient because it failed to name the United States of America as the Defendant. Judge France explains that the Debtor's lawsuit (Bankr. Adv. Pro. No. 05-00128) had to be dismissed because, by naming as defendant and serving only the IRS, had not properly served its complaint, which is a condition to government's waiver of its sovereign immunity. The United States was the proper defendant, notwithstanding the debtor's contention that the IRS, by filing a proof of claim, had consented and become subject to the bankruptcy court's jurisdiction. The IRS, Judge France explains, filed a proof of claim only as an agent for the United States. Judge France dismissed the suit without prejudice to the Debtor re- filing the suit and naming the United States of America as the proper defendant. Core Group Inc., dba the Interactive Core, filed for chapter 11 protection on June 13, 2006 (Bankr. M.D. Pa. Case No. 05-03952). The Debtor is represented by Sara A. Austin, Esq., at the Austin Law Firm LLC in York, Pennsylvania. CRC HEALTH: S&P Rates Amended $434 Mil. Sr. Sec. Term Loan B at B ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its loan and recovery ratings to CRC Health Corp.'s amended and restated $434 million senior secured term loan B due 2013. The loan is rated 'B' (at the same level as the 'B' corporate credit rating on CRC Health) with a recovery rating of '2', indicating the expectation for substantial (80%-100%) recovery of principal in the event of a payment default. About $190 million of the term loan, along with a $99 million holding company loan and additional sponsor equity, will be used to finance the acquisition of Aspen Education Group for $291 million and to pay down existing revolver borrowings. At the same time, Standard & Poor's affirmed its existing ratings on CRC, including the 'B' corporate credit rating. The ratings were removed from CreditWatch, where they were placed with negative implications Sept. 29, 2006, following the company's announcement of its plan to acquire Aspen Education. "At that time, we thought that the details of the financing might weaken the company's credit profile enough for a lower rating, but after our review of the transaction specifics, it was determined that the existing rating level was appropriate," explained Standard & Poor's credit analyst Alain Pelanne. The rating outlook on CRC is stable. The low-speculative-grade rating on CRC reflects the company's aggressive efforts to capitalize on its relatively narrow position in substance abuse treatment with a highly leveraged capital structure. With the Aspen acquisition, the company increases its presence in the highly fragmented behavioral health care industry by approximately 50%. At closing, which is expected November 2006, CRC will provide substance abuse treatment services in 103 facilities and clinics in 23 states, and 32 therapeutic education programs in 12 states and the U.K. CRC Health: Moody's Puts Ba3 Rating on Proposed $190 Million Loan ----------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to CRC Health Corporation Inc.'s proposed $190 million add-on term loan in connection with the acquisition of Aspen Education Group. Proceeds derived from the new add-on term loan facility will be utilized to fund the acquisition and its related fees and expenses and to pay down the outstanding revolver balance. Moody's assigned these ratings: -- Ba3 to the $190 million senior secured add-on term loan B due 2013, LGD2, 29% Ratings affirmed: -- $100 million senior secured revolver due 2012, rated Ba3, LGD2, 29% -- $245 million senior secured term loan B due 2013, rated Ba3, LGD2, 29% -- $200 million senior subordinated notes due 2016, rated Caa1, LGD5, 80% -- Corporate Family Rating, rated B2 -- Speculative Grade Liquidity Rating, SGL-2 The affirmation of the B2 Corporate Family Rating reflects the combined entity's high leverage, low free cash flow in the near term, and minimal debt reduction in the intermediate term. The value of these metrics is considered to be weak for the rating category. The stable outlook reflects Moody's expectation that CRC will continue to increase top-line growth, expand margins at both existing and acquired facilities, and generate operating cash flow by means of higher rates, improved census and continued, strong cost control measures. If the integration of acquired facilities is behind plan or other factors lead to slower revenue growth, increased margin pressure and a contraction in the level of free cash flow, the outlook could change to negative. Another large acquisition that further increases the company's already high leverage or constrains the company's liquidity could result in a downgrade. The rating could be upgraded if better than expected operational results serve to reduce Debt/EBITDA to below 5.5x and improve FCF/Debt to 5% or better. CRC Health Corporation, based in Cupertino, California, owns and operates drug and alcohol rehabilitation facilities and clinics specializing in the treatment of chemical dependency and mental health disorders through a network of more than 100 facilities across 23 states. For the twelve months ended June 30, 2006, the company generated revenues of approximately $234 million. CWALT INC: $4.3 Million of Certificates Gets Fitch's Low-B Rating ----------------------------------------------------------------- Fitch rates CWALT, Inc.'s Mortgage Pass-Through Certificates, Alternative Loan Trust 2006-35CB: -- $599.9 million classes A-1, X, PO, and A-R certificates (senior certificates) 'AAA'; -- $10.9 million class M certificates 'AA'; -- $4.6 million class B-1 certificates 'A' -- $3.4 million class B-2 certificates 'BBB'; -- $2.5 million class B-3 certificates 'BB'; -- $1.8 million privately offered class B-4 certificates 'B'. The 'AAA' rating on the senior certificates reflects the 4.00% subordination provided by the 1.75% class M, 0.75% class B-1, 0.55% class B-2, 0.40% class B-3, 0.30% privately offered class B- 4, and 0.25% privately offered class B-5 (not rated by Fitch). Classes M, B-1, B-2, B-3 and B-4 are rated 'AA', 'A', 'BBB', 'BB' and 'B' based on their respective subordination only. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults. In addition, the rating also reflects the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Countrywide Home Loans Servicing LP, which is rated 'RMS2+' by Fitch and is a direct wholly owned subsidiary of Countrywide Home Loans, Inc. Approximately 66.75% of the initial loans were originated under CHL's Expanded Underwriting Guidelines. Mortgage loans underwritten pursuant to the Expanded Underwriting Guidelines may have higher loan-to-value ratios, higher loan amounts, higher debt-to-income ratios and different documentation requirements than those associated with the Standard Underwriting Guidelines. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for the presence of these attributes As of the cut-off date, Oct. 1, 2006, the mortgage pool consists of 30-year conventional, fixed rate, fully amortizing, first liens on one- to four-family residential properties. The aggregate balance of the mortgage loans is $624,988,537 with an average loan balance of $219,525. The weighted-average original loan-to-value ratio is 67.69%. The weighted average FICO credit score is approximately 719. Cash-out refinance loans represent 40.13% of the mortgage pool and second homes 5.44%. The states that represent the largest portion of mortgage loans are California (30.95%) and Florida (7.98%). All other states represent less than 5% of the pool as of the cut-off date. CWALT purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The Bank of New York will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. CWALT INC: Fitch's Rating on $3.3MM Class B-4 Certs. Remains at B ----------------------------------------------------------------- Fitch rates CWALT, Inc.'s Mortgage Pass-Through Certificates, Alternative Loan Trust 2006-36T2: -- $702,131,793 classes 1-A-1 through 1-A-16, 2-A-1 through 2-A-8, 1-X, 2-X, PO, and A-R certificates (senior certificates) 'AAA'; -- $16,762,700 class M-1 'AA'; -- $1,862,400 class M-2 'AA'; -- $8,194,700 class B-1 'A'; -- $5,959,700 class B-2 'BBB'; -- $3,724,900 class B-3 'BB'; -- $3,352,300 class B-4 'B'. The 'AAA' rating on the senior certificates reflects the 5.75% subordination provided by the 2.25% Class M-1, the 0.25% Class M- 2, the 1.10% Class B-1, the 0.80% Class B-2, the 0.50% privately offered Class B-3, the 0.45% privately offered Class B-4 and the 0.40% privately offered Class B-5. Classes M-1, M-2, B-1, B-2, B- 3, and B-4 are rated 'AA', 'AA', 'A', 'BBB', 'BB', and 'B' based on their respective subordination only. Fitch believes the credit enhancement will be adequate to support mortgagor defaults. In addition, the rating also reflects the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Countrywide Home Loans Servicing LP (Countrywide Servicing), rated RMS2+ by Fitch, a direct wholly owned subsidiary of Countrywide Home Loans, Inc. The mortgage pool consists of two loan groups. Loan Group 1 consists primarily of 30-year conventional, fully amortizing mortgage loans totaling $424,975,374 as of the cut-off date, October 1, 2006, secured by first liens on one-to four- family residential properties. The mortgage pool, as of the cut-off date, demonstrates an approximate weighted-average original-loan- to-value of 73.47%. The weighted average FICO credit score is approximately 707. Cash-out refinance loans represent 40.02% of the mortgage pool and second homes 5.76%. The average loan balance is $644,879. The three states that represent the largest portion of mortgage loans are California (49.49%), New York (7.48%), and Florida (6.15%). All other states represent less than 5% of the cut-off date pool balance. Loan Group 2 consists primarily of 30-year conventional, fully amortizing mortgage loans totaling $319,993,061 as of the cut-off date, October 1, 2006, secured by first liens on one-to four- family residential properties. The mortgage pool, as of the cut- off date, demonstrates an approximate weighted-average OLTV of 70.24%. The weighted average FICO credit score is approximately 689. Cash-out refinance loans represent 45.46% of the mortgage pool and second homes 7.25%. The average loan balance is $622,555. The three states that represent the largest portion of mortgage loans are California (27.12%), Florida (10.33%), New York (7.50%), Maryland (5.12%), and New Jersey (5.02%). All other states represent less than 5% of the cut-off date pool balance. Approximately 70.88% and 97.55% of the mortgage loans in loan group 1 and loan group 2, respectively, have been underwritten pursuant to Countrywide Home Loans' Expanded Underwriting Guidelines. Mortgage loans underwritten pursuant to the Expanded Underwriting Guidelines may have higher loan-to-value ratios, higher loan amounts, higher debt-to-income ratios and different documentation requirements than those associated with the Standard Underwriting Guidelines. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for the presence of these attributes. CWALT purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The Bank of New York will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. DANA CORP: Court Permits Debtors and Franklin to Conduct Discovery ------------------------------------------------------------------ In November 2005, Franklin Fueling Systems, Inc., and Dana Corporation and its debtor-affiliates entered into three agreements: (1) A Supply Agreement requiring the Debtors to supply certain in-ground flexible fuel pipe to FFS; (2) A Bailment Agreement relating to certain of FFS' property to be used by the Debtors in the manufacture of the piping products; and (3) An Equipment Sale Agreement to convey certain used equipment to FFS. Each of the Agreements are interrelated, and together they govern the overall relationship between the Debtors and Franklin, Jon C. Vigano, Esq., at Schiff Hardin, LLP, in New York, explains. As of Sept. 21, 2006, the Debtors failed to comply with numerous postpetition obligations under the Supply Agreement on at least 15 separate occasions, Mr. Vigano notes. The Debtors failed to meet their obligations both as to quantity and quality of the products. The Debtors also failed to cure the postpetition defaults and their failure to cure the defaults triggered 15 independent and separate breaches under the Supply Agreement, Mr. Vigano says. Those breaches have significantly harmed and continue to harm FFS, Mr. Vigano asserts. The continuing defaults constitute incurable material, non-monetary defaults. The defaults also call into the Debtors' ability to perform under the Supply Agreement in the future, Mr. Vigano adds. Moreover, the Debtors' defaults caused FFS to incur $27,114 in costs to supervise and monitor the Debtors' product for ongoing quality, volume, specification and delivery issues. Mr. Vigano relates that the Supply Agreement provides that the Debtors will indemnify and hold FFS harmless from all costs, losses and damages incurred because of the Debtors' breach of the Agreement. Thus, the postpetition costs should be allowed as an administrative expense under Section 503(b) of the Bankruptcy Code. Accordingly, FFS asks the U.S. Bankruptcy Court for the Southern District of New York to: (a) modify the automatic stay to permit it to immediately terminate the Agreements; (b) modify the automatic stay to permit it to retrieve its property located at certain of the Debtors' facilities; (c) approve and allow the $27,114 postpetition costs it incurred as a result of the Debtors' breaches of the Supply Agreement as an administrative expense under Section 503(b); and (d) require the Debtors to promptly pay $27,114. Debtors Respond The Debtors assert that the circumstances surrounding the Agreements, the multi-year relationship they govern, the parties' performance under them and the events Franklin characterizes as "defaults" are complicated and extensive. Corinne Ball, Esq., at Jones Day, in New York, argues that: (1) the Lift Stay Motion omits key facts and obscures the full context of the circumstances making the picture incomplete and misleading; (2) the Lift Stay Motion is utterly without evidentiary support; and (3) Franklin ignores applicable state law, contract and bankruptcy principles, with respect to the "defaults" it alleges. Given the numerous facts at issue in the dispute, the importance of developing those facts to apply the governing legal principles and the significance of the Agreements to their estates, the Debtors believe that a full-blown discovery process is very necessary. Ms. Ball informs the Court that the Debtors have already served a first set of written discovery requests on Franklin. After completion of the fact investigation, the Debtors believe that a proper evidentiary record and more complete legal briefing will thoroughly debunk Franklin's position, and show that: (a) their performance under the Agreements have been legally sound and the alleged "defaults" are neither material, incurable nor non-monetary in the eyes of the law; (b) Franklin has not suffered material harm and, to the contrary, Franklin has obtained a healthy surplus of XP Pipe and has not experienced any customer delivery interruptions as a result of the Debtors' performance under the Supply Agreement; and (c) their performance for the past several months demonstrates a solid and reliable ability to perform under the Supply Agreement throughout the remainder of its term, if it is not sooner assumed and assigned to a purchaser of the Debtors' Fluid Routing Group. Ms. Ball tells the Court that the Agreements are a valuable estate asset and an important component of the Debtors' Fluid Routing Group, which is currently being marketed for sale. The Debtors believe the evidence will go so far as to show that Franklin itself has caused the so-called defaults. According to Ms. Ball, shortly after the Petition Date, Franklin has been demanding far in excess of its true market requirements of XP Pipe and has been making those demands on inconsistent, unrealistic and unforgiving schedules, for no legitimate business reason. As a result of those demands, the Debtors believe that Franklin has stockpiled many months of surplus inventory, thus contributing to their so-called defaults through failures in meeting certain of its own obligations under the Supply Agreements. Contingent upon discovery, further briefing of the issues and a full evidentiary hearing, the Debtors believe that there is no cause for relief from the automatic stay or granting administrative claims in favor of Franklin. Hence, the Debtors ask the Court should deny Franklin's request. Court Ruling The Court authorized the Debtors and Franklin to conduct discovery pursuant to Rules 7026, 7028 and 7037 of the Federal Rules of Bankruptcy Procedure. The Court directed the Debtors to serve written responses and any privilege, and make responsive, non-privilege documents available for Franklin's inspection and copying no later than Nov. 2, 2006. The Court permitted either party to serve additional document requests, interrogatories or requests for admissions; provided that: (i) neither Party may serve more than 25 interrogatories in total or 150 document requests in total, including discrete subparts as to both; and (ii) all document requests, interrogatories or requests for admissions must be served so that the deadline for responses is no later than the date for the close of written discovery. The responding Party must serve written responses and any privilege logs, and make responsive, non-privileged documents available for inspection and copying by the requesting Party no later than 15 days after service of the requests. About Dana Corporation Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DANA CORP: Wants Furillo's and Buono's Lift Stay Requests Denied ---------------------------------------------------------------- Dana Corporation and its debtor-affiliates acknowledge that Carl Furillo and Joseph Buono's Disability Claims have been liquidated before their bankruptcy filing. The settlements, however, did not provide that non-estate assets are available to pay the Claims, the Debtors contend. Instead, Corinne Ball, Esq., at Jones Day, in New York, relates, the Settlements provide that the Disability Claims are nothing more than prepetition general unsecured claims against the Debtors. Thus, there is no basis to permit Messrs. Furillo and Buono to pursue collection of their claims against the Debtors outside of the normal claims allowance and plan distribution process, Ms. Ball asserts. The Settlement Agreements provide that the Debtors, and not their pension trust funds, were to pay the Settlement Amounts, Ms. Ball adds. Messrs. Furillo and Buono did not support their allegations that their settled claims were to be paid from non- estate assets in the Pension Trust, Ms. Ball points out. Furthermore, Ms. Ball points out, Messrs. Furillo's and Buono's Claims were not only for payment of medical disability pension, but also for alleged negligence, breach of fiduciary duty and violation of contractual, statutory and fiduciary duties by the Debtors as the administrator of the Pension Agreement. Thus, the Buono and Furillo Settlement Amounts represent resolutions, not only of claims that in theory might have called for Pension Trust funds, but also of claims that apparently could only be asserted against the Debtors, Ms. Ball maintains. The Debtors do not dispute the amount or priority of Messrs. Furillo's and Buono's prepetition general, unsecured claims, but they cannot "jump ahead" of other general unsecured claimants to be paid in full, Ms. Ball asserts. Accordingly, the Debtors ask the U.S. Bankruptcy Court for the Southern District of New York to deny Messrs. Furillo's and Buono's requests to lift the automatic stay. As reported in the Troubled Company Reporter on May 26, 2006, Messrs. Furillo and Buono sought to have the automatic stay lifted to: -- complete all of the documents necessary for the distribution of their settlement proceeds with regards to their claim against the Dana Corporation and its debtor- affiliates; and -- enforce their right granted under the Debtors' pension plan. On April 14, 2005, Messrs. Furillo and Buono commenced an action before the United States District Court for the Eastern District of Pennsylvania, alleging that Dana Corporation failed to pay them disability pension benefits in connection with an application of that benefits filed in December 2000. The Claimants alleged that they were covered by a Pension Agreement issued by Dana and governed by the Employee Retirement Income Security Act of 1974. A Dana Corporation Pension Plan for members of Local Union Number 3733 United Steel Workers' of America {AFL-CIO) Parish Division-Reading Plant govern the Claimants' pension rights. On Feb. 2, 2006, Messrs. Furillo and Buono resolved their pension claim for a lump sum of $65,000 each, to be paid out of the trust fund established pursuant to Dana's pension plan. Gregory J. Boles, Esq., at Fenner & Boles, LLC, in Philadelphia, Pennsylvania, asserts that the assets of the trust fund are not necessary for an effective reorganization. In the event that the stay is not lifted, the Messrs. Furillo and Buono asked the Court to: -- require adequate protection for their interests; or -- deem the automatic stay inapplicable because the property is not the property of the estate. About Dana Corporation Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DAVE & BUSTERS: 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 restaurant sector, the rating agency confirmed its B2 Corporate Family Rating for Dave & Busters Inc. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $100M Sr. Sec. Term d. 2/2013 B1 Ba2 LGD2 12% $60M Sr. Sec. Revolver d. 2/2011 B1 Ba2 LGD2 12% $175M 11.25% Sr. Unsec. Notes d. 2/2014 B3 B3 LGD4 68% 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%). Dave & Busters Inc. operates a chain of about 50 food and entertainment complexes in the US, Canada, and Mexico. The company's locations offer casual dining, full bar service, and a cavernous game room. DEATH ROW: Court Approves LECG LLC as Accountants Advisors ---------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California in Los Angeles gave R. Todd Neilson, the Chapter 11 Trustee appointed in Death Row Records Inc.'s bankruptcy case, authority to employ LECG LLC as his accountants and financial advisors. As reported in the Troubled Company Reporter on Sept. 21, 2006, LECG LLC is expected to: a) analyze all transactions pursuant to the Debtor's cessation of business; b) review all payments made on account of distribution contracts; c) analyze daily transactions; d) investigate all transfers of funds and purchases of investments; e) complete Chapter 11 operating and interim reports in compliance with U.S. Trustee's Office guidelines; f) assist the Trustee in the identification of assets, including causes of action; g) assist the Trustee in the pursuit of any litigation he may pursue, including providing any expert witness testimony that may be necessary; h) perform any necessary tax work and other analysis which is required by the Trustee to properly administer the estate and conclude the case; i) assist the Trustee in preparation of state and federal income tax returns for the estate; j) communicate with taxing authorities on behalf of the estate; and k) assist with such other financial advisory or accounting services requested by the Trustee. The Trustee said that Ernst & Young's professionals will be paid based on their customary hourly rates. A copy of those rates are available for free at http://researcharchives.com/t/s?1202 To the best of the Trustee's knowledge, Ernst & Young does not have any interest materially adverse to the Debtor's estate or other interested parties. Headquartered in Compton, California, Death Row Records Inc. -- http://www.deathrowrecords.net/-- is an independent record producer. The company and its owner, Marion Knight, Jr., filed for chapter 11 protection on April 4, 2006 (Bankr. C.D. Calif. Case No. 06-11205 and 06-11187). Daniel J. McCarthy, Esq., at Hill, Farrer & Burrill, LLP, and Robert S. Altagen, Esq., represent the Debtors in their restructuring efforts. R. Todd Neilson serves as Chapter 11 Trustee for the Debtor's estate. When the Debtors filed for protection from their creditors, they listed total assets of $1,500,000 and total debts of $119,794,000. DELPHI CORP: Resolves SEC Fraud Lawsuit --------------------------------------- Delphi Corporation confirmed yesterday that the Securities and Exchange Commission commenced and simultaneously settled with Delphi a lawsuit alleging violations of federal securities laws. The lawsuit and settlement relate to transactions that were the subject of a restatement by Delphi in June 2005. Under the agreement approved by the Commission, Delphi agreed, without admitting or denying any wrongdoing, to be enjoined from future violations of the securities laws. The SEC did not impose civil monetary penalties against Delphi. "We have cooperated fully with the Commission's investigation and will continue to do so. We are pleased to put the SEC investigation behind us and consider this settlement an important step in our transformation process," said Delphi Chairman and CEO Robert S. Miller. Troy, Mich.-based Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. DELPHI CORP: Shifts Power Products Trade to Automotive Holdings --------------------------------------------------------------- Delphi Corporation has identified its power products business as a non-core operation. Management responsibility for the power products business -- which develops and manufactures power lift gates, power deck lids, power sliding doors, and power cinching latches and strikers -- will be transitioned to Delphi's Automotive Holdings Group. As a result of the decision, Delphi will begin evaluating strategic alternatives for the Power Products business, including the potential sale of this business. Troy, Mich.-based Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Panel Balks at Move to Recognize Late-Filed Claims --------------------------------------------------------------- The Official Committee of Unsecured Creditors in Delphi Corporation and its debtor-affiliates' chapter 11 cases tells the U.S. Bankruptcy Court for the Southern District of New York that the Debtors' request to deem 396 proofs of claim as timely filed is inappropriate, unreasonable and improper. The Committee is sympathetic to the issues the Debtors have raised and understands the difficulty in properly identifying the date the 396 Questionable Proofs of Claim were received. The Committee, however, does not agree that those circumstances justify the "deemed timeliness" of the Questionable Claims that assert amounts totaling more than $21,000,000. The failure of Kurtzman Carson Consultants LLC to properly document receipt of the Questionable Claims complicates the Debtors' analysis of timeliness, but it does not change the burden of proof or the likelihood of the Claims being timely, Robert J. Rosenberg, Esq., at Latham & Watkins LLP, in New York, contends. The claimants that have filed the Questionable Claims still have the burden of showing that their claims were timely filed, and the Debtors still have the ability to address each Claim individually and reasonably. According to a post office supervisor, the Bowling Green Post Office usually places mail into the Post Office Box by 11:00 a.m. or noon, Mr. Rosenberg notes. Only mail that is mistakenly placed in an incorrect Post Office Box, incorrectly routed to a different station, or late in arriving at Bowling Green, would be put in the Post Office Box after noon. Consequently, it is likely that no mail was placed by the Post Office into the Post Office Box from 2:30 p.m. to 5:00 p.m., Mr. Rosenberg says. It is thus very likely that none of the Questionable Claims were timely filed, Mr. Rosenberg emphasizes. The Debtors' explanation that "equity" demands that all of the Claims be deemed timely filed, although attractive on its face, is misplaced, Mr. Rosenberg argues. "It is no more inequitable to disallow the Claims as late filed, and thereby risk disallowing a potentially timely claim, than it would be to deem the Claims as timely, and thereby risk diluting returns to other creditors. Moreover, it no more inequitable to disallow a claim as untimely if it was received on August 9 than it would be if the claim were received on August 10." Considering the likelihood that none of the Claims were actually received in the Post Office Box between 2:30 p.m. and 5:00 p.m. on July 31, 2006, it would be more inequitable to allow them as timely than to disallow them as untimely, Mr. Rosenberg asserts. Accordingly, the Committee asks the Court to deny the Debtors' request in its entirety. Mr. Rosenberg notes that all of the damages were caused by the mistakes of KCC and its agent, The DRS Group. Subsequently, any order on the Debtor's request should explicitly recognize the preservation of any and all claims. The Committee will continue to investigate the Claims, Mr. Rosenberg informs the Court. If the Committee determines that the Claims have merit but the Debtors refuse to prosecute them, the Committee reserves the right to seek the Court's authority to prosecute the Claims on the Debtors' behalf. Debtors Talk Back The Debtors maintain that there is a very high likelihood that a significant number of the 396 Questionable Proofs of Claim were timely filed and received. The general and conclusionary statements of one Bowling Green Post Office supervisor is insufficient to support the Committee's argument, John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, asserts. "The Debtors are acting appropriately in asking the Court to deem the Questionable Claims timely filed considering the uncertainty surrounding each Questionable Claim's date and time of receipt," Mr. Butler argues. "It is not appropriate to minimize the claims pool at the expense of innocent claimants whose rights would be prejudiced through no fault of their own if the Committee's Objection were sustained." The Debtors assert that none of their creditors will be unfairly prejudiced by their request. The Debtors do not ask the Court to allow any of the Questionable Claims, Mr. Butler emphasizes. In fact, the Debtors expressly reserve all of their rights to further object to any or all of the Claims at a later date on any basis whatsoever other than that the Claims were not timely filed, Mr. Butler clarifies. The Claims have not yet been reconciled and they will only be allowed in the amount that the Debtors or the Court ultimately determine to be valid obligations of the Debtors. Troy, Mich.-based Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) DENNY'S CORP: Earns $25.5 Million for the Quarter ended Sept. 27 ---------------------------------------------------------------- Denny's Corporation reported total operating revenue of $258.2 million for its third quarter ended Sept. 27, 2006, an increase of 3.8%, or $9.5 million over the prior year quarter. The Company's restaurant sales increased 3.9%, or $8.9 million, to $234.7 million as a result of a 4.2% increase in company same- store sales. The sales increase offset an eleven-unit decline in company-owned restaurants since the third quarter of last year. Franchise revenue increased 2.6%, or $600,000, to $23.5 million. The Company's restaurant operating margin for the third quarter was 13.8% compared with 10.7% for the same period last year. Other operating costs improved 2.4 percentage points due to a $7.2 million reduction in legal settlement costs resulting from $5.8 million in specific charges taken in the prior year period. Gains on disposition of assets increased $39 million, from the sale of 65 restaurant properties owned by the company and previously leased to franchisee operators. Operating income for the third quarter was $55.6 million, an increase of $46.4 million compared with prior year operating income of $9.2 million. Excluding the $39 million asset sale gain, operating income increased $7.5 million to $16.6 million compared with $9.1 million in the prior year period. Interest expense for the third quarter increased $1 million to $15 million due to higher interest rates on the variable-rate portions of the Company's debt compared with the prior year period. Net income for the third quarter was $25.5 million, an increase of $28.9 million, compared with prior year net loss of $3.4 million. Excluding asset sale gains and income taxes from the current and prior year period, net income increased $4.9 million to $100,000. The Company sold an additional five properties during the third quarter for gross proceeds of $5 million. The net proceeds, along with surplus cash, were used to reduce the outstanding balance on its first lien term loan by $80 million during the quarter. Year- to-date the Company has reduced its debt balances by approximately 15%, or $84 million. At the end of the third quarter, the Company owned 21 restaurant properties that are being marketed for sale, of which six are contracted for sale under the earlier multi-property transaction and are expected to close by year end. The Company expects that 19 of the remaining properties will be sold within the next twelve months. Headquartered in Spartanburg, South Carolina, Denny's Corporation -- http://www.dennys.com/-- is America's largest full-service family restaurant chain, consisting of 543 company-owned units and 1,035 franchised and licensed units, with operations in the United States, Canada, Costa Rica, Guam, Mexico, New Zealand and Puerto Rico. * * * As reported in the Troubled Company Reporter on Aug. 11, 2006 Denny's Corporation's balance sheet at June 28, 2006 showed $500.3 million in total assets and $758.2 million in total liabilities, resulting in a $257.9 million stockholders' deficit. As reported in the Troubled Company Reporter on Oct. 9, 2006 Standard & Poor's Ratings Services raised its corporate credit rating on Armstrong World Industries Inc. to 'BB' from 'D', following the Company's emergence from bankruptcy on Oct. 2, 2006. The outlook is stable. DEVELOPERS DIVERSIFIED: Buying Inland Retail for $6.2 Billion ------------------------------------------------------------- Developers Diversified and Inland Retail Real Estate Trust, Inc. have entered into a definitive merger agreement. Under the terms of the agreement, Developers Diversified will acquire all of the outstanding shares of IRRETI for a total merger consideration of $14.00 per share in cash. Developers Diversified may elect to issue up to $4.00 per share of the total merger consideration in the form of Developers Diversified common stock to be based upon the ten-day average closing price of Developers Diversified shares two trading days prior to the IRRETI stockholders' meeting to approve the transaction. The election to issue Developers Diversified common stock may be made up to 15 calendar days prior to the IRRETI stockholders' meeting and may be revoked by Developers Diversified at any time if the revocation would not delay the stockholders' meeting for more than ten business days. The transaction has a total enterprise value of approximately $6.2 billion. This amount includes approximately $2.3 billion of existing debt, a significant portion of which is expected to be prepaid at closing. IRRETI's real estate portfolio aggregates 307 community centers, neighborhood shopping centers and single tenant/net leased retail properties, comprising 43.6 million square feet of total GLA. Developers Diversified has reached agreement with a major U.S. institutional investor on a joint venture which will acquire 67 of IRRETI's community center assets for approximately $3 billion of total asset value. The joint venture will be leveraged up to 60% loan to value and Developers Diversified will contribute 15% of the equity. Developers Diversified will leverage its co-investment with fees for asset management, leasing, property management, development/tenant coordination and acquisitions. Developers Diversified will also earn a promoted interest equal to 20% of the cash flow of the joint venture after the partners have received an internal rate of return equal to 10% on their equity investment. Additionally, Developers Diversified has received financing commitments totaling in excess of $3 billion, which it may use to fund all or a portion of the total merger consideration. Scott A. Wolstein, Developers Diversified's Chairman and Chief Executive Officer, commented, "This is an exciting transaction that strengthens our industry position through control of some of the highest quality, market-dominant community centers in the Southeast. We're especially pleased to co-invest in this opportunity with a new strategic institutional joint venture relationship. We are excited to add these outstanding properties to our platform and to apply our leasing and management skills to enhance value both for the benefit of our shareholders and for the benefit of our new capital partner." IRRETI's portfolio of properties is a high quality institutional retail portfolio which has dominant market positions in several key growth-oriented Southeast U.S. markets. The properties are well-leased at 95% occupancy. Deferred maintenance is minimal, as the portfolio averages seven years of age and the properties have been well maintained. Daniel B. Hurwitz, Developers Diversified's Senior Executive Vice President and Chief Investment Officer, added, "We're pleased with the opportunity to expand our footprint in such key markets as Atlanta, Charlotte, Miami and Orlando. Additionally, we strengthen our relationships with numerous national retailers such as Target, Wal-Mart, Lowe's, Home Depot and Kohl's. The combination of outstanding locations coupled with strong co- tenancy makes the Inland portfolio a natural fit with the Developers Diversified operating platform." Over 70% of the portfolio is located in these growth-oriented southeastern states: 2006-2011 No. Total GLA Population State Properties (MSF) % Total GLA Growth --- ---------- --------- ----------- ---------- Georgia 53 11.2 25.7% 8.3% Florida 68 8.7 19.9% 9.7% North Carolina 41 6.6 15.1% 6.7% South Carolina 25 2.7 6.2% 5.3% Virginia 14 2.5 5.7% 6.0% ---------- --------- ----------- ---------- Subtotal/Wtd. Avg. 201 31.7 72.7% 7.9% U.S. Average 2006-2011 Population Growth 4.8% The portfolio is tenanted by the leading retailers in their respective categories in the Southeast U.S. A summary of the portfolio's top five tenants by total GLA: Owned % Total Total Total Units GLA Owned GLA % Total Tenant (Owned/Unowned) (MSF) GLA (MSF) GLA ------ --------------- ----- ------- ----- ------- Target 27 0.0 0.0% 3.7 8.5% Wal-Mart 19 1.8 5.1% 3.5 8.1% Publix 53 2.4 6.7% 2.4 5.5% Lowe's Home Imp. 13 0.9 2.5% 1.5 3.3% Kroger 24 1.3 3.6% 1.3 3.0% --------------- ----- ------- ----- ------- Subtotal - Top 5 136 6.3 17.8% 12.4 28.4% Tenants In addition to the portfolio of operating properties, Developers Diversified will acquire a development pipeline of five projects and numerous potential expansion and redevelopment projects. Developers Diversified plans to generate additional value by implementing its proactive leasing, development, redevelopment and property management systems. In addition, the Company intends, immediately upon closing, to incorporate the IRRETI assets in its highly successful ancillary income program, which will result in additional value creation. Barry Lazarus, President and CEO of Inland Retail, noted, "We are extremely gratified to present this exciting liquidity event to our stockholders. This transaction offers very attractive returns to our investors who initially acquired our stock at $10 a share. We are delighted to be able to offer our investors an outstanding return on their initial investments while delivering our extremely high quality portfolio to one of the premier owner/operators in our sector. We look forward to working closely with Developers Diversified's management throughout the transition process." Following the merger, Developers Diversified will own or manage over 800 shopping centers in 45 states, plus Puerto Rico and Brazil, comprising 162 million square feet. Completion of the transaction, which is expected to occur in the first quarter of 2007, is subject to approval of the merger agreement by IRRETI shareholders and other customary closing conditions described in the merger agreement. The merger was unanimously approved by Developers Diversified's Board of Directors. The merger was unanimously approved by IRRETI's Board of Directors, with two related party directors recusing themselves. Macquarie Capital Partners LLC is acting as exclusive financial advisor to Developers Diversified. Banc of America Securities LLC is acting as exclusive financial advisor to IRRETI. Baker & Hostetler LLP is serving as Developers Diversified's legal advisers. Houlihan Lokey Howard & Zukin provided a fairness opinion to the Board of Directors of IRRETI. Duane Morris LLP is serving as IRRETI's legal advisers. About Inland Retail Inland Retail Real Estate Trust, Inc. is a self-administered and self-managed real estate investment trust primarily focused on acquiring, developing and managing community and neighborhood shopping centers in the eastern United States. The Company is a public, non-listed REIT. About Developers Diversified Developers Diversified Realty Corporation -- http://www.ddr.com/ -- currently owns and manages over 500 retail operating and development properties in 44 states, plus Puerto Rico and Brazil, totaling 118 million square feet. The Company is a self- administered and self-managed real estate investment trust operating as a fully integrated real estate company which acquires, develops and leases shopping centers. DEVELOPERS DIVERSIFIED: Filing Form S-3 for 3.50% Senior Notes -------------------------------------------------------------- Developers Diversified Realty Corporation intends to file with the Securities and Exchange Commission on or about Nov. 6, 2006 a Registration Statement on Form S-3 for the registration under the Securities Act of 1933, as amended, of resales of the Company's previously issued 3.50% Convertible Senior Notes due 2011 and the common shares, no par value per share, of the Company which may, under certain circumstances, become issuable upon conversion of the Notes. The Notes were originally issued on Aug. 28, 2006; at the same time a Registration Rights Agreement was entered into among the Company and the initial purchasers of the Notes, which requires the Shelf Registration Statement. In accordance with the Registration Rights Agreement, beneficial holders of the Registrable Securities that wish to use the Shelf Registration Statement in connection with a resale of their Registrable Securities must complete the Selling Security holder Notice and Questionnaire, copies of which can be obtained by contacting: Joan U. Allgood Executive Vice President Corporate Transactions and Governance Developers Diversified Realty Corporation 3300 Enterprise Parkway Beachwood, OH 44122 Phone: 216-755-5656 Fax: 216-755-1656 Developers Diversified Realty Corporation -- http://www.ddr.com/ -- currently owns and manages over 500 retail operating and development properties in 44 states, plus Puerto Rico and Brazil, totaling 118 million square feet. The Company is a self- administered and self-managed real estate investment trust operating as a fully integrated real estate company which acquires, develops and leases shopping centers. DEVELOPERS DIVERSIFIED: Fitch Holds BB+ Preferred Stock Rating -------------------------------------------------------------- Fitch Ratings has affirmed Developers Diversified Realty Corporation's ratings following the company's announcement of the pending acquisition of Inland Retail Real Estate Trust Inc.: DDR -- Issuer Default Rating at 'BBB'; -- Senior unsecured debt at 'BBB'; -- Preferred stock at 'BB+'. JDN Realty Corp. -- Unsecured debt at 'BBB'. The Rating Outlook is Stable. After completion of the acquisition, DDR will realize an increased size and geographic foothold, particularly with a focus on higher population growth markets. Upon culmination of the acquisition, DDR will have a large and well-diversified portfolio with over 800 shopping centers in 45 states and Puerto Rico and Brazil. No state will constitute over an 11% concentration of total square footage and the top five will encompass only approximately 44% of total gross leaseable area. Fitch believes that the transaction will be leverage-neutral upon closing or shortly thereafter and coverage metrics will remain adequate for the rating category. Management continues to pursue a high-quality portfolio with reasonably comfortable lease maturity schedules to strong credit quality anchors and in-line tenants. While there is a large amount of secured debt in the IRRETI portfolio today, DDR intends to pay off the vast majority (over 75%) on the $3 billion of assets it wholly own on its balance sheet, which should serve to improve the company's unencumbered asset profile and to further strengthen financial flexibility going forward. Historically, the company has shown a considerable appetite for large acquisitions and this transaction appears consistent with these others where management has demonstrated successful integration and shown improved operating performance. The ratings do acknowledge that the IRRETI acquisition is a substantial undertaking for the company that contains inherent risks such as generating a cohesive transition. Fitch anticipates the possibility of modest deterioration in DDR's interest and fixed-charge coverage and leverage ratios in the near term as the transaction closes due to the assumption of debt and other transaction and integration costs. Moreover, it is noted that aside from the anticipated additional debt following closing, the company also has relatively near-term requirements of 30% of existing debt coming due in the next two years. However, Fitch is comfortable with the financing of the transaction and the company's experience in successfully handling similar situations in prior acquisitions. Support for the rating is also derived from the EBITDA (defined as recurring earnings before interest, taxes, depreciation and amortization) to interest expense ratio, which was 2.4 times (x) for the most recent quarter ended June 30, 2006. Likewise, the fixed-charge ratio (defined as EBITDA less capital expenditures and straight line rent adjustments to total interest expense and preferred dividends) for the company was 1.8x for the most recent quarter. With respect to leverage, debt to undepreciated book capital and debt plus preferred stock to undepreciated book capital basis was 53.9% and 63.2%, respectively, at quarter-end June 30, 2006. Moreover, Fitch estimates the risk-adjusted capital ratio for the company at 1.15x as of June 30, 2006. All of these measures are consistent with the 'BBB' issuer and unsecured debt rating and are expected to remain within a narrow range of this level. Developers Diversified Realty Corporation is a self-administered Ohio-based real estate investment trust that acquires, develops, owns, and manages primarily community and neighborhood shopping centers. As of June 30, 2006, the company had interests in 465 properties aggregating approximately 115 million square feet of gross leaseable area located in 44 states. Pre-merger announcement, the company had total assets of approximately $7.1 billion, total debt of $4.1 billion, and an undepreciated total book capital of $7.6 billion. DHIMANT PATEL: Case Summary & Five Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Dhimant Patel 1456 Cresthaven Lane San Jose, CA 95118 Bankruptcy Case No.: 06-52173 Chapter 11 Petition Date: October 27, 2006 Court: Northern District of California (San Jose) Judge: Roger L. Efremsky Debtor's Counsel: Charles B. Greene, Esq. 84 West Santa Clara Street, Suite 770 San Jose, CA 95113 Tel: (408) 279-3518 Fax: (408) 279-4264 Total Assets: $1,194,759 Total Debts: $1,290,068 Debtor's Five Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service 200 1040 Taxes $580,400 Stop HQ5420 P.O. Box 99 San Jose, CA 95103 Bank of America Charges Incurred $34,863 P.O. Box 60069 2004, 2005, 2006 City of Industry, CA 91716 MBNA America Charges Incurred $32,219 P.O. Box 15289 2004, 2005, 2006 Wilmington, DE 19886 Costco American Express Charges Incurred $21,934 P.O. Box 0001 2004, 2005, 2006 Los Angeles, CA 90096 Golden Bay Federal Credit Union 2006 Hyundai $18,290 P.O. Box 1449 Elantra Secured: Mountain View, CA 94042 $12,300 DORAL FINANCIAL: 10-Q Filing Cues S&P to Remove Ratings from Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services removed from CreditWatch and affirmed its ratings on Doral Financial Corp., including its 'B+' counterparty rating. The ratings had been placed on CreditWatch with negative implications on April 19, 2005. The outlook is negative. The rating actions follow Doral's filing of its first and second quarter 10-Qs on Oct. 23, 2006, which brings it up to date on its Securities and Exchange Commission filings and eliminates concerns over the possibility of accelerated debt repayments. "However, there are still significant problems the new management team must address," explained Standard & Poor's credit analyst Michael Driscoll. "These include the refinancing of $625 million in debt due July 2007, which requires external financing, the high levels of interest rate risk on the balance sheet, continued legal and regulatory problems, a decline in mortgage originations, and a soft local economy, all of which have contributed to poor financial results," he added. Indeed, Doral has reported a net loss of $33.8 million for the first six months of 2006, driven by a deteriorating net interest margin (NIM), losses associated with unwinding various mortgage transactions, and declines in mortgage loan and IO valuations. Furthermore, expenses remain elevated as management works through restatement costs, legal costs, and severance costs as it rationalizes the business. Further rationalization is needed, as Doral's efficiency ratio was 162% for the first six months of 2006. Despite all of the negative news surrounding Doral over the past year and half, the brand itself remains strong. Doral has more than 500,00 customers, but each customer uses only slightly more than one product on average. Clearly, there are significant cross-selling opportunities, a goal management intends to pursue. The negative outlook reflects our concerns regarding the refinancing of the $625 million in debt due July 2007 and the uncertainty surrounding the timing and probability of core profitability to rebound. At this point in time, Doral intends to refinance the July 2007 senior debt and execution will depend on the market conditions at that time and the progress Doral has made in its restructuring initiatives. If Doral continues to post operating losses and its core mortgage franchise languishes, the ratings could be lowered. However, if Doral returns to profitability, the ratings could stabilize or even be raised depending on the extent of the improvement in financial performance. DOUGLAS HAN: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtors: Douglas S. Han Amy M. Han dba 4th Ave Gas & Deli 1430 West Casino Road, Suite 323 Everett, WA 98204 Bankruptcy Case No.: 06-13778 Chapter 11 Petition Date: October 26, 2006 Court: Western District of Washington (Seattle) Judge: Philip H. Brandt Debtors' Counsel: Raymond G. Sandoval, Esq. RGS Legal 801 Pine Street, Suite 100 Seattle, WA 98101-1811 Tel: (206) 343-4465 Fax: (206) 343-4467 Total Assets: $2,225,318 Total Debts: $2,145,404 Debtors' 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America Business Debt $70,000 P.O. Box 21848 Greensboro, NC 27420 MBNA Visa (BOA) Business Debt $47,717 P.O. Box 37271 Baltimore, MD 21297 Monogram Bank - North America Credit Card $47,717 P.O. 17054 Wilmington, DE 19884 U.S. Bank/NA ND Check Credit $45,169 4325 17th Avenue South Fargo, ND 58125 Advanta Bank Corp. Business Debt $15,029 P.O. Box 8088 Philadelphia, PA 19101-8088 Yunkyung Cho Personal Debt $10,000 Amex Business Debt $9,470 Bank of America Credit Card $8,260 Leslie Clay Terry, III Attorney and Legal $7,256 GM Chase Mastercard Business Debt $6,900 Nordstrom FSB Credit Card $4,393 Norstrom Visa Consumer Debt $4,305 Ferrell Gas Business Debt $1,965 Evergreen Environmental Service Business Debt $910 City of Everett Back Taxes $1 Snoqualmie Finance Department Business Debt $1 Snohomish County Treasurer Back Taxes $1 Verizon Northwest Other $1 Verizon Northwest Inc. Other $1 Wfnnb/Express Structure Charge Account $1 DOV PHARMACEUTICAL: May File for Bankruptcy to Improve Liquidity ---------------------------------------------------------------- DOV Pharmaceutical Inc. said it is exploring initiatives to improve liquidity and that it may be forced to seek protection under United States bankruptcy laws, Reuters reports. According Reuters, the company plans to initiate discussions with major stakeholders regarding strategic alternatives, which include a consensual restructuring of capital structure. NASDAQ Delisting Notice DOV Pharmaceutical has received notification that the NASDAQ Listing Qualifications Panel has determined to delist the company's securities, effective at the open of business on Oct. 27, 2006. The delisting according to NASDAQ is a result of the company's failure to meet the minimum market value of listed securities requirement for continued listing. As a result of the delisting, the company is obligated to repurchase its 2.50% convertible subordinated debentures, due 2025, on or prior Nov. 11. However, the company said it currently does not have the capital to repurchase the $70 million debentures, Reuters relates. DOV Pharmaceutical Inc. is a biopharmaceutical company focused on the discovery, acquisition and development of novel drug candidates for central nervous system disorders. The Company's product candidates address some of the largest pharmaceutical markets in the world including depression, pain and insomnia. DURA AUTOMOTIVE: U.S. and Canadian Operations File for Chapter 11 ----------------------------------------------------------------- DURA Automotive Systems Inc.'s U.S. and Canadian subsidiaries filed yesterday, Oct. 30, 2006, for protection under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the District of Delaware. DURA's European and other operations outside the U.S. and Canada, accounting for approximately 51% of DURA's revenue, are not part of the filing. DURA's decision to pursue reorganization under Chapter 11 came after evaluating all options to restructure its balance sheet to reduce the company's indebtedness and interest expense. DURA elected to pursue a restructuring under court protection as it will facilitate both a financial restructuring and ongoing operational restructuring, the successful implementation of which will help DURA overcome current financial and industry pressures and position the company for long-term success. DIP Financing As part of the filing, DURA has arranged for approximately $300 million in Debtor-in-Possession financing from Goldman Sachs, GE Capital, and Barclays, which will be used by DURA to fund normal business operations and continue its operational restructuring program initiated in February 2006. The company has requested, and expects to receive, permission from the Court to pay employee salaries, wages and benefits. DURA has also asked for authority to pay certain critical pre-petition vendor claims and will continue to pay its post-petition obligations in the ordinary course of business. DURA said the steps it is taking would help ensure continuity of supply to customers. "With industry conditions tightening further, we concluded that our capital structure is no longer appropriate," chairman and chief executive officer of DURA Automotive Systems Larry Denton said. "The Chapter 11 process will enable us to work with our creditors on a plan that will reduce our debt burden and align the business to meet the challenges of tomorrow's automotive marketplace. "The entire North American automotive supply industry is at an extremely difficult juncture," Mr. Denton continued. "Pursuing a financial reorganization under court protections is the prudent course of action and positioning us for long-term sustainability. This is in the best interest of our employees, customers, vendors, and other business partners." DURA said the accelerating deterioration of the North American automotive industry, in particular, further production cuts by the major U.S. OEMs and the escalating cost of raw materials, adversely affected DURA's cash position prior to the filing. The DIP financing will improve DURA's liquidity, providing the company with sufficient working capital to continue normal operations and fund its turnaround. In February 2006, DURA initiated an operational restructuring program, focused on improving quality, lowering production costs, increasing EBITDA and rightsizing the business to account for capacity reductions. The operational restructuring program is generating improvements today and will continue to generate additional improvements throughout the bankruptcy process. "Once our operational and financial programs are complete, we believe that DURA will have improved its competitive position in the automotive supply market, combining best-in-class quality with best-in-cost production through our global lean-manufacturing footprint," Mr. Denton said. "DURA plans to continue to serve customers with innovative, competitively priced products that meet the highest standards of quality today and into the future." About DURA Automotive Systems Rochester Hills, Mich.-based DURA Automotive Systems, Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a leading supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to every North American, Japanese and European original equipment manufacturer and many leading Tier 1 automotive suppliers. * * * As reported in the Troubled Company Reporter on Oct. 19, 2006, Moody's Investors Service lowered the Probability of Default rating of Dura Automotive Systems Inc. to D from Caa3. As reported in the Troubled Company Reporter on Oct. 18, 2006, Standard & Poor's Ratings Services lowered the corporate credit rating of Dura Automotive Systems Inc. and its subsidiary, Dura Operating Corp., to 'D' from 'CCC'. DURA AUTOMOTIVE: Case Summary & 30 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Dura Automotive Systems, Inc. aka Dura Automotive Holdings, Inc. aka MC Holding Corp. 2791 Research Drive Rochester Hills, MI 48309-3575 Bankruptcy Case No.: 06-11202 Debtor-affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Dura Operating Corp. 06-11203 Adwest Electronics Inc. 06-11204 Atwood Automotive, Inc. 06-11205 Atwood Mobile Products, Inc. 06-11206 Automotive Aviation Partners, LLC 06-11207 Creation Group Transportation, Inc. 06-11208 Creation Group, Inc. 06-11209 Creation Windows, Inc. 06-11210 Creation Windows, LLC 06-11211 Creation Group Holdings, Inc. 06-11212 Dura Aircraft Operating Company, LLC 06-11213 Dura Automotive Systems Cable Operations Inc. 06-11214 Dura Automotive Systems of Indiana, Inc. 06-11215 Dura Brake Systems, L.L.C. 06-11216 Dura Cables North LLC 06-11217 Dura Cables South LLC 06-11218 Dura Fremont L.L.C. 06-11219 Dura Gladwin L.L.C. 06-11220 Dura Global Technologies, Inc. 06-11221 Dura G.P. 06-11222 Dura Mancelona L.L.C. 06-11223 Dura Services L.L.C. 06-11224 Dura Shifter L.L.C. 06-11225 Dura Spicebright, Inc. 06-11226 Kemberly, Inc. 06-11227 Kemberly, LLC 06-11228 Mark I Molded Plastics of Tennessee, Inc. 06-11229 Patent Licensing Clearinghouse L.L.C. 06-11230 Spec-Temp, Inc. 06-11231 Trident Automotive, L.L.C. 06-11232 Trident Automotive, L.P. 06-11233 Universal Tool & Stamping Company, Inc. 06-11234 Dura Automotive Canada ULC 06-11235 Dura Automotive Systems (Canada), Ltd. 06-11236 Dura Canada LP 06-11237 Dura Holdings Canada LP 06-11238 Dura Holdings ULC 06-11239 Dura Ontario, Inc. 06-11240 Dura Operating Canada LP 06-11241 Trident Automotive Canada Co. 06-11242 Trident Automotive Limited 06-11243 Type of Business: The Debtors design and manufacture driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules, and exterior trim systems for the global automotive industry. The Debtors also supplies similar products to the recreation vehicle and specialty vehicle industries. The Debtors sell their automotive products to every North American, Japanese, and European original equipment manufacturer and many leading Tier 1 automotive suppliers. See http://www.DURAauto.com/ Chapter 11 Petition Date: October 30, 2006 Court: District of Delaware Judge: Kevin J. Carey Debtors' Lead Counsel: Richard M. Cieri, Esq. Marc Kieselstein, Esq. Roger James Higgins, Esq. Ryan Blaine Bennett, Esq. Kirkland & Ellis LLP 200 East Randolph Drive Chicago, IL 60601-6636 Tel: (312) 861-2000 Fax: (312) 861-2200 Debtors' Co-Counsel: Mark D. Collins, Esq. Daniel J. DeFranseschi, Esq. Jason M. Madron, Esq. Richards Layton & Finger, P.A. One Rodney Square 920 North King Street Wilmington, DE 19801 Tel: (302) 651-7575 Fax: (302) 498-7575 Debtors' Special Counsel: Baker & McKenzie Debtors' Conflicts Counsel: Togut, Segal & Segal LLP Debtors' Investment Banker: Miller Buckfire & Co., LLC Debtors' Financial Advisor: Glass & Associates Inc. Debtors' Notice, Claims and Balloting Agent: Kurtzman Carson Consultants LLC Debtors' Corporate Communications Consultants: Brunswick Group LLC Financial Condition as of July 2, 2006: Total Assets: $1,993,178,000 Total Debts: $1,730,758,000 Consolidated List of Debtors' 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ U.S. Bank Trust Services 9% Senior Subd. $523,530,000 60 Livingston Ave. EP-MN-WS3C Notes St. Paul, MN 55107 Attn: Richard Prokosch Tel: (651) 495-3918 Fax: (651) 495-8097 BNY Midwest Trust Company 8.625% Senior $400,000,000 2 N LaSalle Street, Suite 1020 Chicago, IL 60602 Attn: Roxanne J. Ellwanger Tel: (312) 827-8574 Fax: (312) 827-8542 JP Morgan Trust Company 7.5% Convertible $55,205,000 Institutional Trust Service 227 West Monroe, Suite 2600 Chicago, IL 60606 Attn: Sharon K. McGrath Tel: (402) 496-1960 Fax: (402) 496-2014 Johnson Electric North America Trade $3,258,156 47660 Halyard Drive Plymouth, MI 48101 Attn: Jessi Lamb Doug Eberle Doug Stange Tel: (734) 392-5451 Fax: (734) 392-5480 (734) 392-5388 (734) 392-5386 ACH Glass Trade $2,200,817 17333 Federal Drive, Suite 230 Allen Park, MI 48101 Attn: Dave Thompson Steve Ewing Tel: (313) 755-3735 Fax: (313) 755-2285 HS Spring Group Trade $1,969,900 25 Worchester Road Toronto, ON M9W IK9 Canada 3805 Business Park Drive Louisville, KY 40213 Attn: Kerry Pursley Paul Law Pamella Collins Tel: (416) 675-9072 Fax: (416) 675-9074 Ready Rivet and Fastener Ltd. Trade $1,877,979 170 Hollinger Crescent Kitchner, ON N2K 2Z3 Canada Attn: Dan Collins Tel: (519) 745-6119 Fax: (519) 745-9453 ACH Vidriocar Trade $837,881 Calle Miguel Calalan # 420 Parque Industrial Rio Bravo Juarez, Chihuahua 32700 Mexico Attn: Armando Galindo Tel: (526) 566-295-153 Fax: (595) 021-501-617 MakSteel Trade $949,700 7615 Torbram Road Mississauga, ON L4T 4A8 Canada Attn: Norm Trudeau Bill Cooke Tel: (905) 671-3000 x 2255 Fax: (905) 673-4976 Thompson IG LLC Trade $782,031 3196 Thompson Road Fenton, MI 48430 Attn: Chris DeSonia Debbie Schultz Tel: (810) 629-9558 Fax: (810) 629-0041 Fastco Industries Inc. Trade $623,113 2685 Mullins Avenue NW P.O. Box 141427 Grand Rapids, MI 49544 Attn: Craig Gill Marti Archibald Tel: (616) 453-5428 Fax: (616) 791-0481 Astro Shapes Inc. Trade $581,593 65 Main Street P.O. Box 2 Struthers, OH 44471 Attn: Terri Michaud Alison Ritchie Tel: (330) 755-1414 Fax: (330) 755-3641 Technical Services Inc. Trade $540,704 57006 241st Street Ames, IA 50010 Attn: Martin Simpson Tel: (525) 232-3188 Fax: (515) 232-2953 Young Technology Inc. Trade $527,091 332 Commerce Drive Carol Stream, IL 60188 Attn: Eric Luhrs John Wenstrup Tel: (630) 690-4320 ext. 20 Fax: (630) 690-9487 Royal Plastics Inc. Trade $525,362 3765 Quincy Street Hudsonville, MI 49426 Attn: Perry Franco Tel: (616) 667-4155 Fax: (616) 896-0290 Worthington Steel Trade $500,232 200 Old Wilson Bridge Road Columbus, OH 43085 Attn: Tom Grabowski John Cummings Tel: (614) 438-3210 Fax: (614) 840-3706 Camcar Textron CDN Trade $495,869 87 Disco Road Rexdale, ON M9W 6K2 Canada Attn: Andrew Chubb Brian Erickson Tel: (800) 268-4806 Fax: (416) 675-3762 White Rogers Trade $463,291 P.O. Box 93638 Chicago, IL 60673 Attn: Debbie Schmidt Tel: (870) 793-3855 Fax: (870) 793-1822 Kilbank Metal Turning & Trade $460,115 Forming Inc. 4 Barrie Boulevard St. Thomas, ON N5P 4B9 Canada Attn: Donna Dyson Steve Smith Tel: (519) 631-4470 Fax: (519) 631-3152 PPG Industries Trade $441,408 One PPG Place Pittsburgh, PA 15272 Attn: Karen Blaylock Jason Skeen Tel: (412) 434-3131 Fax: (419) 526-7487 AGC Automotive Americas Trade $426,018 1 Auto Glass Drive P.O. Box 5000 Elizabethtown, KY 42701 Attn: Darryl Mezigian Tel: (248) 324-5062 Fax: (270) 769-8295 Sturgis Molded Products Trade $406,473 70343 Clark Street P.O. Box 246 Sturgis, MI 49091 Attn: Rejean Schragg Pam Kain Tel: 1-800-572-1786 Fax: (269) 651-4072 Freedom Technologies Corp. Trade $373,596 10370 Citation Drive, Suite 200 Brighton, MI 48116 Attn: John Piatek Tel: (810) 227-3737 Fax: (810) 227-3909 Carthage Wire Mill Trade $358,129 1225 East Central Avenue Carthage, MO 64836 Attn: Christian Lupo Tel: 1-800-527-1786 Fax: (314) 567-7334 Indalex Aluminum Solutions Trade $353,787 75 Tri-State International Suite 450 Lincolnshire, IL 60069 Attn: Pat Wooley Connie Shinuald Tel: (866) 576-0146 Fax: (847) 295-3851 McLaughlin Metal Sales Co. Trade $338,998 12898 Pennridge Drive Bridgeton, MO 63044 Attn: Wilson Allee Dan Gutos Tel: (314) 567-8585 Fax: (314) 567-7334 Orchid Automation Trade $338,005 331 Alden Road Markham, ON L3R3L4 Canada Attn: Darrell Corkum Tel: (615) 661-4300 Fax: (615) 661-4359 Ford Motor Company Trade $337,542 P.O. Box 6248 Dearborn, MI 48126 Attn: Steve Martin Jennifer Zinn Tel: (313) 322-3000 ext. 9798 Fax: (313) 845-4089 SAIA - Burgess North America Trade $336,283 801 Scholz Drive Vandalia, OH 45377 Attn: Ron Rogers Chris Mullins Tel: (937) 454-2345 Fax: (937) 898-8624 Pilkington-Clinton Plant Trade $332,499 11700 Tecumseh-Clinton Road Clinton, MI 49236 Attn: Terrance Gallagher Pat Gallagher Tel: (517) 456-2167 Fax: (517) 456-4242 EDUCATE INC: Moody's Places Ba3 Rated $159 Mil. Term Loan on Watch ------------------------------------------------------------------ Moody's Investors Service puts the long-term debt ratings of Educate Inc. and the ratings on the senior secured credit facilities of Educate Operating Company LLC on review for possible downgrade. These ratings are affected: * Educate, Inc. -- The B1 rated Corporate Family Rating. * Educate Operating Company, LLC -- $30 million senior secured revolving credit facility due 2009 rated Ba3, LGD2, 24%; -- $159 million senior secured term loan B due 2012 rated Ba3, LGD2, 24%. The review is prompted by the company's weakening cash generation and earnings, which arose in part due to the company's acquisition of a substantial number of franchise centers and the resulting need for incremental training and retention programs for learning center managers. The review will also address indications of reduced lead generation attributable to prior advertising and marketing campaigns, the potential loss of operational focus as the company considers the proposed management buyout announced on September 25, 2006 and, also, the likelihood that additional indebtedness would be assumed by the company if this or a similar transaction takes place. As of June 30, 2006, of the $30 million revolving credit facility, about $17 million was available to the company net of $12 million in advances and $1 million in outstanding letters of credit. Revolver advances have since been repaid. Moody's expects the company to seek covenant modifications to ensure continued orderly access to the revolver. Educate Operating Company, LLC, is the operating subsidiary of Educate Inc. The company, headquartered in Baltimore, Maryland, is a leading education services company for students ranging from pre-kindergarten through high school. Its portfolio of brands includes: -- Sylvan Learning Centers, which provides customized supplemental, remedial and enrichment programs in reading, writing and mathematics; -- Hooked on Phonics, which delivers early reading, math and study skills programs; and, -- Catapult Learning, a leading provider of educational services to public and non-public schools. Educate had revenue of $327 million for the twelve months ended Sept. 30, 2006. ENTERGY NEW ORLEANS: U.S. Trustee Amends Committee Membership ------------------------------------------------------------- Asplundh Tree Expert Co., represented by Joseph P. Dwyer, has resigned from the Official Committee of Unsecured Creditors in Entergy New Orleans, Inc.'s Chapter 11 case. R. Michael Bolen, the United States Trustee for Region 5, appointed NRG Power Marketing, Inc., to replace Asplundh in the Committee. The Committee is now comprised of: (1) Apache Corporation Attn: Roxanne Armstrong 2000 Post Oak Blvd. Houston, Texas 77056-4400 Tel: (713) 296-6501 Fax: (713) 296-6501 (2) Western Gas Resources, Inc. Attn: Brian Jeffries 1099 - 18th Street, Suite 1200 Denver, Colorado 80202 Tel: (303) 452-5603 Fax: (303) 457-9748 (3) NRG Power Marketing, Inc. Attn: Jeffrey M. Baudier 112 Telly Street New Roads, Louisiana 70760 Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. Carey L. Menasco, Esq., Philip Kirkpatrick Jones, Jr., Esq., and Joseph P. Hebert, Esq., at Liskow & Lewis, APLC, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ENTERGY NEW: Court Dismisses Request for August Tax Payment ----------------------------------------------------------- Entergy New Orleans Inc. and Entergy Services Inc. informed the U.S. Bankruptcy Court for the Eastern District of Louisiana that their entry of stipulations relating to ESI's refund of the August Franchise Fee and Taxes have rendered moot ENOI's motion for authority to pay certain taxes and franchise fees owed to the City of New Orleans. At the parties' behest, the Court dismisses the Motion. ESI to Refund August Tax Payment Before it filed for bankruptcy, the Debtor owed a $1,096,711 consumer use tax payment to the City of New Orleans, Louisiana, for the period of August 2005. On Sept. 15, 2005, ESI issued a check to the City of New Orleans on behalf of ENOI in payment for the $1,096,711 August Tax Payment. The check was delivered on behalf of ENOI to the City on September 19, 2005, but the City did not cash the check until after the Petition Date. ENOI subsequently reimbursed ESI for the August Tax Payment on October 5, 2005. The reimbursement occurred during the confusion and emergency events surrounding Hurricane Katrina, the displacement of Entergy personnel from their offices, and the difficulties of accessing bank and accounting records. Notwithstanding that the Debtors filed a motion seeking approval of ENOI's payment of the August Tax Payment, ENOI has made a demand on ESI to refund the October 5 payment. ENOI and ESI eventually negotiated a stipulation, which the Court subsequently approved. Under the stipulation, the parties agreed that: (1) ENOI will withdraw the portion of the Motion relating to the August Tax payment; (2) ESI will agree to the entry of a judgment refunding ENOI for the amount of the $1,096,711 August Tax Payment, plus interest accruing from October 5, 2005, through the date of payment calculated at the rate charged under the DIP Credit Agreement; (3) ENOI will reserve all of its rights, claims and causes of action, which it may have as a result of the refund of the August Tax Payment to ENOI; and (4) ESI will have until 30 days from the date of the Court's order approving the stipulation to file a proof of claim for the amount of the August Tax Payment reserving to ENOI and any party-in-interest all rights to object to the claim except as to the timeliness of the filing. Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. Carey L. Menasco, Esq., Philip Kirkpatrick Jones, Jr., Esq., and Joseph P. Hebert, Esq., at Liskow & Lewis, APLC, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FIRST BANCORP: Fitch Puts Low-B Ratings on Negative Watch --------------------------------------------------------- Fitch Ratings has placed First Bancorp's long-term issuer default ratings 'BB' and Individual ratings 'C/D' on Rating Watch Negative. At the same time, Fitch is affirming the ratings of FBP's subsidiary, FirstBank of Puerto Rico at 'BB' and 'B', respectively. The bank's Rating Outlook is Negative. In December 2005, FBP liquidated certain securities at the parent to make a capital contribution to the bank. While this had a positive effect of restoring capital ratios at the bank, it depleted a substantial portion of liquid assets at the parent. The weakened liquidity profile is exacerbated by the requirements for dividend approval by regulators. Positively, FBP has enhanced its liquidity contingency planning at the parent. As part of the regulatory agreement in place, FBP submitted a written plan to provide for the maintenance of an adequate liquidity position, including establishing appropriate liquidity measures at the parent, and maintenance of sufficient liquidity to meet commitments and unanticipated needs. While further enhancement is needed, the increase in capital ratios, and continued dividend approval from regulators evidences that FBP is making progress and meeting current needs. Fitch will closely monitor the progress of enhancing parent company liquidity in the near term to resolve the Negative Rating Watch. Ratings reflect outstanding restated financials, an ongoing investigation by the Securities and Exchange Commission, the formal regulatory agreements in place, shareholder lawsuits, and weaker financial performance. At the same time, the company has made progress as it continues to navigate through its accounting problems. FBP recently filed its restated financials for 2000- 2004, and has achieved some success in addressing the reduction of the mortgage-related transactions with Doral Financial Corporation and R & G Financial. In May, FBP recovered $2.4 billion of its $2.9 billion loan to Doral, largely addressing the bank regulators' concern of the single borrower concentration risk to Doral. The company continues to work with both Doral and R&G in reducing remaining balances. Beyond accounting-related problems, the company's financial performance has been substantially weakened. Elevated expenses associated with restatement, legal issues and contingency costs are also squeezing profitability. While some of these expenses should be nonrecurring in nature, core earnings are still estimated to be fairly weak. Margin contraction is also pressured by a levered balance sheet, the rate differential on its interest rate swaps which are Libor-based, and the loss of interest income from the repayment of Doral loans which were floating rate assets. A slower local economy will also likely keep earnings under pressure. Resolution of the Negative Outlook will focus on the ongoing challenges of managing through the accounting, funding and financial aspects related to the mortgage transactions. A return to a Stable Rating Outlook will likely not precede the conclusion of the audited financials, SEC investigation, settlement of lawsuits and regulatory agreements, and the expectation of a period of steady state performance. These ratings have been placed on Rating Watch Negative: First BanCorp -- Long-term IDR at 'BB'; -- Individual at 'C/D'. These ratings have been affirmed with a Negative Outlook: First BanCorp -- Short-term at 'B'; -- Support '5'. FirstBank Puerto Rico -- Long-term IDR at 'BB'; -- Long-term deposit obligations at 'BB+'; -- Short-term deposit obligations at 'B'; -- Short-term at 'B'; -- Individual at 'C/D'; -- Support at '5'. FIRST MERCURY: Moody's Withdraws B2 Rating on Sr. Notes Due 2012 ---------------------------------------------------------------- Moody's Investors Service reported that it has affirmed the Baa3 insurance financial strength rating of First Mercury Insurance Company following the initial public offering of its parent, First Mercury Financial Corporation. In the same action, Moody's has withdrawn the B2 rating on the $65 million senior notes issued by First Mercury Holdings, Inc. as the notes were redeemed following the initial public offering. Moody's has also assigned a long-term issuer rating of Ba3 to FMR and the outlook for the ratings is stable. On October 18, 2006, FMR completed its initial public offering and used part of the proceeds to redeem the senior notes originally issued by First Mercury Holdings, Inc., an upstream holding company, in August 2005. As part of the IPO transaction, First Mercury Holdings was merged into First Mercury Financial Corporation, the intermediate holding company. The proceeds from the IPO were also used to redeem the convertible preferred stock held by Glencoe Capital and to repurchase shares from Glencoe, who now owns approximately 11% of outstanding shares following the IPO. Glencoe Capital is a private equity firm who had been the controlling shareholder of First Mercury Financial Corporation prior to the IPO. Moody's reported that First Mercury's ratings reflect the company's established position in providing general and professional liability insurance for the security industry, its modest catastrophe exposure, and the strong profit margins and significant cash flows of its unregulated subsidiaries. These strengths are offset by the challenges associated with being a new publicly-traded company, which include compliance with Section 404 of the Sarbanes-Oxley Act by year-end 2007 and implementation of a new corporate governance framework. Further, First Mercury's ratings also contemplate risks associated with recent growth, in light of the cyclicality inherent in the excess and surplus lines marketplace and the company's focus on medium-tail casualty business -- which results in uncertainty with respect to the adequacy of loss reserves. At present, these uncertainties, along with the company's modest scale, outweigh the benefits of an improved financial leverage profile. The rating agency noted, however, that several factors could place positive pressure on the ratings including: (a) marked progress toward Section 404 compliance and an independent Board of Directors; and, (b) evidence that recent growth has been profitable. In addition, an enduring commitment to an adjusted financial leverage profile below 40%, together with ROEs above 10%, would be needed to move the rating higher. Conversely, these factors would put downward pressure on the ratings: -- combined ratio greater than 95%; -- adverse reserve development on prior years' losses in excess of 7% of carried reserves; and, -- operating leverage above 1.3x. The last rating action on First Mercury occurred on August 2005 when Moody's assigned a B2 rating to the $65 million senior notes issued by First Mercury Holdings and a Baa3 insurance financial strength rating to First Mercury Insurance Company. These are the rating actions: * First Mercury Insurance Company -- insurance financial strength affirmed at Baa3. ` -- Outlook is stable * First Mercury Financial Corporation -- long-term issuer rating at Ba3. -- Outlook is stable * First Mercury Holdings, Inc. -- senior floating rate notes due 2012 at B2 withdrawn. First Mercury Financial Corporation, headquartered in Southfield, Michigan, is the holding company for two insurance operating companies CoverX Corporation and ARPCO Group. Its insurance subsidiaries provide specialty insurance products and services to the excess and surplus lines market in the United States, with particular expertise in the security industry. FOAMEX INTERNATIONAL: Schulte Roth Represents Ad Hoc Committee -------------------------------------------------------------- Pursuant to Rule 2019(a) of the Federal Rules of Bankruptcy Procedure, Adam C. Harris, Esq., at Schulte Roth & Zabel LLP, in New York, discloses that his firm represents the Ad Hoc Committee of the holders of Foamex International Inc. and its debtor- affiliates' 10-3/4% Senior Secured Notes due April 1, 2009. Foamex L.P., and Foamex Capital Corporation issued the 10-3/4% Senior Secured Notes under an Indenture dated March 25, 2002, with the U.S. Bank National Association, as trustee. The Senior Noteholders Committee's members are: (a) Basso Capital, (b) Cerdarview Capital Management, LP, (c) Chilton Investment Company, Inc., (d) Credit Suisse First Bolton, (e) Goldman Sachs & Co., (f) Jefries & Company, Inc., (g) Murray Capital Management, Inc., (h) Northeast Investors, (i) Plainfield Asset Management LLC, (j) Quadrangle, (k) Rockview Capital, (l) TQA Investors, LLC, and (m) Venor Capital Management LP. Mr. Harris states that as of Oct. 24, 2006, the aggregate principal amount of Senior Secured Notes held or managed by the Senior Noteholders Committee is approximately $200,000,000. The aggregate principal amount of all the Senior Secured Notes outstanding is $300,000,000. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FOAMEX INTERNATIONAL: Trade Creditors Sell 39 Claims ---------------------------------------------------- In September 2006, the Clerk of the U.S. Bankruptcy Court for the District of Delaware recorded 39 claim transfers in Foamex International Inc. and its debtor-affiliates' Chapter 11 cases. Among the largest claim transfers for September 2006 are: Transferor Transferee Claim Amt. ---------- ---------- ---------- Anatomic Concepts Inc. Argo Partners $10,195 Chemical Distributors Inc. Argo Partners 29,366 Corry Area Industrial Denvel Revenue Management 6,496 Ernest Paper Products, Inc. Argo Partners 10,487 Greenfield Research Inc. Argo Partners 8,065 Imex Vinyl Packaging Argo Partners 13,980 Jam Fire Protection Argo Partners 5,693 Klett Rooney Lieber & Schorling Argo Partners 6,052 Leland R. Yoss & Shirley J. Argo Partners 169,962 Logical Systems Inc. Argo Partners 7,273 Luis Ponce ASM Capital, L.P. 131,255 MTM De Mexico Argo Partners 8,800 Recticel NV Argo Partners 19,560 Staffmark, Inc. Revenue Management 60,772 The Holland Group Argo Partners 11,257 True Form Manufacturing Argo Partners 14,532 The claim transfers were filed by: * Adam Moskowitz on behalf of ASM Capital LP 22 Jennings Lane Woodbury, NY 11797 * Matthew Gold on behalf of Argo Partners 12 West 37th Street, 9th Floor New York, NY 10018 * Robert Minkoff on behalf of Revenue Management One University Plaza, Suite 312 Hackensack, NJ 07601 Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FOCUS CORP: S&P Rates Proposed CDN$195 Million Secured Debts at B- ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B-' long-term corporate credit rating to Edmonton, Alta.-based Focus Corporation. At the same time, Standard & Poor's assigned its 'B-' rating, with a recovery rating of '3', to Focus' proposed six-year CDN$165 million secured term loan B and CDN$30 million five-year secured revolving credit facility (unfunded at close). The '3' recovery rating reflects the expectation of meaningful recovery (50%-80%) of principal in a payment default scenario. The outlook is stable. "The ratings on Focus Corporation reflect the company's aggressively leveraged balance sheet following the proposed bank financing, highly cyclical business environment, geographic concentration, and dependence on nonrecurring project work for revenues," Standard & Poor's credit analyst Jamie Koutsoukis said. "Although the current market demand for both the company's geomatics and engineering services is very strong, the more than 100% leveraging of Focus' balance sheet will reduce the company's flexibility to sustain itself during a downturn as its financial commitments have increased significantly," Ms. Koutsoukis added. Focus provides a range of engineering, geomatics, planning, and project management services to clients involved in oil and gas, oil sands, infrastructure, land development, and environmental projects in western Canada. Focus provides these services through two divisions: Geomatics Energy Services and Intec Engineering Services. Geomatics primarily provides land surveying and mapping to oil and gas companies, while Intec provides engineering services to public and private customers. The company is securing bank funding and will use the proceeds of the proposed term loan facilities to fund two acquisitions, refinance existing debt, and pay a dividend to existing shareholders. The stable outlook reflects Standard & Poor's expectation that the company will continue to benefit from high oil prices and strong demand for both its geomatics and engineering services. Although the company will be 100% leveraged, Focus should be able to meet its interest and operating obligations and complete some debt reduction. An outlook revision to positive or an upgrade would be dependent on Focus demonstrating significant debt reduction and an overall strengthening of its coverage and leverage metrics. Conversely, a negative ratings action could occur if the company was to see a decline in demand for its services and a subsequent weakening of its financial profile. FORD MOTOR: Closes Production at Atlanta Assembly Plant ------------------------------------------------------- Production ended at Ford Motor Company's Atlanta Assembly Plant on Friday, Oct. 27, at 7 a.m. when the company produced its last Ford Taurus. Ford produced 7.5 million Taurus units since the sedan was introduced in 1985. From 1992 to 1996, Taurus was the best- selling car in the United States. Its peak year was 1992 with 409,751 units sold. Ford produced Taurus at two assembly plants - Atlanta and Chicago - until 2004 when Chicago Assembly began production of Ford Five Hundred, Freestyle and Mercury Montego. The Atlanta Assembly opened in 1947 and built a variety of historical models including the light trucks, Ford Fairlane, Fairmont, Falcon, Galaxie, Grananda, LTD, Rachero, Torino, Thunderbird, Marquis, Sable and Taurus. For the past five years Atlanta Assembly has ranked among the top 10 most productive assembly plants in North America, as reported by Harbour Consulting. In the 2005 report, Atlanta ranked number one in productivity. Atlanta Assembly employed 1,950 workers, including 1,800 hourly and 150 salaried. The hourly employees, like all UAW-represented Ford employees in the U.S., can select among eight separation, educational and retirement packages. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Company -- http://www.ford.com/-- manufactures and distributes automobiles in 200 markets across six continents. With more than 324,000 employees worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Motor Credit Company and The Hertz Corporation. * * * As reported in the Troubled Company Reporter on Oct. 24, 2006, Standard & Poor's Ratings Services placed its 'B' senior unsecured debt issue ratings on Ford Motor Co. on CreditWatch with negative implications. At the same time, S&P affirmed all other ratings on Ford, Ford Motor Credit Co., and related entities, except the rating on Ford Motor Co. Capital Trust II 6.5% cumulative convertible trust preferred securities, which was lowered to 'CCC- ' from 'CCC.' At the same time, Fitch Ratings placed Ford Motor's 'B+/RR3' senior unsecured debt on Rating Watch Negative reflecting Ford's intent to raise secured financing that would impair the position of unsecured debt holders. Under Fitch's recovery rating scenario it was estimated that unsecured holders would recover approximately 68% in a bankruptcy scenario, equating to a Recovery Rating of 'RR3' (50-70% recovery). Moody's Investors Service has disclosed that Ford's very weak third quarter performance, with automotive operations generating a pre-tax loss of $1.8 billion and a negative operating cash flow of $3 billion, was consistent with the expectations which led to the September 19 downgrade of the company's long-term rating to B3. FORTUNE NATURAL: Judge Brown Nixes 90% of Greenwich's Claim ----------------------------------------------------------- The Official Committee of Unsecured Creditors and other parties- in-interest objected to a $300,000 claim filed by Greenwich Legal Associates LLC against Fortune Natural Resources Corp. The Committee objects on two related grounds, asserting that Greenwich is both an attorney of the debtor and an insider of the debtor, and is thus entitled to a claim equivalent only to the reasonable value of the services it provided to the debtor, not the full $300,000. Greenwich's claim arises from a Business and Management Consulting Agreement, dated as of February 4, 2004, between the Fortune Natural and Lacoff Associates, LLC. Lacoff Associates agreed "to make its representatives available to consult with [the debtor's] board of directors . . . concerning matters relating to proposed business combinations or transactions, tax statutes and regulations and the use of net operating loss carryforwards, and general matters of importance concerning the business and financial affairs of . . ." the debtor. The agreement specifically excepted "any . . . services normally performed by public accounts [sic]." For this, Lacoff Associates was to be paid a monthly fee of $75,000 plus expenses. The agreement was amended, supposedly on May 1, 2004, to assign Lacoff Associates' "rights, duties, and obligations" under the agreement to Greenwich. Both Lacoff Associates and Greenwich are Connecticut limited liability companies. Brandon Lacoff and Lacoff Associates are Greenwich's two LLC members. Brandon Lacoff is Lacoff Associates' sole member. Brandon Lacoff is both an attorney and an accountant, and is the son of Martin Lacoff, a director of the debtor. In a decision published at 2006 WL 2811906, the Honorable Jerry A. Brown finds that Greenwich is an insider and its claim can be allowed only for the reasonable value of its services, which, Judge Brown says, is $25,000. Fortune Natural Resources Corp. filed for chapter 11 protection on June 1, 2004 (Bankr. E.D. La. Case No. 04-14112). At July 31, 2004, the Debtor reported $5,958,924 in assets and liabilities totaling $6,304,871. On April 10, 2006, the Bankruptcy Court entered an order confirming the company's chapter 11 plan of reorganization. The Plan took effect on April 21, 2006, canceling all equity interests and other instruments evidencing an ownership in the Company. GALLERIA INVESTMENTS: Taps Gleeds USA as Contract Auditor --------------------------------------------------------- Galleria Investments LLC asks the U.S. Bankruptcy Court for the Northern District of Georgia for permission to employ Gleeds USA Inc. as its construction contract auditor. Gleeds USA will perform an audit of the amounts alleged to be owed under the construction contracts between the Debtor and Ordner Construction Co. Inc. Prior to the Debtor's bankruptcy filing, Ordner Construction served as the prime contractor for the construction of the shopping center located on Debtor's property. On May 26, 2006, Ordner Construction filed its proof of claim of $1,527,444.29. The Debtor tells the Court that it will provide $5,000 to Gleeds USA before the commencement of work. Gleeds USA's professionals bill: Designation Hourly Rate ----------- ----------- Principal $195 Senior Vice President $185 Vice President $175 Operations Director $150 Senior Project Consultant $125 Project Consultant $110 Administrative $50 To the best of the Debtor's knowledge, Gleeds USA does not hold any interest adverse to the estate. Gleeds USA can be reached at: Gleeds USA Inc. c/o Chris Williams, Vice President Four Concourse Parkway, Suite 215 Atlanta, Georgia 30328 Tel: 770-395-1500 Fax: 770-395-1655 http://www.gleedsusa.com/ Headquartered in Decatur, Georgia, Galleria Investments, LLC, operates a shopping center in Duluth, Georgia. The company filed for chapter 11 protection on Mar. 6, 2006 (Bankr. N.D. Ga. case No. 06-62557). G. Frank Nason, IV, Esq., at Lamberth Cifelli Stokes & Stout, P.A., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. Galleria Investments has been under state court receivership since Feb. 24, 2006. GATEHOUSE MEDIA: S&P Cuts Sr. Sec. Credit Facilities Rating to B+ ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on GateHouse Media Operating Inc. to stable from negative. In addition, Standard & Poor's affirmed its 'B+' corporate credit rating on the company. At the same time, Standard & Poor's lowered its rating on GateHouse Media Operating's first-lien senior secured credit facilities to 'B+' with a recovery rating of '2', from 'BB-' with a recovery rating of '1'. The '2' recovery rating indicates expectations for a substantial (80%-100%) recovery of principal in the event of a payment default. Standard & Poor's also withdrew its rating on the company's second-lien senior secured term loan. The ratings on GateHouse Media Operating are based on the consolidated credit quality of its holding company parent, GateHouse Media Inc. "The outlook revision reflects the company's stronger financial profile that will result from the repayment of the $152 million second-lien senior secured term loan with the proceeds from GateHouse Media's IPO on Oct. 24, 2006," Standard & Poor's credit analyst Donald Wong said. This offering raised net proceeds of about $228 million ($262 million if the underwriters exercise in full their over- allotment option). The lower rating on GateHouse Media's $610 million first-lien senior secured credit facilities reflects a more severe simulated default scenario needed to trigger a payment default with a less levered capital structure; this was previously discussed in our May 17, 2006, recovery report. In addition, the absence of junior debt in the company's revised capital structure is a factor in the lower recovery prospects for the first-lien lenders. GATEWAY DISTRIBUTORS: Posts $1.1 Mil. Net Loss in Second Quarter ----------------------------------------------------------------- Gateway Distributors Ltd. reported a $1,115,805 net loss on $155,767 of sales for the three months ended June 30, 2006, compared to a $319,808 net income on $190,081 of sales for the same period in 2005. At June 30, 2006, the company's balance sheet showed $4,300,605 in total assets and $4,515,232 in total liabilities, resulting in a $214,627 stockholders' deficit. The company's June 30, 2006 balance sheet also showed strained liquidity with $372,309 in total current assets available to pay $3,579,659 in total current liabilities. Full-text copies of the company's financial statements for the three months ended June 30, 2006, are available for free at: http://researcharchives.com/t/s?1428 Going Concern Doubt As reported in the Troubled Company Reporter on May 15, 2006, Lawrence Scharfman & Co., CPA PC, in Boynton Beach, Florida, raised substantial doubt about Gateway Distributors, Ltd.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2005, and 2004. The auditor pointed to the company's need for additional working capital for its planned activity and payment of debt. About Gateway Distributors Gateway Distributors Ltd. markets and distributes different nutritional and health products. These products are intended to provide nutritional supplementation to the users. These products are not intended to diagnose, treat, cure or prevent any disease. GLOBAL DOCUGRAPHIX: Wants Court Approval on Chapter 7 Conversion ---------------------------------------------------------------- Global Docugraphix Inc. and its debtor-affilate Global Docugrahpix USA Inc. ask the U.S. Bankruptcy Court for the Northern District of Texas to convert their chapter 11 case to a chapter 7 liquidation proceeding. The Hon. Stacey G. C. Jernigan will convene a meeting at 9:30 a.m., on Oct. 27, 2006 at 110 Commerce Street, 4th floor in Dallas, Texas. Although the Bankruptcy Code require no hearing on the relief requested, Judge Jernigan set the hearing on Oct. 27, 2006 to allow sufficient time for the Debtors to liquidate the remaining estate before conversion. Headquartered in Plano, Texas, Global DocuGraphix, Inc. -- http://www.gdxinc.com/-- is a commercial printing company offering products and solutions for printing, advertising, marketing, office, and document management. The Company and its subsidiary, Global DocuGraphix USA, Inc., filed for chapter 11 protection on July 18, 2006 (Bankr. N.D. Tex. Case No. 06-32889) Holland N. O'Neil, Esq., and Richard McCoy Roberson, Esq., at Gardere, Wynne and Sewell LLP represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they reported assets and debts totaling between $10 million and $50 million. GOODYEAR TIRE: Closing Tire Manufacturing Plant in Tyler, Texas --------------------------------------------------------------- The Goodyear Tire & Rubber Company reports the planned closure of its tire manufacturing facility in Tyler, Texas, as part of its previously announced strategy to exit certain segments of the private label tire business. At the time of its June private label announcement, Goodyear said that the decision would require a corresponding reduction in North American Tire's manufacturing capacity and that plant performance, capabilities, cost savings opportunity and the focus on serving NAT customers would dictate capacity reduction. "We must take the steps necessary to reduce our costs and improve our competitive position," said Jon Rich, president, North American Tire. "While this is an extremely difficult decision for everyone involved, it was required to help turn around our North American business." Rich said the timing of the action would be coordinated to minimize the impact on Goodyear's customers. Goodyear previously announced to investors an aggressive strategy to reduce costs by more than $1 billion by 2008, including reduction in high-cost tire manufacturing capacity. The Tyler plant principally produces small diameter passenger tires, a segment that has been under considerable pressure from low cost imports. The action is expected to eliminate about 1,100 positions, create annual savings of approximately $50 million after tax, and result in a restructuring charge of between $155 million and $165 million after tax. The cash portion of these charges is estimated to be between $40 million and $50 million. Opened in 1962, the plant has produced approximately 25,000 passenger and light truck tires per day. About Goodyear Tire Headquartered in Akron, Ohio, The Goodyear Tire & Rubber Company (NYSE: GT) -- http://www.goodyear.com/-- is the world's largest tire company. The company manufactures tires, engineered rubber products and chemicals in more than 90 facilities in 28 countries. It has marketing operations in almost every country around the world. Goodyear employs more than 80,000 people worldwide. * * * As reported in the Troubled Company Reporter on Oct. 23, 2006, Fitch Ratings placed The Goodyear Tire & Rubber Company on Rating Watch Negative. Goodyear's current debt and recovery ratings are -- Issuer Default Rating (IDR) 'B'; $1.5 billion first lien credit facility 'BB/RR1'; $1.2 billion second lien term loan 'BB/RR1'; $300 million third lien term loan 'B/RR4'; $650 million third lien senior secured notes 'B/RR4'; Senior Unsecured Debt 'CCC+/RR6'. As reported in the Troubled Company Reporter on Oct. 19, 2006, Standard & Poor's Ratings Services placed its 'B+' corporate credit rating on Goodyear Tire & Rubber Co. on CreditWatch with negative implications because of the potential for business disruptions and earnings pressures that could result from the ongoing labor dispute at some of its North American operations. Goodyear has total debt of about $7 billion. As reported in the Troubled Company Reporter on Oct. 18, 2006, Moody's Investors Service affirmed Goodyear Tire & Rubber Company's B1 Corporate Family rating, but changed the outlook to negative from stable. At the same time, the company's Speculative Grade Liquidity rating was lowered to SGL-3 from SGL-2. These rating actions reflect the increased operating uncertainty arising from the ongoing United Steelworkers strike at Goodyear's North American facilities, and the company's decision to increase cash on hand by drawing-down $975 million under its domestic revolving credit facility. GREENS WORLDWIDE: Posts $2.7 Million Net Loss in Second Quarter ---------------------------------------------------------------- Greens Worldwide Inc. reported a $2,785,876 net loss on revenues of $965,595 for the three month period ended June 30, 2006, compared to a $16,931 net loss on $760 of revenues for the same period in 2005. The company's balance sheet showed $8,003,906 in total assets, $3,772,873 in total liabilities, and $4,231,033 in total stockholders' equity. The company also showed strained liquidity with $2,694,405 in total current assets available to pay $3,035,289 in total current liabilities. Full-text copies of the company's second quarter financial statements are available for free at: http://researcharchives.com/t/s?142c Going Concern Doubt Most & Company, LLP, in New York, raised substantial doubt about Greens Worldwide Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the company's stockholders' deficit, and operating losses and negative operating cash flow since inception. Greens Worldwide Incorporated -- http://grwwsports.com/-- through its wholly owned subsidiary, US Pro Golf Tour, operates an intermediary professional golf tour conducting events for former PGA Tour professionals preparing for the Champions Tour, non- exempt professionals on the Champions Tour, and celebrity challengers and professionals 18 years old and up preparing for the PGA Tour. HERBALIFE LTD: Amends Employment Pact with CEO Richard Goudis ------------------------------------------------------------- Herbalife Ltd., entered into an employment agreement with Richard P. Goudis, pursuant to which, he will continue to serve as chief financial officer and will receive an annual salary of $525,000. Mr. Goudis will continue to be entitled to participate in the Company's employee benefit plans and arrangements made available to most senior executives, as well as long-term incentive plan for senior executives. The Company also granted Mr. Goudis 15,000 Stock Units pursuant to the 2005 Stock Incentive Plan, with each Stock Unit representing the right to receive one common share of the Company. Herbalife Ltd. (NYSE: HLF) -- http://www.herbalife.com/-- is a marketing company that sells weight-management, nutritional supplements and personal care products intended to support a healthy lifestyle. Herbalife products are sold in 62 countries through a network of more than one million independent distributors. The company supports the Herbalife Family Foundation -- http://www.herbalifefamily.org/-- and its Casa Herbalife program to bring good nutrition to children. * * * Standard & Poor's Ratings Services rated Herbalife Ltd.'s long- term foreign and local issuer credit ratings at BB+. HOST HOTELS: S&P Rates Proposed $500 Million Senior Notes at BB --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' rating to Host Hotels & Resorts L.P.'s proposed $500 million senior notes due 2014. These notes are offered to qualified institutional buyers in a private placement, and proceeds will be used to refinance the company's $450 million 9.5% senior notes due 2007, to pay fees, and for general corporate purposes. At the same time, Standard & Poor's affirmed its 'BB' corporate credit rating on the real estate investment trust and its parent and sole general partner, Host Hotels & Resorts Inc. The outlook is stable. Ratings reflect Host's aggressive financial profile and its reliance on external sources of capital for growth. These factors are tempered by Host's high-quality and geographically diversified hotel portfolio; the high barriers to entry for new competitors because of its hotels' locations primarily in urban and resort markets or in close proximity to airports; the company's strong brand relationships; and its experienced management team. IDEAL ELECTRIC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Ideal Electric Company 300 East First Street Mansfield, OH 44902 Bankruptcy Case No.: 06-62179 Type of Business: The Debtor is a manufacturer and distributor of medium power generators for gas, steam and hydro turbines, and diesel engines. See http://www.idealelectricco.com/ Chapter 11 Petition Date: October 29, 2006 Court: Northern District of Ohio (Canton) Judge: Russ Kendig Debtor's Counsel: Harry W. Greenfield, Esq. Buckley King, LPA 600 Superior Avenue East, Suite 1400 Cleveland, OH 44114 Tel: (216) 363-1400 Fax: (216) 579-1020 Total Assets: $22,636,221 Total Debts: $14,340,480 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Waukesha Bearings Corp. $376,231 W231 N2811 Roundy Cir. East Suite 200 Waukesha, WI 53187-1616 Essex Group Inc. $267,650 c/o Dessie Kelly/Pauline T. 1601 Wall Street Fort Wayne, IN 46801-1601 Kingsbury Inc. $262,561 10385 Drummond Avenue Philadelphia, PA 19154 Rea Magnet Wire Company Inc. $186,800 3600 East Pontiac Street Fort Wayne, IN 46803 LSI Steel Processing Division $185,416 Lamination Special Ties 4444 South Kildare Avenue Chicago, IL 60632 Anthem Blue Cross $140,595 Kenilworth Steel $109,491 Ellwood City Forge Co. $104,592 Nance Steel Sales Inc. $94,194 Turbine Engine Service Commission $93,456 Hodge Foundry $79,443 Fidelity Investments $75,838 Michelle Bearing $68,556 Mapes & Sprowl $67,047 Hannon Elec. Co. $61,375 Olympic Steel $53,651 Ohio Bureau of Workers Comp. $51,567 Quality Technical Sales Commissions $44,937 Formsprag Clutch $43,873 Koller Neilson Associates Commissions $40,993 INCO LTD: CVRD Brings In New Board Following Purchase Completion ---------------------------------------------------------------- Following the acquisition by CVRD Canada Inc. of 174,624,019 of Inco Limited's common shares, representing approximately 75.66% of Inco's issued and outstanding common shares, each of the members of Inco's Board of Directors has resigned, with the exception of Scott Hand. CVRD Canada is a wholly owned indirect subsidiary of Companhia Vale do Rio Doce, The vacancies left by the departure of the incumbent directors have been filled with CVRD nominees Roger Agnelli (Chief Executive Officer, CVRD), Jose Auto Lancaster Oliveira (Executive Director, Non-Ferrous Minerals, CVRD), Murilo Pinto de Oliveira Ferreira (Executive Director, Equity Holdings and Business Development, CVRD), Fabio de Oliveira Barbosa (Chief Financial Officer, CVRD), Gabriel Stoliar (Executive Director, Planning, CVRD) and independent directors Michael Phelps, Mel Leiderman, Stephen Wallenstein and Stanley Greig. Roger Agnelli will serve as chair of the Board of Directors. CVRD Canada has asked incumbent Inco Chief Executive Officer, Scott Hand, to remain with Inco to help oversee operations during the transition period. Inco also reported that it intends to withdraw its common shares from listing on the New York Stock Exchange and from registration under Section 12(b) of the U.S. Securities Exchange Act of 1934, as amended. Inco expects that the delisting will become effective in 20 days and that the deregistration will become effective in 100 days. The Company has not arranged for listing on any other U.S. national securities exchange or for quotation of the common shares in any quotation medium. Inco also intends to delist its common shares from the Toronto Stock Exchange as soon as it is in a position to do so. CVRD Canada has previously disclosed that it intends to acquire 100% of the Inco common shares by way of either a "compulsory acquisition" or a "subsequent acquisition transaction" and to cause Inco to effect deregistration and to cease reporting under the Exchange Act once the number of Inco security holders is sufficiently reduced. In light of these facts, Inco's Board of Directors authorized the withdrawal of Inco common shares from listing on the NYSE and from registration under Section 12(b) of the Exchange Act. Effective immediately, Inco will satisfy its reporting obligations under the Exchange Act by filing reports with the SEC on the forms available for use by foreign private issuers, instead of those used by U.S. domestic reporting companies, which it has historically used on a voluntary basis. About Inco Ltd. Headquartered in Sudbury, Ontario, Inco Limited (TSX, NYSE:N) -- http://www.inco.com/-- produces nickel, which is used primarily for manufacturing stainless steel and batteries. Inco also mines and processes copper, gold, cobalt, and platinum group metals. It makes nickel battery materials and nickel foams, flakes, and powders for use in catalysts, electronics, and paints. Sulphuric acid and liquid sulphur dioxide are produced as byproducts. The company's primary mining and processing operations are in Canada, Indonesia, and the U.K. * * * Inco Limited's 3-1/2% Subordinated Convertible Debentures due 2052 carry Moody's Investors Service's Ba1 rating. INT'L GALLERIES: Trustee Wants Court Okay to Use Cash Collateral ---------------------------------------------------------------- Dan Lain, Esq., the chapter 7 trustee appointed in International Gallerires Inc.'s bankruptcy case, asks the U.S. Bankruptcy Court for the Northern District of Texas for authority to use the Debtor's cash collateral. The Trustee requests to make $1,216,147 present cash collateral disbursements and $307,000 future disbursements. The proposed disbursements of cash are to pay secured obligations owed to the landlords and taxing authorities, and administrative expenses. The administrative expenses that the Trustee proposes are to pay those claimants who provided post-petition services that were needed to maintain and preserve the value of the Debtor's assets. A full-text copy of the Debtor's agreed order regarding Trustee's use of cash collateral is available for free at: http://ResearchArchives.com/t/s?1423 Headquartered in Addison, Texas, International Galleries Inc. -- http://www.igi-art.com/-- sponsors artists and sells their artwork through referrals. The company filed for chapter 11 protection on Jan. 31, 2006 (Bankr. N.D. Tex. Case No. 06-30306). Omar J. Alaniz, Esq., at Neligan Foley LLP represented the Debtor in its restructuring efforts. David W. Elmquist, Esq., at Winstead Sechrest & Minick P.C., served as counsel to the Official Committee of Unsecured Creditors. On May 16, 2006, the case was converted to a Chapter 7 liquidation. Dan Lain serves as the Chapter 7 Trustee for the Debtor and is represented by Jeffery D. Carruth, Esq., at Winstead, Sechrest & Minick. When the Debtor filed for protection from its creditors, it estimated assets less than $50,000 and debts between $10 million to $50 million. INTERMUNE INC: Paying $36.9 Million Actimmune Drug Suit Settlement ----------------------------------------------------------------- InterMune Inc. has agreed to pay more than $36.9 million to settle charges regarding illegal promotion of its Actimmune drug, Reuters reports, citing the U.S. Justice Department. InterMune was accused of promoting the drug to treat lung scarring despite not being approved by the U.S. Food and Drug Administration for that use, and submitting false claims for reimbursement from government health programs, the Justice Department told Reuters. According to the report, the company is expected to enter into an agreement with the government to defer prosecution for two years, contingent on its cooperation with the investigation and efforts to implement changes to its compliance policies. Under the settlement, Reuters relates that Intermune will pay more than $30.2 million for losses suffered by the federal Medicare and Medicaid programs, the Veteran's Administration, Department of Defense and Federal Employees Health Benefits program. The company will also pay about $6.7 million to state Medicaid programs, the report said. Brisbane, Calif.-based InterMune Inc. -- http://www.intermune.com/ -- a biotechnology company, engages in the research, development, and commercialization of therapies in pulmonology and hepatology. * * * Intermune Inc.'s balance sheet at June 30, 2006, showed total assets of $224,967,000 and total liabilities of $229,662,000 resulting in a total stockholders' deficit of $4,695,000. For the three months ended June 30, 2006, the company reported a $43,980,000 net loss on $24,111,000 of net revenues, compared to a $23,728,000 net loss on $26,674,000 of net revenues for the three months ended June 30, 2005. INTRAWEST CORP: Fortress Purchase Cues S&P to Withdraw Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services withdrew all its ratings, including the 'BB-' long-term issuer credit rating, on Intrawest Corp. following the company's announcement that it has been acquired by a subsidiary of Fortress Group. As a result, all of Intrawest's unsecured debentures (CDN$125 million, notes due 2009, and $575 million notes due 2013) have been tendered and redeemed. At the time of withdrawal, the credit profile of the issue outstanding continues to perform within the range of expectations and assumptions incorporated into the current ratings. INTREPID TECHNOLOGY: June 30 Balance Sheet Upside-Down by $2.1MM ---------------------------------------------------------------- For the year ended June 30, 2006, Intrepid Technology and Resources Inc. reported a $1,990,079 net loss on $447,300 of net revenues, compared with a $1,471,208 net loss on $399,153 of net revenues for the year ended June 30, 2005. At June 30, 2006, the company's balance sheet showed total assets of $3,195,064, total liabilities of $1,014,493, and total stockholders' equity of $2,180,571, compared with a $476,772 deficit for the year ended June 30, 2005. The company's June 30 balance sheet also showed strained liquidity with $976,672 in total current assets and $1,014,493 in total current liabilities. Full-text copies of the company's financial statements for the year ended June 30, 2006, are available for free at: http://researcharchives.com/t/s?140a Intrepid Technology & Resources Inc. provides engineering, construction, and operation services for alternative energy facilities, including methane gas production plants and hydroelectric, geothermal, and wind generation facilities. The company also promotes the use of its bioreactor technology in California. Going Concern Doubt As reported in the Troubled Company Reporter on July 26, 2006, Jones Simkins, p.c., in Logan, Utah, raised substantial doubt about Intrepid Technology & Resources, Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended June 30, 2005. The auditor pointed to the company's stockholders deficit and negative cash flows from operations. JP MORGAN: S&P Affirms B- Rating on Class O Certificates -------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on nine classes of commercial mortgage pass-through certificates from J.P. Morgan Chase Commercial Mortgage Securities Corp.'s series 2003- C1. Concurrently, ratings are affirmed on 11 other classes from the same series. The raised and affirmed ratings on the pooled certificates reflect credit enhancement levels that provide adequate support through various stress scenarios. The upgrades of several senior certificates reflect the defeasance of $151.9 million (15%) of the pool's collateral since issuance. The raised and affirmed ratings on the raked certificates reflect the stable operating performance of the Concord Mills regional mall in Concord, N.C. The cash flow from the Concord Mills loan serves as the sole source of payment for those certificates. As of the Oct. 12, 2006, remittance report, the collateral pool consisted of 103 loans and one real estate owned asset with an aggregate trust balance of $1.037 billion, compared with 104 loans with a balance of $1.067 billion at issuance. The master servicer, Wachovia Bank N.A., reported primarily full- year 2005 financial information for 100% of the pool, excluding the defeased collateral. Based on this information and excluding the defeased collateral, Standard & Poor's calculated the weighted average debt service coverage to be 1.57x, compared with 1.59x at issuance. One appraisal reduction amount totaling $3.5 million is in effect that is related to the aforementioned REO asset ($7.0 million, 1%), which is the only asset with the special servicer, LNR Partners Inc. All other loans in the pool are current. To date, the trust has not experienced any losses. The top 10 loans secured by real estate have an aggregate outstanding balance of $470.2 million (43%) and a weighted average DSC of 1.65x, down slightly from 1.71x at issuance. The decline reflects significant decreases in DSC for two of the top 10 loans, which are on the master servicer's watchlist. Standard & Poor's reviewed the property inspections provided by the master servicer for all of the assets underlying the top 10 loans. Two of the properties were characterized as "excellent" and the remaining collateral was characterized as "good." Credit characteristics for two of the top 10 loans in the pool continue to have credit characteristics consistent with investment-grade obligations. Details of these loans are: Concord Mills is the largest loan in the pool ($172.6 million; 17%) and has a senior and subordinate interest. The senior interest has a trust balance of $152.6 million. The subordinate interest has a $20.0 million balance and is raked to the "CM" certificates. The loan is secured by the 1,257,201-sq.-ft. Concord Mills regional mall, which was built in 1999. The property is 100% occupied. Despite a 10% increase in effective gross income, the year-end 2005 DSC was 1.65x, down from 1.90x at issuance. The decline in DSC was attributable to increases in real estate taxes, repairs, and maintenance. Standard & Poor's adjusted net cash flow has been stable since issuance. The Mills Corp. (Mills; not rated), a Virginia-based REIT, is the sponsor for the loan and has disclosed that it is being investigated by the SEC and plans to restate its earnings. In addition, Mills is considering various financial options, including a sale of the company. Standard & Poor's will continue to monitor the situation and evaluate the financial and operational effects, if any, on the performance of the trust collateral. Bishops Gate is the fourth-largest loan in the pool with a trust balance of $36.2 million (3.5%; A note). The B note is held outside of the trust and has a balance of $23.2 million. The loan is secured by two class A suburban office buildings in Mount Laurel, N.J., with 438,896 total sq. ft. Both properties were built-to-suit in 1999 for PHH Corp. (BBB/Watch Neg/A-2). Both properties are 100% occupied by PHH Corp. and have 20-year noncancelable leases through December 2022. Year-end 2005 DSC for both properties was 2.46x, up from 2.30x at issuance. Standard & Poor's adjusted NCF has been stable since issuance. Wachovia reported a watchlist of 12 loans with an aggregate outstanding balance of $108.2 million (10%), which includes two of the top 10 loans in the pool. The largest loan on the watchlist is Crossroads Mall ($42.0 million, 4.%), which is also the second-largest loan in the pool. The loan is on the watchlist because of declines in DSC and in-line occupancy since issuance. Year-end 2005 DSC was 0.97x, down from 1.64x at issuance. For the first six months of 2006, occupancy was 71%, down from 90% at issuance. As of June 30, 2006, the 232,507 sq. ft. of in-line space that serves as collateral for this loan was only 56% occupied. The entire footprint of the class B regional mall in Omaha, Neb., is 858,889 sq. ft. The collateral securing this loan was reduced from 452,788 sq. ft. at issuance after the Younkers space and portions of the mall's parking lot were released as collateral and subsequently sold to Target. After making the purchase, Target demolished the Younkers space and is developing a new 116,000-sq.-ft. store, which is expected to open next month. In addition, Steve & Barry's will lease 55,000 sq. ft. of space on the second level of the property. The Gables Champions loan ($21.1 million; 2%), the 10th-largest in the pool, is secured by a 404-unit garden-style apartment complex in Houston, Texas, that was built in 1995. The loan is on the watchlist because of low DSC. At year-end 2005, DSC was 0.90x and occupancy was 94%. The decline in DSC is attributable to rent concessions in an overbuilt Houston market. The loan was assumed in May 2006 and is being converted to luxury rental apartments. The sixth-largest exposure ($28.3 million, 2%), Westheimer at Sage office/retail complex, is not on Wachovia's watchlist but was factored into S&P's analysis because of the near-term lease expiration of its largest tenant. This loan is secured by two office buildings built in 1967 with 423,869 sq. ft. At year-end 2005, DSC was 1.30x and occupancy was 71%. The largest tenant occupies approximately 130,000 sq. ft. and has a lease that expires in January 2007. The only asset with the special servicer, the Warwick Apartments, is REO and is secured by a 320-unit garden-style apartment complex built in 1982 in Dallas, Texas. The total exposure is $8.5 million. The loan was transferred to the special servicer in November 2004 due to monetary default. The property became REO in May 2005. A purchase and sale agreement was extended until Nov. 23, 2006, after the buyer found additional deferred maintenance, including potential environmental issues. Due to these issues, the borrower requested a reduction in price. A December 2005 appraisal, the most recent, valued the property at $5.3 million. Standard & Poor's stressed various loans in the transaction, paying closer attention to the assets with the special servicer and those on the watchlist. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2003-C1 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ B AAA AA 16.79% C AA+ AA- 15.74% D AA A 12.59% E AA- A- 11.15% F A+ BBB+ 9.45% G A- BBB 6.56% H BBB BBB- 4.99% Concord Mills Loan Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ CM-1 A BBB+ N/A CM-2 BBB+ BBB N/A Ratings Affirmed J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2003-C1 Class Rating Credit enhancement ----- ------ ------------------ A-1 AAA 20.20% A-2 AAA 20.20% J BB+ 4.99% K BB 3.94% L BB- 3.28% M B+ 2.49% N B 2.10% O B- 1.92% X-1 AAA N/A X-2 AAA N/A Concord Mills Loan Class Rating Credit enhancement ----- ------ ------------------ CM-3 BBB- N/A N/A - Not applicable KAISER ALUMINUM: Gramercy Alumina Moves for Summary Judgment ------------------------------------------------------------ Plaintiffs Gramercy Alumina LLC and St. Ann Bauxite Limited ask the U.S. Bankruptcy Court for the District of Delaware for partial summary judgment against defendants Kaiser Aluminum & Chemical Corporation and Kaiser Bauxite Company pursuant to Rule 56 of the Federal Rules of Civil Procedure. Michael D. DeBaecke, Esq., at Blank Rome LLP, in Wilmington, Delaware, maintains that the Defendants breached the agreement by failing to disclose health insurance benefits provided to retirees from the bauxite mining facility in St. Ann, Jamaica, that they sold to the Plaintiffs. Mr. DeBaecke says the Defendants' breach of the Agreement triggers their obligation to indemnify the Plaintiffs. Citing Alstrin v St. Paul Mercury Ins. Co, 179 F. Supp. 2d 376, 388 (D. Del. 2002), Mr. DeBaecke asserts that partial summary judgment is appropriate because there is no genuine issue as to any material fact and the Plaintiffs are entitled to judgment as a matter of law. Because the Plaintiffs have sustained damages due to the Defendants' failure to disclose the retiree benefits, partial summary judgment is appropriate, Mr. DeBaecke adds. Defendants' Motion for Summary Judgment The Defendants tell the Court that there are no facts that support the Plaintiffs' complaint that they breached 14 different provisions of the Agreement in regard to the Retiree Benefits. Kimberly D. Newmarch, Esq., at Richards, Layton & Finger in Wilmington, Delaware, says the undisputed factual record demonstrates that Kaiser satisfied all of its obligations under the Agreement, thus it is entitled to judgment as a matter of law. Furthermore, even assuming Kaiser breached the Agreement, Ms. Newmarch contends that the Plaintiffs cannot, as a matter of law, prove that they are entitled to damages because: -- they have admitted that they knew the retiree life insurance benefits existed before closing the transaction; -- they purchased the St. Ann operations with full knowledge of the total cost of producing bauxite, which included the cost of the Retiree Benefits; and -- the future costs of Retiree Benefits are highly contingent and, thus, are not reasonably certain. Accordingly, the Defendants ask the Court for a summary judgment in their favor. Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on Feb. 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. Lazard Freres & Co. serves as the Debtors' financial advisor. Lisa G. Beckerman, Esq., H. Rey Stroube, III, Esq., and Henry J. Kaim, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP, and William P. Bowden, Esq., at Ashby & Geddes represent the Debtors' Official Committee of Unsecured Creditors. The Debtors' Chapter 11 Plan became effective on July 6, 2006. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 107; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 609/392-0900) KAISER ALUMINUM: Trustee Balks at LeBlanc's Admin. Claim Payments ----------------------------------------------------------------- Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, objects to LeBlanc and Waddell's request for payment of $300,000 in administrative expenses because it is unclear whether the firm is a proper entity entitled to receive an administrative expense claim under Sections 503(b)(3)(D) and 503(b)(4) of the Bankruptcy Code. As reported in the Troubled Company Reporter on Sept. 18, 2006, Brett D. Fallon, Esq., at Morris, James, Hitchens & Williams LLP, in Wilmington, Delaware, related that Leblanc & Waddell represented the interests of the CTPV and NIHL claimants in Kaiser Aluminum Corporation's Chapter 11 cases. LeBlanc & Waddell filed nine Louisiana state court lawsuits in the 34th Judicial Court for the Parish of St. Bernard, involving over 400 plaintiffs against Kaiser between June 1997 and January 2002. The Louisiana state court actions remain stayed as a consequence of Kaiser's bankruptcy filing. According to David M. Klauder, Esq., in Wilmington, Delaware, LeBlanc has not provided any support for its contention that it is a creditor. To the extent LeBlanc is classified as a creditor and thus eligible for allowance of administrative expense under Section 503(b)(3)(D), then it also must be proven that it provided a substantial contribution in the case and that the fees of the law firm it hired are reasonable, Mr. Klauder maintains. The U.S. Trustee asks the Court to issue a ruling commensurate with her objection. Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on Feb. 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. Lazard Freres & Co. serves as the Debtors' financial advisor. Lisa G. Beckerman, Esq., H. Rey Stroube, III, Esq., and Henry J. Kaim, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP, and William P. Bowden, Esq., at Ashby & Geddes represent the Debtors' Official Committee of Unsecured Creditors. The Debtors' Chapter 11 Plan became effective on July 6, 2006. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 107; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 609/392-0900) KANSAS CITY SOUTHERN: Fitch Ratings Holds B+ IDR Rating ------------------------------------------------------- Fitch Ratings has affirmed the 'B+' foreign and local currency Issuer Default Ratings for Kansas City Southern de Mexico, S.A. de C.V. The Rating Outlook for these ratings is Stable. Fitch has also affirmed the 'B+' foreign currency and the 'RR4' recovery rating of KCSM's notes: -- $150 million notes due 2007; -- $178 million notes due 2012; -- $460 million notes due 2012. The ratings for KCSM are supported by the company's solid business position as a leading provider of railway transportation services in Mexico with a diversified revenue base consisting of five main industrial sectors. Although operating earnings have improved in 2006, the ratings continue to reflect KCSM's weak financial profile due to its high leverage and tight liquidity. Over the past several years, KCSM has operated in a challenging environment characterized by fierce competition, higher fuel costs, a depreciating Mexican peso versus the U.S. dollar, and a general shift in manufacturing to China from several countries, including Mexico. KCSM's capital structure remains highly levered. As of June 30, 2006, KSCM had approximately $1.4 billion in total debt consisting primarily of $788 million in unsecured notes due in 2007 ($150 million) and 2012 ($638 million) and an estimated $493 million of off-balance debt associated with lease obligations. KCSM's EBITDAR, defined as operating EBITDA plus the company's locomotive and railcar lease payments, was $157 million in the first half of 2006 and the ratio of total debt-to-EBITDAR was 4.5 times (x), an improvement compared with 6.1x in 2005 and 5.5x in 2004. EBITDAR covered fixed expenses, defined as interest expense plus lease payments, by about 2.0x in the first half of 2006 compared with 1.2x in 2005 and 1.5x in 2004. KCSM's liquidity remains tight with $16.3 million of cash as of June 30, 2006. Refinancing risk is high due to the June 15, 2007 maturity of KCSM's $150 million 10.25% notes. Fitch views the transaction completed on April 1, 2005 in which Grupo TMM sold its 51% voting interest in Grupo KCSM (formerly Grupo TFM) to Kansas City Southern as being mildly positive for KCSM. The transaction replaced KCSM's financially distressed controlling shareholder, Grupo TMM, with KCS, a U.S. entity that has a stronger financial profile but one that is also highly leveraged. On Sept. 12, 2005, KCS and other parties entered into an agreement to resolve a dispute with the Mexican government concerning the refund of value added taxes. The result of the settlement involved the cashless exchange of the government's 20% stake in KCSM for the VAT refund such that KCS now owns 100% of the common stock of KCSM via Grupo KCSM, the holding company for KCSM. Despite the acquisition, the KCS railway group continues to be a small operation with about 60% of consolidated earnings generated by the Mexican railroad, KCSM. KCSM is well positioned to continue to benefit from the growth in the Mexican economy and cross-border trade as a result of the North American Free Trade Agreement. The company's revenues are derived predominantly from cross-border freight transportation with the U.S. KCS is now focusing on integrating KCSM into its U.S. rail network, increasing the company's traffic volumes via truck-to-rail conversion efforts, improving efficiencies, adding infrastructure, and developing an international inter-modal corridor to link the port of Lazaro Cardenas on Mexico's south Pacific coast and important commercial cities such as San Luis Potosi and Monterrey with the southeastern U.S. via Jackson, Miss. The route covers major distribution markets such as Mexico City and Laredo, Texas. KCSM is one of three main railroad networks in Mexico, transporting approximately 40% of the country's railway freight volumes. The company's main tracks cover 2,600 miles throughout commercial and industrial areas in the northeastern and central region of the country and serve three of Mexico's main seaports. KSCM operates a strategically significant route connecting Mexico City with Nuevo Laredo-Laredo, TX, the largest freight exchange point between the U.S. and Mexico. In 2005, revenues were generated from diverse sectors such as agro-industrial (23%), cement, metals and minerals (20%), chemical and petrochemical (18%), automotive (16%), manufacturing and industrial (14%), and intermodal (8%). Kansas City Southern of the U.S. owns 100% of KSCM via its wholly owned subsidiary, Grupo KCSM. KARA HOMES: Wants Until Nov. 15 to File Schedules and Statements ---------------------------------------------------------------- Kara Homes Inc. asks the U.S. Bankruptcy Court for the District of New Jersey to further extend, until Nov. 15, 2006, the period within which it can file its schedules of assets and liabilities and statements of financial affairs. The Debtor relates that in the event no objection or responsive pleading is filed, the motion will be deemed uncontested and may be granted by the Court. Headquartered in East Brunswick, New Jersey, Kara Homes, Inc., aka Kara Homes Development LLC, builds single-family homes, condominiums, town homes, and active-adult communities. The Company filed for chapter 11 protection on Oct. 5, 2006 (Bankr. D. N.J. Case No. 06-19626). David L. Bruck, Esq., at Greenbaum, Rowe, Smith, et al., represents the Debtor. When the Debtor filed for protection from its creditors, it listed total assets of $350,179,841 and total debts of $296,840,591. On Oct. 9, 2006, nine affiliates filed separate chapter 11 petitions in the same Bankruptcy Court. On Oct. 10, 2006, 12 more affiliates filed chapter 11 petitions. Kara Homes' exclusive period to file a chapter 11 plan expires on Feb. 2, 2007. LARRY VARNER: Involuntary Chapter 11 Case Summary ------------------------------------------------- Alleged Debtor: Larry Varner and Randall Todd Duncan, Tenants in Partnership aka RR&R aka RR&L dba Kingsport Sports Club aka SIR dba Store It Rite 2003 American Way Kingsport, TN 37660 Involuntary Petition Date: October 27, 2006 Case Number: 06-50998 Chapter: 11 Court: Eastern District of Tennessee (Greeneville) Judge: Marcia Phillips Parsons Petitioners' Counsel: Fred M. Leonard, Esq. 27 Sixth Street Bristol, TN 37620 Tel: (423) 968-3151 Petitioner Claim Amount ---------- ------------ Larry Gene Varner Unknown 2003 American Way Kingsport, TN 37660 LAS AMERICAS: Judge Rimel Confirms Chapter 11 Reorganization Plan ----------------------------------------------------------------- The Honorable Whitney Rimel of the U.S. Bankruptcy Court for the Eastern District of California has confirmed Chapter 11 Trustee Randell Parker's Modified Plan of Reorganization for Las Americas Broadband, Inc. On the effective date of the Plan, estate property will revest to the Debtor. The Reorganized Debtor will remain in existence only until all of its assets are liquidated after which it will be dissolved. Mr. Parker will become an agent under the Plan for the purposes of carrying out the Plan and administering the liquidation of remaining assets. He will have authority to sell estate property transferred to the Reorganized Debtor or abandon assets to a holder of a claim secured by these assets. The plan agent will have two years from the effective date to complete the liquidation of assets and distribute the proceeds under the terms of the Plan. Treatment of Claims The fully secured claim of Chesterfield Financial Corp, totaling $121,235, will be paid in full on the effective date. The $152,474 Claim of Power and Telephone Supply Co. will be paid through the liquidation of assets securing its claim. Any unpaid claim balance will be treated as a general unsecured claim. USBU LoanOne, LLC's $350,000 secured claim will be paid ten days following the Court's approval of the Moore Settlement. If the Court determines that Joseph Trahan's $202,427 secured claim is valid, the claim will be paid on the effective date. If the lien is not valid, Mr. Trahan's claim will be classified as a general unsecured claim. Moore DP LLC's $34,481 claim will be paid through the liquidation of collateral securing the debt. The Internal Revenue Service's $500,000 claim will be paid in full on the effective date. Any unpaid amount will be grouped under the general unsecured class. The $76,442 claim of the California Employment Development Department will be paid in full on the effective date. The $51,129 claim of National Cable Television Cooperative, Inc., will be pad in full from the liquidation of collateral securing its claim. Holders of general unsecured claims will receive a pro rata distribution of the proceeds from the liquidation of estate assets subject to the payment of al other senior claims. The Debtor's stock will be cancelled on the effective date and interest holders will get nothing under the Plan. A copy of the Debtor's Modified Plan of Reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=061030041333 Headquartered in Tehachapi, California, Las Americas Broadband, Inc. -- http://www.lasamericasbroadband.com/-- operates a cable and satellite television network in Kern County, California. The Debtor filed for chapter 11 protection on Feb. 28, 2005 (Bankr. E.D. Calif. Case No. 05-11397). Leonard K. Welsh, Esq., at Klein, DeNatale, Goldner, Cooper, Rosenlieb & Kimball, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $4,964,500 in total assets and $4,641,110 in total debts. LEHMAN XS: Moody's Puts B2 Rating on Class A-4 Notes ---------------------------------------------------- Moody's Investors Service assigned ratings of A3 to the Class A-1 notes, Baa3 to the Class A-2 notes, Ba3 to the Class A-3 notes, and B2 to the Class A-4 notes issued by Lehman XS NIM Company 2006-GPM5. The notes are backed by residual and prepayment penalty cash flows from an underlying securitization of Alt-A, adjustable-rate, negative amortization mortgage loans: GreenPoint Mortgage Funding Trust Mortgage Pass-Through Certificates, Series 2006-AR5. The cash flows available to repay the notes are significantly impacted by the rate of loan prepayments and the timing and amount of loan losses on the underlying transaction's mortgage pool. Moody's examined various combinations of loss and prepayment scenarios to evaluate the cash flows to the rated notes. These are the rating actions: Issuer: Lehman XS Net Interest Margin Notes Series 2006-GPM5 Cl. A-1, Assigned A3 Cl. A-2, Assigned Baa3 Cl. A-3, Assigned Ba3 Cl. A-4, Assigned B2 The notes were sold in privately negotiated transactions without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144A. LIFESTREAM TECHNOLOGIES: Exploring Strategic Alternatives --------------------------------------------------------- Lifestream Technologies, Inc. is seeking strategic alternatives for all or portions of its business, and is focusing on the orderly wind down and sale of its assets. The Company also reported that its stock is expected to be delisted from the OTC Bulletin Board effective Nov. 3, 2006, due to its failure to timely file its annual report on Form 10-KSB for the fiscal year ended June 30, 2006. The Company's stock also currently trades on the electronic "pink sheets," which is not affected by the pending delisting from the OTC Bulletin Board. The Company further reported that together with Lifestream Diagnostics Inc. the Company has entered into a Forbearance Agreement with its senior lender RAB Special Situations (Master) Fund Limited. As contemplated by the Forbearance Agreement, the Company has engaged the turnaround specialist firm Conway MacKenzie & Dunleavy to provide restructuring services. As a part of this engagement, the Company appointed Frank R. Mack, a Managing Director of CM&D, as Chief Restructuring Officer. Mr. Mack will report directly to the Board of Directors of the Company. Prior to joining Conway MacKenzie & Dunleavy, Mr. Mack was a Principal of Kugman Associates, Inc. He is a Certified Turnaround Professional, a Certified Fraud Examiner and a Certified Public Accountant. Mr. Mack received his Master of Business Administration in Finance from the University of Chicago's Graduation School of Business and his Bachelor of Science degree from DePaul University. The Company does not have an employment agreement with Mr. Mack. The Company's contract with CM&D provides that the Company will pay for the service of CM&D personnel on an hourly basis at rates ranging from $235 to $495 per hour. About Lifestream Lifestream Technologies Inc. -- http://www.lifestreamtech.com/-- markets a proprietary over-the-counter, total cholesterol- monitoring device for at-home use by both health-conscious and at- risk consumers. The Company's cholesterol monitor enables an individual, through regular at-home monitoring of their total cholesterol level, to continually assess their susceptibility to developing cardiovascular disease, the single largest cause of premature death and permanent disability among adult men and women in the U.S. Going Concern Doubt Lifestream's independent registered public accountants, BDO Seidman, LLP, expressed substantial doubt about the Company's ability to continue as a going concern after it audited Lifestream's condensed consolidated financial statements for the fiscal years ended June 30, 2005 and 2004. The accountants pointed to substantial operating and net losses, as well as negative operating cash flow, since its inception. MERIDIAN AUTOMOTIVE: Plan-Filing Period Extended Until December 31 ------------------------------------------------------------------ The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware extended Meridian Automotive Systems Inc. and its debtor-affiliates' exclusive period to file a chapter 11 plan of reorganization until Dec. 31, 2006. Judge Walrath also extended the Debtors' exclusive period to solicit acceptances of that plan until March 1, 2007. As reported in the Troubled Company Reporter on Oct. 16, 2006, the brief extension of the Exclusive Periods is intended to enable the Debtors to continue the Plan process in an orderly, efficient, and cost-effective manner. Moreover, the extension of the Exclusive Periods will enable the Debtors to solicit acceptances of the Fourth Amended Plan, and to pursue its confirmation without the distraction that would be attendant to the filing of a competing plan. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MERIDIAN AUTOMOTIVE: Has Until March 1 to Remove Civil Actions -------------------------------------------------------------- The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware extended Meridian Automotive Systems Inc. and its debtor-affiliates' time to exclusively file notices of removal of prepetition civil actions to and including March 1, 2007. As reported in the Troubled Company Reporter on Oct. 16, 2006, the Debtors asserted that the extension would give them more time to make fully informed decisions concerning removal of each pending prepetition civil action and will ensure that they do not forfeit their rights under Section 1452 of the Judiciary and Judicial Procedures Code. The rights of the Debtors' adversaries will not be prejudiced by the extension because any party to a prepetition action that is removed may seek to have it remanded to the state court pursuant to Section 1452(b). Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MERRILL LYNCH: Moody's Rates $2.2 Mil. Class L Certificates at B3 ----------------------------------------------------------------- Moody's Investors Service assigned definitive ratings to certificates issued by Merrill Lynch Financial Assets Inc. Commercial Mortgage Pass-Through Certificates, Series 2006-Canada 20. These are the rating actions: -- the CDN$77.5 million Class A-1 Certificates due October 2021 rated Aaa -- the CDN$179.95 million Class A-2 Certificates due October 2021 rated Aaa -- the CDN$267.15 million Class A-3 Certificates due October 2021 rated Aaa -- the CDN$14.9 million Class B Certificates due October 2021 rated Aa2 -- the CDN$14.1 million Class C Certificates due October 2021 rated A2 -- the CDN$15.6 million Class D Certificates due October 2021 rated Baa2 -- the CDN$4.5 million Class E Certificates due October 2021 rated Baa3, -- the CDN$5.2 million Class F Certificates due October 2021 rated Ba1, -- the CDN$2.2 million Class G Certificates due October 2021 rated Ba2 -- the CDN$2.2 million Class H Certificates due October 2021 rated Ba3, -- CDN$1.5 million Class J Certificates due October 2021 rated B1, -- the CDN $1.5 million Class K Certificates due October 2021 rated B2, -- the CDN$2.2 million Class L Certificates due October 2021 rated B3, -- the CDN$574.7* million Class XP-1 Certificates due October 2021 rated Aaa, -- the CDN$0.001* million Class XP-2 Certificates due October 2021 rated Aaa, and, -- the CDN$595.3* million Class XC Certificates due October 2021 rated Aaa. * Initial notional amount The ratings on the Certificates are based on the quality of the underlying collateral -- a pool of multifamily and commercial loans located in Canada. The ratings on the Certificates are also based on the credit enhancement furnished by the subordinate tranches and on the structural and legal integrity of the transaction. The pool's strengths include: -- its high percentage of less risky asset classes; -- recourse on 58.2% of the pool; -- the diversity of the collateral; -- and the creditor friendly legal environment in Canada. Moody's concerns include the concentration of the pool, where the top ten loans account for 51.0% of the total pool balance and the existence of subordinated debt on 11.7% of the pool. Moody's beginning loan-to-value ratio was 91% on a weighted average basis. Moody's issued provisional ratings on the Certificates on October 2006. MICRON TECHNOLOGY: Earns $408 Million in 2006 Fiscal Year --------------------------------------------------------- Micron Technology Inc. reported results of operations for its 2006 fiscal year and fourth quarter, which ended Aug. 31, 2006. For the 2006 fiscal year, the Company earned net income of $408 million on net sales of $5.3 billion, which compares to net income of $188 million on net sales of $4.9 billion for the prior fiscal year. For the fourth quarter of fiscal 2006, the Company earned net income of $64 million on net sales of $1.4 billion. "Micron effectively executed its diversification strategy, resulting in strong financial performance for the year while strengthening its platform for future success," said Steve Appleton, Micron's chairman, CEO and president. In fiscal 2006, the Company began to realize benefits from its diversification strategy, particularly with its CMOS image sensors. The Company is the world's leading provider of CMOS image sensors and doubled its sales of imaging products from fiscal 2005 to 2006. The establishment in 2006 of the Company's joint venture with Intel Corporation for NAND flash memory production positioned Micron for significant growth in this market. This alliance enables the Company to realize the benefits of research and development cost sharing and, through joint investments with Intel, accelerate its NAND production ramp. Once completed, these investments will allow the Company to bring additional scale and cost reductions to its memory operations. The Company's NAND product offering was further broadened with the acquisition of Lexar Media, which provides a significant retail presence and strengthened the Company's portfolio of intellectual property. The effects of the Company's transformation in fiscal 2006 noticeably strengthened the Company's balance sheet. Cash and investment balances increased $1.8 billion over the year at the same time debt was reduced by approximately $600 million. The Company invested approximately $1.6 billion in capital expenditures in fiscal 2006. These investments were heavily concentrated in 300mm wafer fab tooling as the Company positions its Manassas, Lehi and TECH Semiconductor operations for advanced 300mm production. Comparing the Company's fourth quarter results to the previous quarter, net sales grew primarily as a result of increased sales in the Company's memory segment. Sales of DDR and DDR2 memory products increased slightly in the fourth quarter of fiscal 2006 compared to the third quarter, representing approximately 50% of the Company's total net sales. Sales of imaging products in the fourth quarter of fiscal 2006 represented approximately 15% of the Company's sales. Sales of NAND flash products increased in the quarter and represented approximately 9% of the Company's total net sales for the fourth quarter. Sales of NAND flash products in the fourth quarter of fiscal 2006 include only limited volumes from Lexar, as purchase accounting precludes the Company from recognizing Lexar inventory in the distribution channel as of the date of the acquisition. As a result of the acquisition, the Company's operating expenses in the fourth quarter of fiscal 2006 include approximately $20 million for the Lexar operations. During the fourth quarter of fiscal 2006, the Company settled various legal matters adversely affecting the Company's gross margin by approximately $45 million, or three percentage points. Absent the effect of these settlements, the Company's gross margin on sales of memory products in the fourth quarter of fiscal 2006 would have been slightly higher than the gross margin in the preceding quarter. At the end of the fourth quarter of fiscal 2006, the Company had $3.1 billion in cash and short-term investments. During fiscal 2006 and the fourth quarter, the Company generated $2.0 billion and $330 million, respectively, in cash from operations and invested $1.6 billion and $633 million, respectively, in capital expenditures. The Company anticipates capital expenditures for fiscal year 2007 to be approximately $4 billion. Subsequent to the end of fiscal 2006, the Company and Toshiba Corporation entered into agreements settling all outstanding NAND flash memory-related litigation between the Companies. Toshiba purchased certain of the Company's semiconductor technology patents and licensed certain patents previously owned by Lexar Media. The Company will receive payments totaling $288 million over several years. About Micron Micron Technology, Inc. (NYSE:MU) -- http://www.micron.com/-- is a worldwide provider of semiconductor solutions. Through its worldwide operations, Micron manufactures and markets DRAMs, NAND flash memory, CMOS image sensors, other semiconductor components, and memory modules for use in leading-edge computing, consumer, networking, and mobile products. * * * On Dec. 8, 2005, Moody's Investors Service revised its ratings outlook on Micron Technology to stable (Corporate Family Rating at Ba3). Moody's affirmed the Company's Ba3 Senior Implied rating, Ba3 Issuer rating, (P) Ba3 Senior unsecured shelf registration rating, (P) B2 Subordinated shelf registration rating, B2 rating on $632 million 2.5% convertible subordinated notes due February 2010 and B2 rating on $210 million 6.5%, junior subordinated notes. MILLS CORP: Could File Delinquent Financial Statements in 4 Weeks ----------------------------------------------------------------- The Mills Corporation now expects to file its Form 10-K in three to four weeks. The Mills' first, second and third quarter 2006 Form 10-Qs are expected to be filed shortly after the 2005 Form 10-K is filed with the Securities and Exchange Commission. In a Current Report on Form 8-K filed with the SEC on Sept. 15, 2006, The Mills reported that it believed that it would file its 2005 Form 10-K on or about Oct. 31, 2006. This timing was dependent on, among other things, completion of the restatement of prior years' financial statements, the completion of the independent investigation being conducted by the Audit Committee of the Board of Directors of The Mills, with the assistance of Gibson, Dunn & Crutcher, LLP, the Audit Committee's independent counsel, and the completion of the audit of The Mills' 2005 financial statements conducted by the Company's independent registered public accountants, Ernst & Young LLP. Due in part to the complexity of the restatement, the number of accounting adjustments and the number of years being restated, the time required to complete the independent investigation, the time required by Ernst & Young to complete its audit procedures, it has taken longer than expected to finalize The Mills' 2005 Form 10-K. As disclosed in a press release issued on Feb. 23, 2006, the Audit Committee, advised by independent counsel, has been conducting an investigation into various accounting issues, including those issues, and various other issues that were brought to the attention of the Audit Committee and its independent counsel during the course of the Investigation. The Investigation is now essentially complete. The Audit Committee has received oral reports from its independent counsel regarding the anticipated findings of the Investigation. The Audit Committee and its independent counsel also have kept the Company's Board of Directors, Ernst & Young, and the staff of the SEC, Division of Enforcement, apprised regarding the anticipated findings of the Investigation. The Audit Committee and its independent counsel, subject to the identification by the Company or Ernst & Young of any additional issue prior to the filing of the Company's financial statements for the year ended Dec. 31, 2005 and the Company's restated financial statements for certain prior years, expect to complete the Investigation by mid-November 2006. Headquartered in Chevy Chase, Maryland, The Mills Corporation (NYSE:MLS) -- http://www.themills.com/-- develops, owns, manages retail destinations including regional shopping malls, market dominant retail and entertainment centers, and international retail and leisure destinations. The Company owns 42 properties in the U.S., Canada and Europe, totaling 51 million square feet. In addition, The Mills has various projects in development, redevelopment or under construction around the world. * * * As reported in the Troubled Company Reporter on March 24, 2006, The Mills Corporation disclosed that the Securities and Exchange Commission has commenced a formal investigation. The SEC initiated an informal inquiry in January after the Company reported the restatement of its prior period financials. Mills is restating its financial results from 2000 through 2004 and its unaudited quarterly results for 2005 to correct accounting errors related primarily to certain investments by a wholly owned taxable REIT subsidiary, Mills Enterprises, Inc., and changes in the accrual of the compensation expense related to its Long-Term Incentive Plan. As reported in the Troubled Company Reporter on April 17, 2006, The Mills Limited Partnership entered into an Amendment No. 3 and Waiver to its Second Amended and Restated Revolving Credit and Term Loan Agreement, dated as of Dec. 17, 2004, among Mills Limited, JPMorgan Chase Bank, N.A., as lender and administrative agent, and the other lenders. The agreement provides a conditional waiver through Dec. 31, 2006, of events of default under the facility that are associated, among other things, with: * the pending restatement of the financial statements of Mills Corporation and Mills Limited, and * the delay in the filing of the 2005 Form 10-K of Mills Corp. and Mills Limited. MOORE MEDICAL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Moore Medical Center, LLC 700 South Telephone Road Moore, OK 73160 Bankruptcy Case No.: 06-12867 Chapter 11 Petition Date: October 28, 2006 Court: Western District of Oklahoma (Oklahoma City) Debtor's Counsel: Joseph A. Friedman, Esq. Kane Russell Coleman & Logan P.C. 1601 Elm Street, Suite 3700 Dallas, TX 75201 Tel: (214) 777-4200 Fax: (214) 777-4299 Estimated Assets: $50 Million to $100 Million Estimated Debts: $50 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Sri Surgical Express Inc. Trade Debt $221,836 P.O. Box 861412 Orlando, FL 32886 McKesson General Medical Cor. Trade Debt $162,009 P.O. Box 120001 Dallas, TX 75312 Costigan & Associates, Inc. Trade Debt $116,500 304 South Ramblin Oaks Moore, OK 73160 Og&E Trade Debt $87,866 P.O. Box 24990 Oklahoma City, OK 73124 Xactimed Trade Debt $75,768 9400 North Central Expsy, E 7 Dallas, TX 75231 Omnicell Trade Debt $74,541 Sylvan N. Goldman Center OBI Trade Debt $71,532 Get Well Network Inc. Trade Debt $66,567 Johnson and Johnson Trade Debt $65,279 HMS Trade Debt $55,702 Angelica Textile Service Trade Debt $55,485 Diagnostic Lab of Oklahoma Trade Debt $54,484 Steris Corp. Trade Debt $54,000 Boston Scientific Corp. Trade Debt $47,407 Sysco Food Service Trade Debt $45,824 Butler Restoration Trade Debt $40,297 Surgical Specialists of Trade Debt $40,000 Oklahoma CR Bard Inc. Trade Debt $39,314 3M Health Information Systems Trade Debt $33,374 Dade Behring Trade Debt $26,698 MORTGAGE ASSET: $1.9 Mil. Class B-4 Certs. Get Fitch's BB Rating ---------------------------------------------------------------- Mortgage Asset Securities Transactions Asset Securitization Trust 2006-3 (which closed on Oct. 27, 2006) mortgage pass-through certificates are rated by Fitch: -- $426.8 million classes 1-A-1 to 1-A-11, 2-A-1 to 2-A-5, 3- A-1, A-LR, A-UR, 15-PO, 30-PO,15-A-X and 30-A-X certificates 'AAA' (senior certificates); -- $6.1 million class B-1 'AA'; -- $2.6 million class B-2 'A+'; -- $880,000 class B-3 'A'; -- $1.9 million class B-4 'BB' -- $660,000 class B-5 'B'. The 'AAA' ratings on the senior certificates reflect the 3.00% subordination provided by the 1.40% class B-1, 0.60% class B-2, 0.20% class B-3, 0.45% privately offered class B-4, 0.15% privately offered class B-5, and 0.20% privately offered class B- 6. Classes B-1, B-2, B-3, and the privately offered classes B-4, and B-5 are rated 'AA', 'A+', 'A', 'BB', and 'B', respectively, based on their respective subordination. Class B-6 is not rated by Fitch. The ratings also reflect the quality of the underlying collateral, SunTrust (rated 'RPS2' by Fitch) and Cenlar FSB (rated 'RPS3+' by Fitch) as primary servicers, Wells Fargo Bank, N.A. (rated 'RPS1' by Fitch) as master servicer, and U.S. Bank National Association, as Trustee. The transaction is secured by three pools of mortgage loans. Loan groups 1, 2, and 3 are cross-collateralized and supported by the B-1 through B-6 subordinate certificates. The transaction also consists of five classes of senior exchangeable certificates: class 1-A-9, 1-A-10, 1-A-11, 2-A-4, and 2-A-5. All or a portion of certain classes of offered certificates may be exchanged for a proportionate interest in the related exchangeable certificates. All or a portion of the exchangeable certificates may also be exchanged for the related offered certificates in the same manner. This process may occur repeatedly. The classes of offered certificates and of exchangeable certificates that are outstanding at any given time and the outstanding principal balances and notional amounts of these classes will depend upon any related distributions of principal, as well as any exchanges that occur. Offered certificates and exchangeable certificates in any combination may be exchanged only in the proportions shown in the governing documents. Holders of exchangeable certificates will be the beneficial owners of a proportionate interest in the certificates in the related combination group and will receive a proportionate share of the distributions on those certificates. All mortgage loans in all three groups were underwritten using each originator's guideline. These guidelines are less stringent than Fannie Mae or Freddie Mac's general underwriting guidelines and could include limited documentation or higher maximum loan-to- value ratios. Mortgage loans underwritten to those guidelines could experience higher rates of default and losses than loans underwritten using Fannie Mae or Freddie Mac's general underwriting guidelines. Loan groups 1, 2, and 3 in the aggregate consist of 797 recently originated conventional, fixed-rate, fully amortizing, first lien, one- to four-family residential mortgage loans with remaining terms to stated maturity ranging from 166 to 359 months. The aggregate outstanding balance of the pool as of Oct. 1, 2006 (the cut-off date) is $440,071,053 with an average balance of $552,159 and a weighted average coupon of 6.557%. The weighted average original loan-to-value ratio for the mortgage loans in the pool is approximately 68.40%. The weighted average FICO credit score is 745. Second homes and investor-occupied properties comprise 5.08% and 1.70% of the loans in the group, respectively. Rate/Term and cash-out refinances account for 22.31% and 28.16% of the loans in the group, respectively. The states that represent the largest geographic concentration of mortgaged properties are California (33.27%), Florida (10.55%), Virginia (6.98%) and Georgia (5.33%). All other states represent less than 5% of the aggregate pool balance as of the cut-off date. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. Mortgage Asset Securities Transactions, Inc. deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, elections will be made to treat the trust as multiple real estate mortgage investment conduits with a tiered structure. Wells Fargo Bank, National Association will act as trustee. NESCO INDUSTRIES: Has $10 Million Stockholders' Deficit at July 31 ------------------------------------------------------------------ At July 31, 2006, Nesco Industries Inc.'s balance sheet reported a $10,064,000 total stockholders' deficit resulting from total assets of $1,465,000 and total liabilities of $11,529,000. The company's July 31 balance sheet also showed strained liquidity with $380,000 in total current assets and $11,220,000 in total current liabilities. For the three months ended July 31, 2006, the company's net loss decreased to $799,000 from $1,202,000 for the three months ended July 31, 2005. Revenues for the current quarter increased to $391,000 from $386,000 for the same period in 2005. Full-text copies of the company's financial statements for the three months ended July 31, 2006, are available for free at: http://researcharchives.com/t/s?140b Headquartered in New York, Nesco Industries, Inc. (OTCBB: NESK) dba Hydrogel Design Systems, manufactures, markets, sells and distributes aqueous polymer-based radiation ionized gels used in various medical and cosmetic consumer products. NISKA GAS: Moody's Assigns Loss-Given-Default Ratings ----------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the broad energy midstream sector, encompassing companies that engage in the extraction, treating, transmission, distribution, and logistics for crude oil, natural gas, and other hydrocarbon products, the rating agency affirmed it Ba3 rating on Niska Gas Storage Canada ULC's Sr. Sec. Term Loan due 2013. In addition, Moody's attached an LGD4 rating on these loans, suggesting noteholders will experience a 50% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Niska Gas Storage's -- http://www.niskags.com/-- natural gas storage business is located in key North American natural gas producing and consuming regions and is connected to multiple gas transmission pipelines. Niska and its subsidiaries own and operate approximately 140 billion cubic feet (Bcf) of working gas capacity at three facilities: Suffield - 85 Bcf in Alberta; Countess - 40 Bcf in Alberta; and Salt Plains - 15 Bcf in Oklahoma. The Suffield and Countess gas storage facilities conduct business under the name AECO Hub. NORAMPAC INC: Earns CDN$24.3 Mil. for Quarter Ended Sept. 30, 2006 ------------------------------------------------------------------ Norampac Inc., reported a net income of CDN$24.3 million for the quarter ended Sept. 30, 2006, compared to a net loss of CDN$11 million for the same period in 2005. Sales was reported CDN$328 million in the third quarter of 2006, versus CDN$320 million for the corresponding quarter in 2005. Compared to the third quarter of 2005, shipments of containerboard in the third quarter of 2006 were down by 1.3% but up by 8.3 % if the volume in 2005 coming from the permanent closure of its paper machine no.1 at Red Rock in Sept. 2005 is not taken into account. Operating income in the third quarter of 2006 was CDN$41 million, compared to an operating loss of CND$20 million for the corresponding quarter in 2005. For the nine-month period ended Sept. 30, 2006, net income was CDN$62.2 million, compared to a net income of CDN$8.1 million for the same period in 2005. For the nine-month period ended Sept. 30, 2006, sales were CDN$959 million compared to CDN$981 million for the same period in 2005. For the nine-month period ended Sept. 30, 2006, shipments for both the containerboard and the corrugated products segments were approximately at the same level as the same period in 2005. Norampac owns eight containerboard mills and 26 corrugated products plants in the United States, Canada and France. With annual production capacity of more than 1.45 million short tons, Norampac is the largest containerboard producer in Canada and the seventh largest in North America. Norampac, which is also a major Canadian manufacturer of corrugated products, is a joint venture company owned by Domtar Inc. (TSX: DTC) and Cascades Inc. (TSX: CAS). * * * As reported in the Troubled Company Reporter on June 14, 2006, Moody's Investors Service downgraded Norampac Inc.'s corporate family rating to Ba3 from Ba2, assigned a Ba2 rating to its CDN$325 million senior secured five-year revolver and downgraded its senior unsecured debt ratings to B1, effective June 12, 2006. OPTIMAL CARE: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Optimal Care Dialysis, Inc. 18600 James Couzens Detroit, MI 48202 Tel: (313) 341-7870 Bankruptcy Case No.: 06-55616 Chapter 11 Petition Date: October 27, 2006 Court: Eastern District of Michigan (Detroit) Judge: Walter Shapero Debtor's Counsel: William L. Johnson, Esq. 29777 Telegraph Road, Suite 2500 Southfield, MI 48034 Tel: (248) 357-4800 Fax: (248) 357-4298 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ GAMBRO Credit Card $15,380,938 P.O. Box 88845 Charges - Supplies Chicago, IL 60695-1845 Metro Medical Supply Inc. Medical Supplies $2,700,970 200 Cumberland Bend Nashville, TN 37228 JPMorgan Chase Bank, N.A. Principal Loan $218,904 Grand River & Fenkell Business Banking Group LPO 18203 Fenkell Avenue Detroit, MI 48223 Shorebank, Detroit Office Equipment $200,000 Shorebank Bidco, Inc. 228 West Washington Marquette, MI 49855 Fresenius Medical Care Medical Supplies $93,218 95 Hayden Avenue Lexington, MA 02420-9192 Henry Schen Inc. Medical Supplies $21,191 Chase Equipment Leasing Inc. Dialysis Equipment $18,376 The Hartford Insurance Premiums $3,411 Advanta Bank Corp. Credit Card $3,319 Minntech Corp. Medical Dialysis $2,039 Supplies Champion Manufacturing Inc. Credit Charges $2,000 Supply Fast Flight Medical Billing Services $1,900 Billing Service P.C. Lab Safety Supply Lab Supplies $1,314 Colin Medical Instruments Corp. Medical Equipment $1,134 Detroit Edison Utility Services $1,134 Agility Bioservices Bio-Hazard Disposal $1,100 American Telephone and Phone Services $898 Telegraph City of Detroit Water Services $761 Water and Sewerage Dept. Covenant Disposal Waste Disposal $500 Services Inc. Champion Nursing Service Charges $400 PERFORMANCE TRANSPORTATION: Inks Services Pact with Qwest Comms --------------------------------------------------------------- Performance Transportation Services Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Western District of New York for permission to enter into a telecommunication services agreement with Qwest Communications Corporation. Garry M. Graber, Esq., at Hodgson Russ LLP in Buffalo, New York, explains that the Debtors utilize domestic and international long-distance telephone and Internet services to ensure efficient and unrestricted communications between their employees and their customers. Mr. Graber says proper telecommunications service is important for the Debtors to conduct their business effectively. According to Mr. Graber, the services of the Debtors' current provider have diminished and that they believe that they are not obtaining timely responses to their customer service requests. Due to this, the Debtors examined alternatives and determined that Qwest provides the most cost-effective services. He points out that Qwest will provide reliable telecommunication services at substantial cost-savings of $540,000 over a three-year term. Under the Agreement, the Debtors will: * pay reduced monthly rates; * have the ability to increase their telecommunications capacity within one network; and * obtain more responsive customer service. Without the Agreement, the Debtors will be forced to pursue other proposals or continue the services of their current provider at greater cost to the Debtors' estates and their creditors, Mr. Graber says. Due to confidentiality concerns, the Debtors did not file a copy of the Agreement together with the Motion. Mr. Graber says the Debtors will provide copies of the Agreement upon request to: * counsel for the official committee of unsecured creditors; * counsel to the administrative agent to (i) the Debtors' prepetition secured lenders under the first lien credit agreement and (ii) the DIP lenders; * counsel to the administrative agent to the Debtors' prepetition secured lenders under the second lien credit agreement; * the United States Trustee; and * the Court. Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PERFORMANCE TRANSPORTATION: Panel Argues Against Compensation Plan ------------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in Performance Transportation Services, Inc., and its debtor affiliates' bankruptcy cases presents more arguments to support its opposition of the Debtors' proposed modified performance-based program. As reported in the Troubled Company Reporter on July 31, 2006, the Debtors' performance-based program consists of two components: 1. the EBITDAR Realization Bonus; and 2. the Value Added Bonus. Under the terms of the Modified Program, the Debtors increased the number of their management personnel eligible to achieve a bonus payment, to include all 54 participants that were eligible for a bonus payment under the Debtors' prepetition bonus plan. The Modified Program does not include any type of severance payments. The Committee has previously told the Court that the Modified Incentive Program merely expands the eligible participates in an attempt to justify the top-heavy bonuses to insiders and increases the cost of the Original Program while still providing a windfall to the Debtors' two top insiders. The Modified Program, like the Original Program, is nothing more than a stealth key employee retention plan intended to reward insiders. To further strengthen its argument, the Committee points the Court to the decision of the U.S. Bankruptcy Court for the Southern District of New York in In re Dana Corporation, No. 06-10354, 2006 WL 2563458 (Bankr. S.D.N.Y. September 5, 2006). In Dana, Judge Burton L. Lifland rejected an incentive scheme similar to the program proposed by the Debtors. According to David Neier, Esq., at Winston & Strawn LLP, in New York, Dana seeks approval of a compensation plan to six of its executives -- a move disputed by the parties including its creditors' committee. Dana's compensation plan comprises various components, including a target completion bonus that was based upon Dana obtaining certain total enterprise values six months after the effective date of a plan of reorganization. The objecting parties assert that the artificially low "lay up" thresholds for the payment of the target completion bonuses virtually guaranteed that Dana's most senior executives would be paid so long as they remained employees of Dana, and therefore the proposed bonuses were more akin to a "pay to stay" or key employee retention plan prohibited under the recently revised Section 503(c) of the Bankruptcy Code. In response, Dana alleges that the proposed bonuses are incentive-based and not retention payments subject to Section 503(c). It also compares its plan to the approved bonus programs in In re Nobex Corp., Case No. 05-20050 (Bankr. D. Del. Jan. 12, 2006); and In re Calpine Corp., Case No. 05-60200 (Bankr. S.D.N.Y. Apr. 26, 2006). Mr. Neier, however, notes that the Dana court found the reliance upon the decision of Nobex and Calpine misplaced. It rejected Dana's bonus plan for failing to comply with Sections 503(c) and 363. Mr. Neier also points out that the Committee submitted a proposal to the Debtors but heard nothing from them. But what worried the Creditors more than the lack of negotiations, is the apparent lack of progress by the Debtors on their reorganization efforts -- something that the Committee would like the Debtors to validate why management deserve the bonuses. Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PHOTRONICS INC: Moody's Assigns Loss-Given-Default Ratings ---------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. technology semiconductor and distributor sector, the rating agency affirmed its B1 corporate family rating on Photronics, Inc. Additionally, Moody's revised its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $190MM 4.75% Convertible Subordinated Notes due 2006 B3 B2 LGD5 73% $150MM 2.25% Convertible Subordinated Notes due 2008 B3 B2 LGD5 73% 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%). POP N GO: Posts $4.4 Million Net Loss in Third Fiscal Quarter -------------------------------------------------------------- Pop N Go Inc. reported a $4.4 million net loss on $18,661 total sales for the quarter ended June 30, 2006, compared to a $0.6 million net loss on $12,248 total sales for the same period in 2005. At June 30, 2006, the company's balance sheet showed $1.39 million in total assets and $17.14 million in total liabilities, resulting in a $15.75 million stockholders' deficit. The company's accumulated deficit reached $32.9 million at June 30, 2006. The company's June 30 balance sheet also showed strained liquidity with $1.29 million in total current assets available to pay $16.91 million in total current liabilities. A full-text copy of the company's balance sheet is available for free at http://researcharchives.com/t/s?1429 Going Concern Doubt Kabani & Company, Inc. expressed substantial doubt about the company's ability to continue as a going concern after auditing the company's financial statements for the fiscal year ended Sept. 30, 2005. The auditing firm pointed to the net losses incurred during the fiscal year ended Sept. 30, 2005 of $2.5 million, the negative cash flow in operating activities amounting to $1.8 million in fiscal 2005, and the company's accumulated deficit of $23.2 million at Sept. 30, 2005. About Pop N Go, Inc. Pop N Go, Inc. -- http://www.popngo.com/-- is a Delaware corporation, organized in October of 1996, for the purpose of conducting a business in the development, manufacturing, marketing and distribution of a new line of specialty food service and food vending machine equipment and related food products. The company began operations in October 1996 and began shipping its first product, the Pop N Go Hot Air Popcorn Vending Machine during the 4th quarter of 1997. The company acquired all of the outstanding shares of Nuts to Go, Inc. in February of 1998 and thereby technology under development for a hot nuts vending machine In July of 2001, the Company acquired Branax, LLC, a development stage company which had developed a variety of single serving packaged flavorings for use on popcorn and other snack foods. The company operates domestically as well as internationally. The company sells its machines to Australia, North America, Europe, Asia and South America. PRODIGY HEALTH: Moody's Junks Proposed $75MM Sr. Facility Rating ---------------------------------------------------------------- Moody's Investors Service assigned a B2 corporate family rating to Prodigy Health Group, Inc. In connection with this rating, Moody's assigned a B2 senior secured rating to the proposed $175 million senior secured 1st lien credit facility, and a Caa1 rating to the proposed $75 million 2nd lien senior secured credit facility. The outlook on the ratings is stable. Moody's comments that it anticipates that the proceeds of the term loans will be used to fund an acquisition and retire all existing debt at Prodigy and the acquired company. Prodigy is a health services holding company under which several operating companies provide self--funded health plan administration to employers, claims processing to managed care companies, and medical management to health plan payers. With the acquisition, the rating agency said, Prodigy will become the largest privately held health plan manager, with a national geographic base, over one million members, and combined annual fee revenue of approximately $180 million. Moody's reported the B2 corporate family rating and the assigned debt ratings reflect the company's high leverage as a result of the added debt, low coverage ratio, and the uncertainty with respect to the synergies and operational effectiveness of the combined company. Moody's notes that Prodigy has been very acquisitive, with its most recent acquisitions being American Health Holding, which has become its medical management subsidiary, and Weyco, a small third party administrator. The rating agency says it expects Prodigy to continue to seek additional small acquisitions in the TPA market. Prodigy's health plan division, Meritain Health, caters to middle market employers that have special administrative needs that the large national health insurance carriers are unable to provide. Prodigy markets in areas where the provider discounts it obtains through its rental networks are not significantly different from the discounts obtained by the national carriers. Moody's adds that since the target acquisition operates in basically the same market as Prodigy, integration issues should not be overly troublesome. Synergies to be gained from the acquisition involve staff reductions and gains from optimizing vendor contracts. The rating agency states that the ratings could move up if debt to EBITDA is reduced to at least 3.5x, EBITDA interest coverage is at least 3.5x, and the combined company achieves annual organic growth of at least 3.5% while maintaining current earnings margin levels. However, if the company becomes involved in another large acquisition involving additional debt, if EBITDA interest coverage falls below 1x, if free cash flow to debt is below 2.5%, or if there is an annual decline in revenue of 10% or greater then the ratings could be moved down. These ratings were assigned with a stable outlook: * Prodigy Health Group, Inc. -- corporate family rating of B2; -- 1st lien senior secured rating at B2; and, -- 2nd lien senior secured rating at Caa1. Prodigy Health Group, Inc. is headquartered in Westport, Connecticut. As of December 31, 2005 the company reported shareholder's equity of $8.2 million. Total revenue for calendar year 2005 was $46.8 million. R&G FINANCIAL: Fitch Lowers to IDR to BB with Negative Outlook -------------------------------------------------------------- Fitch Ratings has lowe